Hackers for hire targeted ‘hundreds of institutions’, says report; Euro’s Path to Global Prominence Leads Through Green Finance

Jun 9, 2020

First Read

Unsung Heroes: OCC’s Dan Busby
By Sarah Rudolph – John Lothian News

Dan Busby has his hands full as head of operations at OCC, but he insists he is having fun.

He and his team are responsible for the back office operations for the world’s biggest equity derivatives clearing organization. OCC provides clearance, settlement and completes the life cycle of the trade for 16 options exchanges and four futures exchanges (they just added The Small Exchange on Monday) and is “really a 24×6 operation,” Busby said. And they are dealing with extraordinarily high volumes now, because of the coronavirus pandemic, while at the same time working on the Renaissance technology modernization project, which OCC has been “redoing from the ground up.”

The Renaissance project is “a massive effort” and the biggest initiative for the OCC in a long time, Busby said. They have been hiring recently for the project and are planning for as early as 2022 as the launch date.

Back office operations at OCC start Sunday night because some of the futures markets open at 5:00 pm. There are six teams in operations: the market operations team interfaces with exchanges and monitors new listings and trade activity. Member Services is primarily about relationship management with OCC’s clearing member firms, Busby said. The collateral services team does morning settlement and collects what the member firms owe. The corporate actions team monitors options underlyings for any upcoming corporate actions such as dividends and provides investors with guidance. The external testing team responds to member requests for testing capabilities.

To read the rest of this article, go HERE.


Hits & Takes
By John Lothian, Sarah Rudolph

The new NFA board video is out with a report from the last NFA board meeting. This video is a little different as there are no speakers or voices, just background music and text and pictures. Due to the Covid-19 outbreak and the stay-at-home order, this was the approach NFA took to deliver their quarterly board update. The update was produced by John Lothian Productions head videographer Patrick Lothian. I am biased, but I really like the way the NFA did this.

Congratulations to Nancy Bohannon, vice president of human resources for the National Futures Association, who is celebrating 31 years with the NFA. She started in 1989 as a director of human resources and served as a managing director from 2013 to 2019 before being promoted to vice president in 2019. Her long career at the NFA is a testament to her and to the NFA as an organization. Congratulations, Nancy.

Today we start a new print series for John Lothian News, Unsung Heroes. The series is being written by JLN Editor-in-Chief Sarah Rudolph and is about those back-office unsung heroes who have helped keep the markets and our industry humming along during this pandemic and stay-at-home orders. They have braved the risks of Covid-19 to keep doing their jobs from their offices or disaster recovery locations, while the rest of us are safely ensconced at home.

We begin with a profile of Dan Busby, senior vice president and head of operations at OCC. If you have a suggestion for an unsung hero at your organization, please reach out to Sarah Rudolph at sarahrudolph@johnlothian.com

Steptoe and Matthew Kulkin are holding a webinar titled “Market Oversight and Regulation: FINRA and NFA Priorities and Practices” on June 17 from 2:00 p.m. to 3:00 p.m. EDT. Speakers at the event will be Kulkin, Tom Gira, executive vice president, FINRA market regulation and transparency services, Philip Shaikun, FINRA vice president and associate general counsel, Bill St. Louis, FINRA senior vice president, member supervision, Regina Thoele, NFA senior vice president, compliance and Carol Wooding, NFA senior vice president, general counsel and secretary.

MIAX Chairman Thomas Gallagher shared some thoughts on happenings in the USA in a letter to employees at MIAX Holdings that was shared on LinkedIn by MIAX Futures CEO Mark Wetjen

I was in a big box home improvement store in Delavan, Wisconsin yesterday and most of the people in the store were not wearing masks. I was wearing one.

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


As Diners Flock to Delivery Apps, Restaurants Fear for Their Future; While the apps say they are saving them in the pandemic, many restaurateurs say the opposite.
Nathaniel Popper – WSJ
Before the coronavirus lockdowns, Matt Majesky didn’t take much notice of the fees that Grubhub and Uber Eats charged him every time they processed an order for his restaurant, Pierogi Mountain.

