Deutsche Börse to buy majority stake in ISS; China aims for more sway over copper prices with futures launch

Nov 18, 2020

First Read

$15,861/$300,000 (5.3%)
Brian Rice


Hits & Takes
John Lothian & JLN Staff

Rand Financial is closing down at the end of 2020, according to a trusted industry source close to the company. Employees were notified in an all-employee meeting on Monday that the firm would wind down by December 31, 2020. Employees were reportedly given three months severance. Requests for comment from Rand executives went unanswered.

The SGX Bull Charge saw the participants clock 150,000 km in the virtual charity run, raising $3.63 million for beneficiaries.

FIA is holding a holiday auction to benefit Futures For Kids. Prizes range from experiences, dinners, gift vouchers, signed sports memorabilia, jewelry and more. You can register and join the event on December 8 HERE.

Sam Mehta has been named chief operating officer of Chicago-based PEAK6 Capital Management.

The University of Chicago Law School, AFX and the Becker Friedman Institute are holding a webinar on December 3 at 12 PM CT. There will be a keynote address from Acting Comptroller of the Currency Brian Brooks and FDIC Chair Jelena McWilliams. It also features Kathy Kraninger, director of the Consumer Financial Protection Bureau (CFPB). Director Kraninger will be speaking on “CFPB’s Response in the Age of Covid-19”. She will be introduced by Tom Miles, Dean of the University of Chicago Law School. Following introductions, the Hon. J. Chris Giancarlo, former chairman of the Commodity Futures Trading Commission and AFX’s independent director, will moderate a “fireside chat” with Director Kraninger followed by Q&A.

Vela’s direct market access platform now includes Eurex FX.

I can remember when a super-spreader was just a really good trader.

New Orleans has banned Mardi Gras parades for 2021, but not all celebrations.

According to NBC data, the coronavirus is on the rise in all 50 U.S. states. Stay safe. Be smart!

I borrowed this from Twitter, but it is very true. A Zoom Thanksgiving is better than an ICU Christmas.

We had a new donor to the JLN MarketsWiki Education GoFundMe campaign, Brian Rice. Brian is the owner of, a comprehensive ag risk management company. Thank you to Brian and all those who have given and all those who have yet to give. Support our efforts to preserve industry history by supporting our GoFundMe campaign.

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


Well, it happened – bitcoin is now worth almost as much as it was at its peak in 2017. Back then, the bitcoin derivatives market wasn’t like what we have today, and this time, Bitcoin derivatives volumes and open interest are reaching new all-time highs. The CME Group’s bitcoin futures hit $975.5 billion in open interest Monday, and OI for bitcoin options across all exchanges, regulated or not, is currently sitting at $3.8 billion. The lion’s share of that comes from Deribit, with $3 billion in open interest on bitcoin options.~MR

The Chicago Mercantile Exchange has begun publishing eight volatility indexes based on its 10-year Treasury note futures — measures that would have been particularly interesting to see during the COVID-infused Treasury volatility spikes of March and April — and G5 FX currency pair futures. The benchmark indexes use what the CME calls its CVOL methodology to measure the 30-day implied volatility of the underlying futures contracts, based on the prices of their options (using all strike prices, not just the at-the-money options prices). In a release, CME said it plans to publish additional volatility indexes spanning its asset classes in first-half 2021. More details are here. ~SC

The Cboe Options Institute hosts a 60-minute webinar today, November 18, at 11 a.m. CT on options for managing environmental, social and governance (ESG) exposure. Continuing education (CE) credit is available. Register here. ~SC

Eurex has promoted Vassilis Vergotis to head of strategy. He will work with Michael Peters, Eurex’s new CEO. You can read about this and other moves at the FIA’s October/November People News page here. ~SR



Coronavirus cases at ‘worst explosion’ means it’s time to consider canceling Thanksgiving: doctor
Zack Guzman – Yahoo Finance
As the nation continues to set record daily totals of new coronavirus cases ahead of Thanksgiving, doctors are warning that it might be time to cancel traditional Thanksgiving plans.

*****See my comment above. A Zoom Thanksgiving is better than an ICU Christmas.~JJL


Central Bankers Are Too Strong. And Too Weak; Yellen, Rajan, King, and Summers explore the paradox in a Bloomberg forum
Peter Coy – Bloomberg
Are central bankers too strong or too weak? Unfortunately for the global economy, the answer is both: Their control of money is a blunt instrument that’s good for achieving some objectives, but worthless for others. Never has the disparity been clearer than now, with financial markets soaring on the back of easy monetary policy even as many lives are wrecked by the Covid-19 pandemic.

***** Our weakness is our strength~JJL


SGX Bull Charge community clocks 150,000 km in Virtual Charity Run, raising $3.63 million for beneficiaries
Participants across different cities surpass collective target of 100,000 km amid challenging year for charitable fundraising; President Halimah Yacob witnesses presentation of cheque for $3.63 million to SGX Bull Charge beneficiaries
The SGX Bull Charge community has gone the extra mile for beneficiaries in the Virtual Charity Run, clocking over 150,000 km to surpass its collective target of 100,000 km. With the support of corporate sponsors and individual donors, the flagship charity initiative of Singapore Exchange (SGX) raised $3.63 million amid a challenging year for charitable fundraising.

***** Many thanks to the SGX people and community for their great work.~JJL


Tuesday’s Top Three
Our top story Tuesday was It’s a great time to be an options trader, from Crain’s Chicago Business. Second was – third time in the top three – the Wall Street Journal opinion piece, This is a massive failure of character among Republicans — with evangelicals out in front. (That’s white evangelicals, by the way.) Third was The Trade’s Nasdaq software failure causes market blackout at ASX.


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Lead Stories

Deutsche Börse to buy majority stake in ISS
Purchase of 80% holding from Genstar values shareholder advisory group at EUR1.9bn
Philip Stafford – FT
Deutsche Börse has agreed to buy a majority stake in Institutional Shareholder Services in a deal that values the shareholder advisory group at EUR1.9bn and marks the latest in a string of deals among the world’s largest exchanges.

