How China’s tensions could boost Hong Kong’s exchange; Justice Department Closing Insider-Trading Investigations Into Three U.S. Senators

May 27, 2020

First Read

Hits & Takes
By JLN Staff

The Justice Department has ended the investigation into the stock trades of three U.S. Senators, including Sen. Kelly Loeffler of Georgia, the New York Times reported

A former Commodity News Service colleague of Suzanne Cosgrove’s and mine, Cythia Owens, is part of an organization called “The Goodness Collaborative,” which “is one part supportive community, one part consultancy, and one part capability development.” They say they believe in superpowers, which they call your goodness. What they do is offer a range of services for individuals and businesses (big and small): strategic consulting, team-based and personal coaching, community-building, and experience design.

I was moved to share the story of The Goodness Collaborative after reading a lovely post on their site titled “So this is resilience” by Sarah Ash Evens Foltz.

Aite Group has a report out by Senior Analyst Audrey Blater titled “Five Important Changes to the Repo Market Every Investor Should Know About; Repo no longer lives in isolation.” You have to buy the report, but if you need to know, you need to pay. There is an introduction to the paper on the site.

Our friends at Curve Global are offering a webinar with the modest name of “The Future of Derivatives: Add Value to How You Trade – Trading the Block Market.” The webinar is Monday, 8 June 2020 at 4.30 – 5.00 p.m. BST. Register HERE.

Supercritical Partner Jay Caauwe is raising money for the Rex Foundation Covid-19 Relief Fund. You can support his efforts HERE.

Stay safe!~JJL

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Imagineer Technology Group is offering a live virtual roundtable on Wednesday, June 3rd, at 2pm CT titled “Vendors vs. Virus: How software providers in the asset management & trading industries are adapting in the COVID-19 pandemic.” Moderated by Jeremie Bacon, CEO of Imagineer, it includes panelists: Rick Lane, CEO of Trading Technologies; Hazem Dawani, CEO of Predata; Monel Amin, Founder & CEO of DiligenceVault; and Kristi Ross, Co-CEO & President of tastytrade.
The event is free and you can go here to register. ~SR

Later today, CME will transfer open interest in natural gas and crude oil futures and futures options from NFX to CME Clearing using the block trade functions at CME. The CME’s May 26 Special Executive Report notes that it is making this accommodation “in response to client demand.” You might remember that last November Deutsche Boerse’s EEX’s Nodal Exchange said, “Nodal will acquire the core assets of NFX, including the portfolio of NFX contracts.” Nodal said the acquisition involved the transfer of NFX’s open interest to Nodal Clear. The financial terms were not made public. Since there is little protectable IP involved in those contracts, it sounds like Nodal was buying “goodwill.” Apparently, though, not everyone wants to go to NODAL and NODAL Clear and some members and customers are voting with their (electronic) feet to move to CME.~Thom Thompson

The CME Group will launch options on Micro E-mini S&P 500 and Micro E-mini Nasdaq-100 Futures for trading in Fall 2020, pending regulatory approval. You can read the press release in our “Exchanges” section today, and you can read more about it on the CME’s website.~MR

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Justice Department ends insider-trading probe into Sen. Kelly Loeffler; investigation of Sen. Richard Burr’s prepandemic trades continues; Two months ago, members of Congress and their advisers sold hundreds of thousands of dollars in stock after attending a closed-door briefing about the new coronavirus
Aruna Viswanatha – MarketWatch
The Justice Department is closing investigations into three U.S. senators for stocks trades made shortly before the coronavirus market turmoil, but is continuing a related investigation into Sen. Richard Burr, according to people familiar with the matter.
/on.mktw.net/2Af86Aw

*****Good news for Sen. Loeffler, but she will still be hearing about this through the election from her opponents, no doubt.~JJL

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CME trading floor’s coronavirus shutdown to last at least 3 more weeks; CME’s trading pits make reopening ‘complicated’
Jonathan Garber – FOXBusiness
The New York Stock Exchange reopened its trading floor on Tuesday, but Chicago’s legendary trading pits will remain closed for at least the next several weeks. Exchange operator CME Group will keep its trading floor closed for at least three weeks after Illinois’ stay-at-home order, which is scheduled to expire on May 29, is lifted. The exchange closed its trading floor at the end of business on March 13.
/fxn.ws/2X4O1WE

******I have figured out that the only kind of trading that could occur on the trading floor without shouting or the need even to be in the trading pit is bagging trades. Unfortunately, this type of trading is a violation of the rules. Oh well!~JJL

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Taleb-Asness Black Swan Spat Is a Teaching Moment; Investors should recognize where the “Black Swan” author and a quant fund pioneer tend to agree rather than differ.
Aaron Brown – Bloomberg
The recent Twitter spat between “Black Swan” author Nassim Nicholas Taleb and quant investing pioneer Cliff Asness over hedging against highly remote events reminded me why Luke Skywalker needed two droids: R2-D2 to ignore chaos and calmly proceed with the long-term plan, and C-3PO to point out all the exotic dangers that make everything hopeless.
/bloom.bg/3c8GF90

*****No one saw this coming.~JJL

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Coronavirus: The human cost of virus misinformation
Marianna Spring – BBC
A BBC team tracking coronavirus misinformation has found links to assaults, arsons and deaths. And experts say the potential for indirect harm caused by rumours, conspiracy theories and bad health information could be much bigger. “We thought the government was using it to distract us,” says Brian Lee Hitchens, “or it was to do with 5G. So we didn’t follow the rules or seek help sooner.” Brian, 46, is talking by phone from his hospital bed in Florida. His wife is critically ill – sedated, on a ventilator in an adjacent ward.
/bbc.in/3c4hEM1

*****There is evil in the world.~JJL

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Tuesday’s Top Three
Our top story Tuesday was Chicago Derivatives Executive Pens Murder Mystery Thriller Set In Chicago’s Markets, JLN’s video interview with Margaret Wiermanski, derivatives industry executive and new author. Second was Risk.net’s Ronin expanded rapidly before flaming out, accounts show, which was our top story Friday. Third was the Washington Post’s Why failing to reopen Purdue University this fall would be an unacceptable breach of duty.

