Day Traders Are a New Wrinkle in the Negative Oil Price Mystery; Stock Exchanges Win Legal Battle With SEC Over Data Fees

Jun 8, 2020

First Read

Hits & Takes
By JLN Staff

Saturday morning I took my dogs to the dog park for some exercise, then I did something I had not done since the shelter-at-home order went into effect. I filled up the gas tank in my automobile. Since March I have not been in a bank branch. I have not been to the barber. I have not eaten inside a restaurant, though I have ordered take-out. I have only been down to my office in the CBOT Building once since March, and that was in the first week, to pick up something and check for mail.

Today, I am headed out of state for the first time to go visit my mom, though from a safe distance. I have only been to church to shoot the video for the web worship service that Robby Lothian and I produce for St. Peter’s UCC in Elmhurst, IL.

Many of the telephone calls I make these days are Zoom calls, or some other video service. Life is entirely different, though in some ways not. I was used to working from home as I spent a quarter of my pre-Covid 19 days in my home office producing this newsletter.

I miss seeing my colleagues in person and collaborating in the office. Nurturing a corporate culture is easier when you are together. Assessing how people are doing is easier when you are with them. But the JLN team is showing incredible resilience to this work at home time, and continuing to produce high quality content. We may do less video today, but we are doing more podcasts. Our routines are not different, only where we are doing them. We are lucky to be able to do so. And we don’t forget those who are not so lucky. I am proud of the team for how they are responding to the challenges for them and the community around them.

Matt Leising’s lead story today indicates it was not just Interactive Broker clients who had a hard time getting out of crude oil positions on April 21 when prices went negative. TD Ameritrade and ETrade clients also had technology issues that prevented them from trading at negative prices. Many of these day trades assumed prices could not go negative, something they learned the hard way.

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

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The CME Group said in a notice dated June 4 that it was reviewing plans to reconfigure its Eurodollar options pit, which has been closed since March 13, 2020 due to COVID-19 concerns. The CME also said it is discussing options for its other open outcry pits. Additional details are expected in the next several weeks. No word on reopening the pits. Reached by JLN late Friday, a spokeswoman said the CME had no further comment. ~SC

ICYMI: Registration is now open for the FIA‘s annual International Derivatives Expo in a virtual format on June 23-25, offering three half-days of programming. Industry executives and others will debate the importance and resilience of markets and provide insight on lessons learned from the recent market volatility. You can go here to register. ~SR

According to the OCC, Friday’s volume was the second-highest ever for the U.S. equity options markets at 47,534,507 contracts cleared. The highest was 48,963,585 on February 28 of this year, and the third-highest was 45,444,904 on February 27, 2020.~MR

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The Spread: Derivatives On-Demand
JohnLothianNews.com

This week on The Spread, FIA announces IDX 2020, the Small Exchange launches, OCC celebrates increased volumes for cleared derivatives trades, and more.

Watch the video »

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Fox News apologizes for graphic displaying stock performance after death of George Floyd, MLK
Marina Pitofsky – The Hill
Fox News issued an apology Saturday for a graphic displaying stock market performances in the aftermaths of the deaths and violence against black Americans including George Floyd, Martin Luther King Jr., Michael Brown and Rodney King. The graphic aired Friday on the network’s “Special Report with Bret Baier.”
/bit.ly/2UhfQcD

*****Stupid is as….~JJL

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Poll: 80 percent of voters say things are out of control in the U.S.
Mark Murray – NBC News
Eight out of 10 voters believe that things are out of control in the United States, with majorities still concerned about the spread of the coronavirus, pessimistic about the economy’s returning to normal before next year and down on President Donald Trump’s ability to unite the nation.
Those are the major findings of a new NBC News/Wall Street Journal poll that was conducted May 28 to June 2, during the aftermath of George Floyd’s death in Minneapolis, as the U.S. death toll from the coronavirus surpassed 100,000 and after millions of people have lost their jobs.
/nbcnews.to/2AbKIUU

*****The other 20 percent were in a bar in Wisconsin.~JJL

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Dealing with personal loss while navigating chaotic markets; The longtime head of Jefferies was set for 2020 to be a celebratory year
Laura Noonan – FT
Jefferies entered 2020 with record quarterly earnings, setting chief executive Rich Handler on course for a celebration to mark his 20th year at the helm of one of the world’s biggest independent investment banks. Within weeks of closing that quarter on February 29, New York-based Jefferies was navigating chaotic markets from hastily-created home offices as its hometown became the pandemic’s epicentre and global economies lurched towards recession. Then, coronavirus claimed the life of Mr Handler’s longtime finance chief Peg Broadbent, who was just 56, a shock made worse by the inability to properly grieve “a great partner to all of us” because of lockdown restrictions.
/on.ft.com/3dJvt41

*****Life is a box of chocolates……~JJL

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Treasure worth over $1M found in Rocky Mountains after decade-long search
Peter Aitken, Fox News
A New Mexico treasure hunter revealed that his chest of gold, jewels and other valuables worth over $1 million has been found. Ten years ago, Forrest Fenn gained a cult following when he announced that he had hidden the chest somewhere in the Rocky Mountains. He inspired tens of thousands to set out in search of his treasure, but the prize eluded everyone — until now.
/bit.ly/30rvCFs

****** Great story comes to an end?~JJL

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A Goldman Sachs Cowboy Lists Horse Ranch With Near-50% Price Cut; The 4,675-acre equestrian estate is in the Santa Ynez Valley, close to Santa Barbara
James Tarmy – Bloomberg
Fredric Steck had been at Goldman Sachs for almost 20 years when he decided to become a gentleman cowboy. Although he was working in New York at the time as the head of sales for the firm’s U.S. fixed income division, most of his family lived in California and he returned whenever he could. “New York, with all due respect, was not my favorite place,” he says. “It’s an energetic place with a lot of incredible things going on, but it’s not an easy place to be.”
/bloom.bg/2UkDd4W

*****The new corporate headquarters for John J. Lothian & Company, Inc.?~JJL

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Friday’s Top Three
Our top story Friday, by far, was Bloomberg’s A Goldman Executive Has Advice for His White Colleagues – a repeat from Thursday’s top three. Second was Ken Griffin Buys Basquiat Painting for More Than $100 Million, also from Bloomberg. Third was a story about our top story, Goldman Sachs executive’s email making plea for racial equality goes viral at firm, from Yahoo Finance.

