ETrade’s Sale Is the Death Knell for Discount Brokerages; SEC Poised to Rule on Controversial ‘Speed Bump’ Proposal

Feb 21, 2020

First Read

USDA: Hemp Pilot a Success
Thom Thompson – John Lothian News

In a report published on Thursday, the USDA announced that the recent state-level industrial hemp pilot programs had helped restart hemp production in the United States after the crop had been outlawed nationally since 1970, when it was included in the Controlled Substances Act. Pilot programs under strict state oversight were authorized by the 2014 Farm Act.

Noting that industrial hemp production grew from zero acres in 2013 to more than 90,000 acres planted in 2018, the USDA warned that “supplies could grow more quickly than demand.” According to the report, some producers were hit with rapidly falling prices in 2019.

Industrial hemp includes those cannabis plants, fiber, and seeds that contain less than 0.3% THC, the psychotropic component of cannabis, and the products that are derived from them.

To read the rest of this story, go here.

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Hits & Takes
By JLN Staff

The ASX is launching the S&P/ASX All Technology Index. Here is what the head of ASX said about it:
“We’ve seen tremendous growth in the number of technology companies listing on ASX and the quality of their performance recently. Over the last three years, the annualised total return from the S&P/ASX 200 has been around 10 per cent, while the return from the new All Tech Index over the same period—if it had existed—would have been over 20 per cent,” ASX CEO and Managing Director Dominic Stevens said.~JJL

We have posted part two of our interview with Tom Zagara, a former CBOE trader, as part of our MarketsWiki Education Open Outcry Traders History Project. Zagara talks about getting hung on a trade, the drug problem on the floor, including the drug bust on CBOE trading floor. He talks about a trader who gave away millions to charity and he gives his take on rise and fall of Steve Fossett.~JJL

The Hollywood Reporter, a publication we read infrequently, has the news that Dev Patel will star in a movie called “Flash Crash,” a thriller that tells “the incredible true story” of Navinder Singh Sarao, based on the soon-to-be-published book, “Flash Crash: A Trading Savant, a Global Manhunt, and the Most Mysterious Market Crash in History” by Liam Vaughan. ~Thom Thompson

Eventus Systems, Inc. is not done with new hires. Eric Einfalt has joined the firm as chief strategy officer. Einfalt most recently was with XR Trading.~JJL

The CBOE has filed its annual report with the SEC.~JJL

We have a story from The Block in our “Cryptocurrency” section about “Decentraland,” a new video game built on the Ethereum blockchain in which players can use their Ethereum wallets to buy real estate in a virtual world. Video games like Second Life, The Sims, and Minecraft already let you do things like build a house that you can customize – the difference is they don’t charge you for real estate in the virtual world of the game. Of course, you do have to pay for the game to play it in the first place – perhaps Decentraland uses the microtransaction business model, where the game is free and purchases made in-game for items (like real estate) that you use in-game are its main source of profit. The Block’s story doesn’t give enough details to be able to tell. If that isn’t the case, and you have to pay for the game and then pay for stuff in the game in order to play it…I don’t know anyone who would want to play a game like that, especially when there are so many non-crypto alternatives out there already. It seems like something made by crypto enthusiasts, for crypto enthusiasts primarily.~MR

The Wall Street Journal has a story about what foods to eat to beat depression.~JJL

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Tom Zagara – Part 2 – Open Outcry Traders History Project
JohnLothianNews.com

Tom Zagara has lots of great stories to tell from his time as a trader at the Chicago Board Options Exchange. There were so many, we broke his interview into two parts. In Part 2 of his interview for the Open Outcry Traders History Project, Zagara tells the tale of the drug bust on the CBOE trading floor and how the runners and clerks on the floor dumped their drugs into the garbage cans and then dove in to retrieve them when the FBI had left. He talks about how he and other traders would protect brokers and eat bad trades when necessary to be on the brokers’ good side when orders came to the trading pit. Zagara almost went bankrupt twice, but learned his lesson. Sometimes he learned it the hard way. This is part two of a two part interview Tom did with John Lothian News for the Open Outcry Traders History Project.

Watch the video »

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Bond Markets Climb Onto 21st Century Cloud
JohnLothianNews.com

Tech firms find their niche as fixed-income trading finally embraces electronic platforms. Do you remember blue lists? Bonds have come a long way since those days, says 280 CapMarket’s David Rudd.

“The cloud allows the (bond trading) platform to be much more dynamic,” David Rudd says. “It allows you to see more and run more analytics in real time.”

Suzanne Cosgrove of John Lothian News interviews David Rudd, the co-founder of 280 CapMarkets, for this JLN Interview Podcast.

Listen to the podcast HERE

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Virus Epidemic Enters New Phase as Cases Outside China Multiply
Jeff Sutherland – Bloomberg
Renewed concern as cases grow in South Korea and Japan; Attention shifting as China infection growth slows down
South Korea’s cases have soared past 200. Those for Singapore and Japan have topped 85. And then there are the 600-plus from a quarantined cruise ship in Japan.
/bloom.bg/2PegFQW

*****It will be important to watch the numbers from outside China to gauge if the numbers from China are accurate. Here is a perfect example of why Freedom of the Press is imperative.~JJL

