EU plans flurry of rule changes to boost market recovery; A new age of financial repression may soon be upon us

Jul 23, 2020

First Read

Yesterday, John Lothian News presented its first-ever virtual MarketsWiki Education World of Opportunity event. We thank all those who attended. If you weren’t able to attend, or if you want to recall that wonderful experience, our intrepid reporters Suzanne Cosgrove, Thom Thompson and Matt Raebel attended and wrote up some notes on the speakers’ presentations. Here they are.


Jen Just Tells Financial Industry Interns: “There must be a better way”
Thom Thompson – John Lothian News

The kick-off speaker at yesterday’s World of Opportunity (“WOO” – woo! woo!) was Jennifer Just, a co-founder of Peak6. Located in the CBOT building, Peak6 is an investment and trading company built with a focus on disruptive technology. Just talked about how one statement, “There must be a better way!” has motivated her intellectual and professional development. Key parts of Peak6’s brand are curiosity and flexibility.

Just spent her first day at O’Connor, one the first great listed options trading firms, sitting on the sidelines on the Cboe trading floor as traders digested the failure of Drexel Burnham. She ended that day smitten with the options trading industry, about which she still really knew nothing.

To read the rest of this report, go here.


World of Opportunity 2020: Climate Change Expected to be Part of Future Jobs Landscape
Suzanne Cosgrove – John Lothian News

While climate change may not have an obvious connection to the financial industry at first glance, Alessandro Cocco, vice president of the Financial Markets Group at the Federal Reserve Bank of Chicago, drew clear lines between the two for his audience on Wednesday during MarketsWiki Education’s “World of Opportunity 2020.”

To read the rest of this report, go here.


World of Opportunity 2020: Greenwood Project Takes Different Tack to Closing Diversity Gap
Suzanne Cosgrove – JLN

“Kids can’t be what they can’t see,” said Bevon Joseph, co-founder of the Greenwood Project, explaining why education, mentorship and internships are necessary steps to closing the opportunity gap for Black and Latinx students seeking to work in the financial industry.

Speaking to the participants in the online MarketsWiki Education “World of Opportunity 2020” seminar Wednesday, the 42-year-old Joseph said he was inspired to learn as much as he could about financial services when he took his first job in the business as the trading floor “computer guy” for JPMorgan Chase in New York.

To read the rest of this report, go here.


Andre Buckles On Hiring During a Pandemic
By Matt Raebel – JLN

The fourth guest speaker at MarketsWiki Education World of Opportunity 2020 was Andre Buckles, vice president of talent acquisition at the Options Clearing Corporation. Buckles has been hiring people for various companies, including Northern Trust and Zurich North America, for over two decades, and he had plenty of tips for the students in the audience looking for advice on how to get hired.

To read the rest of this report, go here.


Novelist Eileen Flaherty Tells All in Lothian Interview
Thom Thompson – John Lothian News

The MarketsWiki Education 2020 virtual program concluded with John Lothian’s interview of Eileen Flaherty. Among other accomplishments, Flaherty has written a novel called The Perilous Step, about an attorney. As Flaherty avows, the soon to be published book is fiction, clear proof of which is the depiction of the protagonist on the cover not wearing pink. It is only on the mythical frozen day in hell when Flaherty would be seen in public not wearing pink. Therefore, the protagonist cannot be Flaherty.

To read the rest of this commentary, go here.


Hits & Takes
By John Lothian

The first ever MarketsWiki Education World of Opportunity virtual event is done and in the books, as they say. We had about 100 people at the event at its peak. We gave out Amazon gift cards between speakers instead of industry SWAG as we had done in past years. Such are the changes we had to make because of the pandemic.

I want to thank our speakers for their presentations, Jennifer Just, Bevon Joseph, Alessandro Cocco, Andre Buckles and finally our fireside chat with new author Eileen Flaherty. I also want to thank our sponsors The OCC and Barchart. Jeff Bergstrom did a great job as the technical director and Nancy Ashburn led the signup effort. And thank you to the JLN journalists who covered the event. We will have the videos of the event in the coming weeks, as well as some other MWE WOO pre-recorded talks to share with the attendees and you JLN readers.

All in all, I was pleased with the first virtual MWE WOO event and believe we will offer more in the coming months.

Sen. Kelly Loeffler has claimed she has been cancelled because of her opposition to the Black Lives Matter movement. The risk she has is not being cancelled, it is being cancelled and replaced.

Jon Butler, the CEO at Velox Financial Technology, LLC, has a post on LinkedIn titled “Why are trading floors stacked with screens and is it a problem?”

At yesterday’s MarketsWiki Education World of Opportunity event, the Chicago Fed’s Alessandro Cocco said he smiles every day when he sees the message below in JLN.

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


China’s abuse of the Uighurs is a moral outrage; US and UK are right to condemn the internment of Muslim population
The editorial board – FT
China’s internment of Uighurs and other Muslims in the north-western Xinjiang province is a moral outrage. In the name of fighting terrorism the People’s Republic has imprisoned as many as 2m people, according to estimates from the US State Department. In a chilling example of the euphemisms behind which authoritarians can hide a policy of ethnic cleansing, the Chinese government describes the prison camps in which Uighurs are shaved, fed pork and forced to renounce their religion as “vocational training centres”.

*****This needs more attention. Thank you to the FT editorial board.~JJL


London Derivatives Exchange selects Exberry to deliver matching engine technology; A scalable infrastructure to launch traditional, alternative and digital asset markets around the world
Exberry, the exchange technology pioneer, has been appointed by London Derivatives Exchange (LDX) to provide matching engine technology. The new technology partnership will enable LDX to launch global markets and cover a wide spectrum of asset classes.
*****Our new friends at Exberry grab their first client. Nice work!~JJL


U.S. records 2,600 new coronavirus cases every hour as total approaches four million
Lisa Shumaker – Reuters
U.S. coronavirus cases were approaching 4 million on Thursday, with over 2,600 new cases every hour on average, the highest rate in the world, according to a Reuters tally.

