How Many Americans Will Ayn Rand Kill? Liberty doesn’t mean freedom to infect other people; EU explores tougher curbs on City hedge fund managers

Oct 23, 2020

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How we think and what we think about Peak6 is about to change
By John J. Lothian

Peak6 was founded as a proprietary trading firm in Chicago by Matthew N. Hulsizer and Jennifer Just.

We might think of Peak6 as the firm with the most prestigious office in the financial district of Chicago, since they occupy the space that was the 1929 trading room, the old Mansfield Room in the Chicago Board of Trade Building. Their open concept office on the fourth and fifth floors of the CBOT Building looks directly down LaSalle Street, the same view CBOT members saw for decades.

But how we think about Peak6 is going to change. It is already changing because of the work of their new chief creative officer, Michael Davis, an award-winning creative executive.

Davis was hired nine weeks ago and it struck me as strange that a proprietary trading firm would hire a chief creative officer. Most of the prop firms I know are very secretive. Some make you sign a non-disclosure agreement just to walk in their offices.

But Davis was hired to tell the Peak6 story. He is not just a chief marketing officer, but is creating something bigger. Better. In fact, something excellent.

To read the rest of this commentary, go here.


FTSE Russell, CME Group and iShares look at what’s driving US equity markets
Sarah Rudolph – John Lothian News

The 2020 rollercoaster continues in equities markets, and investors are turning to a variety of investment products to hedge and diversify, according to speakers at FTSE Russell’s webinar titled, “What’s been driving US equity markets outperformance?” on Thursday.

US equities outperformed international stocks this year and gained the most since June, when the rest of the market rally was losing steam.

Mark Barnes, FTSE Russell’s Head of Investment Research, Americas noted U.S. equity markets hit all-time highs in February after COVID hit in China, but that was before the virus was understood. They then hit lows in March, and the smaller cap Russell 2000 dropped further than the Russell 1000 in that period.

In equities, both momentum and quality stocks did well in general in 2020, and value and small-size stocks underperformed, he said. However, quality stocks in the Russell 2000 did not do well, which was an outlier.

To read the rest of this story, go here.


Hits & Takes
By John Lothian

OneChicago is rolling over in its grave and its CEO, David Downey is either crying, laughing or both over the CFTC and SEC finally addressing in a historic joint meeting the issue of securities futures margins. Margins for securities futures were dropped from 20% to 15% in the new rule, according to CFTC and SEC press releases. This is something Downey pleaded (and pleaded) and cajoled regulators to do for years.

It is too late for OneChicago, whose demise may be more related to the zero commission movement than any “determinative impact statutory provisions,” as CFTC Commissioner Brian Quintenz put it. I still believe in the product, as a financing alternative for equities, and think someone will come into this space soon with a new exchange.

Acuiti Management Intelligence in partnership with FIS is holding a webinar titled “How is ESG changing the buy-side/sell-side relationship?” The webinar is on October 29 at 11 AM New York time, 15:00 London and 22:00 Singapore. The discussion will focus on how the growth of ESG in fixed income and other non-equity asset classes will create new instruments to structure and trade, what are the challenges in building liquidity in ESG-screed options markets and what new services can the sell-side launch today to cater to the growing ESG demand.

Acuiti will be joined by Magnus Linder, senior trader, Swedbank Robur; Martin Jarzebowski, director of ESG and responsible investing, Federated Hermes; Patrick Kondarjian, head of EMEA wealth sales & global ESG product, HSBC; and Pontus Eriksson, head of strategy, FIS. You can register HERE.

Last night I conducted an interview with Managing Director Kevin Rideout at Hong Kong Exchanges and Clearing over Zoom about HKEX’s new deal with MSCI to trade the MSCI suite at HKEX rather than SGX, where the suite had traded for years. Look for this interview on soon.

I was having right brain/left brain cramps when I interviewed Peak6’s chief creative officer Michael Davis. He is a brilliant marketing and creative soul with links to our industry from his earliest days. I can’t wait to see how Peak6’s brand, and those of his affiliate companies, will be represented when Davis and his team find the joint connections and purpose or “why” for these enterprises. See my story above for more about Davis and Peak6.

The word of the day is “malarkey.”

I have greater appreciation for a mute button more than ever today. Before the debate, I used it in my Zoom interview so my dog barking would not make it into the interview.

For the first time, we did not have any new donations to our JLN MarketsWiki Education GoFundMe campaign. So far we have raised $9041 from 44 donors. Help us preserve the history of our industry by donating to our campaign.

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


Nasdaq Chief Economist Phil Mackintosh has a column on the Nasdaq blog titled, “Short Interest in Nasdaq Isn’t Rising,” taking issue with a recent article that showed that Nasdaq short interest was at all-time highs. ~SR


HKEX Plans to Extend Trading and Clearing of MSCI Derivatives to Cover Hong Kong Holidays
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce plans to extend trading and clearing of all MSCI derivatives contracts to cover Hong Kong public holidays. This represents HKEX’s latest market enhancement to support the global trading community in managing their risks and optimising their portfolios. Hang Seng Index and Hang Seng China Enterprises Index derivatives will not be under the scope of holiday trading at this stage.

*****Forget about taking Dragon Boat Festival day off on Thursday, June 25. You are just going to have to trade instead.~JJL


Yale’s David Swensen Puts Money Managers on Notice About Diversity; Endowment chief tells investment firms they will be gauged by their hiring of women and minorities
Juliet Chung and Dawn Lim – WSJ
America’s most prominent endowment chief has a message for the firms that manage the school’s money: Hire more women and minorities, or possibly lose the university’s backing. David Swensen is the veteran investment chief of Yale University’s $31.2 billion endowment. Earlier this month, he told the dozens of firms that manage Yale’s money they would be measured on their progress increasing the diversity of their investment staffs. Mr. Swensen said the Yale Investments Office would be working to improve its own team’s composition, too.

