Kodak’s $765 Million Moment; Robinhood upstarts who ambushed financial establishment

Aug 21, 2020

First Read


Legal cannabis ups the ante for alternative payment systems
Chicago entrepreneurs seek to bring cash-heavy retail industry into digital age
By Suzanne Cosgrove – John Lothian News

With legal cannabis sales in the U.S. projected to bring in about $3 billion in 2020, local fintech entrepreneurs are turning their attention to payment systems that can be used by the cash-heavy cannabis industry, which by federal law does not have access to nationally chartered banks.

Businesses with too much cash on hand evoke safety concerns — loss, robbery, theft and the chance of COVID-19 contagion, for starters. Some of the systems appear to be more workarounds than innovations, but all promise to reduce the amount of physical cash flowing between consumers and retailers.

Among the entrepreneurs is former Cboe Global Markets trader Terrence Patton, founder and chairman of CannaTrac Technology. CannaTrac is a cashless payment company that allows for payment by an app that also offers consumers a map showing which nearby dispensaries take it.

To read the rest of this story, go here.


Hits & Takes
By John Lothian & JLN Staff

There are three more weekends before Labor Day, signifying the end of the summer. Where did the summer go? Did we have a summer?

Labor Day is another time when families and friends get together, which raises the chances that COVID-19 will be spread more. Labor Day used to be one of my favorite weekends when my young family would go away to family camp with other families from my church. Alas, kids grow up and things change.

But given the surge in the virus we are seeing in the U.S., Europe and elsewhere already, Labor Day Weekend represents a unique risk of spreading the disease. I encourage everyone to stay smart and stay safe. Find new ways and maybe start new traditions for this end of the summer demarcation celebrated in the U.S. Let’s not make bad things worse.

Eurex and Interactive Brokers are teaming up for a webinar highlighting new opportunities at Eurex FX, equities and fixed income products as markets find unchartered territory in preparation of the US election and the UK exit from the EU. Register HERE.

Ivan Brown, head of options at NYSE, sat for an interview with Mark Longo at The Options Insider to talk about NYSE’s reopening of its trading floors, options market structure, and some of the dynamics making 2020 unique.

I am trying to figure out if there is someone who enjoys their job more than Allan Schoenberg of Nasdaq. He gave an expression of pure joy on LInkedIn about his job and his love of it.

Have a great day 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 new blog post titled “Dispelling the Complementary Product Theory for Market Data” about an NMS II comment letter proposing that exchange data is complementary and therefore should not be complimentary. To become less confused by that, go here.~SR


E*TRADE Study Reveals Risk Tolerance Spike Among Millennial and Gen Z Investors; Over half of young investors indicate they are trading more frequently since the outbreak
Business Wire
E*TRADE Financial Corporation (NASDAQ: ETFC) today announced results from the most recent wave of StreetWise, the E*TRADE quarterly tracking study of experienced investors. Results show trading trends among Gen Z and Millennial investors during the COVID-19 crisis:

*****Whatever happened to just playing a lot of foosball?~JJL


Does Robinhood Make It Too Easy to Trade? From Free Stocks to Confetti; Some behavioral researchers say the app’s simplicity encourages novice investors to take bigger risks
Michael Wursthorn and Euirim Choi – WSJ
Few brokerage apps have captured people’s attention like Robinhood Markets Inc. The Silicon Valley company has turned the complex process of trading stocks into a simple, free swipe across a screen. But some behavioral researchers contend that that simplicity is turning investing into a game, and nudging inexperienced investors to take bigger risks.

******The easier it is to lose money, the more money you can lose.~JJL


LabCFTC Opens Registration for September 24 Empower Innovation 2020 Event; Agenda Features Fireside Chat with CFTC Chairman, In-Depth Discussions About the Impact of Technology and Innovation During Crises
The Commodity Futures Trading Commission today opened registration and released the agenda for LabCFTC’s first Empower Innovation 2020 session, “The Power of Innovation: Where Tech & Crisis Collide.” First announced in July, Empower Innovation 2020 is a three-part, interactive virtual series hosted by LabCFTC to facilitate a dialogue on cutting-edge fintech innovation among innovators, regulators, market participants, and the public. [See CFTC Press Release No. 8198-20]

******It will be a little easier getting through security for this event.~JJL


‘Bored’ ravens straying from Tower of London as tourist numbers fall
Sarah Marsh – The Guardian
A lack of tourists is driving the ravens at the Tower of London to boredom and causing them to fly away. Legend has it the monarchy and the Tower of London will fall if its six resident ravens leave the fortress.

*****Easily fixed with the help of Walt Disney and some animatronic ravens.~JJL



CryptoMarketsWiki Coin of the Week: Tether (USDT)
This week, Tether (USDT) made a lot of waves. Tether became the biggest cryptocurrency by market cap, overtaking XRP. The stablecoin now has a reported market cap of over $12 billion. Tether also reportedly moved 1 billion USDT from TRON’s blockchain to the Ethereum blockchain, a move known as a “chain swap.” This increased Ethereum’s supply of USDT to 8.5 billion – meaning roughly 65 percent of the total supply of USDT is now on Ethereum’s blockchain. Tether also integrated the OMG Network, an Ethereum-based payments system that can handle a significant number of transactions simultaneously at a lower cost than that of the Ethereum network, the transaction fees of which have been increasing recently.