China aims for more sway over copper prices with futures launch; Analysts say renminbi-denominated contracts open to foreign investors could become global benchmark
Henry Sanderson – FT
Shanghai is launching a challenge to London’s dominance in metals trading by issuing a new futures contract for copper that analysts say has the potential to become a global benchmark. The Shanghai International Energy Exchange (INE) will start trading monthly copper futures denominated in renminbi on Thursday, in contracts based on the metal to be delivered into warehouses in China.

Hedge funds under scrutiny over role in March bond market ructions; Financial Stability Board warns Fed actions to soothe market could cause excess risk-taking
Robin Wigglesworth and Colby Smith – FT
Global policymakers are examining the role hedge funds played in the mayhem that enveloped the $20tn US Treasury market in March, warning that the Federal Reserve’s intervention could fuel more aggressive trading.

The Vaccines Will Probably Work. Making Them Fast Will Be the Hard Part; Front-runners in the coronavirus vaccine race won’t make nearly as many doses this year as were predicted, but they may kick into high gear next year.
Katie Thomas – NY Times
The promising news that not just one but two coronavirus vaccines were more than 90 percent effective in early results has buoyed hopes that an end to the pandemic is in sight.

Renaissance, Two Sigma See Losses as Quant Giants Navigate Chaos
Katia Porzecanski and Hema Parmar – Bloomberg
RenTec’s long-biased fund was down 20% through October; Computer-led firms have struggled with rapid swings in markets
Two of the hedge fund industry’s quantitative powerhouses are getting tripped up this year as wild markets throw off their investing models. Renaissance Technologies, which manages the world’s biggest quant hedge fund, and Two Sigma Advisers have seen losses across several of their funds in 2020, a sign of how unprecedented market volatility caused by the Covid-19 pandemic hurt even the most sophisticated traders.

Christine Lagarde on Her Plans for the European Central Bank; The first female president of the E.C.B. recalibrates its mission.
Alison Smale and Jack Ewing – NY Times
On a recent afternoon, as dusk drew, Christine Lagarde, president of the European Central Bank, was sharing some of the details of her plan to fight climate change, encourage global cooperation and strengthen the credibility of international institutions.

SEC Chairman Urges Corporate Insiders to Avoid Quick Stock Sales; Drug-company executives were allowed to sell stock during announcements of Covid-19 vaccine results
Paul Kiernan – WSJ
Securities and Exchange Commission Chairman Jay Clayton on Tuesday called for company insiders to avoid immediately trading after they set up plans to sell shares they have accumulated, following a spate of big-ticket stock sales by pharmaceutical executives.

Traders unlikely to return to trading desks every day post-pandemic, research suggests ;
Firms tackled remote working by shifting focus to compliance infrastructure and partnering with external technology providers, Greenwich Associates research found.
Annabel Smith – The Trade
A small minority of traders are expected to return to trading desks every day in the post-pandemic world, as firms are tipped to support remote working in the long-term, research has suggested.

The Brexit End Game
As we approach the sharp end of the Brexit process, a bit more clarity has emerged on how cross-border derivatives business between UK and EU participants will work. Last week, UK chancellor Rishi Sunak announced a series of unilateral equivalence decisions, meant to ensure some level of continuity for UK entities trading with EU firms after the end of the Brexit transition period on December 31, 2020. But there are still some glaring gaps that haven’t been addressed by either the UK or EU, including equivalence for trading venues…

CFTC Selects Nakamoto Terminal as Winner of Agency’s First Science Prize Competition; Company Also Named CFTC’s Innovator of the Year for its Science Prize Competition Submission
The Commodity Futures Trading Commission today announced Nakamoto Terminal (NTerminal), a data platform developer based in Washington, D.C., as the winner of Project Streetlamp, the CFTC’s first competition under the Science Prize Competition Act of 2015. As part of the competition, NTerminal also received the CFTC’s first Innovator of the Year award in recognition of its successful submission. Both announcements were made during today’s Empower Innovation 2020 virtual session.

IHS Markit Adds Tool to SFTR Platform to Catch Missing LEIs The data provider’s SFTR offering provides opt-in features to minimize LEI-related errors in collateral messages.
Mariella Reason – Waters Technology
IHS Markit has expanded its solution for reporting under the Securities Financing Transaction Regulation (SFTR), which began phased implementation in April this year, with a tool for identifying Legal Entity Identifier (LEI) errors in reports.

Shelton’s Fed Nomination Blocked in Blow to Trump, McConnell
Laura Litvan and Erik Wasson – Bloomberg
Senate GOP leader preserves chance to reconsider nomination; Romney, Collins join Democrats in opposing Trump’s nominee
Judy Shelton’s nomination to the Federal Reserve Board was blocked in the Senate Tuesday, a stunning setback for Senate Majority Leader Mitch McConnell and a blow to President Donald Trump’s drive to shake up the U.S. central bank before he leaves office.

Robinhood Seeks Advisers for Potential IPO Next Year
Crystal Tse and Scott Deveau – Bloomberg
Robinhood Markets, the trading platform that’s proved popular with novice investors, has asked banks to pitch for roles in an initial public offering, according to people with knowledge of the matter. The company is aiming to go public as soon as the first quarter of 2021, said the people, who asked not to be identified because the information is private.

Fraud-Prone Aid Program Sent $7 Million to Family’s Fake Farms; The SBA approved loans and grants to dozens of new agricultural businesses registered at three single-family homes in the Cleveland area.
Polly Mosendz, Zachary Mider, and Jeff Green – Bloomberg
The single-family house on Forestview Avenue in Euclid, Ohio, a suburb of Cleveland, shows no signs of farming activity. The only things growing on the one-eighth-acre plot are trees, shrubs and grass. But 20 companies registered at that address, with names like Organic Ohio Berries LLC and Garlic Farming LLC, have won government approval for loans and grants intended to support small businesses hurt by the pandemic.