*****Can you say “out of control pandemic?”~JJL


Symphony appoints former Goldman Sachs executive to head up expansion; Brad Levy joins Symphony as president and chief commercial officer tasked with overseeing the firm’s expansion.
Annabel Smith – The Trade
Messaging systems provider Symphony has confirmed it has hired industry veteran and former Goldman Sachs executive, Brad Levy, as it enters a new phase of growth.

*****Brad Levy knows how to make fintech make music.~JJL



Wednesday’s Top Three
Our top story Wednesday was Citadel again, with Citadel Securities pays $700,000 fine, from Crain’s Chicago Business. Second was another repeat, the YouTube video of Robert Downey Jr. commenting on his visit to the Nymex trading floor. Third was the Financial Times’ SGX and Nasdaq seal pact to streamline secondary offerings.


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Lead Stories

EU plans flurry of rule changes to boost market recovery; Tweaks to financial regulations, to be announced soon, follow EUR750bn relief package
Philip Stafford – FT
Brussels is set to unveil a series of quick fixes to its financial market rules, including measures to ease trading in small-cap stocks and energy derivatives, in an attempt to boost the region’s recovery from the Covid-19 pandemic.

A new age of financial repression may soon be upon us; The battle to inflate away debts will be long and probably punishing for stocks and savers
Russell Napier – FT
During the Covid-19 crisis, control of the supply of money has quietly passed from central banks to governments. As a result, investors need to prepare for a new era of inflation.

South Korea considers extending short-selling ban as market booms; Skyrocketing shares since initial suspension prompts fears of speculative bubble
Song Jung – FT
South Korea is considering an extension of its ban on short selling even as a buying frenzy by retail investors raises fears of a bubble in parts of the stock market.

SEC disclosure change would allow activists to ‘go dark’, lawyers warn; Only largest hedge funds would have to detail equity stakes under proposed rules
Ortenca Aliaj – FT
Activist investors in the US stand to be big beneficiaries of a new rule from Wall Street’s top regulator that would allow most hedge funds to keep their equity stakes secret.

Morgan Stanley blocks remote network access for China interns; Bank to host programme in its offices as concern grows over Beijing’s cyber security rules
Laura Noonan – FT
Morgan Stanley has blocked its interns in China from logging on remotely to the bank’s virtual network as foreign companies become increasingly concerned about Beijing’s tough cyber security rules.

Sweden’s Coronavirus Approach Doesn’t Pay Off for the Economy
Johanna Jeansson (Economist), Björn van Roye (Economist) and Tom Orlik (Economist) – Bloomberg
Sweden and Norway took very different approaches to controlling Covid-19, with the latter swiftly adopting strict lockdown controls and ramping up testing, while the former attempted to combat the virus by using mainly voluntary, non-regulatory social distancing measures.

Ex-Barclays Banker’s Lewd Staveley Comments Revealed
Ellen Milligan – Bloomberg
Stephen Jones stepped down as head of UK Finance in June; Jones called Staveley ‘thick’ and commented on her appearance
Stephen Jones’s misogynistic and lewd comments about financier Amanda Staveley, which led to his resignation as the U.K.’s top bank lobbyist, were finally revealed in court Thursday.

Why Common Bonds Signal a New Era for Europe; The EU has borrowed from capital markets in the past, but never on such a scale, nor with the ability to spend the proceeds so freely
Joe Wallace and Pat Minczeski – WSJ
The European Union took a giant step toward selling hundreds of billions of euros in common bonds for the first time. The proposed issuance is part of a EUR1.8 trillion ($2.1 trillion) spending package to combat the recession caused by the coronavirus, hammered out by the region’s leaders in the early hours of Tuesday.

SEC Votes to Regulate Proxy Advisers More Closely; Commissioners voted 3 to 1 in favor of the new rule
Paul Kiernan – WSJ
Firms that advise institutional investors and other market participants on how to vote at annual shareholder meetings will be regulated more closely following a vote by the Securities and Exchange Commission Wednesday.

Froth Returns to China’s Stock Market, Echoing the 2015 Crisis; Chinese stocks are surging. Foreign investors have rushed in. University graduates and factory workers are opening up trading accounts. Is disaster on the horizon?
By Alexandra Stevenson – NY Times
When Beijing signaled this month that it was time to buy China, investors did not hesitate. But it did not take long for some to get cold feet as officials warned that the market was overheating.


Coronavirus Live Updates: U.S. Nears 4 Million Cases as Multiple States Set Records
NY Times
Alabama, California, Idaho and Texas recorded daily death records. Other states reported their highest daily case totals. As pandemic protections reach an end, landlords are moving to evict people.

Want to Know Where Covid-19 May Hit Next? Watch the Apple Store Closures
Apple has consistently been one of the first retailers to close its doors in areas of the U.S. just as they see a surge in Covid-19 cases. WSJ tracked hundreds of store closures, coronavirus statistics and lockdown measures to piece together Apple’s shutdown strategy. Illustration: John McColgan

Unemployment Claims Hold at Historically High Levels; Data suggests labor market’s recovery could be cooling because of an uptick in coronavirus cases
Eric Morath – WSJ
Worker applications for unemployment benefits have plateaued at historically high levels after easing for months from a peak early in the coronavirus pandemic, suggesting layoffs remain elevated and the labor market’s recovery is cooling.