*****Restaurants are going to have to become cannabis dispensaries and start to sell an after dinner brownie or joint to make up for the lack of alcohol sales.~JJL


Former Wall Street Trader’s Meal Service Delivers Social Justice; Sam Polk of Everytable sees parallels between the 2008 financial crash and the current pandemic.
Kate Krader – Bloomberg
In 2008, when Sam Polk was a senior distressed trader at King Street Capital Management, stress was his operating principle. King Street was one of the world’s largest distressed hedge funds at the time. “Bear Stearns went down, Lehman Brothers went down. Structures we thought were stable were disappearing in front of our eyes,” recalls Polk, who spent the time leveraging bets against the assets of the shut-down banks. Polk left Wall Street in February 2010, frustrated that while the country was awash in job losses and foreclosures, his co-workers worried about their bonuses.

******The best kind of deliveries.~JJL


Negative thinking linked to dementia in later life, but you can learn to be more positive
Sandee LaMotte, CNN
Are you a pessimist by nature, a “glass half empty” sort of person? That’s not good for your brain. A new study found that repetitive negative thinking in later life was linked to cognitive decline and greater deposits of two harmful proteins responsible for Alzheimer’s disease. “We propose that repetitive negative thinking may be a new risk factor for dementia,” said lead author Dr. Natalie Marchant, a psychiatrist and senior research fellow in the department of mental health at University College London, in a statement.

*****Learn to be more positive, ASAP.~JJL


Netflix secured trademarks for ‘Space Force’ before US military could
Brooke Seipel – The Hill
The Netflix original comedy “Space Force,” which is based on the new branch of the military launched by President Trump, reportedly obtained trademark rights for the name before the government. According to The Hollywood Reporter, the show secured trademark rights to “Space Force” in multiple places, including Europe, Australia and Mexico, while the Air Force owns only a pending application for registration in the United States. That means the show has more confirmed trademark rights than the U.S. military.

*****The first students of the Space Force academy will be Space Cadets.~JJL



Monday’s Top Three
Our top story Monday was Matt Leising’s Bloomberg story, Day Traders Are a New Wrinkle in the Negative Oil Price Mystery. Second was The New York Post’s story, Treasure worth over $1M found in Rocky Mountains after decade-long search. There’s gold in them thar hills! Third was Bloomberg’s A Goldman Sachs Cowboy Lists Horse Ranch With Near-50% Price Cut. Wow, get it while it’s cheap!


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Lead Stories

Hackers for hire targeted ‘hundreds of institutions’, says report; Researchers found 28,000 web pages set up to steal passwords from politicians, lawyers and journalists
Paul Murphy – FT
A hackers-for-hire group dubbed “Dark Basin” has targeted thousands of individuals and hundreds of institutions around the world, including advocacy groups, journalists, elected officials, lawyers, hedge funds and companies, according to the internet watchdog Citizen Lab.

Euro’s Path to Global Prominence Leads Through Green Finance
Piotr Skolimowski – Bloomberg
ECB shows euro made for almost half of all green bonds in 2019; Annual report showed euro remains second most used currency
The euro has carved out a dominant position in the fast-growing market for green-bond financing, accounting for almost half of all new issuances last year, according to the European Central Bank. The development dovetails with European Union ambitions to make the continent the first climate-neutral region by 2050. ECB President Christine Lagarde has promised to reflect on how her institution could contribute, after repeatedly coming under fire from environmental groups for buying bonds of polluters as part of its monetary stimulus.

Exclusive: Obscure Indian cyber firm spied on politicians, investors worldwide
Jack Stubbs, Raphael Satter, Christopher Bing – Reuters
A little-known Indian IT firm offered its hacking services to help clients spy on more than 10,000 email accounts over a period of seven years. Delhi-based BellTroX InfoTech Services targeted government officials in Europe, gambling tycoons in the Bahamas, and well-known investors in the United States including private equity giant KKR and short seller Muddy Waters, according to three former employees, outside researchers, and a trail of online evidence.

Hong Kong hedge funds explore exit as national security law looms; City’s status as premier Asian destination for industry talent is at stake
Hudson Lockett and Daniel Shane – FT
Hong Kong-based hedge funds are exploring plans to uproot their operations as China prepares to impose sweeping national security legislation on the Asian financial hub.

Deutsche Bank backs US operations despite stretched balance sheet; Regional chief says German lender has deployed more capital to American business
Laura Noonan – FT
Deutsche Bank has continued to back its US operations through the coronavirus pandemic despite broader financial pressures on the group, according to its top regional executives.