Dolly Parton helped fund Moderna’s Covid-19 vaccine research
Scottie Andrew, CNN
More than seven months later, it’s been revealed that the legendary performer’s donation helped fund Moderna’s Covid-19 vaccine, which this week became the second coronavirus vaccine with a stunningly high success rate. Moderna’s coronavirus vaccine is 94.5% effective, according to company data Moderna’s coronavirus vaccine is 94.5% effective, according to company data

U.S. Midwest Covid Surge Lasts Longer Than Coasts’ Agony
Nic Querolo – Bloomberg
Covid-19 is pummeling the Midwest and Upper Plains, particularly states like Iowa, Wisconsin and the Dakotas, in a sustained attack that’s outlasted spikes in coastal hubs. The Midwest registered more than 65,000 new cases Monday, just shy of half the national total. Kansas and Michigan both reported record case counts, according to Covid Tracking Project data.

Turns Out We Never Really Stopped Hoarding Toilet Paper; And now that the pandemic is worse than ever, expect more of the same.
Mark Gongloff – Bloomberg
The Hunkering Will Continue Until Morale Improves
Back in the dark days of mid-March, Justin Fox wrote a reassuring column about how we weren’t all going to have to shelter in place for 18 months, as one particularly dire forecast suggested. To everyone’s relief, he was right. But now, eight months later, we’re hunkering down again.

Covid Hospitalizations Jump Over 10% in Five Days in U.S. States
Jason Gale – Bloomberg
Hospital beds are filling up across the U.S., bolstered by a surge in coronavirus cases in the Midwest, government data show. Illinois, Michigan, Ohio, Minnesota and Iowa are among states recording the biggest increases in Covid-19 hospitalizations over the past week, according to Department of Health and Human Services data analyzed by Bloomberg News. In North and South Dakota, more than one in five hospital patients has the pandemic disease.

Pfizer, BioNTech Plan Filing as Vaccine Proves 95% Effective
Robert Langreth – Bloomberg
Application for U.S. emergency authorization expected in days; Shot staved off severe cases and also worked in older people
Pfizer Inc. said a final analysis of clinical-trial data showed its Covid-19 vaccine was 95% effective, paving the way for the company to apply for the first U.S. regulatory authorization for a coronavirus shot within days.

U.S. Approves First Self-Testing Kit for Detecting Covid-19
Jinshan Hong and Emma Court – Bloomberg
The U.S. gave the greenlight for the first Covid-19 diagnostic kit for self-testing at home, adding an additional tool to battle the pandemic as nationwide testing capabilities come under more strain. The Food and Drug Administration issued an emergency use authorization to Lucira Health Inc.’s rapid-result All-In-One Test Kit, according to a statement from the government agency Tuesday.

Pfizer Vaccine’s Safety Milestone Is Just the Beginning; Tracking adverse reactions will be crucial to keeping public trust in Covid vaccination drives and provide an important defense against anti-vaxxers.
Therese Raphael – Bloomberg
Regulatory authorities are gearing up for a deluge in people reporting side effects when the new Covid-19 vaccines go into use. Even as vaccines like the one from Pfizer Inc. and BioNTech SE reach safety milestones and look set for regulatory approval, managing the reporting and follow-up of what are known as adverse drug reactions will be critical to keeping to the high levels of public participation needed for a vaccination program to be successful.

Pfizer-BioNTech trial data show vaccine to be even more effective; Companies say they will submit shot for approval in US and EU within days
Hannah Kuchler and Joe Miller – FT
Pfizer and BioNTech said they would submit their Covid-19 vaccine for US and EU emergency approval “within days”, after new data showed it was even more effective than previously reported.

Watchdog criticises government over awarding of £17bn Covid contracts; National Audit Office raises concerns over lack of transparency and potential conflicts of interest
Tabby Kinder, Gill Plimmer and Jim Pickard – FT
Britain’s public spending watchdog has criticised the government for a series of failures when it awarded more than £17bn of contracts to private companies to tackle the coronavirus crisis, including a lack of transparency, errors and potential conflicts of interest.

The kids aren’t alright: How Generation Covid is losing out; A global FT survey shows resentment is brewing among the under-30s as unemployment and restrictions bite
Federica Cocco – FT
When Mary Finnegan, 27, and her sister Meg, 22, left their Brooklyn apartment to return to their parents’ home in March, they took enough clothes to last two weeks. Their stay stretched into months. “It was like a return to homeschooling: no boys, no play dates, nowhere to go, except home and the liquor store,” Mary told the Financial Times.

900 Mayo Clinic staffers diagnosed with COVID-19 over last two weeks
Jack Hobbs – NY Post
More than 900 staffers at the Mayo Clinic have reportedly been diagnosed with COVID-19 in the past two weeks. Dr. Amy Williams, dean of clinical practices at the multi-state hospital system, announced the number on Tuesday during a call with reporters.

Exchanges, OTC and Clearing

CME Group Announces Launch of New Implied Volatility Indexes
PR Newswire
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it began daily publication of a suite of new implied volatility benchmark indexes based on its innovative, proprietary CME Group Volatility Index (CVOL) methodology. Beginning with eight implied volatility indexes on its 10-Year Treasury Note futures and G5 FX currency pair futures, the CVOL family of indexes will be expanded to include benchmarks across all major asset classes in the first half of 2021.