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Lead Stories

How China’s tensions could boost Hong Kong’s exchange; HKEX’s next chief executive will have to manage a tricky relationship with Beijing
Henny Sender – FT
When Charles Li became chief executive of Hong Kong’s stock exchange a decade ago, it was after fighting off many contenders for the position. As HKEX’s board begins the search to replace its widely respected leader next year, the list of potential candidates is dishearteningly short. The main requirements have not changed much in the past 10 years. The candidate must be capable of being the quintessential Hong Kong figure — living simultaneously in a Chinese and an international world. Mr Li, a mainlander who previously worked at institutions including JPMorgan China and Merrill Lynch China, personified that mix.
/on.ft.com/2ZC0dQu

Justice Department Closing Insider-Trading Investigations Into Three U.S. Senators; Probe continues into stock trades that GOP Sen. Richard Burr of North Carolina made earlier this year
Aruna Viswanatha – WSJ
The Justice Department is closing investigations into three U.S. senators for stocks trades made shortly before the coronavirus market turmoil, but is continuing a related investigation into GOP Sen. Richard Burr, according to people familiar with the matter.
/on.wsj.com/2M4Jzkw

The Fed Boldly Saves Markets. Now It’s Worrying About Main Street Business
Craig Torres – Bloomberg
Next phase of risk deep into ‘the marrow of the real economy’; Powell says more fiscal help needed in addition to Fed loans
The Federal Reserve’s next front in the battle to support the U.S. economy is to prevent millions of American small businesses from becoming the Achilles heel of the recovery. Fed Chairman Jerome Powell told the Senate Banking Committee last week that he’s concerned about America’s “jobs machine” — its small and medium sized firms — tipping into bankruptcy and destroying the “work of many families and generations.” If that happens, there will be fewer jobs when state governors declare it’s safe for households to go back to work.
/bloom.bg/2zpfzx7

Avoiding Volatility Is Even Harder Than It Looks in This Market; In an economy-wide crisis, defensive investments can get burned, too.
Joanna Ossinger – Bloomberg
For investors who aim to hold down the volatility of their investments, this has been a very unsettling year. Not only have markets been wild, but many classic havens proved not to be so safe in the face of the coronavirus pandemic. Take one of the simplest examples: buying stocks that in the past have shown low volatility. The S&P 500 Low Volatility Index—which measures the 100 steadiest stocks in the S&P 500—has lost more than 16% so far this year, compared with a loss of about 7% for the broader gauge. The low-volatility companies were hit slightly harder during the equity rout from Feb. 19 to March 23 and have recovered less than the market since then.
/bloom.bg/3grm0Aa

HKEX to launch MSCI Asia and emerging markets derivatives; As HKEX plans launch of new MSCI futures and options, SGX confirmed it will reduce its MSCI licensing agreement from February 2021.
Hayley McDowell – The Trade
Hong Kong Exchanges & Clearing (HKEX) has signed a major licensing agreement with MSCI to launch Asia and emerging markets futures and options contracts.
/bit.ly/2M1keHY

NYSE reopens trading floor after two-month Covid shutdown; Brokers required to wear masks, observe distancing rules and avoid public transport
Philip Stafford and Colby Smith – FT
The New York Stock Exchange has partially reopened its famous Wall Street trading floor, with around a quarter of brokers returning after a two-month shutdown caused by the coronavirus crisis.
/on.ft.com/2B7245E

Floor trading resumes at NYSE, with masks and plexiglas
AFP
The New York Stock Exchange, the symbolic heart of Wall Street, reopened its floor Tuesday after a two-month closure due to the coronavirus, with traders donning masks and separated by plexiglas.
/yhoo.it/2yHbAeY

NYSE president: ‘While we are reopening, it is not back to business as usual’
Brian Sozzi – Yahoo Finance
Commence open outcry on the New York Stock Exchange trading floor, with a protective mask firmly in place of course. The iconic trading venue reopened on Tuesday — with the opening bell rung by New York state Governor Andrew Cuomo — for human traders after a nearly two-month shutdown at the hands of the deadly COVID-19 pandemic.
/yhoo.it/2M4PQNa

‘Leaks and rumours’: UK regulator flags perils of bankers working from home
Huw Jones – Reuters
Bankers working from their kitchens or bedrooms may raise new risks around handling sensitive information, meaning financial firms must check if their surveillance systems can spot suspicious transactions, British regulators said on Wednesday.
/reut.rs/3d8T1iu

Cboe set to reopen trading floor in Chicago next month; Cboe has confirmed its open outcry options trading floor in Chicago is scheduled to partially resume operations next month after it was shut down in March due to coronavirus.
Kiays Khalil – The Trade
Cboe Global Markets has confirmed it will reopen its Options Exchange (C1) trading floor in Chicago after being forced to shut it down due to the coronavirus pandemic.
/bit.ly/3c8xS70

EU Will Propose 750 Billion-Euro Fiscal Stimulus Package
Nikos Chrysoloras and Viktoria Dendrinou – Bloomberg
500 billion euros would be sent as grants to member states; The proposal will need the agreement of all 27 EU nations
The European Union’s executive arm will propose a new fiscal stimulus package of as much as 750 billion euros ($823 billion) in an unprecedented push to overcome the deepest recession in living memory, according to a tweet by European Commissioner Paolo Gentiloni.
/bloom.bg/2zzDxFR

Hedge Funds Plan Extreme Lengths to Protect Staff After Lockdown
Hema Parmar – Bloomberg
Money managers may go further than the measures at giant banks; Some may abandon offices. Others tackle the restroom conundrum
One hedge fund may shut an office in Asia permanently and have employees work from home. Another may dramatically shrink its Manhattan headquarters. Meanwhile, industry titan Millennium Management has a 50-point checklist for reopening offices that includes air filtration and an application process for staff who want to come in. Around town, rivals are discussing procuring infrared temperature scanners for entryways and plexiglass dividers to slide between desks.
/bloom.bg/3d5C3So