****This reminds me about the old joke about two men in the restroom peeing. After finishing, one washes his hands (a Harvard Man) and the other does not (a Yale man). The Harvard man says, “at Harvard they teach us to wash our hands after peeing.” The Yale man says, “at Yale they teach us not to pee on our hands.” Some things can be washed away, others can be proactively managed in the first place.~JJL


PayPal is shilling crypto on the internet; Censor-resistant money, censored.
Jemima Kelly – FT
Hot on the heels of Nigel Farage’s declaration of war against the financial system and inducement to freedom-lovers everywhere to stock up on gold and silver, we now have another call to arms. But this time, it’s different. This time, it’s crypto.

*****This is a brilliant headline; the use of the word shilling in this sense is just genius.~JJL


CryptoMarketsWiki Coin of the Week: USD Coin (USDC)
Circle’s USD Coin is dominating in the DeFi (decentralized finance) markets. While Tether remains the most-used stablecoin on centralized exchanges such as Coinbase with a market cap of $16 billion worth of USDT in circulation, USDC is the most-traded stablecoin by total daily value locked (value of stablecoins in USD locked in as collateral per day) on DeFi platforms like Uniswap, according to data from Flipside Crypto.


Thursday’s Top Three
Our top story Thursday was Mike Unetich: The Path To Electronic Trading, a video from John Lothian News. Second was Why Ditching Libor Is Vexing the Financial World, from Bloomberg News. Third was John Lothian’s Harris Kay Joins Murphy & McGonigle from JLN.


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Lead Stories

How Many Americans Will Ayn Rand Kill? Liberty doesn’t mean freedom to infect other people.
Paul Krugman – NY Times
A long time ago, in an America far, far away — actually just last spring — many conservatives dismissed Covid-19 as a New York problem. It’s true that in the first few months of the pandemic, the New York area, the port of entry for many infected visitors from Europe, was hit very hard. But the focus on New York also played into right-wing “American carnage” narratives about the evils of densely populated, diverse cities. Rural white states imagined themselves immune.

Robinhood’s Addictive App Made Trading a Pandemic Pastime; Now the platform has to make money from its devoted fans.
Annie Massa, Sarah Poncez – Bloomberg
On March 2, just before offices shuttered across the U.S., the staff at Robinhood Markets Inc. worked long after sunset in their Menlo Park, Calif., headquarters. Executives huddled around co-founder Vlad Tenev, then disbanded to bring orders back to their teams. The company faced an emergency: A systemwide outage had disabled its online trading app throughout one of the stock market’s busiest days in months.

EU explores tougher curbs on City hedge fund managers; European Commission consults on restricting overseas management of firms
Jim Brunsden in Brussels and Siobhan Riding – FT
Brussels is exploring whether to restrict the possibility for hedge funds to be managed from overseas financial centres such as the City of London, reviving an idea that UK asset managers see as an existential threat. The European Commission included questions on a possible tightening of the rules governing hedge funds in a consultation paper published on Thursday, picking up on suggestions earlier this year from the bloc’s top market regulator that “delegation” of fund management should be more clearly limited in response to Brexit.

The confusing investment path to saving the planet; Many hurdles have to be overcome to turn your portfolio green, but it is worth making the effort
Alice Ross – FT
When Cambridge university said this month that its £3.5bn endowment fund would finally pull out of fossil fuel investments, the fund’s chief investment officer Tilly Franklin said they were trying to “align our investment strategy with the science”.

Japan finance chief vows steps to prevent another TSE outage
Finance Minister Taro Aso said Tuesday the financial authorities will take appropriate steps to prevent a recurrence of the Tokyo Stock Exchange’s full-day outage earlier in the month. The Financial Services Agency plans an on-site inspection of the exchange with an eye on issuing an operation improvement order, sources familiar with the matter have said, after the bourse reported details of the glitch to the watchdog while pledging to launch an overhaul of its trading system and carry out a drill to ensure that a backup system works properly.

Japan Mulling Integrated Financial Inspections by FSA, BOJ
Jiji Press
The Japanese government is considering having the Financial Services Agency and the Bank of Japan conduct inspections on financial institutions’ business conditions, currently done respectively, in an integrated manner, according to administrative and regulatory reform minister Taro Kono.

HKEX Welcomes First Hong Kong/Mainland ETF Cross-Listing
First listings of ETFs in Hong Kong and Shenzhen under a new ETF Cross-listing Scheme Signing of MOU between HKEX and SZSE to promote the Scheme; Hong Kong-listed ETF AUM grew to over $300 billion, as at 30 September 2020
We a(HKEX) is pleased to welcome today (Friday) the first listings of Exchange Traded Funds (ETFs) in Hong Kong and Shenzhen under the Hong Kong-Mainland ETF Cross-listing Scheme, which facilitates cross-listing of ETFs between markets in Hong Kong and Mainland China.

Unprecedented change; In celebration of TradeTech’s 20th Anniversary, buy-side industry veteran and head trader for EMEA equities at Invesco, David Miller, explores the evolution of trading over the past two decades.
David Miller – The Trade
Over the past 20 years, I have seen unprecedented degrees of change in the industry from faxed confirmations and single screens to low-latency electronic trading and the onset of artificial intelligence. Soon after I joined the buy-side, just after the millennium, we moved away from directed orders to suggested, and then finally preferred brokers, all leading to more autonomy of the buy-side trader and the evolution of the high volume, technology based multi-asset trading desks we see today.

TikTok Studios, Zoom Rooms and Co-Working Spaces Are the New Must-Have Home Amenities; As working from home becomes the norm, residential developers are trading movie rooms and lounges for souped-up work spaces
Katy McLaughlin – WSJ
When Ric Bucher, a television and radio basketball commentator and writer who is a familiar face on Fox Sports, finished a roughly $40,000 office remodel in his Half Moon Bay, Calif., home, he wondered if it was worth it. His workspace, completed about three years ago, was soundproofed, professionally wired, attractively lit, and rigged with professional-grade cameras and microphones. The idea was that if he ever needed to record a podcast or tape a television segment from home, he could.