Covid crisis softens Germany’s stiff corporate culture; Pandemic has been a decisive moment in showing what is possible with remote working
Joe Miller – FT
After months of being banished from the office because of Covid-19 restrictions, 140,000 Siemens employees in 43 countries learnt last week they had earned the permanent right to work from home for up to three days a week.

AT&T loses monthly subscribers as media unit takes a hit from COVID-19
AT&T Inc said on Thursday it lost monthly phone subscribers and suffered a $2 billion revenue decline from delayed movie releases and advertising shortfalls in the second quarter as the COVID-19 pandemic ravaged its business.

Promise and prevention: Experts discuss the race for a COVID-19 vaccine
Beatrix Lockwood – Reuters
As the global race for a COVID-19 vaccine heats up, Reuters invited a group of healthcare experts to answer questions as part of our #AskReuters Twitter chat series.

U.S. eviction bans are ending. That could worsen the spread of coronavirus
Michelle Conlin – Reuters
Last month, as the coronavirus was surging in Houston, recently unemployed hospital secretary Ramzan Boudoin got more bad news: She had six days to vacate her apartment for failing to pay the rent.

U.S. sets global benchmark for COVID-19 vaccine price at around the cost of a flu shot
Carl O’Donnell – Reuters
The U.S. government has set a benchmark for COVID-19 vaccine pricing in a $2 billion deal announced on Wednesday with Pfizer Inc (PFE.N) and German biotech BioNTech SE (22UAy.F) that will likely pressure other manufacturers to set similar prices, industry analysts told Reuters.

I Was Wrong About Florida’s Response to Covid-19; I gave Governor Ron DeSantis more credit than he deserved for the low death rate in his state.
Joe Nocera – Bloomberg
A little after 11 a.m. each weekday, I receive an email alert from the Miami Herald. It contains the latest Covid-19 numbers for Florida. And every day, I wince a little when I see them. Florida is now the epicenter of the pandemic in the U.S. Since July 10, the number of new positive cases has averaged more than 10,000 a day. As of Wednesday, the total number of cases was nearly 380,000 according to the state’s health department. The positivity rate — the percentage of those tested who turn out to be infected — is well above 18%. Hospitals in Miami-Dade County are approaching capacity. “The residents here are terrified and I’m terrified,” Donna Shalala, Miami’s Democratic congresswoman, said over the weekend. She called for Governor Ron DeSantis to impose a lockdown.

Swiss Re Suffers $1.1 Billion Loss on Coronavirus Claims
Patrick Henry and Marion Halftermeyer – Bloomberg
Firm had $2.5 billion of virus claims, reserves in first half; Sale of ReAssure unit to Phoenix Group has completed
Swiss Re reported a net loss of about $1.1 billion in the first half, driven by claims related to the coronavirus pandemic. Covid-related claims and reserves totaled $2.5 billion in the first six months, the company said in a statement late Wednesday. That includes $476 million of losses booked in the first quarter, mostly from canceled events.

Escape From New York Pushes Hamptons Home Prices to 13-Year High
Oshrat Carmiel – Bloomberg
City-dwellers in search of space are willing to pay a premium; Number of transactions falls, but the median price jumps 27%
New Yorkers seeking a Hamptons retreat during the Covid-19 lockdown were big spenders. Their purchases sent home prices in the Long Island beach towns to a 13-year high.

Cash Handouts Could Curb Virus in Poor Nations, UN Says
Prinesha Naidoo – Bloomberg
Six-month program could cost about $199 billion a month; Suspended debt payments could be reallocated to cash payments
Temporary basic income payments could stem the spread of the coronavirus pandemic by allowing the world’s poorest people to stay at home, according to a new report from the United Nations Development Programme.

Dr. Anthony Fauci warns the coronavirus won’t ever be eradicated
Berkely Lovelace, Jr.
White House coronavirus advisor Dr. Anthony Fauci said Wednesday it is unlikely the coronavirus will ever be eradicated.

Exchanges, OTC and Clearing

Transfer to Euronext Paris opens new chapter in Solutions 30’s outstanding stockmarket journey
Euronext today celebrated the transfer of Solutions 30 SE, Europe’s leading provider of new-technology solutions, from listing on Euronext Growth to Euronext Paris (ticker code : S30).

Euronext today congratulated ENERGISME, a French producer of energy management software, on its listing on Euronext Growth in Paris )

Eurex’s new Related Security Spread Futures (RSS) – an update
At the end of June, Eurex launched its RSS Futures offering – a listed solution for relative value trades in related securities, a core hedge fund strategy. Here’s a short update on the main facts around these new products.

Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and Montréal Exchange Closed for Civic Holiday
Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and Montréal Exchange will be closed on Monday, August 3, 2020 for the Civic Holiday. The Exchanges will re-open and resume regular trading on Tuesday, August 4, 2020.

Nasdaq Reports Second Quarter 2020 Results, Resilient Business Adapting to Deliver Continued Growth
Second quarter 2020 net revenues1 were $699 million, an increase of 12% over the second quarter of 2019. Compared to the prior year period, revenues in the non-trading segments2 increased 7%, primarily due to organic growth, while Market Services revenues rose 22%, driven by record trading volumes in U.S. equities and options.

Revised Regulatory Relief Concerning Covid-19 Pandemic
CME Group
This revised Special Executive Report (SER) is being issued in connection with the June 9, 2020, CME Group Inc. press release announcing the reopening of the Eurodollar options trading pit on August 10, 2020. It is being issued to advise all members and member firms, and employees of the foregoing, that the regulatory relief provided in the original SER does not apply when parties are conducting business on the trading floor or when they are present on the premises of an entity registered to conduct customer business.


