Hits & Takes
By JLN Staff
CFTC Commissioner Dan Berkovitz issued a statement this morning calling for the CFTC’s Energy and Environmental Markets Advisory Committee to play a role should convergence issues with the CME Group’s WTI crude oil contract persist after the $55 drop the day before the May WTI futures stopped trading.
In summary he says:
“The CFTC must determine the causes of this unprecedented price movement and divergence from physical markets. The Commission should work with the Chicago Mercantile Exchange (“CME”) to ensure that trading in upcoming WTI expirations is orderly, supports convergence, and reflects supply and demand in the physical market, while maintaining sufficient liquidity for commercial market participants. If convergence issues persist, the CFTC’s Energy and Environmental Markets Advisory Committee (“EEMAC”) can play an important role in advising the Commission on how to achieve these objectives.”
Walt Lukken of the FIA mused that the former participants of the IDX Gala Kilt Challenge should all get in their kilts and go for a run to raise money for the Futures for Kids charity. A week ago or so I shared a link for a video of Jeremy Grant’s spirited walk in a kilt. As I mentioned before, this challenge was problematic for me because I did not have access to a kilt for hire, nor can I run well these days. So instead of me running in a kilt, we have my animated self running in a kilt around the world
Speaking about the FIA, they came up with a similar to ours (great minds think alike) idea to hold a webinar on May 13 at 9:30 AM CDT titled “Negative pricing – why it happens and its implications.” The webinar will be moderated by laundry room-home-office-bound Walt Lukken, and panelists include Rob Creamer, President & CEO, Geneva Trading; Mike Davis, Director, Oil Market Development, Intercontinental Exchange; Michael Haigh, Global Head of Commodities Research, Societe Generale; Kari Larsen, Partner, Perkins Coie; and Derek Sammann, Senior Managing Director, Global Head of Commodities & Options Products, CME Group.
FIA has also published a FAQ about negative pricing HERE. The FAQ is very helpful as I could find nothing in the glossaries on the CFTC, CME or NFA websites about negative pricing when I looked back in April. Additionally, negative prices were never mentioned in any of the FCM account form disclosures for a couple I checked. So, this FAQ is greatly appreciated and needed.
JLN’s event on the Bachelier Option Model, which will cover some of the same territory as the FIA event (but better), will be the next day from the FIA’s, May 14 at 3:30 PM CDT. Sign up for our event by emailing me at email@example.com.
Here are CME Group Executive Chairman and CEO Terry Duffy’s |comments at the annual meeting about the reopening of the trading floor. It is going to be a while, and then some. The CME is asking members to sign away their liability for going back to the trading floor. Telling exchange members they can’t sue for getting Covid-19, or just sue in general, is a big tell. It says, one way or another the exchange floor will be dead.
Yesterday I interviewed longtime industry back office executive Margaret Wiermanski about the novel she just self published about the industry, “Silent Partners.” If you have been around the Chicago derivatives business since 2008, you will love this murder mystery and financial thriller. The proceeds from sales of the book go to the Greenwood Project. This is book one of three books planned. I highly recommend it. I could not put it down.~JJL
John Davidson: OCC CEO Explains the ‘Fortunate Coincidence’ of Pandemic Preparation
Flexible by design, OCC moves ahead with an update of its clearing technology even as its employees meet the challenges of working from home during the COVID-19 crisis.
The Glut Drowning the Oil Market; Excess supply is collapsing crude prices and threatening energy producers
Amrith Ramkumar, Tristan Wyatt and Collin Eaton – WSJ
The world is awash in oil. Lockdown measures are crippling demand, and supply isn’t falling quickly enough to keep up. Oil-storage tanks around the world are rapidly filling with crude, leaving the new production coming out of the ground with nowhere to go. The overwhelming glut is threatening one of the world’s vital industries and could prolong the economic fallout from the coronavirus. As storage filled, one price for U.S. crude recently fell below $0 a barrel—a first in oil-market history—effectively meaning sellers would have to pay buyers to take barrels off their hands.
*****Excellent in depth WSJ piece on the oil glut and its causes and impact.~JJL
CME aims to reopen Chicago trading floor; Traders will need to sign waivers before returning to the pits.
Lynne Marek – Crain’s Chicago Business
Chicago futures exchange operator CME Group expects to reopen its trading floor three weeks after it becomes legal to do so, but it will ask anyone accessing the floor to sign a waiver saying they recognize the risks of being there. The update on reopening the Chicago floor came from CME Chairman and CEO Terry Duffy during a virtual version of the company’s annual meeting today. It was closed indefinitely on March 13 due to the coronavirus pandemic.
*****If you are dying to go back and work on the trading floor, you might just be right.~JJL
Crisis Talk — OCC’s John Davidson on clearing during coronavirus chaos
Ross Lancaster – GlobalCapital.com
John Davidson is CEO of the Options Clearing Corporation, the equity derivatives clearing house. GlobalCapital caught up with him to discuss how clearing has held up during the Covid-19 crisis during which equity markets endured huge volatility, and how he is planning for the return from lockdown.
*****John Davidson is the right man for the right job at the right time.~JJL
Trump asks Justice Department to look into meat price disparities
President Donald Trump said on Wednesday he had urged the Justice Department to look into allegations that the meatpacking industry broke antitrust law because the price that slaughterhouses pay farmers for animals had dropped even as meat prices rose.
*****He asks the Justice Department, not the CFTC.~JJL
Cocaine trade caught in disrupted global supply chains; Drugs traffickers hit by coronavirus-induced slowdown and seizures, says UN agency
Andres Schipani, Gideon Long and Jude Webber – FT
The coronavirus pandemic has hit cocaine traffickers, a UN report has found, as global lockdowns have brought transport to a near-standstill and disrupted a business that relies on legal trade to “camouflage” its activities and on individuals being able to distribute drugs to consumers.
