Hits & Takes
By John Lothian & JLN Staff
Random thoughts: Since the pandemic hit, I have not worn a suit. I have only worn a dress shirt twice, and only once to leave the house. I have not used cash, nor carried any, since the pandemic hit. I have only been to the dry cleaners once since March. I have a closet of clothes that are not being worn, while my shorts and t-shirt collection are getting regular wear. I have only worn three different pairs of shoes, all casual, during the pandemic and I spend a lot of time barefoot (except when I am stepping on nails).
Good news. The blood clots in my lung and legs are resolved, or resolving to the point I can have medical procedures again. First up is a cortisone shot in my back to relieve my back pain. Then I will hopefully really return to a more active state.
My diet has totally changed during the pandemic and I am eating lots of leafy greens, fruits and vegetables. There has been some backsliding from time to time, but I know what I need to eat and am trying hard to keep to the diet. I eat enough Greek yogurt that I am growing hair in strange places. My favorite snack is walnuts.
The FIA and the FIA PTG issued a statement with the original title of “FIA and FIA PTG comment in support of the CFTC’s electronic trading proposal.”
OCC Executive Chairman Craig Donohue and his wife Elsa have sold their home in Kenilworth for $7.5 million, the highest price anyone has paid for a listed home in Kenilworth since 2008. The story is by Crain’s Chicago Business.
Eurex has a video on Youtube featuring Jonas Ullmann, a member of the executive board, expounding on the benefits of the PassiveLiquidityProtection program. It is good to see an exchange utilize their board members in such a public way promoting the enterprise.
Barchart announced a program for free data and tools for Ag economics programs.
RSM has issued a white paper titled “Optional accounting expedients can make LIBOR transition easier.”
Eventus CEO Travis Schwab was interviewed by Mark Longo of The Options Insider in a podcast titled “The Crypto Rundown 73: Hunting Crypto Manipulators.”
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
Nasdaq Inc has filed with the SEC to change its rules to let companies that debut on the stock market through a direct listing raise capital, as an alternative to doing an IPO, Reuters reports HERE. Nasdaq has been working on the filing for around a year, according to a person familiar with the matter, the article says. The NYSE made a similar proposal in June.~SR
Beware leaders’ rush to approve vaccines; Political pressure to bring out Covid inoculations plays into anti-vaxxers’ hands
The editorial board – FT
When Vladimir Putin said this month that Russia had become the first country to grant regulatory approval for a vaccine to prevent coronavirus, the announcement was met with caution from scientists and officials. Now Donald Trump is attempting to put America, if not first, at least a close second in fast-tracking a vaccine for widespread public use.
*****I am glad to see the FT editorial board agree with me.~JJL
Fed Seen Holding Rates at Zero for Five-Years Plus in New Policy
Rich Miller – Bloomberg
Fed expected to tolerate faster inflation, lower unemployment; Powell to speak Thursday on long-awaited Fed framework review
The Federal Reserve looks likely to keep short-term interest rates near zero for five years or possibly more after it adopts a new strategy for carrying out monetary policy. The new approach, which could be unveiled as soon as next month, is likely to result in policy makers taking a more relaxed view toward inflation, even to the point of welcoming a modest, temporary rise above their 2% target to make up for past shortfalls.
*****This is going to put some pressure on interest rate dominant exchanges to promote and develop alternative products for clients to trade.~JJL
Remember Office Banter? Audio Apps Want to Bring That Back; Voice platforms like Chalk, Watercooler, Space and Voiceroom aim to foster the random chats that bind
Ann-Marie Alcántara – WSJ
After months of video chats and binge-watching streaming video, some people are trying out digital platforms built for audio. The exclusive networking app Clubhouse, from Alpha Exploration Co., has drawn attention to the space, but others such as Chalk App Inc., Space Soft Inc. and Watercooler are using voice for a range of experiences.
*****I am wondering how much more productive the JLN staff is without my constant banter.~JJL
Gamers Reap Millions From Twitch-Fueled River of Record Cash
Maya Tribbitt and Ian King – Bloomberg
Streamers aim to sustain momentum as virus lockdowns end; Covid has made the idea of gaming full time more attainable
When pandemic-fueled lockdowns led to a boom in streaming video games, millions of people suddenly saw a clearer path to turning their favorite waste of time into a career. Livestreaming via Twitch and YouTube, which lets gamers play in front of an audience and build a rapport with fans, has exploded this year. Advertising and promotional money is flooding into the industry like never before. And companies such as Activision Blizzard Inc. increasingly see themselves as the media giants of this era — with gamers as the new movie stars.
*****Friendly neighborhood millennial here – this may be hard to wrap your head around, but a lot of people I know spend more time watching gaming content on YouTube and Twitch than they spend actually playing video games. Some people spend more time watching gaming streams or edited gaming content – informational videos, comedy videos, etc. – than watching Netflix. I sometimes play video games to unwind at the end of the day, and there are definitely weeks where the only times I watch television are when I’m watching YouTube on my TV via my Firestick.~MR
Tuesday’s Top Three
There must be a lot of Chicagoans reading this newsletter. Our top story on Tuesday once again was Running list: Chicago-area restaurants closed permanently due to coronavirus pandemic economic woes, from the Chicago Tribune. Sad news for so many. Next was the Wall Street Journal’s The Shakeout in the ETF Industry Is Accelerating. Third was Wall Street cop amps up sleuthing to ferret out spoofing Trades, from BNN Bloomberg, about the CFTC’s enhanced surveillance capability.