Symphony names Brad Levy as president and chief commercial officer
Symphony, the leading provider of secure collaboration for global markets, today announced the appointment of financial industry pioneer Brad Levy, as President and Chief Commercial Officer.

Slack Accuses Microsoft of Illegally Crushing Competition; The complaint, filed in Europe, threatens Microsoft’s recent ability to avoid regulatory scrutiny.
Steve Lohr – NY Times
Microsoft is undeniably one of the Big Tech elite, given its size, wealth and stock market value. But the software giant has stood apart from Google, Facebook, Amazon and Apple in one important respect: Microsoft, once the bully of the tech world, has escaped antitrust scrutiny so far.

Cassini Systems and IHS Markit Partner to Provide Automated Margin Estimates within thinkFolio
Cassini Systems
Cassini Systems, the leading provider of pre- and post-trade margin and collateral analytics for derivatives markets, and business information provider IHS Markit (NYSE: INFO) announced today that they are partnering to automate the calculation of margin estimates within thinkFolio. The collaboration will, for the first time, provide advanced pre-trade analytics for over-the-counter (OTC) and exchange-traded derivatives directly within thinkFolio from IHS Markit, the leading multi-asset class investment management platform.

Wirecard Probe in Philippines Focuses on Two Bankers Who May Have Forged Documents; Philippine money-laundering investigators have identified more than 50 people and entities of interest in the Wirecard case
Feliz Solomon – WSJ
Philippine investigators say they have identified dozens of people and entities of interest in their probe into Wirecard AG, and are focusing on two bank employees who may have facilitated a multinational accounting scandal at the insolvent German payments company.

How to Survive a Ransomware Attack Without Paying the Ransom
William Turton – Bloomberg
At around midnight Oslo time on March 19, 2019, computers owned by Norsk Hydro ASA, a large aluminum manufacturer, started encrypting files and going offline en masse. It took two hours before a worker at its operations center in Hungary realized what was happening. He followed a scripted security procedure and took the company’s entire network offline—including its website, email system, payroll, and everything else. By then, a lot of damage was already done. Five hundred of Hydro’s servers and 2,700 of its PCs had been rendered useless, and a ransom note was flashing on employees’ computer screens.

Tower Research global compliance chief joins Eventus Systems as new regulatory head; Joseph Schifano joins Eventus as global head of regulatory affairs after six years with Tower Research Capital.
Annabel Smith – The Trad
The global chief compliance officer at Tower Research Capital has departed after six years with the high-frequency trading firm to join market surveillance technology Eventus Systems in a senior role.

Users flock to Twitter during pandemic but ad revenues fall; Surge in audience amid coronavirus crisis and protests but advertisers remain cautious
Tim Bradshaw – FT
Twitter’s usage surged during the coronavirus pandemic and civil rights protests, adding 20m new daily users in its second quarter from the previous three months, but sales still fell as the internet group warned of a choppy advertising market.

Hudson Fintech Hires Two Senior Executives For Business Development
Hudson Fintech, the London-based Capital Markets technology firm, today announced two senior appointments to support its growth strategy. Ashley Daffin joins as Director of Strategic Development, responsible for global development strategy. Ashley has worked in Capital Markets FinTech for 30 years, which includes institutional sales roles at HSBC, NYSE and Refinitiv, as well as working with a variety of FinTech start-ups on business development. He is also Chair of the Education Committee at ACI UK (the Financial Markets Association), working with the FX industry to increase Global Code of Conduct compliance.


Steve Wozniak Sues YouTube Over Twitter-Like Bitcoin Scam
Robert Burnson – Bloomberg
Apple Inc. co-founder Steve Wozniak says YouTube has for months allowed scammers to use his name and likeness as part of a phony bitcoin giveaway similar to the one that was quickly extinguished by Twitter Inc. last week. Scammers used images and video of Wozniak, who left Apple in 1985, to convince YouTube users that he was hosting a live giveaway and anyone who sent him bitcoins will get double the number back, according to a lawsuit filed Tuesday in state court in San Mateo County, California. “But when users transfer their cryptocurrency, in an irreversible transaction, they receive nothing back.”

Federally Chartered Banks and Thrifts May Provide Custody Services For Crypto Assets
Office of the Comptroller of the Currency (press release)
The Office of the Comptroller of the Currency (OCC) today published a letter clarifying national banks’ and federal savings associations’ authority to provide cryptocurrency custody services for customers. National and state banks and thrifts have long provided safekeeping and custody services, including both physical objects and electronic assets. The OCC has specifically recognized the importance of digital assets and the authority for banks to provide safekeeping for such assets since 1998.

The U.K.’s first licensed crypto hedge fund is shutting down
Michael McSweeney – The Block
Prime Factor Capital, the first cryptocurrency hedge fund in the U.K. to win approval from the country’s government, is closing its doors. Financial News reported on Wednesday that the firm — founded by former BlackRock execs and granted approval from the U.K. Financial Conduct Authority last summer — is shuttering “due to insufficient demand from institutional investors,” according its CEO, Nic Niedermowwe. “We can confirm that the fund, despite having delivered an average monthly performance in excess of 4%, is being wound down due to insufficient demand from institutional investors,” Niedermowwe told the publication.

US House Passes Two Blockchain Amendments in Annual Defense Budget Bill
Sebastian Sinclair – Coindesk
The U.S. House of Representatives has unanimously passed two amendments to the National Defense Authorization Act (NDAA) that could boost the use of blockchain technology in the nation’s military. While the amendments are yet to be set in stone, and are pending approval by the U.S. Senate and President Donald Trump, they highlight the use of distributed ledger technology (DLT) for defense-related activities ahead of the 2021 fiscal year. The bipartisan provisions were introduced by Rep. Darren Soto of Florida (D-FL 9th District) and passed Tuesday.

