Coronavirus Closes China to the World, Straining Global Economy; Cboe plans March launch for US market close mechanism

Feb 3, 2020

First Read

Hits & Takes
By JLN Staff

Eileen Flaherty’s book, “The Perilous Step,” had its cover reveal on Friday. It was trending number one on for White Collar Crime True Accounts in new releases Friday. It is currently number 3.~JJL

In America we put our trust in rodents to tell us the weather and don’t believe scientists about climate.~JJL

The Financial Times has a story about a successful senior bond trader at Citigroup in London being suspended for stealing food from the office canteen. The story mentions a couple of similar trader oddities. Some things that happen in the financial markets are just weird.~SR

Congratulations to the Kansas City (MISSOURI!) Chiefs on their Super Bowl Victory over the San Francisco 49ers. The 49ers’ name relates to the Gold Rush in California that was a big thing starting in 1848 when gold was discovered at Sutter’s Mill.~JJL

My favorite commercial during the Super Bowl was the one with Bill Murray about Groundhog Day, based on the movie by the same name. I don’t remember the firm associated with it though. Oh yes, it was Jeep.~JJL


Wuhan Coronavirus Looks Increasingly Like a Pandemic, Experts Say; Rapidly rising caseloads alarm researchers, who fear the virus may make its way across the globe. But scientists cannot yet predict how many deaths may result.
Donald G. McNeil Jr. – NY Times
The Wuhan coronavirus spreading from China is now likely to become a pandemic that circles the globe, according to many of the world’s leading infectious disease experts.

*****Some good news for your Monday morning.~JJL


More Hedge Exemptions; FCM Liability for Omnibus Client; Cybersecurity
Gary DeWaal – Bridging the Week
The Commodity Futures Trading Commission proposed to revise its position limits regime by increasing to 25 (from nine) the number of commodity derivatives contracts subject to federal limits; by augmenting the number of enumerated bona fide hedging exemptions; and by expediting the process for persons legitimately requiring non-enumerated hedge exemptions to gain approvals. Two commissioners objected to the proposal. Separately, a futures commission merchant was fined US $650,000 by a panel of the business conduct committee of the Commodity Exchange, Inc. for purportedly mishandling the reporting of positions in an omnibus account of a brokerage firm client and responding inaccurately to the exchange’s investigatory inquiries – although it solely passed along audit trail information provided to it by the customer.


Friday’s Top Three
Our most read story on Friday was Matt Leising’s brief explanation and history of spoofing, appropriately titled Spoofing, from Bloomberg. Second was The Financial Times’ Avocado crime soars ahead of America’s Super Bowl. I must admit that avocados, crime, and the Superbowl were three things I did not particularly associate with each other previously. In third was Bloomberg’s article about the coronavirus crisis, Commodity Shipping Costs Fall 99.95% After Virus Slams Market.


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Lead Stories

Coronavirus Closes China to the World, Straining Global Economy; Rarely has such an integral part of multinational industry and trade faced such an abrupt and open-ended freeze out
James T. Areddy – WSJ
China’s isolation amid the coronavirus outbreak, a rare freeze out for such a vital economic center, is rippling across the world. Uncertainty over the virus—which has infected more than 17,000 people— has disrupted world-wide trade and supply chains, depressed asset prices, and forced multinational businesses to make hard decisions with limited information.

Cboe plans March launch for US market close mechanism; Cboe Market Close (CMC) will go live in March this year after the exchange gained approval to launch the mechanism last month.
Hayley McDowell – The Trade
US exchange group Cboe Global Markets has confirmed it will launch its end-of-day matching mechanism on 6 March, shortly after receiving regulatory approval to move ahead with the controversial service.

Nasdaq Names Roland Chai Global Chief Risk Officer; Chai, most recently Head of Post-Trade at Hong Kong Exchange, will oversee Nasdaq’s global risk program
Nasdaq (Nasdaq: NDAQ) today announced that Roland Chai, most recently Head of Post-Trade at Hong Kong Exchange, will join the executive leadership team as Chief Risk Officer (CRO). Chai will be responsible for developing, reviewing and maintaining Nasdaq’s global risk program. He will report to Adena Friedman, President and CEO, Nasdaq.

At BlackRock, Public Firings, Overseas Probe Send Message About Office Misbehavior; Money-management giant faces new demands from the public as its responsibilities as a corporate watchdog grow
Dawn Lim, Steven Russolillo and Jing Yang – WSJ
When BlackRock Inc. BLK -2.29% fired two executives last year who had romantic relationships with subordinates, the money-management giant didn’t do it quietly.