Goldman Pays Billions—And Takes Millions From Top Execs—To End 1MDB Scandal; The bank will pay nearly $3 billion and recoup $174 million from executives
Liz Hoffman and Dave Michaels – WSJ
Goldman Sachs GS 1.23% Group Inc. on Thursday admitted it broke U.S. corruption laws, agreed to pay billions of dollars to global regulators and financially punished its top executives, resolving one of the biggest scandals in Wall Street history. Goldman took $174 million in compensation from executives and agreed to pay nearly $3 billion to officials in four countries to end a yearslong investigation into its dealings with a Malaysian investment fund at the heart of a global bribery ring. Its check to the U.S. government is the largest such fine ever paid.

Ryan Lance, the oilman defying crash with big bet on US shale; Conoco chief’s $13.3bn Concho deal will create world’s biggest independent oil and gas producer
Derek Brower – FT
If Big Oil is going through an existential crisis, someone forgot to tell Ryan Lance. On Monday ConocoPhillips, the company Mr Lance runs, announced its plan to buy Concho Resources, a big shale oil producer, in an all-equity deal worth $13.3bn.

2020 Women in Finance Asia Awards Winners Announced
Markets Media Group and GlobalTrading announced the second-annual Women in Finance Asia Awards in a Sept. 24 virtual event.

Exchanges Take Differing Approaches To ESG Derivatives
Shanny Basar – MarketsMedia
Deutsche Börse’s Eurex has launched a suite of derivatives based on ESG versions of benchmark indices while Nasdaq aims to launch bespoke products to meet the variety of environmental, social governance strategies in the market.

BOJ Official Says Digital Currency Needs Public Support First
Toru Fujioka and Sumio Ito – Bloomberg
Point man Kamiyama says future issuance not set in stone; Says digital yen would aim to boost payment system not policy
A Bank of Japan move to launch a digital currency would be conditional on public support, according to a senior BOJ official who says no final decision has been made even after the announcement of testing to start next year. “There is no conclusion yet,” said Kazushige Kamiyama, the head of the central bank’s payment system department and the person in charge of looking into a possible digital yen. “At the end of the day there’s no way we can proceed without gaining sufficient understanding from the Japanese public.”

Covid Crisis Strengthens U.S. Dollar’s Role in Global Economy
Enda Curran and Finbarr Flynn – Bloomberg
Central bank swap lines played key role during the crisis; Dollar dependency creates risks if greenback strengthens
Overseas borrowers have flocked to the dollar this year at a record pace, with sovereigns from Indonesia to Colombia and companies from Nissan Motor Co. to Manila’s water utility racking up sales of $1.29 trillion. It’s a key economic takeaway from the Covid-19 crisis: just as happened in the wake of the global financial meltdown of 2008, the dollar is cementing its role as the world’s dominant currency even as unilateralist policies from President Donald Trump rile allies and rivals alike.


The Coronavirus Has Claimed 2.5 Million Years of Potential Life in the U.S., Study Finds; A Harvard researcher added up the number of years that Americans who died from Covid-19 might have lived had they reached a typical life expectancy.
Katherine J. Wu – NY Times
In less than a year, the coronavirus has killed more than 220,000 Americans. But even that staggering number downplays the true toll of the pandemic, according to a recent analysis.

Swedish Central Bank Reveals Grim View of Latest Covid Trend
Niclas Rolander – Bloomberg
‘Risks at the moment are skewed more to the downside’; We can buy more covered and municipal bonds, governor says
The Riksbank governor, Stefan Ingves, fears the economic outlook is deteriorating amid signs the coronavirus pandemic is tightening its grip across Europe, and ensnaring Sweden again too. “If you look at our forecasts, it will take a few years before GDP is back” at pre-crisis levels, Ingves said in an interview in Stockholm. “And those forecasts were done before the rather bleak situation that we are seeing in Europe today, so there’s reason to believe that the risks at the moment are skewed more to the downside.”

Exchanges, OTC and Clearing

Top-25 Record Reported at MGEX
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), reports that yesterday, October 21st was the 23rd best day in the history of the exchange with a total volume of 24,159 contracts.

5 Questions with Maurice Farhart of the Australian Securities Exchange
Brian Mehta – Trading Technologies Trade Talk Blog
For nearly 15 years, Trading Technologies has offered clients the ability to trade Australian derivatives. In fact the first market we connected to in the APAC region was the Sydney Futures Exchange (SFE), which has since merged with the Australian Stock Exchange to form the Australian Securities Exchange (ASX). Although ASX is based halfway around the world from our headquarters in Chicago, they’ve had a team of employees in Chicago for several years to better serve their international client base. We recently talked with Chicago-based Maurice Farhart, who serves as the exchange’s Head of International Sales, to learn about the latest developments at ASX and find out what the exchange has in store for the new fiscal year that began on July 1. You can learn more about the exchange by following them on Twitter at @ASX.

London Stock Exchange Group PLC Trading Statement Including Revenues and KPIS for the Three Months Ending 20 September 2020 (Q3)
London Stock Exchange Group
Resilient Q3 performance across the Group despite challenging market conditions; Q3 total income up 2% to £600 million; On a nine-month year-to-date basis total income up 6% to £1,835 million; Continue to demonstrate strong operational resilience, focusing on continuity of service for customers and the welfare of employees, majority of whom continue to work remotely due to COVID-19 pandemic

Fashionette AG’s share subscription started on the Frankfurt Stock Exchange
Deutsche Boerse Group
Start of trading in the Scale segment planned for October 29th; DirectPlace subscription function supports the placement of shares
The share subscription for the IPO of fashionette AG (ISIN: DE000A2QEFA1 ) on the Frankfurt Stock Exchange started today and is expected to last until October 27th. Including the over-allotment option, up to 3,605,000 shares are offered; the bookbuilding range is between EUR 30.00 and EUR 38.00 per share. The first trading day of fashionette AG in the Scale segment is planned for October 29th.