Thursday’s Top Three
Our top story Thursday was Why Everyone Cares About This Italian Exchange, a Bloomberg opinion piece about the London Stock Exchange’s attempt to sell its holding in Italy’s MTS SpA bond-trading platform. Second was JLN’s DOJ Settles Criminal Spoofing Charge Against Scotiabank For $60.4 Million, another new addition to our Spoofing Special Report. Third was Getting “Unstuck”: A Five-Step Process for Generating New Concepts, a LinkedIn post from the CME Group’s Julie Winkler.


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Lead Stories

Kodak’s $765 Million Moment: How It Happened and How It Went Wrong; Peter Navarro, trade adviser, spearheaded the idea and used his sway to help Kodak navigate the bureaucracy—until the deal blew up
Rachael Levy, Geoffrey Rogow and Alex Leary – WSJ
On a white board in his office earlier this year, Trump trade adviser Peter Navarro made a list of potential companies that could manufacture pharmaceuticals in the U.S. He separated them into three columns, one for each stage of the production process. Eastman Kodak Co. KODK -7.83% stood out, overlapping two of the three columns. The way Mr. Navarro saw it, he recalled, Kodak could help produce the ingredients to jump-start generic drug production and ease the country’s reliance on foreign supplies.

Robinhood upstarts who ambushed financial establishment; Brokerage founders who wanted to ‘help the everyman’ have joined the super-rich
Richard Henderson and Miles Kruppa – FT
Baiju Bhatt was walking barefoot around Palo Alto in 2013 when he realised his new company Robinhood was on the verge of bankruptcy. After a meeting with venture capitalist Tim Draper — sealed by a promise along with his co-founder, Vlad Tenev, to forgo a salary — the start-up was saved.

CME Group to Launch New South American Soybean (Platts) Futures Contract on September 21
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it will launch South American Soybean (Platts) Futures on September 21, 2020, pending all relevant regulatory review periods. This contract will offer market participants a new tool to directly manage exposure to the Brazilian soybean market.

Crypto Assets of $50 Billion Moved From China in the Past Year
Matthew Leising – Bloomberg
Report suggests digital coins contribute to capital flight; Tether coin is ‘a U.S. dollar replacement’ for some in China
About $50 billion in cryptocurrency assets have left China in the past year, a possible indication that investors are dodging rules that limit how much capital they’re allowed to transfer from the nation, according to new research by blockchain forensics firm Chainalysis.

Nouriel Roubini Says Wall Street Euphoria Ignores Main Street Hardships
Manas Pratap Singh – Bloomberg
The global economy faces a risk of a slow recovery or even another slump along the way unless a vaccine is found, according to Nouriel Roubini. Speaking on Bloomberg Television on Friday, Roubini predicted that the shape of the recovery, which some predicted to be V, “is becoming a U and the U could become a W if we don’t find a vaccine and don’t have enough stimulus.”

SGX and FTSE Russell enter partnership for multi-asset index derivatives; The partnership will see SGX and FTSE Russell develop an offering that will include single country, regional equity, ESG and real estate FTSE index derivatives.
Annabel Smith – The Trade
The London Stock Exchange Group’s FTSE Russell and Singapore Exchange (SGX) have teamed up to develop a multi-asset index derivatives offering focused on Asian and emerging markets. In a statement, both institutions confirmed that the strategic partnership will initially develop index derivatives on Asian and emerging markets single country and regional equity derivatives, as well as ESG and listed real estate index derivatives.

Barstool Sports founder Dave Portnoy back from short-lived COVID-19 scare
Nicolas Vega – NY Post
Dave Portnoy’s COVID-19 scare didn’t last long. The Barstool Sports founder on Thursday morning posted an update to his Twitter page claiming that he beat the deadly virus, a day after scaring his fans and investors when he revealed he had been “sick as a motherf—er” and bedridden for 40 hours.

Natural Gas Prices Are on Fire, but Producers Are Holding Back; The reticence of producers to chase rising prices is supporting the market
Ryan Dezember – WSJ
Natural gas prices have shot up nearly 60% since late June, and speculators are betting they will keep climbing. But the companies that control the country’s spigots aren’t so sure. Appalachian energy producers are taking a cautious approach to reopening the taps they shut in spring when the coronavirus pandemic torpedoed prices in an already glutted market.

Online Betting Is on a Roll. Time to Cash in Some Chips; Shares of the leading online sports betting companies have skyrocketed as investors wager on the future of wagering
Spencer Jakab – WSJ
Ping pong, anyone? A deal that seemingly hit the trifecta in December had investors worried that it wouldn’t win, place or show after the pandemic hit. Late last year, a blank-check company worth $400 million announced that it would issue shares and enter into a $3.3 billion three-way combination with daily fantasy sports specialist DraftKings DKNG 0.14% and gambling technology company SBTech, renaming the combined company DraftKings. Its shares surged.

CEOs’ plans to reset capitalism bump into reality of pandemic; Washington’s leading business lobby group made commitments a year ago, but did anything change?
Andrew Edgecliffe-Johnson and Billy Nauman – FT
When stay-at-home orders swept the US in March, the rubbish stopped piling up outside shops, schools and stadiums, slashing $40m from Waste Management’s revenues in two weeks. Jim Fish, its chief executive, responded not by slashing costs but by guaranteeing his full-time staff’s pay for the pandemic’s duration and offering small businesses a free month’s service once they reopened.

The Difference Between Great Leaders and ‘Innovators’; Innovative leaders may not take us to Mars on their own, but they just might give us a fighting chance of solving our most fundamental and stubborn human problems.
Jessica Nordlander, Inc.
Innovation means a lot of different things to a lot of different people. A startup flickers to life on it, a well-toned unicorn has often had a steady diet of it, and legacy brands will, at some point, inevitably hear that the lack of it is the reason their good times are behind them.