Death Toll at 362; China May Cut Growth Target: Virus Update
Bloomberg News
The death toll from the coronavirus outbreak rose past 360 and total confirmed cases reached almost 17,400. Chinese officials are evaluating cuts to their growth target for 2020 and the central bank stepped in to help cushion the economy.

China Oil Demand Has Plunged 20% Because of the Virus Lockdown
Alfred Cang, Javier Blas, and Sharon Cho – Bloomberg
Executives describe privately the scale of the demand shock; Oil falls to a one-year low as OPEC weighs its response
WATCH: Chinese oil demand has dropped by about three million barrels a day.
Chinese oil demand has dropped by about three million barrels a day, or 20% of total consumption, as the coronavirus squeezes the economy, according to people with inside knowledge of the country’s energy industry.

UK competition regulator to ramp up pursuit of US tech giants; Watchdog head looks to ‘take back control’ of policy direction following Brexit
Javier Espinoza in Brussels and Kate Beioley – FT
The UK competition watchdog is to pursue antitrust investigations against US tech giants independently of Brussels and will push for tougher powers to go after the likes of Google and Facebook in the wake of Brexit.

Climate Models Are Running Red Hot, and Scientists Don’t Know Why; The simulators used to forecast warming have suddenly started giving us less time.
Eric Roston – Bloomberg
There are dozens of climate models, and for decades they’ve agreed on what it would take to heat the planet by about 3° Celsius. It’s an outcome that would be disastrous—flooded cities, agricultural failures, deadly heat—but there’s been a grim steadiness in the consensus among these complicated climate simulations.

No Reprieve for Emerging Markets With Rout in Virus-Hit China
Netty Idayu Ismail, Lilian Karunungan, Robert Brand, and Sydney Maki – Bloomberg
Volatility in emerging-market stocks and currencies jumps; China markets resume trading; stocks slide as bonds jump
Fresh from their worst month since August, emerging-market stocks and currencies are headed for more tumult as investors weigh the economic shocks from the coronavirus outbreak.

Banks and fund managers come back for another bite at bitcoin; Strong performance by specialist crypto funds has whetted traders’ appetites
Eva Szalay and Laurence Fletcher – FT
Financial markets are cosying up once more to crypto. Institutions such as banks and asset managers have long had a vexed relationship with cryptocurrencies, put off by reputational risks, lack of regulation and volatile returns. But a spell of better performance is drawing them deeper in.

Buy-side traders urge regulators to exclude cash bond market from CSDR buy-in regime; Trade associations have said cash bond markets should be excluded from initial rollout of the CSDR buy-in regime until the regulation’s impact on liquidity is fully assessed.
Hayley McDowell – The Trade
Two major buy-side trade bodies have urged regulatory authorities to exclude cash bond markets and phase in the implementation of the CSDR buy-in regime, amid growing concerns that the upcoming rules will have a detrimental impact on liquidity.

Exchanges, OTC and Clearing

SGX welcomes Resources Global Development Limited to Catalist
SGX (press release)
Singapore Exchange (SGX) today welcomed Resources Global Development Limited to its Catalist under the stock code “QSD”. The company is principally engaged in the coal trading and shipping services business within the Indonesian territories. Francis Lee, CEO of Resources Global Development Limited, said, “Over the years, with the depth and diversity of our technical and operational expertise, we have established a reputation as a reliable coal trader and coal shipping company in Indonesia. We will tap our listing status to further augment our operations and footprint as we chart new growth.”

The World Federation Of Exchanges Agrees 2020 Priorities
The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has agreed its 2020 business priorities will focus on the following areas: the value of the exchange role in creating data; CCPs and their role in systemic safety; Environmental, Social & Governance (ESG) issues; and building appropriate market structure around technology-led trends.

Cboe Announces Dynamic Lineup for 36th Annual Cboe Risk Management Conference U.S. 2020; Cboe’s premier educational forum takes place March 2 – 4 in Bonita Springs, FL
Cboe Global Markets, Inc.
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world’s largest exchange holding companies, will host the 36th annual Cboe Risk Management Conference (RMCSM) U.S. at the Hyatt Regency Coconut Point Resort in Bonita Springs, Florida, on Monday, March 2, through Wednesday, March 4.

