Historic Day in Markets Has Traders Rethinking What’s Possible

Mar 9, 2020

First Read

Hits & Takes
By JLN Staff

Welcome to International Women’s Day. Here are the celebrations around the world.~JJL

From Peter Schack of CNBC: If the S&P 500 declines 7%, (208 points), trading will pause for 15 minutes; if it declines 13%, (386 pts) trading will again pause for 15 minutes; and if falls 20%, (594 pts) the markets will close for the day. ~JJL

HKEX Group has decided to cancel the LME Asia Dinner and postpone the LME Asia Seminar this year due to the coronavirus outbreak. Both were due to be held in Hong Kong on Wednesday 6 May 2020. This decision has been taken for the safety of staff, customers and friends in the metals industry across the region.~JJL

Deutsche Börse and Eurex have issued a release, “COVID-19: How we handle the situation.~JJL

Deutsche Börse announced its supervisory board has appointed Heike Eckert to the Executive Board. Congratulations to Heike!~JJL

There are reportedly about 100 people who still traveled to Boca Raton, site of the cancelled FIA International Conference. We will try to get reports on who and what occurred if we can.~JJL

On the CBOE Alumni Facebook group, it was reported that longtime CBOE and CBOT member Larry Blum had passed away.~JJL

There are more than 220 cruise ships sailing around every continent including Antarctica. The US State Department warned to avoid cruise ships, especially if you have underlying health issues.~JJL

C|NET says Star Trek’s Vulcan salute from Spock should replace handshakes in the coronavirus era. What about those of us who can’t do that?~JJL

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The Spread: Coronavirus Causes Conference Cancellations
JohnLothianNews.com

This week on The Spread – FIA Boca and OIC canceled due to coronavirus concerns, and record-smashing options trading and clearing volumes crash Robinhood, but not the OCC.

Watch the video »

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Confirmed coronavirus may force Americans to avoid crowds and cancel cruises; U.S. cases near 550
Susan Cornwell, Nathan Layne – WSJ
Older Americans, especially those with chronic medical concerns, should probably avoid big social gatherings and airline flights, given the rapid spread of coronavirus, a top U.S. health official said on Sunday, as investors braced for another volatile week in financial markets.
/reut.rs/38CgsxR

*****If you can do math, you will not like the growth rate of US cases.~JJL

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Spain Says Coronavirus Cases Almost Doubled Overnight to 999
Charlie Devereux – Bloomberg
The number of confirmed coronavirus cases in Spain almost doubled overnight, with acute concentrations in the capital Madrid and the Basque country, an industrial hub.
/bloom.bg/2v58vDu

*****And mathematicians are really not going to like this one.~JJL

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Ireland May Cancel St. Patrick’s Day
Peter Flanagan – Bloomberg
Irish authorities are set to make a call on whether to cancel the nation’s St. Patrick’s Day celebrations within days, as it grapples with increasing numbers of coronavirus cases. “Public health experts are considering the issue of St Patrick’s Day,” Irish Health Minister Simon Harris said in an RTE radio interview Monday. “I expect clarity to be brought to that within the next 24 to 48 hours.”
/bloom.bg/2IudDUQ

*****We need a saint that can drive out coronavirus.~JJL

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COVID-19; Business Continuity Plans; Capping AML Surveillance Alerts
Gary DeWaal – Bridging the Week
Last week, international regulators began issuing guidance and/or relief to impacted firms in response to the spread of COVID-19. The impact of this novel coronavirus has already begun materially to affect operations and behaviors in the financial services industry. Separately, a former chief operational risk and chief compliance officer of a US national bank was sanctioned US $450,000 by the Financial Crimes Enforcement Network for his role in the bank’s capping of suspicious activity alerts generated by the firm’s monitoring system for over five years in order to accommodate an inadequate number of anti-money laundering surveillance staff.
/bit.ly/2TPWk5V

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Friday’s Top Three
Our most read story Friday was Business lessons from the Spanish flu of 1918 from the Financial Times. Second was CNBC’s Rick Santelli suggests giving everyone coronavirus to spare the economy, from MarketWatch. Third was some good news for a change, Euronext introduces its first all-employee share grant, from Euronext.