*****Hard to blend into a crowd when there is no crowd.~JJL
Wednesday’s Top Three
Our most read story Wednesday was The New York Times’ Loeffler Got Lucrative Parting Gift From Public Company en Route to the Senate. (From the article: “Ms. Loeffler’s Senate office said that to dispel any questions about potential conflicts of interests she had formally requested to be removed from a Senate agriculture subcommittee that oversees the Commodity Futures Trading Commission.”) Second was Bloomberg’s Fed Embraces Libor Again and Risks Undermining Push to Kill It. Third was the deeply depressing Restaurant CEO on COVID-19: ‘I honestly don’t see a scenario where 50% to 60% of restaurants don’t close’, from Yahoo Finance.
177,127,259 pages viewed; 24,122 pages; 224,050 edits
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Hong Kong Exchanges CEO Charles Li to Step Down; Longtime chief told board he won’t seek reappointment when his contract expires in October 2021
Quentin Webb and Joanne Chiu – WSJ
The operator of Hong Kong’s stock exchange said its longtime chief executive plans to step down by October 2021, or earlier if a successor is found before then. Beijing-born former investment banker Charles Li, CEO of Hong Kong Exchanges and Clearing Ltd. since January 2010, told the board he doesn’t intend to seek reappointment when his current contract ends on Oct. 15 next year, the company said in a regulatory filing Thursday.
BlackRock’s Fink Delivers Grim Outlook With Tax Hikes for Corporate America
Sridhar Natarajan – Bloomberg
CEO lays out concern for consumer demand, bankruptcies on call; He says U.S. corporate tax rate may rise to about 29% from 21%
BlackRock Inc. Chief Executive Officer Larry Fink had a stark message for a private audience: As bad as things have been for corporate America in recent weeks, they’re likely to get worse. Mass bankruptcies, empty planes, cautious consumers and an increase in the corporate tax rate to as high as 29% were part of a vision Fink sketched out on a call this week. The message from the leader of the world’s biggest asset manager contrasts with the ebullient tones of a stock market that has snapped back from recent lows.
Exchanges Told to Give Brokers More Say in How Stock Data Are Distributed; SEC order follows complaints that exchanges favor clients who pay more for extra speed, data
Dave Michaels – WSJ
The SEC ordered the nation’s stock exchanges Wednesday to give stockbrokers and investors greater input into how real-time stock prices are distributed. The Securities and Exchange Commission issued the directive after hearing for years that the New York Stock Exchange and other market centers have too much control over the packaging and pricing of information about trades and share prices.
Ken Griffin’s Shutdown Playbook Kept Him on Top of Markets
Liz McCormick – Bloomberg
Citadel Securities opened a trading floor in Palm Beach; Griffin says customers saw ‘close to flawless’ experience
It took a thousand extra servers, new trenches for fiber-optic lines and a bunch of rooms at the Four Seasons resort in Palm Beach, Florida, for one of the world’s biggest trading shops to cope with the pandemic — all accomplished in less than a week.
ErisX Secures Virtual Currency License From the New York State Department of Financial Services
ErisX today announced that Eris Clearing, LLC has secured a virtual currency license from the New York State Department of Financial Services (NYDFS). Eris Clearing is the clearing and settlement arm of the ErisX platform for spot and regulated futures on cryptocurrencies.
Bloomberg to Pay $5 Million to Settle SEC Investigation of Brokerage Practices; Regulator says unit executed some client trades without disclosing it allowed partners to determine how orders would be filled
Dave Michaels – WSJ
A subsidiary of media and financial-data company Bloomberg LP agreed Wednesday to pay $5 million to settle regulatory claims that it executed some clients’ stock trades in a way inconsistent with its customer disclosures.
Post-Flash Crash Fixes Bolstered Markets During Coronavirus Selloff; Abrupt plunge in 2010 prompted effort to shore up stock market’s electronic underpinnings
Alexander Osipovich – WSJ
A decade ago, the flash crash of May 6, 2010, rocked markets. What followed was a broad effort by regulators and Wall Street to fix the complex electronic systems that underpin the U.S. stock market—moves that appear to have paid off in the recent coronavirus-induced nosedive.
BoE warns economy to shrink 30% but holds fire on new stimulus; Central bank governor predicts bounce back from downturn in first half
Chris Giles – FT
The Bank of England has forecast that the coronavirus crisis will push the UK economy into a historically large recession, with output dropping 30 per cent in the first half of the year, but it decided not to launch a new stimulus.
Lira hits record low as Ankara targets ‘manipulation’ by foreign banks; Investor angst mounts as Turkish economy deteriorates and currency firepower declines
Laura Pitel and Adam Samson – FT
Turkey’s lira hit a record low on Thursday after authorities announced a crackdown on “manipulation” by foreign banks based in London.
Hong Kong exchange chief to step down after failed LSE bid; Charles Li will not seek reappointment when contract expires in October 2021
Hudson Lockett and Primrose Riordan – FT
The head of Hong Kong’s stock exchange has announced he will step down months after leading a failed $32bn bid to buy its London counterpart, casting doubt over the bourse’s strategy at a time when the city’s status as a financial hub is under pressure.
Gloom Grips U.S. Small Businesses, With 52% Predicting Failure
Alexandre Tanzi – Bloomberg
Covid-19 could shutter most American small businesses. That’s according to a new survey from the Society for Human Resource Management which found that 52% expect to be out of business within six months. The survey of 375 firms was conducted between April 15-21 and doesn’t account for improved business conditions as some U.S. states reopen this month.
Hundreds of Earnings Calls Show Companies More Scared Than 2008
Justina Lee – Bloomberg
Fed study finds more firms are cutting investments and payouts; 2008 example suggests funding fears won’t normalize for a year
The once-in-a-century pandemic has unleashed financing fears all over Corporate America that far exceed the 2008 crisis, as executives prep for fresh economic and market pain. A new study by Federal Reserve researchers used a machine-reading program to sift through more than 600 earnings calls last month in order to map out the virus-induced fallout.