Hong Kong Exchange post-trade head joins Nasdaq as risk chief; Roland Chai has been with HKEX since 2017, and spent more than seven years with LCH.Clearnet prior to that.
Hayley McDowell – The Trade
The head of post-trade at Hong Kong Exchanges and Clearing (HKEX) is set to depart after almost three years to join US exchange group Nasdaq.

Panel: The evolving role of collateral; HSBC on Collateral Management and Derivatives Clearing
This year’ Derivatives Forum in Frankfurt dedicates an entire stream on Capital & Collateral Efficiencies. We are pleased to have Clement Cordier, Head of Derivatives Clearing Services at HSBC France to share some of his thoughts on the evolving role of collateral management and how HSBC is leveraging those opportunities.

Eurex Improve – it’s all in the name
Imagine a functionality which allowed end-customers’ orders to benefit from the full price competition of Eurex’s order book, while being guaranteed to be executed in case markets move to the customer’s disadvantage. Wouldn’t that be a huge improvement?

Eurex Exchange Readiness Newsflash | Updates February 2020
With this Newsflash, we would like to draw your attention to the upcoming publications, events and necessary actions for the ongoing initiatives:

Cash markets generated sales of EUR 145.3 billion in January
Deutsche Börse
In January, sales of EUR 145.3 billion were achieved on the cash markets of Deutsche Börse (previous year: EUR 123.4 billion). Xetra accounted for EUR 123.2 billion of this (previous year: EUR 112.3 billion), bringing average Xetra daily sales to EUR 5.6 billion. EUR 4.1 billion was traded on the Frankfurt Stock Exchange (previous year: EUR 2.9 billion) and EUR 18.0 billion on the Tradegate Exchange (previous year: EUR 8.2 billion).

Nasdaq Acquires OneReport to Accelerate Delivery of ESG Reporting and Workflow Solution to Corporate Clients
Nasdaq, Inc. (Nasdaq: NDAQ) announced today the acquisition of OneReport, Inc. (“OneReport”), a privately-held provider of corporate responsibility and environmental, social, and governance (ESG) data management and reporting services. OneReport will accelerate the delivery of Nasdaq’s recently-announced ESG reporting and workflow solution, to be named Nasdaq OneReport. The platform is now available to companies as part of the suite of solutions offered by Nasdaq’s Corporate Services business.


Worldline-Ingenico: $8.6 Billion Fintech’s Not Quite Cheap Enough
Chris Hughes – Bloomberg
Consolidation in the digital payments industry has traditionally meant bold deals to buy fast-growing assets at sky-high valuations — with the acquirers often cheered on blindly by investors. Worldline SA has chosen a different path: A modestly expensive deal to buy struggling French peer Ingenico Group SA. Shareholders have frowned. Worldline Chief Executive Officer Gilles Grapinet must be wishing he’d stuck with convention.

Privilege And Peril In Fintech
Jon Schlossberg – Forbes
Even though they pretend to be, most fintech products aren’t built for the vast majority of Americans. Take, for example, the (fictional, but relatable) Miller family. In terms of everyday finance, the Millers are doing the best they can. With their annual pay hovering (and fluctuating) around the U.S. median at $61,000 a year, they manage to follow the 50/30/20 rule for budgeting for necessities/wants/goals religiously. They live frugally, clip coupons and save for the future every chance they can.

UK drives record $8.5 billion FinTech investment in Europe
Hayley McDowell – The Trade
European FinTech investment attracted record funding throughout 2019 driven by a 38% surge from the UK, according to a report from industry body Innovate Finance. The results from Innovate Finance’s report suggest that market participants are shrugging off concerns about Brexit, as the UK’s FinTech investment climbing to a record $4.9 billion during the year. Europe’s major FinTech hubs, including, Germany, France, Sweden as well as the UK, also saw record investment during the period as the region’s total investment surged 49% year-on-year to $8.5 billion.

UnionBank inks talent development program with Singapore Management University
Media OutReach via Business Insider
3 February 2020 – Union Bank of the Philippines (UnionBank) and the Singapore Management University (SMU) — one of Asia’s premier universities – recently inked an agreement to further develop the potential of SMU’s brightest and most entrepreneurial students by learning from UnionBankers. Under the partnership, up to 10 pre-screened SMU students with mixed expertise will be exposed to various projects of UnionBank for 12 weeks to co-create the development of emerging technologies.


Asset managers come back for another bite at bitcoin
Eva Szalay and Laurence Fletcher – Financial Times
Financial markets are cosying up once more to crypto. Institutions such as banks and asset managers have long had a vexed relationship with cryptocurrencies, put off by reputational risks, lack of regulation and volatile returns. But a spell of better performance is drawing them deeper in.