US exchanges win appeal on SEC market data fee ruling; Court of Appeals have denied the SEC’s move to stop a review of its decision on market data fee increases by NYSE and Nasdaq.
Hayley McDowell – The Trade
Nasdaq and the New York Stock Exchange (NYSE) have won an appeal against a controversial ruling in 2018 from the US regulator on changes to market data fees. The US Court of Appeals in Washington denied the SEC’s petition to stop a review of its ruling that Nasdaq and NYSE had failed to justify an increase in market data fees, supporting a judicial review of the action instead.

Ex-LSE boss Xavier Rolet blasts shorter trading hours: ‘It’s a storm in a tea-cup’; The boom in snazzy algorithms and off-exchange trades make the argument irrelevant, the former LSE chief executive said
Shruti Tripathi Chopra and Trista Kelley – Financial News
The debate over slashing stock market hours is a “storm in a tea-cup”, according to Xavier Rolet, the former chief executive of the London Stock Exchange.

JP Morgan global equities electronic trading head departs for COO role at IEX; Daniel Ciment will become COO of IEX Exchange after ten years with JP Morgan, most recently leading its electronic equities trading business globally.
Hayley McDowell – The Trade
The Investors Exchange (IEX) has hired the head of global equities electronic trading at JP Morgan as chief operating officer to oversee its exchange operations. Daniel Ciment joins IEX after ten years at JP Morgan where he served as head of global equities electronic trading and global agency program trading. He will begin his role as COO of IEX Exchange next month, reporting to IEX president and co-founder Ronan Ryan.

Vitol veteran Ian Taylor dies after long cancer illness
Florence Tan, Julia Payne, Olga Yagova – Reuters
Ian Taylor, who built Vitol into the world’s biggest oil trader, has died from pneumonia at the age of 64, the company said on Tuesday, after surviving bouts of cancer and a stroke last year.

How Vitol was blindsided by the oil price plunge; First-quarter profits at world’s largest independent oil trader drop 70 per cent
David Sheppard and Neil Hume – FT
Vitol chief executive Russell Hardy was in a buoyant mood in February. Oil prices had slumped as the coronavirus outbreak hammered fuel demand in China, but crude had started to recover as the disease appeared to be under control.

Turkey Signs Deal With Euroclear to Lift Foreign Demand for Debt
Cagan Koc – Bloomberg
Turkey reached an agreement with one of the world’s biggest bond clearing systems to settle transactions in its debt market. The deal with Euroclear will increase foreign investors’ access to bonds denominated in liras, dollars, euros and gold, Turkey’s Treasury said Tuesday on its website.

Libor trap lurks in 2021 US stress tests; Using SOFR, borrowing could boom and revenues collapse Risk.net montage
Robert Mackenzie Smith – Risk.net
As Libor’s likely demise approaches, banks are fretting over how to model the adoption of replacement risk-free rates in next year’s round of US regulatory stress tests.

Charles Schwab takes big steps toward buying rival, moving HQ from California to Texas
Mark Calvey – San Francisco Business Times
The combined firm will have over 20 million brokerage accounts with more than $5 trillion in client assets and will be based in Westlake, Texas.

Remote working is not the same for financial traders – here’s why
Daniel Beunza, Derin Kent – TheConversation.com
For lots of office workers, coronavirus proved to their companies that remote working is possible. Working from home has been unexpectedly effective for many. But not for all financial traders. The shift to trading from home may even have contributed to the market crash on March 9. Either way, as lockdown measures begin to lift, executives and policy makers hope to reopen socially distant trading rooms while retaining their unique dynamic.

Former CFTC Chairman Chris Giancarlo Cautions Against Changing the Rules in a Crisis
The ICE House – ICE
Chris Giancarlo’s voice resonates with experience and authority. He didn’t stand still when his term as Chairman of the U.S. Commodity Futures Trading Commission came to end last year. He’s immersed himself in a wide range of initiatives built on his decades of service in government and FinTech, which he explains in this episode. But he’s also keeping a close eye on his old beat, and doesn’t like what he sees from European regulators tinkering with the complex plumbing of central counterparty clearing that underpins the global markets. “Now,” he says, “is not the time to change the rules on CCP resolution.”


Rising markets and inequality grow from the same root; Covid-19 puts workers under immense strain, while asset owners feel much less pain
Robert Armstrong – FT
Was the market right all along? Until last Friday, it looked as if stock markets had lost all track of reality. In the world, we saw spiralling unemployment and political disarray. In the markets, especially the huge American market, exuberance.