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Lead Stories

Historic Day in Markets Has Traders Rethinking What’s Possible
Bloomberg News
Oil’s plunge has rippled through almost every asset class; Traders grapple with panic selling, margin calls, sudden moves
What started with the biggest oil-price collapse since 1991 is shaping up to be one of the wildest days in years for global markets. Panic selling, margin calls, vanishing liquidity and coronavirus work-from-home arrangements were just some of the challenges traders faced as risk assets plunged, currency volatility soared and money flooded into government bonds. They also had to figure out how an oil-price war and rapidly spreading outbreak will affect the global economy, companies and geopolitics.
/bloom.bg/2TyDGk0

Financial Conditions Are Tightening at Fastest Pace Since Lehman
Todd White – Bloomberg
Culprit found in widening credit spreads, not bank liquidity; ‘We’re pricing in global recession of magnitude’: BI’s Jersey
Even before today financial conditions were tightening at the fastest pace since the 2008 crisis. Markets buffeted by coronavirus fears were thrown into tumult Monday by the potential of a full-blown oil-price war. The next pain point to watch is in credit, from frozen primary markets to potential blow-ups in leveraged companies. And it’s all happening so fast few can hazard a guess as to how it will play out.
/bloom.bg/330sPma

Oil Drops 31% in Worst Loss Since Gulf War as Price Fight Erupts
Dan Murtaugh and Alfred Cang – Bloomberg
Saudi Arabia makes deepest price cuts in at least 20 years; Collapse of OPEC+ alliance triggers oil supply free-for-all
Oil markets tumbled the most since the Gulf War in 1991 after the disintegration of the OPEC+ alliance triggered an all-out price-war among the world’s biggest producers. In one of the most dramatic bouts of selling ever, Brent futures sunk by 31% in a matter of seconds after the open of trading in Asia on Monday after already suffering their biggest loss since the global financial crisis at the end of last week. As Brent collapsed as low as $31 a barrel, Goldman Sachs Group Inc. warned prices could drop into the $20s.

Oil crash: why Saudi Arabia has started a global crude price war; Aggressive move by world’s top exporter has sent shockwaves through markets
Anjli Raval and David Sheppard – FT
Oil prices crashed by as much as 30 per cent after Saudi Arabia fired the first shots in a price war, in crude’s biggest one-day fall since the early 1990s Gulf war.
/on.ft.com/38B6Tio

Barclays: the legal fight over a company’s ‘controlling mind’; The investigation into the bank’s actions has renewed calls for reform of laws over white-collar crime
Caroline Binham and Jane Croft – FT
Roger Jenkins was once one of Britain’s most powerful bankers, earning as much as £75m in 2005. But sitting in the dock at London’s Old Bailey dressed down in a dark jumper and trousers, it was sometimes difficult to remember that he was once the “gatekeeper” of Barclays Bank’s multibillion-pound relationship with Qatar’s then prime minister Sheikh Hamad bin Jabr al-Thani, who he had first met on board a yacht in Sardinia.
/on.ft.com/2v51XVq

Another Volatile Trading Week Awaits in the Age of Coronavirus
Brian Bremner – Bloomberg
S&P 500 has fallen about as much as in its last 6 corrections; The fear of the unknown makes this crisis different from 2008
A virus-stricken ship, with more than 3,500 on board, prepares to dock in California. Saudi Arabia unleashes all-out war on the price of oil. Italy announces a lockdown around Milan, the nation’s economic engine. Wall Street analysts worry about signs of distress in the corporate funding markets.
/bloom.bg/3cHiOi9

There Is a ‘Tipping Point’ Before Coronavirus Kills
Jason Gale – Bloomberg
Covid-19’s trek to lower respiratory tract marks severe phase; Progression from mild or moderate to severe can occur quickly
The new coronavirus causes little more than a cough if it stays in the nose and throat, which it does for the majority of people unlucky enough to be infected. Danger starts when it reaches the lungs.

Oil Traders Seek Out Storage at Sea After Crude Prices Collapse
Serene Cheong, Sharon Cho, and Alex Longley – Bloomberg
Traders, shipbrokers say few vessels are open for time charter; Owners expect surge in oil flows, floating storage interest
Oil’s plunge has revived memories of the 2008-09 recession, when traders snapped up dozens of tankers to park unwanted barrels at sea. Brent futures for May collapsed as much as 32% on Monday after Saudi Arabia began offering its crude at deep discounts, stoking immediate concerns of an oil-price war. On Friday, the kingdom and its allies in OPEC failed to secure Russia’s participation in a pact to limit global supply.
/bloom.bg/2TC09fW

Shale Drillers Are Staring Down the Barrel of Worst Oil Bust Yet
Joe Carroll, Rachel Adams-Heard, David Wethe, and Kevin Crowley – Bloomberg
They can’t count on Russia, OPEC to bail out market this time; Before the virus, U.S. drillers were already in dire straits
America’s shale drillers have never faced an oil bust quite like this. The split between Russia and its one-time OPEC allies last week has ignited an all-out price war, leaving oil markets defenseless against the unprecedented demand shock brought on by the coronavirus. Crude plunged by the most since the 1990s on Monday, with West Texas Intermediate touching $30 a barrel, a level at which vast swathes of the U.S. shale patch become unprofitable.
/bloom.bg/2IADlXC