Fuel price slump puts North American LNG projects on ice; Glut dims prospects for shale gas exports from the US and Canada
Gregory Meyer – FT
A worldwide slump in fuel prices is putting billions of dollars of liquefied natural gas investment on ice.
/on.ft.com/36zJI8R

investors are piling into Tokyo-listed shares
Leo Lewis – FT
Just as Japan was ending the nation’s state of emergency and purring over the success of the “Japan model”, analysts started to draw a detailed picture of how coronavirus has transformed sales of certain items and, by implication, behaviour.
/on.ft.com/2yCq1AV

Coronavirus

To beat Covid-19, find today’s superspreading ‘Typhoid Marys’; A more informative factor than R is the ‘dispersion parameter’ known as k
Anjana Ahuja – FT
In the early 1880s, Irishwoman Mary Mallon emigrated to New York and began working as a cook. Her meals came with a side order of typhoid: as an asymptomatic carrier of the disease, she infected about 50 people, three of whom died.
/on.ft.com/2Xxy3Dr

Drug Touted by Trump Rejected for Covid Patients in France
Marthe Fourcade – Bloomberg
Hydroxychloroquine, the old malaria medicine touted as a treatment for Covid-19, can no longer be used to treat the new coronavirus in France amid growing evidence that it can cause more harm than good.
/bloom.bg/2zzKh6E

Cost of U.K. Coronavirus Support Jumps About $12 Billion in a Week
David Goodman – Bloomberg
Government has spent nearly 50 billion pounds on all plans; U.K.’s Sunak is mulling ways to gradually withdraw support
The cost of the U.K. government’s programs to support the economy through the coronavirus crisis increased by more than 10 billion pounds ($12.3 billion) in the space of a week — a stark reminder of the heavy price the Treasury is paying to keep businesses afloat.
/bloom.bg/2B1se9H

Keeping Economic Data Flowing During COVID-19
Louis Marc Ducharme, James Tebrake, and Zaijin Zhan – IMF
Accurate and timely economic data are crucial for informing policy decisions, especially during a crisis. But the COVID-19 pandemic has disrupted the production of many key statistics. Without reliable data, policymakers cannot assess how badly the pandemic is hurting people and the economy, nor can they properly monitor the recovery.
/bit.ly/3c6Agek

Anders Tegnell, the man behind Sweden’s no-lockdown coronavirus strategy; “Other countries? Maybe they needed a bit more ice in their stomach”
Claudio Bresciani – The Sunday Times
Democratic Republic of Congo, 1995. An ebola outbreak has just been declared. Anders Tegnell, a Swedish epidemiologist, is sent to Kinshasa to help with the response. Panic is widespread, the relief operation is a mess, people are dying. No one knows what they’re meant to do, and competing directives from different agencies have added to the confusion. Sound familiar?
/bit.ly/2TBHrEY

Sweden ‘wrong’ not to shut down, says former state epidemiologist; Scientist who oversaw the response to Sars says country has failed the vulnerable
Richard Orange – The Guardian
The predecessor of Sweden’s state epidemiologist has broken her silence on the country’s controversial coronavirus strategy, saying she now believes the authorities should have put in place tougher restrictions in the early stages of the pandemic to bring the virus under control.
/bit.ly/2yFIIni

Stockholm Won’t Reach Herd Immunity In May, Sweden’s Chief Epidemiologist Says
H.J. Mai – NPR
Sweden’s controversial approach to fighting the coronavirus pandemic has so far failed to produce the expected results, and there are calls within the country for the government to change its strategy.
/n.pr/36BMF8R

Merck chief casts doubt on coronavirus vaccine timeframe; Ken Frazier calls 12 to 18-month targets ‘very aggressive’ as he announces biotech acquisition
David Crow – FT
Merck chief executive Ken Frazier has cast doubt on the 12 to 18-month timeframe to develop an effective coronavirus vaccine, describing the widely mooted schedule as “very aggressive”
/on.ft.com/2A9Bf0f

Exchanges, OTC and Clearing

HKEX Signs Agreement with MSCI to License Indexes to Launch Asia and Emerging Markets Futures and Options Contracts
HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) is today pleased to announce that its wholly owned subsidiary, Hong Kong Futures Exchange Limited, has signed a major licensing agreement with MSCI Inc. (NYSE: MSCI), a leading provider of mission critical decision support tools and services for the global investment community, to license a suite of MSCI indexes in Asia and Emerging Markets for the introduction of futures and options contracts in Hong Kong.
/bit.ly/2X5rdpD

Cboe Global Markets Plans to Reopen Chicago Trading Floor on Monday, June 8, 2020
Cboe (press release)
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today announced it plans to reopen its Cboe Options Exchange (C1) trading floor in Chicago and resume trading operations on the floor in a modified manner on Monday, June 8, 2020.
/bit.ly/2TGRQ2g

Standards of Conduct related to the Reopening of the Cboe; Options Trading Floor and COVID-19
Cboe
Applicable Cboe Exchange: Cboe Options
Effective March 16, 2020, Cboe closed the Cboe Options Exchange (the “Exchange”) trading floor in Chicago until further notice related to the COVID-19 virus. Effective June 8, 2020, Cboe Options will reopen its trading floor and resume trading operations on the floor in a modified manner. In order to help protect the safety and welfare of persons on the trading floor given the circumstances of COVID-19 pandemic, until further notice, Trading Permit Holders and associated persons and employees of Trading Permit Holders (collectively, “TPHs”) accessing the Exchange’s facilities at 400 South LaSalle, including the trading floor, (the “Facilities”) must follow the practices set forth below. Please note that in accordance with these requirements, badge access will be restricted to only those trading floor personnel that the TPH organization has notified Cboe of in advance. TPH organizations must also provide advance notice to Cboe of any changes to personnel.
/bit.ly/2ZCH68K