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Lead Stories

Day Traders Are a New Wrinkle in the Negative Oil Price Mystery; It wasn’t just Interactive Brokers: Customers of ETrade and TD Ameritrade were shut out when the futures contract price fell below zero.
Matthew Leising – Bloomberg
Add another possible cause for oil prices going negative for the first time ever in April: the day-trader effect. A month after West Texas Intermediate crude oil futures settled at negative $37.63 on April 20, few conclusions have been reached as to what caused the crash. At first, people pointed to the outsize influence the enormous United States Oil Fund LP plays in crude. But it turns out the exchange-traded fund was out of the May contract at the time it breached zero. The shortage of available space to store oil at the key hub in Cushing, Okla., was another likely culprit, yet the market had known about that problem for weeks. Oil watchers then fingered the late selling by the Bank of China’s Crude Oil Treasure fund, but still, no definitive explanation has emerged.
/bloom.bg/3f67YCv

Stock Exchanges Win Legal Battle With SEC Over Data Fees; A court rejects the regulator’s decision to reject fee increases
Dave Michaels and Alexander Osipovich – WSJ
U.S. stock exchanges won a legal battle with their regulator on Friday when an appeals court ruled some fee increases can’t be challenged by the government after they have taken effect. The decision by the U.S. Court of Appeals for the District of Columbia Circuit appears to end a 14-year legal dispute over fees that exchanges charge for data that show the most complete view of market activity. Brokers, traders and investors say the information is essential for pricing orders and responding to market conditions.
/on.wsj.com/2UmhdGN

Sweden’s PM Rebuked as Covid Deaths Ignite Political Anger
Niclas Rolander – Bloomberg
The prime minister of Sweden was forced to defend his Covid-19 strategy after opposition parties mounted a scathing attack on his government amid signs its handling of the pandemic has been fatally flawed.
/bloom.bg/3h4CIFP

Nasdaq Overtakes NYSE in Coronavirus-Era IPOs; Pandemic curtails activity, reins in celebrations of corporate debuts on NYSE’s historic trading floor
U.S. initial public offerings in 2020 by amount raised
Source: Dealogic – WSJ
Nasdaq Inc. NDAQ 1.67% has edged past the New York Stock Exchange in initial public offerings this year as the coronavirus pandemic has curtailed activity and reined in celebrations of corporate debuts on the NYSE’s historic trading floor.
/on.wsj.com/2BLHJTN

Fidelity chief warns of global corporate solvency crisis; Anne Richards says asset managers unable to provide enough cash to keep businesses afloat
Attracta Mooney – FT
Fidelity International boss Anne Richards has warned that the asset management industry will struggle to provide enough capital to fix the solvency problems public businesses face as economies emerge from lockdown.
/on.ft.com/2XI6k4j

BNP has Goldman in its sights after beefing up hedge fund business; French bank aims to join prime broking’s top 3 following acquisition of Deutsche unit last year
Stephen Morris – FT
BNP Paribas is seeking to displace Goldman Sachs as one of the top three global prime brokers to hedge funds, and surpass Barclays as the dominant European player after acquiring Deutsche Bank’s business last year.
/on.ft.com/3dLT4kL

The economist who could save the world
Ishaan Tharoor – Washington Post
Who’s afraid of big spending now? Across western democracies, the impact of the coronavirus pandemic has compelled governments of various stripes to unleash fiscal stimulus on their battered societies. Even before the virus paralyzed much of the global economy, public attitudes toward austerity had long soured, with parties across the political spectrum increasingly embracing more active social spending and eschewing platforms that touted cuts.
/wapo.st/2A4ouEA

Two Former Fidessa Employees Make Push into OMS Interop Space; Two former Fidessa employees are working with Glue42, which in turn is working with Fidessa and Ion, on bringing interoperability to the OMS space.
Rebecca Natale – Waters Technology
A year has passed since roughly a quarter of Fidessa’s global workforce left the 40-year-old tech company, following the 2018 takeover by trading technology conglomerate Ion Group. Now, some former employees are again working with the equities and derivatives order management system (OMS) provider from the outside by proxy.
/bit.ly/3f2Fsli

R.J. O’Brien Establishes New Specialty in Soft Commodities with Hiring of Veteran Brokerage Team in London
Gary Papier, James Hunt, David Cutler Join RJO Limited
R.J. O’Brien Press Release
Chicago-based R.J. O’Brien & Associates (RJO), the oldest and largest independent futures brokerage and clearing firm in the United States, announced today that its sister company, London-based R.J. O’Brien Limited (RJO Limited), has brought on a veteran team of brokers to establish a new specialty in soft commodities. Gary Papier, James Hunt and David Cutler have extensive experience in futures and commodities, particularly in coffee, sugar, cocoa and cotton.
/prn.to/2XL7RXv

Who Needs Cities When We All Work From Home? Urban areas will survive a surge in working from home but may have to reinvent themselves
Justin Lahart – WSJ
For decades people have predicted technology would level America’s geographic playing field, allowing areas outside of knowledge-industry hubs such as the San Francisco Bay and New York metropolitan areas to attract more high earners. It hasn’t happened, but Covid-19 could change that.
/on.wsj.com/2YcGiVN