Virus Spreaders Who Never Show Symptoms ‘Very Rare,’ WHO Says
Jeff Sutherland – Bloomberg
Finding could have major impact on battle to contain Covid-19; Asymptomatic threat has made nations wary of opening economies
Transmission of the novel coronavirus by people who don’t develop symptoms is “very rare,” the World Health Organization said, playing down concerns that these so-called silent spreaders might serve as a major conduit for the disease.

England & Wales Deaths Fall; U.K. Virus Fatalities Pass 51,000
Eddie Spence – Bloomberg
Deaths involving coronavirus in England and Wales fell to the lowest in eight weeks, even as the U.K. became the first in Europe with more than 51,000 mortalities linked to the virus.

Shutdowns prevented 60 million coronavirus infections in the U.S., study finds
Joel Achenbach and Laura Meckler – Washington Post
Shutdown orders prevented about 60 million novel coronavirus infections in the United States and 285 million in China, according to a research study published Monday that examined how stay-at-home orders and other restrictions limited the spread of the contagion.

Exchanges, OTC and Clearing

Deutsche Börse successfully places hybrid bonds worth EUR 600 million at an attractive interest rate of 1.25 percent; Deutsche Börse AG successfully placed a corporate bond worth EUR 600 million today. The hybrid bond has a term of 27 years with a first notice date after 7 years and a coupon of 1.25 percent annually until the first notice date.
Deutsche Börse
Deutsche Börse has thus prematurely refinanced its outstanding hybrid bond in the amount of EUR 600 million before the upcoming first notice date. With the refinancing, the company achieves considerable interest savings, since the new instrument with its interest rate of 1.25 percent replaces the old bond with a 2.75 percent coupon.

Eurex clears first inflation swap transactions
BNP Paribas, UniCredit and Societe Generale the first banks to clear inflation swaps through Eurex Clearing; Another important addition to Eurex’s euro liquidity pool
Eurex Clearing, one of the leading CCPs globally and part of Deutsche Börse Group, has cleared its first inflation swap transactions. Initial trades were submitted by BNP Paribas, UniCredit and Societe Generale. This demonstrates a continued commitment from international banks to meet end client demand and access more OTC products at Eurex Clearing.


Cloud9 And 28Stone Team Up To Streamline Remote Workflows
Cloud9 Technologies (“Cloud9”), a leader in cloud-based communications, has partnered with 28Stone Consulting, a leading provider of business and consulting services to the financial services industry, to enable the institutional trading community to efficiently implement and customize Cloud9’s cloud-based voice trading solutions.

TRADE Calls: Caplin Systems – Demand for FX Technology
Kiays Khalil – The Trade
John Ashworth, CEO of web trading technology provider Caplin Systems, joins The TRADE virtually to discuss FX market participants’ response to market volatility amid the COVID-19 pandemic, and which technologies have become increasingly important during the crisis.

Societe Generale deploys big xyt platform for execution analytics; Societe Generale Luxembourg has implemented execution analytics from big xyt via its transaction cost analysis platform.
Kiays Khalil – The Trade
Market data provider big xyt has confirmed it will provide Societe Generale Luxembourg with advanced execution analytics through its transaction cost analysis (TCA) platform. Societe Generale has implemented the execution analytics to supply its clients with more granular trading performance metrics. The investment bank will use big xyt’s consolidated view of the marketplace to measure and benchmark executions to help clients react more efficiently to changing market dynamics and reduce transaction costs.

Former Treasury Officials Positioned to Shape Fintech From Private Sector; A spate of fintech hires suggests that new cryptocurrency and other financial technology regulations could be shaped as much by the private sector as by federal agencies themselves
Mengqi Sun and Ian Talley – WSJ
Financial technology companies are snapping up former government officials as they seek to navigate the still-developing patchwork of regulations governing cryptocurrency and other financial technology. A handful of recent high-profile hires could signal a stronger role being played by the private sector in the evolution of those rules.


Ethereum Co-Founder’s Firm Starts Compliance Service for Tokens
Olga Kharif – Bloomberg
ConsenSys know-your-customer product will focus on DeFi; Automated system will track 280,000 tokens issued on Ethereum
ConsenSys Inc., which is seeking to transform itself into a full-service software provider for the Ethereum network, is releasing an automated service for catching crypto’s bad guys. Headed by one of Ethereum’s co-founders, Joseph Lubin, the New York-based company is rolling out a product focused on the know-your-customer regulatory compliance requirements that have proved to be a headache for many cryptocurrency firms.