Urban Exiles Are Fueling a Suburban Housing Boom Across the U.S.; Low mortgage rates and the emerging Covid-era lifestyle spark a surge in demand in California’s Inland Empire and other bedroom communities.
Prashant Gopal, John Gittelsohn – Bloomberg
Homebuilder Jimmy Previti’s sales haven’t been this strong since last decade’s housing boom. And that makes him nervous. His home turf, the Inland Empire, 45 miles from densely populated Los Angeles, is at the center of a suburban land rush. In the Covid era, the single-family houses that are the stock in trade for Previti’s Frontier Communities are a hot commodity. Armed with the lowest mortgage rates in history, buyers are increasingly shunning urban centers, settling instead where they can live at a safe distance from their neighbors. “Is this the little runup before everything runs off the rails?” asks Previti, chief executive officer of Frontier. “Nobody can tell.”

Millions of U.S. Jobs to Be Lost for Years, IRS Projections Show
Laura Davison and Alexandre Tanzi – Bloomberg
IRS forecasts 37.2 million fewer W-2 forms for next year; More gig workers are also seen, compared with before pandemic
The Internal Revenue Service projects that lower levels of employment in the U.S. could persist for years, showcasing the economic fallout of the coronavirus pandemic. The IRS forecasts there will be about 229.4 million employee-classified jobs in 2021 — about 37.2 million fewer than it had estimated last year, before the virus hit, according to updated data released Thursday. The statistics are an estimate how many of the W-2 tax forms that are used to track employee wages and withholding the agency will receive.


Why is the ‘anti-vaxxer’ movement growing during a pandemic? US concerns that Trump will rush to approve a vaccine before election is playing into wider safety fears
David Crow and Kiran Stacey -FT
Greer McVay insists she is “not an anti-vaxxer — not at all”. She is up to date with her own immunisations and had her son vaccinated when he was a child. But she fears the development of a vaccine for coronavirus is being dangerously rushed, in part to improve Donald Trump’s prospects ahead of the presidential election in November.

PwC UK delays annual results to take in cost of Covid-19; Big Four auditor says it needs more time to assess the damage before signing off on pay and bonuses
Tabby Kinder – FT
PwC UK will delay publishing its annual results until next year as it assesses the impact of the pandemic on pay and bonuses for its staff and partners.

Airbnb bans groups of more than 16 over virus and violence fears; Accommodation platform says some guests have ‘chosen to take bar and club behaviour to homes’ during pandemic
Alice Hancock – FT
Parties of more than 16 people will be banned at Airbnb properties, after fears of virus contagion and a number of shootings at events held in its listings in the US prompted the short-term rentals group to revise its global policy.

Hong Kong to Start Virus Testing for Entire City on Sept. 1
Jinshan Hong – Bloomberg
One-time, free, voluntary test drive may last up to two weeks; Government hasn’t set any target for itself, Carrie Lam says
Hong Kong Chief Executive Carrie Lam said the city will kick off a campaign to test its entire population for the novel coronavirus on Sept. 1, in the first such effort attempted outside of mainland China.

Europe Battles Virus Spike With No Appetite for New Lockdowns
Chris Reiter – Bloomberg
Focus on targeted measures like face masks and travel warnings; Leaders are wary of hobbling region’s economic recovery
Europe is facing a resurgence of coronavirus infections with little willingness to resort to the stringent restrictions on movement that helped the region control the pandemic after an initial surge in March and April. Economies were decimated by the crisis in the second quarter, and governments are desperate to foster a swift recovery. German Chancellor Angela Merkel on Thursday urged European leaders to work together to avoid reviving lockdowns, calling instead for unified action.

As Remote Work Continues, Companies Fret Over How to Monitor Employees’ Data Handling; Workers can record meetings, copy documents, or share corporate devices with family members without employer consent
Catherine Stupp – WSJ
Corporate cybersecurity leaders are concerned that it may be easier for employees to expose data or create openings for hackers while working remotely during the pandemic. But companies have limited capabilities to monitor certain violations of data policies.

‘Be adults’: Colleges crack down on campus partying amid derailed pandemic re-openings
Aarthi Swaminathan -Yahoo Finance
Some U.S. colleges decided to re-open campus — with precautions varying by school — for the fall amid the coronavirus pandemic, and it’s not going well so far. Now the roughly 600 colleges that are holding in-person classes are doubling down on enforcement of social distancing guidelines and attempting to deter students from partying after several big-name schools were forced to shut down or suspend plans.

Millions of Americans scrape by after benefits expire: ‘I lost everything’; Americans struggle to survive after $600 unemployment benefits expire and are left to rely on state benefits while waiting on Trump’s reduced federal benefits of $400 a week
Michael Sainato – the Guardian
A single mother of three children, Sandra Bivin of Denver, Colorado, is now being forced to try to survive on $58 a week since the $600-a-week expanded unemployment benefits expired on 26 July.

Eurex’s incoming options speed bump could disadvantage liquidity takers, HFT firm warns; As Eurex prepares to launch its PLP speed bump initiative on the DAX index options market next week, HFT firm Optiver has warned the scheme could harm liquidity takers.
Hayley McDowell – The Trade
European proprietary firm Optiver has warned the launch of a speed bump to slow down aggressive high-speed trading on the Eurex DAX index options market could disadvantage liquidity takers.