Equity Derivatives: Equity options on S&T AG and Lonza Group AG – Update to Eurex Circular 079/20
Eurex Circular 082/20 Equity Derivatives: Equity options on S&T AG and Lonza Group AG – Update to Eurex Circular 079/20

PatientSky admitted to trading
The e-health company PatientSky Group has today been admitted to trading on Merkur Market (ticker code: PSKY-ME). “PatientSky has since 2014 established the company as a leading e-health provider in the Nordics and the rapidly growing e-health market by developing innovative digitalized solutions for both patients and healthcare professionals. Being listed on Merkur Marked is an important milestone and will support the company in achieving its growth ambitions”, comments Johan Zetterström, CEO of PatientSky.

Nasdaq accounting head to succeed retiring chief financial officer; Nasdaq’s chief accounting officer, Ann Dennison, will succeed chief financial officer, Michael Ptasnik, who is set to retire in March next year.
Annabel Smith – The Trade
The chief accounting officer at US exchange group Nasdaq is set to succeed Michael Ptasnik as chief financial officer when he retires in March next year. Ann Dennison will replace Ptasnik in the senior finance role from 1 March 2021 upon his retirement after he spent four years in the role.

HKEX Welcomes First Hong Kong/Mainland ETF Cross-Listing
First listings of ETFs in Hong Kong and Shenzhen under a new ETF Cross-listing Scheme Signing of MOU between HKEX and SZSE to promote the Scheme; Hong Kong-listed ETF AUM grew to over $300 billion, as at 30 September 2020
We (HKEX) is pleased to welcome today (Friday) the first listings of Exchange Traded Funds (ETFs) in Hong Kong and Shenzhen under the Hong Kong-Mainland ETF Cross-listing Scheme, which facilitates cross-listing of ETFs between markets in Hong Kong and Mainland China.

Performance Bond Requirements: Agriculture, Energy, and Equity Margins – Effective October 23, 2020
CME Group
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below.

Product Modification Summary: Reduction of the Minimum Price Increments for Options on the Russian Ruble/U.S. Dollar (RUB/USD) Futures and Options on the South African Rand/U.S. Dollar (ZAR/USD) Futures – Effective November 23, 2020
CME Group
Effective Sunday, November 22, 2020 for trade date Monday, November 23, 2020 and pending all relevant CFTC regulatory review periods, please be advised that the Chicago Mercantile Exchange, Inc. (CME or EXCHANGE) will amend the minimum price increment for the following products:

Performance Bond Requirements: Energy – Effective October 23, 2020
CME Group
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below.

CME STP Notices: October 22, 2020
CME Group
BrokerTec Stream on CME STP – December 7
CME STP Support of BrokerTec Markets – November 16
BrokerTec Stream on CME STP FIX- December 7
CME STP FIX Support of BrokerTec Markets – November 16
New – CME STP FIX and FIXML APIs Connectivity Documentation

About publication of materials of Council for Recurrence Prevention Measures(1st meeting)
Today, Council for Recurrence Prevention Measures(1st meeting) was held and post the materials of this Council. Also, outline of minutes of this Council will be published as soon as it is ready.

RI Digital: Japan 2020 will be held on October 28-29
Responsible Investor (RI) will hold their “RI Digital: Japan 2020” event on October 28-29. Japan Exchange Group, Inc. is sponsoring this event as Partner. This event will provide a platform for Japanese investors to keep abreast of globally important discussions. From big questions such as the state of play in ESG to practical questions on stewardship, diversity, corporate resilience, and decarbonization, the participants will discuss the key themes which urgently require reconsideration to envision the recovery and to shape a sustainable new normal.


Blackboxstocks Announces Integration with TradeStation Allowing Users to Trade without Leaving the Blackbox Platform; Companies to Host Official Launch Webinar to Demonstrate Powerful Functionalities Offered by Partnership at 3:30PM CST Thursday October 22, 2020
Blackboxstocks, Inc.
Blackboxstocks, Inc. (OTC: BLBX) (“Blackbox”), a financial technology and social media hybrid platform offering real-time proprietary analytics for stock and options traders of all levels, today announced that it has integrated with TradeStation Securities, Inc. (“TradeStation”), enabling Blackbox users to trade stocks and options via TradeStation without ever leaving the Blackbox platform.

Chinese Fintech Company Lufax Seeks Up to $2.4 Billion in U.S. IPO
Joanne Chiu – WSJ
Lufax Holding Ltd., a smaller rival to Chinese financial-technology giant Ant Group Co., is seeking to raise as much as $2.4 billion from an initial public offering in the U.S.
The deal is likely to put a substantially lower value on Lufax—which has reinvented itself after China cracked down on peer-to-peer lending, once a key business line—than a private fundraising last year.

China Fintech Firm Lufax Seeks Up to $2.36 Billion in IPO
Julia Fioretti and Crystal Tse – Bloomberg
U.S. IPOs by Chinese companies have boomed this year; Lufax has pivoted from its peer-to-peer lending roots
Chinese financial technology firm Lufax Holding Ltd., backed by Ping An Insurance Group Co., is looking to raise as much as $2.36 billion in an initial public offering that would be one of the biggest by a Chinese company this year on a U.S. exchange.

UK fintech Mode jumps 9% on joining the Bitcoin bonanza, following the lead of US tech firms Square and Microstrategy
Theo Golden and Shalini Nagarajan – Markets Insider
UK-based fintech Mode Global Holdings will convert 10% of its cash reserves into Bitcoin, becoming the first publicly-traded British company to announce a notable purchase of the flagship cryptocurrency.
The company’s stock rose 9% in afternoon trading on Thursday.


Bequant launches enhanced Prime Services including access to derivatives
Sunil Chauhan – Bequant
Bequant, the leading digital assets prime broker, is pleased to announce the launch of a new suite of options available to institutional clients including hedge funds, family offices, professional traders, pensions and endowments and other sophisticated market participants.