The entire economy is Fyre Festival, crypto edition
Jemima Kelly – Financial Times
As regular readers will know, we have a theory that The Entire Economy Is Fyre Festival. We even put on an event last year to celebrate the TEEIFF concept (complete with Fyre Festival-style promo video featuring influencers like Pamela Anderson and, um, us). As regular readers will also know, we often find ourselves remarking on the absurdity, fakery and moral depravity of much of the land of crypto. So it will come as no surprise to you, we’re sure, to see these two ideas come together here.

Mastercard Left Libra Association Over Regulatory and Viability Concerns, Says CEO
Paddy Baker – Coindesk
Mastercard’s CEO says the firm pulled out of the Facebook-led Libra project after developing concerns over its business model and compliance. Ajay Banga, who has been the CEO and president of Mastercard since 2009, told the Financial Times his attitude towards Libra deteriorated as project members proposed linking what was supposed to be a globally inclusive currency to a proprietary digital wallet, Calibra. “It went from this altruistic idea into their own wallet. I’m like: ‘this doesn’t sound right,'” said Banga.

Zcash’s Funding Vote and the Woes of Decentralized Governance
William Foxley – Coindesk
The zcash community has agreed to continue funding the development of its privacy coin, ZEC, as spearheaded by the Electric Coin Company (ECC) and the Zcash Foundation, according to voting results published by the foundation Thursday.
The decision marks the end of a months-long – and often contentious – campaign to address imminent funding losses for both organizations. For the ECC and Zcash Foundation to continue developing zcash, particularly as its use case faces increased scrutiny from international regulators grappling with the implications of privacy coins, the funding is a lifeline for hiring top talent.

Derivatives exchanges in Asia and the U.S. are designed for different types of traders, according to FTX CEO Sam Bankman-Fried
Yilun Cheng – The Block
Derivatives markets in Asia and the U.S. cater to different types of customers, said Sam Bankman-Fried, CEO of crypto derivatives exchange FTX. In an episode of The Scoop, Bankman-Fried explained that while derivatives exchanges in Asia like OKEx and BitMEX have a more efficient process for onboarding retail traders, the U.S. market is dominated by regulated exchanges like CME Group and is better suited for traditional Wall Street institutions.

Venezuela Puts the Crypt in Cryptocurrency
Mary Anastasia O’Grady – WSJ Opinion
Venezuelan dictator Nicolás Maduro is again unleashing armies of inspectors across the country to enforce price controls as a means of controlling hyperinflation, the Venezuelan newspaper Tal Cual reported last week. As I wrote in August, the regime last year started to allow the dollar to circulate and turned a blind eye to vendors asking consumers to pay in line with costs. The welcome effect was that dire shortages in food and medicine were fading as merchants eagerly restocked shelves. Now the price police are back.

CFTC chairman reiterates belief that ether futures will be launched
Yogita Khatri – The Block
Commodity Futures Trading Commission (CFTC) chairman Heath Tarbert remarked Thursday that the crypto market could see the launch of ether (ETH)-based futures contracts. “We have seen bitcoin futures, both cash-settled as well as physically-delivered. My guess is we are going to see ether futures as well,” Tarbert told Bloomberg in an interview on Thursday. The chairman first discussed ether futures in October, when he said he “absolutely” believes the futures tied to the ethereum-based token could trade in the next six to 12 months.

Winklevoss Patents Tout Use Case for Gemini Stablecoin Tech in Banking
Paddy Baker – Coindesk
The owners of the Gemini cryptocurrency exchange, the Winklevoss brothers, have won a flurry of U.S. patents for stablecoin technology they say could be issued by commercial banks. Six patents, awarded between August 2019 and January 2020 to Tyler and Cameron Winklevoss’ intellectual property company, outline a system, similar to the collateralized token model already used by tether and the brothers’ Gemini dollar (GUSD), that allows users to directly swap fiat currency for their digital equivalents.

Ex-Vikings Investor Rejects Plea Deal in Cryptocurrency Case
Bob Van Voris and Chris Dolmetsch – Bloomberg
An Arizona businessman who once held a minority stake in the National Football League’s Minnesota Vikings rejected a plea deal after talks broke down with prosecutors, setting up an April trial. Reginald Fowler is charged with running an unlicensed money-transmitting operation tied to virtual currency trading. He was set to plead guilty to a single felony, if he agreed to forfeit as much as $371 million in more than 50 accounts.