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The Airlines Halting China Flights as Virus Outbreak Spreads
Demetrios Pogkas, Cedric Sam and Chloe Whiteaker – Bloomberg
The coronavirus outbreak has disrupted flights to and from China, one of the world’s busiest travel markets, as airlines around the globe halt service.
Commercial flights to and from Wuhan, where the virus is centered, have mostly stopped. Cancellations have spread to major hubs in Beijing and Shanghai. Carriers from British Airways to Singapore Airlines to United Airlines have suspended flights to China’s biggest cities.
/bloom.bg/39VuAmD

*****Demand should drop.~JJL

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It’s the Warmest Winter Ever and It’s the North Pole’s Fault; Climate change and odd Arctic weather patterns combined to keep the cold from moving south.
Brian K Sullivan – Bloomberg
With just weeks left to go, the world is heading toward the warmest winter ever recorded as a strange brew of weather patterns at the top of the world combines with the mercury-boosting influence of climate change.
/bloom.bg/3a41l1p

***** Despite the risk of climate change, I have appreciated the lack of a minus 30 degree spree of winter weather this year.~JJL

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Thursday’s Top Three
Our most read story Thursday was The Financial Times’ JPMorgan and Goldman throw weight behind exchange start-up, about Members Exchange, the new stock market aiming to challenge the established U.S. equity exchanges. Next up was the latest big acquisition, Morgan Stanley Is Buying E*Trade, Betting on Smaller Customers, from the Wall Street Journal. Third was Sen. Kelly Loeffler Appears In ‘Hunting’ Video But Doesn’t Actually Have A Hunting License, from the Huffington Post, about the former Bakkt CEO, who is campaigning to hang on to her Senate seat.

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CryptoMarketsWiki Coin of the Week: Tether (USDT)
Tether burned 300 million USDT tokens this week, knocking its total worldwide circulating supply down to 4.62 billion USDT. This hit the TRON network especially hard – Tether is a common source of liquidity in the fiat-to-crypto markets, and TRON had been growing at an apparently unrestricted rate due to the presence of large amounts of USDT in its network.
bit.ly/2Ac0RqE

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MarketsWiki Stats
172,779,392 pages viewed; 24,058 pages; 223,368 edits
MarketsWiki Statistics

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CryptoMarketsWiki Website»
CryptoMarketsWiki, our archive of the cryptocurrency and blockchain world, is going strong and keeping pace as this area of finance grows and evolves.Recently Updated Pages

Recently updated pages include
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Lead Stories

ETrade’s Sale Is the Death Knell for Discount Brokerages; In an age of zero commissions, trading is just a way to draw in customers for other products.
Annie Massa – Bloomberg
Throw dirt on it. The era of independent online brokers is over. It was Charles Schwab Corp. that plunged the knife in, but the sale of ETrade Financial Corp. was the last gasp. Schwab’s purchase of TD Ameritrade Holding Corp. to create a $5 trillion monster serving customers who trade stocks in their pajamas for free made it impossible for ETrade to continue as it was. Morgan Stanley swooped in, and for $13 billion in stock it gets to clothe itself in ETrade’s digital street cred, attracting younger, tech-savvier clients to a bank whose reputation is staid even by Wall Street standards.
/bloom.bg/2wvZ7sU

SEC Poised to Rule on Controversial ‘Speed Bump’ Proposal; Regulator is due to approve or reject a plan from Cboe to introduce trading delays to one of its exchanges
Alexander Osipovich – WSJ
The Securities and Exchange Commission is set to decide on a hotly disputed proposal that could lead to the further proliferation of “speed bumps,” or split-second trading delays, in the U.S. stock market.
/on.wsj.com/3bUe34l

Wall Street Has a $1 Trillion Climate Risk
Alastair Marsh – Bloomberg
Lenders face risk of polluting firms defaulting, report says; Banks also stand to gain from demand for sustainable finance
Global efforts to slow climate change could cost the financial industry $1 trillion. That’s how much the consultancy Oliver Wyman estimates banks, insurers and asset managers stand to lose in the event of more aggressive policies, such as a carbon tax. Drastic changes could prompt a wave of defaults among polluting companies, which firms are not fully considering as they decide where to invest and lend, the consultancy said.
/bloom.bg/39QUyYt

Biggest swaps trades poised for reporting delay in win for banks
Ben Bain and Silla Brush – Bloomberg
A push to delay reporting of transactions in the $640 trillion global swaps market is gaining steam in Washington, signaling a possible win for Wall Street banks as regulators move to overhaul how they keep tabs on trading.
/bloom.bg/32h3fZS

E*Trade Deal Highlights Tech-Driven Change Felt in Many Markets
Matthew Leising – Bloomberg
Fixed income also reshaped by technology demand, report finds; ‘New and better digital products’ are driving competition
Morgan Stanley’s $13 billion deal to acquire E*Trade Financial Corp. is driven in part by the bank’s need to meet equity investors’ demands for the latest technology and digital trading tools — and the same forces are reshaping the fixed-income market.
/bloom.bg/37OHzVO

Blockchain System Cracks U.S. Equities Market for Certain Trades
Bloomberg
Credit Suisse, Instinet are using new service from Paxos; Around $1 million in trades a day as Paxos looks for growth
A select group of U.S. equity trades is being settled using a private blockchain as Paxos Trust Co. pushes for approval to offer its service to more dealers. Broker-dealers Credit Suisse Group AG and Nomura Holdings Inc.’s Instinet are swapping cash for stocks using the Paxos Settlement System, the first operational use of a private blockchain in U.S. equity markets, Paxos co-founder and Chief Executive Officer Charles Cascarilla said in an interview. He expects Societe Generale SA to join soon.
bit.ly/32jCR1d