PayPal in Talks to Buy Crypto Firms Including BitGo
Ed Hammond and Katie Roof – Bloomberg
PayPal Holdings Inc. is exploring acquisitions of cryptocurrency companies including Bitcoin custodian BitGo Inc., according to people familiar with the matter, a move that would expand its embrace of digital coins. PayPal has been holding talks with BitGo, a company that helps investors store Bitcoin securely, and could reach a deal within weeks, the people said, asking not to be identified because the matter is private. Talks could still fall apart and PayPal could opt to buy other targets, the people added.

CME quietly surpasses BitMEX to become second-largest bitcoin futures exchange
Yogita Khatri – The Block
CME Group, a regulated bitcoin futures trading platform, has quietly become the second-largest player, surpassing Binance and BitMEX. Yesterday, CME recorded an open interest of $790 million as compared to $718 million by Binance and $601 million by BitMEX, according to The Block Research. Open interest in the value of outstanding derivative contracts that are yet to be settled.

Trial of Russian in alleged bitcoin fraud to wrap in Paris
Nicolas Vaux-montagny – Associated Press
A court in Paris is wrapping up a trial Friday against Alexander Vinnik, who is accused of using ransomware in a 135 million-euro ($160 million) fraud using the cryptocurrency bitcoin. The 41-year-old Russian, who is also wanted in the United States and Russia, faces up to ten years in prison in France over charges of extortion, money laundering and criminal association. A series of attacks on French businesses and organizations between 2016 and 2018 led to 20 victims paying ransom demands issued in bitcoin, one of the more widely used cryptocurrencies.

Franklin Templeton backs crypto security platform Curv; New York-based digital asset security specialist adds Franklin Templeton to its list of investors after $23 million funding round.
Hayley McDowell – The Trade
Franklin Templeton has become an investor in New York-based digital asset security platform provider Curv, in a move that signals further interest from the buy-side in the cryptocurrency space.

China’s central bank says it helped crack down on gambling websites that used USDT to launder funds
Wolfie Zhao – The Block
The People’s Bank of China (PBoC) said it has cracked down on illegal online gambling activities that involve the use of cryptocurrencies for cross-border capital flow. The central bank published a blog post on WeChat Thursday that detailed its recent efforts in assisting law enforcement to quash online gambling businesses.

Grayscale Added $300M Digital Assets to Its Portfolio During the Last Day
Sebastian Sinclair – Coindesk
Digital asset manager Grayscale Investments has acquired an additional $300 million in cryptocurrencies over the last 24 hours. Grayscale CEO Barry Silbert made the announcement via tweet late Thursday evening, shortly after his company posted an update to its digital asset portfolio. “Added a cool $300 million in assets under management in one day,” Silbert said. The additional sum brings the total held under management to $7.3 billion.

Former Gemini Europe chief Julian Sawyer takes the reins as CEO at Bitstamp
Ryan Weeks – The Block
Serial fintech executive Julian Sawyer has taken a new role as chief executive of Luxembourg-based crypto exchange Bitstamp. Sawyer was previously at Gemini, which he joined in December 2019 to lead its European expansion. Gemini Europe Services Ltd was able to achieve registration by the UK’s Financial Conduct Authority as a regulated crypto asset business in August 2020, but by that time, Sawyer had quietly left the company.

(Podcast) LMAX’s CEO breaks down the real impact of the U.K. crypto derivatives ban
Aislinn Keely – The Block
Earlier this month, the U.K’s Financial Conduct Authority (FCA) banned the sale of cryptocurrency derivatives and exchange-traded notes to retail users, sparking concern that the regulator didn’t listen to feedback on the proposal. The ban will take effect in January of next year, affecting crypto brokers, investment platforms, financial advisers and, of course, derivatives exchanges. But, David Mercer, CEO of LMAX Group, said what the ban really does is effectively halve the leverage. The FCA had already limited leverage to retail customers to two-to-one, now it’s one-to-one.

Bitcoin’s market run-up sends options to all-time high for open interest
Frank Chaparro – The Block
Bitcoin’s price has been on a tear — and that’s helped bring the options market for the digital asset to new heights, according to data compiled by The Block. The price of bitcoin has appreciated by about 15% over the last five days, sending the price of the cryptocurrency above $13,000 for the first time since 2019.


Russia Gives NSA Whistle-Blower Snowden Permanent Residency
Henry Meyer – Bloomberg
Trump in August indicated possible pardon for whistle-blower; Putin asylum for Snowden provoked stand-off with Obama
Edward Snowden, the former National Security Agency contractor who disclosed top-secret U.S. spying programs, has obtained permanent residency in Russia, his lawyer said.

Russian Hacks of U.S. Government Networks Prompt Election Warning; Group has previously been linked to attacks on U.S. electrical infrastructure
Robert McMillan and Alexa Corse – WSJ
Russian government hackers have targeted dozens of state and local government and aviation computer networks since last month and stolen data from at least two servers, actions that could presage efforts to undermine the election, two federal agencies said Thursday.

US election 2020: how to avoid being manipulated by fake news
FT Video
The forces behind voter manipulation have more tools and tactics at their disposal than ever before. FT technology reporter Hannah Murphy runs through what to look out for in the run up to this year’s US presidential contest

Saba Capital’s Boaz Weinstein Predicts Credit Chaos Around U.S. Election
Erik Schatzker – Bloomberg
He’s zeroing in on divergence between VIX and credit spreads; After huge win in March, flagship hedge fund is up 80% in 2020
Never in his 22-year career has Boaz Weinstein seen such a disconnect between the complacency of credit investors and the anxiety of equity investors, and he predicts it could unravel in an “incredible move” around the Nov. 3 U.S. election.

Democrats shaky on financial transaction tax
Matt Friedman – Politico
The three top Democratic leaders of New Jersey are behind taxing electronic financial transactions at a small fraction of a cent, but signs abound that the finance industry’s threats to move their trades out of the state are scaring lower-ranking Democrats off the bill.