U.S. Mail Delays Slow Delivery of Medicines; In addition to concerns over mail-in voting, the cost-cutting at the Postal Service affects the millions of people who get their prescriptions by mail.
Reed Abelson – NY Times
To many people who rely on the mail to deliver their prescriptions, the latest political skirmishing over the U.S. Postal Service doesn’t really matter. They’ve been dealing with delays for weeks, and while some are not urgent, others are more worrisome.

Covid-19 Data Will Once Again Be Collected by CDC, in Policy Reversal; Hospitals will return to reporting new cases to Centers for Disease Control and Prevention, Trump administration says, after shift to Health and Human Services led to delays and data problems
Robbie Whelan – WSJ
The U.S. Department of Health and Human Services is reversing course on a change to the way hospitals report critical information on the coronavirus pandemic to the government, returning the responsibility for data collection to the Centers for Disease Control and Prevention.

Sweden records highest death tally in 150 years in first half of 2020
Hilary McGann and Emma Reynolds, CNN
Sweden recorded its highest death tally in 150 years for the first half of 2020, according to the country’s official statistics office. Between January and June this year, 51,405 deaths were registered — more than 6,500 fatalities (or 15%) over the same period in 2019.

Getting Old Needs a New Look; Covid-19 has exposed the lethal vulnerabilities of nursing homes and assisted-living facilities. Can better design make aging safer?
Patrick Sisson – Bloomberg
In at least one way, the United States’s tragic response to the coronavirus hasn’t been an outlier: Just like in the rest of the world, the consequences of the pandemic were amplified inside living facilities for older adults. As of August 13, at least 68,000 residents and workers in long-term care facilities in the U.S. have died from the coronavirus, according to New York Times research, a number that comprises more than 40% of the nation’s total. That percentage that’s been matched or exceeded by other countries across the globe. In Europe, half of all Covid-19 deaths happened in nursing homes and long-term care facilities, according to the World Health Organization. In Canada, which has been far more effective at containing the disease, 82 percent of the country’s deaths have been concentrated among these facilities.

Exchanges, OTC and Clearing

Moscow Exchange announces results for the second quarter of 2020
Moscow Exchange (MOEX) today announces its financial results in accordance with International Financial Reporting Standards (IFRS) for Q2 2020. Record fee income from the Money Market and Depository & Settlement Services as well as strong performance by the Equities Market helped MOEX achieve all-time high F&C income for the third quarter in a row.

SGX and FTSE Russell sign long-term strategic partnership agreement across asset classes
Both parties are developing innovative Asian multi-asset solutions, as evolving investment landscape calls for greater diversification opportunities and high-quality access to Asia
Singapore Exchange (SGX), Asia’s leading international multi-asset exchange and FTSE Russell, a global index, data and analytics provider, have signed an agreement to strategically broaden and deepen their long-term partnership to deliver new Asian multi-asset solutions.

New Product Summary: Initial Listing of Four (4) European Renewable Fuel Futures Contracts
CME Group
Initial Listing of Four (4) European Renewable Fuel Futures Contracts.

New Product Summary: Initial Listing of the Nasdaq-100 Volatility Index Futures Contract – October 5, 2020
CME Group
Initial Listing of the Nasdaq-100 Volatility Index Futures Contract

Initial Listing of the FOB Santos Soybeans Financially Settled (Platts) Futures Contract
CME Group

Amendments to the Daily Price Limits Rule of the Live Cattle and Feeder Cattle Futures Contracts
CME Group

Initial Listing of the UAN FOB NOLA Futures Contract
CME Group

Parameter Updates Pertaining to the Concentration Margin Program – Effective August 21, 2020
CME Group
Effective August 21, 2020, CME Clearing will enact parameter revisions to its concentration margin program for futures and options. No changes will be made to the concentration margin program methodology.

Performance Bond Requirements: Agriculture, Energy, FX and Interest Rate Margins – Effective August 21, 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. The rates will be effective after the close of business on August 21, 2020.

Shenzhen Stock Exchange Firmly Implements The Opinions On Providing Judicial Safeguard To The Reform Of The ChiNext Board And Strives To Do A Good Job In Implementing The Reform http://
On 18 August 2020, the Supreme People’s Court of the People’s Republic of China released the Opinions on Providing Judicial Safeguard to the Reform of the ChiNext Board and the Pilot Project of the Registration-based IPO System. On August 19, the Guangdong Higher People’s Court issued the Opinions on Implementing Judicial Safeguard to the Reform of the SZSE ChiNext Board and the Pilot Project of the Registration-based IPO System. Those documents, especially formulated for the reform of the SZSE ChiNext Board and the pilot project of the registration-based IPO system, have laid a solid rule-of-law foundation for SZSE to carry out stock issuance and listing review and self-disciplinary regulation.


Wirecard agrees sale of UK business to Visa-backed bank; Railsbank would take on collapsed German group’s UK payment card technology, clients and some staff
Nicholas Megaw, Owen Walker and Matthew Vincent – FT
Collapsed German payments company Wirecard has agreed to sell the remnants of its UK business to Railsbank, a UK start-up backed by Visa.

SteelEye releases auto-trade reconstruction technology; The new auto-trade reconstruction technology from SteelEye will reduce the time taken to reconstruct a trade from days to seconds.
Annabel Smith – The Trade
Compliance technology firm SteelEye has released auto-trade reconstruction technology which the firm claims can minimise the time taken for a firm to reconstruct a trade down to seconds.

NatWest joins FX novation platform Capitolis amid record volumes; Capitolis has seen record transaction volumes of $417 billion in the second quarter of 2020 on its FX options novations platform.
Annabel Smith – The Trade
Foreign exchange novation platform provider Capitolis has confirmed that NatWest is the latest major institution to join its network, following record volumes earlier this year. Capitolis said it achieved a record $417 billion in notional for FX options novations during the second quarter, almost doubling the volume from the year prior.

