London Traders Hit $500 Million Jackpot When Oil Went Negative; Libor and Euribor replacements are also vulnerable

Aug 4, 2020

First Read

Analysis: Fed’s Hold On Economy Challenged As Virus Eludes Policy Outlook
By Suzanne Cosgrove – John Lothian News

While the Federal Reserve is known for its laser focus on goals that include maximum employment, price stability, moderate interest rates and a stable financial system, those goals have proven slippery as the coronavirus persists and continues to tamp down progress, exposing some structural gaps in the process.

In a virtual roundtable for the financial press held Monday, Chicago Federal Reserve President Charles Evans was clear: “The path of the economy is going to depend on the course of the virus.”

He began his comments with a shout-out to essential workers who, Evans said, put their own health at risk. “Without their contributions, we would not be as far along as we are,” he said.

But so far, that’s not very far. The U.S. experienced a dismal second quarter, with gross domestic product declining by just short of 33 percent on an annualized basis. Some 18 million U.S. workers are unemployed and the unemployment rate is around 11 percent.

To read the rest of this report, go here.

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Hits & Takes
By JLN Staff

The CME Group released their July volume report and there are some doozies of statistics. Their equity index average daily volume, or ADV, grew 82% in July 2019, including equity index options being up 16%. The Micro E-mini futures had an ADV of 2 million contracts. That is 2 million contracts a day on average for this fairly new contract.

The E-mini Russell 2000 futures ADV grew 61% from July 2019 and the E-mini Nasdaq-100 futures ADV grew 53% from July 2019.

Silver futures ADV increased 36% from July 2019, Soybean options ADV grew 34% from July 2019 and Natural Gas options ADV rose 19% from July 2019. Foreign Exchange futures and options ADV grew 10% from July 2019, New Zealand dollar futures ADV grew 26% from July 2019 and Euro FX futures ADV grew 24% from July 2019.

OCC reported their July 2020 total volume was up 52.5 percent from a year ago and was the highest July ever.

Bloomberg has a special section and series of stories about what it is like to be Black on Wall Street. We included some of the stories yesterday, but failed to mention the special section. It is some really good work by Bloomberg.

William English, who helped develop the computer mouse, has died at the age of 91. He finally had one too many double clicks.

A Bloomberg story says the workday is 48 minutes longer during the pandemic and has more meetings. If that were only true, I would have another 3 hours of time every day.

The pandemic has changed the ways people drink coffee and the types of coffee that are being consumed. For me, it is just more and more coffee, one pod at a time.

The Wall Street Journal’s Juliet Chung is reporting that hedge-fund launches during the pandemic are picking up.

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

*****
Reddit, an extremely popular online news and social media platform, is apparently working on a cryptocurrency project. If you’ve never heard of it, ask any millennial you know; you’re pretty much guaranteed to get an answer. It’s also the domain of WallStreetBets, the online community notorious for its vulgar market memes and reckless Robinhood-related antics, though WallStreetBets is just one of about 2.3 million individual communities on the Reddit platform with about 430 million active monthly users (as of 2019 – now that more people are stuck at home, I wouldn’t be shocked if that number has increased). Twenty-two Ethereum blockchain developers have submitted proposals to the project.~MR

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Over 100 CEOs beg Congress: Don’t let small businesses fail permanently
Ethan Wolff-Mann – Yahoo Finance
More than 100 CEOs from some of America’s largest companies urged Congress to provide longer-term relief to small businesses devastated by the coronavirus pandemic. In a pleading letter, Salesforce CEO Marc Benioff, Starbucks founder Howard Schultz, former American Express CEO Ken Chenault, and Walmart CEO Doug McMillon and others asked lawmakers for a list of measures that would help small businesses, which contribute 44% of the country’s GDP and employ half the nation’s private-sector workforce to stay afloat.
/jlne.ws/33oj0kb

*****Small businesses are the engine that makes the economy go and creates the most employment. If they are allowed to fail en masse, we are all in trouble.~JJL

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Trump seeks Treasury cut in Microsoft deal to acquire TikTok unit; US president drops opposition to purchase but insists government should receive ‘very large percentage’
Demetri Sevastopulo and Hannah Murphy – FT
Donald Trump has abandoned his opposition to Microsoft buying TikTok’s American operations, but now wants a cut of the deal for the US Treasury in exchange for approving an acquisition of the Chinese-owned video app.
/jlne.ws/3kdv11F

*****There is taxation and there is extortion. Which one is this?~JJL

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Trump Organization Puts ‘Apprentice’ Chopper on the Block
Tom Maloney and Caleb Melby – Bloomberg
Red, white and blue Sikorsky listed for sale without a price; Eric Trump says they ‘simply don’t need’ all three helicopters
A Trump Organization helicopter featured in the opening credits of “The Apprentice” with now-President Donald Trump is for sale. The 1989 Sikorsky S-76B, painted red, white and blue, registration N76DT, is listed for sale without a price on controller.com. Helivalue, a helicopter appraisal business, values similar models at $400,000 to $950,000.
/jlne.ws/3k7DyDj