U.S. Companies Cut a Record 20.2 Million Jobs, ADP Says
Vince Golle – Bloomberg
Employment at U.S. companies plummeted in April by the most in records back to 2002 as coronavirus mitigation efforts brought business activity to a near standstill. Private payrolls slumped by 20.2 million from a month earlier, according to ADP Research Institute data released Wednesday. Employment in March was revised down to a 149,000 decrease from a previously reported 27,000 drop. The report reflects data through April 12 to align with Labor Department figures, and doesn’t include the impacts of Covid-19 that occurred later in the month.
Sterling Trading Tech Names Freddy Zainal as Director of Business Development
Sterling Trading Tech
Sterling Trading Tech (STT) is pleased to announce the appointment of Farid (Freddy) Zainal as the Director of Business Development. Mr. Zainal joins the STT team with the mandate to expand the reach of Sterling Trading Tech’s product lines, including its cloud-based real-time Sterling Risk System.
TRADE Calls: Liquidnet – Trending tech for asset managers
Kiays Khalil – The Trade
Liquidnet’s new global head of Investment Analytics, Vicky Sanders joins The TRADE to discuss her recent move and the technology trends for asset managers during the COVID-19 lockdown.
Investors make big bets on silver closing giant gap with gold; For some analysts the industrial metal looks cheap, even given the Covid-19 slowdown
Henry Sanderson – FT
Investors are betting on a rally in silver, after the gap between gold and the industrial metal soared to its widest level in more than three centuries. In March the price of an ounce of gold was 125 times higher than the same amount of silver — a record going back to at least 1687, according to data compiled by Ross Norman, a veteran gold trader.
Insider Trading on Soccer Trades; Also social investment banking, oil divestitures, bank dividends and JETS.
Matt Levine – Bloomberg
Soccer transfer insider trading
If you are the chief executive officer of a public company, and a bigger company comes to you and offers to buy your company, and you are considering it seriously, you will probably tell someone. You will definitely tell your board of directors. You’ll tell the company’s other senior executives. You’ll hire lawyers and bankers, and tell them. You’ll probably want their advice; at least, you will want to talk through the issues with a sympathetic listener. These people—people whose job is to advise you on mergers-and-acquisitions decisions—are the obvious people to talk to.
World Faces Rare ‘Inflationary Depression,’ Says Keynes Scholar
Alaa Shahine – Bloomberg
Historian Skidelsky says inflation or tax can pay for spending; He says powers of money creation are ‘uncomfortable but true’
The world economy could face a unique “inflationary depression” as it emerges from lockdowns, with government spending propping up demand even as unemployment soars, according to economic historian Robert Skidelsky.
Most States That Are Reopening Fail to Meet White House Guidelines
Keith Collins and Lauren Leather – NY Times
More than half of U.S. states have begun to reopen their economies or plan to do so soon. But most fail to meet criteria recommended by the Trump administration to resume business and social activities.
Most Americans trust governors over Trump on reopening, poll shows; FT-Peterson survey finds 71% back states as support slips for president’s economic stewardship
Lauren Fedor and Christine Zhang – FT
An overwhelming majority of American voters trust their state’s governor over Donald Trump to decide when to reopen businesses, according to a new poll for the Financial Times that signals mounting dissatisfaction with the president’s handling of the coronavirus crisis.
Travel From New York City Seeded Wave of U.S. Outbreaks; The coronavirus outbreak in New York City became the primary source of infections around the United States, researchers have found.
Benedict Carey and James Glanz – NY Times
New York City’s coronavirus outbreak grew so large by early March that the city became the primary source of new infections in the United States, new research reveals, as thousands of infected people traveled from the city and seeded outbreaks around the country.
Coronavirus boosts digital banking as Argentines lose fondness for cash; SoftBank-funded fintech challenger Ualá expands rapidly amid the pandemic
Michael Stott and Benedict Mander – FT
Argentina is one of the world’s toughest business environments for investors, yet some of the biggest names in technology including Tencent and SoftBank have placed their first bets there on a fintech start-up which is reporting explosive growth amid the coronavirus lockdown.
From blood clots to ‘Covid toe’: the medical mysteries of coronavirus | Free to read; The wide variety of Covid-19 symptoms seen by doctors is confounding the scientific community
Clive Cookson – FT
When the first cases of a new coronavirus started to appear in China last December, the disease seemed to be a particularly aggressive respiratory infection. An “urgent notice” that month from the Wuhan health commission warned of “successive cases of unknown pneumonia”.
The Silicon Valley Workplace Will Never Be the Same; Communal lunches, soda machines and the open-floor office may become relics.
Priya Anand – Bloomberg
When the headquarters of Mission Bio reopens next week, employees will find many of the familiar perks they enjoyed before Silicon Valley went into lockdown have changed. Instead of the communal trays of catered lunches served a few times a week, each employee will get their own boxed meal. The snacks will remain free, but the soda machine and tub of almonds will be replaced with canned beverages, bottled water and individually wrapped protein bites. One new benefit: Every two weeks, the startup plans to provide Covid-19 tests onsite to any staff member who wants one.
The Pandemic Is Disrupting the Illegal Drug Trade
Andrew Davis – Bloomberg
Traffickers are shifting to virus-related crimes: UN report; Virus Fallout may lead to stockpiles of cheap, very pure drugs
The novel-coronavirus pandemic is disrupting the illicit drug trade through increased border controls, reduced air traffic and supply shortages, though the outbreak’s economic fallout may lead to more people getting involved in the business, a United Nations-sponsored report warned.
Small-Business Owners Say PPP Isn’t the Solution They Need; Paying employees not to work won’t save anyone’s company.
Devin Leonard – Bloomberg
If anyone had mastered the art of running bookstores in the Amazon age, it was Sarah McNally. Her flagship McNally Jackson shop in SoHo and a second location in Williamsburg, Brooklyn, were filled on evenings and weekends with customers who appreciated her carefully chosen titles. Recently, she’d doubled the size of her company, opening two additional stores—just in time for the coronavirus pandemic. “It was terrible timing,” she says in early April.