AI as a blueprint for fintech startups
Marc Gilman – TechCrunch
While most startup founders would prefer not to pore over laws, regulations and interpretive materials to design a perfect product, it’s an essential exercise for those developing financial services solutions. For fintechs and the other finserv-related startups (e.g., regtech, suptech, etc.) understanding the regulatory obligations of customers and prospects will be core to your mission. In some cases, the process of interpretation and analysis might be a heavy lift involving expert outside counsel, lobbying efforts, and specialized consulting services.

US Bank Regulator Sees Potential in Fintech Solutions to Legacy Banking Issues
Jack Martin – Cointelegraph
The United States Acting Comptroller of the Currency, Brian Brooks, recently expressed his willingness to embrace fintech solutions in an interview with CNN.
Brooks, who was formerly Chief Legal Officer at Coinbase, explained that his job now was to “identify impediments that make it harder for people to get what they want and need.”


JP Morgan prepares to launch UK digital bank next year
Jessica Clark – City AM
The investment bank is finalising plans to open its UK challenger bank in the first quarter of 2021, according to Sky News. It has signed up suppliers to provide cloud and digital banking infrastructure, including Amazon Web Services and 10x Future Technologies.

Crypto Assets of $50 Billion Moved From China in the Past Year
Matthew Leising – Bloomberg
About $50 billion in cryptocurrency assets have left China in the past year, a possible indication that investors are dodging rules that limit how much capital they’re allowed to transfer from the nation, according to new research by blockchain forensics firm Chainalysis. The controversial cryptocurrency Tether accounted for more than $18 billion of the outflows from East Asia in the period, the firm said Thursday in a report. Tether, a so-called stablecoin because its value is pegged to the U.S. dollar, accounts for 93% of stablecoin use in the region.

Thiel-Backed Valar Among Latest BlockFi Financing Participants
Vildana Hajric – Bloomberg
BlockFi Inc., a financial services firm focused on cryptocurrencies, raised $50 million. Morgan Creek Digital was the lead investor in the funding, which included an infusion from Peter Thiel-backed Valar Ventures. It’s the company’s third series C funding round in the past year, during which revenue increased 10-fold. CMT Digital, Castle Island Ventures, Winklevoss Capital, and the Cleveland Cavaliers’s Matthew Dellavedova, among others, also participated. Two university endowments took part, though the company declined to name them.

Bitcoin Options Open Interest Nears All Time High – But Rise in Puts Could Presage Drop
Omkar Godbole – Coindesk
While open positions in bitcoin (BTC) options have risen to near record-high levels, it’s not necessarily a good thing for those hoping for the rally in the cryptocurrency to continue. The total number of outstanding BTC options contracts – open interest (OI) – increased to $2.10 billion Thursday – just shy of the all-time high of $2.11 billion in late July, per data from Skew.

CFTC seeks $572 million in penalty and restitution from the owner of ‘fraudulent’ bitcoin scheme Control-Finance
Yogita Khatri – The Block
The U.S. Commodity Futures Trading Commission (CFTC) is reportedly seeking $572 million in penalty and restitution from the owner of “fraudulent” bitcoin trading scheme Control-Finance. FinanceFeeds reported the news on Friday, citing a proposed default judgment filed by the CFTC with the New York Southern District Court on Thursday. Per the judgment, Control-Finance owner and sole director Benjamin Reynolds will have to pay $429 million in penalty and $143 million in restitution, as he failed to appear or answer the CFTC’s complaint originally launched in June 2019.

Ready to Wumbo: LND Enables More, Larger Bitcoin Transactions on Lightning
Alyssa Hertig – Coindesk
Bitcoin’s Lightning Network has reached a significant milestone. An important capacity limit meant to protect users of the nascent protocol is being tweaked, toppling a barrier to entry for companies looking to adopt the novel payment system. LND, a leading Lightning Network implementation from startup Lightning Labs, has announced it has adopted support for wumbo channels. Going forward, users can deposit more money into Lightning Network channels than before, as well as send larger transactions.

Swiss firm raises $15M to build out DeFi data platform
Aislinn Keely – The Block
A Swiss firm says it plans to build an open-source financial data product reminiscent of Bloomberg’s offerings — and it just raised over $15 million for the project. DIA is a data platform focused on the decentralized finance (DeFi) space. The company has its sights set on becoming a fully decentralized autonomous organization (DAO) in the next five years.

John McAfee ghosts his own privacy-first cryptocurrency project
Robert Stevens – Decrypt
John McAfee has abandoned the Ghost cryptocurrency project. McAfee once touted Ghost as the “future” of privacy online. Disagreements with Ghost developers, however, appear to have caused the cybersecurity mogul to call it quits.

Bitcoin Has Lost Its Way: Here’s How to Return to Crypto’s Subversive Roots
Rachel-Rose O’Leary – Coindesk
These days I spend most of my time tweaking the code of a bitcoin wallet that runs in Terminal. Based on Libbitcoin, it’s built to work over Nym Technologies’ anonymizing mixnet. I call it the Dark Renaissance wallet. It’s mostly a learning exercise to hone my C++ skills, but the Dark Renaissance wallet is a harbinger for what is to come.

