SEC Commissioner Sparks ICO Safe Harbor
“Hey there, baby, I could use just a little help”
Thom Thompson – John Lothian News
Hester Peirce, a commissioner at the U.S. Securities and Exchange Commission, came to Chicago last Thursday to talk about her proposal for a temporary safe harbor for certain cryptocurrency token issuers. Quoting Bruce Springsteen’s Dancing in the Dark, Peirce said she hopes her proposal will spark some fire among her fellow commissioners for providing a way to develop utility token-based networks without being impeded by securities laws.
Speaking at the Fourth International Blockchain Congress, Peirce addressed one of the digital asset and cryptocurrency industry’s chief concerns – how to raise development funds by issuing tokens that will later be used in the project’s operation without running afoul of U.S. securities laws.
While the digital asset industry might benefit from some regulatory relief and a dose of legal certainty, it is not clear that Peirce’s proposal will find a ready audience outside the SEC. Under her proposal, developers would still be required up front to provide information about the development team and its project plans and to make timely disclosures of material changes and developments. Even in the safe harbor provided by Peirce’s proposal, token issuers would remain subject to the anti-fraud provisions of the securities laws.
To read the rest of this story, go here.
Hits & Takes
By JLN Staff
This morning we have the first part of a two-part video for the MarketsWiki Education Open Outcry Traders History Project. The trader in question is Tom Zagara, a former CBOE trader who offered an enthusiastic and unvarnished interview about his career as trader, broker and market-maker starting in the 1970s.~JJL
If you can’t make Boca, and want an update about what is going on in Washington, DC, don’t miss FIA’s Walt Lukken in Chicago on February 19 for the FIA Operations Americas Division presentation of “Perspective 2020: Washington and Beyond.“~JJL
Michael Bloomberg is winning the contest for the most viral social media posts in the campaign for the Democratic nomination for President. First his team posted the video of President Trump’s post impeachment speech with a gingerbread man (with pants on fire) dancing on Trump while the words “lie” and “unfair” are repeated over and over again. Second was a tweet from Team Bloomberg during the Oscars about awards called “The Donalds.” Trump won all the awards, from the Most Lies to the Best Fictional Wall. Bloomberg clearly found some young people to help his campaign troll with the best of them on social media.~JJL
It turns out Democratic candidate for President Joe Biden needs $5 from me. At least that is what he is emailing me about five times a day.~JJL
Tom Zagara – Open Outcry Traders History Project – Part 1
Tom Zagara has lots of great stories to tell from his time as a trader at the Chicago Board Options Exchange. He was a broker, trader, marketmaker and more down on the CBOE trading floor starting in the 1970s. His best day trading was the stock market crash of 1987. He was positioned to make markets because of the discipline of his trading, covering short positions before they expired. As a result, he had plenty of trading firepower for when the market was so out of sorts. This is part one of a two part interview Tom had with John Lothian News for the Open Outcry Traders History Project.
NYSE Owner’s Exploration of eBay Deal Opens New Era for Exchanges; Intercontinental Exchange’s ‘outside the box’ approach to eBay came as it and rivals focus more on data and technology
Alexander Osipovich – WSJ
The revelation that the owner of the New York Stock Exchange approached eBay Inc. EBAY -4.74% about a possible takeover—only to dump the idea after an investor backlash—stunned observers on Wall Street and beyond.
*****Consolidation in the exchange and trading sector has often focused on “low-hanging fruit,” something the CME Group has mentioned many times over the years when talking about acquisitions they acquired or sought. In the case of ICE’s interest in eBay, ICE had to reach to the end of the branch for the next acquisition, meaning the era of low-hanging fruit in the exchange space is over. It has already been picked. There are certainly small deals to make, as the developing fintech sector will continue to be of interest to the exchange super players. But this attempted move by ICE for eBay suggests the big deals in the industry, those low hanging fruit ones that can be integrated into existing systems and networks, are over. That is bad news for the sector, which has fed on small, medium and large deals since exchanges transitioned to public companies with rising stock prices. I personally don’t buy it. There are more deals out there in the exchange space. Just keep looking. But buying eBay for me was a smart move to control the consumer data generated by the auctions. Data is king today.~JJL
How Japan Wants to Streamline Tokyo Stock Exchange
Shoko Oda – Bloomberg
A Japanese plan to reform the Tokyo Stock Exchange (TSE) is finally taking shape. The makeover may include paring the number of the TSE’s markets, new market capitalization and float requirements, and what the benchmark index will include. While many market participants have clamored for years for change, some worry about the negative repercussions a reordering could have on listed companies and investors, at least initially. The bourse hopes to have a new framework ready by June or July — and to possibly start implementing the changes in 2022.