Banks risk being caught off-guard by climate change; Report finds institutions are not doing enough to make their balance sheets more green
Billy Nauman and Patrick Temple-West – FT
Climate change is creating substantial, unrecognised risk in the financial system as banks are failing to prepare for green regulation and carbon taxes that will have an impact on the companies they lend to.
/on.ft.com/3bY9LZV

China reopens bond futures market to big local banks; Pilot to include country’s five largest state-owned lenders and qualifying insurers
Don Weinland – FT
Chinese banks have been given the green light to trade in domestic bond futures, a landmark in the reopening of a market that was shut in the 1990s after a panicked sell-off that saw the collapse of the country’s largest brokerage.
/on.ft.com/2V7oU53

Will Morgan Stanley’s ETrade deal herald more banking takeovers? The fight for middle America’s wallets is fuelling talk of further consolidation
Laura Noonan – FT
Morgan Stanley has given a boost to those who have long argued that a wave of banking takeovers is on its way after striking the biggest deal by a “global systemically important bank” since the label was created during the financial crisis.
/on.ft.com/2v2I01q

Morgan Stanley Ignites Banking Takeover Buzz With Gorman’s Deal
Jennifer Surane, Lananh Nguyen, and Nabila Ahmed – Bloomberg
After surprise deal, he predicts rivals to do more ‘bolt-ons’; Banks need scale, which means acquisitions, consultant says
It was hard for James Gorman to contain his exuberance. The chief executive officer of Morgan Stanley had just ended a decade-long drought of major takeovers by top U.S. banks with his surprise deal to buy E*Trade Financial Corp. for $13 billion. Across the industry, where it’s long been taboo to get “too big,” speculation was erupting that conditions had finally lined up for a wave of similarly hefty acquisitions.
/bloom.bg/3a43avh

Free Stock Trades Are Stirring an Epic Mom-and-Pop Buying Frenzy
Lu Wang and Vildana Hajric – Bloomberg
Ameritrade’s million-trade days in quarter exceeds all of 2019; Brokerage volume explodes as hot stocks like Tesla lure money
Small investors are back. In a big way. Their fingerprints are visible on Apple Inc.’s staggering rally. They piled into Tesla Inc. as it tripled, and turned speculative fliers like Virgin Galactic Holdings Inc. into some of the most heavily traded shares in the country. Why the enthusiasm? Some see a link to decisions by brokerages to cut commissions on trades to nothing.
/bloom.bg/39MFv22

Australia Banks to Face Climate Stress Tests, Regulator Says
Emily Cadman – Bloomberg
Follows the U.K. and Singapore in ramping up surveillance; Devastating bushfires add urgency to issue in Australia
Get serious on climate change risks. That’s the message from Australia’s prudential regulator as it joined counterparts in the U.K., the Netherlands and Singapore in ramping up its surveillance of how ready financial institutions are to deal with climate change.
/bloom.bg/2v7TAsj

Financial industry will need to find $100bn of unrecognised assets to meet collateral requirements; A new study found the two-way initial margin rules for non-cleared derivatives will also result in a collateral shortfall of $60 billion alone.
Joe Parsons – The Trade
Banks, custodians and buy-side firms will have to find almost $100 billion of unrecognised assets to support a more demanding and complex collateral management ecosystem, according to a new study.
bit.ly/32csQTF

Exchanges, OTC and Clearing

New Study Finds Index Strategies Using Cboe Russell 2000 Options Offer Income Generation and Downside Protection; Index strategies using Cboe Russell 2000 Options have exhibited less severe maximum drawdowns, lower standard deviations relative to underlying equity index since 2001; Inclusion of Cboe PUTR Index in a traditional stock/bond portfolio also enhanced risk-adjusted returns
Cboe Global Markets, Inc.
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world’s largest exchange holding companies, and Wilshire Analytics, the investment technology group of Wilshire Associates Incorporated (Wilshire®), a leading global financial services firm, today released new research designed for financial professionals examining the effectiveness of options-selling index strategies. Options-selling index strategies are designed to provide investors with income from premiums and a potential downside cushion in the event of a market turn.
/prn.to/2HF9tcj

Nasdaq promotes FICC European head to president of Stockholm exchange; Ekström will take on responsibility of Nasdaq’s Stockholm stock exchange from 1 April
Kiays Khalil – The Trade
Nasdaq has promoted its head of European fixed income, commodities and currencies (FICC), Fredrik Ekström, to lead its Stockholm-based stock exchange. He replaces Lauri Roshendahl, Nasdaq’s current president of the exchange and head of European equities and post-trade, who plans to retire at the end of the first quarter.
bit.ly/32pHG9z

Miami International Holdings Executive Thomas P. Gallagher Elected Chairman of Bermuda Stock Exchange
PR Newswire
Miami International Holdings, Inc. (MIH), the parent holding company of the MIAX Exchange Group™ and majority stock owner of the Bermuda Stock Exchange (BSX), today announced that its Chairman and CEO Thomas P. Gallagher has been elected Chairman of the Council (Board of Directors) of the BSX. Outgoing Chairman David A. Brown will remain on the Council as Deputy Chairman, replacing Jeff Conyers.
bit.ly/2HLdmMN

CCPs clash over Brexit impact on euro clearing activity; Representatives from LCH and EuroCCP highlight contradicting trends they are seeing in clearing activity throughout Europe following Brexit.
Jon Watkins – The Trade
Central counterparty (CCP) LCH has defended itself against claims that euro-denominated clearing activity has moved to continental Europe following Brexit. The London Stock Exchange Group-owned clearing house dominates the clearing of euro-denominated instruments, despite years of debate over what would happen to activity following the UK’s withdrawal from the European Union.
bit.ly/2ui7esm