INX Crypto Exchange to Launch $117M IPO Next Week
Marc Hochstein – Coindesk
INX Ltd. said it will launch its long-awaited landmark initial public offering (IPO) as soon as Monday, capping a nearly two-year journey for the startup cryptocurrency and security token exchange.
“It is anticipated that the offering will begin on Aug. 24, 2020, or shortly thereafter,” the Gibraltar-based company said in a press release Thursday. As previously reported, INX has priced its 130 million tokens, which are to run on the Ethereum blockchain, at $0.90 each, totaling $117 million in gross proceeds. This was smack in the middle of the target range of $0.80 to $1.00 per token.

Los Alamos National Laboratory builds an AI system to detect illicit crypto miners
Yogita Khatri – The Block
Los Alamos National Laboratory, partly-owned by the U.S. Department of Energy’s National Nuclear Security Administration, has developed an artificial intelligence (AI)-based system to detect illicit cryptocurrency miners. The system is specifically designed for malicious actors that target supercomputers to mine cryptocurrencies like bitcoin (BTC) and monero (XMR), the laboratory announced on Thursday. Recent reports have indicated that academic supercomputers are targeted by would-be attackers to install crypto mining hardware.

ETC Labs proposes multi-stage plan for securing Ethereum Classic against 51% attacks
Michael McSweeney – The Block
Ethereum Classic (ETC) Labs proposed a multi-stage strategy on Wednesday to combat the risk of 51% attacks, which have roiled the network in recent weeks. As The Block has reported, Ethereum Classic saw two such attacks — wherein a miner amasses sufficient hashing power to amend the network’s transaction history — in early August. And as later outlined, major exchanges are watching closely to see whether the network issues might ultimately prompt them to delist the ETC token entirely. The issue stems from the fact that Ethereum Classic’s hash rate remains very low — the cost to carry out this form of attack is about $5,300 per hour, according to Crypto51.


France Makes an Impossible Coronavirus Promise; Europe’s governments are better equipped to deal with the second wave of the pandemic, but no one can definitively rule out more general lockdowns.
Ferdinando Giugliano – Bloomberg
The resurgence of the coronavirus in Europe has reignited fears that governments will have to lock down their economies again in the autumn. Some political leaders, including President Emmanuel Macron of France, have rushed to dismiss this possibility, saying the collateral damage from a new bout of confinement would just be too high.

Storms, Trade Wars and Covid: Farmers Hit Again in Trump Country
Kim Chipman and Isis Almeida – Bloomberg
Rolling along Iowa’s gentle hills in mid-August is usually like surfing a green tidal wave. Corn fields are so lush that plants often tower several feet over the heads of crop scouts setting out to analyze yields. This year, some scouts were crawling around on their hands and knees to find ears of grain during the annual expedition.

Steve Bannon Charged in Alleged Border-Wall Fundraising Scheme; Former Trump adviser and three others indicted on fraud charges over activities involving online crowdfunding campaign called We Build the Wall
Corinne Ramey, Rebecca Ballhaus and Elizabeth Findell – WSJ
Former senior Trump adviser Steve Bannon was arrested and charged with fraud Thursday in connection with an alleged scheme to siphon hundreds of thousands of dollars from a crowdfunding campaign backing one of the president’s signature promises: building a wall along the southern U.S. border.

Senate Leadership Fund Gets $10 Million Boost From Schwarzman
Bill Allison – Bloomberg
Super-PAC raises $27 million to help GOP hold Senate majority; Democratic counterpart SMP raised $18.4 million in July
Blackstone Group Inc. co-founder Stephen Schwarzman gave $10 million to the Senate Leadership Fund, a super-PAC tied to Majority Leader Mitch McConnell, part of a $27 million haul it raised in July according to its latest filing with the Federal Election Commission.

Trump’s Court Redo Is Set to Be Even Broader If He Wins New Term
Greg Stohr – Bloomberg
Re-election would see Trump add to his 200 judicial appointees; Trump boasts of extending the conservative leaning on courts
President Donald Trump has reshaped the federal judiciary. If he wins another four years, he could transform it entirely. Trump heads into next week’s Republican National Convention able to boast of having installed more than 200 judges, including 53 on the U.S. appeals courts and two Supreme Court justices. Republican appointees now constitute a majority of the full-time judges on seven of the 13 federal appeals courts, up from four when Trump took office in 2017.

Trump says he wants to use ‘sheriffs’ as poll watchers on Election Day; Republicans are planning their largest poll watching effort in decades.
Dareh Gregorian
President Donald Trump, who’s repeatedly railed against mail-in voting, said Thursday he has concerns about in-person voting as well, and wants to use law-enforcement as poll watchers on Election Day.

Trump Predicts Broad Election Cheating, Without Giving Evidence
Josh Wingrove – Bloomberg
He speaks just before Biden was set to accept nomination; Earlier in day, Trump went to town next to Biden’s birthplace
President Donald Trump called into a television program on Thursday night to claim there will be election fraud and assail Joe Biden just before his challenger was to accept the Democratic nomination.

Trump Threatens Tariffs for U.S. Companies That Won’t Move Jobs Back
Saleha Mohsin, Justin Sink, and Mario Parker – Bloomberg
Navarro says ‘tariffs mean more American jobs’ in statement; Unclear whether White House is developing new policy
President Donald Trump threatened Thursday that if he’s re-elected, he’ll impose tariffs on U.S. companies that refuse to move jobs back to the country from overseas. “We will give tax credits to companies to bring jobs back to America, and if they don’t do it, we will put tariffs on those companies, and they will have to pay us a lot of money,” Trump said during a campaign event in Pennsylvania.