Deutsche Börse acquires leading governance, ESG data and analytics provider ISS
Deutsche Börse
Deutsche Börse to acquire majority stake in Institutional Shareholder Services (ISS) in partnership with current management and Genstar Capital, based on an ISS valuation of USD 2,275 million (EUR 1,925 million) for 100%;Move positions Deutsche Börse as a leading global provider of ESG data and analytics;High complementarity of ISS’ data and research businesses with Deutsche Börse Group’s businesses along the entire value chain, creates additional growth opportunities on both sides
ISS remains autonomous within the Group to ensure independence of its data and research;Current CEO Gary Retelny continues to lead ISS
Deutsche Börse AG, Institutional Shareholder Services Inc. (ISS) and Genstar Capital LLC announced today that Deutsche Börse will acquire a majority share of approximately 80% in ISS, valuing ISS at USD 2,275 million (EUR 1,925 million) for 100% of the business (cash and debt free). Genstar Capital and current management will continue to hold a stake of approximately 20%. The transaction is expected to close in the first half of 2021 subject to customary closing conditions and regulatory approvals.

Deutsche Boerse to Buy 80% of Institutional Shareholder Services
Viren Vaghela – Bloomberg
Deutsche Boerse AG agreed to buy a majority stake in Institutional Shareholder Services Inc., a transaction that aims to seize on the growing appetite for sustainable investing.

Deutsche Börse targets ESG expansion with ISS acquisition; Institutional Shareholder Services (ISS) will be acquired by Deutsche Börse as the exchange operator looks to enhance its ESG data and analytics offering.  
Annabel Smith – The Trade
European exchange operator Deutsche Börse is set to expand its environmental, social, and corporate governance (ESG) data and analytics offering following a major deal with Institutional Shareholder Services (ISS).

Intercontinental Exchange Publishes 2020 Corporate Responsibility Report
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of mortgage technology, data and listings services, today released its fifth annual Corporate Responsibility Report.

ICE Benchmark Administration to Consult On Its Intention to Cease the Publication of GBP, EUR, CHF and JPY LIBOR
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of mortgage technology, data and listings services, announces that ICE Benchmark Administration Limited (IBA) will consult on its intention to cease the publication of all GBP, EUR, CHF and JPY LIBOR settings. Discussions involving IBA, the Financial Conduct Authority (FCA), other official sector bodies and the panel banks are continuing regarding the future of USD LIBOR.

DTCC Press Release
New survey of global broker-dealers analyzes costs across cash securities operations and finds opportunities for individual firm cost reductions of 20-25% across the post-trade lifecycle
New York/London/Hong Kong/Singapore/Sydney, November 18, 2020 – Certain post-trade processing costs for cash securities at large broker-dealer firms could be reduced by 20-25% through automation, according to a recent survey of nine of the world’s leading broker-dealer firms by The Depository Trust & Clearing Corporation (DTCC), the premier market infrastructure for the global financial services industry.

Xplora admitted to trading
The smartwatch company Xplora Technologies has today been admitted to trading on Merkur Market (ticker code: XPLRA-ME).

Driven by client demand – additional Eurex products to be extended into Asia Pacific time zones
On 7 December 2020, we will extend a further four products for the Asian Pacific time zones: the 10-year Euro-OAT, EURO STOXX Banks, STOXX Europe 600, and VSTOXX Futures, thus catering to the market demands for further trading and hedging opportunities.

New medium-term growth strategy Compass 2023: Deutsche Börse aims for further organic growth and a higher contribution through M&A; Net sales and profits are expected to increase by around 10% annually
Deutsche Börse AG
Deutsche Börse AG presented its new medium-term growth strategy Compass 2023 at its virtual investor day on November 18. The group underlined that after successfully implementing the last medium-term strategy Roadmap 2020, it continues to see a large number of growth opportunities in the coming years. The main growth drivers are trends in the capital market, which Deutsche Börse picks up on with its broad and diversified business model. In addition to the continued organic growth in net sales, Deutsche Börse plans to increase net sales growth through M&A.

TMX Group Names Cindy Bush Chief Human Resources Officer
TMX Group Limited, Canada’s premier exchange operator and leading global market solutions provider, has appointed Cindy Bush as Chief Human Resources Officer, effective December 7, 2020.

Performance Bond Requirements: Energy – Effective November 18, 2020
CME Group
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below.

REMINDER – Amendments to the Exercise Price Rule of the Options on Three-Month Eurodollar and Three-Month SOFR Futures Contracts – Addition of 6.25 Basis Point Strike Price Intervals
CME Group
Please be reminded that effective Sunday, November 22, 2020 for trade date Monday, November 23, 2020, Chicago Mercantile Exchange Inc. (“CME” or “Exchange”) will amend the Exercise Price rules of the Options on Three-Month Eurodollar Futures (Rulebook Chapter 452A) and Options on Three-Month SOFR Futures contracts (Rulebook Chapter 460A) (the “Contracts”) for trading on the CME trading floor, the CME
Globex trading platform (“CME Globex”) and for submission of clearing via CME ClearPort (collectively, the “Rule Amendments”).

Application for Copper Regularity
CME Group
Notice is hereby given that Stagecoach Cartage and Distribution, LLC has applied for regularity for copper deliverable against the COMEX Copper futures contract:

JPX/TSE’s “Practical Handbook for ESG Disclosure” receives UNCTAD award
In March 2020, Japan Exchange Group (JPX) and Tokyo Stock Exchange (TSE) released a “Practical Handbook for ESG Disclosure” to support listed companies’ voluntary disclosure of ESG-related information. This Handbook has now been announced as an honouree of the United Nations Conference on Trade and Development (UNCTAD) ISAR Honours.

Nodal And IncubEx Launch First-Ever Physically-Delivered RIN Futures And Options, Plus New Slate Of REC Contracts
Nodal Exchange and IncubEx today announced the successful launch of eight new Renewable Identification Number (RIN) futures and options contracts, plus seven new Renewable Energy Certificate (REC) contracts.

FIA October 2020 SEF Tracker
Trading volume on SEFs reached $581.5 billion in average notional value per day during October 2020. Trading was down in every category.