U.S. Yield Curve Inside 1% Sounds Alarm for Global Bond Markets
Stephen Spratt, Ruth Carson, and Dana El Baltaji – Bloomberg
Markets price in almost 75 bps of Fed rate cuts in March; Everybody’s buying Treasuries, says Sompo Japan Nipponkoa
The entire yield curve for U.S. bonds fell below 1% for the first time in history after an all-out price war between the world’s biggest oil exporters triggered an unprecedented global bond rally.
/bloom.bg/39Ag0kN

Criminals Cash In on Coronavirus; Hospitals from Italy to Japan have reported disappearing inventories of newly precious masks and hand sanitizer
Alistair MacDonald, Giulia Petroni and River Davis – WSJ
As coronavirus sparks a global run on medical supplies, criminals are moving in. Hospitals from Italy to Japan have reported disappearing inventories of newly precious masks and hand sanitizer. Authorities in Ukraine, Taiwan and elsewhere have broken up efforts to smuggle such goods across borders. Authorities in the U.S. and elsewhere also report frauds in which people are tricked into buying nonexistent medical supplies or providing financial information to criminals posing as health workers.
/on.wsj.com/39NjLmY

Forex turnover jumps as traders rush to unwind leveraged bets
Reuters
Turnover on some of the world’s major currency pairs surged on Monday as a 30% crash in oil prices sent foreign exchange prices swinging wildly and triggered an investor stampede out of riskier currencies to the relative safety of the Japanese yen.
/reut.rs/2wKwsQQ

Exchanges, OTC and Clearing

Citi to cut ties with two-thirds of foreign exchange platforms; Bank’s review found most trading venues did not provide value for money
Eva Szalay – FT
Citigroup, one of the largest dealers in the $6.6tn-a-day foreign exchange market, has confirmed it is severing ties with nearly two-thirds of the trading platforms it uses as part of an effort to cut costs.
/on.ft.com/2TBfzBt

COVID-19: How we handle the situation
Eurex
We at Deutsche Börse create trust in the markets of today and tomorrow. As reliable market infrastructure provider, trusted partner and caring employer, we take the global COVID-19 situation very seriously.
bit.ly/2IyNzbi

Deutsche Börse AG’s Supervisory Board appoints Heike Eckert to the Executive Board
Deutsche Börse AG
As Hauke ??Stars, as previously announced, is not available for a third term as a member of the Executive Board of Deutsche Börse AG, the Supervisory Board of Deutsche Börse AG made the following personnel decision in today’s meeting:
bit.ly/335w2Rb

Reminder of Deadline for Applications to the Listing Committee and Listing Review Committee
HKEX
The Listing Nominating Committee of The Stock Exchange of Hong Kong Limited (the Exchange), a wholly owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), wishes to remind potential applicants that the deadline for submitting applications for nomination to the Listing CommitteeNote or the Listing Review Committee is 3 April 2020. News releases published on 10 January 2020 inviting applications for nomination to the Listing Committee and the Listing Review Committee are available to view on the HKEX website.
bit.ly/39FOD96

LME Asia Week
LME
Against the backdrop of the novel coronavirus, HKEX Group has made the difficult decision to cancel the LME Asia Dinner and postpone the LME Asia Seminar this year. Both were due to be held in Hong Kong on Wednesday 6 May 2020. This decision has been taken for the safety of staff, customers and friends in the metals industry across the region.
bit.ly/2SKLtcT

SGX appoints Ng Yao Loong as Deputy CFO
SGX
Singapore Exchange (SGX) today announced the appointment of Mr Ng Yao Loong as Deputy Chief Financial Officer (CFO) with effect from 1 April 2020. Mr Ng will succeed Mr Chng Lay Chew as CFO from 1 October 2020 onwards, upon Mr Chng’s retirement.
bit.ly/331OgmR

SGX reports market statistics for February 2020
SGX
Supply-chain uncertainties drive heightened demand for risk-management solutions; Investors continue to seek access to Emerging Asia, in particular China
Singapore Exchange (SGX) today released its market statistics for February 2020. Rising concern over the impact of the COVID-19 outbreak on the global economy and on supply chains drove heightened demand for risk management solutions across financial and commodity markets, lifting derivatives trading volume to a record.
bit.ly/38CGP6y

Update of ETF Market Making Incentive Scheme Version 2.0
JPX
Tokyo Stock Exchange, Inc. (TSE) introduced an ETF Market Making Incentive Scheme in order to improve liquidity in the ETF market in July 2018. Thereafter, TSE launched ETF Market Making Scheme Version 2.0 (Ver.2.0) in April 2019 and will now be updating said scheme on April 1, 2020.
bit.ly/2TAjXAB

Warsaw Stock Exchange Monthly Statistics For February 2020
Mondovisione
Warsaw Stock Exchange Monthly Statistics for February 2020 is now available:
bit.ly/38yhElS