Equity index derivatives: Introduction of Related Security Spread (“RSS”) Futures
Eurex
The Management Board of Eurex Deutschland took the following decisions with effect from 30 March 2020:
bit.ly/37SIx3G

HKEX Welcomes Government Appointments to its Board
HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) today (Friday) welcomed the Government’s appointment of Susan Chow and the reappointment of Laura M Cha and Benjamin Hung to its Board of Directors.
bit.ly/32djwPg

Launch of the S&P/ASX All Technology Index
ASX
ASX, in partnership with S&P Dow Jones Indices (S&PDJI), today launched the S&P/ASX All Technology Index (All Tech Index), ahead of its go-live on Monday, 24 February. The new index captures ASX-listed companies in the fast-growing technology sector. ASX CEO and Managing Director, Dominic Stevens, said that the All Tech Index will enhance the profile and understanding of listed technology companies in Australia, and increase opportunities for investors.
bit.ly/38NDdQf

TSX Venture Exchange Announces the 2020 Venture 50; TSXV’s top performing companies to celebrate with market open and closing ceremonies on Friday, February 21
TMX
TSX Venture Exchange (TSXV) is pleased to announce the 2020 Venture 50, the exchange’s flagship annual program showcasing the top performing listed companies from five industry sectors: Clean Technology and Life Sciences, Diversified Industries, Energy, Mining, and Technology.
bit.ly/32gnR4i

Appointment of Representative Executive Officers and Candidates for Directors and Executive Officers, etc.
JPX
We hereby announce that Japan Exchange Group, Inc. (JPX) decided on appointments of Representative Executive Officers at the Board of Directors meeting held on February 21, 2020. In addition, JPX decided on candidates for Directors and Executive Officers etc. effective from April 1, 2020. Details are as follows:
bit.ly/37K4sKg

Publication of “Overview of Market Structure Review and Outline of the New Market Segments”
JPX
Today, TSE published the “Overview of Market Structure Review and Outline of the New Market Segments” regarding the Cash Equity Market Structure Review. Upon publication of final report from “Expert Study Group on Capital Markets in Japan of the Financial System Council” at the end of last year, TSE has been drafting a concrete and detailed design of the new market, which is summarized in the document published today.
bit.ly/32gXyuY

Fintech

BidFX unveils upgraded mobile trading app for institutional clients; Latest version of the trading app from BidFX will give the buy-side 24/7 access to trade forex markets.
Kiays Khalil – The Trade
FX electronic trading specialist BidFX has completed an upgrade to its mobile trading app for institutional clients, following increased demand for more features among hedge funds and asset managers.
bit.ly/32d8iu0

Silicon Valley Is Quietly Building Its Own Wall Street
Can a new stock exchange backed by the Bay Area’s most powerful players take on the NYSE and Nasdaq?
Adam Bluestein – Marker.Medium.com
On a drizzly San Francisco day in December, Eric Ries is stationed inside the Succession-worthy offices of Orrick, Herrington & Sutcliffe. Here, at the billion-dollar law firm — whose clients include Oracle, Microsoft, Intel, Cisco, Pinterest, and Stripe — guys dressed VC chic in V-neck cashmere sweaters and soft loafers shush across carpeted floors. It’s a frictionless world, all potential irritants engineered away. If you want to be where it happens in Bay Area tech, this is a good place to start.
/bit.ly/2v6Ttgt

Cryptocurrencies

Virtual-Reality World Turns Digital Currency Into Cold Cash
Olga Kharif – Bloomberg
Decentraland token Mana has surged in value this year; Seeing if gamers value ownership enough to join the community
One of the more unusual projects funded during the height of the cryptocurrency boom is making its debut as an unlikely financial success for many of its participants.
/bloom.bg/2Vh71kt

Binance is ‘not authorised’ to operate in Malta, says the country’s financial regulator
Yogita Khatri – The Block
Binance is “not authorised” to operate in Malta, the country’s financial watchdog has said. Announcing the news on Friday, the Malta Financial Services Authority (MFSA) said Binance is not subject to its regulatory oversight. “The Authority is however assessing if Binance has any activities in Malta which may not fall within the realm of regulatory oversight,” it said, adding: “Admission of virtual financial assets to trading and/or for offering virtual financial assets to the public in and from Malta requires an MFSA licence in terms of the Virtual Financial Assets Act (CAP 590) of 2018.”
bit.ly/39L2pqG

Coronavirus outbreak could accelerate China’s digital currency issuance, says former central bank president
Celia Wan – The Block
Efforts to combat the coronavirus could accelerate the Chinese central bank’s plans to issue a digital currency, according to a former president of the People’s Bank of China. In a February 16 interview with China Daily, Lihui Li argued that a digital currency’s efficiency, cost-effectiveness, and convenience make it especially desirable during an epidemic. Li previously helmed the People’s Bank of China and now serves as the blockchain lead for the state-run National Internet Finance Association.
bit.ly/37M30qz

Sweden’s central bank starts testing its digital currency e-krona
Yogita Khatri – The Block
Sveriges Riksbank, the central bank of Sweden, has begun testing its digital currency e-krona — a move that takes the country a step closer to issue the world’s first central bank digital currency (CBDC). E-krona would be an alternative to cash and is aimed at making payments, deposits and withdrawals simpler via a mobile app, the central bank said in a statement on Thursday.
bit.ly/2V8zxEy