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Cyberattacks Halt New Zealand’s Stock Exchange Twice in Two Days; NZX, the exchange operator, said distributed denial of service attacks were carried out from overseas
Stuart Condie – WSJ
A cyberattack brought New Zealand’s stock market to a standstill for a second time in two days. NZX Ltd., the locally listed operator of the exchange, said the cyberattack was carried out from overseas but didn’t provide any information to back up the finding. Trading in all cash markets was suspended for more than three hours Wednesday as the NZX tried to resolve what it described as a connectivity issue. The NZX said it was similar to the problem that forced it to halt trading about an hour early on Tuesday.
Investors Hoard Gold, Bitcoin and Whisky to Soothe Inflation Fear; Consumer price increases have been tame for years, but assets seen as hedges are hot again.
John Ainger, Vildana Hajric, Adeola Eribake, Eddie van der Walt – Bloomberg
One lunchtime in 2009, as the U.S. Federal Reserve started purchasing Treasuries in the aftermath of the global financial crisis, Richard Hodges stepped out of his office to buy his first gold bar in the City of London. Over the next decade, he built up his personal collection to several kilograms’ worth, stored in his “own little Bank of England basement.” Hodges, who also works as a money manager at Nomura Asset Management, thinks central banks’ stimulus has ushered in an “age of currency and asset price manipulation.” He’s betting that physical, tangible gold could retain its value if all of that goes wrong and paper assets crumple. “I even stack these little bars like they do in the movies,” he says.
SGX partners with Cassini systems in preparation for 2021 UMR regulation; The partnership between Singapore Exchange (SGX) and Cassini Systems will allow market participants free analyses of their average aggregated notional amount (AANA).
Annabel Smith – The Trade
The Singapore Exchange (SGX) has partnered with derivatives margin analytics provider Cassini Systems to prepare market participants for incoming uncleared margin rules (UMRs). SGX will use Cassini’s domain expertise to provide participants with free analyses of their average aggregated notional amount (AANA), representing the gross value of open, non-centrally cleared derivatives positions.
Banks revisit prime brokerage growth strategies as hedge funds bounce back; An asset class rotation among hedge funds could encourage prime brokers to invest significantly in specialising in servicing credit and multi-asset strategies.
Joe Parsons – The Trade
With many hedge funds recording a return to profitability through new trading strategies, banks offering prime brokerage could look to change their approach to servicing clients. As markets recover following the extreme volatility caused by the COVID-19 pandemic, hedge funds managing macro and credit have witnessed some of the biggest rebounds.
The financial therapists helping wealthy people cope with change; For affluent clients, a pandemic, economic volatility and political turmoil have brought on a bit of shock
Madison Darbyshire – FT
When the dotcom bubble burst two decades ago, psychologist William Martin started getting calls for the first time from an unexpected source. People were anxious, depressed and even suicidal, and they had one question: “Can you help me talk about money?”
Vanguard uproots staff from Hong Kong to focus on Shanghai; World’s second-largest asset manager says its new regional hub will be mainland China
Thomas Hale, Siobhan Riding and Robin Wigglesworth – FT
Vanguard Group has said it will leave Hong Kong and plans to relocate staff from the territory to Shanghai, becoming the latest US firm to focus on the opening up of mainland China’s vast fund industry.
RBC’s Capital Markets Strength Helps Bank Counter Virus Woes
Doug Alexander – Bloomberg
Canada’s biggest bank beats estimates on trading, provisions; National Bank also tops expectations in fiscal third quarter
Royal Bank of Canada beat back the economic impacts of the Covid-19 pandemic, with record capital markets earnings and loan-loss provisions that were about half what analysts expected in its fiscal third quarter. Profit from the bank’s RBC Capital Markets division rose 45% to a record C$949 million ($720 million) in the three months through July, helping Canada’s largest lender by assets post earnings that beat analysts’ estimates.
How the Sacklers Shifted $10.8 Billion of Their Opioid Fortune
Emma Vickers – Bloomberg
As the U.S. bumbles its way through the coronavirus pandemic, it can be easy to overlook the opioid epidemic that’s shattered so many lives. But a trove of documents that Bloomberg Businessweek has spent months analyzing helps explain how the company at the center of the crisis moved money around in the years prior to declaring bankruptcy. Purdue Pharma LP faced its first court challenge in 2007, pleading guilty to misleading the public about the addictive potential of its flagship painkiller, OxyContin. By 2019 more than 130 people were dying daily from opioid overdoses in the U.S., and Purdue faced thousands of lawsuits for its role in the epidemic. The company, owned by the Sackler family, declared bankruptcy in September of that year to short-circuit the lawsuits.
TradeTech Europe unveils 20th anniversary virtual agenda; The Worldwide Business Research event originally due to take place in Paris will be available virtually on the 20 and 21 October.
Annabel Smith – The Trade
TradeTech has revealed the agenda for the virtual delivery of its Europe 2020 conference, with discussions focusing on the post-COVID-19 liquidity landscape and navigating the new market structure, as the event marks its 20th anniversary.