CME Group Chief Financial Officer and Global Head of Financial and OTC Products to Present at Deutsche Bank Global Financial Services Virtual Conference
CME Group
CME Group announced today that John Pietrowicz, Chief Financial Officer, and Sean Tully, Senior Managing Director and Global Head of Financial and OTC Products, will present at the Deutsche Bank 10th Annual Global Financial Services Conference, which will be held virtually on Wednesday, May 27, at 1:00 p.m. (Eastern Time).
/bit.ly/3dapbKw

CME Group to Launch Options on Micro E-mini S&P 500 and Micro E-mini Nasdaq-100 Futures
PR Newswire
CME Group, the world’s leading and most diverse derivatives marketplace, announced it will launch options on its Micro E-mini S&P 500 and Micro E-mini Nasdaq-100 futures contracts. The new options will be available for trading in the fall of 2020, pending regulatory review.
/prn.to/3gs6Evp

Nasdaq CEO Adena Friedman to Present at Upcoming Investor Conferences
Nasdaq
Nasdaq (Nasdaq: NDAQ) is a global technology company serving the capital markets and other industries. Our diverse offering of data, analytics, software and services enables clients to optimize and execute their business vision with confidence. To learn more about the company, technology solutions and career opportunities, visit us on LinkedIn, on Twitter @Nasdaq, or at www.nasdaq.com.
/bit.ly/3d6Dj7P

Amendment to Policies Concerning Calculation of TSE Indices
JPX
In considering the amendment to “Policies Concerning Calculation of TSE Indices”, Tokyo Stock Exchange, Inc. (TSE) has taken into account the opinions from market users, which were gathered through the Index Consultation process, and has decided to implement the amendment.
/bit.ly/2AeZgTm

SGX reduces licence agreement with MSCI from February 2021; continues to serve global investors with pan-Asian multi-asset solutions
SGX
SGX and MSCI will retain their partnership on MSCI Singapore Index products and will both work to extend it well beyond 2021; MSCI Singapore futures and options remain listed; Licence agreement for all other MSCI products will expire in February 2021; SGX continues to grow a one-stop, multi-asset platform to trade and manage Asian risk comprehensively across equities, fixed income, currencies and commodities
Singapore Exchange (SGX) today reaffirmed its commitment to providing market participants with a single platform to trade and risk-manage Asia across asset classes, as it reduces its licence agreement with MSCI Inc.
/bit.ly/2AeZaLu

Nigerian Stock Exchange, International Finance Corporation Highlight Gender Implications Of COVID-19 In Inaugural Seminar Under The Nigeria2Equal Program
Mondovisione
The Nigerian Stock Exchange (“NSE” or “The Exchange”) in collaboration with the International Finance Corporation (IFC), have launched the Nigeria2Equal Programme with an inaugural seminar on Monday, 25 May 2020. The virtual seminar, themed, “Gender Implications of COVID-19: Supporting Women as Employees in the New Normal” highlighted the differential socioeconomic impacts the Coronavirus, COVID-19, will have on men and women, with women predicted to face more negative impacts.
/bit.ly/3c7J1VA

Fintech

Trading Technologies expands further into Chinese derivatives market; Partnership with Zhengzhou Esunny will give Trading Technologies greater access to the Chinese derivatives market.
Kiays Khalil – The Trade
Chicago-based technology provider Trading Technologies (TT) has expanded access to the Chinese derivatives market for clients through a new partnership with Esunny.
/bit.ly/2LZ9IB8

Tencent to invest $70 billion in ‘new infrastructure’
Pei Li – Reuters
Chinese tech giant Tencent Holdings (0700.HK) will invest 500 billion yuan ($70 billion) over the next five years in technology infrastructure including cloud computing, artificial intelligence and cybersecurity, the company said Tuesday.
The announcement comes after call by Beijing last month for a tech-driven structural upgrade of the world’s second-largest economy through investment in “new infrastructure” and a boom in demand for business software and cloud services.
/reut.rs/36zZhNT

Hong Kong bank survey reveals state of fintech growth
Victor Chatenay – Business Insider
A new report identifies the opportunities and challenges associated with collaborating with fintechs, in addition to how banks expect the Hong Kong fintech space to grow over the next decade, per Crowdfund Insider. The report was released by the Hong Kong Institute for Monetary and Financial Research (HKIMR), and the findings are based on a survey of Hong Kong’s traditional banks and the newly licensed virtual banks.
/bit.ly/3d9vNJb

Ripple CEO: China will overtake USA in blockchain and Fintech
Collin Brown – Crypto News Flash
The global race for market leadership in blockchain and fintech is entering the next round. Some countries such as Malta or Switzerland are considered a “Blockchain paradise” due to their simple and clear legal situation and have already attracted many well-known companies. Ripple CEO Brad Garlinghouse, however, once again criticized the attitude of the USA.
/bit.ly/2X4dsI0

Singapore fintech firm secures $17M to build out platform
Eileen Yu – ZDNet
GoBear has secured $17 million in funds that it says will drive its efforts to become a “full-fledged financial services platform”. It plans to focus on three growth areas, namely, online financial supermarket, digital insurance brokerage, and digital lending.
/zd.net/36zPmYy

Cryptocurrencies

Facebook Renames Blockchain Division After Libra Confusion
Kurt Wagner – Bloomberg
Calibra group building a digital wallet is now called Novi; Rename could change perception of Facebook’s involvement
Facebook Inc. has renamed its blockchain division, called Calibra, to distance it from the Libra digital currency that Facebook created. The blockchain team is building a digital wallet for Facebook’s apps, which will eventually hold the Libra digital currency, but Facebook won’t control the coin.
/bloom.bg/3guLyMM

ErisX Addresses OTC Trading with Enhanced Block Trading Capabilities
ErisX
ErisX announced today that our block trading facility can now be accessed through our REST API. Block trading is available on all the Exchange’s listed spot and futures products to eliminate Members’ bi-lateral counterparty risk. By implementing this workflow that is familiar to capital markets professionals, ErisX is enhancing crypto OTC practices.
/bwnews.pr/2M1ymRw