CoinField Taps Chainalysis’ KYT for Real-Time Crypto Monitoring
Arnab Shome – Finance Magnates
Crypto exchange CoinField announced on Thursday its partnership with Chainalysis for the utilization of its anti-money laundering (AML) compliance solution. The exchange will integrate the blockchain analyzer’s know-your-transaction (KYT) solution to prevent money laundering and other illicit activities with digital currencies on its platform.
bit.ly/39RZKLN

Europe’s New AML Directive Means Banks Can No Longer Shut Crypto Out
Pawel Kuskowski – Forbes
Anyone doing business in the crypto space knows it’s not regulations that are the biggest obstacle to getting off the ground. Rather, it’s the widespread lack of access to basic financial necessities — like a bank account. This is killing crypto businesses by shutting them out of the mainstream economy.
bit.ly/2HMTqJm

Fidelity Acquires Stake in Hong Kong Crypto Firm BC Group
Eric Lam – Bloomberg
Fidelity International has acquired a HK$110.5 million ($14.2 million) stake in the operator of OSL, one of Asia’s biggest digital-asset platforms for professional investors.
/bloom.bg/2Vctv6a

The Surprising Way Millions Are Being Introduced To Bitcoin
Billy Bambrough – Forbes
Young people are far more interested in bitcoin and cryptocurrencies than anyone else—and where are the young people today? On short-form video-sharing app TikTok, where Square’s Cash App, which made around $150 million in bitcoin revenue in its last quarter, is going viral—and introducing millions to bitcoin and crypto.
bit.ly/2Pf3Y8i

Riot Blockchain Plans Sale of Crypto Exchange as It Invests More Millions in Bitcoin Mining
David Pan – Coindesk
Nasdaq-listed Riot Blockchain plans to sell its cryptocurrency exchange RiotX while doubling down on its bitcoin mining businesses. In an announcement on Thursday, the company said it is considering opportunities to divest itself of the limited assets associated with the exchange, launched in early 2018, due to the regulatory environment, security risks and competition from peers. “In order to concentrate its focus on cryptocurrency mining, Riot has opted to sunset further development of Riot’s U.S.-based digital currency exchange,” the company said in a statement.
bit.ly/2T4GpjD

Ethereum-based virtual game world Decentraland has launched
Yilun Cheng – The Block
Decentraland, a virtual reality game built on the Ethereum blockchain, is now open to the public. The game lets users connect to their Ethereum wallets and purchase virtual real estate in the form of a non-fungible token (NFT) called LAND. Contrary to games like Second Life or World of Warcraft – where games creators ultimately hold ownership of all game items – transactions on Decentraland are recorded on the Ethereum blockchain and token holders have full control over the virtual property that they possess.
bit.ly/2PcWJ0B

New Settlement Layer to Offer Asian Crypto Institutions Local Alternative to Silvergate Bank
Paddy Baker – Coindesk
Legacy Trust’s digital asset division has plans to create the first settlement layer in Asia for institutional investors trading both fiat and cryptocurrencies. First Digital Trust (FDT) announced Friday that its new rapid settlement and clearing network (RSCN) will provide custodian clients, including some of Asia’s most prominent over-the-counter desks and financial institutions, with the means to transfer digital assets seamlessly across the region.
bit.ly/32mnmG0

Paxos’ equity settlement business goes live with Credit Suisse and Nomura’s Instinet as first clients
Yogita Khatri – The Block
Stablecoin issuer Paxos has officially ventured into the business of blockchain-based equity settlement. Announcing the news on Thursday, Paxos said Credit Suisse and Nomura’s Instinet are the first two firms to use its settlement service, which helps settle select U.S. listed equity trades. The service operates on a private and permissioned network. “It’s the first time that blockchain is being used in a live environment, the first time that U.S. equities are settling outside the DTC/NSCC [Depository Trust Company/ National Securities Clearing Corporation system],” a Paxos spokesperson told The Block.
bit.ly/2wDZZvT

Politics

How Bloomberg Outspent His Rivals, and Sanders Outraised Them All
Sarah Almukhtar, Thomas Kaplan, K.K. Rebecca Lai and Rachel Shorey – NY Times
the end of January, Michael R. Bloomberg had spent $409 million on his presidential campaign, more than what four other leading candidates — Bernie Sanders, Joseph R. Biden Jr., Elizabeth Warren and Pete Buttigieg — had spent combined since they started running.
/nyti.ms/2P9vvIk

Trump Berated Intelligence Chief Over Report Russia Wants Him Re-Elected; President chastised official after staffer informed bipartisan House panel that Moscow might again seek to boost his campaign
Dustin Volz – WSJ
President Trump lashed out at his acting director of national intelligence, Joseph Maguire, earlier this month after learning that one of his subordinates had briefed the House Intelligence Committee about Russia’s apparent preference for Mr. Trump in the 2020 presidential contest, people familiar with the matter said.
/on.wsj.com/3bW2zx8

Bloomberg faces tough questions after Democratic debate debut; Concerns raised about billionaire’s ability to be president after widely panned performance
Lauren Fedor – FT
Michael Bloomberg’s campaign tried on Thursday to put a positive spin on his widely panned debut presidential debate performance, even as his top adviser conceded he had gotten off to a shaky start and Democrats raised concerns about the viability of his candidacy.
/on.ft.com/2v3Esft