U.S. Treasury Says Vietnam Deliberately Weakened Currency
By Michelle Jamrisko – Bloomberg
Treasury assessment is part of Commerce Department probe; Vietnam undervalued its currency by about 4.7%, US says
An investigation by the U.S. Treasury Department found that Vietnam deliberately undervalued its currency by about 4.7% against the dollar in 2019, according to a letter sent to the U.S. Commerce Department. The State Bank of Vietnam, the nation’s central bank, facilitated net purchases of about $22 billion worth of foreign exchange last year, which had the effect of undervaluing the dong in a range of 4.2% to 5.2%, according to the letter. The purchases were estimated to have pushed down Vietnam’s real effective exchange rate by 3.5% to 4.8%.
Bitcoin Investor Files For Giant $350 Million IPO For Possible Merger
Michael del Castillo – Forbes
The founder of early bitcoin venture capital firm Ribbit Capital has filed for a massive $350 million initial public offering. While little is known about the company, called Ribbit LEAP, CEO Meyer “Micky” Malta could use the increasingly popular “blank check” structure to effect a merger, acquire assets, purchase stocks, or reorganize a similar business, according to the SEC S-1 form filed today. To give an idea of the kinds of work Ribbit LEAP might do, the Cayman Islands-based company, short for Ribbit Capital Long-Term Equity Acquisition Pool, identifies its predecessor’s mission among the “guiding principles” in the filing.
SBA Accused of Skirting Financial Disclosure Rule; Inspectors general ask agency to detail PPP loans of $25,000 or more, citing 2006 law
By Cezary Podkul and Ryan Tracy – WSJ
A watchdog panel of government inspectors general is asking the Small Business Administration to provide the names of borrowers who received Paycheck Protection Program loans of $25,000 and up, citing a 2006 law that requires their disclosure.
The Urge to Reverse Merge; SPACs are just getting started
The “blank check” acquisition funds known as special purpose acquisition companies, or SPACs, have raised more than $30 billion so far this year, versus $13 billion in all of last year. Can they keep it up? DealBook spoke with some of the most plugged-in SPAC bankers and lawyers on Wall Street, and they cited three factors driving the boom:
PRIMER: Ameribor and its role in the Libor transition
John Crabb – IFLR
IFLR’s latest explainer looks at the American Interbank Offer Rate and why small and mid-sized banks prefer it to other replacements.
ConsenSys Acquires Quorum® Platform From J.P. Morgan – ConsenSys Today Announced The Acquisition Of Quorum®, An Enterprise-Variant Of The Ethereum Blockchain Developed By J.P. Morgan
ConsenSys, an industry-leading blockchain software company, today announced the acquisition of Quorum®, an enterprise-variant of the Ethereum blockchain developed by J.P. Morgan (NYSE: JPM). With the addition of Quorum, ConsenSys now offers a full range of products, services, and support for Quorum, accelerating the availability of features and capabilities—such as digital asset functionality and document management.
How Baby Boomers Are Coping With Covid-19’s Financial Hit; The pandemic has left many people at or near retirement age out of work and unexpectedly living on a shoestring budget
Clare Ansberry – WSJ
After Sue Sweetra was laid off because of the pandemic, the 56-year-old widow began volunteering regularly at a free farmers market, where she and other volunteers received boxes of potatoes, onions, turkey and cheese.
Coronavirus Got Through Australia’s Hotel Defense and Authorities Are Seeking How; Government inquiry hears accounts of missteps including inadequate training, inconsistent face-mask use
Mike Cherney – WSJ
Australia’s decision to close its border and use hotels to quarantine returning residents initially helped prevent significant coronavirus outbreaks. But the virus eventually found a way through the country’s defenses, and authorities are now trying to understand what went wrong.
Covid-19 proves globalisation is not dead; As the pandemic pushes more activities online, national borders seem less relevant than ever
Ian Goldin – FT
Covid-19 will not kill globalisation. Rather, it will accelerate underlying trends, compressing into 2020 a transformation in flows across national borders that would have taken years to emerge. As individuals and companies move online, national borders become less relevant. Virtual meetings are substituting for travel and physical meetings, with their greater efficiency leading to higher levels of engagement.
Central bankers face virus hit to global economy at crisis forum; Annual Jackson Hole gathering will take place online for first time due to pandemic
James Polit and Chris Giles – FT
Central bankers’ annual gathering at the Rocky Mountain resort of Jackson Hole in late August has often served as a crisis-fighting forum — from the currency meltdowns of the 1990s to the Great Recession a decade ago.
Some Countries Don’t Want to Wait for Superpowers’ Vaccines
James Paton – Bloomberg
Rich nations have already locked up billions of Covid-19 doses; Argentina, Nigeria, Thailand are nurturing projects at home
After Covid-19’s emergence in Buenos Aires led to a strict lockdown in March, Juliana Cassataro and her fellow vaccine researchers grew concerned. The U.S., Europe and China had already revved up their quests to obtain shots; how far back in line would Argentina have to wait for supplies?