Kraken Security Labs: Hackers can exploit Trezor hardware wallets with only 15 minutes of physical access to the device
Yilun Cheng – The Block
Kraken Security Labs announced that they had performed an attack against Trezor’s cryptocurrency hardware wallets and found that hackers can extract the seeds in under 15 minutes. The flaw is inherent to the wallet hardware and cannot be fixed, according to Kraken, but users can protect their assets by turning on the BIP39 passphrase and ensuring physical control over their wallets.
Kraken Security Labs has identified a critical security flaw in Trezor’s cryptocurrency hardware wallets, which allows hackers to extract seeds in under 15 minutes.

Brexit Divorce Is Advertising Opportunity for Crypto Firms
Daniel Kuhn – Coindesk
As the United Kingdom left the European Union this week, the Paris-based hardware provider Ledger and Vienna-based exchange Bitpanda made their thoughts known on the theme of “Brexit.” Hanging in Canary Wharf, a financial district in London, on Friday was Ledger’s 7-by-4-meter digital billboard, reviving and modifying the controversial pro-Brexit slogan “take back control.”

Japan’s SBI to offer XRP as shareholders benefit later this year
Yogita Khatri – The Block
Japanese financial services giant SBI Holdings is set to give shareholders the option to receive XRP as a benefit. Under the new option, shareholders can obtain as much as 8,000 yen worth of the digital asset XRP (~$74), SBI announced Friday. The record date for the benefit is March 31. Shareholders holding 100 to 1,000 shares as of March 31, and those holding 1,000+ shares and holding for less than one year, can choose to receive 2,000 yen (~$18) worth of XRP.

Options Growth Will Ignite Innovation in the Bitcoin Market – But Not in the Way You Think
Richard Rosenblum – Coindesk
Richard Rosenblum is co-founder and co-head of trading at crypto liquidity provider GSR. The opinions below are the author’s and do not reflect the position of CoinDesk. Like futures, the launch of bitcoin options on major exchanges has been met with anticipation. Hopeful observers believe the CME’s and Bakkt’s entry into the burgeoning options market will further encourage institutional participation. It will – but not necessarily in the way they expect.

Singapore Clears Securities Token Platform iSTOX for Full Trading
David Pan – Coindesk
The Monetary Authority of Singapore (MAS) has greenlit a tokenized securities trading firm for full operations within the city-state. Announced Monday, iSTOX has graduated from the Singapore central bank’s fintech regulatory sandbox and is set to be one of the first securities token platforms that is licensed as a capital markets services provider, said the platform’s operator ICHX Tech. The platform will provide both retail and institutional investors with issuance, custody and trading services for digitized securities. One of the firm’s goals is to open certain parts of the financial market to more investors, Chief Strategy Officer Darius Liu previously told CoinDesk.

Trading Platform iSTOX Receives Singapore Regulatory Approvals
Joanna Ossinger – Bloomberg
Trading platform iSTOX said it received approvals from Singapore’s regulator that will allow it to expand its activities.

Former FCA MTF supervisor joins institutional digital asset exchange start-up; Alex Royle has spent the past year leading the supervision of trading venues in the UK for the FCA.
Hayley McDowell – The Trade
A soon-to-launch institutional digital securities exchange has hired the former supervisor of multilateral and organised trading facilities (MTF and OTF) at the UK’s financial watchdog as chief compliance officer.


Bernie Sanders Surges Ahead of Iowa Caucuses Today
Misyrlena Egkolfopoulou – Bloomberg
Democratic race fluid as first votes cast in 2020 election; Warren leans into her plans, her gender as closing arguments
Elizabeth Warren, once riding high in crucial Iowa after months of pushing her detailed plans, has been usurped as the darling of the progressive left by a surging Bernie Sanders.

What Does Michael Bloomberg Think He’s Doing? The former mayor could go down as the white knight of establishment Democrats, a secret agent for democratic socialism, or a real-world experiment in the limits of plutocracy.
Derek Thompson – The Atlantic
Michael Bloomberg built his business and political career on the accumulation and analysis of data, which is the fossil record of history—of precedent. Which makes it all the more unusual that his road to the presidency doesn’t have any.

Loeffler works to gain traction with conservatives amid Collins primary bid
JulieGrace Brufke – The Hill
Sen. Kelly Loeffler (R-Ga.) is taking steps to earn support from the conservative flank of the Republican party as she faces what is expected to be a heated primary battle for her Senate seat against Rep. Doug Collins (R-Ga.).

