Extinction by Algos Threatens Chicago’s Silenced Trading Pits; Wall Street Has Billions to Lose in China From Mounting Tension

May 28, 2020

First Read

Hits & Takes
By John J. Lothian

Two friends of JLN have partnered together and yesterday announced a new exchange operator to mainstream digital asset investing and trading. CrossTower Co-founders CEO Kapil Rathi and President Kristin Boggiano, Rathi formerly of BATS/Cboe and Boggiano, founder of WIND and formerly of Guggenheim Partners, have both presented for MarketsWiki Education World of Opportunity in the past.

They state in their press release that “The CrossTower platform was methodically built for institutional and individual investors with best-in-class safeguards, services and capabilities designed to make the next-generation financial markets a reality.” Welcome to the show!

CME Group is going to launch Micro E-Mini S&P 500 options and Micro E-Mini Nasdaq-100 futures contracts in the fall. I therefore expect next spring the CME Group will launch E-Nano S&P 500 futures in order to allow better hedging of the E-Micro S&P 500 options. They will be out-minimizing the Small Exchange. And just in case you are wondering what will come after CME offers E-Nano options, here are the next levels: pico (million-millionth), femto (million-billionth), atto (billion-billionth), zepto (billion-trillionth), yocto (trillion-trillionth)

Bakkt sent out a note today saying they have a new website and some new product updates, which includes a Bakkt early program to be able to pay with Bakkt Cash on your Starbucks app. Will Bakkt Cash be the new S&H Green Stamps?

Here is the fight between Joe Kernan and Andrew Ross Sorkin of CBNC live on the air via the Twitter accounts of Julie Verhage, which was mentioned in the FT story about the clash. Not to be missed.

Stay safe!~JJL


CNBC clash of the titans: Kernen vs Sorkin
Jamie Powell – FT
During the heights of the market sell-off in March, Alphaville watched a lot of CNBC — the 24/7 stock (and crypto) shilling service brought to you by NBC Universal. We witnessed some pretty amazing moments as markets crashed. There was Bill Ackman’s meltdown after he cashed in a $2.6bn trade via credit hedges; tech lottery winner pin-up Chamath Palihapitiya’s criticism of corporate buybacks; and, of course, Jim Cramer taking a call from the White House live on air. (Just in case you wondered what the president’s priorities were during the worst global health crisis in a century.)

*****I said back in 2016 we were in a media war and this and President Trump’s attack on social media companies yesterday, and executive order expected today, are the latest examples.~JJL


Trump is set to announce an executive order against social media companies
Brian Fung, Ryan Nobles and Kevin Liptak – CNN
President Donald Trump is set to announce an executive order against social media companies on Thursday, days after Twitter called two of his tweets “potentially misleading.”
The draft executive order being prepared by the Trump administration seeks to curtail the power of large social media platforms including Twitter and Facebook by attempting to reinterpret a critical 1996 law that shields websites and tech companies from lawsuits.

***** The power of the bully pulpit is sometimes just hot air, though this executive order has a chilling effect on freedom of expression.~JJL


This Is How Deeply the Coronavirus Changed Our Behavior; Twenty graphics that show how fear transformed human activity in 2020.
Zoe Schneeweiss, Dan Murtaugh, and Bloomberg Economics
In ealy 2020 a deadly microscopic predator sent humans into hiding and slammed the brakes on global commerce. Economic destruction like this hasn’t been seen since the Great Depression. Here we illustrate the new coronavirus’s effects on basic metrics such as gross domestic product and unemployment, the collapse in demand for fuel, the rapid adoption of telehealth, and the surge in liquor purchases. This is a new economy built on fear.

***** I don’t even want to look. That fact they stopped at 20 is amazing.~JJL


Ford’s police SUVs will heat up to 133 degrees to disinfect the interior
Peter Valdes-Dapena – CNN
The ongoing spread of coronavirus has made disinfecting police vehicles a major issue. After the New York City Police Department asked for a better way to sanitize its vehicles, Ford created software that will burn the germs out of the police department’s SUVs, the company announced Wednesday.

*****This is just like having a black leather interior and leaving the windows closed on a hot day.~JJL


Welcome to the age of insult, you snowflake; Insults on social media aren’t there to persuade, but to frighten opponents into silence
Simon Kuper – FT
The characteristic rhetorical device of our political era is the insult. Donald Trump, who understands that insults make news, rode to the presidency on a torrent of “losers”, “elites” and “nasty” women. Meanwhile, his opponents gave it right back to him. This year’s US presidential campaign will be worse, partly because Trump has turned up the political volume, and partly because social distancing has shifted even more of life on to insult-rich social media.

***** I recently had the most unpleasant exchange with a non-subscriber who came across JLN online and called me out for some comments I made from stories drawn from the newsletter, as I often do. In this case, the person was highly insulting and continued to be so as I tried to engage them in an email correspondence to inquire about their own claims. They never provided any kind of sources for their statements, but instead continued to insult me in a highly inflammatory manner. I am used to this behavior on the internet for my days in discussion groups back in the 1990s, but this was egregious and all about delivering insults rather than making any kind of point. I blocked the person from my email and moved on. I always treat people with respect. I will argue differences, but I don’t personsonalize it. I might say someone’s point is nonsensical, but I don’t say the person is nonsensical. I try to remember to treat others as I want to be treated.~JJL



Wednesday’s Top Three
Our most-read story Wednesday was CME trading floor’s coronavirus shutdown to last at least 3 more weeks, from FOX Business. Social distancing on a trading floor is not easy. Second was The New York Times’s Justice Dept. Ends Inquiries Into 3 Senators’ Stock Trades (including Sen. Kelly Loeffler, Republican of Georgia). Third was Bloomberg’s Taleb-Asness Black Swan Spat Is a Teaching Moment, about Nassim Nicholas Taleb and Cliff Asness and their views on tail-risk hedging.