CFTC, SEC hold first-ever joint meeting to discuss margin-related harmonization
Jeff Reeves –
The US Commodity Futures Trading Commission and the US Securities and Exchange Commission held their first-ever joint public meeting on 22 October. The meeting between two of the nation’s top financial market regulators was held via teleconference, and featured a joint final rulemaking that aligned minimum margin requirements for security futures as well as a request for public comment on margining of swaps and security-based swaps that are not cleared. In his opening statement, CFTC Chairman Heath Tarbert noted that “some critics have maintained that the US financial regulatory system is fragmented, inefficient, and too often plagued with petty turf battles.” However, he noted that distinctly different characteristics in the respective markets of the CFTC and the SEC creates “compelling logic” to support two different and distinct regulatory bodies, particularly given the scale of US capital markets.

SEC Whistleblower Program Awards Tipster a Record $114 Million; The whistleblower, who was not identified, gave the SEC and another agency ‘substantial, ongoing assistance’ critical to bringing successful enforcement actions
Mengqi Sun – WSJ
The U.S. Securities and Exchange Commission’s whistleblower program on Thursday awarded more than $114 million—a record amount—to a person whose information helped it and another agency bring successful enforcement actions against a company, the agency said.

U.K. Regulator Investigates 14 Firms in Tax Scandal Across Four Countries
Ellen Milligan and Jonathan Browning – Bloomberg
FCA looking at dividend-stripping schemes in four countries; U.K. probe comes as Danish authorities contact London traders
The U.K. financial regulator is investigating 14 firms and six individuals over their roles in the tax scandal known as Cum-Ex, according to a person with direct knowledge of the cases. The Financial Conduct Authority is looking at firms that operated dividend stripping schemes in Denmark, Germany, France and Italy, said the person, who declined to be identified because the investigations are private. The regulator has been quiet about its plans since February, when one official said a decision on whether to pursue Cum-Ex cases was imminent.

ASIC Annual Report 2019-2020
ASIC’s Annual Report for the 2019-20 financial year has been tabled today in the Australian Parliament. The report is a record of ASIC’s activities and performance for the previous financial year. In 2019-20 ASIC continued to work towards our vision of a fair, strong and efficient financial system for all Australians.

Statement by ASIC regarding relocation payments made to the Chair, James Shipton and Deputy Chair, Daniel Crennan QC
Statement by James Shipton, ASIC Chair, at the House of Representatives Standing Committee on Economics, Parliament House, 23 October 2020
The ASIC 2019-20 Annual Report was tabled in Parliament earlier today. A note in the report identifies payments of certain relocation expenses incurred on my behalf (on my appointment and return to Australia from the US) and Deputy Chair Crennan (following an agreement that he move from Melbourne to Sydney).

ASIC product intervention order strengthens CFD protections
ASIC has made a product intervention order imposing conditions on the issue and distribution of contracts for difference (CFDs) to retail clients. ASIC’s order strengthens consumer protections by reducing CFD leverage available to retail clients and by targeting CFD product features and sales practices that amplify retail clients’ CFD losses. It also brings Australian practice into line with protections in force in comparable markets elsewhere.

Proposed Rule Change to Amend the By-Laws of FINRA Regulation, Inc. to Align the Grounds for Removal of NAC Members with an Existing Provision in the FINRA By-Laws Related to the Removal of FINRA Governors
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to amend the By-Laws of FINRA Regulation, Inc. (“FINRA Regulation”), FINRA’s regulatory subsidiary, to further align the grounds for member removal from the National Adjudicatory Council (“NAC”) with an existing provision in the FINRA By-Laws related to the removal of a FINRA Governor from the FINRA Board of Governors (“FINRA Board”).

SEC Issues Record $114 Million Whistleblower Award
The Securities and Exchange Commission today announced an award of over $114 million to a whistleblower whose information and assistance led to the successful enforcement of SEC and related actions.

SEC Charges Goldman Sachs With FCPA Violations
The Securities and Exchange Commission today announced charges against The Goldman Sachs Group Inc. for violations of the Foreign Corrupt Practices Act (FCPA) in connection with the 1Malaysia Development Berhad (1MDB) bribe scheme, and as part of coordinated resolutions, it has agreed to pay more than $2.9 billion, which includes more than $1 billion to settle the SEC’s charges.

At Joint Open Meeting, SEC and CFTC Approve Final Rule on Security Futures Margin and Request for Comment on Portfolio Margining
The Securities and Exchange Commission and the Commodity Futures Trading Commission, at their first joint open meeting to vote on rulemaking initiatives, today approved: (1) a joint final rule to harmonize the minimum margin level for security futures held in a futures account with the minimum margin level for security futures held in a securities portfolio margin account, and (2) the issuance of a joint request for comment on the portfolio margining of uncleared swaps and non-cleared security-based swaps.

SEC to Host Panel with Women Entrepreneurs of Color on Oct. 28
The Securities and Exchange Commission today announced it will host a virtual forum next week featuring women entrepreneurs and investors of color from Los Angeles and Atlanta discussing their business experiences and ways to improve access to capital for minorities and women.

Opening Statement by Chairman Heath P. Tarbert Before Historic Joint SEC-CFTC Open Meeting
It is an honor to be here today at what is a historic moment. This is the first ever joint open meeting of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) to vote on a final rule in our shared 45-year history. Despite the close relationship between our two agencies and the jurisdictional overlap between certain of the products we regulate, we have never formally gathered together—in this case virtually—to adopt a joint rule. I am happy that with today’s meeting this is no longer the case. I hope coming together today will bode well for future relations between our agencies. I want to thank Chairman Clayton and the rest of the Commissioners—both at the SEC and the CFTC—for making this joint meeting happen.