Italy Rules Out a New Lockdown Despite Surge in Virus Cases
John Follain – Bloomberg
Health Minister Roberto Speranza speaks in Bloomberg interview; Speranza says contagion limited, low impact on health service
Italy has ruled out imposing a new nationwide lockdown despite an upsurge in coronavirus cases, as the country struggles to emerge from the worst recession in living memory. The increase in contagion has been limited, with very low impact on health services, Health Minister Roberto Speranza said in an interview with Bloomberg News.
Brain Deficits, Nerve Pain Can Torment Covid Patients for Months
Robert Langreth and Emma Court – Bloomberg
Scientists starting studies on mysterious long term ailments; Initially mild symptoms worsen later in thousands of Americans
A growing contingent of Covid-19 patients whose symptoms were initially mild are now facing mysterious long-term neurological problems, including memory and sleep disturbances, dizziness, nerve pain and what survivors refer to as “brain fog.”
Updated CDC guidelines now say people exposed to coronavirus may not need to be tested
Jamie Gumbrecht, Michael Nedelman and Maggie Fox, CNN
The US Centers for Disease Control and Prevention has changed its Covid-19 testing guidelines. The agency no longer recommends testing for most people without symptoms, even if they’ve been in close contact with someone known to have the virus.
Why Does the Coronavirus Hit Men Harder? A New Clue; Women produce a more powerful immune response than do men, a new study finds.
Apoorva Mandavilli – NY Times
The coronavirus may infect anyone, young or old, but older men are up to twice as likely to become severely sick and to die as women of the same age. Why? The first study to look at immune response by sex has turned up a clue: Men produce a weaker immune response to the virus than do women, the researchers concluded.
Exchanges, OTC and Clearing
Another Record Breaking Day at MGEX
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), reports that yesterday, August 24th was the 11th best day in the history of the Exchange for total volume with 26,343 contracts traded.
Exclusive: Nasdaq files with SEC for IPO alternative to raise funds
Joshua Franklin – Reuters
Exchange operator Nasdaq Inc (NDAQ.O) has filed with U.S. regulators to change its rules to enable companies that debut on the stock market through a direct listing to raise capital, as an alternative to an initial public offering.
Record number of companies at Oslo Børs; Companies are flocking to Oslo Børs, and the number of companies listed or traded at Oslo Børs is now at its highest level since the financial crisis. Two new companies have been admitted today: Aker Carbon Capture and Aker Offshore Wind.
With the two companies admitted today, there are now 253 companies with shares listed on Oslo Børs or Oslo Axess or traded on Merkur Market. Not since 2008 has the number of companies listed or traded been so large.
Eurex Exchange Readiness Newsflash | Incident handling: Matching engine processing delay
While our constant effort is to keep the usual high availability rate of the Eurex T7 trading system, we want to support our trading participants to be prepared as best as possible for the rarely occurring incident cases. Therefore, we publish newsflash messages on a regular basis that explain the handling of various special incident cases or provide more general incident handling information. Today we provide you with the information needed in case a delay in the matching engine processing takes place.
Australian investors adapt to challenging market conditions
Over 9 million Australians hold investments outside their home and super, with 6.6 million directly holding exchange-listed investments, according to the ASX Australian Investor Study 2020 released today. Dominic Stevens, ASX Managing Director and CEO, said that the 2020 study comes at a historic time as investors
respond to the challenges from the COVID pandemic.
Reduction of the Minimum Price Fluctuation of the Micro Silver Futures Contract
Effective Sunday, September 20, 2020 for trade date Monday, September 21, 2020, Commodity Exchange, Inc. (“COMEX” or “Exchange”) will amend Rule 121102.C. (“Price Increments”) of the Micro Silver Futures contract (Rulebook Chapter 121; Commodity Code: SIL) (the “Contract”) to decrease the minimum price fluctuation for outright and spread transactions for trades executed on the CME Globex electronic trading platform and submitted for clearing on CME ClearPort as set forth below
Barchart Announces Free Data and Tools for Ag Economics Programs
Barchart, a leading provider of market data and technology services to the financial, media and commodity industries, announced they will provide free data and tools for university Agricultural Economics programs in an effort to support the next generation of leaders in agriculture.
Ant Group IPO could be biggest ever—Why it picked China over US for debut
Naomi Xu Elegant – Fortune
Chinese fintech giant Ant Group filed for initial public offerings in Hong Kong and Shanghai on Tuesday in what may become the largest IPO in history. The company will issue at least 10% in new shares in the IPO, which Bloomberg estimates will raise close to $30 billion.
In its Hong Kong Stock Exchange filing application, Ant disclosed profit margins of around 30% for the first six months of 2020 and revealed that Alipay, the mobile payment platform it runs, has an active annual user base of a whopping 1 billion.
Ant Group’s $200 Billion Hill Could Soon Become Mountainous; Ant’s IPO looks enormous but less so in the context of other, even pricier payment firms like Square and PayPal
Jacky Wong – WSJ
Chinese financial-technology company Ant Group may sound small, but it could ride China’s technology-investment wave to grow into a market behemoth. The company, controlled by Chinese billionaire Jack Ma, has filed for concurrent initial public offerings in Shanghai and Hong Kong. Ant is expected to fetch a valuation above $200 billion. With the company selling at least 10% of share capital, the IPOs could together amount to one of the largest listings ever.