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Lead Stories

Extinction by Algos Threatens Chicago’s Silenced Trading Pits
Elizabeth Stanton and Alyce Andres – Bloomberg
Eurodollar options floor handled half of volume before close; Electronic players look to capitalize on virus threat
Pete Kosanovich can’t wait to put his trading jacket back on and return to the noisy Chicago pit where he’s worked for 17 years. The burly former football player is known on the floor by the letters “MGLA” printed on his badge, a nickname referencing the 1960s cartoon “Magilla Gorilla.”

Wall Street Has Billions to Lose in China From Mounting Tension
Bloomberg News
Five big U.S. banks had $70.8 billion exposure to China; China is opening its $45 trillion financial market this year
Wall Street giants such as Goldman Sachs Group Inc. and JPMorgan Chase & Co. have tens of billions of dollars at stake in China as political tension risks derailing the nation’s opening of its $45 trillion financial market.

Failed Trades During Pandemic Prompt Calls to Overhaul EU Rule
Silla Brush – Bloomberg
Volatility would have been worse under new rule, lobbyists say; European regulators will introduce buy-in regulation next year
Big banks and money managers are ramping up a lobbying campaign against looming European trading regulations, arguing that they would have exacerbated market stress during the peak of the coronavirus outbreak.

CrossTower Launches Crypto-to-Crypto Trading
Julie Ros – P&L
CrossTower, a new exchange operator with a mission to mainstream digital asset investing and trading for institutional and individual investors, today announced the launch of its multi-asset trading platform founded by two capital markets veterans, CEO Kapil Rathi and president Kristin Boggiano, who recently worked together at AlphaPoint, a white label crypto exchange software firm.

On a Mission to Mainstream Digital Asset Investing and Trading, Capital Markets Veterans Launch CrossTower Exchange; CrossTower Co-founders CEO Kapil Rathi and President Kristin Boggiano bring a combined 40 years of exchange and regulatory experience to the firm
CrossTower, a new exchange operator, today announced the launch of its new multi-asset trading platform founded by capital markets veterans on a mission to mainstream digital asset investing and trading. The CrossTower platform was methodically built for institutional and individual investors with best-in-class safeguards, services and capabilities designed to make the next-generation financial markets a reality.

Hong Kong is the battleground in a US-China cold war; Fight over Beijing’s security law for the city will have a chilling effect on business
Jamil Anderlini – FT
By imposing a draconian national security law on Hong Kong, China’s leaders have clearly decided that stamping out dissent in the territory is more important than preserving its status as Asia’s premier financial centre.

Commodity traders need to embrace a digital future; The industry’s reluctance to adopt technology platforms has made it vulnerable to fraud
Etienne Amic – FT
The collapse of Agritrade International, Hin Leong Trading, Phoenix Commodities or ZenRock Commodities Trading — commodity trading firms seem to be failing with some regularity over recent months. Superficially, commodity traders share some features of the lightly regulated investment banks that existed before the 2008 financial crisis. They have leveraged balance sheets; they extend credit to suppliers; and they transact in derivatives executed on regulated exchanges.

SEC chair warns of risks tied to ESG ratings; Jay Clayton says merging separate metrics can lead to imprecise analysis
Chris Flood – FT
The US asset management industry’s top regulator has warned about the risks of relying on simple ratings when considering environmental, social or governance issues as part of an investment decision.

Trump-China Feud Is Increasing Risks for Markets and Economy
Bloomberg News
Rising geopolitical tensions could undermine recovery hopes; Hong Kong, multinationals at risk in worst-case scenarios
It’s only a matter of time before the Trump administration hits China over a range of grievances. The question for CEOs, investors and economic policy makers is how bad things will get. U.S. lawmakers moved on two fronts Wednesday, with Secretary of State Michael Pompeo declaring Hong Kong no longer autonomous from China and the House of Representatives authorizing sanctions against Chinese officials for abuses against Muslim minorities. Other bills in the pipeline would target Huawei Technologies Co., Chinese companies listed in the U.S. and banks that do business with Chinese officials who interfere in Hong Kong’s affairs.

China Approves Hong Kong Security Legislation, Defying Trump
Iain Marlow – Bloomberg
U.S. declared that Hong Kong was no longer autonomous; Move could trigger sanctions, including revoking trade status
Chinese lawmakers approved a proposal for sweeping new national security legislation in Hong Kong, defying a threat by U.S. President Donald Trump to respond strongly to a measure that democracy advocates say will curb essential freedoms in the city.

CME Group automates repo workflow with BrokerTec and TriOptima solution; BrokerTec and TriOptima collaboration aims to solve operational burden around manual processes for repo trading.
Hayley McDowell – The Trade
US exchange CME Group has moved to fully automate processes across the repo transaction lifecycle through a new collaboration between its BrokerTec and TriOptima divisions.

HKEX grabs derivatives deal from Singapore rival; Agreement with MSCI expected to bolster Hong Kong exchange’s international ambitions
Hudson Lockett and Philip Stafford – FT
Print this page
Hong Kong’s stock exchange group took a big step in its efforts to broaden its appeal to international investors on Wednesday when it snatched a key derivatives licensing agreement from the hands of its Singapore rival after 23 years, sending SGX’s shares tumbling.