Pakistan’s Stocks Fall, Rupee Weakens Amid Global Sell-Off
By Faseeh Mangi – Bloomberg
Benchmark index plunged as much as 6% before recovering; Pakistan’s rupee drops 1.5%, most in eight months at close
Follow Bloomberg on Telegram for all the investment news and analysis you need. Trading in Pakistan’s stock market was halted for 45 minutes on Monday morning, with the losses triggering exchange rules as panic gripped global financial markets after a price war in crud
/bloom.bg/2ItfkBU

Fintech

Visa partners with Paga on payments and fintech for Africa and abroad
Jake Bright – Yahoo Finance
Visa has entered a partnership with Nigeria based startup Paga on payments and technology.
Founded in Lagos, Paga scaled its fintech business in West Africa, before targeting expansion in Ethiopia and Mexico.
/yhoo.it/2Iz7cQi

UK’s Fintech Alliance Launches New Mentoring Hub to Connect Industry Leaders with Startup Founders
Omar Faridi – CrowdFund Insider
The Fintech Alliance has introduced a new program via its platform, called the Fintech Alliance Mentoring Hub.
The hub will help financial technology industry leaders connect with startup founders, entrepreneurs and other professionals who want to gain more experience and move up the career ladder in Fintech.
bit.ly/39zEGde

Cryptocurrencies

Isn’t bitcoin meant to be a safe haven?
Jemima Kelly – FT
When the world is crumbling around you, it’s important to have somewhere safe to park your money. That’s why there are these “safe haven assets” that investors flock to at times distress like gold, high-rated government bonds and, of course, bitcoin. (Or “digital gold”, as it’s sometimes called. Ahem.)
/on.ft.com/38vNbEU

IRS Crypto Summit Was About the Exchange of Ideas, Not Tax Guidance
Nikhilesh De – Coindesk
WASHINGTON — “We might be overcomplicating things,” an audience member at the Internal Revenue Service’s crypto summit said midway through the first panel. The IRS hosted four panels Tuesday, discussing technology, exchanges, the tax filing process and regulatory guidance in a daylong session uniting industry stakeholders, tax experts and regulators. The goal: Sort out some of the questions and concerns the broader crypto-holding public has about reporting its taxes.
bit.ly/39DmZJI

Cryptos No Refuge in Market Carnage as Bitcoin Breaks $8,000
Eric Lam – Bloomberg
Cryptocurrencies are not immune to the gyrations rocking global markets, plunging along with a broad range of assets on Monday in the wake of the collapse in crude oil prices. Bitcoin, the largest digital currency, dropped as much as 16% from Friday’s close after extending a sell-off begun over the weekend, and was trading at around $7,820 as of 7:31 a.m. in New York. That’s the biggest one-day slump at least since September, according to consolidated pricing compiled by Bloomberg.
/bloom.bg/38ufRhC

How Blockchain Can Be Used to Promote Gender Equality
Denelle Dixon – Coindesk
Denelle Dixon is the CEO and Executive Director of the Stellar Development Foundation, a non-profit organization that supports the development and growth of Stellar, an open-source blockchain network that connects the world’s financial infrastructure. Previously, she was the COO of Mozilla, and served as general counsel and legal advisor in private equity and technology.
bit.ly/3aCBkGz

Exiled Bitmain Co-Founder Is Fighting Back With Second Lawsuit
Wolfie Zhao – Coindesk
Micree Ketuan Zhan, the ousted co-founder of Bitmain, has filed another lawsuit in his fight to regain control of the bitcoin mining giant – this time in his home country. A recent notice from the Changle District court in China’s Fujian province indicates Zhan has filed a lawsuit against Bitmain’s fully-owned subsidiary Fujian Zhanhua Intelligence Technologies, as well as Beijing Bitmain Technologies as a related third party.
bit.ly/2TUrJEa

The Dangerous Truth About India’s Cryptocurrency Verdict
Tanvi Ratna – Coindesk
Industry watchers cheered on March 6 when the Supreme Court of India struck down the Reserve Bank of India’s (RBI) ban on financial institutions providing banking services to cryptocurrency businesses. However, embedded in the text of the judgment are multiple red flags. In addition, a draft bill to ban cryptocurrencies, released on Feb. 28, 2019, could still move through Parliament. As analyzed by me previously, taken together, the partial court victory and the possibility of legislation moving forward mean that crypto’s legal status in India remains vulnerable.
bit.ly/331d5zc

Blow To Bitcoin As Coinbase CEO Makes Serious Warning
Billy Bambrough – Forbes
Bitcoin, the oldest and the most valuable cryptocurrency by some margin, is fighting for supremacy against a raft of plucky rivals. The bitcoin price, up some 25% since the beginning of the year, has been outpaced by many smaller so-called altcoins—and some think bitcoin could still lose its pole position. Now, Brian Armstrong, the chief executive of the largest U.S. bitcoin and cryptocurrency exchange Coinbase and long time altcoin proponent, has warned it might not be bitcoin that pushes the cryptocurrency ecosystem “from [around] 50 million users to 5 billion.”
bit.ly/2IzaG5j