China Study Finds 5% to 15% of Covid-19 Cases Are Reactivated
Among recovered Chinese Covid-19 patients, about 5% to 15% may have tested positive again, a Chinese study found.
Buyers’ Remorse Is Catching in the Coronavirus Era; So if you’re closing a deal, best not to leave any loopholes in the fine print.
Shuli Ren – Bloomberg
Dealmakers, listen up. If you’re looking to close a transaction, make sure you read the contract terms even more carefully than usual. Buyer’s remorse is spreading in the coronavirus era.
Ousted whistleblower files complaint alleging he was pressured to give contract to friend of Kushner; “I was pressured to let politics and cronyism drive decisions over the opinions of the best scientists we have”
Igor Derysh – Salon
A doctor ousted as the director of a federal agency working to develop a coronavirus vaccine filed a whistleblower complaint Tuesday accusing the Trump administration of corruption.
Exchanges, OTC and Clearing
CME Group Inc. Announces Preliminary Results from its 2020 Annual Meeting of Shareholders
CME Group Inc. (NASDAQ: CME) today announced the preliminary shareholder voting results from its 2020 annual meeting.
At the meeting, shareholders: elected Terrence A. Duffy, Timothy S. Bitsberger, Charles P. Carey, Dennis H. Chookaszian, Bryan T. Durkin, Ana Dutra, Martin J. Gepsman, Larry G. Gerdes, Daniel R. Glickman, Daniel G. Kaye, Phyllis M. Lockett, Deborah J. Lucas, Terry L. Savage, Rahael Seifu, William R. Shepard, Howard J. Siegel and Dennis A. Suskind, each for a one-year term expiring in 2021; ratified the appointment of Ernst & Young LLP as the company’s independent registered public accounting firm for 2020; and approved, on an advisory basis, the compensation of named executive officers. In addition, the company’s Class B-1 shareholders elected William W. Hobert, Patrick J. Mulchrone and Robert J. Tierney, and the Class B-2 shareholders elected Michael G. Dennis and Patrick W. Maloney each for a one-year term expiring in 2021. There was no quorum in the election of the Class B-3 director. As a result, Elizabeth A. Cook will holdover and continue to serve until her successor is duly elected at the 2021 annual meeting.
CME Tries Again to Make Three-Year Treasury Futures a Thing
Elizabeth Stanton – Bloomberg
Contract introduced in 2009 failed to develop a following; Market’s growth and structural changes may spur adoption
This time is different for U.S. Treasury three-year note futures, according to CME Group Inc. The futures exchange giant that lists a suite of six Treasury note and bond contracts that are among the world’s most-traded financial products said this week it’s attempting to revive a seventh — a three-year note contract that was launched in 2009 and, while not formally de-listed, stopped trading in 2010.
CME Group Declares Quarterly Dividend
CME Group Inc., the world’s leading and most diverse derivatives marketplace, today declared a second-quarter dividend of $0.85 per share, payable June 25, 2020, to shareholders of record as of June 10, 2020.
Variable Storage Rate (VSR) Results for Wheat and KC HRW Wheat Premium (Storage) Rates
Administrative Amendments to the Contract Title of Three (3) Baltic LPG Freight Futures and Options Contracts
The Position Limits on Securities Options
OSE sets the position limits and large position reporting threshold on Securities Options, which will be applied from May 8, 2020.
UnaVista approved by ESMA to be a trade repository under SFTR
London Stock Exchange Group
MTS launches new unsecured money market trading platform, MTS Depo; ESMA confirms that UnaVista TRADEcho B.V. has met the requirements for registration as a trade repository for SFTR; The Securities Financing Transactions Regulation (SFTR) will introduce new reporting obligations for firms from 13 July 2020; UnaVista is one of Europe’s largest regulatory reporting platforms for MiFID II and EMIR compliance
UnaVista TRADEcho B.V., part of London Stock Exchange Group, is delighted to announce that it has been approved by the ESMA Board of Supervisors to be registered as a trade repository under SFTR.
ICE Benchmark Administration Publishes Fourth Update Regarding the U.S. Dollar ICE Bank Yield Index
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced that ICE Benchmark Administration Limited (IBA) has published its fourth update regarding the U.S. Dollar ICE Bank Yield Index.
Changes in Representation on the ASX Corporate Governance Council
The ASX Corporate Governance Council (‘Council’) wishes to announce the following changes in the representatives on the Council. After a decade in the role, Kevin Lewis has announced that he is stepping down as ASX’s Chief Compliance Officer, effective 1 July 2020, and will be taking up a different role at ASX as he transitions to retirement in mid-2022.
Chief Executive Succession Plan
Mr Charles Li, Chief Executive, Hong Kong Exchanges and Clearing Limited (HKEX), today
informed the Board of his intention not to seek reappointment as HKEX Chief Executive at the end of his current contract, in October 2021. Mr Li confirmed his full commitment to continuing to lead the organisation until that date, or earlier, should a successor be appointed before such time. HKEX has formed a selection committee, led by HKEX Chairman Mrs Laura M Cha, with HKEX Directors, Mr Apurv Bagri, Mr Benjamin Hung and Mr Rafael Gil-Tienda, to conduct a formal
HKEX 2020 First Quarter Results
Charles Li, Chief Executive said: “Our focus in these extraordinary times has been on maintaining resilient and fully functioning fair and orderly financial markets. Despite one of the most volatile and uncertain periods in recent times, HKEX core businesses in Cash,
Derivatives and Commodities have had a good quarter, reflecting record Stock Connect and Bond Connect quarterly volumes and 39 new company listings, ranking HKEX first in the world for number of IPOs in Q1 2020. We have not been unaffected by the macroeconomic conditions however, with the significant fall in global portfolio valuations impacting our
investment income, though we have, and continue to take steps to de-risk our collective investment schemes. We are on track with our Strategic Plan 2019-2021, well-placed to capture future growth opportunities, and fully focused on managing our costs and risks. I am confident that HKEX is well-prepared for the challenges ahead of us.”