What Hong Kong Losing Its ‘Special Status’ Would Mean
Iain Marlow and Daniel Flatley – Bloomberg
Under the United States-Hong Kong Policy Act of 1992, the U.S. treats Hong Kong, a semi-autonomous part of China, differently than the mainland in trade, commerce and other areas. Now U.S. President Donald Trump could rescind that “special status” to punish China for recent moves to tighten its grip on the city amid a resurgence of pro-democracy street protests. In its most extreme form, that would effectively mean treating the global financial hub no differently than any other Chinese city, a seismic shift that could harm both economies at an already difficult time. China has promised countermeasures against any foreign “interference.”

Viewpoint: Confessions from the Laundry Room
Walt Lukken – FIA.org
12,403 days. That’s the estimate of the number of times that Bill Murray painfully relives the same day as TV weatherman Phil Connors in the movie Groundhog Day. This estimate is based on the days recounted in the movie plus other days Phil references being shot, poisoned, frozen, hanged, electrocuted, burned, and stabbed. Throw in the time needed to become an expert in ice sculpting, piano playing, card flicking, and French, Bill Murray’s character is believed to have spent nearly 34 years repeating the same day.

Investors Cheer Europe’s Step Toward United Bond Market; European Union proposes borrowing 750 billion euros from capital markets to aid recovery from coronavirus pandemic
Caitlin Ostroff and Anna Hirtenstein – WSJ
Bond investors cautiously cheered a proposal by the European Union to issue centrally backed bonds for the first time, a move that attempts to address financial divisions that have long plagued the eurozone.

Euro-Area Economy Closer to ECB’s Worst-Case Estimates, Lagarde Says
Carolynn Look – Bloomberg
President Lagarde speaks in online Q&A session for youth; Economic contraction in 2020 to be in range of 8% to 12%
The euro-area economy is faring worse than hoped, facing a recession as bad as the European Central Bank’s more pessimistic forecasts. Output is set to shrink between 8% and 12%, ECB President Christine Lagarde and Vice President Luis De Guindos both said on Wednesday, calling a milder scenario out of date. The remarks highlight the severity of the repercussions for Europe after businesses were forced to close because of the coronavirus pandemic, costing hundreds of thousands of jobs and furloughing millions more.

Pandemic Accelerates Digital Transformation
Shanny Basar – MarketsMedia
The Covid-19 pandemic and the need for staff to work remotely has accelerated digital transformation in financial services and highlighted the need for increased cyber security. A panel discussed Covid-19: Building operational resilience- How adaptable and shock-resistant are we? at TSAM Digital conference yesterday.

Why work from Wall Street when you can WFH? As the New York Stock Exchange trading floor reopens, the value of face-to-face networking is once again under discussion
Gillian Tett – FT
Two decades ago, Daniel Beunza, a professor at London’s Cass Business School, embarked on some ethnographic — or fly-on-the-wall — research into that modern financial jungle, the Wall Street derivatives trading floor.

Europe’s $826 Billion Recovery Fund Will Have Strings Attached
Viktoria Dendrinou – Bloomberg
Nations need to submit investment plans to get access to funds; Funds will be distributed in installments based on milestones
The European Union’s top economic officials warned that the bloc’s 750 billion-euro ($826 billion) recovery package won’t give countries blank checks, as grants and loans will be conditional on the implementation of reforms and will have to focus on the region’s green and digital priorities.

US benchmark switch splits swaptions market; Some users ignore new guidance to nominate SOFR for swap discounting
Rebekah Tunstead – Risk.net
US dollar swaptions users are divided over new guidance designed to avoid a valuation change when clearing houses switch their swap discounting curves later this year.

Coronavirus Hasn’t Killed the Global Balance of Power; Americans who hail a new era of global cooperation haven’t been paying attention to what China is up to.
Hal Brands – Bloomberg
Is the global balance of power passe after Covid-19? It’s easy to see why smart observers might think so. The pandemic has rendered some of the world’s largest countries more helpless than some of the smallest. It has shown that some threats cannot be contained without cooperation across geopolitical and ideological lines. And so the coronavirus has tapped into a longstanding American hope that the grim realities of geopolitics might give way to something better.

Greensill drops libel suit against Reuters over bond story
Greensill Capital said it has dropped a libel suit against Reuters over a story which said that the financing group had provided a false statement to market participants in 2018.

Breakingviews – Hong Kong financiers face Man Group’s terror
Pete Sweeney – Reuters
Hong Kong’s financiers should study the lesson Man Group learned during the Chinese stock crash of 2015. Chinese authorities detained bankers and brokers, including the British hedge fund’s China head, as state media blamed foreign forces for sabotaging markets. Beijing’s proposed new security law will extend this attitude to Hong Kong. Traders and investors may have as much cause to worry as protesters.


‘We All Feel At Risk’: 100,000 People Dead From COVID-19 In The U.S.
David Welna – NPR
The U.S. death toll from COVID-19 has reached a somber milestone: As of Wednesday afternoon, the highly infectious viral disease has taken more than 100,000 lives nationwide. Soaring from two known coronavirus fatalities in February to more than 58,000 in April, the tally of U.S. deaths — in a country with fewer than 5% of the world’s inhabitants — now accounts for nearly one-third of all the known lives lost worldwide to the pandemic.