Telstra Launches the Telstra Octagon Platform to Speed up Trading Across Eight Global Exchanges; Telstra Octagon leverages the company’s low latency subsea network, direct exchange connections to support hyper-competitive global asset, currency, commodities and futures trading activities.
Telstra, a leading global telecommunications and technology company, has announced the launch of the Telstra Octagon, a global financial trading solution that provides organizations with low latency connectivity directly into eight of the world’s most valuable futures and commodities marketplaces.

Barchart and Agvance Enable Agribusinesses to Connect with their Growers
Barchart, a leading provider of commodity data and agribusiness solutions, and SSI, the trusted leader in ag retail software, together announce a collaboration that empowers agribusinesses to connect more effectively with their growers by making data like contracts and scale tickets from SSI’s Agvance software available within Barchart’s Marketplace apps.

Brazil launches ‘Pix’ instant payments system, Whatsapp to enter ‘soon’
Jamie McGeever, Marcela Ayres and Carolina Mandl – Reuters
Brazil’s central bank on Monday launched an instant payments platform that will speed up and simplify transactions, as well as foster financial sector competition and lure in new players such as big techs Facebook Inc and Google.

The Man at the Center of Wirecard’s Deal Machine; Henry O’Sullivan, an outside adviser, was paid on 10 Wirecard deals, some of which are the focus of investigators trying to unravel the company’s collapse
Paul J. Davies – WSJ
German prosecutors allege that Wirecard AG WDI -3.86% executives overpaid for a string of companies, causing massive losses to shareholders of the now disgraced financial-technology company.

Bank of America adopts FIX API for ICE ETF platform; The FIX API will provide Bank of America with an electronic workflow between its OMS and ETF issuers’ platforms via the ICE ETF Hub.
Annabel Smith – The Trade
Bank of America has become the first authorised participant to implement the new FIX API for the ETF ecosystem from US exchange group ICE.

Eris closes $2 million funding round after launch of SOFR swap futures at CME Group;
The investment round at Eris Innovations raised $2 million and followed the recent launch of Eris SOFR swap futures with CME Group.
Annabel Smith – The Trade
US-based derivatives specialist Eris Innovations has closed a $2 million investment round shortly after launching SOFR swap futures with exchange operator CME Group.

Robinhood Gearing Up for Potential IPO in Early 2021: Report
Danny Nelson – Coindesk
Trading platform Robinhood Markets has begin searching for bank partners to assist it in an initial public offering that could be held in early 2021, according to Bloomberg. Bloomberg’s sources indicated Robinhood has not yet committed to an IPO. It is, however, shopping for banks that could serve as advisers. An IPO would seek to capitalize on Robinhood’s lucrative audience of first-time investors who flock to the firm’s popular stock trading platform. At last check the firm had a valuation of $11.7 billion.


Bitcoin Goes Parabolic in Retracement of 2017 Record Highs
Vildana Hajric and Elena Popina – Bloomberg
Wider institutional acceptance catapults coin up 150% in 2020; Advocates now have their eyes on on all-time-high of $20,000
Bitcoin is quickly approaching the record highs that spurred a mania among investors almost three years ago that ended in a violent crash. The controversial digital asset, which was originally promoted as an alternative to national currencies such as the dollar, surged as much as $1,160, or 7% to $17,864 on Tuesday. It has more than doubled this year, spurring memories of the 1,375% rally in 2017 that preceded a 70% decline the following year. Even so, advocates and even skeptics are saying it may continue to push higher.

The Bitcoin Comeback: Is Crypto Finally Going Mainstream?
Edward Robinson – Bloomberg
What You Need To Know; Don’t look now, but Bitcoin is back.
After a couple of big crashes that destroyed billions in value, the digital currency has rebounded to its highest value since January 2018, crossing $18,000 this week. The cause: a flurry of developments that suggest Bitcoin has taken some big steps toward going mainstream. In October, global payments giant PayPal Holdings Inc. started permitting its customers to buy and sell Bitcoin and other cryptocurrencies from their accounts. A number of tech companies, including payments player Square Inc., have begun holding portions of their cash reserves in Bitcoin. And in August, Fidelity Investments, the asset management firm with $3.3 trillion in assets, announced the launch of its first Bitcoin mutual fund.

Rocketing Bitcoin Stakes Its Claim as Pandemic Refuge for Brave
Joanna Ossinger – Bloomberg
Jump versus gold spotlights case for Bitcoin as store of value; Coin’s volatility is top argument against ‘digital gold’ claim
Bitcoin is seizing the spotlight from gold as a hedge against risks such as further dollar weakness or a pick-up in inflation, after widening its performance lead over the yellow metal.

Ray Dalio Says He ‘Might Be Missing Something’ About Bitcoin
Nathan Crooks – Bloomberg
Ray Dalio said Tuesday that he might be missing something about Bitcoin as the cryptocurrency passed $17,000 for the first time in almost three years.
“It’s not very good as a store-hold of wealth because its volatility is great and has little correlation with the prices of what I need to buy,” the billionaire founder of Bridgewater Associates said in a series of posts on Twitter, adding that governments could eventually outlaw it if it started to compete with the currencies they control.

Zcash Undergoes First Halving as Major Upgrade Drops ‘Founders Fund’
Sebastian Sinclair – Coindesk
Four years after forking from Bitcoin, privacy-centric blockchain network Zcash has completed its first halving. At 12:37 UTC, Zcash passed block height 1,046,400 to trigger the event that cuts miners’ rewards from 6.25 ZEC to 3.125 ZEC. A miner reward reduction or “halving” event occurs when the block subsidy, generated from new coins mined, is divided by two. The coded-in event usually triggers every four years at particular block heights depending on the particular chain.

CME bitcoin futures cross $1 billion in open interest — a new all-time high
Yogita Khatri – The Block
CME Group’s cash-settled bitcoin futures have hit an all-time high open interest of $1 billion. The milestone comes as bitcoin price continues to surge at around $18,000 levels. The spike in the open interest, or the value of outstanding derivative contracts that are yet to be settled, suggests that more money is flowing in the market, and traders expect a near-term rise in bitcoin’s volatility.