***** Stronger, faster, better…here we come.~JJL
The executive success factors that lead directly to jail; Regulation and new demands may push more senior managers into unethical action
Andrew Hill – FT
Before Bernie Ebbers was a convicted felon, and when he was only halfway to becoming a telecoms billionaire, he sounded like a management guru. In 1997, the former WorldCom chief executive and onetime basketball coach, who died last week, compared himself to a cheerleader, with a hands-off managerial style of the sort now encouraged everywhere. “When you come to the table with a physical education degree like I do, you don’t know a lot about the technical stuff,” he quipped to The Guardian.
*****Do not pass go, go directly to jail. This has been around a long time.~JJL
70% chance of recession in next six months, study from MIT and State Street finds
Pippa Stevens – CNBC
There’s a 70% chance that a recession will hit in the next six months, according to new research from the MIT Sloan School of Management and State Street Associates. The researchers created an index comprised of four factors and then used the Mahalanobis distance — a measure initially used to analyze human skulls — to determine how current market conditions compare to prior recessions.
*****That is an aggressive prediction.~JJL
A Cyber Security Update by VSEC, LLC
John Falck – VSEC
CFTC Request About ‘Cloud Hopper’ Attacks and Recommended Security Responses
The CFTC asked all futures markets participants to report by January 20th if they had (or had not) been impacted by the Cloud Hopper security breaches described by the Wall Street Journal on December 30, 2019. These attacks hit about a dozen cloud service providers, including IBM and HPE / DXC. Attributed by the FBI and the DOJ to professional hacking groups associated with the Chinese government, these attacks targeted the theft of confidential data from companies in many industries.
***** Our friends at VSEC offering their latest update for the safety of your data.~JJL
Potential Crypto Certainty; Market Disruption; ADRs; Block Trades
Gary DeWaal – Bridging the Week
Last week, a commissioner at the Securities and Exchange Commission proposed a rule that would provide a bright line when a digital asset initially issued to raise funds to help develop a new network might later be regarded as a non-security. As proposed, network developers and the digital token would not be subject to registration requirements for three years after issuance of the asset, provided certain conditions were satisfied.
Friday’s Top Three
Our most read story by a big margin on Friday was Bloomberg Quint’s Where Have All The Futures Traders Gone? Ask the Hedge Funds, about why aggregate positions in S&P 500 futures have fallen as a percentage of the index’s market cap since the financial crisis. Second was a repeat from Thursday’s top three, CME Group Inc. Names Slate of Director Nominees. Third was the sordid story of the college admissions scandal, in Former Pimco C.E.O. Gets 9 Months in Prison in College Admissions Case. Nobody has gotten a lot of time so far in this case, unsurprisingly.
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Cryptocurrency Scams Took in More Than $4 Billion in 2019
Paul Vigna and Eun-Young Jeong – WSJ
Seo Jin-ho, a travel-agency operator in South Korea, wasn’t interested in exotic investments when a colleague first introduced him to PlusToken, a platform that traded bitcoin and other cryptocurrencies. But the colleague was persistent. “You won’t regret this,” she said, according to Mr. Seo. She visited him several times early in 2019, telling him he could earn 10% a month. Finally, his skepticism gave way, and he bought $860 of cryptocurrency on the PlusToken platform. His investment grew at a dazzling rate. He invested more—a lot more. In less than five months, he bought $86,000 of cryptocurrencies, cashing out only $500.
Hedge fund ‘Masters of Mayfair’ are no more, says Man CEO; Culture of the star trader was damaging to sector, believes Luke Ellis
Laurence Fletcher – FT
Star traders earning eye-watering pay packets have no place in today’s hedge fund industry, according to the head of the world’s largest publicly traded hedge fund manager. Luke Ellis, chief executive of London-based Man Group, told the Financial Times that the star-trader culture, once emblematic of the hedge fund industry, had been damaging to the sector.
More than EUR1tn of investor money is stuck in ‘zombie’ funds; Two-thirds of newly launched funds fail to raise the required EUR100m to break even, research finds
Siobhan Riding – FT
Close to EUR1.2tn of investor money is languishing in subscale “zombie” funds globally, raising uncomfortable truths about the inefficiency of the asset management industry.
Why Man Group is more about mastering machines; Luke Ellis and John Cryan take bold stance among star fund managers who take home millions
Kate Burgess – FT
Hedgies are no longer masters of the universe or Mayfair. Not at Man Group, at least, says the hedge fund manager’s boss Luke Ellis. The business is more about machines. Lombard understands the attraction. Machines don’t have egos. They don’t refuse to open their laptops for anything less than a polo pony.