Coca-Cola vending machines in Australia and New Zealand now accept bitcoin
Yogita Khatri – The Block
More than 2,000 Coca-Cola vending machines across Australia and New Zealand now accept bitcoin (BTC) as a payment option. Coca-Cola Amatil, the largest bottler and distributor of the brand in Asia-Pacific, has partnered with crypto payments startup Centrapay, for the initiative.

‘Bitcoin Billionaires’ book about Winklevoss twins to turn into a movie
Yogita Khatri – The Block
Cameron and Tyler Winklevoss, the twin co-founders of crypto exchange and custodian Gemini, are set to get Hollywood treatment for the second time. The twins have partnered with film producer Greg Silverman’s Stampede Ventures to co-produce a movie adaptation of “Bitcoin Billionaires” book, Deadline reported Monday. The book, written by New York Times bestselling author Ben Mezrich, tells the story of how the twins became the first bitcoin billionaires in 2017.

US Marshals Service Seeks Firm to Custody and Sell Crypto Seized From Criminals
Sebastian Sinclair – Coindesk
The U.S. Marshals Service (USMS) is on the hunt for a contractor to help manage the cryptocurrency it seizes in operations against criminals. One of the oldest federal law enforcement agencies in the country, the USMS has updated its request for information it put out on April 24 to a contract relating to virtual currency management and disposal services, as first reported by The Block.

MakerDAO community greenlights first ‘real-world’ assets for use as collateral
Mike Orcutt – The Block
The MakerDAO community has taken a key step toward letting people use tokenized trade invoices and music streaming royalties as collateral for stablecoin loans. A community vote has signaled strong support for two new collateral on-boarding proposals spearheaded by a startup called Centrifuge, which has developed a protocol that lets users turn real assets into securities against which interest-bearing ERC20 tokens can be issued. Centrifuge has teamed with Paperchain and ConsolFreight to tokenize music streaming royalties and trade invoices, respectively.

Monero-for-Bail Project Sees Increased Demand During Protests
Benjamin Powers – Coindesk
A software program that mines Monero to bail people out of jail has seen an uptick in use as protests over the police killing of George Floyd continue across the U.S. The software is called Bail Bloc and runs in the background of your computer, passively generating Monero that is then distributed to bail funds.

ConsenSys is launching a DeFi-focused compliance service
Yilun Cheng – The Block
ConsenSys is releasing a compliance service to help exchanges and decentralized finance (DeFi) projects analyze trading activities for tokens issued on Ethereum. Crypto exchanges are subject to various forms of know-your-customer rules meant to deter money laundering and other illegal transactions. To satisfy these requirements, many of them rely on outside analytics firms like Chainalysis, Elliptic, and CipherTrace to identify users and tokens that are potentially linked to criminal activities.

Chainalysis Supports Two Privacy Coins Despite Regulatory Overhead
Aziz Abdel-Qader – Finance Magnates
Chainalysis, a New York-based provider of compliance software for monitoring cryptocurrencies transactions, today announced support for two privacy coins, Dash and Zcash. The move comes even as major crypto exchanges preferred to delist the privacy-focused cryptocurrencies to align with international anti-money-laundering standards. On the Chainalysis part, while digital asset platforms find it easier to delist these coins, the Blockchain intelligence firm opted to figure out how to help them adhere to the additional risk management requirements.

Crypto-friendly Bank Frick now processes payments via USDC stablecoin, says it is faster than SWIFT
Yogita Khatri – The Block
Bank Frick, the Liechtenstein-based crypto-friendly bank, has added support for a stablecoin for the first time. The bank now allows its clients to trade and custody the USDC stablecoin, as well as enables them to process USD payments via the stablecoin.

Saudi Monetary Authority Pumped Some of $13B Bank Infusion Using Blockchain
Danny Nelson – Coindesk
The Saudi Arabian Monetary Authority (SAMA) has distributed cash to local banks over blockchain. On Monday, the central bank announced that it had deposited “part” of a recent banking sector liquidity pump through “blockchain technology,” after injecting 50 billion riyals ($13.3 billion) into local banks on June 1. At the time, SAMA said banks maintained an average Liquidity Coverage Ratio (LCR) of 201%, meaning Saudi banks had more than enough cash on hand to cover short-term obligations.