Three charged by SFO in Axiom fund collapse investigation; Trio accused of carrying out fraudulent scheme
Mike Sheen – Investment Week
The Serious Fraud Office (SFO) has charged three men with multiple offences in connection with the 2012 collapse of the Axiom Legal Financing fund, with the trio accused of carrying out a fraudulent scheme to divert money from the vehicle for their own benefit. Launched in 2009, the Cayman-domiciled Axiom fund promised investors returns of 11% a year, and was promoted as “an uncorrelated, open-ended investment that provides short-term finance to UK law firms” who work on a no-win, no-fee basis on cases with a high chance of success.

FinCEN issues additional FAQs to address questions regarding customer due diligence requirements for covered financial institutions
On August 3, 2020, the Financial Crimes Enforcement Network (FinCEN), in consultation with the federal functional regulators, published new Frequently Asked Questions (FAQs) on its website regarding customer due diligence (CDD) requirements for covered financial institutions. These FAQs clarify the regulatory requirements related to obtaining customer information, establishing a customer risk profile, and performing ongoing monitoring of the customer relationship in order to assist covered financial institutions with their compliance obligations. These FAQs are in addition to those FinCEN previously published on July 19, 2016 and April 3, 2018.

Fraudsters Using Registered Representatives Names to Establish Imposter Websites
Several firms have recently informed FINRA that malicious actors are using registered representatives’ names and other information to establish websites (“imposter websites”) that appear to be the representatives’ personal sites and are also calling and directing potential customers to use these imposter websites. Imposters may be using these sites to collect personal information from the potential customers with the likely end goal of committing financial fraud.1 This Notice describes certain common characteristics of these sites and actions firms and registered representatives can take to monitor for and address these sites.

ASIC manages transition to new regulatory regime for litigation funding schemes
ASIC has made ASIC Corporations (Litigation Funding Schemes) Instrument 2020/787 (Instrument) to manage the transition to the new regulatory regime for litigation funding.

ASIC commences proceedings against RI Advice Group Pty Ltd for alleged failure to have adequate cyber security systems
ASIC has today commenced proceedings in the Federal Court of Australia against RI Advice Group Pty Ltd (RI), an Australian Financial Services (AFS) licence holder, for failing to have adequate cyber security systems.

Dubai Financial Services Authority Public Holiday Notification
The DFSA offices will be closed for business on Sunday, 23 August 2020 to mark the Hijri New Year. The DFSA offices will reopen on Monday, 24 August 2020.

Investing and Trading

Lack of trading data hits ETF growth in Europe; PwC report finds Mifid II has had only a limited effect on improving transparency
Robert Van Egghen – FT
Exchange traded fund distribution in Europe is being hindered because market data providers have shown little interest in creating a shared database of equity prices and trading volumes, market participants say.

US utilities investors seek relief in greater regulation; Fund managers crave high and reliable payouts from stocks often seen as bond proxies
Gregory Meyer – FT
Wall Street is applauding a shift by big US energy utilities to dump unregulated businesses, as investors prize the stability of high and predictable returns.

The Euro’s Strength Against the Dollar Might Become Contagious; The recent move into the single currency could turn into an investor stampede if dollar flight takes hold.
Marcus Ashworth – Bloomberg
The euro is becoming the go-to currency for safety and liquidity as we approach the U.S. presidential elections and investors bet on a rocky time for the dollar. This may be a source of pride for European policy makers in how they’ve handled the pandemic so far. Unfortunately, it’s a potential problem for exporters on the continent, not least its manufacturers.

How to avoid blowing up your trading account using options
Jonathan Garber – FOXBusiness
Options are a great tool for investors who want to limit risk but can prove costly for those who don’t know how to use them properly, according to one market pro. An option’s value is determined by a number of factors, including price, time to expiration and volatility, and investors who may be less tuned in to financial markets could be caught off guard by sudden shifts that result in the value of their purchase going to zero or even lower.

Environmental, Social and Corporate Governance

Poor Planning Left California Short of Electricity in a Heat Wave; Scores of power plants were down or operating below their capacity just as hot weather drove up demand.
Ivan Penn – NY Times
Everybody had known for days that a heat wave was about to wallop California. Yet a dashboard maintained by the organization that manages the state’s electric grid showed that scores of power plants were down or producing below peak strength, a stunning failure of planning, poor record keeping and sheer bad luck.

The Tragedy in Tulsa Didn’t End in 1921
On May 31, 1921, the entire Greenwood neighborhood of Tulsa, Oklahoma, was destroyed and hundreds of its Black residents were murdered by a White mob. The massacre and the destruction of the prosperous enclave, dubbed “Black Wall Street,” was the single largest incident of racial violence in American history. While the neighborhood was razed, the survivors weren’t deterred as they rebuilt Greenwood over the coming decades. But what demolished the neighborhood a second time four decades later was much less overt, but no less racist.

Goldman Sees Pandemic Spurring Growth in ESG Bond Issuance
David Caleb Mutua – Bloomberg
Utilities, tech, health-care sectors among potential borrowers; Issuers can save up to 10 basis points by going sustainable
Issuance of bonds for social and green projects will accelerate as investors focus more on sustainability and the environment in the age of Covid-19, according to Goldman Sachs Group Inc.

Move over ‘FAANG,’ the next decade of investing will be defined by ‘ESG,’ says Morgan Stanley
Pippa Stevens – CNBC
If FAANG dominated the market during the 2010s, Morgan Stanley believes ESG will be the defining acronym over the next decade.
The firm said Wednesday that the acronym, short for environmental, social and corporate governance, is “likely to dominate financial markets during the 2020s” due to societal trends driving change across consumer, corporate and investor behavior. Far from just a marker of “good” or “bad,” Morgan Stanley said ESG-focused metrics are essential to understanding a company’s growth potential as well as possible risks, among other things.