Cryptopia Liquidators Face Further Complaints from Anguished Creditors
Aziz Abdel-Qader – Finance Magnates
GNY, a machine learning platform for blockchain applications, has opened fire on liquidators for hacked cryptocurrency exchange Cryptopia, alleging that they failed to comply with their duties. GNY isn’t the only Cryptopia victim seeking recourse and have recently had clashes with David Ruscoe and Russell Moore from Grant Thornton who are overseeing liquidation. GNY claims to have been the largest wallet holder in the now defunct exchange, which closed its doors in 2019 after suffering a devastating hack. The Channel Islands-based blockchain firm reported losses of more than $18 million when millions of dollars’ worth of LML tokens syphoned from its digital wallets.

CFTC Seeks Industry Advice on Blockchain Applications
Sandali Handagama – Coindesk
Not all central bank digital currencies (CBDCs) are created equal, a Georgetown Law Professor said during a Commodity Futures Trading Commission (CFTC) tech advisory meeting last Thursday. A digital currency backed by the Federal Reserve was one of the main topics discussed during the four hour-long remote meeting, organized by the commission’s technology advisory committee (TAC). Chris Brummer, Georgetown Law Professor and Faculty Director of the Institute of International Economic Law, presented an overview of CBDCs, explaining how one might be designed and issued, on behalf of TAC’s Virtual Currencies Subcommittee.

Prime Factor Closes Books as Institutional Investors Wary of Cryptos
Aziz Abdel-Qader – Finance Magnates
Prime Factor Capital Ltd., a crypto hedge fund manager set up by former employees of BlackRock, has shuttered all operations as the retail-driven market failed to convince institutional investors to jump in. The news was first reported by Financial News. Prime Factor Capital was the first crypto hedge fund to win the stamp of approval from the Financial Conduct Authority. It was approved by UK regulators as a full-scope alternative investment fund manager back in 2018.

Chainlink Integration Brings Data Feeds to Binance’s DeFi Project
William Foxley – Coindesk
Smart Contract (BSC) platform with data provider Chainlink, according to a blog post shared with CoinDesk. The collaboration was announced Thursday. The integration highlights Binance’s intention to create an alternate platform for Ethereum dapps, particularly aimed at the currently popular DeFi market. Chainlink provides data from on-and-off chain sources called oracles for decentralized applications (dapps). The network has integrated with numerous DeFi projects such as bZx over the first half of 2020.

The Twitter hackers’ Bitcoin shell game
Robert Hackett and David Z. Morris – Fortune
There’s a scene that recurs in heist films: invariably, a gang of bank robbers demands a large sum in “small, unmarked bills.” It’s a smart stipulation (whether or not it’s common in real bank robberies). “Unmarked” means the serial numbers have not been recorded by the police. The bills’ numbers should also be random, rather than consecutive, making it harder to determine whether they are “dirty.” The point is to prevent law enforcement from later identifying—and blacklisting—the ill-gotten loot.

Binance lists Maker and Dai tokens amid DeFi boom
Yogita Khatri – The Block
Crypto exchange Binance is today listing MakerDAO’s governance token Maker (MKR) and decentralized stablecoin DAI. The exchange supports eight trading pairs for the tokens — MKR/BNB, MKR/BTC, MKR/BUSD, MKR/USDT, DAI/BNB, DAI/BTC, DAI/BUSD, and DAI/USDT. The listings come amid decentralized finance (DeFi) boom. “DeFi is a hot topic for the blockchain industry this year. We received a lot of requests from our users [for the listings],” a Binance spokesperson told The Block.

Senate Hearing Sees Digital Dollar as a Tool for Economic Supremacy
Nikhilesh De – Coindesk
The idea of a U.S. digital dollar is no longer a fringe novelty. Now, it may be a means to an end. The U.S. Senate Banking, Housing and Urban Affairs Subcommittee on Economic Policy conducted a hearing on “Winning the Economic Competition” between China and the U.S. on Wednesday. Once again, the idea of a Federal Reserve-administered central bank digital currency reared its head. Much of the hearing was about America’s economic relationship with China, and both nations’ economic relationships with the rest of the world. Four of the five speakers had no close ties to the crypto space, and discussed issues like supply chain dependence and technologies like 5G.

tZERO Partners With Aspen Digital Inc. To Enable The Trading Of The St. Regis Aspen Digital Security
ZERO, a leader in financial innovation and liquidity for private companies, announced today that it has entered into a partnership with Aspen Digital Inc. to enable its digital security (ASPEN) to trade on the tZERO ATS. The ASPEN shares represent $18 million of indirect ownership in the St. Regis Aspen Resort, a five-star, 179-room luxury hotel located in Aspen, Colorado


God Help Us if Judy Shelton Joins the Fed; Trump’s latest unqualified nominee to the Federal Reserve Board must be rejected.
Steven Rattner – NY times
Having failed in past attempts to put unqualified ideologues on the Federal Reserve Board, President Trump is giving it another try — and is closer to victory than previously.

New York to Trump: Don’t say ‘drop dead’; City struggles to wrest coronavirus aid from a Queens-born president
Joshua Chaffin – FT
It took just a few days after the September 11 terror attacks for a Texan President, George W Bush, to promise a $20bn cheque from the federal government to help rebuild New York City.

Donald Trump’s little green men; US president wants to ignite a cultural war to save his re-election campaign
Edward Luce – FT
They wore no badges, drove unidentified vehicles and whisked people off into the night. Vladimir Putin’s “little green men” were a tool of Russian hybrid warfare: everyone knew who gave the orders but there was plausible deniability.