Lithuania Is Trialing a CBDC No One Can Use – And That’s by Design
Danny Nelson – Coindesk
Lithuania’s central bank is one month away from minting money too advanced for nearly anyone to use. That’s because Lietuvos Bankas’ upcoming coinage is no pocket change or banknote – it’s a digital currency on the NEM blockchain. The Bank of Lithuania is issuing “LBCoin” – a commemorative digital token – with technology its own officials say no shopkeeper has the e-wallet necessary to accept.

South African solar start-up SunExchange raises $3 million
South African blockchain-based renewable energy start-up SunExchange has raised $3 million from a company backed by one of the country’s richest businessmen, the firm said on Tuesday.


Trump’s Scorn for Climate Change Meets Courts Saying It Matters
Jennifer A Dlouhy and Malathi Nayak – Bloomberg
Federal judges find agencies giving short shrift to climate; Oil industry investments at risk throughout the Western U.S.
The Trump administration has expressed little concern over climate change as it pursues its goal of American dominance in the energy market. Federal judges say it should be concerned.

Boris Johnson Shows Donald Trump How to Lead the Free World; A dispute over inviting Russia to the G-7 highlights the importance of maintaining solidarity among democracies.
Hal Brands – Bloomberg
The U.S. did more than any other country to build the web of international institutions through which it and its democratic allies have exercised influence since World War II. So it might be surprising to hear that America is on the wrong side of a fight about adapting those institutions to a new age of great-power rivalry. Yet this is the inescapable conclusion from a recent dust-up over who should be included in an expanded Group of Seven.

What a Slave Trader’s Statue Says About Britain; The killing of George Floyd has been a call to action in the U.K. too. People are right to be angry.
Therese Raphael – Bloomberg
If Britons wanted a reason to protest against institutional racism, or police brutality, they didn’t have to look 4,000 miles away. There have been plenty of local examples over the years. “I can’t breathe” will have resonated with many black families here.

The GOP has gone from tea party libertarianism to Trumpian authoritarianism
Max Boot – Washington Post
In 2014, Tom Cotton ran for the U.S. Senate proclaiming: “I believe in less government and more freedom.” Seven days ago, amid massive anti-racism protests accompanied by scattered looting, the Republican senator from Arkansas demanded the deployment of at least five Army divisions to the streets. “No quarter for insurrectionists, anarchists, rioters, and looters,” he wrote, employing a military term for “take no prisoners.”

Trump and Barr Violated Free Speech for a Photo Op; Black Lives Matter and tear-gassed protesters are right to sue the government for stepping on their constitutional rights.
Noah Feldman – Bloomberg
Did President Donald Trump’s administration violate the First Amendment on June 1 when various police and other security forces tear gassed peaceful demonstrators in Lafayette Square park so the president could walk to St. John’s Church for a photo op? That is the central question in a lawsuit brought over the weekend by the Washington, D.C. chapter of Black Lives Matter and a number of individual protesters.

American police shoot, kill and imprison more people than other developed countries. Here’s the data
Rob Picheta and Henrik Pettersson, CNN
Enough. That’s the message from many of the protesters who have filled American cities for nearly two weeks, demanding justice for the death of George Floyd and seeking to end a litany of police killings of black Americans.


Statement on Government support package for debt advice services
The Treasury has today announced an extra £37.8 million of funding(link is external) to provide essential debt advice services and help more people who are struggling with their finances due to coronavirus (Covid-19). The distribution of the funding across England will be overseen by The Money and Pensions Service (MaPS) and will come from a combination of sources: £20.6 million from Government, £14.2 million will be raised through a one-off increase to the debt advice levy and a further £3 million contribution from MaPS. For the Devolved Authorities, £2m (out of an additional £5.9m) will come from the Devolved Authorities’ debt advice levy.

NFA Board Update—May 2020 Meeting
NFA Video

Upcoming Board Meeting
This week, the FINRA Board of Governors will meet virtually for its June 2020 meeting. Among several important topics of discussion, the Board will review FINRA’s 2019 Annual Financial Report. Highlighted below are some of the key items the Board committees will consider during the meeting.