Hong Kong Is Showing Symptoms of a Failed State; With empty supermarket shelves and rising public distrust, the coronavirus-hit city is ticking most of the boxes.
Clara Ferreira Marques – Bloomberg
Grocery runs in Asia’s financial powerhouse have begun to remind me of shopping in Russia in the chaotic summer of 1998. You grab what you can find, and if there is a queue, you consider joining it. Surgical masks and sanitizer gel are bartered for; detergent shelves are bare. A run on toilet paper last week, after an online rumor, was reminiscent of Venezuela.
Investors Who Tried to Save Credit Suisse’s CEO Hastened His Demise; Tidjane Thiam quit after months of pressure as the Swiss bank’s board ran out of patience with fallout from a spying scandal
Jenny Strasburg, Margot Patrick and Julie Steinberg – WSJ
A drumbeat of investors’ public support for Credit Suisse Group AG CS -0.23% Chief Executive Tidjane Thiam over the past week was intended to force the bank’s board to back him or sacrifice one of their own amid a high-stakes spying scandal. The plan backfired.
Big Technology Stocks Dominate ESG Funds; The most commonly held S&P 500 stocks in actively managed sustainable equity funds last fall were giants including Microsoft, Alphabet and Apple
Akane Otani – WSJ
Funds that market themselves as sustainable investments aren’t necessarily focused on companies that fight climate change, develop wind turbines or promote diverse boards.
Big investors ignore proxy advisers on controversial votes; BlackRock, Vanguard and State Street routinely vote to block environmental and social action at companies, research says
Attracta Mooney – FT
BlackRock, Vanguard and State Street routinely ignore their proxy advisers’ recommendations and vote to block environmental and social action at companies, according to research that rebuts claims that big asset managers blindly follow voting advice.
EU regulator call for clearer rules on rescuing banks; Elke König warns of ‘perceived inequality’ over dealing with failing lenders
Laura Noonan – FT
Europe needs clearer rules on how to deal with failing lenders to prevent the “perceived inequality” triggered by cases such as the EUR3.6bn rescue of Germany’s Nord LB, according to the head of the EU agency created to wind down banks.
Money, Morality and a Challenge to Silicon Valley
‘Where is my money coming from?’
Silicon Valley is abuzz over a series of tweets from Chamath Palihapitiya, the venture capitalist and provocateur, suggesting that investment firms and start-ups should look more closely at who’s giving them money.
Xi Jinping faces China’s Chernobyl moment; The coronavirus crisis could lay bare the absurdities of autocracy for all to see
Jamil Anderlini – FT
Throughout Chinese history, the reign of an imperial line was believed to follow a pattern known as the dynastic cycle. A strong, unifying leader establishes an empire that would rise, flourish but eventually decline, lose the “mandate of heaven” and be overthrown by the next dynasty.
Greta Beer Fought to Recover Holocaust-Era Deposits From Swiss Banks; Decades long battle helped lead to $1.25 billion settlement but didn’t unearth her own family’s wealth
James R. Hagerty – WSJ
Shortly before he died of a kidney ailment in 1940, Greta Beer’s father told the family there was no need to worry about money. The Jewish industrialist said he had deposited profits from his Romanian textile business in a Swiss bank.
Exchanges, OTC and Clearing
JPX Monthly Headlines – January 2020
JPX group companies undertake various initiatives and disseminate information with the aim of providing the most attractive markets to all users.
Nasdaq, Inc. Announces Proposed Senior Notes Offering
Nasdaq, Inc. (the “Company”) (Nasdaq: NDAQ) today announced that it plans to offer, subject to market and other conditions, Euro-denominated senior notes (the “Offering”). The Company expects to use the net proceeds from the Offering to refinance indebtedness and for other general corporate purposes.
Eurex launches additional ESG futures after successful first year of ESG trading; New STOXX USA 500 ESG-X Index Futures tradable at Eurex / First ESG contract covering the U.S. that excludes thermal coal / Broadest ESG offering worldwide in listed ESG derivatives
Eurex, the leading European derivatives exchange, looks back on a successful first year in ESG trading. Investment companies are increasingly using ESG derivatives to hedge sustainably invested assets, as demonstrated by Metzler Asset Management’s recently launched value protection fund. The launch of the new STOXX® USA 500 ESG-X Index Futures is the next step to support market participants in their sustainable investment strategies beyond Europe.