Coronavirus may never go away, even with a vaccine; Embracing that reality is crucial to the next phase of America’s pandemic response, experts say.
William Wan and Carolyn Y. Johnson – Washington Post
There’s a good chance the coronavirus will never go away. Even after a vaccine is discovered and deployed, the coronavirus will likely remain for decades to come, circulating among the world’s population.

Most Countries Fail to Capture Extent of Covid-19 Deaths; Many leave the untested off coronavirus tallies; Belgium doesn’t, despite the outcry
Daniel Michaels – WSJ
A growing pool of global death statistics indicates that few countries are accurately capturing fatalities from the new coronavirus—and in some the shortfall is significant . In the U.S., Russia, the U.K., the Netherlands and many other countries, the number of deaths recorded from all causes has jumped since March and far exceeded the number of deaths those countries report as linked to Covid-19, the disease caused by the coronavirus.

UK suffers highest death rate from coronavirus; FT analysis of data from 19 countries finds Britain hit hardest, ahead of US, Italy, Spain and Belgium
John Burn-Murdoch and Chris Giles – FT
The UK has suffered the highest rate of deaths from the coronavirus pandemic among countries that produce comparable data, according to excess mortality figures.

Covid-19 Brings a Reckoning of Layoffs to Silicon Valley
Sarah McBride and Christopher Cannon – Bloomberg
Layoffs have slammed tech companies both large and small since the start of the coronavirus pandemic in mid-March. The industry has cut more than 40,000 jobs so far, but this month was the cruelest yet. In a single week in early May, Uber Technologies Inc. announced it would slash 3,700 positions, Airbnb Inc. said it would cut 1,900 and Lyft Inc. fired or furloughed more than 1,000.

Help Wanted: Risk-Takers Willing to Work Hard Jobs for Low Pay
Alexandre Tanzi – Bloomberg
As coronavirus-induced lockdowns forced millions of workers out of jobs, some U.S. industries — from shipping to online learning — are hiring tens of thousands to meet demand related to Covid-19.

In Europe the Virus Raises New Walls Between East and West; Lockdowns and emergency action revive memories of communist rule. Will such measures energize authoritarian tendencies?
Andrea Dudik – Bloomberg
On May 20, as I neared the border with Austria, I was so stressed that I was afraid I wouldn’t be able to speak when I got to the crossing. It was my first trip out of the Czech Republic after two months of the pandemic lockdown, and I hadn’t seen my mother in all that time. She was in Vienna recovering from cancer chemotherapy and a broken ankle; I wanted to bring her home to Prague. What if I couldn’t get across to Vienna for some reason? I had medical permission for my mother to travel in case they asked. But what would I do if the border officials had some other question that was impossible to answer? What would I do if they didn’t let me through?

No preferential access to Themis’ potential COVID-19 vaccine: CEO
Nobody will get preferential access to a potential COVID-19 drug developed by vaccine maker Themis Bioscience, which is being bought by U.S. pharmaceuticals firm Merck & Co Inc, the Austrian firm’s chief executive said on Thursday.

Exchanges, OTC and Clearing

CME Group to Launch Options on Micro E-mini S&P 500 and Micro E-mini Nasdaq-100 Futures
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, announced it will launch options on its Micro E-mini S&P 500 and Micro E-mini Nasdaq-100 futures contracts. The new options will be available for trading in the fall of 2020, pending regulatory review.

BrokerTec And TriOptima Collaborate To Deliver First End-To-End Repo Workflow Solution
CME Group
BrokerTec, a leading provider of electronic trading platforms and technology services in fixed income markets, and TriOptima, a leading infrastructure service that lowers costs and mitigates risk in OTC derivatives markets, today announced that they have collaborated to deliver the industry’s first end-to-end repo workflow solution for industry participants. This provides full automation across the lifecycle of a repo trade.

Deutsche Börse starts partnership with Chinese data provider Wind
Deutsche Börse
Deutsche Börse is the first non-Chinese stock exchange to partner with leading financial data provider in China; Memorandum of Understanding signed to support easier access to the European capital market
Deutsche Börse and Wind, the leading provider of financial data in China, have agreed to make it easier for Chinese investors to access the European market. The initiative, which is driven by high demand, enables Chinese institutional investors to have easier access to European markets thanks to market data and services offered by Deutsche Börse and its derivatives exchange Eurex.

Eurex Exchange Readiness Newsflash | Eurex Exchange T7 Release 8.1 – Readiness Statement is available
With this Newsflash we would like to make you aware of the mandatory feedback that we kindly request from you. Please submit the “Readiness Statement” for the go live of T7 Release 8.1 prior to launch. Please enter your dedicated Eurex PIN (for security reasons) in the online questionnaire. The PIN for your company has been sent to the Central Coordinator.

Ice swap rate adds safety net with Tradeweb quotes; Inclusion of dealer-to-client prices will boost publication rate in stress periods, IBA claims Risk.net montage
Helen Bartholomew – Risk.Net
A key benchmark used to price swaptions and some rate-linked structured products will move to a new methodology on May 29, after failing to print on more than a third of occasions this year.


Choppy markets revive quest for RFQ’s ‘magic number’; Deutsche argues for smaller, stronger panels; Citi offers better prices for ‘full amount’ trades
Luke Clancy – Risk.net
According to De La Soul’s 1990 hip-hop smash, the magic number was three – “no more, no less”, the group insisted. But for buy side foreign exchange traders, the optimum number of dealers to approach for a price may be as low as one, or higher than 10 – an old debate that’s gaining a new edge in pandemic-struck trading.