Bitstamp seeks court approval to subpoena Citibank, Bank of America as part of a spat with former payment processor
Frank Chaparro – The Block
Crypto exchange Bitstamp has submitted documents in the U.S. District Court for the Southern District of New York in a bid to subpoena Wall Street behemoths Citibank and Bank of America as part of a discovery process in an ongoing dispute with a payments processor. The European crypto exchange claimed in the filing that Danish firm CNG Processing failed to meet the original terms of its business arrangement as a payments processor for the firm. Bitstamp hired CNG to facilitate domestic and international banking transfers on behalf of its clients.

Grayscale Holds $10.4 Billion of Bitcoin and Cryptocurrency
Shaurya Malwa – Decrypt
Crypto fund manager Grayscale now holds over $10 billion worth of Bitcoin and other cryptocurrencies on behalf of its clients, it said in a tweet yesterday. The firm was launched in 2013 and is one of the first players to offer crypto-focused services to institutional clients.

Vietnam’s Ministry of Education Adopts Blockchain Record-Keeping
Sandali Handagama – Coindesk
Vietnam’s Ministry of Education and Training (MOET) has entered into an exclusive agreement with Singapore-based smart contract platform TomoChain to archive student records on a blockchain, TomoChain announced Wednesday. According to the announcement, the National Qualifications Archive program will upload all certifications achieved by Vietnam’s high school and higher education students to the TomoChain public blockchain to create a transparent and immutable record. Qualifications are currently managed by educational and training institutions, resulting in delayed verification processes by recruitment agencies and human resources, the statement said.

Alleged Promoter of BitConnect Crypto Scam Charged in Australia
Daniel Palmer – Coindesk
A man alleged to have promoted the cryptocurrency fraud BitConnect faces a prison term in Australia. The Australian Securities & Investments Commission (ASIC) announced Tuesday that John Bigatton has been charged with operating an unregistered managed investment scheme, providing unlicensed financial services and making false or misleading statements affecting market participation. The charges (six in total) each bring possible maximum prison terms of two – 10 years, as well as possible monetary penalties totaling upwards of A$80,000 (US$58,500).

BitMEX and founders face yet another lawsuit alleging money laundering and market manipulation
by Yogita Khatri – The Block
Beleaguered crypto derivatives exchange BitMEX and its founders are facing yet another lawsuit that alleges racketeering, money laundering, and market manipulation.


Trump Fires Cyber Official Who Challenged Election Claims
Kartikay Mehrotra and Alyza Sebenius – Bloomberg
Krebs had started, and appeared on, ‘Rumor Control’ website; His agency declared 2020 the most secure American election
President Donald Trump on Tuesday announced he had fired a Department of Homeland Security official who has publicly contradicted the president’s unfounded claims about widespread election fraud. Christopher Krebs, a former Microsoft Corp. executive, was nominated by Trump to a top cybersecurity job in 2018 and became the first director of the Cybersecurity and Infrastructure Security Agency, known as CISA, later that year. His agency had declared the Nov. 3 election “the most secure in American history.”

Mink Scandal Costs Danish Minister His Job Amid Ongoing Probe
Morten Buttler – Bloomberg
Denmark’s response to a coronavirus mutation in its mink population has just cost a Cabinet minister his job. Mogens Jensen, the 57-year-old minister for food and veterinary affairs, is stepping down after losing parliament’s support, according to a statement issued by his office on Wednesday.

The End of Trump’s Reign of Tweet Terror Is Near; The president’s magic social media wand will soon be powerless.
Kara Swisher – NY Times
It’s going to disappear. One day, like a miracle, it will disappear. Not Covid-19, despite some promising news of late on vaccine development. I am talking about Donald Trump on Twitter.

Can Trump actually stage a coup and stay in office for a second term? The president refuses to acknowledge Biden’s win, but experts say there is no constitutional path forward for him to remain in the White House
Sam Levine – The Guardian
Joe Biden won the presidential election, a fact that Donald Trump and other Republicans refuse to acknowledge.

The madness of King Trump, America’s sulky George III sequel
Ian Martin – The Guardian
“He went mad and lost America”. A conventional summary of King George III, the tragic figure who took on the colonies, sending in his troops to “dominate” the streets and crush resistance. Alas, the war of independence didn’t end well, for George anyway. Defeated, bipolar, suffering frequent manic episodes, he retreated to Windsor Castle having nevertheless amassed an impressive library and a reputation for cultured intelligence.


DMA Enhances Compliance Control with SteelEye; Implementing SteelEye for MiFIR Reporting, Trade Surveillance and Best Execution
SteelEye, the compliance technology and data analytics firm, has been selected by authorised Financial Services Provider, SCM DMA (Pty) Ltd. Regulated by the Financial Sector Conduct Authority in South Africa, DMA provides multi-asset execution, prime brokerage, trading technology and portfolio management solutions to institutional clients and their end customers.

US regulators issue stern warning on volatility ETPs; SEC’s guidance follows sanction of five companies that have been ordered to repay $3m to investors
Emma Boyde – FT
US regulators have issued a stern warning to broker dealers and financial advisers to stop selling “unsuitable” volatility-linked exchange traded products to retail investors.

Andrew Bailey signals looser UK financial regulations in investment drive; BoE governor says more ‘productive investment’ required to recover quickly from crisis
Chris Giles and Josephine Cumbo – FT
The Bank of England governor signalled on Tuesday that he favours loosening financial regulations in an attempt to foster higher long-term “productive investment” as the UK recovers from the coronavirus crisis.

ESMA publishes first overview of the size and structure of EU securities markets
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today published its first statistical report on European Union (EU) securities markets. The Report uses new regulatory data sources to give, for the first time, a comprehensive overview of European equity and bond markets in 2019, including the number, characteristics, volumes traded and transparency data on the equity and bond instruments subject to MiFID II.