China threatens to stop recognising BNO passports of Hong Kong residents
China threatened on Thursday to withdraw its recognition of British National Overseas passports held by residents of Hong Kong, in retaliation for the former colonial ruler’s policy of easing their path to citizenship.

Xi’s Own Campaign to Stay in Power Pits China Against the World
Bloomberg News
China’s president faces a party leadership test in 2022; ‘There is very likely some real resistance under the surface’
Less than four months before the U.S. election, President Donald Trump has made his tough China policy a centerpiece of his campaign to stay in power. Over in Beijing, President Xi Jinping is similarly preparing for China’s own leadership contest in 2022, when a once-in-five-year gathering is expected to take place to pick the Communist Party’s top leaders and set policy priorities. While the country’s 1.4 billion citizens don’t get a vote, public sentiment still matters when it comes to how much support Xi can muster from senior party leaders for his indefinite rule.

Scaramucci: ‘Biden is actually more of a Republican than President Trump’
Adriana Belmonte- Yahoo Finance
“Many Republicans feel that Joe Biden is actually more of a Republican than President Trump if you really study his record, and you studied Trumpism,” Anthony Scaramucci, founder of SkyBride Capital and former White House Communications Director, said during Yahoo Finance’s All Markets Summit Extra. “And so, I think it’s going to be a very difficult election for the president.”

Sen. Kelly Loeffler Mocked For Claiming She’s Been ‘Canceled’
Josephine Harvey- Huffington Post
Sen. Kelly Loeffler (R-Ga.) claimed Wednesday that she’s been “canceled” for her opposition to the Black Lives Matter movement, prompting critics to point out she’s still one of the wealthiest members of Congress, co-owner of the Atlanta Dream WNBA team and has faced no real consequences for her actions.


New FCA chief apportions blame for pension and mini-bond scandals; Nikhil Rathi questions Treasury’s timing in introducing both sets of new regulations
Matthew Vincent – FT
The incoming head of the UK’s financial regulator has suggested that government mistakes contributed to recent pension and mini-bond mis-selling scandals — and vowed to make the protection of vulnerable consumers a priority when he takes up his post in October.

ESMA publishes the MiFID/MiFIR Annual Review Report
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has published today the MiFID/MiFIR Annual Review Report under Commission Delegated Regulation (EU) 2017/583 (RTS 2). This report lays down the thresholds for the liquidity criterion ‘average daily number of trades’ for bonds, as well as the trade percentiles.

FINRA New Issue Submission Platform
As announced in the April 28, 2020 notice, “Introduction to Transparency Services Initiatives and Webpage”, FINRA will be retiring the current FINRA New Issue Form and will be replacing it with an updated submission platform. The new platform will be available with the same log in credentials used to access the FINRA New Form today and is expected to go live on Monday, September 28, 2020.

SEC Adopts Rule Amendments to Provide Investors Using Proxy Voting Advice More Transparent, Accurate and Complete Information; SEC Issues Supplemental Guidance Concerning Proxy Voting Responsibilities of Investment Advisers
The Securities and Exchange Commission today voted to adopt amendments to its rules governing proxy solicitations designed to ensure that clients of proxy voting advice businesses have reasonable and timely access to more transparent, accurate and complete information on which to make voting decisions. The amendments aim to facilitate the ability of those who use proxy voting advice—investors and others who vote on investors’ behalf—to make informed voting decisions without imposing undue costs or delays that could adversely affect the timely provision of proxy voting advice.

CFTC Approves Final Swap Dealer Capital Rule at July 22 Open Meeting;CFTC Completes All Required Rulemakings Under Section 731 of the Dodd-Frank Act
The Commodity Futures Trading Commission at its open meeting today approved a final rule regarding new capital and financial reporting requirements for swap dealers (SDs) and major swap participants (MSPs). Adoption of this rule marks the completion of the CFTC’s required rulemakings under Section 731 of the Dodd-Frank Act, which was enacted 10 years ago this week.

Opening Statement of Commissioner Rostin Behnam before the Meeting of the Commodity Futures Trading Commission
Questions and concerns about the COVID-19 virus have rightfully dominated headlines and pervaded our daily conversations dating back to the first weeks of this year when there were still so many unknowns. How severe was it going to be? Why are some people impacted more than others when they are infected? How exactly does it spread? And, of course, when will we be able to resume normal life? What will the new “normal” be? We may not know the precise answers to many of these questions until well after the pandemic has passed. But, in the meantime, the rapid, exponential spread of the virus seemingly evades a complete understanding of how we can address and mitigate the risk it poses to the population in the near and long term.

Opening Statement of Commissioner Dan M. Berkovitz at July 22 Commission Meeting;We Must Preserve the Protections of the Dodd-Frank Act
Ten years ago yesterday, President Barack Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). Drafted in the midst of the most severe financial crisis and economic recession since the 1930s, the Dodd-Frank Act created a new, comprehensive framework for regulating swap markets. The absence of swap market regulation and transparency had helped to cause the crisis. Over the past decade, the CFTC has worked diligently to develop regulations to implement the Dodd-Frank framework.

Statement of Chairman Heath P. Tarbert in Support of Final Swap Dealer Capital Rule
Today marks 10 years and a day since the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) was signed into law. Much has changed during the past decade—our derivatives markets today are faster, increasingly digital, and more deeply connected to the global economy than they were in 2010. Yet amidst these changes, there has been at least one constant: the absence of capital requirements for swap dealers and major swap participants for which the CFTC is responsible.[1] As a response to the credit crisis of 2008, Section 731 of the Dodd-Frank Act amended the Commodity Exchange Act (“CEA”), providing that the CFTC “shall adopt” capital and financial reporting requirements for these entities.[2] It is high time to fulfill this mandate and close the book on our Dodd-Frank Act responsibilities.[3] After all, “late” is always better than “too late.”