April figures at Eurex and EEX
While total turnover on the international derivatives exchange Eurex fell by 25% year-on-year in April, the Leipzig-based European Energy Exchange (EEX) posted strong year-on-year growth. The number of contracts traded in European equity index derivatives remained stable, with turnover rising by 1% year-on-year from 69.5 million contracts in April 2019 to 70.1 million in April 2020 – while volumes of European equity derivatives fell back to 21.2 million. Overall, April volumes at Eurex stood at 121.4 million compared to 160.8 million in April 2019.
Nodal Exchange Sets Records In Power, Environmental, And Natural Gas Open Interest In April
Nodal Exchange achieved record open interest in power, environmental, and natural gas futures in April 2020. Nodal Exchange continues to improve its strong position in the North American monthly power futures markets achieving a record 992 million MWh of open interest as of April 30, 2020 representing a record 49% market share. Nodal’s power open interest grew 42% year over year in April.
Barchart Releases Whitepaper on Forecasting Commodity Prices Using Grain Yield Forecasts
Barchart, a leading provider of data and technology services to the financial, media, and commodity industries, has released a free whitepaper that explains how agribusinesses, ag lenders, and ag insurers can anticipate USDA estimate revisions to improve crop marketing and underwriting strategies – potentially increasing profits for their business using Barchart’s cmdty Yield Forecast Indexes.
38-Year-Old CEO of Korean Fintech Leader Seeks $200 Million
Sohee Kim – Bloomberg
Viva Republica Ltd., operator of South Korea’s largest fintech startup Toss, is planning to raise about $200 million from investors to bankroll its expansion in online banking and security trading services.
The company just embarked on its funding round and hopes to complete it in coming months, founder Lee Seung-gun said in an interview, declining to disclose the expected valuation. Lee is also aiming to go public in two to three years, with a listing in South Korea, Hong Kong, the U.S. or two of the destinations, he said.
Four Clues To The Future Of Financial Services Firms And Fintech
Martin Boyd – Forbes
As I write this, I can’t help thinking about what my ‘new normal’ looks like. The less than perfect moments involve me turning around and yelling at the dog to stop barking at the rare person who goes past our front door; he is both interrupter and sometimes star of my client video conferences. Obviously, my request is futile. According to a canine expert friend, my yelling sounds to the dog like a joyous bark and therefore encourages more of the same.
Robinhood raised $280 million despite decrease in fintech funding
Victor Chatenay – Business Insider
The US-based commission-free trading app has successfully raised $280 million in Series F funding at an $8.3 billion valuation, per the fintech’s blog. The fund exceeded expectations, as previously reported, and follows the $900 million already raised by the company to date. Robinhood plans to use the funding to upgrade its platform, launch new products, hire more staff, and open a new office in Denver. The raise stands out because global fintech funding has fallen amid the coronavirus pandemic, and other fintechs have been forced to lay off staff to remain afloat.
City trade group wants fintech regulation upgrade
Ryan Weeks – Financial News
Lobby group TheCityUK has called on the country’s top regulators to better coordinate their oversight of UK fintechs. mThe UK’s Financial Conduct Authority, HM Treasury, and Department for International Trade should work with lobby groups to create a more consolidated and user-friendly rulebook for the sector, according to a new report from TheCityUK, published today with PA Consulting.
Facebook’s Libra appoints Bush-era terrorism finance tsar as first chief; Stuart Levey, known for tough enforcement of sanctions on Iran, will head digital currency project
Hannah Murphy, Laura Noonan and Kiran Stacey – FT
The Facebook-created digital currency Libra has unveiled HSBC legal chief and former George W Bush-era terrorism finance tsar Stuart Levey as its first chief executive.
New York Financial Regulator Works to Open the Economy, Grants First Bitcoin License in 2020 to ErisX
The New York State Department of Financial Services (NYDFS) has granted its first BitLicense of the year to cryptocurrency exchange operator ErisX. The virtual currency license allows Eris Clearing to offer New York customers the ability to buy and sell Bitcoin and other cryptocurrencies on the ErisX platform. Eris Clearing also serves as a clearing entity for cryptocurrency futures contracts bought and sold on ErisX.
NYDFS grants BitLicense to crypto exchange operator ErisX
Michael McSweeney – The Block
The New York State Department of Financial Services (NYDFS) has granted its first BitLicense of this year to ErisX, a crypto exchange operator. The firm also received a money transmission license from the agency, according to a Wednesday press statement. “These licenses will enable Eris Clearing to offer New York customers the ability to buy and sell virtual currency on the ErisX platform. Eris Clearing also serves as a clearing entity for the virtual currency futures contracts bought and sold on ErisX,” NYDFS said in a statement.
Crypto Firms Establish Messaging Standard to Deal With FATF Travel Rule
Ian Allison – Coindesk
A new messaging standard released today is designed to help cryptocurrency firms comply with anti-money laundering regulations from the Financial Action Task Force (FATF). The standard, called IVMS101, defines a uniform model for data that must be exchanged by virtual asset service providers (VASPs) alongside cryptocurrency transactions. The standard will identify the pseudonymous senders and receivers of crypto payments, with such information “traveling” with each transaction.
Stablecoins as a collateral sinkhole
Izabella Kaminska – FT
As FT Alphaville covered exhaustively at the time, a key factor inhibiting the effectiveness of QE was its tendency to suck in the world’s best collateral into central bank coffers and immobilise it. The consequence was a shortage of safe assets, which in turn generated negative pressure on interest rates and helped to forced sovereign bond yields below the zero-lower-bound in many geographies.
Tron Foundation declines to comment on coronavirus relief funding report
Michael McSweeney – The Block
The Tron Foundation has declined to comment on a report circulating in Chinese media that it has received stimulus funding from the U.S. government. Tron representative Ryan Dennis told The Block: “We are a private company and this being a financial matter, we are unable to comment. I am happy to share, however, that our first priority is to always follow laws/rules/regulations of the governing bodies wherein we build our worldwide community.”