Fintech regulations in Latin America could fuel growth or freeze out startups
It may have entered the game later than other leading regions such as Europe and North America, but Latin America’s fintech industry is dynamic and growing fast. The sector was recently given a valuation of more than $150 billion and continues to expand year-on-year.

Southeast Asia’s Fintech Startups Face Shakeout From Coronavirus
Shu-Ching Jean Chen – Forbes
The coronavirus is unlikely to halt the rapid advance of fintech firms in the emerging landscapes of Southeast Asia. Along the way, however, it is amplifying the gains of some startups while inflicting pain on many others.


Bitcoiners Go Wild After Goldman Revives Tulip Mania Comparison
Vildana Hajric – Bloomberg
‘We do not recommend Bitcoin’ to clients: Goldman Sachs report; Bank says Bitcoin does not show evidence of hedging inflation
Goldman Sachs Group Inc. just forged a lot of new enemies — in the crypto world. Buzz that Goldman would release a report discussing the state of the economy as well as gold and cryptocurrencies set enthusiasts ablaze, with many hoping the bank would finally put its weight behind digital tokens. But Goldman disappointed and upset many once details of its report were brought to light, with the bank blasting Bitcoin and other coins as unsuitable investments for its clients.

The Battle to Build Crypto’s First Prime Brokerage Heats Up; Crypto Prime Brokerage Coinbase Tagomi
Institutional crypto service providers are quickly learning what Wall Street figured out a long time ago: prime brokerage is a money making machine. In traditional financial markets, prime brokerage is a $30 billion dollar business.

$103M Bailout Denied for Coronavirus-Hit Firms in Switzerland’s ‘Crypto Valley’
Sebastian Sinclair – Coindesk
Crypto companies hard hit by the economic impact of COVID-19 have had a plea for a 100 million Swiss franc ($103 million) bailout rejected by Switzerland’s government. Local news site Tages-Anzeiger reported Wednesday that Heinz Taennler, finance director of the canton of Zug, had been denied a call for assistance for local blockchain startups through a sovereign wealth fund. Taennler had planned to issue loans to local startups, which in turn could be converted into shares.

Samsung Blockchain Wallet now allows users to buy and sell crypto via Gemini
Yogita Khatri – The Block
Crypto exchange Gemini has partnered with Samsung to let Samsung Blockchain Wallet users in the U.S. and Canada to trade cryptocurrencies. Announcing the news on Thursday, Gemini said the partnership would allow over 4 million Samsung users in the U.S. and Canada to buy and sell cryptocurrencies.

*****You can read Gemini’s press release here.~MR

Plaintiffs in Craig Wright case present new evidence that he fabricated his list of Bitcoin addresses and blocks
Aislinn Keely – The Block
Plaintiffs in the Kleinman v. Wright lawsuit have filed a new motion in support of their previously filed sanctions motion, arguing a list of unclaimed bitcoin addresses and blocks he submitted to the court is fraudulent. They have asked the court to issue case-terminating sanctions which would include imposing a judgment against Wright for bad faith conduct.

Number of Bitcoins on Crypto Exchanges Hits 18-Month Low
Zack Voell – Coindesk
The total number of bitcoins held in cryptocurrency exchanges wallets dropped to an 18-month low just above 2.3 million on Monday, according to data estimates from Glassnode. The decline marks an 11% year-to-date reduction in the number of bitcoins held by exchanges. Meanwhile, over the same period, the amount of ether in exchange wallets increased by more than 7%. Some market participants see this as a sign that more bitcoin investors are increasingly taking direct possession of their cryptocurrency.

Bitcoin Custody Giant BitGo Launches Institutional Trading Service
Ben Jessel – Forbes
BitGo, a leader in digital asset financial services, announced today that it is now offering institutional trading services through its new entity BitGo Prime. The ability to seamlessly trade from secure, insured cold storage is being offered exclusively to BitGo Prime clients, whose assets are held with qualified custodian BitGo Trust.

A new actively managed bitcoin hedge fund gets launched in Hong Kong
Yogita Khatri – The Block
Hong Kong-based crypto asset manager MaiCapital has launched a new actively managed bitcoin hedge fund for professional investors. The “Bitcoin+ Investment Fund” is a quant fund, and aims to track and potentially outperform bitcoin’s performance in various market conditions by applying quantitative algorithms.

Cryptocurrency is coming for social networks
Robert Hackett and David Z. Morris – Fortune
There is an image I cannot get out of my mind. It is of Facebook CEO Mark Zuckerberg telling a plucky employee in a giant inflatable Pikachu costume that Facebook “is not a democracy.”

Reddit’s Fortnite Community Outpaces r/CryptoCurrency in Token Transfers
Joshua Mapperson – Cointelegraph
Reddit’s r/FortNiteBR community has conducted almost five times as many ERC-20 token transfers as the r/CryptoCurrency community with over 1% of Fortnite subscribers holding tokens. After only two weeks of Reddit launching their Ethereum-based Community Points system, over 15,000 users have performed almost 18,000 token transfers with over 80% using FortNite’s Brick tokens as shown by DappRadar’s Reddit Points Tracker.

‘Focus on Retirement’: Crypto Custodian Rolls Out Hybrid IRA Offering
Nathan DiCamillo – Coindesk
Digital asset custodian Kingdom Trust is offering investors a single retirement account for traditional and digital assets.