FTSE Mondo Visione Exchanges Index Breaks Through 65,000, Up By 5% In January, Nasdaq Up 8.7%, CME Group 8.2% And ICE 7.8%
Despite the spectre of risk presented by the spread of the coronavirus and its implications for the global economy, the FTSE Mondo Visione Index broke through 65,000, establishing a new closing all-time high of 65,167.76 0n 30 January 2020.
Moscow Exchange Expands Interest Rate Derivatives Offering
On 10 February 2020, Moscow Exchange launched a cash-settled futures contract on the USD-denominated Russian Secured Funding Average Rate (RUSFARUSD), which tracks rates of CCP-cleared repo orders and trades secured with USD-denominated General Collateral Certificates (GCC) on MOEX’s Money Market.
MIAX PEARL Equities – Publication Of Proposed Equities Rules By SEC
On February 6, 2020, the Securities and Exchange Commission (SEC) published MIAX PEARL’s proposal to adopt rules governing the trading of equity securities under its exchange license. MIAX PEARL is expected to begin trading equity securities in September 2020, subject to SEC approval.
Rome monitoring LSE-Refinitiv impact on Italy bourse, bond market
Italian authorities are closely monitoring each step of the London Stock Exchange’s acquisition of Refinitiv because it affects the country’s financial market infrastructure, the Bank of Italy’s governor said on Saturday.
NY Court orders Nasdaq to produce data about HFT firms; Nasdaq will have to produce documents relating to the identity of high frequency trading firms trading on the defendants’ exchanges.
Maria Nikolova – Finance Feeds
A high-frequency trading lawsuit targeting some of the major US stock exchanges, such as BATS Global Markets, Inc., Chicago Stock Exchange, Inc., Direct Edge ECN, LLC, New York Stock Exchange, LLC, NYSE Arca, Inc., Nasdaq OMX BX, Inc., and the Nasdaq Stock Market LLC, continues at the New York Southern District Court. The plaintiffs in this lawsuit are several investment funds which bring claims against the exchanges under Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b). In brief, the plaintiffs allege that the Exchanges sold certain services to high-frequency trading (HFT) firms, which then used those services to engage in allegedly manipulative trading schemes at the plaintiffs’ expense.
Intercontinental Exchange Launches FIX Connectivity and Multi-Order Functionality for ICE ETF Hub
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced the launch of two key enhancements for its ICE ETF Hub platform:
T. Rowe Price, Schroders and Allianz among new high-profile members of Plato Partnership; Buy-side heavyweights join Credit Suisse and Exane BNP Paribas as Plato Partnership’s newest members.
Joe Parsons – The Trade
Not-for-profit trading consortium Plato Partnership has bolstered its network with the addition of three major asset management firms and two leading broker-dealer firms.
State Street adds trio of electronic trading experts to Global Markets team; Highly-experienced electronic trading and execution experts join State Street’s Global Markets roster.
Jonathan Watkins – The Trade
State Street Global Markets has made a series of moves to bolster its electronic trading sales team in the US, with two additions coming from Clearpool Group. Dan Duffy joins the Boston headquartered firm as head of equity sales and trading for the Americas, leaving his role at Clearpool after seven years. He had most recently been head of execution services.
Santander fintech guru trades punk rock for asset management; Mariano Belinky brings his disruptive tactics to the bank’s fund arm
Siobhan Riding – FT
Mariano Belinky is an outsider in the staid world of fund management. The asset management chief of Santander, one of Spain’s most conservative institutions, is a former fintech guru with a passion for punk rockers the Ramones and a large collection of bass guitars, including one that hangs on the wall of his London office.
Why financial professionals say cybersecurity is the toughest risk to manage
Jennifer Shanker – Yahoo Finance
A new survey from the The Association of Financial Professionals finds cybersecurity is “the most challenging risk to manage,” a drastic change from 2009 when it was a much smaller concern for financial professionals.
Cryptocurrency specialist to push for UK banking licence; DAG Global will resubmit application despite regulatory caution
Nicholas Megaw – FT
A UK start-up is applying to become the country’s first bank for cryptocurrency businesses, in what will be a test of regulators’ openness to the digital assets as they grapple with concerns over links to financial crime.
Crypto CROs, stablecoins on the agenda for this month’s CFTC Technology Advisory Committee meeting
Mike McSweeney – The Block
An advisory body on technology issues created by the U.S. Commodity Futures Trading Commission will see presentations on self-regulatory organizations (CROs) for the crypto industry as well as stablecoins. According to a Feb. 6 notice, the CFTC’s Technology Advisory Committee (TAC) will “hear presentations on stablecoins, audit trails, compliance solutions, and cryptocurrency self-regulatory organizations, insurance, and custody.” It’s not clear from the notice, the TAC’s Virtual Currency Subcommittee is likely to be giving presentations on these topics.