US states weigh exit from power market in clean-energy dispute; New Jersey, Maryland and Illinois say a new federal policy will undermine renewables
Gregory Meyer – FT
Three US states are weighing secession from a portion of the largest US power market, concerned that a new federal policy will counteract efforts to use cleaner energy. New Jersey, Maryland and Illinois are examining an exit after the Federal Energy Regulatory Commission handed down an order that critics say favours fossil fuels over renewables. The biggest utility in Virginia has also said it is preserving the option if necessary.
/on.ft.com/3dKMWcm

Saudis Raise Oil Prices by Most in 20 Years to Bolster Rally
Anthony Di Paola and Javier Blas – Bloomberg
Aramco raises official oil pricing globally as supply tightens; OPEC+ decided Saturday to extend production cuts through July
Saudi Arabia increased prices for some crude exports by the most in at least two decades, doubling down on a strategy to bolster the oil market after OPEC+ producers extended historic output cuts over the weekend.
/bloom.bg/3dHwUQA

A Conclave of America’s Top CEOs Talks Race and Making Change; More than 300 chief executives, mayors and government officials gather online for a rare peer-to-peer conversation about race relations and social justice
Kathryn Dill – WSJ
Leaders of General Motors Co., Johnson & Johnson, American Airlines Group Inc. and other big businesses gathered via Zoom this week for a roundtable about the business impacts of the coronavirus. With protests gaining momentum across the U.S., the participants quickly changed the subject.
/on.wsj.com/3eWZxta

Fed’s Coronavirus Rescues Invite Bigger Bailouts; Ending the cycle of saving investors and markets from themselves is going to be really hard.
Bill Dudley – Bloomberg
The Federal Reserve has responded aggressively to market strains and the sharp drop in the economy caused by the coronavirus pandemic. The central bank cut short-term interest rates nearly to zero, bought hundreds of billions of dollars of Treasuries and mortgage-backed securities and it introduced a plethora of special liquidity facilities designed to support markets. The Fed’s actions have largely worked, easing financial conditions and enabling corporations and municipalities to borrow in the U.S. debt markets. If I were in the Fed’s shoes, I would have pushed for the same forceful interventions.
/bloom.bg/3f6upHJ

U.S. East Coast’s Carbon Market Surges as More States Join
Chris Martin – Bloomberg Green
Prices in the U.S. East Coast’s carbon market surged to the highest since 2015, bucking impacts from the coronavirus as the program expands into three more states.
/bloom.bg/30myAeG

Massive bailout leaves Wall Street giant exposed to fire from all sides; The world’s largest asset manager is sparking concern from U.S. lawmakers in both parties on multiple fronts.
Victoria Guida – Politico
BlackRock, a Wall Street titan that manages $7 trillion in assets, is facing growing scrutiny over its role at the center of the Federal Reserve’s massive bailout of U.S. corporations — and it’s coming from all sides.
/politi.co/2Y7tVug

The Great Diamond Glut: Miners Stuck With Gems Worth Billions; The coronavirus pandemic has devastated the diamond world.
Thomas Biesheuvel – Bloomberg
In one of the world’s biggest diamond vaults, hidden inside a nondescript office compound on the dusty outskirts of Botswana’s capital, the precious stones just keep piling up.
/bloom.bg/2XMK0Xv

Coronavirus

Global Infections Breach 7 Million; Drug Mergers: Virus Update
Bloomberg News
Worldwide infections from the coronavirus surpassed the 7 million mark, a little more than a week after reaching 6 million cases. The global pandemic is hitting such milestones faster as hot spots including Brazil and India drive a daily increase of more than 100,000 cases.
/bloom.bg/2UkkZR4

New York City Begins Reopening After 3 Months of Outbreak and Hardship; As many as 400,000 people may return to work on Monday in a city still recovering from the pandemic and roiled by protests.
J. David Goodman – NY Times
Exactly 100 days since its first case of coronavirus was confirmed, New York City, which weathered extensive hardship as an epicenter of the worldwide outbreak, is set to take the first tentative steps toward reopening its doors on Monday.
/nyti.ms/2YcLfht

‘Worse Than a War Zone’: Covid-19 Batters India’s Mumbai City; The densely populated and prosperous metropolis is at the center of India’s worsening coronavirus outbreak
Krishna Pokharel and Rajesh Roy – WSJ
India is struggling to suppress the coronavirus pandemic in Mumbai, one of the world’s most densely populated cities, as its hospitals are pushed to the brink. Nurses and other health workers wearing full-body protection suits are fainting from the summer heat in un-air-conditioned facilities, as patients are turned away for lack of beds and bodies lie unclaimed in some hospitals.
/on.wsj.com/2YgOODv

People Aren’t Visiting Branches. Banks Are Wondering How Many They Actually Need; The coronavirus pandemic has forced people to bank online. That could speed plans to close more branches.
Orla McCaffrey – Bloomberg
People are visiting bank branches less frequently during the coronavirus pandemic. That could speed up some banks’ plans for shutting them down. Branch traffic fell more than 30% in April and the first three weeks of May compared with the same period last year, according to Novantas, a financial-services research firm. Teller transactions dropped 32% in March and April compared with the same period last year, Novantas said.
/on.wsj.com/30osXwn

Managing Covid debt mountains is a key task for the next decade; Treasury bond issuance and central bank QE must work in tandem for economic recovery
Gavyn Davies – FT
The surge in government borrowing in all the major advanced economies due to the pandemic has had few precedents, even in wartime. In the US, for example, public borrowing in the quarter from April to June 2020 alone is expected to reach $3tn, almost 15 per cent of this calendar year’s gross domestic product.
/on.ft.com/3cGmNtV

New Zealand eliminates transmission of coronavirus; Jacinda Ardern says country has no active cases and will focus on reopening economy
Alice Woodhouse and Richard Henderson – FT
New Zealand has eliminated transmission of coronavirus and announced it would lift social distancing measures, with Prime Minister Jacinda Ardern saying the government would now focus on reopening its economy.
/on.ft.com/37ckn5t