Updates to ADF User Guide & Specifications
FINRA has updated the Alternative Display Facility (ADF) User Guide and ADF FIX Specification for Trade Reporting to now include the Miami Stock Exchange (MIAX).

CFTC Orders UK Company to Pay Over $490,000 for Registration and Supervision Violations
The Commodity Futures Trading Commission today issued an order filing and settling charges against Gain Capital UK Limited (Gain UK) of London, England for failing to register as a retail foreign exchange dealer (RFED) and for supervision violations related to the handling of a customer account managed by an unregistered commodity trading advisor (CTA). The order requires Gain UK to pay a $250,000 civil monetary penalty, to disgorge $241,671, and to cease and desist from any further violations of the Commodity Exchange Act (CEA) or CFTC regulations, as charged.

ESMA extends deadline for responses to consultation on EMIR REFIT
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has decided, in view of the effects of the ongoing COVID-19 pandemic on stakeholders and market participants, to extend the response date for the consultation on the technical standards on reporting, data quality, data access and registration of Trade Repositories under EMIR REFIT to 3 July 2020.

ESAs announce public hearing on ESG disclosures
The three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) will organise a public hearing on proposed environmental, social and governance (ESG) disclosure standards for financial market participants, advisers and products.

Investing and Trading

HSBC cuts year-end 10-year UK gilt yield forecast to 0%
HSBC (HSBA.L) said on Tuesday that it had lowered its year-end forecast on 10-year British government bond yields to 0%, given a small probability of negative interest rates and a sense that rates will stay low for a long period.

Nasdaq Composite Erases Coronavirus Losses to Seize New Record; Index dominated by Apple, Microsoft, Amazon.com, Alphabet and Facebook has surged 45% since late March
Karen Langley – WSJ
The Nasdaq Composite stock index is trading at new highs, the latest sign of the resilience of the big technology companies that have powered the stock market over the past decade. The index, which is dominated by Apple Inc., Microsoft Corp., Amazon.com Inc., Alphabet Inc. and Facebook Inc., has surged 45% since late March. Investors are increasingly betting those companies will emerge even stronger from the pandemic, taking the broader stock market along with them.

U.S. Frackers to Zero In on Richest Oil Fields After Coronavirus; Southwest’s Permian Basin to draw most new investment, while less-profitable fields face longer road to recovery
Collin Eaton – WSJ
As the American shale-drilling industry slowly recovers from a historic crash in oil prices, it is poised to grow in fewer places than before. Even before U.S. benchmark prices fell into negative territory in April, investment in once-booming oil fields in North Dakota and South Texas was waning while producers drilled through many of their sweetest spots.

BP to slash 10,000 jobs as pandemic bites; UK group seeks 15% reduction in workforce and accelerates strategic shift
Anjli Raval – FT
BP will cut 10,000 jobs as coronavirus hits the UK oil major’s finances and accelerates a strategic shift to become a “leaner” company under its new chief executive.

Collapsing rates leave investors dangerously exposed to equity risk; The classic portfolio — 60% stocks, 40% government bonds — no longer makes sense
Paul Britton – FT
Covid-19 has brought us to a historic turning point in financial markets. A fundamental investment strategy that has protected institutional and retail investors alike for decades — balancing equity risk by holding high-quality government bonds — has finally run its course. When the Fed lowered short-term rates to zero in response to the pandemic, the last shoe dropped.

Barclays Tells Rich Clients to Buy U.S. Stocks, Shun EM Equities
Selcuk Gokoluk – Bloomberg
Emerging-market governments vulnerable, Salman Haider says; Inadequate fiscal support undermines EM equity outlook
Emerging-market stocks may be recovering, but cash-rich investors would be better off avoiding the risks that still abound in developing nations. Barclays Plc is telling its high net-worth clients in emerging markets to invest in U.S. equities instead, despite the S&P 500’s breakneck rally.


SocGen Signals It Missed Trading Rally as Momentum Slowed
Alexandre Rajbhandari – Bloomberg
Dividend cancellations continued to hit equities unit in April; Fixed-income saw ‘lower volumes in a still solid market’
Societe Generale SA signaled it may have missed out on the trading boom that buoyed rivals in the second quarter and said it’s taking longer than expected for market conditions to return to normal as global lenders wrestle with the impact of the coronavirus.