SEC Adopts Rules to Facilitate Electronic Submission of Documents to the Agency
The Securities and Exchange Commission today voted to adopt rules and rule amendments that will provide additional flexibility in connection with documents filed with the Commission by permitting the use of electronic signatures in authentication documents, and facilitate electronic service and filing in the Commission’s administrative proceedings. These new rules and amendments are part of a series of initiatives designed to modernize and strengthen the agency’s operations.

OECD Working Group on Bribery Issues Report Commending United States for Maintaining Leading Role in the Fight Against Transnational Corruption
The Working Group on Bribery of the Organisation for Economic Co-operation and Development (OECD Working Group) issued its Phase 4 Report of the United States today, announced the Securities and Exchange Commission and the U.S. Departments of Justice, Commerce, and State.

CFTC Selects Nakamoto Terminal as Winner of Agency’s First Science Prize Competition
Company Also Named CFTC’s Innovator of the Year for its Science Prize Competition Submission
The Commodity Futures Trading Commission today announced Nakamoto Terminal (NTerminal), a data platform developer based in Washington, D.C., as the winner of Project Streetlamp, the CFTC’s first competition under the Science Prize Competition Act of 2015. As part of the competition, NTerminal also received the CFTC’s first Innovator of the Year award in recognition of its successful submission. Both announcements were made during today’s Empower Innovation 2020 virtual session.

FCA warns firms to be responsible when handling client data
The current economic climate is changing the way many firms operate and may cause some to leave the market or merge with other firms. When this happens, firms must make sure they lawfully process and transfer client data.

FCA consults on new benchmarks powers
ICE Benchmark Administration (IBA), the FCA-regulated and authorised administrator of LIBOR, has today announced that it will consult on its intention that the euro, sterling, Swiss franc and yen LIBOR panels would, subject to confirmation following IBA’s consultation, cease at end-2021.

Ontario Securities Commission Awards Over Half A Million To Three Whistleblowers
The Ontario Securities Commission (OSC) has awarded a total of CAD $585,000 to three whistleblowers, each of whom provided timely, specific and credible information that helped advance enforcement action resulting in monetary payments to the OSC.

Investing and Trading

Aramco Can Do Whatever It Likes With Bond Money; Investors won’t mind if the oil giant uses bond funds to pay dividends. It’s one of the world’s biggest companies, and the yields are generous.
Marcus Ashworth – Bloomberg
Is it wise to lend money to a company that’s simply going to use it to pay its equity holders a fat dividend? If it’s one of the world’s largest and most profitable businesses, the answer is probably yes.

U.S. Farms May Face Profitability Squeeze Into 2021, Survey Says
Kim Chipman – Bloomberg Lenders say 51% of borrowers had profit in pandemic year; Farm bankruptcies are expected to rise next year amid strains
A shaken U.S. agriculture industry already “stressed” by a profitability squeeze in a pandemic year may see little relief in 2021, according to a survey of industry lenders.

Revenge of the Little Guy Spells Danger for FANGs; The last time smaller stocks reversed a period of underperformance was when the dotcom bubble burst.
John Authers – Bloomberg
Rotating to the Small Guys
The little guys are back. After another rather weird day of trading, even the outsize gain for Tesla Inc. that followed news of its accession to the S&P 500 couldn’t stop a down day for U.S. stocks. But beneath the surface, smaller companies are stirring.

A $20 Billion Corner of the Credit World Fights for Survival
Tasos Vossos – Bloomberg
Lyxor pulls the plug on floating-rate fund after assets plunge; Monetary easing and shrinking supply bedevil investing style
Endless monetary stimulus is creating an existential crisis for a defensive bond strategy on both sides of the Atlantic and threatening a multi-billion dollar wipeout in the world of exchange-traded funds. As the pandemic spurs deflationary pressure, demand for floating-rate notes that protect against interest-rate hikes has collapsed like never before.

Why inflation could be on the way back; The global economy may be shifting as it did four decades ago
Martin Wolf – FT
Are we about to move into a new era of unexpectedly high inflation, rather than the below-target inflation we are used to? Many dismiss this view. But the boy who cried wolf was right the last time. A book just out is crying wolf insistently. Notably, it states that, as a result of today’s fiscal and monetary largesse, “as in the aftermath of many wars, there will be a surge in inflation, quite likely more than 5 per cent, or even on the order of 10 per cent in 2021”. That would change everything.

Aramco Raises $8 Billion Bond to Fund Dividend Pledge; World’s largest oil producer contends with fall in crude prices caused by pandemic
Rory Jones in Dubai and Emese Bartha – FT
Saudi Aramco raised $8 billion from the sale of U.S. dollar-denominated bonds Tuesday as the cash-strapped oil giant seeks funds to meet a dividend pledge to shareholders.

Environmental, Social and Corporate Governance

Vanguard, Fidelity Investments Fall Short in ESG Fund Ratings
Lucca De Paoli – Bloomberg
Morningstar finds low ESG integration in quarter of 40 firms; Low scores given for small teams, lack of active engagement
Fund giants including Vanguard Group Inc. and Fidelity Investments Inc. have been given low ratings by research firm Morningstar Inc. in its first in-depth assessment on incorporating environmental, social and governance factors into investment decisions.

Goldman Picks Its Winners in the ESG Sweepstakes; Which S&P 500 companies will benefit the most from a growing emphasis on sustainable investing?
Tim Quinson – Bloomberg
Intel Corp., Walt Disney Co., General Mills Inc., American Express Co., Amgen Inc. Five big names from five very different industries—yet they all have one thing in common: They are among a group of companies Goldman Sachs expects to benefit from the growing popularity of ESG investing.

The U.S. Wants to Tame Climate Risk. Banks Are Ready to Push Back; The Biden administration will want to limit climate risk in the financial industry. They’re up against firms well-versed in lobbying for looser rules
Kate Mackenzie – Bloomberg
U.S. financial regulators are gearing up to tackle climate change under President-elect Joe Biden. The industry will be ready to make sure any new rules suit them.