How slaughterhouses became breeding grounds for coronavirus; High infection rates among employees worldwide put working practices under renewed scrutiny
Emiko Terazono and Andres Schipani – FT
It has been a hectic time for Brazilian prosecutors negotiating with the country’s meat suppliers to implement measures to protect slaughterhouse workers from coronavirus.
/on.ft.com/379inL0

Hydroxychloroquine Farce Has Tragic Consequences; A rush to publish studies based on flawed science gets us no closer to a cure, and hurts public trust.
Lionel Laurent – Bloomberg
“Follow the science” — these are reassuring words in a pandemic like Covid-19, when widespread fear of a deadly virus can be exploited by unscrupulous politicians, snake-oil salesmen and cranks. Public trust in scientists has risen recently.
/bloom.bg/2XFnv6C

New Evidence Social Distancing Is on the Wane; SafeGraph data show that only a third of the public is now staying at home all day.
Peter Coy
There’s growing evidence that life is returning to normal in the U.S. even though Covid-19, the disease caused by the novel coronavirus, remains a threat. These charts show that the reopening of the country’s economy has occurred steadily since early April, when social distancing was at its maximum.
/bloom.bg/379CSao

PwC gives staff AI wristband to monitor stress levels during pandemic; The Big Four firm is ‘actively looking’ at offering this technology to clients
Emily Horton – Financial News
Stress levels, fear of redundancy and concerns about balancing work, childcare and self-care are ramping up across financial services, and one of the Big Four accounting firms is trying to tackle this head-on by using the latest developments in artificial intelligence and psychological analysis.
/bit.ly/30jXKKT

Dutch Cooperation Made an ‘Intelligent Lockdown’ a Success
Despite a largely laissez-faire attitude, the Netherlands has fared better than most.
Paul Tullis – Bloomberg
Across a small square from Amsterdam’s Mint Tower, where the Dutch Republic manufactured coins in the 17th century, begins Kalverstraat, one of the busiest shopping streets in the Netherlands. Dozens of major brands such as H&M, Nike, Swatch, and Swarovski are here. On a pre-Covid-19 Saturday, about 7,000 people an hour might pass a storefront along the pedestrian thoroughfare.
/bloom.bg/3h28KlY

Exchanges, OTC and Clearing

Nasdaq, NYSE Get Court Win on 2018 SEC Ruling in Data-Fee Battle
Bloomberg Law
Nasdaq Inc. and the New York Stock Exchange won an appeals court ruling forcing the U.S. Securities and Exchange Commission to reconsider its 2018 finding that stock exchanges had failed to justify fee increases for market data.
/bit.ly/3f1szId

NMS II: Why Forced Competition Actually Costs Investors More
Phil Mackintosh – Nasdaq
One of the conundrums created by the SEC’s new NMS II proposal is whether the market works better as a utility or a competitive market.
/bit.ly/3h7DFgQ

JPX Monthly Headlines – May2020
JPX
JPX group companies undertake various initiatives and disseminate information with the aim of providing the most attractive markets to all users.
/bit.ly/2Ybg9Xr

SGX reports market statistics for May 2020
SGX
SDAV rises as reopening of economies lifts sentiment in equity markets; Derivatives gain amid increased portfolio demand in FX, commodities
Singapore Exchange (SGX) today released its market statistics for May 2020. The reopening of economies around the world lifted sentiment in equity markets, even as the COVID-19 pandemic continue to cloud the outlook for global growth. The exchange’s derivatives franchise gained amid increased portfolio demand in foreign exchange (FX) and commodities.
/bit.ly/3h3467b

May monthly figures at Eurex and EEX
Eurex
May saw a fall in the number of traded derivatives contracts at Eurex while OTC Clearing, and the GC Pooling market at Eurex Repo, showed strong growth; Traded derivatives contracts down due to effects of the ongoing pandemic, including reduced interest rates, as well as exceptionally high volume during this period last year.
All classes of financial derivatives at Eurex showed declines in the number of traded contracts in May 2020 compared to May 2019, with the largest fall coming in European equity derivatives – down 58% year-on-year.
/bit.ly/2YbD4SG

Euronext announces volumes for May 2020
Euronext
Euronext, the leading pan-European exchange, today announced trading volumes for May 2020.
/bit.ly/2BC4r0n

Seismic shift or gentle transformation? The fallout of the CME decision
Ronen Kertis, CEO and founder, Cappitech via The Trade
The CME has had a long history in the regulatory reporting industry coupled with strong client relationships. Their recent announcement about their departure from Asia and Europe as a TR/ARM and vendor has caused shockwaves across the market and, without a doubt, they will be missed.
/bit.ly/2AdxtDk

Fintech

NICE Actimize To Acquire Guardian Analytics
The OTC Space
NICE Actimize has entered a definitive agreement to acquire Guardian Analytics, the provider of an AI cloud-based financial crime risk management solutions. Powered by the cloud, Guardian Analytics simplifies deployments and ongoing operations, optimising operational resource efficiency.
/bit.ly/3h7zC3W

Bank of England launches task force to tackle outdated post-trade systems; The report from the UK central bank found that financial firms are spending upwards of $20 billion a year on post-trade processing systems alone.
Joe Parsons – The Trade
The Bank of England has made moves to establish a new task force aimed at identifying and tackling outdated post-trade technologies. In a new report from the UK central bank, it found that financial firms are spending upwards of $20 billion a year on post-trade processing systems alone, and less than a third of FinTech investment is spent on the middle and back-office.
/bit.ly/2BKSPIE

The TRADE launches 2020 EMS survey; Buy-side users invited to rate their EMS providers in the 2020 edition of The TRADE’s annual survey.
Hayley McDowell – The Trade
The TRADE’s annual Execution Management System (EMS) survey is now open for submissions, allowing buy-side users to assess and rate their vendors. Now in its eighth year, buy-side clients are invited to rate their EMS providers across 13 functional categories, alongside the chance to detail what additional capabilities they would like to see from vendors in the future.
/bit.ly/3h5lE2D