PwC pledges to review fraud detection after Wirecard scandal shakes industry; Audit profession needs to ensure its relevance, says chairman of Big Four firm
Tabby Kinder – FT
The global chairman of PwC has pledged to “aggressively” review how the firm can better hunt for frauds following Wirecard and other accounting scandals. “We want to make sure we’re moving forward [on the detection of fraud] to ensure the relevance of the profession,” said Bob Moritz, who has run the accounting and advisory giant for four years.
New blank-check company lays groundwork for a fintech deal
Kate Rooney – CNBC
A new shell company set up by a former banking CEO is set to go public this week, with the eventual plan to buy up a fintech company.
The special purpose acquisition company — also known as a SPAC — will list on the Nasdaq Wednesday morning, according to its executives.
Cryptocurrency Industry Entrepreneur Mathew D’Souza Passes After Battle with Leukemia
Entrepreneur Mathew J. D’Souza, CPA, 29, died August 21, 2020, surrounded by his loved ones after a heroic 7-year battle with leukemia. Matt is survived by his parents, brothers, and countless friends. Matt had one of the most well-respected names in the Bitcoin & Blockchain industry. He built several multi-million dollar companies from scratch and cultivated a network of connections that led to unprecedented success in the cryptocurrency space. In 2017, Matt co-founded Blockchain Opportunity Fund, LLC, a multi-million dollar cryptocurrency hedge fund.
Crypto soars again as traders embrace ‘DeFi’ and ‘yield farming’—but some see echoes of the 2017 bubble
Jeff John Roberts – Fortune
In late 2017, cryptocurrency prices went crazy as Bitcoin brushed $20,000 and the value of other digital tokens—many of them fly-by-night projects—soared inexplicably. Today, something similar is underway, albeit on a smaller scale. In recent months, speculators have rushed to snatch up digital coins with names like COMP and LINK that are now among the most popular cryptocurrencies, with market caps suddenly worth billions of dollars. And earlier this month, a novelty currency called YAM began trading at over $100 right after it appeared, only to crash to around $1 days later.
The IRS has sent another round of letters warning U.S. crypto holders about their taxes
Michael McSweeney – The Block
New information indicates that the U.S. Internal Revenue Service has sent a new batch of letters to suspected crypto holders about whether they correctly reported their transactions. CoinTracker.io, which offers a service for crypto-related tax preparation, published a letter Tuesday that it said came from one of its users. The service’s blog post said that “[i]t has come to our attention from CoinTracker users that the IRS has starting sending out another wave of cryptocurrency tax warning letters to U.S. crypto users.” The service linked to several Reddit posts from people who say they received letters.
Bitwage Rolls Out Tax Calculator Tool as IRS Ramps Up Crypto Pressure
Sebastian Sinclair – Coindesk
Crypto payroll provider Bitwage and software developer Consultabit have added a new tax tool to their bitcoin investment calculator. Announced Wednesday, the new tax add-on will help crypto investors stay on top of their reporting obligations by providing an estimate of federal taxes due on their bitcoin gains. The calculator presents a total owed to the Internal Revenue Service (IRS) based on amounts invested, annual income and marital status. Additionally, Bitwage and Consultabit have added a button allowing investors to view their gains and taxes on one-time purchases.
Cryptocurrency exchange FTX acquires portfolio tracker Blockfolio
Romain Dillet – Tech Crunch
FTX, a cryptocurrency exchange that offers derivatives, options and other sophisticated products, is acquiring a popular portfolio tracking app, Blockfolio. FTX is spending $150 million for the acquisition. But take that price with a grain of salt as it’s a combination of cash, cryptocurrency and stock. Cryptocurrency (and stock) in particular might not be perfectly liquid. While an exchange buying a portfolio tracking app seems to be a right fit, they don’t necessarily have the same audience right now. FTX is better positioned for professional traders as it lets you trade on futures markets and it even offers ERC-20 tokens that track the volatility of bitcoin.
Coinbase appoints new general manager to oversee Europe operations
Saniya More – The Block
Crypto exchange Coinbase has appointed Marcus Hughes as the new general manager overseeing its European operations, the company announced Tuesday. Hughes served as general counsel for Coinbase’s international operations for the past two years. Prior to his time at Coinbase, Hughes spent nearly a decade at Morgan Stanley, where he was an executive director in its legal and compliance division.
Crypto Exchange Coincheck to Launch Japan’s First IEO
David Pan – Coindesk
Coincheck, one of the largest crypto exchanges in Japan, announced Tuesday that it would support a domestic company to launch the country’s first Initial Exchange Offering (IEO) and raise funds via a token sale. Hash Palette, a platform that distributes content such as Japanese graphic novels (manga), anime and music, aims to raise about 1 billion yen ($9.4 million) through a token sale on Coincheck, CoinDesk Japan reported.
Central bank digital currencies will ‘complement’ cash: BIS study
Momina Khan – The Block
In its recent report, the Bank for International Settlements (BIS) examined the rise of central bank digital currencies (CBDCs) across different economies, and said that its role would be “intended as a complement to, not a replacement for cash.” Additionally, the ultimate goal of the report is to share material on the topic for central banks to learn from one another and eventually add to the international policy dialogue in this space.