Lloyd Blankfein: ‘I might find it harder to vote for Bernie than for Trump’; The former Goldman chief executive on the crash, the criticism — and sparring with Bernie Sanders
Edward Luce – FT
Lloyd Blankfein has not had far to travel. As we take our table, Goldman Sachs’ former chief executive points to his apartment block across Columbus Circle, the Upper West Side vantage point overlooking Central Park. “Not a long commute,” he says.
/on.ft.com/2SWwsok

Trump’s Choice for Spy Chief Collins Says He’s Out of Running
Justin Sink and Billy House – Bloomberg
Doug Collins has challenged Kelly Loeffler in GOP Senate race; Republicans fear that a party battle could cost them the seat
President Donald Trump’s potential nominee for director of national intelligence, Representative Doug Collins, said he would turn down the position to focus on the Georgia senate race.
/bloom.bg/2v3BDep

Trump Ads Will Take Over YouTube’s Homepage on Election Day; The campaign has secured one of the most high-profile spots on the internet.
Mark Bergen and Joshua Brustein – Bloomberg
In the immediate run up to the U.S. presidential election and on Election Day, the homepage of YouTube is set to advertise just one candidate: Donald Trump. The president’s re-election campaign purchased the coveted advertising space atop the country’s most-visited video website for early November, said two people with knowledge of the transaction. The deal ensures Trump will be featured prominently in the key days when voters across the country prepare to head to the polls Nov. 3.
/bloom.bg/39U7Jbq

Michael Milken, junk bond king wins pardon at last; Decades of philanthropy pay off for one of Wall Street’s most complicated figures
Gary Silverman – FT
Michael Milken cried in court when he pleaded guilty in 1990 to violating US security laws. After his pardon this week by Donald Trump, Wall Street’s one-time junk bond king was more measured. He issued a statement mentioning his wife of 51 years, thanking the US president and expressing his commitment to philanthropy.
/on.ft.com/2vSy2Qm

Lawmakers Are Warned That Russia Is Meddling to Re-elect Trump; A classified briefing to House members is said to have angered the president, who complained that Democrats would “weaponize” the disclosure.
Adam Goldman, Julian E. Barnes, Maggie Haberman and Nicholas Fandos – NY Times
Intelligence officials warned House lawmakers last week that Russia was interfering in the 2020 campaign to try to get President Trump re-elected, five people familiar with the matter said, a disclosure to Congress that angered Mr. Trump, who complained that Democrats would use it against him.
/nyti.ms/38QiJ9E

Regulation

Targeted Examination Letter on Zero Commissions
FINRA
Trading & Financial Compliance Examinations (“TFCE”) of the Market Regulation Department (“Market Regulation”) at the Financial Industry Regulatory Authority, Inc. (“FINRA”) is conducting a review of [FIRM] concerning the Firm’s decision not to charge commissions for customer transactions, the impact that not charging commissions has or will have on the Firm’s order routing practices and decisions, and other aspects of the Firm’s business.
bit.ly/32jzl71

CFTC Unanimously Approves Proposed Rules to Improve Data Quality, Streamline Regulations at February 20 Open Meeting
CFTC
The Commodity Futures Trading Commission at its open meeting today unanimously approved two proposed rules to revise CFTC regulations for swap data reporting, dissemination, and public reporting requirements for market participants. The Commission also unanimously approved reopening the comment period of a proposed rule to amend certain agency regulations related to swap data repositories. All three measures are intended to improve data quality and streamline CFTC regulations.
bit.ly/2vOlDgk

Statement of Chairman Heath P. Tarbert in Support of Proposed Rules on Swap Data Reporting
CFTC
Data is the lifeblood of our markets. Yet for too long, market participants have been burdened with confusing and costly swap data reporting rules that do little to advance the Commission’s regulatory functions. In the decade-long effort to refine our swap data rules, we have at times lost sight of Sir Isaac Newton’s wisdom: “Truth is ever to be found in simplicity, and not in the multiplicity and confusion of things.”
bit.ly/2vW2Qj3

Statement of Commissioner Brian D. Quintenz before the Open Commission Meeting on February 20, 2020
CFTC
Open Meeting on Proposed Rule: Amendments to the Real-Time Public Reporting Requirements (Part 43); Proposed Rule: Amendments to the Swap Data Recordkeeping and Reporting Requirements (Part 45); and Reopening of Comment Period: Certain Swap Data Repository and Data Reporting Requirements (Part 49 Verification)
bit.ly/38OWbWv

Statements of Concurrence by Commissioner Rostin Behnam Regarding Proposed Rules on Real-Time Public Reporting and Swap Data Recordkeeping
CFTC
Real-Time Public Reporting Requirements (Part 43)
I respectfully concur in the Commission’s proposal to amend certain real-time public reporting requirements. I support the Commission’s ongoing review of its swap reporting rules; however, I think it is very important that we not lose sight of why we have these rules in the first place. Prior to the 2008 financial crisis, swaps were largely exempt from regulation and traded exclusively over-the-counter.[1]
bit.ly/2SM1aSf

Statement of Commissioner Dawn D. Stump Regarding Proposed Rules: Swap Data Reporting
CFTC
I am very pleased to be here today addressing updates to the Commission’s swap data reporting rules (which I will refer to collectively as the “proposal”). I would like to thank the staff of the Division of Market Oversight (DMO) for their efforts over the past several years to advance what I consider foundational to effectuating reforms in the over-the-counter (OTC) swaps market. I applaud their commitment to adapting these rules, and I am grateful for their attention to incorporating suggestions from my Office. I also would like to thank the Office of the Chief Economist and the Office of General Counsel for their many contributions to ready this rule for consideration today.
bit.ly/2SKFpCy