Aramco Backs New York Fintech Firm Offering Islamic Investments
Matthew Martin – Bloomberg
A New York-based online Islamic investment platform has secured backing from Saudi Aramco, the world’s biggest company, to expand into the Middle East and make Riyadh its hub for the region.
/bloom.bg/3cL4pjL

Dubai’s Financial Hub Invests in Four FinTech Startups
Farah Elbahrawy – Bloomberg
Dubai International Financial Centre invested in four financial technology startups as part of the business hub’s $100 million fund to help companies seeking access to Middle East, Africa and South Asia.
/bloom.bg/379DjS4

Former Treasury Officials Positioned to Shape Fintech From Private Sector
Mengqi Sun and Ian Talley – WSJ
Financial technology companies are snapping up former government officials as they seek to navigate the still-developing patchwork of regulations governing cryptocurrency and other financial technology. A handful of recent high-profile hires could signal a stronger role being played by the private sector in the evolution of those rules.
/on.wsj.com/2Ad81hf

Cassini Systems Named Best Margining Solution in FTF News Technology Innovation Awards 2020
Press Release
Cassini Systems, the leading provider of pre- and post-trade margin and collateral analytics for derivatives market participants, today won the 2020 FTF News Technology Innovation Award for Best Margining Solution.
/bit.ly/3eZKLC7

Cryptocurrencies

Institutional Bitcoin Options Volumes Hit Record Highs in May
Traders Magazine
As investors around the globe look for exposure to safe-haven assets, Bitcoin seems to be proving an attractive choice for institutional investors. May saw volumes on regulated platform CME soar, recovering substantially from a lull in April. Options are one area seeing particularly impressive growth. CME total options volumes reached an all-time monthly high of 5986 contracts traded in May. This figure represents 16 times that of April’s volumes, and dwarfs those of previous months, since Bitcoin options launched on the platform in January.
/bit.ly/2zdnxsW

Stablecoins’ rising demand to attract increased regulation
Jude Lopez – AMB Crypto
Cryptocurrency markets have seen steady growth; increased regulatory clarity has enabled greater adoption. With growing uncertainty in the global markets, many have turned to crypto as a safe-haven asset for long-term investment. Along with these developments, it is also interesting to note 2020 has been a significant year for stablecoins in general. As adoption in crypto grows, demand for stablecoins has grown significantly.
/bit.ly/3cI3YXA

Algorand Foundation launches accelerator program with up to $265K funding support per startup
Yogita Khatri – The Block
The Algorand Foundation has launched an Asia-focused accelerator program to attract projects building out on its native proof-of-stake blockchain network. The program would offer selected startups $15,000 each in upfront seed funding, with up to $250,000 each in follow-on investment, according to a statement shared with The Block. The program is launched in an association with Borderless Capital and LongHash Ventures.
/bit.ly/2MDXXR9

Chinese Police Freezing OTC Traders’ Bank Accounts Over ‘Tainted’ Crypto Transactions
Wolfie Zhao – Coindesk
Thousands of cryptocurrency over-the-counter merchants and their clients may have been affected as police in China freeze bank accounts over crypto and fiat assets tainted by illicit activity. Caught up in a police probe since last Thursday, some Chinese crypto buyers and sellers and OTC market makers have already had accounts frozen because their transactions may have been contaminated by money laundering activities involving cryptocurrencies.
/bit.ly/2ATXk2X

Securitize Debuts On-Chain Dividend Payouts for Lottery.com Security Token
Danny Nelson – Coindesk
Digital security manager Securitize, a blockchain-based transfer agent, has delivered a dividend-like payout to holders of one of its issuer’s security tokens — a company first. Distributing a “royalty payment” to holders of Lottery.com security tokens Friday, Securitize claims it has become the first registered securities record keeper, a transfer agent, that also disburses token-holder payments entirely on a blockchain.
/bit.ly/3cDRy2M

Coinbase Faces Backlash with Offers of Analytics to Government
Arnab Shome – Finance Magnates
Coinbase, a leading US-based crypto exchange, is seeking to offer blockchain analytics services to two United States government agencies, sparking a community backlash against the exchange. First reported by The Block on Friday, the exchange has officially initiated to ink deals with the US Drug Enforcement Administration (DEA) and the Internal Revenue Service (IRS), according to public documents published in April and May respectively.
/bit.ly/3dVVtcV

Brave’s browser has been autocompleting websites with referral codes
Saniya More – The Block
Privacy-focused browser Brave was found to autocomplete several websites and keywords in its address bar with an affiliate code. Shortly after a user published his findings, Brave CEO and co-founder Brendan Eich addressed the incident and called it “a mistake we’re correcting.” Eich said that while Brave is a Binance affiliate, the browser’s autocompleting feature should not have added any new affiliate codes.
/bit.ly/3dJ0sgX

Bitfinex Spin-Out Says Funds Are Lining Up for Its New Decentralized Exchange
Paddy Baker – Coindesk
Bitfinex-incubated DeversiFi claims its re-released decentralized exchange (DEX) is receiving interest from institutions, thanks to a privacy layer that can protect their trading strategies from rivals.
/bit.ly/3hg64Bs

CoinMarketCap Metric Overhaul Keeps Owner Binance at the Top
Paddy Baker – Coindesk
The most popular cryptocurrency price aggregator site has rolled out a new way of ranking exchanges that keeps owner Binance at the top of the exchange table. CoinMarketCap came under fire last month after its new web traffic-based ranking system gave Binance – which acquired the aggregator for a rumored $400 million in April – a perfect score. “Six weeks in and Binance’s acquisition of CoinMarketCap [is] already being abused to manipulate the rankings,” tweeted an irate Mati Greenspan, at the time.
/bit.ly/378Syef