Police seize South Korean crypto exchange Coinbit for allegedly inflating trading volumes
Yogita Khatri – The Block
The Seoul Metropolitan Police Agency has reportedly seized local crypto exchange Coinbit for allegedly inflating trading volumes. South Korea’s oldest newspaper, the Seoul Shinmun, reported the news on Wednesday, saying that Coinbit’s offices have been raided for the alleged fraud. The exchange is accused of using multiple “ghost accounts” to inflate trading volumes.
Are Crypto Platforms Taking Personal Data Protection Seriously Enough?
Rachel McIntosh – Finance Magnates
The security of custody measures on digital assets platforms has been a huge matter of concern for the last several years, and rightfully so. These days, large-scale cryptocurrency exchange hacks are a relatively rare occurrence; however, as recently as last ago, exchange hacks were almost commonplace. In 2018, $875 million was stolen in six major hacks; in 2019, $282 million was stolen in 11 hacks.
Binance.UK Joins Trade Association CryptoUK – The British Affiliate Of The World’s Largest Crypto Exchange Assumes A Seat On The Cryptoasset Association’s Executive Committee Alongside Coinbase, CoinShares, CrytpoCompare, eToro And Ripple
Binance.UK, the British affiliate of the global blockchain company behind the world’s largest cryptocurrency exchange, today announced it is joining CryptoUK, the U.K.’s self-regulatory trade association representing the digital asset sector, as an Executive Member.
A Media Pioneer Tries Again With a New Journalism Cooperative; A group of journalists led by Maria Bustillos is building Brick House, a network of publications with an unusual business model.
By Ben Smith – NY Times
In 2017, the journalist Maria Bustillos helped lead a bold experiment on the edge of tech and media as the pied piper to a group of writers and editors trying to build publications on a platform powered by blockchain technology.
U.S. Firms in China Say Trump’s WeChat Ban Will Hit Them Where It Hurts; American firms are concerned the ban could be applied beyond the U.S. to their operations within China
Liza Lin – WSJ
U.S. businesses in China are pushing back against a looming Trump administration ban on Tencent Holdings TCEHY 1.73% ‘ WeChat app, with a report Wednesday shedding light on just how vital the tool is to companies doing business in the world’s second-largest economy.
From bitcoin to QAnon: bits to qbits
Izabella Kaminska – FT
QAnon is the fringe conspiracy theory linked to the far right that’s currently radicalising everyone from Midwestern moms to the teenage gaming community. Much has been written and theorised about the phenomenon, including its unsavoury links to radical ideologies. Yet despite the stigmas, QAnon continues to spread its tentacles ever deeper into the world wide web. Social media platforms have tried to contain it by censoring accounts and groups linked to the theory but, like lopping off a head of the Hydra, the more they do so the more resilient the movement appears to become. That’s in part because the expectation of censorship is baked into its narrative. The greater the online purges of QAnon become, the greater the proof in followers’ minds that they must be right. This pushes users to parallel platforms and networks and also generates a collective respect for those who sacrificed/ martyred their online profiles for the movement.
Phantom Companies Got More Than $1 Billion in Coronavirus Aid; The number of $10,000 Small Business Administration grants exceeded the number of eligible applicants in many places.
Zachary Mider, Jason Grotto – Bloomberg
A federal program meant to help small businesses hurt by the coronavirus pandemic may have sent more than $1 billion to places it shouldn’t have gone, according to a Bloomberg Businessweek analysis of Small Business Administration data.
RNC Speaker Facing Federal Charges Of Insider Trading
Tom Dreisbach – NPR
Jack Brewer, a member of Black Voices for Trump who is scheduled to speak at the Republican National Convention on Wednesday, was charged with insider trading by the U.S. Securities and Exchange Commission (SEC) earlier this month. Brewer is a former National Football League player, who went on to work in financial services. The SEC alleges he sold 100,000 shares in a penny stock, because he had inside information that the company’s share price was likely to drop. The charges, filed August 6, are civil – not criminal. The SEC is seeking financial penalties, a return of “all ill-gotten gains he received directly or indirectly,” and a permanent ban on Brewer “from participating in any offering of a penny stock.”
Why Presidential Lies Are Even Worse Than They Seem; Moral philosophers have shown how deception corrodes democratic self-government.
By Cass R. Sunstein – Bloomberg
President Donald Trump is a liar — hardly the first but certainly the worst among U.S. presidents. By one count, he has made about 18,000 false or misleading claims, an unmistakable sign of his willingness to deceive.
ASIC grants industry-wide relief to help members of frozen funds make hardship withdrawals
ASIC today announced new relief measures for operators of managed funds to facilitate withdrawals by members facing financial hardship (hardship relief) during the COVID-19 pandemic.
SEC Charges Super Micro and Former CFO in Connection with Widespread Accounting Violations
The Securities and Exchange Commission today charged Super Micro Computer, Inc., a producer of computer servers, and its former CFO, Howard Hideshima, with prematurely recognizing revenue and understating expenses over a period of at least three years.