Academics Attack ESG for Failure to Outperform During Crisis
Amy Whyte – Institutional Investor
In the aftermath of March’s coronavirus crash, numerous fund managers and data providers determined that companies with high ESG scores outperformed during the rapid sell-off — and a surge of money followed into funds focused on environmental, social, and governance issues.
A new academic study, however, raises questions about the link between ESG considerations and stock performance during crises.

US Department of Labor Doubling Down on Scrutiny of ESG Investments
The US Department of Labor (DOL) has reportedly sent letters[1] to several registered investment advisors seeking information about their use of environmental, social, and governance (ESG) funds in retirement plans, as reported by media outlets including Financial Advisor Magazine and Think Advisor. According to news sources, the DOL’s Employee Benefits Security Administration has asked the RIAs for detailed information about their policies and practices regarding ESG-focused investments. The information requested reputedly includes the RIAs’ policies and procedures, communications, performance information, and the names of individuals who participated in making ESG-focused investment decisions.


Brokerage Kepler switches analyst’s coverage in France after ‘intimidation’; Casino and Metro condemn threatening behaviour towards employee who has been assigned to alternative stocks
Robert Smith and Leila Abboud – FT
Kepler Cheuvreux has informed clients that one of its equity analysts has received “anonymous intimidation attempts”, which the brokerage firm said was because of her coverage of certain European retailers.

Goldman Reports Show Hedge Funds, Mutual Funds Split on Megacaps
Joanna Ossinger – Bloomberg
Mutual funds also overweight value as hedge funds avoid it; They diverge on their interest in financial stocks too
The biggest U.S. listed companies are now so large, they’ve become major underweights in mutual-fund portfolios. In contrast, they remain among the most popular picks for hedge funds, according to an analysis by Goldman Sachs Group Inc.

Goldman Sachs Has Money. It Has Power. And Now It Has a Font; The bank’s bespoke new typeface, Goldman Sans, is part of a quest for digital cool.
Josh Wagner and Joel Stein – NY Times
There are so few ways to express yourself when you’re Goldman Sachs. Sure, you can commission a 10-part documentary series about your company’s history, and your chief executive can moonlight as a D.J. in the Hamptons. But how do you let the masses know what it’s like to really be you, the bank, in your everyday functions, processing financial spreadsheets and taking companies public? ou design your own font.


Ukraine’s New Central Bank Boss Touts Independence After Shakeup
Volodymyr Verbyany and Daryna Krasnolutska – Bloomberg
Shevchenko ‘ready’ to defend bank from outside influence; Investors will be watching Sept. 3 rate meeting with new board
The new head of Ukraine’s central bank rejected concerns that his arrival raises the risk of government meddling in monetary policy — something that could jeopardize billions of dollars of foreign aid.

A swarm of locusts of biblical proportions is threatening the food supply of 20 million people in East Africa
Business Insider
Swarms of locusts in East African countries are threatening the food supply of more than 20 million people at a time when food is already scarce because of the coronavirus pandemic.


EU’s Barnier Says Brexit Deal ‘Unlikely’ After Talks Deadlocked
Ian Wishart and Freya Pratty-Williams – Bloomberg
Fishing and state aid are the biggest obstacles to agreement; Barnier hints talks could be extended in effort to end logjam
The European Union and U.K. warned they may not be able to strike a deal on their post-Brexit relationship after a testy week of negotiations that saw little progress. The pound fell.

Pessimism Returns to Brexit Talks as Hopes for Deal Slip Away
Ian Wishart – Bloomberg
U.K. and European Union officials fear a Brexit deal is at risk of slipping through their fingers after a British attempt this week to reboot the deadlocked discussions faltered. U.K. negotiators submitted a draft Free Trade Agreement based on where they believe there is common ground with the EU, said people familiar with the negotiations who asked not to be identified because the discussions are private. So far, the effort to break the stalemate hasn’t led to a breakthrough.

U.K. Economic Revival Is Clouded by Debt, Job Losses and Brexit
Fergal O’Brien and David Goodman – Bloomberg
The U.K. economy rebounded faster than expected in August but the figures were clouded by warnings of an impending crisis for retailers, a jobs crunch, ballooning public debt, and signs that trade talks with the European Union will fail. While IHS Markit’s monthly Purchasing Managers Index, which measures private-sector business activity, jumped to a seven-year high, the report showed that business confidence declined and companies continued to cut jobs.

Sterling steady vs euro, falls vs dollar on mix of Brexit, strong data
Olga Cotaga – Reuters
The British pound lost early strength versus the euro on Friday and fell against the rising U.S. dollar as a mix of Brexit worries and better-than-expected British economic data injected some volatility in the currency. Earlier in the day the pound rose to a 1-1/2-month high versus the euro and inched towards an eight-month high against the greenback after UK retail sales numbers for July came in much higher than expected.


News Publishers Join Fight Against Apple Over App Store Terms; The New York Times and The Wall Street Journal are among companies seeking more favorable terms in Apple’s app store
Benjamin Mullin – WSJ
Major news organizations are joining the growing chorus of companies pushing for more favorable terms on Apple AAPL 2.22% Inc.’s App Store, a crucial link to new digital customers. In a letter to Apple Chief Executive Tim Cook on Thursday, a trade body representing the New York Times, the Washington Post, The Wall Street Journal and other publishers said the outlets want to know what it would take for them to get better deal terms—which would allow them to keep more money from digital subscriptions sold through Apple’s app store.

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