Robo advisor Betterment’s CEO says customers are ‘staying the course’
The Block
Episode 20 of Season 2 of The Scoop was recorded remotely with The Block’s Frank Chaparro along with Jon Stein, founder and CEO of robo advisory firm Betterment as well as special guest co-host, Rebecca Ungarino of Business Insider.
/bit.ly/3c6Uc0L

Polkadot’s blockchain mainnet is now live, allowing limited access to token accounts
Celia Wan – The Block
Polkadot’s blockchain network is now live. According to the network’s managing partner, Web3 Foundation, today marks the first phase of Polkadot’s mainnet rollout. At this stage, Web3 Foundation will retain control of the network, running nodes and validating blocks. Investors of Polkadot’s native token DOT can also access their accounts to express intent to become validators or nominate other validators, although they cannot transfer DOTs at this time, a Polkadot spokesperson told The Block.
/bit.ly/2LZs0Ci

Coinbase Expands Institutional Services With Tagomi Purchase
Olga Kharif – Bloomberg
Coinbase Inc., the largest U.S. cryptocurrency exchange, is expanding its services for institutional investors with the acquisition of digital brokerage Tagomi. Tagomi’s platform is able to automate crypto trades valued at millions of dollars that many other firms still execute manually. Customers include family offices and crypto funds such as Pantera Capital, Bitwise and Multicoin Capital.
/bloom.bg/3c5MST1

Coinbase Buys Tagomi as ‘Foundation’ of Institutional Trading Arm
Ian Allison – Coindesk
San Francisco-based cryptocurrency exchange Coinbase is finally acquiring Tagomi, a prime brokerage platform specializing in digital asset trading. Announced Wednesday, the two companies said the deal is expected to be finalized later this year, without disclosing the financial terms.
/bit.ly/2XzuwEL

Facebook’s Calibra Rebrands to Novi, Details Wallet Tie-Up With WhatsApp
Sebastian Sinclair – Coindesk
In the approach to the launch of the Facebook-spawned Libra payments ecosystem, a key subsidiary has been given a new name and a new look. According to an announcement on Tuesday, Facebook subsidiary and Libra wallet provider Calibra has now been rebranded to Novi – a portmanteau of the Latin root words, “novus” meaning new and “via” meaning way. The first wallet product from the firm is intended to hold Libra’s various digital currencies, once the Facebook-led initiative goes live.
/bit.ly/36G4jIL

BitGo launches BitGo Prime, aiming to bridge crypto lending, custody and trading for institutions
Michael McSweeney – The Block
Crypto services provider BitGo announced Wednesday the launch of BitGo Prime, an institutional-focused trading service. BitGo Prime will be led by Nick Carmi, who has been named the entity’s chief executive. Carmi joined BitGo just over a year ago as its head of financial services, having joined from Tower Research Capital. He previously held roles across the banking world, including at Deutsche Bank, Barclays and Lehman Brothers, among others.
/bit.ly/3cbqQ13

‘Focus on Retirement’: Crypto Custodian Rolls Out Hybrid IRA Offering
Nathan DiCamillo – Coindesk
Digital asset custodian Kingdom Trust is offering investors a single retirement account for traditional and digital assets. Called Choice, the South Dakota-based custodian is offering a self-service retirement platform where investors can buy, sell or hold stocks, exchange-traded funds (ETFs) and digital assets in one tax-advantaged account, said Kingdom Trust CEO Ryan Radloff. Currently, less than 1% of the 100,000 retirement accounts that Kingdom Trust provides custody for have any digital assets as part of their portfolios.
/bit.ly/2yCsM5f

Crypto Broker BUX Expands No-Fee Trading to US Stocks
Aziz Abdel-Qader – Finance Magnates
An Amsterdam-based retail brokerage firm, BUX, announced the soft launch of its service that enables users to trade US shares at no cost, with users who want access to more advanced functionalities paying a small fee for the execution of their transactions. BUX’s offering is a similar concept to commission-free investing app Robinhood, which also has zero brokerage fees and has reached 13 million users in the US. Robinhood raised this month its latest round of funding, ?bringing in $280 million at a $8.3 billion valuation. ?
/bit.ly/2ZDwIhf

First Mover: EOS Has Still to Prove Itself After Spiraling Down This Past Year
Paddy Baker, Omkar Godbole – Coindesk
EOS, a smart-contracts platform, has had its fair share of bother. The blockchain’s launch in 2018 was bumpy: Some users had their accounts frozen, twice. Many more were irritated when they discovered there was an all-powerful arbitrator whose role was unclear. Then last year, Brock Pierce, one of the project’s early backers, said in a public forum that the blockchain ecosystem was a “little bit of a Chinese oligarchy” — implying a troubling lack of decentralization on the network.
/bit.ly/2Xu2jiE

Sterling Trading Tech Partners with Voyager to Launch Crypto Trading Widget
Sterling Trading Tech
Sterling Trading Tech (STT), a leader in compliance, risk and infrastructure solutions for equity, options and futures trading, unveiled a new offering of digital asset trading capabilities through a partnership with Voyager Digital, LLC, a crypto asset broker that provides retail and institutional investors with a turnkey solution to trade crypto assets.
/bit.ly/2X3Rfts

Bitfury announces institutional investor program for mining farms
Aislinn Keely – The Block
Bitfury has announced the launch of an institutional investor program that offers exposure to bitcoin by way of the mining company’s data centers. The program touts “bespoke” investment vehicles, including direct investment and indirect opportunities with funds and private equity, among other modes.
/bit.ly/2XxRs7f

Politics

Twitter puts fact-check label on Trump tweets for first time; Social media site says president’s posts contain ‘potentially misleading information’
Hannah Murphy and Kiran Stacey – FT
Twitter has put a fact-check warning on some of Donald Trump’s tweets for the first time, marking an escalation in tensions between the Silicon Valley company and its most famous user.
/on.ft.com/3eplnpe