Tel Aviv exchange partners with BTP for blockchain securities lending
In May 2018, the Tel Aviv Stock Exchange (TASE), Israel’s only stock market, unveiled work on its Blockchain Securities Lending (BSL) platform in collaboration with Accenture and The Floor. As it nears production, TASE took the smart contract work in-house and today announced that Blockchain Technology Partners (BTP) has been working on operational aspects of the project to ensure production readiness.
Guide To Cryptocurrency Tax Rules
William Baldwin – Forbes
How many bitcoin investors are not up to speed with the IRS crackdown? Millions, probably. Coinbase has 35 million customer accounts. The number of taxpayers reporting crypto trades was, until recently, in the hundreds. If it was once hard to plead ignorance of tax laws regarding crypto, it’s now impossible. The new Form 1040 demands that taxpayers say whether or not they own any virtual currencies. The yes/no question parallels the one that was implemented years ago on offshore investment accounts and led to nasty treatment of people who lied.
Dark Matters: How Investigators Uncover Cryptocurrency Fraud And Illicit Funding
Steve McNew – Forbes
An estimated more than 42 million digital wallets are in use worldwide. The majority of these are anonymous, which is why digital currency is widely viewed as an enabler and contributor to illegal activity. Criminals have long enjoyed the simplicity of cryptocurrency as a means to funnel money undetected by governments. Illicit groups routinely request and receive funding via cryptocurrency because of its anonymity, lack of trackability and inaccessibility by regulatory bodies.
Swiss regulator FINMA wants to bring stricter AML rules for crypto transactions
Yogita Khatri – The Block
The Swiss Financial Market Supervisory Authority (FINMA) has suggested a plan to bring stricter anti-money laundering (AML) rules for crypto transactions. Per a proposal announced Friday, crypto transactions of over 1,000 Swiss francs (~$1,025) will require client identification as opposed to the current limit of 5,000 francs (~$5,120). FINMA said the new limit has been considered due to “heightened” money-laundering risks in the crypto space.
BitGo Grows Crypto Custody Options With New Swiss and Germany Entities
Daniel Palmer – Coindesk
BitGo is expanding its institutional cryptocurrency storage service to Europe with the launch of two new entities in Switzerland and Germany. The Palo Alto, California-based firm said Monday that the new custody options will allow clients to choose the jurisdiction that best suits their needs. The Swiss entity, BitGo GmbH, is a member of the Financial Services Standards Association, overseen by the Swiss Financial Market Supervisory Authority, as per the announcement.
Bitcoin Breaches $10,000 to Hit Highest Level Since October
Vildana Hajric and Joanna Ossinger – Bloomberg
Bitcoin is back above $10,000. The largest cryptocurrency’s recent upward momentum carried it past that psychologically significant level on Sunday for the first time since October, according to Bitstamp pricing. It rose as much as 4.3% on Monday from Friday’s close to $10,163 according to Bloomberg pricing, capping a gain of about 40% so far this year.
Australian Government Eyes Business Benefits in New National Blockchain Roadmap
Sebastian Sinclair – Coindesk
The Australian government recently unveiled plans to ramp up innovation through blockchain technology with an updated national roadmap, released Feb. 7. The Ministry for Industry, Science, Energy and Resources has formulated a new national strategy aimed to capture the potential value generated via business-related blockchain activity, with a particular focus on supporting global supply chain management systems and tracking.
Crypto Sphere Begins to Feel Ill Effects of Coronavirus Outbreak
Olga Kharif – Bloomberg
The coronavirus outbreak in Asia is starting to ripple through the cryptocurrency world in some unanticipated ways — the cancellation of conferences and even the shuttering of facilities that process transactions. From the informal MeetUps held during the initial days of Bitcoin to the extravaganzas at the height of the crypto bubble, gatherings have been a key for wooing investors. NiTROn2020 in Seoul, Hong Kong Blockchain Week 2020 and Token2049 have been postponed.
Social media, messenger companies building cryptocurrencies ‘cannot turn a blind eye to illicit transactions’: FinCEN official
Mike McSweeney – The Block
Jamal El-Hindi, the deputy director of the Financial Crimes Enforcement Network (FinCEN), has called on companies looking to bridge the worlds of cryptocurrency, social media and user messaging to be vigilant about illegal transactions. El-Hindi spoke during the SIFMA 20th Anti-Money Laundering (AML) and Financial Crimes Conference in New York on Thursday. According to prepared remarks published by the agency, such companies “cannot turn a blind eye to illicit transactions that they might be fostering.”