Bitcoin Revenue in Square’s Cash App Tops Fiat Revenue for First Time in Q1
Brady Dale – Coindesk
Bitcoin has flippened USD on Square’s Cash App, sort of. As reported in the publicly traded fintech company’s first-quarter earnings Wednesday, Cash App brought in $222 million on all its other fiat-powered services in Q1. Meanwhile, revenue from bitcoin was $306 million, the first quarter in which bitcoin revenue surpassed all other revenue on the app. “In the first quarter, Cash App gross profit grew 115% year over year,” the shareholder letter reported.
Libra Association Names Stuart Levey as CEO Ahead of Regulatory Push
Kurt Wagner – Bloomberg
The Libra Association, the group behind the proposed digital currency invented by Facebook Inc., named former U.S. Treasury Department official Stuart Levey as its first chief executive officer.
Open interest in CME’s bitcoin futures is now at an all-time high of $400 million
Yogita Khatri – The Block
Open interest in CME Group’s bitcoin futures has touched an all-time high of $400 million, hinting that more money is flowing in the market and that traders are expecting a near-term rise in volatility.
Why Your Crypto Exchange Tax Documents Might Not Be Accurate
David Kemmerer – Forbes
The tax documents you receive at the end of the year from your cryptocurrency exchange can be extremely misleading. Cryptocurrency investors need to report their capital gains and losses as well as any crypto earned as income to stay compliant with tax reporting requirements — here in the U.S. and in most countries around the world. Because cryptocurrency exchanges can’t report on the transactions that occur outside their exchange, their tax reports won’t be accurate if you use any exchanges, wallets or other crypto services outside the one sending you those documents.
Rand Corporation report finds bitcoin is still the dark web’s preferred cryptocurrency
Michael McSweeney – The Block
A newly-published study from think tank Rand Corporation explored the use of the privacy-centric cryptocurrency Zcash among criminals. Perhaps unsurprisingly, the report found that bitcoin is still king in those circles. As first reported by Forbes, the Electric Coin Company – the company behind Zcash – commissioned the study, which was released on May 6. Zcash “has only a minor presence on the dark web,” according to the think tank, “indicating that Zcash is seen as a less attractive option to dark web users and is used less often compared to other cryptocurrencies, particularly Bitcoin and Monero.”
How bitcoin could benefit from the post-crisis privacy debate
Mike Orcutt – The Block
When the markets crashed in mid-March, investors appeared to dump bitcoin along with nearly every other asset in their pursuit of cash, leaving enthusiasts to wonder whether it really is a “safe-haven.” After all, bitcoin has underperformed the equity market for much of the time since the crisis hit.
Cambridge University Releases New Tool for Tracking Global Bitcoin Mining Power
Paddy Baker – Coindesk
A team affiliated with the University of Cambridge has released a new bitcoin data tool showing the countries with the highest concentration of mining activity. The Cambridge Centre for Alternative Finance (CCAF), which is based at the Cambridge Judge Business School, said Wednesday the Bitcoin Mining Map would visualize countries’ monthly share of global hashrate for the very first time, as well as provide more in-depth data for comparing Chinese provinces.
Stellar Development Foundation invests $5 million in crypto wallet provider Abra
Yogita Khatri – The Block
The Stellar Development Foundation, a non-profit that supports the development of the Stellar blockchain, has invested $5 million in crypto wallet provider Abra. Announcing the news on Wednesday, the foundation said its investment would help Abra to expand its products and services on the Stellar network. “Our goal is to democratize access to financial services… As we integrate with Stellar, we’re going to be able to build the next generation of banking [infrastructure],” said Abra CEO Bill Baryhdt.
America Has No Plan for the Worst-Case Scenario on Covid-19; It’s possible that we’ll never get a vaccine or a breakthrough treatment. What then?
Noah Feldman – Bloomberg
In the midst of the constant up-and-down of coronavirus news, both from science and the markets, it’s easy to lose sight of the scariest scenario of them all: the one where there’s no magic bullet. In this entirely plausible situation, there would be no effective Covid-19 vaccine or transformative therapy; the combination of testing and contact tracing wouldn’t successfully suppress the outbreak; and herd immunity would come, if at all, only after millions of deaths around the world.
China’s Military Is Tied to Debilitating New Cyberattack Tool; An Israeli security company said the hacking software, called Aria-body, had been deployed against governments and state-owned companies in Australia and Southeast Asia.
Ronen Bergman and Steven Lee Myers – NY Times
On the morning of Jan. 3, an email was sent from the Indonesian Embassy in Australia to a member of Prime Minister Scott Morrison’s staff who worked on health and ecological issues. Attached was a Word document that aroused no immediate suspicions, since the intended recipient knew the supposed sender.
What Boris Johnson Has Planned for Post-Lockdown Britain; After getting the U.K.’s coronavirus strategy so wrong at the start, it’s little wonder that the prime minister is being much more cautious on the reopening.
Therese Raphael – Bloomberg
The instruction given by Boris Johnson to the British people on March 23 was dead simple: “You must stay at home.” The pithiness and urgency of that message, the alarming rise in deaths, and the U.K. prime minister’s subsequent hospitalization with Covid-19 all reinforced the instruction. People got it.
On the Same Day Sen. Richard Burr Dumped Stock, So Did His Brother-in-Law. Then the Market Crashed; The brother-in-law, a Trump appointee, sold between $97,000 and $280,000 worth of stock. Burr is under federal investigation over whether he traded on non-public information gathered through his work in the Senate.
by Robert Faturechi and Derek Willis- ProPublica
Sen. Richard Burr was not the only member of his family to sell off a significant portion of his stock holdings in February, ahead of the market crash spurred by coronavirus fears. On the same day Burr sold, his brother-in-law also dumped tens of thousands of dollars worth of shares. The market fell by more than 30% in the subsequent month.