Supporting Statement of Commissioner Brian Quintenz Regarding Establishing Capital Requirements for Swap Dealers and Major Swap Participants and Amending Existing FCM Capital Requirements
Ten years and one day ago, the Dodd-Frank Act Wall Street Reform and Consumer Protection Act was enacted. I am proud to vote for today’s final rule which, in my view, is the capstone of the Commodity Futures Trading Commission’s (CFTC or Commission) work to appropriately calibrate the post-crisis reforms. Capital ensures that firms are able to continue to operate during times of economic and financial stress by providing an adequate cushion to protect them from losses. Just as important as the safety and soundness of individual firms, capital is designed to give the marketplace confidence that any given firm has a high probability of surviving the next crisis.

Dissenting Statement of Commissioner Rostin Behnam on Capital Requirements of Swap Dealers and Major Swap Participants
I respectfully dissent from the Commodity Futures Trading Commission’s (the “Commission” or “CFTC”) rulemaking today regarding Capital Requirements of Swap Dealers and Major Swap Participants (the “Final Capital Rule”).

Statement of Commissioner Dawn D. Stump Regarding Final Rule: Capital Requirements of Swap Dealers and Major Swap Participants
Thank you Mr. Chairman for bringing the Commission together, albeit remotely, for both today and tomorrow’s open meetings. I also want to express my gratitude for the hard work and dedication of the staff of the Division of Swap Dealer and Intermediary Oversight (DSIO), Office of General Counsel, and Office of the Chief Economist for the final capital rule before us.

Dissenting Statement of Commissioner Dan M. Berkovitz Regarding Final Rule: Capital Requirements for Swap Dealers and Major Swap Participants
Today, for the first time, the Commission adopts capital requirements for non-bank swap dealers (“Final Rule”). This is the last major swap dealer regulation required under the Dodd-Frank Act. The Dodd-Frank Act specified that the swap dealer capital requirement “shall—(i) help ensure the safety and soundness of the swap dealer or major swap participant; and (ii) be appropriate for the risk associated with the non-cleared swaps held as a swap dealer or major swap participant.”[1]

Investing and Trading

The U.S. Dollar’s Overwhelming Role in a Crisis; New data shows the explosive increase in claims on the U.S. government and central bank during the peak of coronavirus-related market panic this year
Mike Bird – WSJ
America is still top dog—at least when it comes to providing a bolt-hole for panicked financiers during a crisis. The scale of global reliance on the U.S. financial apparatus is reflected in new data from the Bank for International Settlements this week, showing extraordinarily rapid growth in claims on the U.S. official sector by non-U.S. banks in the first quarter.

Think Real Yields Can’t Go Lower? Think Again; Forget about tapering: The economy may need another $12 trillion of asset purchases just to keep ticking over.
John Authers – Bloomberg
More round numbers and more esoteric records. On Wednesday, the real 10-year Treasury yield (the nominal yield minus the inflation breakeven) dropped below minus 0.9% and briefly dipped under the previous all-time low set in December 2012 (marked in the chart). Meanwhile the nominal 10-year yield fell below 0.6%.

Bank of England Ponders a Monumental Gamble; The BOE should only use negative rates as a last resort, and it should set out a road map of other measures it might use before them.
By Marcus Ashworth – Bloomberg
Should U.K. interest rates be taken negative? It would be a monumental gamble that might threaten the health of the country’s banking sector and its ability to manage its current account deficit.

Environmental, Social and Corporate Governance

Investors push for sound data on sustainability; A fuller picture is emerging of Japanese companies’ ESG performance, though gaps remain
Kana Inagaki – FT
Already three weeks behind schedule, Kazuhiko Saito, who heads KPMG Azsa Sustainability in Japan, was preparing to visit a client’s factory this month to assess the manufacturer’s efforts to address climate change. But the tour was abruptly called off due to a resurgence of coronavirus in the country.

How an AGM defeat on climate signals the rise of ESG in Japan; Companies are engaging more with sustainability, though not always for the greenest of motives
Leo Lewis – FT
In late June, a climate-related proposal set before the annual general shareholders’ meeting of Mizuho Financial Group was soundly rejected after receiving a little over a third of the votes cast. Yet defeats, say sustainability experts, have rarely been so revolutionary.

Al Gore Says the World Has Crossed a Threshold on Renewable Energy; The former vice president was one of the speakers at Bloomberg Green’s live event, ‘The Time Is Now.’
Leslie Kaufman – Bloomberg
Former Vice President Al Gore told the audience at Bloomberg Green’s virtual live event, “The Time Is Now,” that he’s encouraged by the fact that so many economic stimulus plans across the globe are focused on carbon reduction. It shows, he said, that the world has crossed a threshold “beyond which it is ever clearer that sustainable technologies are cheaper and better.”


Barclays onboarded as liquidity provider for FXSpotStream; Barclays is the latest bank liquidity provider to be onboarded to the streaming service for FX spot and derivatives from FXSpotStream.
Hayley McDowell – The Trade
UK investment bank Barclays has become the latest major institution to join bank-owned consortium FXSpotStream as a liquidity provider.

Standard Chartered becomes latest player to invest in Cobalt; After recently signing up to Cobalt’s FX post-trade platform, Standard Chartered has now made an investment in the technology provider.
Annabel Smith – The Trade
Foreign exchange post-trade and blockchain technology provider Cobalt has confirmed that Standard Chartered has become the latest institution to invest in the firm.