SET Will Not Post SP Sign On Coronavirus-Affected Listed Securities Allowed By The SEC For Late Submission Of Financial Statements
MondoVisione
In compliance with the Securities and Exchange Commission (SEC)’s announcement to allow extended deadline on financial statement submission for the novel coronavirus outbreak (COVID-2019)-affected listed companies, and in line with the indication that financial statements given a disclaimer of opinion by auditor that the coronavirus outbreak has limited audit scope of subsidiaries and affiliates’ financial statements are in compliance with the rules as specified in Section 56 of the Securities and Exchange Act.
bit.ly/2SM43CD

CFTC’s General Counsel voices stance in action against Telegram; The CFTC’s Office of General Counsel says digital currencies are commodities, adding that many securities are commodities.
Maria Nikolova – Finance Feeds
In line with a request by the New York Southern District Court, the Commodity Futures Trading Commission has filed a Letter with the Court, outlining its views on certain matters in the action targeting Telegram Group and TON Issuer.
bit.ly/2Pdw6Zs

SEC files emergency action against Winston Reed Investments;The company and its principal allegedly raised money from dozens of investors based on promises of exorbitant returns and then misappropriated investor funds.
Maria Nikolova – Finance Feeds
The United States Securities and Exchange Commission (SEC) today announces that it has filed an emergency action and obtained a temporary restraining order and asset freeze against a purported investment firm and its principal who allegedly raised money from dozens of investors based on false promises of high returns and then misappropriated over $150,000 of investor funds.
bit.ly/2vWncZu

US Govt needs additional time to determine restitution in ICO fraud case against Zaslavskiy; The government has been working with the victims and Maksim Zaslavskiy to reach an agreement on the proper restitution amount.
Maria Nikolova – Finance Feeds
More than three months after Maksim Zaslavskiy got a prison sentence over initial coin offering (ICO) fraud, the questions regarding the proper restitution amount in the criminal case against him remain open.
bit.ly/2PcOYIe

Italian regulator orders blocking of more unauthorized investment websites; The number of websites blocked under the so-called “Growth Decree” has surpassed 150.
Maria Nikolova – Finance Feeds
Less than a week after Italy’s Companies and Exchange Commission (CONSOB) ordered the blocking of eight unauthorized investment websites, the regulator has announced action against more websites of entities that target Italian investors without having the necessary permission to do so.
bit.ly/2v2aKYf

Global Brokerage produces nearly 8,000 documents in “mega lawsuit” brought by investors; No depositions have taken place in the lawsuit targeting Global Brokerage, formerly known as FXCM Inc, and a number of its directors.
Maria Nikolova – Finance Feeds
The parties in the “mega lawsuit” targeting Global Brokerage, Inc. formerly known as FXCM Inc. (“FXCM”), Dror Niv, and William Ahdout, have filed a Letter with the New York Southern District Court updating the Court on the progress of discovery to date.
bit.ly/3bWAA0w

Investing and Trading

Traders Flock to Tech Options as Stocks Soar; The biggest tech companies have powered 45% of the S&P 500’s total return this year
Gunjan Banerji – WSJ
A surge in technology shares has propelled U.S. stocks to new heights this year. Options traders are betting that the record run in tech will continue. Traders have turned to derivatives to bet on the continued rise of some tech highfliers, wagering that there are even bigger gains ahead for the group.
/on.wsj.com/2T66Y83

Stocks Clinch Records, E*Trade Finds a Buyer and Walmart Disappoints; But coronavirus fears are still palpable, weighing on Wall Street
Paul Vigna – WSJ
The stock market set records again this week, but investors faced new concerns as well. Apple Inc. AAPL -1.03% warned its sales would take a hit from the coronavirus epidemic, and it is becoming clearer that China’s gross domestic product will suffer, too. It is shaping up to be a down week for Wall Street.
/on.wsj.com/2wB1vPf

‘Monstrous’ run for responsible stocks stokes fears of a bubble; Inflows into ESG funds are driving up stock prices for companies with green credentials
Patrick Temple-West – FT
Companies with the best environmental, social and governance scores have opened up what one analyst calls a “monstrous” valuation premium, in a sign of rampant demand for the hot investment theme.
/on.ft.com/2T1KqFz

US agriculture secretary breaks ranks to endorse carbon pricing; Sonny Perdue is first Trump cabinet member to back policy
Gregory Meyer – FT
A member of Donald Trump’s cabinet has broken ranks with many other Republicans and endorsed putting a price on carbon dioxide, a climate change policy favoured by many economists but shunned by the administration.
/on.ft.com/39X8CzX

Meet the Central Bank That Lost $545 Million, Vexing Lawmakers
Fred Ojambo – Bloomberg
Bank of Uganda made losses in the past 15 years, minister says; State recapitalized the bank with 681.7 billion shillings
The Bank of Uganda has been making losses for most of the past 15 years and lawmakers in East Africa’s third-biggest economy are getting anxious about its ability to execute its mandate.
/bloom.bg/2wyN661

SNB Isn’t Panicking About the Franc And Here’s a Reason Why
Catherine Bosley – Bloomberg
Swiss central bank hasn’t been aggressively intervening; Alternative measure of euro-franc price isn’t as elevated
The Swiss National Bank appears to be content for now to allow the franc to drift higher, with little evidence that it’s getting into a dogfight with markets.
/bloom.bg/2PbdMAe