Crowded Senate battle in Georgia likely won’t end until 2021
Russ Bynum, Ben Nadler – Associated Press
Less than a month after being sworn in as Georgia’s new U.S. senator, Republican Kelly Loeffler faces a 2020 election battle that’s already shaping up to be so contentious that odds are it won’t be over until 2021.

Biden Digs Deep Into Wall Street Rolodex to Brace for Fight
Jennifer Epstein – Bloomberg
Joe Biden’s campaign has added big-name Democratic fundraisers to the candidate’s national finance committee, including billionaire Penny Pritzker and Avenue Capital Croup’s Marc Lasry, as it braces for a protracted fight for the Democratic nomination.

Bloomberg Proposes $5 Trillion in Taxes on the Rich and Corporations; Michael R. Bloomberg, the billionaire presidential hopeful, is including more new taxes in his plan than his moderate rival Joe Biden but less than Bernie Sanders or Elizabeth Warren.
Jim Tankersley and Alexander Burns – NY Times
Former Mayor Michael R. Bloomberg of New York unveiled a plan on Saturday that would raise an estimated $5 trillion in new tax revenue from high earners and corporations, a proposal that would almost certainly raise his personal tax bill but is less aggressive than those from his most liberal rivals for the Democratic presidential nomination.


UK: Open Finance: The FCA Consults On How To Transform The Financial Services Market
James Black and Neelam Hundal –
The UK Financial Conduct Authority (FCA) is consulting on the opportunities and risks presented by open finance, building on the progress and success of open banking. The consultation is relevant not only to banks and payment institutions, but to a very broad cross-section of financial services, including consumer credit firms, investment managers and others. It gives firms an insight into the regulator’s vision for the future of the UK financial services market. The questions asked will shape its approach to policy in the next few years and therefore shape firms’ agendas as well. Now is the time to have your say.

(Board of Directors, February 21, 2019, effective January 31, 2020.)
Section 17(p) of the Commodity Exchange Act (Act) requires NFA “to establish training standards and proficiency testing for persons involved in the solicitation of transactions subject to the provisions of the Act, supervisors of such persons…” This provision of the Act is not limited to those who are required to be registered as associated persons (AP).

Part 2 – Rules Governing the Business Conduct of Members Registered with the Commission
(a) Testing Requirement.
(1) Subject to the provisions of paragraphs (d) and (e) of Bylaw 301, no FCM, RFED, IB, CPO, CTA or LTM Member of NFA shall have associated with it (See Bylaw 301(b)) any person who has not satisfied the applicable proficiency requirements set forth in Registration Rule 401.

SEC Brings Charges Against Fraud Targeting Amish and Mennonite Investors
On Wednesday, Jan. 29, the Securities and Exchange Commission charged a Pennsylvania man with defrauding Amish and Mennonite community members by making false claims about the use of their funds and guaranteed returns.

Big investors battle SEC on shareholder resolution changes; Business Roundtable and US Chamber of Commerce back regulator on small investor clampdown
Billy Nauman – FT
The investment management industry is up in arms over the US Securities and Exchange Commission’s plan to clamp down on shareholders’ ability to push for change at public companies.

ISS chief on his battle with corporate America and the SEC; Gary Retelny says business lobby played dirty over proxy adviser reforms
Attracta Mooney – FT
For a man in battle with Corporate America and the US financial regulator, Gary Retelny is in fine form.

OTC derivatives issuer AxiCorp Financial Services Pty Ltd applies for review of ASIC’s decision to suspend its AFS licence
On 2 January 2020, ASIC suspended the Australian financial services (AFS) licence of over-the-counter derivatives issuer AxiCorp Financial Services Pty Ltd (AFS licence 318 232) (AxiCorp) for four months. On the same day, AxiCorp applied to the Administrative Appeals Tribunal (the Tribunal) for review of ASIC’s suspension decision, as well as for a stay of the suspension decision and for confidentiality orders.

ASIC reports on decisions to cut red tape – April 2019 to September 2019
ASIC has helped the law work better for business by granting over 400 applications for relief between 1 April 2019 and 30 September 2019.

ESMA issues an opinion on Product Intervention measures by Norway
The European Securities and Markets Authority (ESMA) has today issued an opinion on two product intervention measures taken by the National Competent Authority (NCA) of Norway.