Investing and Trading
European Bond Investors Signal Rising Risk Appetite; The extra yield demanded by investors for holding riskier debt and the cost of insuring against default have declined
Anna Hirtenstein – WSJ
Investors are more at ease with holding Europe’s riskiest debt, as the European Central Bank’s vast bond-buying program reduces the supply of safer assets, pushing buyers into other corners of the market. The cost of insuring against default for European high-yield bonds has fallen to the lowest point since March 5, according to the iTraxx Crossover index. The annual cost of a credit default swap that insures EUR10 million ($11.8 million) of high-yield bonds for five years is at EUR326,000, nearly half of the price at the peak of the market turmoil.
Exxon’s Departure From Dow Highlights Market’s Retreat From Energy Bets; After being the largest U.S. company as recently as 2013, Exxon has been eclipsed by technology giants
Karen Langley – WSJ
The Dow Jones Industrial Average’s coming farewell to Exxon Mobil XOM -3.17% Corp. is the latest sign of the waning influence of America’s struggling energy sector. When trading begins next week, the blue-chip benchmark will include only one energy stock: Chevron Corp., CVX -1.23% which will represent just 2.1% of the price-weighted index, according to an S&P Dow Jones Indices analysis.
Equity ETFs showed no obvious signs of stress during this year’s market sell-off © Getty Images
Dave Baxter – FT
While equity exchange traded funds showed no obvious signs of stress during this year’s sell-off, the picture looked vastly different in the bond space. In March, some of the biggest corporate bond ETFs’ shares traded at discounts of more than 5 per cent to net asset value (NAV), having not exceeded discounts of 0.1 per cent in January.
Low rainfall in US Midwest drives corn prices higher; Benchmark up almost 4% since start of week as sweltering heat hits crop conditions
Emiko Terazono – FT
Worries about a lack of rainfall this month in the US Midwest have lifted corn prices, with data from the US Department of Agriculture pointing to deteriorating crop conditions.
Wealthy Women Are More Likely to Drop Advisers for Bad Service
Lananh Nguyen – Bloomberg
Advisers show unconscious gender bias in meetings, study finds; Younger female investors are poised to transform industry
Wealthy female investors who have negative experiences with their financial advisers are more likely than men to fire them. That’s one of the conclusions from a gender-bias study by Bank of America Corp.’s wealth-management business, which comes as female clients control an ever-increasing share of financial assets. For investors who had bad experiences with their financial advisers, 35% of women decided to switch, even though they were less likely to complain, compared with 30% of men, who were more likely to confront their adviser or complain.
Investors Hoard Gold, Bitcoin and Whisky to Soothe Inflation Fear
John Ainger, Vildana Hajric, Adeola Eribake, and Eddie van der Walt – Bloomberg
One lunchtime in 2009, as the U.S. Federal Reserve started purchasing Treasuries in the aftermath of the global financial crisis, Richard Hodges stepped out of his office to buy his first gold bar in the City of London. Over the next decade, he built up his personal collection to several kilograms’ worth, stored in his “own little Bank of England basement.” Hodges, who also works as a money manager at Nomura Asset Management, thinks central banks’ stimulus has ushered in an “age of currency and asset price manipulation.”
Environmental, Social and Corporate Governance
UN-backed climate fund faces wave of abuse allegations from staff; Former and current employees describe incidents of sexism, racism and harassment at Green Climate Fund
Edward White in Wellington and Leslie Hook – FT
The UN-backed Green Climate Fund, the world’s largest climate finance institution, is facing a wave of internal misconduct complaints including allegations of sexism and harassment in the workplace, and criticism over the death of an employee from coronavirus.
Can Interest in ESG Investing Hold Up During a Pandemic?
Samantha Lamas – Morningstar
Interest in sustainable investing has grown tremendously in recent years, and our research has shown that this applies to most investors, regardless of gender or age. Given this rise in popularity, a growing number of asset managers and public companies are making sustainability-focused changes.
As Morningstar’s director of sustainability research Jon Hale noted in his Sustainable Funds U.S. Landscape Report, many “companies started off 2020 by issuing significant commitments to sustainability.” Along with these commitments, asset flows into sustainable funds increased fourfold in 2019 alone and continue to see record inflows so far this year.
Calling For ESG Strategies Based on Solutions, Not Safety
Emily Chasan – Bloomberg
As ESG investing grows, a key question for asset managers and owners will be whether the strategy can be as good at solving the world’s most pressing problems as it can be at avoiding risk.
In a world currently defined by the coronavirus pandemic, ESG strategies have shown themselves to be very good at avoiding risk. Bets on health care, technology and companies that prioritized employee safety panned out. Investors have been putting so much capital to work in this space that some are wondering if ESG is becoming a gold-like asset class, one to which investors flee for safety.
ANALYSIS: GAO Report Reveals ESG Disclosure Variations
The Government Accountability Office (GAO) has issued a significant report on environmental, social and governance (ESG) disclosures. According to the GAO, most of the institutional investors interviewed use ESG information to assess corporate risk management, and to inform their votes at shareholder meetings. The institutional investors noted that they want additional ESG disclosures to address gaps and inconsistencies in company disclosures that limit their usefulness. Issuers, meanwhile, cautioned that prescriptive ESG reporting rules would increase costs and impact management efficiency.