China’s central bank to invest $4.7M into its blockchain trade finance platform
Yogita Khatri – The Block
The People’s Bank of China (PBoC) has secured 32.35 million yuan (~$4.7 million) in special funding for further developing its blockchain trade finance platform. The funding, to be injected over three years, is expected to improve the platform for small and medium-sized enterprises (SMEs) to access a broader range of financing tools, the Global Times reported Monday, citing Xinhua News Agency. Over 35 banks are currently part of the blockchain trade finance platform, who have helped process 87 billion yuan (~$12.4 billion) worth of transactions as of December 2019.
bit.ly/2TBto2L

During MIT panel, experts say blockchain is not yet a clear design choice for central bank digital currencies
Yilun Cheng – The Block
Experts at the MIT Bitcoin Expo on Saturday argued that blockchain as a technology is not yet a clear choice for central bank digital currencies due to challenges regarding privacy protection, interoperability, and the ability to move value on a consistent basis At the same time, they believe that the introduction of central bank digital currencies is a necessary improvement upon the existing global financial system because they advance financial inclusion, cu the cost of handling cash and help mitigate risks during crises.
bit.ly/331mN4w

Paradigm Leads $12M Round for DeFi-Friendly Wallet Startup
Leigh Cuen – Coindesk
It’s about to be easier than ever to take risky bets using ethereum-based financial products, thanks to the crypto wallet startup Argent. Paradigm, spearheaded by Coinbase co-founder Fred Ehrsam, just led Argent’s $12 million Series A, along with Compound founder Robert Leshner and Index Ventures. The London-based wallet startup has now raised $16 million since it was founded in December 2017. “I don’t know what the revenue model will be, but we know it’s going to attract a lot of users.” Leshner said of Argent. “They are creating one of the smoothest on-ramps to DeFi [decentralized finance] products.”
bit.ly/39MNVal

Politics

U.S. conservative leader had contact with coronavirus case at conference
Susan Cornwell, Jeff Mason – Reuters
The organizer of a large gathering of prominent U.S. conservative politicians and activists said on Sunday he had some “incidental” contact with an attendee who has since tested positive for coronavirus, but that he felt “healthy as a horse” and had not heard of anyone else falling ill.
/reut.rs/2IrUumB

For Trump, Coronavirus Proves to Be an Enemy He Can’t Tweet Away; A president who is at his strongest politically when he has a human target to attack has found it harder to confront a growing outbreak that has rattled the country.
Peter Baker – NY Times
Defending against criticism of his handling of the coronavirus, President Trump suggested the other day that he could hardly have been expected to be ready for such an unexpected crisis.
/nyti.ms/2VRDXjL

You Can’t Gaslight a Virus; President Trump’s usual political tricks won’t work now.
Charles M. Blow – NY Times
In the Donald Trump era, Democrats and Republicans generally live with two completely different concepts of reality. Their views of Trump, his competence and character, could hardly be more different.
/nyti.ms/2TAhnKV

Twitter flags video retweeted by President Trump as ‘manipulated media’; It’s the first time the social network has enforced a new policy to fight doctored
Videos
Cat Zakrzewski – Washington Post
Twitter applied its new “manipulated media” label for the first time on Sunday to a deceptively edited video of former vice president Joe Biden. The video was shared by White House social media director Dan Scavino and retweeted by President Trump.
/wapo.st/38ukWqc

Don’t Worry. America’s Response to the Coronavirus Will Improve; The U.S. has a long and dangerous tradition of starting slow but effectively responding to global crises.
By Tyler Cowen – Bloomberg
With testing for Covid-19 slow to get off the ground in the U.S. and the White House in denial, it has become increasingly obvious that the country isn’t ready for the current public health crisis. How can it be that South Korea has done more than 140,000 tests, while a much larger and wealthier America has done only a few thousand?
/bloom.bg/2IyRXag

Regulation

NY judge freezes hedge fund manager Philip Falcone’s assets; Decision follows failure to pay millions in legal fees in fight with regulators
Ortenca Aliaj – FT
A New York judge has frozen assets belonging to hedge fund manager Philip Falcone and his Harbinger Offshore fund after he failed to pay millions in legal fees to a Manhattan law firm that defended him in high-stakes litigation against US regulators.
/on.ft.com/39DhZoq

ESMA Newsletter – Nº12
ESMA
Welcome to the twelfth edition of ESMA’s newsletter. This month, ESMA has published its strategy on sustainable finance and launched a call for candidates to join our stakeholders group with a deadline for applications of 29 March. We also opened two important consultations which close at the end of March. Also in this issue, we take a look ot our full list of ESMA staff speaking appearances and we catch up on publications from February. Stay with us for more updates!
bit.ly/39FQ1Zm