LNG Cargoes Canceled as Virus Compounds U.S. Export Glut
Anna Shiryaevskaya and Naureen S Malik – Bloomberg
Gas oversupply has sent prices crashing across the globe; Coronavirus is stifling demand from China, a major importer
A buyer of liquefied natural gas has canceled two cargoes from Cheniere Energy Inc., the biggest U.S. exporter, as a global glut pummels prices for the fuel and threatens to shut a key outlet for shale production.
/bloom.bg/2Tguu2D

Two Big Reasons to Worry About Stocks; Screamingly high share prices relative to corporate sales and shrinking profit margins are flashing a warning.
John Authers – Bloomberg
During the latest earnings season, U.S. companies delivered a message that, on the surface, gave investors reason to cheer: Profits were back to growing again after a year in which they had suffered a decline. But that good news masked a development that suggests Corporate America is beginning what could be a painful adjustment, and one that could put a damper on future stock returns.
/bloom.bg/37LmJ9V

Institutions

Cabbies worry as hedge fund snaps up taxi medallions
Thornton McEnery – NY Post
De Blasio nominee won’t give specifics on Taxi and Limousine Commission concerns
New York taxi drivers and politicians are raising alarms after a secretive hedge fund this week quietly became the city’s largest owner of taxi-medallion loans.
bit.ly/2PemEVU

Founders of Hedge Fund Senator Splitting Up; A rift had grown between the founders of the $6.9 billion company
Juliet Chung – WSJ
The founders of $6.9 billion hedge-fund firm Senator Investment Group are splitting up after 12 years together, following a rift that had grown between the two.
/on.wsj.com/3bVNcoC

Oil trader Pierre Andurand suffers big hedge fund loss; London-based fund extends rough run in choppy period for energy markets
Laurence Fletcher and David Sheppard – FT
Pierre Andurand, one of the world’s best-known oil traders, has suffered a big loss in his hedge fund during a turbulent start to 2020 for energy markets. Mr Andurand, founder of London-based Andurand Capital Management, one of the last few hedge funds specialising in oil, experienced a loss of about 8 per cent in his main fund in January, according to three people familiar with its performance.
/on.ft.com/2VbuLq8

Investment banking revenues fall to lowest since 2008; Industry data also show increasing job cuts as lenders bulk up in other areas instead
Laura Noonan – FT
Top investment banks’ revenues fell to their lowest level since the financial crisis last year, spurring record job cuts even as global equity markets boomed, new research from industry monitor Coalition shows.
/on.ft.com/3bVmEnt

BlackRock tracker takes bulk of £1.3bn sustainable allocations
Elli Duncan – Investmentweek
BlackRock tracker takes bulk of £1.3bn sustainable allocations
Sustainable investments attracted a large volume of assets at the start of the year, with net £1.3bn invested, over half of which went into a low carbon equity tracker managed by BlackRock according to the Morningstar Direct Fund Flows Commentary for January.
bit.ly/2ujK451

Regions

Nomura to Restrict Travel to Countries With Coronavirus Cases
Takashi Nakamichi and Takako Taniguchi – Bloomberg
Nomura Holdings Inc. has asked employees to refrain from all unnecessary travel to countries stricken by the coronavirus. The restriction applies to business trips to all areas where the World Health Organization has confirmed infections, spokesman Yoshitaka Otsu said Friday by phone. It will take effect on Monday.
/bloom.bg/2VankiF

Danske Bank Investors Target Former CEO Seeking $387 Million
Christian Wienberg – Bloomberg
The ousted chief executive of Danske Bank A/S, Thomas Borgen, has been personally targeted in an investor lawsuit arguing he withheld information about potential money laundering that subsequently destroyed the lender’s market value.
/bloom.bg/2wDSQf3

China’s Traders Throw Away Script After Virus Jolts Stocks
Bloomberg News
nvestors look far-afield for signs policy help will top out; School-reopen dates, train ticket sales included on watch list
China’s stock traders are navigating the vagaries of the country’s coronavirus data for clues on when euphoria fanned by Beijing’s emergency support measures may peak.
/bloom.bg/2SOScnr

Brexit

English football divided over post-Brexit visas for players; Premier League opposes FA’s plans to curb foreign nationals at top clubs
Murad Ahmed, John Burn-Murdoch and Sammy Mngqosini – FT
Liverpool manager Jürgen Klopp says “Brexit — makes no sense”. Former Cardiff City manager Neil Warnock argues the UK will thrive outside the EU: “Football-wise as well, absolutely. To hell with the rest of the world.”
/on.ft.com/3bWpWXG

EU leaders at odds over filling EUR75bn Brexit shortfall
Daniel Boffey – The Guardian
A summit to fix the EU’s long-term budget looked in danger of ending in failure after less than a day of talks, with leaders miles apart on how to fill the EUR75bn (£63bn) hole left by Brexit. As sources predicted a potential early close in Brussels, the European council president, Charles Michel, came under criticism for aiming “far too high” with a proposed budget of 1.074% of the bloc’s gross national income (EUR1.094tn).
bit.ly/2T11yvj

Miscellaneous

The Boy Scouts’ Survival Plan: Bankruptcy
WSJ
The Boy Scouts of America filed for bankruptcy this week. WSJ’s Valerie Bauerlein and Andrew Scurria explain how the organization reached this point, after decades of declining membership and intensifying legal pressure over sex abuse allegations.
/on.wsj.com/38P0xgj

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