Japan should create its digital currency within 2-3 years, says a senior lawmaker
Yogita Khatri – The Block
A senior lawmaker from Japan’s ruling Liberal Democratic Party has said that the country should create its own digital yen within next 2-3 years. “The sooner the better. We’ll draft proposals to be included in government’s policy guidelines, and hopefully make it happen in two-to-three years,” Kozo Yamamoto told Reuters on Monday. The lawmaker’s remarks highlight the pressure Japan feels against China’s progress on digital currency.
Democracy is under threat, we must add a D to ESG; Democracy bonds could empower the fight for human rights
Marcos Buscaglia – FT
Green bonds, designed to finance projects with positive environmental or climatic effects, are one response from financial markets to an existential threat facing the human race.
Republicans and Democrats Are Living in Different Economies; The arguments of both the president and his detractors are at odds with reality.
Ramesh Ponnuru – Bloomberg
Republicans and Democrats don’t just have different political beliefs and agendas these days. They are living in different economies. In his State of the Union address, President Donald Trump maintained that he had “reversed the failed economic policies of the previous administration” and thus “launched the great American comeback.” Responding for the Democrats, Michigan Governor Gretchen Whitmer described a bleak economy that is working only for the wealthy. These stories are at odds with each other, and both are at odds with reality.
Bass Says Virus Should Spread to China Leadership as Spat Widens
Hannah Levitt – Bloomberg
Kyle Bass took his long-time battle with China up another notch by getting into a heated spat with the influential editor-in-chief of a Communist Party-backed newspaper. The hedge fund manager suggested on Twitter that the U.S. abandon efforts to help contain the coronavirus and let it spread through China’s leadership.
He Combs the Web for Russian Bots. That Makes Him a Target; Ben Nimmo helped pioneer disinformation investigations. His work is now more urgent as misleading internet tactics spread.
Adam Satariano – NY Times
In August 2017, Ben Nimmo was declared dead by 13,000 Russian bots on Twitter. “Our beloved friend and colleague Ben Nimmo passed away this morning,” read the epitaph, which was manipulated to look as if it were from a co-worker’s Twitter account. “Ben, we will never forget you.”
Bloomberg uses Romney’s impeachment vote speech to bash Trump in new ad
Kelly Phares – Fox News
Democratic presidential candidate Mike Bloomberg is capitalizing on the vote by Sen. Mitt Romney, R-Utah., last week to convict and remove President Trump on the “abuse of power” article of impeachment.
What Markets Get Right (and Wrong) About Campaigns
Lu Wang – Bloomberg
It happens every year: a political race heats up, and investors become obsessed with how it’s playing in the equity market. In the U.S., that means that when a Republican pulls ahead, there will be voices saying that must be good for stocks. Sudden losses in a marquee industry like banks send analysts scrambling to find the policy or campaign pledge to blame. But while it makes for lively dinner conversation, it’s wise to take everything in this realm with a grain of salt. Simply put, the market’s knee-jerk reactions to political news are notoriously volatile and often wrong. And in the end it’s never clear if politics is influencing stocks, stocks are influencing politics or if everything is getting pushed around by something else entirely.
Former Kleenmaid director sentenced to nine years imprisonment for fraud and insolvent trading
A former director of the Kleenmaid group of companies, Mr Andrew Eric Young was sentenced to nine years’ imprisonment on Friday 7 February 2020 after being found guilty by a District Court jury of 19 offences arising out of the collapse of the national whitegoods distributor.
Time does not heal all in the case of Settlement Discipline Regime extension; The delay from ESMA may not have gone far enough according to some market experts who believe challenges persist despite time extension.
Jon Watkins – The Trade
The delay of the Settlement Discipline Regime (SDR) in Europe by six months will not solve the challenges the industry faces through the introduction of the new regulation, experts have claimed.
SEC Seeks to Curb Shareholder Resolutions; Companies say resolutions pose undue burdens; small investors defend them as a pillar of shareholder democracy
Paul Kiernan – WSJ
It is a yearly ritual for American corporations: executives of Fortune 500 companies appearing at shareholder meetings to answer investors’ concerns about everything from board membership to climate-change policies.
The SEC is wrong to hobble shareholder proposals; Repeat proxy resolutions help investors hold companies accountable
Fiona Reynolds – FT
A broad range of investors pushed back hard last week against plans by the US Securities and Exchange Commission to make it harder for investors to hold corporate decision makers accountable to their shareholders.