ESG falls down the investment agenda; Survey shows big investors have demoted environmental, social and governance issues as pandemic bites
Kristen Talman – FT
Environmental, social and governance issues have fallen down the agenda of big investors this year as they grapple with the repercussion of the pandemic and subsequent economic downturn.


Goldman Plans New Round of Job Cuts as Pandemic Pause Ends
Sridhar Natarajan – Bloomberg
Goldman leaders speed ahead with cuts in quick succession; After pandemic moratorium, bank returns focus to cutting costs
Goldman Sachs Group Inc. is preparing to trim its workforce for the second time in just three months, as a moratorium on firings during the pandemic gives way to a push to improve efficiency. This round isn’t expected to exceed the roughly 400 positions the bank began eliminating in September, according to people with knowledge of the matter. But executives expect to go deeper in the coming year, in what could eventually amount to one of the most significant staff reductions at the bank as it looks to deliver on a promise to rein in costs.

Soros Regrets Early Investment in Peter Thiel’s Palantir
Devon Pendleton – Bloomberg
Soros Fund Management, which revealed that it owned 18.46 million shares of Palantir Technologies Inc., said it made the investment in the data-mining company in 2012 and wouldn’t do the same again today.

BlackRock-Backed Arrival in Talks to Go Public Via SPAC
Gillian Tan – Bloomberg
Arrival Ltd., a maker of electric vans and buses backed by investors including BlackRock Inc., is in talks to combine with CIIG Merger Corp., a blank-check firm, according to people with knowledge of the matter.

Roger Ferguson to step down after 12 years at helm of TIAA; Investment industry veteran has been tipped for US cabinet post under Joe Biden
Michael Mackenzie – FT
Roger Ferguson, one of the leading figures in the US investment industry, said he plans to step down as chief executive of TIAA after more than 12 years running the $1.2tn-in-assets financial services company.

The Big Interview: Nadine Chakar; Head of global markets at State Street, Nadine Chakar, speaks to Annabel Smith about the challenges posed by the COVID-19 pandemic, its impact on onboarding for Charles River and the rise of outsourced trading.
Annabel Smith – The Trade
What was the biggest challenge for State Street in shifting to remote working?


India’s Latest Bank Rescue Lays Out More Creditor-Friendly Path
Bijou George and Anurag Joshi – Bloomberg
Creditors of smaller Indian bank lenders may have reason to cheer the central bank’s approach to the rescue of Lakshmi Vilas Bank Ltd., which contrasts with the bailout of a larger local bank earlier this year.

This Time, India Is Getting a Bank Rescue Right; A Singapore institution’s takeover of a zombie lender sends a good signal to global rivals.
Andy Mukherjee – Bloomberg
Another Indian bank has failed, the third collapse of a major deposit-taking institution in 15 months and the first since the onset of the coronavirus pandemic. But instead of allowing a zombie lender to linger after a half-baked rescue, the central bank has wisely decided to put Lakshmi Vilas Bank Ltd. out of its misery. Better still, it’s called upon a foreign institution to take over the assets and liabilities. That should stoke interest of other global banks.

Venezuelan oil could become world’s biggest stranded asset, say experts; Climate change poses mortal threat to shattered country’s only economic lifeline
Michael Stott – FT
Once a wealthy oil exporter, Venezuela’s hopes of reviving its shattered economy are pinned on huge investment in extracting one of the world’s most carbon-heavy blends of crude.

Saudi Arabia Raises Minimum Wage for Citizens by 33%
Abeer Abu Omar and Vivian Nereim – Bloomberg
Saudi Arabia will raise its minimum wage for citizens by a third to 4,000 riyals ($1,066), according to a statement by the Ministry of Human Resources and Social Development.


Brexit: What’s happening and what comes next?
BBC News
It’s been a hectic year in news, with the coronavirus pandemic and the US presidential election dominating the headlines. Brexit deadlines have come and gone, but now it’s fair to say crunch time is fast approaching for the UK’s departure from the European Union. So, given everything that’s been going on, it feels like a good time to catch up on where we are.

Failure to seal post-Brexit deal would more than halve UK growth, says KPMG
Richard Partington – The Guardian
Failure to strike a post-Brexit trade deal would cut the UK’s economic growth rate by more than half next year, delaying a full recovery from the coronavirus pandemic, according to a report. The accountancy firm KPMG said the economy would suffer heavily should the UK fail to secure a trade deal with the EU before the end of the Brexit transition period at the end of December, just as the country attempts to escape the deepest recession since records began.

On the ground with UK efforts to train drivers for post-Brexit border
Peter Foster – FT
The frontline of the battle to get Britain ready for its post-Brexit borders runs through a 20ft portable cabin dropped in front of a café at the Ashford international truck stop in Kent. Emblazoned on the outside is the message: “UK’s New Start — Let’s Get Going”. Inside, two cubicles, each with a desk and computer set to the homescreen of the UK government’s transition website, are ready to train willing drivers. For 16 hours a day revolving pairs of agents working under contract for the UK government’s Department for Transport try to catch the attention of truckers as they wander past, eyes red-rimmed with fatigue, bath towel or box of takeaway food in hand.

EU trade negotiators to update member states on Brexit on Friday
EU negotiators are due to update envoys of the bloc’s 27 member states on the latest in trade talks with Britain at 0700 GMT on Friday, two diplomatic sources told Reuters on Wednesday. Brexit update has been added to the agenda of EU Brussels ambassadors meeting but the sources said the negotiating team of Michel Barnier could still cancel the closed-door briefing depending on how talks with the UK are going.

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First Read $51,906/$300,000 (17.3%) ++++ Hits & Takes John Lothian & JLN Staff The STA is holding the 88th Annual Market Structure Conference in person on October 6-8 at the JW Marriott in Washington, DC with the title "The Great Return." That is a very good...

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