ESMA consults on draft technical standards for benchmarks
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has launched a consultation on draft Regulatory Technical Standards (RTS) under the Benchmarks Regulation (BMR) covering governance, methodology, infringements reporting, critical benchmarks.
bit.ly/2v512nV

ESMA’s supervision focuses on outstanding credit ratings, data quality and third country CCPs
ESMA
The European Securities and Markets Authority (ESMA) has published its 2020 Supervision Work Programme, detailing the areas of focus for its supervision of Credit Rating Agencies (CRAs), Trade Repositories (TRs) and the monitoring of third-country Central Clearing Counterparties (TC-CCPs) and Central Securities Depositories (TC-CSDs). ESMA is also preparing for its new supervisory responsibilities under the Securities Financing Transactions Regulation (SFTR), the Securitisation Regulation (SECR), the Benchmarks Regulation and MiFIR.
bit.ly/2IyXZYc

National Futures Association: Proposed Technical Amendments to NFA
Interpretive Notice 9025 – Compliance Rule 2-29: Use of Promotional
Material Containing Hypothetical Performance Results and Interpretive
Notice 9053 – Forex Transactions
NFA
bit.ly/2v7qk51

FCA begins review on data in wholesale markets
UK FCA
The Financial Conduct Authority (FCA) has today begun a review into the use and value of data and advanced analytics in wholesale financial markets, both now and in the future.
bit.ly/2IulilV

Investing and Trading

The ants, whales and pandas battling for a £34m investment contract; UBS, EdenTree and other investment groups pitch sustainable credentials before London audience
Attracta Mooney – FT
Which animal best describes your business and culture? That was the unorthodox question thrown at five asset managers standing on a London stage this week as they attempted to win a £33.5m investment contract.
/on.ft.com/3cGSJzJ

MSCI president defends decision to include China; Baer Pettit hits back at suggestions the index provider is in cahoots with Beijing
Chris Flood – FT
Baer Pettit is introduced as “front and centre” of MSCI’s work with clients by an enthusiastic press officer for the indices and data analytics provider.
/on.ft.com/3cGnPHN

Investors stunned by blowout bond rally; Fund managers rush for safety of government debt at quickest pace since crisis of 2008
Tommy Stubbington, Robin Wigglesworth and Colby Smith – FT
A record-breaking global bond rally accelerated on Friday, with growing fears over the economic impact of coronavirus sending investors scrambling for the safety of government debt at the fastest pace since the financial crisis of 2008.
/on.ft.com/2xeFgie

Citi Oil Veteran Says $20s Likely on Unique Demand-Supply Shock
Ramsey Al-Rikabi – Bloomberg
Oil’s getting hammered by a unique concurrence of demand and supply shocks that could send prices into the $20s, according Ed Morse, Citigroup Inc.’s head of commodities research.
/bloom.bg/2TBbNrA

A McKinsey Exec Built a 1,000-Piece Art Collection. Now He’s Selling; Kito de Boer, with his wife Jane, collected modern Indian art for years. Christie’s in New York will be auctioning off a portion of it this month.
James Tarmy – Blomberg
Kito de Boer had been working at McKinsey for seven years when he moved to Delhi in 1992 to open up the company’s India office. “The reality of the job is that it’s pretty much all-consuming,” he says. “Or it risks becoming that. What is work—and what is not work—becomes quite blurred.”
/bloom.bg/2TAihab

The $6 Trillion ETF Revolution Began 30 Years Ago in Toronto
Divya Balji – Bloomberg
As U.S. regulators balked, ‘everybody played nicely’ in Canada; The hunt was on for an instrument to trade the whole market
The investing revolution that has swept up more than $6 trillion in assets and upended markets the world over first sparked to life not on Wall Street, but a stock exchange to the north.
/bloom.bg/38B8Cof

Taxes May Be a Bigger Deal Than Alpha, This Fund Manager Says; Few people think to look at the impact of capital gains on their mutual funds.
Jon Asmundsson – Bloomberg
Joe Huber is a big investor in mutual funds. The founder and chief executive officer of El Segundo, Calif.-based Huber Capital Management runs four funds he invests in, so it’s a safe bet he’s a fan of those. But there’s one thing he’s never liked about the investment format in general. U.S. mutual funds get kind of a raw deal from the government: “You have to pay taxes on capital gains every year—short-term, long-term capital gains,” Huber says, even if you don’t sell your fund shares.
/bloom.bg/2IzqdCq

Coronavirus Epidemic Exacerbates Metals Glut; China, the top producer of aluminum and steel, has kept up output as demand falls
Bob Tita – Bloomberg
The world was already awash in excess steel and aluminum. The new coronavirus epidemic is deepening the pool. China is the world’s top producer and consumer of steel and aluminum. With factories closed and the movement of people and freight restricted to slow the spread of the new coronavirus, China’s demand for those metals has plummeted.
/on.wsj.com/2wIfp1Q