Senator who dumped shares after coronavirus briefing reportedly got a $9 million payout as she left the publicly traded company run by her husband
Bryan Pietsch – Business Insider
Sen. Kelly Loeffler received more than $9 million when she left Intercontinental Exchange to fill an empty Senate seat, according to a report from The New York Times.
George Conway: Trump went ballistic at me on Twitter. Here’s why he reacts with such rage.
George T. Conway III – Washington Post
Americans died from covid-19 at the rate of about one every 42 seconds during the past month. That ought to keep any president awake at night. Not Donald Trump.
Brussels plans new anti-money laundering authority; European Commission seeks to strengthen enforcement powers after banking scandals
Sam Fleming and Jim Brunsden – FT
Brussels will on Thursday detail plans for new pan-European powers to crack down on money laundering after a series of scandals rocked the region’s banking sector and exposed patchy enforcement across the bloc.
CFTC’s Global Markets Advisory Committee to Meet on May 19
Commissioner Dawn Stump, the sponsor of the Commodity Futures Trading Commission’s Global Markets Advisory Committee (GMAC), today announced the GMAC will hold a public meeting on Tuesday, May 19, 2020. The meeting will begin at 10:00 a.m. (EDT) and be held via conference call in accordance with the agency’s implementation of social distancing due to the COVID-19 (coronavirus) pandemic.
The Financial Services Regulatory Initiatives Forum launches Grid to help financial firms’ planning
The Financial Services Regulatory Initiatives Forum has today launched a new initiative to help financial firms prepare for upcoming regulatory work – the Regulatory Initiatives Grid.
Regulation Best Interest and Form CRS: Where Are We Now
Join panelists as they discuss Regulation Best Interest and Form CRS, its impact on the industry and effective practices to help broker-dealers manage their obligations.
SEC Charges Bloomberg Tradebook for Order Routing Misrepresentations
The Securities and Exchange Commission today filed settled charges against registered broker-dealer Bloomberg Tradebook LLC for making material misrepresentations and omitting material facts about how the firm handled certain customer trade orders.
SEC Directs Equity Exchanges and Financial Industry Regulatory Authority to Improve Governance of Market Data Plans
The Securities and Exchange Commission today issued an order directing the equity exchanges and the Financial Industry Regulatory Authority (FINRA) (the participants) to submit a new National Market System plan (NMS plan) with a modernized governance structure for the production of public consolidated equity market data and the dissemination of trade and quote data from trading venues.
Reminders on director trading during COVID-19
We have recently seen significant volatility in financial markets in response to the uncertainty and rapidly changing situation surrounding COVID-19. During this time, investors understandably have a heightened interest in information and signals relating to the impact of the current operating conditions on their company or scheme. This includes a sharpened focus on direct and indirect trading in securities and other financial products related to a listed entity by directors of that entity and other ‘insiders’.
ASIC warns consumers: Investment advertising is not always ‘true to label’
ASIC warns consumers about investment advertising that compares fixed-term investment products to bank term deposits. A surge in such marketing of fixed-term investment products in recent months has prompted ASIC to caution consumers to take care making investment decisions based on such advertising.
ISDA Requests Relief From SEC On Accounting
On May 1, ISDA wrote to the US Securities and Exchange Commission to request relief from certain US GAAP derivatives and hedging rules that otherwise may cause some cashflow hedge relationships to be discontinued because of the impact of some requirements included in the CARES ACT relief program.
Investing and Trading
Investors row back on ethical principles, research shows; Many put a company’s economic recovery before ESG commitments in coronavirus crisis
Madison Darbyshire – FT
Nine out of 10 investors would prioritise a company’s economic recovery over its ethical principles, in a sign that investor commitment to more responsible forms of investing is faltering in the market downturn.
Investors fear Italy is heading for ‘junk’ borrower status; Coveted top-quality rating hanging by a thread as Moody’s decision looms
Tommy Stubbington – FT
Fund managers are growing increasingly nervous Italy could lose its investment-grade credit rating, a development that would create upheaval in European bond markets.
‘Gamified’ investing leaves millennials playing with fire; Slick stock-trading apps skip over the risks for inexperienced investors
Siddarth Shrikanth – FT
When US oil prices crashed into negative territory last month for the first time in history, the financial pages were filled with warnings to retail investors looking to bet on a rebound. One trader said that it was a case of “muppets vs sharks” as amateur investors became caught up in the market carnage when they tried to call the bottom for crude prices. Such stories did not halt the millennial rush.
US Treasury plumps for longer-term debt to fund $3tn stimulus; Details of historic borrowing plans send government bond yields higher
Colby Smith – FT
The US Treasury says it plans to significantly increase the proportion of borrowing through longer-term debt, as it set out details of how it will fund the government’s $3tn-plus stimulus of the coronavirus-ravaged economy.
A return to 1970s stagflation is only a broken supply chain away; The death of inflation has been exaggerated and after the pandemic we may need it
Stephen Roach – FT
Back in the early 1970s, when I was a pup, my colleagues and I on the staff of the US Federal Reserve Board, analysed inflation from the cost-push or supply side. Global economic growth had unleashed a surge in commodity prices, reinforced by a quadrupling of oil prices after the 1973 Arab-Israeli Yom Kippur war. With labour markets already tight, productivity weakening, and US regulatory costs mounting, a wage-price spiral soon ensued. A stagflationary decade of double-digit inflation and slow growth followed. Financial market performance was atrocious.
One Investor Bets Big on Doomsday Scene Needing Monster ECB Cut
James Hirai – Bloomberg
Trader hoards options targeting ECB slashing key rate to -1%; Interest rate cuts may be in order if economic crisis deepens
The European Central Bank put the onus on banks to fund the pandemic-hit economy’s recovery when it loosened loan conditions last week, but investors are beginning to bet that won’t be enough.