FINRA Requests Comments on Proposed Amendments to the Capital Acquisition Broker (CAB) Rules; Comment Period Expires: March 30, 2020
FINRA’s CAB rules provide a simplified rulebook for broker-dealers that engage only in limited capital advisory, corporate restructuring and private placement activities. FINRA is requesting comment on proposed amendments to the CAB rules to make them more useful to CABs without reducing investor protection.

FINRA Executive Vice President for Regulatory Policy and Legal Compliance Officer Tom Selman Announces Retirement
FINRA announced today that Tom Selman, Executive Vice President for Regulatory Policy and Legal Compliance Officer, is retiring after 24 years at the organization.

SEC Proposes Amendments to Modernize and Enhance Financial Disclosures
The Securities and Exchange Commission today announced that it has voted to propose amendments to modernize, simplify, and enhance certain financial disclosure requirements in Regulation S-K. The proposed amendments would eliminate duplicative disclosures and modernize and enhance Management’s Discussion and Analysis disclosures for the benefit of investors, while simplifying compliance efforts for companies. The Commission also announced that it is providing guidance on key performance indicators and metrics in Management’s Discussion and Analysis.

Agencies Propose Changes to Modify “Covered Funds” Restrictions of Volcker Rule
Five federal financial regulatory agencies on Thursday invited public comment on a proposal to modify regulations implementing the Volcker rule’s general prohibition on banking entities investing in or sponsoring hedge funds or private equity funds – known as “covered funds.”

Investing and Trading

Treasury Set to Detail 20-Year Bond Role in $1 Trillion Funding
Liz McCormick and Saleha Mohsin – Bloomberg
Most dealers predict sales of new security will begin in May; CBO projects U.S. deficit to top $1 trillion from 2020 to 2030
Treasury Secretary Steven Mnuchin’s debt managers are poised to detail how they will integrate the revived 20-year note into their arsenal for funding U.S. deficits forecast to top $1 trillion each year over the next decade.

Owain Johnson – Open Markets
News that the U.S. Department of the Treasury is planning to issue 20-year bonds in the next few months has generated substantial attention from the interest rate market.

Justice Department Accused of Abusing Process to Extend Statute of Limitations; Agency improperly requested foreign evidence to bring fraud cases, former prosecutor claims
Aruna Viswanatha and Dave Michaels – WSJ
Justice Department lawyers have improperly used requests for overseas evidence to buy more time to bring some fraud cases, a memo filed with the agency’s internal watchdog alleges.

Traders Brace for More Stock Volatility; Issues tied to presidential-voting season and impacts of the coronavirus outbreak on the global economy stir options activity
Gunjan Banerji and Michael Wursthorn – WSJ
Investors are betting the volatility that has rattled markets over the past two weeks is here to stay. Many are bracing for dramatic swings in stocks as the U.S. presidential election season ramps up and investors assess the impact of the coronavirus outbreak on global economic activity.

What the Stock Market May Be Missing About the Coronavirus; So far the impact on U.S. assets has been muted, but there are reasons to fear that investors are being complacent
James Mackintosh – WSJ
It took investors a few days, but they think they have the effect of the new coronavirus from China worked out. The broad thrust: Suppliers to China, and travel and holiday stocks, will suffer, but nasty effects for the market as a whole will be offset by central banks. The virus will be controlled enough that it won’t cause a recession in the West.

Tesla short-sellers take record losses in battle with Elon Musk; Electric carmaker’s share price rise cost those betting against company $5.8bn in January
Richard Henderson – FT
Investors betting against Tesla suffered record losses of $5.8bn in January after the stock hit a new high, marking a win for chief executive Elon Musk in a long-running battle with short-sellers.

Coronavirus should snap investors out of ‘buy the dip’ mentality; Viral outbreak highlights weak global growth and less effective central banks
Mohamed El-Erian – FT
Last week’s fretting over the coronavirus was a good illustration of a tug of war that has been playing out in financial markets for a while: between favourable sentiment and mounting longer-term economic uncertainties.


Leon Black’s Apollo Sues Former Employees
Chris Dolmetsch – Bloomberg
Firm claims ex-workers helped others form competing business; Suit is part of continuing fight with Caldera founder Siddiqui
Apollo Global Management Inc. is stepping up its fight with former employees who bolted to form a competing business.

Top Credit Suisse Investor Herro Says He’s 100% Behind CEO Thiam
Patrick Winters and Marion Halftermeyer – Bloomberg
Sees orchestrated news flow seeking to destabilize Thiam; Says Thiam has brought stable growth and earnings to the bank
Credit Suisse Group AG investor David Herro said that he’s 100% behind Chief Executive Officer Tidjane Thiam, after mounting tensions between him and chairman Urs Rohner.