Opening Statement of Commissioner Brian Quintenz Before the SEC and CFTC Joint Open Meeting on October 22, 2020
CFTC Chairman Heath Tarbert and SEC Chairman Jay Clayton, thank you both for calling this meeting. I am honored to join my fellow CFTC and SEC Commissioners to participate in the first-ever joint SEC and CFTC open meeting to consider and vote on rulemaking initiatives. Both items on today’s agenda showcase the hard work and cooperation between CFTC and SEC staff and remind us of how critical these staff and Commission-level relationships are to ensuring a rationalized regulatory framework for firms and products spanning both the derivatives and securities markets.

Statement of Commissioner Rostin Behnam Before Joint Open Meeting of the CFTC and SEC
Good morning. I would like to start by thanking Chairman Tarbert, Chairman Clayton, my fellow CFTC commissioners, the commissioners from the Securities and Exchange Commission (SEC), and all of the staff from both agencies.

Statement of Commissioner Dawn D. Stump Regarding Joint Final Rule: Customer Margin Rules Relating to Security Futures
I am pleased to be a part of today’s Joint Open Meeting of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).

FCA confirms measures to support closed book and interest-only/part-and-part mortgage borrowers
The FCA has confirmed the introduction of measures to support some closed book mortgage borrowers, some of whom may be mortgage prisoners.

FCA and PRA fine Goldman Sachs International £96.6m for risk management failures in connection with 1MDB
The FCA and the Prudential Regulation Authority (PRA) have fined Goldman Sachs International (GSI) a total of £96.6 million (US$126 million) for risk management failures connected to 1Malaysia Development Berhad (1MDB) and its role in three fund raising transactions for 1MDB. The FCA and PRA fines are part of a US$2.9 billion globally coordinated resolution reached with the Goldman Sachs Group Inc. (GSG) and its subsidiaries.

Investing and Trading

World Bank Sees Slow Commodities Recovery After Virus Hit
Grace I Kay and Andres Guerra Luz – Bloomberg
Oil demand could see “lasting impacts” from the coronavirus while modest gains are projected in metals and agriculture prices as commodity markets recover from the shock of the pandemic, according to the World Bank. The World Bank boosted its projections from April for the average oil price in 2020 and 2021 to $41 a barrel and $44, respectively, as a slow recovery in demand is matched by an easing in supply restrictions. That still leaves prices well below 2019 levels of $61. Outside of energy, a small decline in metal prices will be offset by an increase in agricultural prices this year.

Eerie calm of municipal bonds belies US cities’ tax plight; The $4tn market looks peaceful, but the real-world financial situation is alarming
Gillian Tett – FT
In early 2020 Francis Suarez, mayor of Miami, Florida, was basking in a boom. His city was thriving and seeing buoyant revenues from property sales and taxes.

Risky PIK deals pitched by private equity to yield-hungry investors; Re-emergence of payment-in-kind bonds a sign of ‘frothy’ markets
Joe Rennison – FT
Private equity firms are testing investors’ appetite for returns with new sales of payment-in-kind bonds that offer juicy interest rates but are among the riskiest deals since the Covid crisis began. The re-emergence of PIKs underscores how fixed-income investors are increasingly being asked to accept higher degrees of risk and more onerous terms from corporate bond issuers as soaring prices of higher-quality assets in recent months has deeply depressed yields.

Short Interest in Nasdaq Isn’t Rising
Phil Mackintosh – Nasdaq
A recent article showed that Nasdaq short interest was at all-time highs, suggesting that “bets against the Nasdaq reached their highest point in a decade.”

Environmental, Social and Corporate Governance

The fallacy of ESG investing
Robert Armstrong – Financial Times
A single phrase sums up the appeal of environmental, social and governance investing: “doing well by doing good”. ESG strategies, we are told, promote the greater good and provide superior long-term financial performance.
For example, the world’s largest fund manager, BlackRock, wrote an open letter this year saying that “sustainability- and climate-integrated portfolios can provide better risk-adjusted returns to investors.” That is to say: over time, more virtue equals more money.

From Mental Health to Credit Risk, Here Are Next Big ESG Topics
The issues that drive sustainable investing played before the world’s eyes this year—from wildfires in Australia and the western U.S. to global protests against racial inequality. Nothing grabbed more attention, though, than Covid-19. What will be the environmental or social topic on everyone’s mind next year? We asked an array of experts.

Human Rights Is the Next Frontier of Sustainable Investing
Leslie P. Norton – Barron’s
In the next few years, your investment manager may be signing a pledge to urge companies you own to address any human rights problems, anticipate them, and remedy them.
This is the plan of the U.N.-backed Principles for Responsible Investment, whose signatories are the many asset managers who have grown enamored of ESG, or environmental, social and governance investing. Signing the PRI is a critical badge of ESG street cred. There are more than 3,000 PRI signatories that collectively have over $1 trillion in assets under management.

Billionaire Chris Hohn forces first annual investor vote on climate policy; Spanish airport group Aena agrees to put its efforts to tackle global warming to annual meeting
Attracta Mooney – FT
Spanish airports operator Aena is set to become the first company in the world to give shareholders an annual vote on its effort to tackle climate change, bowing to pressure from billionaire UK hedge fund manager Chris Hohn.

Ethical investment remains a work in progress; It’s still too challenging to find funds that match your principles
Moira O’Neill – FT
The flurry of activity around Good Money Week this year feels more than justified. Launched in 2005, this annual initiative — which starts on Saturday — aims to help people understand the benefits of sustainable and ethical finance, whether in pensions, investments or savings. And 15 years on, Covid-19 is providing new motivation for investors to explore investing in ethical funds.


Barclays Swings to Profit but Sees Persistent Headwinds; U.K. lender rebounds in third quarter but sees challenges continuing into 2021
Simon Clark – WSJ
Barclays BCS 2.61% PLC Chief Executive Jes Staley sounded a cautiously optimistic note about the U.K. bank’s prospects of rebounding from the coronavirus pandemic after it posted a profit in the third quarter.