Turkey joins settlement house Euroclear after 8-year talks; Agreement may help attract investors wary of country’s direction under Erdogan
Laura Pitel in Ankara and Eva Szalay -FT
Turkey is poised to join one of Europe’s largest securities depositories, allowing investors to settle trades in its government bonds, as it bids to attract more international capital at a time when foreign investment has hit a record low.

Gold Imports by India Tumble for a Second Month on Lockdown
Shruti Srivastava and Swansy Afonso – Bloomberg
Country’s stay-at-home rules easing slowly after two months; Demand is expected to stay weak until at least September
Gold imports by India slumped by about 99% for a second straight month in May, disrupted by restrictions to control the coronavirus outbreak in the world’s second-biggest consuming nation.

Amsterdam to Clean Up Sex-and-Drugs Tourism in Post-Virus Reboot
Ruben Munsterman and Ellen Proper – Bloomberg
As the coronavirus pandemic raged in March and April, the 500-year-old Amsterdam city-center became a ghost town: The scantily clad sex workers in brothel windows in small alleys like Stoofsteeg in the red-light district were gone, as were the hordes of tourists who come there to gawk at them; Coffee shops on historic plazas like Rembrandtplein and Leidseplein didn’t get the visitors who descend upon the city by the thousands for the cannabis they sell.

Asia’s Most Expensive Stock Market Risks Repelling Investors
Anuchit Nguyen and Abhishek Vishnoi – Bloomberg
Thailand has become the most expensive stock market in Asia, threatening its prospects for additional near-term gains and foreign buying. The nation’s benchmark SET Index trades at 19.4 times analysts’ one-year earnings estimates, a record high, amid a strong rebound from the coronavirus selloff. In the entire Asia-Pacific area, only Australia and New Zealand are more pricey than Thailand, with MSCI Inc.’s main regional benchmark trading at about 16 times.

Economic Nationalism Is a Wrong Turn for Covid-Hit India; Modi gives voice to a “buy local” campaign to counter pandemic crisis and border tensions with China.
Andy Mukherjee – Bloomberg
Prime Minister Narendra Modi wants all 1.3 billion Indians to be “vocal for local” — meaning, to not just use domestically made products but also to promote them. As an overseas citizen living in Hong Kong, I’m doing my bit by very vocally demanding Indian mangoes on every trip to the grocery. But half the summer is gone, and not a single slice so far.

Locusts Pose a Bigger Economic Threat to Pakistan Than the Virus
Ismail Dilawar and Faseeh Mangi – Bloomberg
Agriculture sector accounts for 20% of Pakistan’s economy; Some provinces diverting resources from virus to fight locusts
Swarms of locusts spreading across Pakistan are emerging as a bigger threat to the economy than the coronavirus pandemic, with the pests threatening farm output, livelihoods and food security. The locust-invasion now covers an area of 57 million hectares in a country with a total crop area of 23 million hectares, said Falak Naz, director general of crop protection at the Ministry of Food Security and Research. While not all the areas infested now are crop lands, the insects are moving fast, he said.


UK to start post-Brexit trade talks with Japan
BBC News
The UK and Japan are set to begin talks on Tuesday aimed at reaching agreement on a post-Brexit trade deal. The negotiations come as London and Tokyo work towards replacing the agreement Britain currently has with Japan through the European Union. Without a new deal by 1 January 2021 the two countries will default to World Trade Organization trading terms. That would mean tariffs and obstacles to commerce between the UK and its fourth-largest non-EU trading partner.

Britain will not seek to extend Brexit transition period, says minister
Lisa O’Carroll – The Guardian
The UK government will tell the EU on Friday it is not going to seek an extension to the Brexit transition period, the paymaster general, Penny Mordaunt, has said. She told the House of Commons in an update on Brexit talks that she and Michael Gove would “emphasise that we will not be extending the transition period” when they meet EU counterparts at a Brexit joint committee meeting on Friday.

U.K. and Japan Start Post-Brexit Talks to Replace EU Deal
Joe Mayes – Bloomberg
The U.K. and Japan start trade talks Tuesday, aiming to replace the free-trade agreement that Britain currently enjoys with the country through the European Union. The British government, whose trade with the world’s third-largest economy was worth more than 31 billion pounds ($39 billion) last year, said it intends to build on the existing EU-Japan deal, signed in 2018, which the U.K. will no longer benefit from when it completes its exit from the bloc at the end of 2020.

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