TokenInsight: Most exchange tokens, including BNB, are undervalued
Robert Stevens – Decrypt
Most exchange tokens are undervalued, claims a report by crypto analytics firm TokenInsight. Exchange tokens are those minted by cryptocurrency exchanges. Often, those holding them are eligible for various benefits on the exchange, such as lower transaction fees. Most famous is BNB, formerly known as Binance Coin, the eponymous coin of the giant crypto exchange. At $2.6 billion, BNB is the seventh-largest cryptocurrency by market cap, according to data from CoinMarketCap, the coin metrics site (that was recently acquired by Binance).
/bit.ly/37bpUcb

Illegal Bitcoin Mining Cost Russia $6.6 Million in 3 Years
Arnab Shome – Finance Magnates
Illegal cryptocurrency mining facilities in Russia have stolen electricity worth almost 450 million rubles ($6.6 million) over the past three years, according to the state-owned power grid Rosseti. The figures were first reported by the grid operator on Telegram and revealed the high cost of “black” mining on its business.
/bit.ly/3dNZmQU

Chinese tech giant Tencent forms alliance to promote blockchain development
Yogita Khatri – The Block
Chinese tech giant Tencent’s cloud service, Tencent Cloud, has launched an alliance to promote the development of the blockchain industry. The alliance aims to attract 100 members this year, including tech companies, industry associations, universities, and think tanks, local outlet Securities Times reported last week. Members plan to establish blockchain industry standards and research potential blockchain applications.
/bit.ly/30k0UhJ

Politics

Colin Powell Says Trump Has ‘Drifted Away’ From U.S. Constitution; The Republican former secretary of state and former military official will vote for Democrat Joe Biden in U.S. election
Michelle Hackman – WSJ
Another former senior military official, Colin Powell, criticized President Trump for his administration’s response to protests over the killing of George Floyd in Minneapolis police custody, saying Mr. Trump has “drifted away” from the U.S. Constitution.
/on.wsj.com/2ME78Rl

Black Lives Matter protests go global, doubts over US jobs data; A rundown of the most important global business stories you need to know for the coming day, from the newsroom of the Financial Times. Available every weekday morning.
FT
US civil rights groups have received a surge of corporate donations since Minneapolis police killed George Floyd, the head of Fidelity International has warned that asset managers will struggle to provide enough cash to keep businesses afloat, and global trade is under threat with up to 400,000 crew stranded either at sea or at home due to Covid-19. Plus, the FT’s James Politi explains why the US Bureau of Labor Statistics is having a hard time pinning down the country’s actual unemployment rate.
/on.ft.com/3cJzYur

Ex-military chiefs add to criticism of Trump over protest response; President’s threat to use troops to quell demonstrations prompts more rebukes
Kadhim Shubber – FT
Donald Trump faced growing criticism from former US military chiefs on Sunday over his handling of anti-police violence protests and his threats to send troops into American cities following the death of George Floyd. Colin Powell, secretary of state in the George W Bush administration, became the latest to sharply criticise the president for threatening to use the military to subdue the demonstrations and cleared peaceful protesters for a photo opportunity.
/on.ft.com/379MyC1

Goldman Reprises Democratic Tax-Hike Worries After Stock Surge
Joanna Ossinger – Bloomberg
Now that U.S. stocks are solidly back in black, the economy’s reopening and infection rates are down, strategists are reviving concerns about the Democratic party’s policy platform.
/bloom.bg/2Un4fbR

2020 Is Not 1968. It May Be Worse; Social unrest helped doom Lyndon Johnson’s presidency. It may end up saving Trump’s.
Niall Ferguson – Bloomberg
The American death toll is rising. An unpopular president fears for his re-election chances. The U.S. sends men into space. Down on Earth, the economy is in trouble. Racial tensions boil over into rallies, looting and violent confrontations with police in cities across the nation, intensifying political polarization and widening the generational divide. The president considers invoking the 1807 Insurrection Act, which empowers a president to deploy the armed forces and National Guard in any state.
/bloom.bg/30wlsUr

America Is Raging. Listen to What’s Being Said; As cities boil over, pleas from sports figures to hear the voices in the streets
Jason Gay – WSJ
A humble ask from a sports columnist: Pay attention.
/on.wsj.com/2AMzMNy

Energy Industry Jilts Trump With Curb on Campaign Donations
Jeffrey Taylor and Bill Allison – Bloomberg
Slimmer wallets, oil price drops and distrust among reasons; Some in industry say relationship with Trump is improving
The oil and gas industry, long one of the most reliable sources of campaign cash for Republican candidates at all levels, is turning a cold shoulder to President Donald Trump.
/bloom.bg/3eUeNHs

Farmers Get Billions in Virus Aid, and Democrats Are Wary
As the administration sends up to $16 billion in additional subsidies, critics are concerned that the funds could be used to ensure that the president maintains the backing of one of his key voting blocs.
Sharon LaFraniere – The New York Times
Cotton farmers were paid 33 times as much in federal subsidies in 2019 as the income they actually lost to trade disruptions, one study showed.
/nyti.ms/3cGEp91

Goldman Sachs Reports a Democrat ‘Blue Wave’ More Likely; Goldman Sachs says the increasing odds of a Democratic “blue wave” in November have also raised the chances of a corporate tax rise.
Rob Lenihan – The Street
The increasing odds of a Democratic “blue wave” in November have also raised the chances of a corporate tax hike, according to a Goldman Sachs report.
/bit.ly/3h02POp

Trump’s Week to Be Remembered as His Undoing or His Revival \
Justin Sink, Mario Parker Bloomberg
Donald Trump endured one of the grimmest weeks of his presidency, as days of protests in U.S. cities emerged as the biggest test yet of his ability to lead in a crisis and put new strains on his argument for a second term.
/bit.ly/30wJYVt