Trump, Furious at Twitter, Aims Order at Tech Giants
Ben Brody, Mario Parker, and Eric Newcomer – Bloomberg
President relies on Twitter to communicate with supporters; He attacks company over fact-checks added to recent tweets
Donald Trump has been raging against Twitter Inc. since the social media platform that helped vault him to the presidency slapped fact-check links on a pair of his tweets.

Get Republicans to Vote Against Trump? This Group Will Spend $10 Million to Try; A new organization, Republican Voters Against Trump, is testing the premise of whether there are really any persuadable voters left.
Annie Karni – WSJ
Four years ago, 50 of the country’s most senior Republican national security officials signed a letter declaring that Donald J. Trump would put the country at risk if he was elected president and that they would not vote for him.

Trump Draft Order Could Seek to Limit Protections for Social-Media Companies; Executive order comes after Twitter fact-checked president’s tweets
John D. McKinnon and Rebecca Ballhaus – WSJ
A draft of an executive order President Trump is expected to sign on Thursday would seek to limit the broad legal protection that federal law currently provides social-media and other online platforms, according to people familiar with the draft.

Fact-checking Donald Trump’s Twitter feed; Social media site should clamp down on misinformation
The editorial board – FT
US president Donald Trump treats Twitter like his predecessor Franklin Delano Roosevelt used the radio: the former reality star’s social media feed allows him to speak directly to his supporters, bypassing traditional media. Yet while FDR’s “fireside chats” aimed to reassure the nation and explain his policies to fight the Great Depression, Mr Trump’s Twitter feed confuses and enrages Americans. His intention is to energise his supporters, and provoke his enemies, ahead of what is likely to be the most divisive election in US history.

Trump is courting a landslide defeat; US president’s bungled coronavirus response has alienated crucial older voters
Edward Luce – FT
Donald Trump’s 2016 victory caught most people by surprise, including him. The safest position since then has been to assume he will do it again. But there is a point at which once-bitten-twice-shy becomes intellectual abdication.

Mark Zuckerberg and Jack Dorsey clash as Trump social media order looms; Tensions escalate between founders of Facebook and Twitter with president threatening action on alleged censorship
Tim Bradshaw – FT
Mark Zuckerberg and Jack Dorsey have clashed over how to tackle misinformation on their social networks, escalating tensions between the founders of Facebook and Twitter as they brace for an executive order from US President Donald Trump over what he called their censorship.

Twitter Fact-Checks China Spokesman’s Tweets About Virus Origins
Derek Wallbank – Bloomberg
Fact check applied to March tweets from China’s Zhao Lijian; Notification similar to what Twitter used on President Trump
Twitter has applied a fact check tag to at least two posts by China Foreign Ministry Spokesman Zhao Lijian, both of which advanced questions about whether the Covid-19 virus began in the U.S. rather than Chin

Premier Li Says China Doesn’t Want Cold War, U.S. Decoupling
Bloomberg News
China’s Premier Li Keqiang struck a conciliatory tone with the U.S., saying that the two sides should cooperate and respect each other’s interests as tensions escalate on many fronts.

China Isn’t Using Its Currency as a Cold War Weapon; The yuan has every logical reason to weaken against the dollar right now. If anything, Beijing has been hands-off.
Shuli Ren – Bloomberg
The deterioration of U.S.-China relations is fast and furious, with Washington throwing out accusations of unfair trade practices, unlawful technology transfer and an early cover-up of the coronavirus outbreak, which has claimed over 100,000 American lives. The Chinese yuan, this year’s beacon of stability, is now is now at risk of tumbling like other emerging markets currencies.

‘Absolutely no legal authority’: Trump’s threats to shut down Twitter are ‘totally asinine’ and reek of censorship, according to legal experts
Sonam Sheth and Eliza Relman – Business Insider
President Donald Trump struck a forceful tone this week when he threatened to “strongly regulate” or entirely shut down social-media companies for what he perceived as an anti-conservative bias.


ASIC takes action on two AFS licensees
ASIC has adopted a practice of issuing combined media releases about administrative action. There is no relationship between the matters or the subjects in this media release, except that ASIC has taken administrative action.

Select Committee on COVID-19 – Opening statement
Opening statement by ASIC Chair James Shipton, at the Senate Select Committee on COVID-19 public hearing, 28 May 2020.

SEC chair warns of risks tied to ESG ratings; Jay Clayton says merging separate metrics can lead to imprecise analysis
Chris Flood – FT
The US asset management industry’s top regulator has warned about the risks of relying on simple ratings when considering environmental, social or governance issues as part of an investment decision.

ESMA Newsletter – Nº14; Welcome to the 14th edition of ESMA’s Newsletter.
?ESMA continues to closely monitor the impact that COVID-19 is having on EU financial markets and, in this isssue, we give an update on ESMA’s recent activities related to COVID-19 and we take a closer look at the Thematic Report on Collateralised Loan Obligations credit ratings in the EU. We also highlight deadlines for closing consultations next month and catch up on the full list of publications from April and May.

Monetary Authority Of Singapore: “Fairness Metrics” To Aid Responsible AI Adoption In Financial Services
The Monetary Authority of Singapore (MAS) announced today that the first phase of the Veritas [1] initiative – a framework for financial institutions to promote the responsible adoption of Artificial Intelligence and Data Analytics (AIDA) – will commence with the development of fairness metrics in credit risk scoring and customer marketing. These metrics will help financial institutions validate the fairness of their AIDA solutions in the two use cases. More use cases will be identified in subsequent phases of the initiative.