Rubber-Glove Maker Becomes Malaysia’s Second-Biggest Company
Tien Hin Chan and Abhishek Vishnoi – Bloomberg
Top Glove Corp. has vaulted past Public Bank Bhd. to become the second most valuable stock on Malaysia’s equities benchmark, capping a dizzying rally by the rubber glove maker.

Quirky IPO Rule Means Wall Street Won’t Lead Ant Group’s Shanghai Sale
Bloomberg News
Banks have to invest in deals they lead on new tech bourse; JPMorgan, Goldman Sachs, UBS plan to pass on China IPO lead
Most Wall Street firms are going to miss out on a chance to lead what could be China’s biggest stock deal when Ant Group goes public in Shanghai. Under a quirky rule for initial public offerings on China’s technology exchange, lead banks must buy at least 2% of the shares issued, up to a cap of 1 billion yuan ($143 million). Global firms such as Morgan Stanley and UBS Group AG, with limited capital on China’s mainland, are reluctant to commit that much money to one deal.

Turkey Asks Banks to Hedge Currency Risk in Move to Buoy Lira
Kerim Karakaya, Cagan Koc, and Asli Kandemir – Bloomberg
Banks told to buy future agreements to balance FX obligations; Measure aims to increase the nation’s currency reserves
Turkey is asking banks to use futures contracts to hedge their growing foreign-currency liabilities to help ease some of the pressure that a surge in dollar demand from local businesses is putting on the lira exchange rate.

Saudis Gained Nothing in First Month After Ending Oil-Price War
Abeer Abu Omar – Bloomberg
The kingdom’s crude export revenue fell in May to $6.4 billion; Under pressure from Trump to boost prices, Saudis cut exports
Saudi Arabia gained no financial reward in the first full month after ending its oil-price war with Russia. The kingdom earned 23.9 billion riyals ($6.4 billion) from oil exports in May, the Riyadh-based General Authority for Statistics said Thursday. That was even less than the previous month, when the price war was at its height, and down more than 60% from last year’s monthly average of $16.8 billion.


Brussels to warn time is running out for Brexit deal; Latest round of talks on UK-EU future relationship have failed to make tangible progress, according to officials
Jim Brunsden and Sam Fleming and George Parker – FT
The EU is expected to warn that only several weeks remain to hammer out a trade deal with the UK if it is to be legally operational by the end of the year, after the latest round of talks failed to make tangible progress.

Brexit Britain is more welcoming than feared; Positive reaction to helping Hong Kongers shows the immigration debate has shifted
Jemima Kelly – FT
After the 2016 Brexit vote, racism and xenophobia seemed to permeate Britain’s air. Overnight, the open and tolerant nation that I thought I’d grown up in?had become an inward-looking place, doomed to an insular future. Or that’s what everyone told me — fellow Remainers in particular.

Considerable gaps remain in Brexit talks, says UK negotiator
Peter Walker – The Guardian
Britain and EU still face “considerable gaps” in significant areas over a Brexit deal, the UK’s chief negotiator, David Frost, has said, while insisting he still believes an agreement can be reached in September. The EU’s chief negotiator, Michel Barnier, in his own comments following the end of the fifth round of formal talks, appeared more downbeat, saying the UK had “not shown the same level of engagement” as the EU in trying to find solutions.

Sterling steady above $1.27 on last day of Brexit talks
Olga Cotaga – Reuters
Sterling stabilized above $1.27 on Thursday on the last day of the Brexit negotiations, with traders looking out for any headlines that may shine some light on whether Britain could walk away from the European Union with a deal at the end of the year. Media reports suggested the United Kingdon has given up hope on reaching a deal so investors should “watch the tone of the statements coming out of today’s final meetings to see if they are of a conciliatory or confrontational nature,” said Marshal Gittler, head of investment research at BDSwiss Group.


When Siblings Can’t Agree on What to Do With an Elderly Parent; Also: We answer readers’ questions about inherited IRAs and Social Security survivors’ benefits
Glenn Ruffenach – WSJ
My siblings and I are at odds over how to care for our mother, who is widowed and not in the best of health. She wants to continue living at home, but two of us think she needs to move to an assisted-living community. (A setting that seems problematic at best, given the coronavirus.) And if she moves, there’s no agreement about whether she should stay in the same area or move close to one of us. Any ideas about how to tackle this?

2016 Was the Perfect Year, at Least in Italy’s Barolo Wine Country; The latest available vintage just might be the best this reviewer has ever tasted.
Elin McCoy – Bloomberg
The star grape in Italy’s northern Piedmont is nebbiolo, named for the misty fog that drifts over the hills at harvest time, when aromas of white truffles and fermenting wine fill the air. It’s the Italian equivalent to Burgundy’s pinot noir, as important to the region as cabernet is to Napa Valley.

John Lothian Newsletter

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Past JLN Newsletters

The Spread – July 30, 2021

The Spread – July 30, 2021

Earnings season in full bloom; Options lead year-to-date derivatives volume; Robinhood’s IPO; John gets real with Get Real VR: Conflicting factors underpin volatility; Cboe cleared for fall European competition; and the Cboe Options Institute’s Kevin Davitt talks about vega in this week’s “Term of the Week.”

The Four Biggest Ways That Robinhood Changed Investing

The Four Biggest Ways That Robinhood Changed Investing

First Read $51,906/$300,000 (17.3%) ++++ Options Continue to Lead Derivatives Volume Uptrend, but Q2 Lags, FIA Data Show Suzanne Cosgrove - John Lothian News Global futures and options volumes continued to trend higher in the first half of 2021 compared to both 2020...

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