Regulation

FINRA Appoints Rainia L. Washington as Executive Vice President – Chief Human Resources Officer
Rainia Washington
FINRA
FINRA announced today that it has named Rainia L. Washington as Executive Vice President – Chief Human Resources Officer. In this role, she will lead FINRA’s People Solutions team, overseeing the organization’s talent recruitment, training and development, diversity and inclusion, compensation and benefits, and employee relations. She will report directly to FINRA President and CEO Robert Cook and will be a member of FINRA’s Management Committee. Washington will start June 15.
/bit.ly/2YcLlFJ

ESMA provides guidance on the compliance function under MiFID II
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today publishes the final guidelines on the MiFID II compliance function. These guidelines replace the ESMA guidelines on the same topic issued in 2012 and include updates that enhance clarity and foster greater convergence in the implementation, and supervision, of the new MiFID II compliance function requirements.
/bit.ly/30lT47m

ESMA announces new methodology for peer reviews
ESMA
The European Securities and Markets Authority (ESMA), the EU securities markets regulator, today publishes a new Peer Review Methodology integrating the improvements to this process that were introduced by the revised ESMA Regulation (ESMAR).
/bit.ly/30kyoMY

Investing and Trading

Wall Street Has No Consensus; Forecasts from analysts about the market and economy are ranging from financial Armageddon to a swift second-half recovery
Simon Constable – WSJ
Judging by their collective forecasts, Wall Street professionals seem confused over where the market and the economy are headed. The estimates of third-quarter economic growth and year-end stock-index levels vary widely compared with just a few weeks ago.
/on.wsj.com/2Yh8mY6

Asset transfers leave creditors feeling ‘J Screwed’; More companies are copying the US retailer J Crew in moving assets out of loan investors’ reach
Joe Rennison – FT
There is a new, slightly crude term doing the rounds in America’s rough-and-tumble loan market. Investors are increasingly asking lawyers and analysts if they are about to get “J Screwed”.
/on.ft.com/2AQxcpE

Investors swept up in optimism need to ask themselves two questions; Few have paused to assess the effectiveness of each dollar, euro and pound expended
Michael Mackenzie – FT
Investors express a range of views at any given time about asset prices and the future. But whether your lens is bullish or bearish, it pays to retain a healthy sense of scepticism — particularly given that the post-Covid-19 environment for economies and the broader financial system present serious challenges for investment portfolios well beyond 2020.
/on.ft.com/37iIDCY

Investors expect credit to outperform despite Covid downturn; Survey of asset managers running a combined $20tn finds them optimistic about corporate bonds
Camilla Hodgson- FT
US corporate debt will outperform sovereign bonds over the next 12 months, the world’s biggest asset managers have predicted, as central banks’ aggressive interventions to support Covid-hit economies create a recovery in capital markets.
/on.ft.com/379Htta

Billionaire Banker Says India’s Lenders Should Raise Capital
Suvashree Ghosh – Bloomberg
Government should be ready to inject funds into state banks; Uday Kotak says it’s a good time to tap capital markets
India should prepare to inject capital into state banks and private-sector lenders need to strengthen their balance sheets, to help bolster the economy against the coronavirus pandemic, according to a senior banker.
/bloom.bg/2zehLqZ

A U.S.-China Cold War Could Be Good for Investors, After All
Chris Anstey – Bloomberg
Bank of America analysts say investment, productivity to gain; Use of government balance sheet, zero rates could boost demand
A stock analyst who gained attention for emphasizing the theme of inequality a decade-and-a-half ago is now promoting the idea that U.S.-China showdown for economic supremacy could prove a boon for investors.
/bloom.bg/3dJcA1l

A Booming Stock Market Could Come Back to Bite the Recovery; Policymakers watching the S&P 500 might ease up on the stimulus that helped create the rally.
Sarah Ponczek – Bloomberg
If you were to look only at the stock market and nothing else, you’d probably have no clue that 21 million Americans are still out of work. You’d probably think everything in the world is fine. Great, even.
/bloom.bg/3eTUwBQ

Two Investors Did a Tour of the Globe to Find the Best Place to Put Their Money
Joe Weisenthal and Tracy Alloway – Bloomberg
As many active fund managers have discovered in recent years, it’s extremely hard to find a sustainable edge in investing. But for people who put in hard work to discover opportunities off the beaten track, it may still be possible to find undiscovered value. On this episode, we speak with Burton Flynn and Ivan Nechunaev of Terra Nova Capital Advisors about their highly unusual approach to doing research. The two of them, along with their families, traveled the globe, spending a month at a time in different countries to find places to put their money. They explained to us why this approach was important, what they learned, which countries excite them the most, and how these markets are dealing with the COVID crisis.
/bloom.bg/2UDaec9

The Case for Alternative Investments; Some advisers see opportune timing for deals and diversification
Cheryl Winokur Munk – WSJ
With stock market swings and exceedingly low interest rates, now could be a good time for some investors to consider alternative assets. Financial advisers cite two reasons. First, for those with the money, the current crisis is creating opportunities for which alternatives such as private equity are particularly well suited. Second, it’s a good time to diversify one’s holdings, given disruptions in the stock and bond markets. Some recommend that investors who meet the qualifications—mainly being “high net worth” and with an appetite for risk—apportion 15% to 35% of their portfolios to alternatives such as private equity and real estate, and private debt.
/on.wsj.com/30jGeGw

Institutions

BNP Paribas promotes veteran to global trading function head for asset management; Sophie Lugiez replaces Philippe Boulenguiez as head of global trading function at BNP Paribas Asset Management after 25 years with the French investment bank.
Hayley McDowell – The Trade
BNP Paribas Asset Management has appointed a new head of global trading function, replacing the former lead who was recently promoted to global chief operating officer of the investment firm.
/bit.ly/2A4hQOE