Investing and Trading

Weakening of Foreign Currencies Opens Up Hedging Options; Weak currencies and market fluctuations prompt some CFOs to re-evaluate currency exposure
Mark Maurer – WSJ
Alamos Gold Inc. last month decided to take advantage of low currency-exchange rates for the Canadian dollar and Mexican peso against the U.S. dollar. The Canadian gold miner protected more of its currency exposure and extended that cover for a longer period.

Fraction of Fed lending facilities have been tapped so far; US central bank engineered market rally before most emergency vehicles were up and running
Colby Smith and Brooke Fox -FT
Only a fraction of the multitrillion dollar emergency lending facilities unveiled by the Federal Reserve has been deployed, more than two months after the US central bank’s promises of action helped stoke a powerful rebound in financial markets.

JDE Peet’s Will Accelerate $2.6 Billion Amsterdam IPO
Thomas Buckley, Scott Deveau, and Crystal Tse – Bloomberg
Firm tells investors orders below 31.50 euros risk missing out; Coffee seller’s IPO to be Europe’s biggest this year
Coffee giant JDE Peet’s BV is wrapping up its initial public offering in 10 days flat, as opposed to the customary four weeks, capturing investor appetite quickly to shield itself from market volatility amid the coronavirus pandemic.

U.S. firms shield CEO pay as pandemic hits workers, investors
Jessica DiNapoli, Ross Kerber – Reuters
Sonic Automotive Inc (SAH.N), which operates 95 U.S. car dealerships, started laying off and furloughing about a third of its workforce as the coronavirus pandemic crushed its sales. Then it changed its executives’ pay packages – handing them a multimillion-dollar windfall.

Big Tech goes on pandemic M&A spree despite political backlash; Rate of dealmaking by Alphabet, Amazon, Apple, Facebook and Microsoft is highest since 2015
Miles Kruppa and James Fontanella-Khan – FT
Big technology companies are hunting for deals at their fastest pace in years, racking up acquisitions and strategic investments despite increased regulatory scrutiny during the coronavirus-led market turmoil.


Tourmaline adds three industry veterans to outsourced trading desk; Outsourced trading has continued to see increased demand from funds in light of the recent volatility and surge in trading volumes.
Kiays Khalil – The Trade
Tourmaline has hired three senior buy-side trading and operations veterans as demand for outsourced trading continues to grow. Alex Goodman, Matt Sindell and Darren Mazzuca are the latest new hires to join Tourmaline. Goodman and Sindell have been appointed managing directors at the firm, while Mazzuca joins as director of operations.

Virtu Financial launches interlisted conditional orders for cross-border block liquidity; Traders in the US and Canada can use the new order types to match sources of block liquidity via POSIT Alert Canada at Virtu Financial.
Hayley McDowell – The Trade
US market maker Virtu Financial has launched interlisted conditional orders via POSIT Alert Canada, allowing traders to access cross-border block liquidity across US and Canadian securities.

FX trade recommendation service goes live at RBC Capital Markets; RBC Capital Markets executes its first FX trades with clients using the new AMOS trade recommendation service.
Kiays Khalil – The Trade
RBC Capital Markets has executed its first FX trade with clients using a new trade recommendation service aimed at hedge funds and real money clients.

Sean Healey, asset management pioneer, dies at 59; Former AMG chief executive helped nurture fund managers including AQR, Winton Capital and ValueAct
Attracta Mooney – FT
Sean Healey, co-chairman and former chief executive of Affiliated Managers Group, the $600bn asset management business, has died of motor neurone disease aged 59.

Jamie Dimon Captures the Stock Market Moment; Central bank action has helped financial valuations recover, but unemployment and diminished consumption can’t be magicked away.
Marcus Ashworth – Bloomberg
Don’t fight the U.S. Federal Reserve — repeat that mantra until it sticks. Jamie Dimon, the boss of JPMorgan Chase & Co., put it well this week. “This wasn’t the bazooka,” he said, referring to Jay Powell’s response to the coronavirus crisis. “The Fed took out the whole military and applied it. Just announcing these programs reduced spreads (the difference between corporate bond yields and their benchmarks) in the market. It’s going to save a lot of small businesses.”

With M&A Dead, Wall Street Bankers Keep Busy With Stock Sales
Crystal Tse – Bloomberg
Sanofi-Regeneron deal latest offering of historic size; Rare area of dealmaking that has held up year-over- year
Wall Street bankers are a lot less busy these days, what with the pandemic-induced drop-off in mergers and acquisitions and initial public offerings. But there’s a gritty, less glamorous dealmaking realm that has held up, and it’s helping banks offset some of that lost M&A and IPO revenue. A variety of companies, looking for liquidity in the weak economy, are selling off big stakes they’ve long held in public corporations.

BNP Paribas Asset Management Appoints Philippe Boulenguiez Global Chief Operating Officer And Member Of The Executive Committee
BNP Paribas Asset Management (‘BNPP AM’) announces the appointment of Philippe Boulenguiez as Global Chief Operating Officer. Based in Paris, he reports to Frédéric Janbon, BNPP AM’s Chief Executive. He additionally joins BNPP AM’s Executive Committee.

Norway oil fund’s incoming chief to jettison majority stake in hedge fund; Nicolai Tangen attempts to tamp down debate over his appointment
Richard Milne – FT
The incoming chief executive of Norway’s $1tn oil fund has agreed to give up a majority stake in the hedge fund he founded and have an independent trustee manage his remaining holdings to ensure he can take charge of the world’s largest sovereign wealth fund.