German ECB executive shrugs off court ruling against bond buying; Isabel Schnabel says constitutional row ‘does not directly affect’ eurozone’s central bank
Martin Arnold – FT
The European Central Bank intends to shrug off the German constitutional court’s ruling against its flagship bond-buying policy and expects Germany’s central bank to resolve the legal impasse, according to one of the eurozone institution’s top executives.
/on.ft.com/2zqrGdm

House Set to Back China Sanctions Amid Rising Tensions With U.S.
Daniel Flatley – Bloomberg
Lawmakers aim to punish Beijing over treatment of Uighurs; China warns of reprisal over moves by White House, Congress
The House of Representatives is poised to give final passage Wednesday to legislation that would sanction Chinese officials for human rights abuses against Muslim minorities, the latest in a series of moves by Congress and the White House to put pressure on the Beijing government.
/bloom.bg/2ZFv26J

New Zealand Ministers Oppose Common Currency With Australia, Citing Euro
Matthew Brockett – Bloomberg
New Zealand has no desire for a common currency with Australia even as the two nations seek to forge closer ties in the post-coronavirus world. That is the view of two senior New Zealand ministers, who were speaking on a webinar Wednesday about prospects for a travel corridor between the neighbors. Asked if the so-called “trans-Tasman bubble” could pave the way for a single currency, Trade Minister David Parker was unequivocal: “No, and I think that would be a terrible outcome for both countries.”
/bloom.bg/2ZGIirW

Ohio Republican governor says wearing a mask is ‘about loving your fellow human being’
Paul LeBlanc, CNN
Republican Gov. Mike DeWine said Tuesday evening that wearing a mask to protect against coronavirus is “about loving your fellow human being,” saying he tells Ohioans to wear the face coverings even as they have become a political flashpoint amid the pandemic.
/cnn.it/3c8NnLY

In Lockdown Scandal, Johnson Reaps What He Sowed; Having fomented a revolution against unaccountable elites, the U.K. prime minister now stands guilty of supporting unaccountable elitism.
Pankaj Mishra – Bloomberg
The prime strategist behind Boris Johnson’s ascent to No. 10 Downing Street might just end up bringing him down. Dominic Cummings, a backroom operator who masterminded both the campaign for Brexit and Johnson’s stunning election victory in December, provoked a firestorm when it was revealed last week that he had violated Britain’s lockdown rules, driving 250 miles to his parents’ property to seek childcare for his son just before himself developing coronavirus symptoms. Instead of addressing widespread public anger, Johnson first forced his ministerial colleagues to line up behind Cummings, then personally endorsed his aide’s actions as both responsible and legal.
/bloom.bg/3d7mRUL

American Politics Is Now Democrats Versus Authoritarians; When one party respects the rule of law but the other doesn’t, political discourse can’t be normal.
Francis Wilkinson – Bloomberg
The Democratic Party now confronts a predicament familiar to democratic political parties in authoritarian states such as Hungary and Russia. As those parties have learned, there is no good answer to the problem.
/bloom.bg/36AP0B8

Trump Threatens to Shut Social Media Companies After Twitter Fact Check
Josh Wingrove – Bloomberg
President Donald Trump threatened to regulate or shutter social media companies — a warning apparently aimed at Twitter Inc. after it began fact-checking his tweets.
/bloom.bg/36zSl3c

Xi Seeks Victory Over Trump in Race for a Covid-19 Vaccine
Bloomberg News
China has several coronavirus vaccines in human trials; Chinese president has pledged to share any vaccine globally
President Xi Jinping’s government is throwing the might of the Chinese state behind the country’s vaccine developers as the world races to make a shot against the coronavirus.
/bloom.bg/3d9sdPf

Trump Says Hong Kong Will Lose Finance Industry After China Law
Jennifer Jacobs – Bloomberg
President Donald Trump believes Hong Kong will lose its status as Asia’s financial hub if the Chinese government proceeds with a new law to curb protests in the territory, the White House press secretary said.
/bloom.bg/3ce74lX

The ‘Liberal Leaning’ Media Has Passed Its Tipping Point; A return to balance would be commercially unviable. The best solution may be an honest embrace of bias.
Van Gordon Sauter – WSJ Opinion
About 35 years ago I was sitting at lunch next to Jeane Kirkpatrick, a onetime Democrat who became a foreign-policy adviser to President Reagan and later U.S. ambassador to the United Nations. She was lamenting what she called the “liberal leaning” media. As the president of CBS News, I assured her it was only a “liberal tilt” and could be corrected.
/on.wsj.com/2TIYkhg

Facebook Executives Shut Down Efforts to Make the Site Less Divisive; The social-media giant internally studied how it polarizes users, then largely shelved the research
Jeff Horwitz and Deepa Seetharaman – WSJ
A Facebook Inc. team had a blunt message for senior executives. The company’s algorithms weren’t bringing people together. They were driving people apart.
/on.wsj.com/2TGOpZe

Regulation

IFAs warned of fake FCA email
Imogen Tew – FT Adviser
Warning bells have been sounded over scammers targeting financial advisers by sending a fake email purporting to be from the City watchdog. The email, sent to advisers over the past few days and seen by FTAdviser, looks like a due diligence request from the Financial Conduct Authority.
/bit.ly/3d6FzMl

Private Equity Firm Ares Management LLC Charged With Compliance Failures
SEC
The Securities and Exchange Commission today announced that Ares Management LLC, a Los Angeles-based private equity firm and registered investment adviser, has agreed to pay one million dollars to settle charges that it failed to implement and enforce policies and procedures reasonably designed to prevent the misuse of material nonpublic information.
/bit.ly/3d8StZY

FINRA’s Transformation of Member Supervision — Examination and Risk Monitoring Program
FINRA
During this session, FINRA staff discuss the migration of examination by business model including the firm grouping structure, how the Risk Monitoring and Examination teams coordinate, and what firms can expect going forward.
/bit.ly/36Bkabm

Reminder – Testing U.S. Treasury Securities Executed to Hedge a Primary Market Transaction
FINRA
Beginning August 3, 2020, members are required to begin to report transactions in U.S. Treasury Securities executed to hedge a List or Fixed Offering Price Transaction or a Takedown Transaction (as defined in FINRA Rule 6710) with an appropriate identifier. See additional information regarding this change in Regulatory Notice 19-30.
/bit.ly/2M0vJ2n