Deutsche Bank latest to launch FX trading engine in Singapore; The Monetary Authority of Singapore said that Deutsche Bank will join BNY Mellon in becoming the latest to establish an FX trading engine in Singapore.
Kiays Khalil – The Trade
Deutsche Bank has become the latest major investment bank to plan the launch of a foreign exchange pricing and trading platform in Singapore in collaboration with the market’s regulator, The TRADE understands.
/bit.ly/2UjAhp5

Paul Myners calls for scrutiny into H2O’s illiquid asset sales; Intervention of former City minister follows asset manager’s sale of assets back to Lars Windhorst
Siobhan Riding – FT
Paul Myners has called on the UK regulator to investigate the value of transactions between H2O Asset Management and entities with links to it, just weeks after the group agreed to sell assets to German financier Lars Windhorst in a deal shrouded in secrecy.
/on.ft.com/2MH9DT7

Virtual certainty? Bankers ask if success of remote roadshows will last
Scott Murdoch, Joshua Franklin – Reuters
Who needs expensive lunches at glitzy hotels and fancy restaurants to court investors for bond deals or the sale of new shares on the stock exchange?
/reut.rs/2UmjNwC

Regions

Saudi Arabia’s Secret Plans to Unveil Its Hidden da Vinci—and Become an Art-World Heavyweight; Since buying the world’s most expensive painting three years ago, Saudi Arabia has kept it out of sight. Now, answers are emerging—alongside its big-league art ambitions.
Kelly Crow – WSJ
Saudi Arabia sparked one of the art world’s biggest mysteries when it paid $450 million for Leonardo da Vinci’s “Salvator Mundi” painting three years ago. Since then, the kingdom has kept the world’s priciest painting out of sight—fueling mounting questions about its fate.
/on.wsj.com/2Untriz

Opec and Russia agree to extend record oil supply cuts; Recovery in prices has encouraged producers to keep restrictions in place
David Sheppard, Anjli Raval and Derek Brower – FT
Opec and Russia have agreed to extend their record oil production cuts for a further month as crude recovers to near $40 a barrel, with the group attempting to prop up a market devastated by the coronavirus pandemic.
/on.ft.com/2XL0MWV

Investors Rush to Safest India Debt Funds on Franklin Freeze
Rahul Satija and Nupur Acharya – Bloomberg
Inflows into banking/psu debt plans reach 14-month high in May; Stock funds get smallest inflow of 2020 amid market volatility
Indian funds that invest largely in state-backed debt received the highest inflow in 14 months as investors remained wary of riskier fixed-income plans after Franklin Templeton abruptly shut such funds in April.
/bloom.bg/2MRqinb

Emerging-Market Rally Seen Unstoppable as Traders Turn to Powell
Netty Idayu Ismail, Livia Yap, and Sydney Maki – Bloomberg
Implied volatility had its biggest weekly drop since 2011; Investors seek clues on further stimulus from the Fed chairman
There’s so much positive momentum in risk assets, it’s difficult to see what could stand in the way of the emerging-market rally, at least in the coming days. The stronger-than-forecast May U.S. jobs report and weekend agreement by OPEC+ to a one-month extension of its record output cuts may add to the optimism about the prospects for a global economic recovery, underpinning risk assets. JPMorgan Chase & Co.’s measure of implied volatility for emerging-market currencies had its biggest weekly drop since 2011. Stocks enjoyed their best week since 2011, while an index of domestic bonds reached its highest point since early March.
/bloom.bg/2XJfuNY

Sweden’s Government Steps Up Efforts to Vet Foreign Takeovers
Rafaela Lindeberg – Bloomberg
Sweden is stepping up efforts to shield its critical businesses from foreign takeovers at a time of economic weakness due to the Covid-19 pandemic.
/bloom.bg/3cKfjX4

Brexit

Dover-Calais post-Brexit trade plagued by uncertainty; Six months before new rules begin there is no clarity on plans to manage cargo traffic
Peter Foster in Dover – FT
Standing on the white cliffs of Dover looking down on the ancient port’s modern freight terminal, two truths about the management of the UK trade border after Brexit instantly become apparent.
/on.ft.com/37bvyLo

The UK and EU are facing the most extreme version of Brexit; Political miscalculations have harmed negotiations that could well fail to secure a trade deal
Wolfgang Münchau – FT
Only a fool would put a probability on whether the EU and the UK will agree a trade deal. What we do know is that there is, and has been for a while, a non-trivial possibility that the UK will not strike a trade deal before the end of this year. In that case, the UK’s trading regime would default to that of the World Trade Organization.
/on.ft.com/3cKyEHo

UK delays pledge to follow EU green finance rules post-Brexit
Siobhan Riding – FT
The UK has held off on fully committing to the EU’s landmark sustainable finance rules after Brexit, raising the prospect of a regulatory clash that would create headaches for Britain’s £9tn fund management sector. City minster John Glen told a House of Commons committee last week that the Treasury would reserve judgment on whether to implement forthcoming European rules aimed at preventing fund managers from falsely marketing their products as sustainable.
/on.ft.com/2Un7S1u

UK post-Brexit drug stockpiles at risk amid virus
Faisal Islam – BBC
The UK has been warned by the pharmaceutical industry that some stockpiles of medical supplies have been “used up entirely” by the virus. A memo seen by the BBC advises the government to buy and store “critical” medicines to treat the virus. Drug makers fear stockpiles cannot feasibly be built back up again in time, if the UK should fail to strike a post-Brexit trade deal with the EU. The government said “robust contingency plans are in place”.
/bbc.in/2zeqA4d

Nissan comes out of lockdown … and braces for Brexit
Jasper Jolly – The Guardian
It must have been a strange last four years for the workers at Nissan’s Sunderland factory, as they went about their business of making cars while at the same time being caught in a symbolic tug of war between a divided Brexit nation. When things are going well for the plant, it apparently shows that Global Britain is surging ahead of rivals; when the wind turns, it is a symbol of the UK’s industrial decline, with government having to go chequebook in hand to bureaucrats in Japan to keep it afloat.
/bit.ly/2AK8SG5

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