Lessons From the Dot-Com Bust; Twenty years ago, the Nasdaq Composite hit a then-record above 5000, the internet-stock peak. Are investors any smarter now?
Mark Hulbert – WSJ
It is perhaps fitting that the stock market plunged last month as we approached the 20th anniversary of the top of the internet-stock bubble. On March 10, 2000, the Nasdaq Composite Index hit an intraday high of 5132.52. We all know what happened next. By October 2002, the index had fallen 78.4%—to 1108.49.
/on.wsj.com/2TBqzPd

Volatility Markets Become The New Battleground For Exchanges As Global Demand Surges: New Burton-Taylor Report
Burton-Taylor International Consulting – PR Newswire
The volatility trading landscape is set to see rapid growth in 2020 as rising customer demand is attracting the attention of global banks, market makers and derivatives exchanges according to a Burton-Taylor International Consulting (part of TP ICAP’s Data & Analytics division) report published today. The new report is based on more than 100 interviews with global banks, market makers, exchanges, and institutional investors active in global volatility markets.
/prn.to/2Izg8Fj

Institutions

Terry Smith blasts platforms for fuelling illusion of fund liquidity; Fund manager accuses Hargreaves Lansdown and others of putting investors at risk
Siobhan Riding – FT
Terry Smith has launched a fresh assault on the UK’s powerful investment supermarkets, accusing the likes of Hargreaves Lansdown of sowing the seeds of Woodford-style investor runs by propagating a myth of instant liquidity.
/on.ft.com/3cMSByT

Jobs bonanza in stewardship and sustainable investing teams; The number of people hired doubled between 2017 and 2020
Attracta Mooney – FT
The world’s biggest asset managers have embarked on a hiring spree across their stewardship and sustainable investing teams, as fund houses tap into growing demand for environmental, social and governance investing.
/on.ft.com/32Z7mtQ

Pimco’s Fels Says Worst Is to Come With Forecast of Recession
John Gittelsohn – Bloomberg
U.S., Europe have ‘distinct possibility’ of first-half slumps; Second-half recovery may be hurt by ‘cracks’ in credit cycle
The U.S. and Europe face the “distinct possibility” of a technical recession in the first half as the coronavirus outbreak dampens demand and supply and drives investors to safe havens, according to Pimco’s Joachim Fels.
/bloom.bg/3cJ8JRS

Once Again, It’s During a Stock Rout That Active Managers Shine
Lu Wang – Bloomberg
About 60% of mutual funds beat benchmarks, most since 2018; Question is, are smaller losses enough to lure investors back?
After a decade-long uphill battle against passive investing, active funds are getting a rare moment of respite, courtesy of the worst equity sell-off since 2018.
/bloom.bg/2vSOFvJ

Wells Fargo Chairman Elizabeth Duke Resigns; Board member James Quigley also quits, ahead of Congressional hearing this week
Ben Eisen – WSJ
Elizabeth Duke has resigned as chairman of Wells Fargo WFC -4.65% & Co.’s board of directors, days before she was set to testify at a congressional hearing on the continuing fallout from the bank’s 2016 fake-account scandal.
/on.wsj.com/39DjGCi

Meet the Men Running JPMorgan While Dimon Recovers; Daniel Pinto and Gordon Smith took the helm at America’s largest bank after CEO James Dimon suffered a heart injury
Orla McCaffrey and David Benoit – WSJ
Daniel Pinto and Gordon Smith had a message to deliver to JPMorgan Chase JPM -5.17% & Co.’s investment bankers at a meeting Friday morning following Chief Executive James Dimon’s emergency heart surgery: Get to work.
/on.wsj.com/38ye0bG

Terry Smith suggests platforms exacerbate fund liquidity issues – reports; ‘Can’t list fund on a platform unless it’s daily dealing’
Ellie Duncan – InvestmentWeek
Terry Smith, manager of the £17.8bn Fundsmith Equity fund, has hit out at platforms for only selling daily dealing funds, creating liquidity problems for those with assets that are harder to sell.
bit.ly/3348eNV

Regions

Saudi Arabia launches oil price war after Russia deal collapse; Kingdom to raise crude production and offer deep discounts just as coronavirus hits demand
Anjli Raval, David Sheppard and Derek Brower – FT
Saudi Arabia has launched an aggressive oil price war targeting its biggest rival producers after Russia refused to join production cuts with Opec, in a move that threatens to swamp the crude market with supplies just as the coronavirus outbreak hits demand.
/on.ft.com/2Iscayr

London Restaurants Braced for Further Losses as Coronavirus Bites; Chinatown hardest hit as Asian tour groups and local diners stay away
Richard Vines – Bloomberg
As new cases of coronavirus begin to pop up in London, restaurateurs are bracing for more pain, with plans to tighten spending and cut staff hours. Restaurants have already taken a hit with many reporting business down at least 10%, with the drop surging to 50% in Chinatown.
/bloom.bg/2xmsYEK