Barclays CEO Promises Clarity on Dividends at Start of 2021
Tom Metcalf and Anna Edwards – Bloomberg
British lenders halted payouts in March after BOE pressure; Comments come as Barclays beats third-quarter profit forecast
Barclays Plc Chief Executive Officer Jes Staley said shareholders will have to wait until early 2021 to learn whether dividends can return, almost a year after the Covid-19 pandemic put the brakes on payouts. “We’ll have the conversations with the Bank of England in the latter part of this year,” Staley said in a Bloomberg Television interview Friday, as he emphasized the strength of the bank’s balance sheet. “We will address our policy around returning capital to shareholders at our year-end results.”

Mystery deepens on H2O bond trading; Documents increase puzzle over asset manager’s illiquid bond deals
Cynthia O’Murchu and Robert Smith – FT
H2O Asset Management has reported hundreds of millions of euros in new illiquid bond trades with a small wealth management firm that denies any involvement in the transactions.

Asset managers in $300bn drive to build private lending funds; Investors switch focus to credit funds as alternative to public markets flooded with stimulus money
Michael Mackenzie and Eric Platt – FT
Asset managers are seeking to raise almost $300bn to plough into private lending deals with groups such as Goldman Sachs and Oaktree hoping to lure investors away from frothy public markets.

Barclays recovers as bad debt charges fall; Surging trading revenues offset economic shock from coronavirus
Stephen Morris – FT
Barclays reported a big drop in provisions for bad loans in the third quarter as the initial economic shock from coronavirus subsided, while revenue at its trading arm continued to surge in turbulent markets, driving better than expected profits.

Hedge Fund Magnate Is Moving His $41 Billion Firm From N.Y. to Florida; The firm, Elliott Management, led by Paul Singer, will transfer its headquarters to West Palm Beach, Fla., because of the pandemic.
Matthew Haag and Dana Rubinstein – NY Times
For more than 40 years, Paul E. Singer has helped cement New York City’s reputation as a global financial capital as the founder of Elliott Management, a hedge fund with $41 billion in assets whose offices overlook Central Park.

Battle of billionaires: Griffin slams Pritzker push for graduated income tax amendment in email to employees
Rick Pearon – Chicago Tribune
Hedge fund billionaire Ken Griffin slammed Democratic Gov. J.B. Pritzker as “a shameless master of personal tax avoidance” Thursday in an email to his Chicago employees that criticized the governor’s push for a graduated-income tax rate amendment.


Italy draws EUR90bn of orders in stellar week for eurozone debt market; Country enjoys its second-lowest borrowing costs on record for a 30-year bond
Tommy Stubbington – FT
Italy’s sale of 30-year bonds drew strong demand on Thursday, locking in near-record low borrowing costs, in the latest sign of investors’ clamour for any eurozone debt offering extra yield above German Bunds.

Argentina bondholders accuse government of undermining recovery; Rebuke comes as bond prices are mired in distressed territory just months after restructuring deal
Colby Smith and Benedict Mander – FT
Some of Argentina’s biggest bondholders issued a sharp rebuke of how the government is handling the country’s deteriorating economic situation, just a few months after reaching a compromise to restructure $65bn worth of debt. Two creditor groups at the heart of the recent negotiations to resolve Argentina’s unsustainable debt burden accused the government of putting forward policies that “undermine” its own economic recovery, in a statement released on Thursday.

China may not recognize British-issued Hong Kong passports
Associated Press
China’s foreign ministry said Friday it may decide not to recognize British-issued passports for Hong Kong residents in retaliation for London’s moves to open a path to citizenship for those holding the documents.


U.K. Signs Trade Deal With Japan as Brexit Talks Heat Up
Isabel Reynolds – Bloomberg
The U.K. signed a trade deal with Japan on Friday, its first with a major economy since Brexit, as the clock runs down on British efforts to reach an agreement with the European Union by the end of the year. In a ceremony in Tokyo, U.K. International Trade Secretary Liz Truss and Japanese Foreign Minister Toshimitsu Motegi put their names to the pact, which was reached in principle in September, about three months after formal negotiations began.

Brexit: £3bn standoff over UK-EU scientific collaboration
Lisa O’Carroll – The Guardian
The UK’s post-Brexit collaboration with European scientists hangs in the balance after it emerged that the EU offer of staying in the Horizon research programme could leave London with a £3bn deficit. “The financial negotiations are not in a good position and the offer that the [European] commission has made to the UK is not appealing,” Vivienne Stern, the director of Universities UK International, told a Lords Brexit committee on Thursday.

Brexit May Be Too Late to Save Britain’s Fishermen
Christopher Jasper – Bloomberg
Boris Johnson is willing to risk a deal with the EU to get back control of trawling grounds, but the industry accounts for 0.1% of the economy. Derek Reader coats the deck of his 40-foot fishing boat in salt-resistant paint ahead of another punishing winter hunting plaice, turbot and cod in the Irish Sea. He hopes it will be his last season. The U.K. has made regaining control of its fishing grounds a central demand in protracted and fraught talks on a post-Brexit trade deal with the European Union. Yet the last trawlerman in the English port of Fleetwood, which once boasted 120 vessels like his, plans to sell the MFV Albion and quit the industry.

Letter: If Brexit is like moving house, we’re downsizing
John Sargeant – FT
Few people will be reassured by UK Cabinet Office minister Michael Gove’s analogy that Brexit is, like moving house, a “hassle” but worth it for the new view (“Business frustrated by ‘waste of time’ call with PM”, October 20). The truth is we are being forced to downsize. In our cramped new accommodation we won’t be seeing so much of our neighbours and to fit into our new home we will have to abandon several valuable items. Cherished belongings may get broken or lost in transit. There will be plenty of moving costs, with little prospect that the chancellor will be waiving stamp duty to ease the transition.

UK seals first big post-Brexit trade deal with Japan; British government has been keen to sign pact as negotiations with Brussels continue
Robin Harding – FT
The UK has completed its first large post-Brexit trade deal after signing an agreement with Japan that will take effect from January 1. Liz Truss, the UK’s international trade secretary, signed the agreement with Toshimitsu Motegi, the Japanese foreign minister, in Tokyo on Friday.

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