Introducing Greg Ruppert and the National Cause and Financial Crimes Detection Programs
FINRA
Between the level of interconnectedness on the web and the sheer about of data available, we’re living in an era ripe for the perpetration of financial fraud. That makes it more important than ever for FINRA to have a holistic view of emerging trends and risks—and the ability to coordinate closely with other regulators and law enforcement. FINRA’s new National Cause and Financial Crimes Detection Programs (NCFC) aims to be the nerve center to do just that.
/bit.ly/36wu4v8

A ban on US banks issuing dividends would be bad policy; Any action to halt payouts would produce substantial costs and little to no benefits
Greg Baer – FT
Economic turmoil related to the Covid-19 pandemic has spurred calls for the Federal Reserve to prevent US banks from issuing dividends, following similar moves by regulators in Europe and the UK. Such action would produce little to no benefits and substantial costs. In fact, a ban could strain banks’ ability to support lending and economic growth, both now and over the long term.
/on.ft.com/2Xxzf9T

Investing and Trading

This Isn’t Your Father’s Corporate-Bond Market; Central banks and tracker funds have upended the way prices are set in the credit market, but the new system could be better for businesses
Jon Sindreu – WSJ
Corporate bonds have never been so popular. Are they a safer investment than they used to be in a downturn, or just riding a wave of central-bank and index-fund money? Both could be true.
/on.wsj.com/2AhXZLh

Why U.S. energy CEOs will get big payouts despite oil meltdown
Tim McLaughlin, David French – Reuters
National Oilwell Varco Inc (NOV) has had a rough few years: Since 2017, the Houston company, whose drilling equipment is in major oilfields worldwide, has lost two-thirds of its value, costing shareholders a combined $9 billion.
/reut.rs/3d6Db85

Oil Cargoes Snapped Up in Asia in Sign Demand Is Coming Back
Serene Cheong and Sharon Cho – Bloomberg
Crude sold from floating storage, or just weeks before loading; Refiners in India, China, South Korea buying prompt cargoes
Asian buyers are snapping up distressed cargoes of oil from Africa to the Middle East in another sign that demand is coming back in the world’s biggest crude-importing region.
/bloom.bg/2zD84CL

Here’s the Real Reason Gold Has Been Rising; Deflation, not inflation, is driving the price up.
Peter Coy
Gold has a reputation as a good hedge against inflation, so if gold is rising, it must be that markets are sniffing out inflation, right? Crispin Odey, a European hedge fund manager, even argues that governments may ban private gold ownership if they lose control of inflation in the wake of the Covid-19 pandemic.
/bloom.bg/36yjzrb

Margin calls on eurozone funds increased fivefold in March
Lorenzo Migliorato, Louie Woodall – Risk.net
Investment funds made over EUR10 billion ($11 billion) in variation margin (VM) payments to derivatives counterparties in the week beginning March 16, up from an average of EUR2 billion a week throughout the first half of February, partial data from the European Central Bank (ECB) shows.
/bit.ly/36zvHbd

Institutions

Citi appoints markets head for Switzerland and Lichtenstein; Alex Neumann takes on an expanded role within markets and securities and services, after leading the equities franchise for Citi in Switzerland.
Hayley McDowell – The Trade
US investment bank Citi has named its new head of markets and securities services (MSS) for Switzerland and Lichtenstein, opting to promote from within for the latest appointment within the revamped division.
/bit.ly/3d8zEq3

Jamie Dimon says no immediate return of share buybacks; JPMorgan chief says US banks will wait for evidence of recovery before resuming payments
Laura Noonan – FT
US banks will not resume their share buyback programmes until executives can see “the white of the eyes of the recovery” and they will not return to pre-coronavirus levels, warned Jamie Dimon, chief executive of JPMorgan Chase, on Tuesday.
/on.ft.com/2Xz5YeX

Bank of Montreal Sets Aside $813 Million for Soured Loans
Doug Alexander – Bloomberg
Bank of Montreal followed other Canadian lenders in building up reserves for loan losses to brace for the aftershocks from plunging oil prices and a pandemic that’s caused a near economic standstill.
/bloom.bg/2TIe03Y

Banks in Denmark May Face a $24 Billion Capital Shortfall
Frances Schwartzkopff – Bloomberg
Crisis likely to eat into bail-in buffers, central bank says; Denmark rejects easing up on MREL buffer requirements
Several of Denmark’s biggest banks will see their so-called bail-in buffers come under intense pressure as the Covid-19 crisis triggers an historic economic slump.
/bloom.bg/2TJvbSP

RBC Sets Aside Record $2.06 Billion for Expected Loan Losses
Doug Alexander – Bloomberg
Royal Bank of Canada set aside a record C$2.83 billion ($2.06 billion) in anticipation of soured loans from plunging oil prices and the economic impacts of the coronavirus pandemic.
/bloom.bg/3eg7Sbg

Bank Stocks Are Either Cheap or Signal More Pain; With the S&P 500 crossing 3,000, watch financial shares to see whether the rally can last.
Brian Chappatta – Bloomberg
Something strange happened in the U.S. stock market on Tuesday. No, it wasn’t that the S&P 500 crossed 3,000 for the first time in almost three months, generating a yelp of joy from the White House and groans from Wall Street veterans who remain perplexed at the seeming disconnect between financial markets and the American economy.
/bloom.bg/2TKwe53

Goldman Was Just Trying to Help; Also boredom trading, rental car margin calls, corporate musical parodies and Roman numerals.
Matt Levine – Bloomberg
In the years leading up to the 2008 financial crisis, Goldman Sachs Group Inc. did some bad mortgage stuff. 1 It bought risky mortgages from mortgage lenders, packaged them into mortgage-backed securities, understated the risks of those loans and the shoddiness of the underwriting in the offering documents for the securities, and sold them to investors. When the loans went bad, the investors lost money. This was a popular activity among a lot of banks in those years, and they all got in a lot of trouble for it.
/bloom.bg/2X7Gc2k