Morgan Stanley donates $20 million to children’s mental health programs
Elizabeth Dilts Marshall – Reuters
Morgan Stanley (MS.N) said on Monday it will give $20 million to seven nonprofit groups working to prevent youth suicide and fight depression and other children’s mental health problems.

BNY Mellon IM’s Newton launches sustainable global bond fund; Expands sustainable range
Mike Sheen – Investment Week
BNY Mellon Investment Management has expanded its sustainable offering with the launch of an absolute return global bond fund under the management of boutique Newton Investment Management, Investment Week can reveal.

JPMorgan’s ‘High-Class Problem’: Its Rising Stock Makes Buybacks More Expensive; Shareholders love buybacks. But JPMorgan could be hitting the point where they no longer make sense.
David Benoit – WSJ
Jamie Dimon is facing a Warren Buffett-like problem: a lot of cash and an expensive stock. Over the past three years, Mr. Dimon’s JPMorgan Chase & Co. has spent most of its profit on share repurchases. That has been a boon for shareholders, since buybacks typically increase a company’s stock price.

Three Questions with Goldman Sachs’ Maeve DuVally
Veronica Dagher – WSJ
Goldman Sachs’s GS -2.61% Maeve DuVally is one of only a handful employees of the financial firm to openly identify as transgender.

Credit Suisse freezes investment bank bonus pool; Unit suffers declines in advisory and capital markets business
Stephen Morris – FT
Credit Suisse has frozen its investment bank bonus pool for the second year running after a surge in trading revenue in 2019 was offset by big declines in its advisory and capital markets business.

Citi suspends senior bond trader over alleged theft from canteen; Paras Shah was one of the highest-profile traders in Europe’s junk bond market
Robert Smith – FT
Citigroup has suspended one of its most senior bond traders in London after the US investment bank accused him of stealing from the office canteen.


Virus fears wipe $393 billion off China’s stock market despite government support moves
Winni Zhou, Noah Sin – Reuters
Investors erased $393 billion from China’s benchmark stock index on Monday, sold the yuan and dumped commodities as fears about the spreading coronavirus and its economic impact drove selling on the first day of trade in China since the Lunar New Year.

Millennial Swede Cuts Active Management in $36 Billion Fund
Rafaela Lindeberg and Hanna Hoikkala – Bloomberg
The woman running the AP1 fund — a $36 billion investor that forms a key pillar within Sweden’s pension system — is adopting a new strategy to gird for what she says will probably be a decade of meager returns. Teresa Isele, who’s been in charge of AP1 since late last year, says the ultra-low rate environment has forced the fund to cut its mid-term return target to 3% from 4%.

China steps in to support financial system as coronavirus spreads; Liquidity boost planned as trading set to resume on Monday after extended break
Don Weinland – FT
Beijing is poised to pump extra cash into China’s financial system on Monday, as part of a package of emergency measures to shield the economy from the effects of the deadly coronavirus outbreak.


UK is the ‘supercharged’ free trade superman, British PM Johnson says
Elizabeth Piper and William James – Reuters
Britain can be the superman of free trade which protectionists are trying to choke but it will not seek to undermine the European Union with a race to the bottom, British Prime Minister Boris Johnson said on Monday.

EU sets out red lines as UK’s Johnson talks tough on trade deal
Elizabeth Piper, John Chalmers – Reuters
The EU made clear on Monday that Britain could not expect a zero-tariffs and zero-quotas deal trade with the bloc unless London agrees to terms that ensure there is fair competition with the European single market.

What if Brexit Works? Britain is remaking itself again. The shape of its society and economy, and its place in the world, are very much up for grabs.
Mark Landler – NY Times
Britain’s departure from the European Union on Friday drew a mournful reaction from many people who have long viewed Brexit as consigning their country, once the vanguard of Europe, to a future of economic mediocrity and geopolitical irrelevance.


Even If You Weren’t Born Into Nobility, You Can Buy Your Way In; For EUR80,000 and up, you too can be a lord or lady.
Benedikt Kammel – Bloomberg
Born into the rubble and deprivation of postwar Germany, Horst Koch wanted out of his small-town cocoon, and at age 21 found his way to a poker table, where he learned to empty the pockets of less experienced players. For decades, Koch says, he earned a handsome living playing cards in Baden-Baden, Aruba, and Las Vegas. Yet he always lusted after the kind of esteem that’s hard for even a champion five-card-stud player to earn at the table.

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