Italy Braces for Market Verdict on Conte Virus Containment Plan
John Follain, Tommaso Ebhardt, and Sonia Sirletti – Bloomberg
Milan stock exchange vows markets will open as normal; Many in Milan flouting Conte’s orders on travel, separation
Prime Minister Giuseppe Conte will find out early Monday whether investors have any faith in his efforts to contain the coronavirus and protect the Italian economy.
/bloom.bg/3cK8DJs

Russia Ready to Deploy Wealth Fund as Oil War Batters Ruble
Andrey Biryukov – Bloomberg
Bank of Russia stops buying FX under budget rule for 30 days; Reserves can cover budget for 6-10 years if oil is under $30
Russia is girding for a protracted slump in oil and may dip into its $150 billion wealth fund to buy the ruble as a breakdown in talks with OPEC kicked off a price war and pushed the currency to its weakest level in four years.
/bloom.bg/330fMkH

U.K. Joins Negative-Yield Club After Bonds Caught in Whirlwind
John Ainger – Bloomberg
Two-year yields become first benchmark to drop below 0%; Money markets expect Bank of England to follow Fed this month
U.K. government bonds rallied to become the latest to join the global negative-yield club as an oil-price war added to concerns about the impact of the coronavirus.
/bloom.bg/337odun

Battle over oil discovery is test case for Mexico investors; Foreign energy companies accuse Pemex of trying to seize control of lucrative Zama field
Jude Webber – FT
Energy companies trying to do a deal with Pemex to share one of Mexico’s biggest oil discoveries accuse the state giant of dragging its feet to win control of the project, in a test case for foreign investment under President Andrés Manuel López Obrador.
/on.ft.com/39Bxey9

Fired Manager at Biggest Africa Fund Says He Was Scapegoated
Antony Sguazzin- Bloomberg
Equities head Madavo says he was fired after he resigned; Public Investment Corp. has withheld bonuses for two years
Fidelis Madavo, who spent 13 years picking stocks for South Africa’s biggest money manager, says he’s being scapegoated in the corruption scandal that has gripped the 2.13 trillion rand ($134 billion) fund. And now he says there are documents to prove his contention.
/bloom.bg/2TzNE4x

Brexit

Boris Johnson Launches War on U.K.’s Own ‘Deep State’
Mark Landler – The New York Times
She is accused of flinging a folder at an aide, hitting the staffer in the head. She reportedly told another offending underling to “get out of my face” and castigated her staff as “useless,” adding an f-bomb for good measure. The allegations of abusive behavior by Home Secretary Priti Patel — all of which she denies — have made her a lightning rod in Prime Minister Boris Johnson’s new cabinet, a ready-made villain for critics who accuse this hard-line Brexit government of running roughshod over British customs and institutions.
/nyti.ms/2TTKaZX

The next Labour leader must hold the Tories to account over Brexit
Jonathan Lis – The Guardian
It is apt that voting in the Labour leadership contest has coincided with the start of Brexit trade negotiations. Both, inextricably, will determine when – or if – we see another Labour government.
Like every other task for the party’s next leader, devising a policy on Brexit feels dangerous, and potentially unrewarding. Labour could widely misjudge the public mood, or appear to be in denial that it lost, or even look like a party of remain that wants to frustrate the process altogether.
bit.ly/2wK12dn

Pension buyout specialist Phoenix reports pre-Brexit boom
Reuters
Insurer Phoenix Group reported a rise in annual profit on Monday as its business of buying and operating corporate pension schemes benefited from British companies rushing to offload risk in the run up to Brexit. The bluechip company said operating profit was 14.4% higher at 810 million pounds ($1.06 billion) for the 12 months ended Dec. 31.
/reut.rs/2v58FuA

Miscellaneous

No hugs, handshakes as U.S. churches take new precautions against coronavirus
Rich McKay – Reuters
With a wide smile and arms outstretched, but quickly dropped into double elbow bumps, James Harper warmly greets fellow congregants at Our Lady of Lourdes Catholic Church on Sunday in Atlanta’s Old Fourth Ward neighborhood.
/reut.rs/2Txs0OA

Students flock to study quant finance in record numbers; Enrollees from India and China make up a third of intake
Owen Walker – FT
Record numbers of students have signed up to study quantitative finance, as demand for the roles within investment companies far outstrips supply.
/on.ft.com/38F4kff

Corporate America Races to Respond to a Crisis That Upends Work
Chip Cutter and Rachel Feintzeig – The Wall Street Journal
Employers are implementing contingency plans, from dividing teams across locations to limiting visitors, as the spread of the novel coronavirus is starting to upend basic expectations about the safety and sustainability of office work. The moves, designed to minimize disruption to businesses while protecting workers, range from advising colleagues to stand at least 6 feet apart, to requiring that people register their personal travel plans with their employers.
/on.wsj.com/39C1tFs

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