Luxury Billionaire Plots Rebound After Taking Biggest Virus Hit
Robert Williams – Bloomberg
Vuitton owner has lost more wealth than anyone in virus crisis; Bernard Arnault maintains massive investments during downturn
In his ninth-floor office on Paris’s Avenue Montaigne, Europe’s wealthiest man, Bernard Arnault, is spending long hours plotting a post-virus future for his luxury goods empire, LVMH. At 71, the billionaire has lived through several crises, but none quite like this one, with his armada of more than 70 brands — from Dior to Fendi — hit from all sides.
Inflation Is the Way to Pay Off Coronavirus Debt; By letting prices rise faster, the Fed can ease the burden of heavy borrowing.
Noah Smith – Bloombeerg
The coronavirus pandemic and the depression that follows will leave the U.S. with a lot of unpayable debts. Consumers who lose their jobs will have difficulty making payments on credit cards, auto loans and student loans. Businesses that lose sales will default on loans and bonds.
It’s Not 1918 Again. The Economic Pain Is Worse; A quick bounce-back seems increasingly unlikely.
Mark Gongloff – Bloomberg
If you haven’t seen it already, a decent thing to watch in pandemic lockdown is the movie “1917.” It’s not relaxing by any stretch; it’s a solid hour and 59 minutes of hair-on-fire panic. But it is strangely reassuring, in that what you’re going through is probably not as bad as being shot at by Germans for two hours.
Crazy Trading on China’s Nasdaq Has Its Own Logic; In a market with no FANGs, it makes sense to chase the next big thing.
Shuli Ren – Bloomberg
Old habits die hard. China’s Nasdaq-like ChiNext board has staged a comeback this year, rallying 17% to trade at an average of — yes, really — 70 times earnings. Is this misguided enthusiasm by an investor base that infamously engineered a stomach-churning crash just five years ago?
Barclays Under U.K. Treasury Pressure to Fix Virus Loans Issues
Stefania Spezzati – Bloomberg
Treasury sends letter to Barclays UK CEO after Monday hearing; U.K. government guaranteeing 100% of loans to struggling firms
Barclays Plc is under political pressure to fix problems with emergency loans that has left small companies struggling to get help during the coronavirus pandemic. Customers have faced issues applying for Bounce Back Loans, which are administered by commercial banks but 100% guaranteed by the state, Mel Stride, chair of the Treasury Committee, said in a letter published Thursday.
For Some JPMorgan Staff, Remote Work Could Become More Permanent
Michelle F Davis – Bloomberg
Most of JPMorgan Chase & Co.’s quarter-million employees have been working from home for more than a month. Some could be asked to keep doing so even after the coronavirus pandemic is over.
Turkey Stiffens Manipulation Rules With Lira at Record Low
Taylan Bilgic, Ugur Yilmaz, and Cagan Koc – Bloomberg
Turkey’s banking regulator expanded the definition of manipulative trades in financial markets as the country’s currency hit a record low. Bank trades that result in “misleading pricing” or keep asset prices at “abnormal or artificial” levels will now be considered manipulative, according to a new BDDK regulation called “Manipulative and Misleading Trades in Financial Markets.” The regulation complements a February law that stiffened punishments and raised jail terms for insider trading and market manipulation.
Turkish Lira Falls to Record, Defying Efforts to Stem the Slide
Constantine Courcoulas, Cagan Koc, and Selcuk Gokoluk – Bloomberg
Currency drops as much as 0.7% to 7.2496 per dollar Thursday; Investors are concerned about fall in central bank’s reserves
Turkey’s lira weakened to an unprecedented low against the dollar, despite concerted efforts by authorities to keep a lid on depreciation.
Norway Delivers Shock Rate Cut to 0% Amid Worst Slump Since WWII
Mikael Holter – Bloomberg
The central bank of Norway delved into uncharted territory on Thursday, cutting its main interest rate to zero and predicting the worst economic contraction since World War II.
Uganda Has Nowhere to Store Tea as Virus Causes Stock to Pile Up
Fred Ojambo – WSJ
Sign up to our Next Africa newsletter and follow Bloomberg Africa on Twitter Africa’s second-biggest tea grower is constrained by storage for its leaf as the coronavirus pandemic curtails global demand, driving warehouse costs higher, according to a lobby group.
Remember Brexit? It hasn’t gone away, you know
On January 31st this year, the European Union ruptured. After 3½ years of torturous politicking, reams of indigestible trade jargon and a veritable mountain of dire warnings, the UK left, marking perhaps the lowest point in the bloc’s 63-year history. We all took a large intake of breath. And then the biggest story in decades dropped off the face of the earth. Never has one dominating news story been so obliterated by another.
Brussels and Britain clash over climate conditions in trade deal
Jim Brunsden – FT
The UK is resisting EU moves to incorporate guarantees on respecting international climate change commitments in a future trade deal, adding to mounting disagreements on both sides over how to forge their post-Brexit relationship. EU officials said the most recent negotiating round with the UK had revealed a clear rift over co-operation in the fight against climate change. The split is emblematic of broader difficulties both sides have identified after two rounds of future relationship talks, with negotiators at odds on the conditions that should be attached to a far-reaching trade deal.
Seven Ways the Government Can Help Bars Survive; At the epicenter of the pandemic in America, a top New York cocktail bar owner thinks less regulation is key to recovery. And it might be how the rest of the country rebounds as well.
Kate Krader – Bloomberg
News that New York’s famed Pegu Club was closing for good upset bar lovers nationwide when the announcement came at the end of April. The 14-year old bar founded by Audrey Saunders had helped pioneer the craft cocktail scene; dozens of top mixologists trained there.
Locked-Down Drinkers Lose Their Thirst for Budweiser, Stella
Thomas Buckley – Bloomberg
AB InBev warns of worse to come as April shipments plunge 32%; Popular brands are getting hit harder than niche ones
Anheuser-Busch InBev NV warned that its biggest three beer brands — Budweiser, Stella Artois and Corona — are bearing the brunt of a collapse in sales caused by the coronavirus.