Regions

Japan broker to ‘crowdsource’ ideas for new activist fund; Monex will seek to channel views of thousands of retail investors already trading stocks
Leo Lewis – FT
One of Japan’s largest online brokerages will attempt to take shareholder activism into the mainstream with a new fund whose managers will “crowdsource” ideas from thousands of retail investors on how best to challenge corporate leaders.
/on.ft.com/3go9v8N

China Plans to Revise Law Governing the Central Bank This Year
Bloomberg News
China’s top legislature said it plans to revise the law governing the People’s Bank of China this year, amid a broadening of the central bank’s role in recent years.
/bloom.bg/2XFAeFk

Why There’s a Looming Debt Crisis in Emerging Markets
Sydney Maki – Bloomberg
Solvency concerns in the developing world are nothing new. But as governments stare down the humanitarian and economic shocks of the coronavirus pandemic, some emerging markets with weak financial positions are at greater risk of defaulting on their debts. More than 100 nations have asked the International Monetary Fund for help, and the Institute of International Finance is coordinating an effort to offer some relief to the poorest countries. Meaningful relief would need the backing of creditors ranging from multilateral organizations to bilateral lenders and private creditors.
/bloom.bg/2XD2KaB

China’s Sliding Yuan Leaves Offshore Rate on Brink of Record Low
Kari Lindberg and Tian Chen – Bloomberg
Currency slumps as tension with U.S. worsens over Hong Kong; History shows depreciation is often quick when PBOC allows it
China’s offshore yuan is on the cusp of a record low on speculation the government would be willing to permit a weaker currency in response to fresh punitive measures from the U.S.
/bloom.bg/2B7wRzd

Siberian Heatwave Points to a Longer Wildfire Season
Akshat Rathi and Jake Rudnitsky – Bloomberg
After the hottest winter on record in Russia, spring has brought with it a heatwave to Siberia. The region has witnessed unusually warm weather this month, with temperatures in some parts of the Arctic as much as 16 degrees Celsius (29 degrees Fahrenheit) higher than the monthly norm, according to Russia’s federal meteorological service.
/bloom.bg/2XyaPx3

New CEO of Norway’s $1 Trillion Fund in Make-Or-Break Moment
Mikael Holter – Bloomberg
Norges Bank Executive Board meets to finalize CEO contract; Central bank watchdog has criticized recruitment process
Norway is about to reveal whether the man chosen to run its $1 trillion wealth fund has passed a key test to prove he won’t be bogged down by conflicts of interest. On Wednesday, the entity that asked London-based hedge-fund manager Nicolai Tangen to become chief executive of the fund is meeting to discuss how to get him past the finish line.
/bloom.bg/2TI5EJH

China Crackdown on Hong Kong Threatens Global Order, EU Says
Nikos Chrysoloras – Bloomberg
EU foreign ministers to discuss Beijing’s moves in video call; Bloc’s foreign policy chief warns over China’s assertiveness
China’s efforts to tighten its grip on Hong Kong pose a threat to the rules-based international order, the European Union’s top diplomat said, calling on member states to respond with a “robust” message.
/bloom.bg/3eg68yK

Japan’s Bond Issuance to Exceed 200 Trillion Yen This Year
Yuko Takeo, Emi Urabe, and Chikako Mogi – Bloomberg
Bulk of the latest rise covers 6-month bills, 1-5 year notes; Market is expecting the BOJ to buy more bonds: Nissay Asset
Japan’s government increased the amount of debt it plans to issue this fiscal year for the third time in under two months, seeking to fund its unprecedented economic stimulus.
/bloom.bg/2LZ76Ds

Brexit

Brexit risks making London’s dirty money fight harder, say lawyers; Top firms fear commitment to intelligence sharing has become a political bargaining chip
Matthew Vincent – FT
The UK will find it harder to stop dirty money flowing through its capital city if close co-operation with EU authorities is excluded from a Brexit deal, City of London lawyers have warned.
/on.ft.com/2ZJva5c

EU Has Bigger Problems to Worry About Than Brexit Gridlock
Ian Wishart – Bloomberg
When Boris Johnson boasted last year he’d got “Brexit done,” weary European governments were only too happy to go along with it. The last thing they need now is for that sort of distraction to return. As countries emerge from their coronavirus lockdowns and memories of the U.K. as a European Union member fade fast, the bloc’s political energy is focused firmly on other things. Top of the list: how to tackle the worst recession in living memory.
/bloom.bg/36A1itr

Brexit changed immigrant perceptions for the better: Study
James Brownsell – Al Jazeera America
London, United Kingdom – There is a dominant narrative in the UK, certainly in liberal media circles and on the losing side of the 2016 European Union withdrawal referendum, that small-minded xenophobia was a major driving force behind Brexit.
/bit.ly/36wL7gC

A Britain Bigger Than Brexit
WSJ Editorial Board
Brexit negotiations between London and Brussels have resumed, and rarely has that issue been less important. What matters now is how both sides plan to recover from the coronavirus recession. The biggest opportunity is Britain’s. The EU looks set to spend years mired in impossible arguments over how to pay for the pandemic’s costs, especially in nations with weaker fiscs. Brussels plods onward with its project of expanding Europe’s bureaucracy and regulatory micromanagement, Germany was slipping toward a recession even before the virus, and Emmanuel Macron’s reforms are stalled in France.
/on.wsj.com/2XwKJuk

Cummings and his ‘Brexit friends’ leave when they should stay, quips EU’s Tusk
Reuters
A senior European Union politician couldn’t help a Brexit quip as he waded into Britain’s row over Dominic Cummings, Prime Minister Boris Johnson’s top adviser and mastermind of leaving the bloc who is accused of violating coronavirus travel curbs. Cummings refused to resign on Monday, saying he had done nothing wrong by driving 250 miles to northern England when Britain was under a strict lockdown.
/reut.rs/3c0TPEY

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