Proposed Rule Change to Amend the FINRA Code of Arbitration Procedure for Customer Disputes and the FINRA Code of Arbitration Procedure for Industry Disputes to Apply Minimum Fees to Requests for Expungement of Customer Dispute Information
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to amend the Code of Arbitration Procedure for Customer Disputes (“Customer Code”) and the Code of Arbitration Procedure for Industry Disputes (“Industry Code”) (together, “Codes”) to apply minimum fees to requests for expungement of customer dispute information. The proposed rule change would amend Part IX (Fees and Awards) of the Codes to apply minimum filing fees to requests for expungement of customer dispute information, whether the request is made as part of the customer arbitration or the associated person files an expungement request in a separate arbitration (“straight-in request”). The proposed rule change would also apply a minimum process fee and member surcharge to straight-in requests, as well as a minimum hearing session fee to expungement-only hearings.
Investing and Trading
What’s really in your ETF basket?
Izabella Kaminska – WSJ
A new SEC rule brought in at the end of last year has made it much easier for official dealers to negotiate the types and proportions of securities they deliver to exchange traded fund (ETF) managers when creating and redeeming ETF units.
Coronavirus sparks hectic trading in search of treatment; Investors have bid up companies even though potential vaccine is distant
Hannah Kuchler and Jennifer Ablan – FT
Investors are bidding up companies trying to alleviate the coronavirus outbreak, from biotechs working on treatments and vaccines to telemedicine companies catering for the sick stuck at home.
Markets Can Brace for Some Painful Treatment; The immediate effects of measures to fight the coronavirus will be costly for economies, albeit necessary.
John Authers – Bloomberg
It’s still unclear whether the coronavirus outbreak is coming under control. In human terms, the news continues to be dreadful, and to cast Chinese authorities in a negative light. But the data, to the extent that we can trust them, suggest the disease is spreading at a slower rate. That is positive, even if the death toll is now greater than for SARS 17 years ago.
Pockets of Currency Volatility May Signal Tide Is Changing
Robert Fullem – Bloomberg
Currencies may be set to become more turbulent in 2020; Realized volatility rises over implied, enticing option-buyers
As broader gauges of implied currency volatility remain near all-time lows, pockets of turbulence are emerging in a potential signal that the foreign-exchange market could be less stable in 2020.
The Hunt Is on for Innovation to Fight the Climate Crisis
Josh Petri and Laura Millan Lombrana – Bloomberg
Over a century ago, under the iron-and-glass dome of the Grand Palais in Paris, inventors unveiled the first diesel engine, motion picture and escalator. Last month, at the annual ChangeNOW conference, the same venue featured hyperloops, hydrogen-powered ships and a device that turns air pollution into algae food.
How the Rise of Passive Investing May Be Creating Huge Distortions in the Market
Tracy Alloway and Joe Weisenthal – Bloomberg
Over the last decade or so, we’ve seen an incredible rise in so-called passive investing. While definitions differ over what this means, we’ve seen more and more money poured into index funds (which own every stock in a given basket). Meanwhile, money has been yanked away from money managers who attempt to select individual stocks. One school of thought argues that this is a positive, in part due to lower fees. But is there a dark side? On this week’s episode, we speak to Mike Green of hedge fund Logica Capital, who argues that the trend is causing major market distortions that will eventually unwind with ugly consequences.
Tech stockpicker raises $6bn for hybrid fund; Henry Ellenbogen: ‘The idea of a public and a private company has become blurred’
Robin Wigglesworth – FT
A star stockpicker has pulled off one of the largest fund launches on record, with a “hybrid” model that reflects some of the biggest trends reshaping finance: the rise of passive investing, algorithmic trading, and the exploding appetite for private investments.
Credit Suisse AM Stages ETF Comeback 7 Years Post-BlackRock Sale
Ksenia Galouchko – Bloomberg
Swiss manager to convert existing European index funds to ETFs; CS AM sold its regional ETF business to BlackRock in 2013
Credit Suisse Asset Management is getting back in the exchange-traded fund game nearly a decade after it effectively exited the business by selling its European unit to BlackRock Inc.
A Sexist Joke Cost Ken Fisher $4 Billion in Assets. He Still Runs $121 Billion; Some big investors were quick to drop the money manager. But his sales machine is doing just fine.
Sabrina Willmer – Bloomberg
Ken Fisher ranks among the most successful money managers in America. But you can reach one of his main offices only by driving up a steep and curving country road in Northern California. A compound of simple wood-shingled buildings, it sits atop a peak with sweeping views of redwoods and Half Moon Bay. “Kings Mountain Country Store,” reads a weathered sign near the entrance, lined with moss-covered boulders.