Pimco to liquidate currency fund after soured emerging market bets; Investor redemptions earlier this year had drained the fund
Carmen Germaine and Eva Szalay – FT
Pimco has moved to liquidate an emerging markets mutual fund that lost more than half its assets this year after several of its bets soured and investors withdrew nearly $2bn. The asset manager disclosed that the Pimco Emerging Markets Currency and Short-Term Investments Fund would stop selling shares to new and existing investors in November before it is wound down in January, according to a filing with US securities regulators on Friday.
Turbulent markets upend volatility hedge funds; Specialist hedge funds caught out after betting on calm conditions in 2020
Laurence Fletcher and Richard Henderson – FT
Hedge funds that bet on market volatility have turned out to be some of the biggest losers from the financial turmoil that struck in March. Volatility hedge funds, which buy and sell derivatives to try and profit from the volatility of stocks, bonds and currencies, lost 2.4 per cent this year to July, according to the latest data from HFR. That compares with an average 0.3 per cent loss among hedge funds more broadly, and a 2.4 per cent return from the S&P 500 index.
U.S. bank profits down 70% from year prior on coronavirus uncertainty
Pete Schroeder – Reuters
U.S. bank profits were down 70% from a year prior in the second quarter of 2020 on continued economic uncertainty driven by the coronavirus pandemic, a regulator reported Tuesday.
China’s STAR Board Defies Financial Gravity in a Hot Market; Shares on the mainland’s year-old Nasdaq-style technology board trade at huge premiums to near-identical stocks in Hong Kong
Xie Yu – WSJ
Shares listed on a Nasdaq-style technology board in China are trading at huge premiums to near-identical stocks in Hong Kong, as mainland investors pour money into a hot market. The gap means investors are sometimes paying more than five times as much as buyers offshore for similar financial assets. That reflects heightened bullishness inside China and how onshore stocks remain somewhat insulated from global markets.
Abu Dhabi Hedge Fund Makes $300 Million Emerging-Market Wager
Netty Idayu Ismail – Bloomberg
Tensai sees Asian stocks outperforming the rest of the world; Al Hayan sees developed markets ‘mostly consolidating’
Tensai Holding Co., a family office that manages $3 billion of hedge-fund and private-equity investments, is putting more money into emerging-market stocks and distressed debt as it expects Asia to outperform the rest of the world.
Lebanon Inflation Soars Past 100% in Latest Sign of Meltdown
Dana Khraiche – Bloomberg
Lebanon suffered another dramatic inflation surge in July as the country’s financial meltdown continued with no end in sight. Consumer prices rose an annual 112.4%, compared with just under 90% in June, according to data released by the official Central Administration of Statistics on Wednesday. Inflation was below 20% as recently as in March.
Egypt Buys a Record Amount of Russia’s Bumper Wheat Crop
Megan Durisin, Anatoly Medetsky, and Salma El Wardany – Bloomberg
Egypt’s state-run buyer bought 530,000 tons on Tuesday; Russia’s big harvest is crowding out rivals this season
Egypt scooped up a record amount of Russian wheat Tuesday as a near-record harvest helps the Black Sea nation’s grain expand its dominance over rival suppliers. Egypt’s state buyer booked 530,000 tons of Russian wheat in a tender Tuesday, the most from the country in data compiled by Bloomberg going back to the 2012-13 season. Russia’s attractive supplies make up 80% of Egypt’s purchases so far this season, compared with about half at a similar time last year.
Swiss Investors Map Out Futuristic Plan for Cargo Underground
Catherine Bosley – Bloomberg
A group of private investors in Switzerland wants to build a system of tunnels with self-driving vehicles to transport goods between Zurich and Geneva. They’ll have to fork out 33 billion francs ($36.3 billion) to realize their dream by 2045.
How the ‘E3’ can help British-EU co-operation overcome Brexit; Group comprising France, Germany and Britain have an interest in strengthening their collaboration
Martin Sandbu – FT
Germany’s defence minister Annegret Kramp-Karrenbauer last week hosted what her department trumpeted as the first formal meeting of defence ministers in the “E3” grouping — France, Germany and the UK. The E3 have worked together for almost two decades, above all on Iran. The potential of collective action by Europe’s big three was illustrated this month when they rebuffed a US attempt to “snap back” sanctions on Iran in the UN Security Council, leaving Washington isolated.
Letter: A high-tech post-Brexit vision is a risky strategy
Robert Holland – FT
Wolfgang Münchau’s vision of a successful Brexit (“No deal Brexit is plausible, and that is no bad thing”, Opinion, August 24) is predicated on prioritising high-tech military products, military and civilian artificial intelligence, 3D printing, data collection and suchlike in the future economic strategy of the UK. London and the south-east, and places such as Cambridge’s Silicon Fen, would no doubt do brilliantly under such a model. But where, one wonders, do the blue-collar Tories of the red wall regions and the small towns of the English North and Midlands, or indeed much of Wales and Scotland, fit into such a vision?
The Girl Scout Uniform, Updated for Gen Z; A stylish utility vest. Leggings. Denim. For the first time in decades, the Girl Scouts are getting new clothes.
Jessica Testa – NY Times
A vest designed for the modern Girl Scout must have pockets, and those pockets must be large enough to fit the largest model of the iPhone. “In all our fittings that was the No. 1 thing,” said Wendy Lou, the deputy chief revenue officer of the Girl Scouts of the USA. “Can you fit the iPhone in there? Yes? Let’s go.”