J.P. Morgan Asset Management partners with Calastone to power Money Market Funds
J.P. Morgan Asset Management has partnered with Calastone, the largest global funds network, to introduce new levels of automation to money market funds via its “Morgan Money” trading platform.

BMO’s $130 Million Trading Loss Shows Pain From Notes, Hedging
Doug Alexander – Bloomberg
Bank of Montreal had about C$180 million ($130 million) in trading losses on a single day in March, a sign of just how risky stocks were as the coronavirus outbreak became a global pandemic.

JPMorgan’s investment banking head: quarterly revenues tracking 50% up from 2019
JPMorgan Chase & Co’s head of its corporate and investment banking division said second-quarter revenues are on track to be up more than 50% higher than the same period last year, thanks to extremely strong fixed income and equities trading revenues.


Currency Volatility Is a Headache for Companies Reducing Reliance on China
Anooja Debnath – Bloomberg
Moving supply chains means handling more volatile FX: Investec; Virus hit accentuated trend spurred by U.S-China tariff wars
Currency volatility is a nemesis for executives planning on reducing their reliance on China. The world’s second-largest economy has the relatively tame yuan with the People’s Bank of China setting a reference rate every day. The currency’s offshore and onshore rates aren’t identical, but they often move in tandem.

Swedish Dirty Money Affair Brings Bankers Closer to Police
Hanna Hoikkala – Bloomberg
The bank at the center of Sweden’s biggest money-laundering scandal says illegal transactions are probably still flowing through the broader financial system, because existing tools to stop them aren’t good enough.

Turkey’s Central Boosts Short-Term FX Borrowing to a Record
Constantine Courcoulas – Bloomberg
The Turkish central bank brought its short-term borrowing of hard currency from local lenders to a record as it looked to boost international reserves after an effort to defend the lira.


Michel Barnier says EU remains ‘open’ to transition period extension; Talks between London and Brussels stall with sides far apart on fisheries and regulatory alignment
George Parker – FT
Michel Barnier, the EU’s chief Brexit negotiator, has told opposition MPs at Westminster that Brussels remains “open” to extending the transition period by up to two years, as talks on a future trade deal continue to founder.

Britain’s Brexiters still do not understand Europe; The underlying assumption remains that the UK is somehow ‘owed’ privileged access
Philip Stephens – FT
Why are the Europeans being so beastly? Why won’t they agree to the post-Brexit trade deal Britain wants? Worse, why doesn’t Brussels understand that it is in the EU’s own interest to sign up to Boris Johnson’s proposals? As the UK prime minister never tires of saying, Britain buys lots of German cars, Italian prosecco and French cheese.

Sterling falls below $1.225, held down by Brexit, negative rates risk
Elizabeth Howcroft – Reuters
The pound fell against the dollar and euro on Thursday, little changed after Wednesday’s reports that Brexit talks are at an impasse, and still held down by speculation about negative interest rates. Sterling fell 1% on Wednesday after Britain told the European Union on Wednesday it needed to break a fundamental impasse to clinch a Brexit trade deal by the end of the year.

UK PM Johnson to go to Brussels next month for Brexit talks: The Times
British Prime Minister Boris Johnson will resume Brexit talks in Brussels next month, the Times newspaper reported on Thursday. Britain’s negotiator with the European Union, David Frost, said Johnson will meet the presidents of the European Commission and Council to formally assess the state of the talks, according to the newspaper.

France says resumed Brexit talks going badly
Dominique Vidalon, John Irish – Reuters
French Foreign Minister Jean-Yves Le Drian said on Wednesday that Brexit talks, which have resumed following an interruption caused by the coronavirus crisis, were not going well. “The resumption (of the talks) is going badly, deep differences remain,” Le Drian told a French Senate hearing.

Step up your no-deal Brexit plans, EU tells banks in Britain
Huw Jones – Reuters
Britain’s financial services sector should be ready for a no-deal Brexit when a transition period with Brussels expires in December, a senior European Union official said on Wednesday.


What the Future of Restaurants Might Look Like: What you need to know
Kate Krader – Bloomberg
Of all the urgent questions presented by the global pandemic, one of the toughest to answer is: What will restaurants look like in the future? And will your favorite restaurant reopen at all? https://bloom.bg/2ZIGYof

Financial Hiring Gets Even Tougher in Never-Meet-in-Person Era
Tom Metcalf, Suzanne Woolley, and Felipe Marques – Bloomberg
Some finance firms filling vacancies with virtual recruiting; Reaching ‘comfort level’ tougher with video, a recruiter says
Quentin Marshall hired three people over the past two months. He filled the roles without meeting any of them in person. Recruiting during a pandemic requires “breaking down a lot of prejudices about how to do things,” said Marshall, head of private banking at U.K. lender Weatherbys. “Once you get over this idea you must be sharing the same oxygen molecules as them, you just get on with it.”

Can restaurants adapt their wine lists after the pandemic? Drinks sales are key to the success of any restaurant, but how they are achieved will have to change
Nicholas Lander – FT
The success of any restaurant depends on a variety of factors — its location and its rent, of course. The wine list and the ingenuity of the kitchen brigade are also important. Less tangible is the warmth of the front-of-house team.

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Past JLN Newsletters

CME to permanently close most trading pits

CME to permanently close most trading pits

First Read $40,626/$300,000 (13.5%) Anonymous ++++ Hits & Takes John Lothian & JLN Staff Without fanfare or amplification from its executives, the CME Group shut the books on most -- but not all -- of its floor trading history Tuesday afternoon with the...

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