There’s an Oil Man on JPMorgan’s Board. Climate Activists Want Him Out; A shareholder group is trying to dislodge former Exxon boss Lee Raymond from the biggest U.S. bank.
Max Abelson and Michelle Davis – Bloomberg
Few people are in a position to influence Jamie Dimon, the chief executive who turned JPMorgan Chase & Co. into the biggest U.S. bank. The longtime climate skeptic who turned Exxon Mobil Corp. into the biggest U.S. oil company is one of them.
Battered Funds Blame ETFs for Overrunning Stock Market. Again
Sarah Ponczek – Bloomberg
Active managers experience worst January in four years: BofA; Shunning market leaders including Apple and Microsoft has hurt
It’s an old theory, with shaky proof, that always gets louder right around now. The stock market is so overrun with dumb index money and exchange-traded funds that it can’t even tell when something bad’s happening.
Giant Wealth Fund Seeks Managers Who Can Beat Frothy Market
Matthew Burgess and Sarah Wells – Bloomberg
Future Fund CIO says skilled managers harder to come by; Firm is lowering investment costs in bid to improve returns
Australia’s sovereign wealth fund has been saying for months that with markets as elevated as they are now, generating gains is only going to get harder. So is finding the right asset managers.
China Pork Prices Head Toward Record High on Supply Concerns
Pork prices seen staying robust in first half of the year; Meat importers cautious as virus hurts catering demand
The rapid spread of the coronavirus in China has failed to dampen a scorching pork rally, with prices heading toward a record high on supply concerns in the world’s biggest meat consumer.
Singapore Braces as Coronavirus Cases Emerge in Finance Hub
Chanyaporn Chanjaroen, Faris Mokhtar, and Krystal Chia – Bloomberg
Cases at Marina Bay Financial Centre, Clifford Centre; There are 43 confirmed cases of coronavirus in Singapore
Singapore’s coronavirus outbreak has spread to its financial center, with some staff at major companies being told to work from home for at least the next few days and temperature screening checkpoints set up at the front doors of several towers.
Solar Is Beating Out Coal in Australia, Pushing Down Emissions
Rob Verdonck – Bloomberg
Wind, solar are helping to lower wholesale power prices; Australians installing record numbers of rooftop panels
Record-high renewables growth is transforming Australia’s electricity landscape, pushing out coal plants and lowering prices and emissions.
Louis Dreyfus says market needs more Brazil sugar
Louis Dreyfus said on Monday the sugar market needed more Brazilian production and prices would remain elevated, after tight supplies drove them to a two-year peak.
Hot Pot Stocks Slide After Family Gets Coronavirus in Hong Kong
Jeanny Yu – Bloomberg
Haidilao, Xiabuxiabu among decliners after news of outbreak; Nine people infected with virus after family gathering
Chinese hot pot stocks skidded in Hong Kong on Monday, after members of the same family who shared a large dinner in January were confirmed to have the coronavirus.
For Wall Street banks in London, Brexit may never be truly over
John Detrixhe – Quartz
During the 40 years or so when Britain was firmly entrenched in the EU, many foreign financial companies, including world-leading giants from Wall Street, made London their European headquarters because it gave them access to the European bloc’s single market. After Brexit, there’s a pathway for banks like JPMorgan to continue serving their EU clients from London, but recent history shows that it won’t be free of obstacles.
Exclusive: France ramps up pressure to shift $200 billion euro clearing away from London – sources
Huw Jones, Leigh Thomas – Reuters
France is looking at ways to lure clearing in euro derivatives away from London to the European Union to lessen the risk of any forced “relocation” backfiring by driving business instead to the U.S., financial industry officials said.
Continuity IRA admits Brexit day lorry bomb plot
Henry McDonald – The Guardian
The Continuity IRA has admitted it tried to smuggle a bomb onto a lorry destined for an Irish Sea ferry. In a statement issued to the Irish News in Belfast the republican terror group said it had planned for the bomb to go off on the day the UK left the EU. The explosive device was discovered after police searches on the Silverwood industrial estate in Lurgan, County Armagh on Tuesday. The bomb, which a senior police officer described as “viable”, was made safe by the army bomb disposal squad.
World’s Happiest People Seek Road to Financial Literacy
Kati Pohjanpalo – Bloomberg
The most cheerful people on Earth are about to get some help managing their finances. In Finland, which topped the most recent United Nations World Happiness Report, the central bank is drawing up a financial-literacy strategy for citizens.