*****Ted Turner was once asked by a reporter if he was having financial difficulties. The reporters were all called to a press conference about Turner selling off some radio stations. Turner said no, this was just a business deal. Turner, who had won the America’s Cup in 1977, said that when he starts selling sailboats you will know he is having financial trouble.~JJL

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RSM $1 Million Gift Endows Accounting Faculty Fellowships at DePaul University
RSM
The RSM US Foundation has made a $1 million gift to DePaul University to promote academic excellence at DePaul’s School of Accountancy & Management Information Systems (MIS). The gift from RSM US LLP (RSM), which is headquartered in Chicago, establishes two endowed faculty fellowships at the school at the Driehaus College of Business. RSM staff and partners who are DePaul alumni contributed $500,000, which was matched through the foundation’s University Giving Match Program.
/jlne.ws/3fqgz2I

*****Very nice work by RSM.~JJL

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Monday’s Top Three
Our top story Monday by a wide margin was the Financial Times’ CME to pay $3.5m over leak of secret trade data. The misconduct goes back to 2008 and involved crude oil and natural gas options on Nymex. Second was Kelly Loeffler talks WNBA, Black Lives Matter with OANN host tied to white supremacy, Nazism from Yahoo Sports. Third was JLN’s Jennifer Just – MarketsWiki Education World of Opportunity video from our first virtual MWE event.

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MarketsWiki Stats
183,103,037 pages viewed; 24,388 pages; 225,646 edits
MarketsWiki Statistics

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CryptoMarketsWiki Website»
CryptoMarketsWiki, our archive of the cryptocurrency and blockchain world, is going strong and keeping pace as this area of finance grows and evolves.Recently Updated Pages

Recently updated pages include
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Lead Stories

London Traders Hit $500 Million Jackpot When Oil Went Negative; Regulators look into a small group of investors who got rich on the unprecedented drop.
Liam Vaughan, Kit Chellel, Benjamin Bain – Bloomberg
On April 20 the price of a barrel of oil for delivery the following month plummeted $40 in an hour, settling at – $37. It was the first time crude had ever crossed into negative territory. Regulators, oil executives, and investors have struggled to understand how a commodity at the heart of almost every aspect of global trade had fallen so far that buyers had to pay counterparties to take it off their hands. But for a small group of veteran traders at a tiny London firm called Vega Capital London Ltd., the mystery mattered less than the results: They pocketed as much as $500 million that day, according to people familiar with the matter, who spoke to Bloomberg Businessweek on condition of anonymity.
/jlne.ws/33nMWN8

Libor and Euribor replacements are also vulnerable; Scandal-hit interbank lending rates need reform starting with greater accountability
Michael Troege – FT
Regulators want to scrap the scandal-hit “Ibor” interest rate benchmarks, including Libor and Euribor, and replace them with central-bank generated rates.
/jlne.ws/3kkGcpA

Hedge funds scour alternative data for edge on Covid and economy; Everything from social media to the R number is being tracked, but some question the value
Laurence Fletcher – FT
A multibillion-dollar industry offering unusual data such as satellite imagery and measurements of social media sentiment is enjoying a boom in demand as hedge funds and companies hunt for clues on how to tackle the coronavirus crisis.
/jlne.ws/3i9p18C

Fidelity Family’s Vast Wealth Is Matched by Passion for Privacy; The Johnson clan keeps a low profile while diversifying into real estate, pharma, fiber optics and Texas shale.
Devon Pendleton, Tom Maloney, Michael McDonald – Bloomberg
The wealthiest family in Yankee New England is exactly what you’d expect. The Johnsons, led by polymathic patriarch Edward “Ned” Crosby III, built a $46.3 billion fortune with Fidelity Investments, whose products shape the finances of about 32 million people worldwide. His daughter, Abigail “Abby” Pierrepont Johnson, now chief executive officer of the family business, is among the most influential people in money management.
/jlne.ws/3i1a0oY

TikTok Influencers Mourn Potential Ban, Flock to Instagram; The viral app has become a lightning rod in U.S.-China relations.
Shelly Banjo and Sarah Frier – Bloomberg
Days after the U.S. government challenged Facebook Inc.’s growing power over social media in a Congressional hearing, the Trump administration handed the company a gift. Late last week, the president said he planned to shut down Facebook’s most formidable challenger: Chinese-owned video-sharing app TikTok. That threat sparked a panic among users that their digital clubhouse would soon be taken away or sold to Microsoft Corp. — and sent many popular TikTokers racing to move their creative endeavors to Instagram, the rival mobile app owned by Facebook.
/jlne.ws/2XshGZM

SGX pioneers Asia’s first international REIT futures; 04 Aug 2020 | Category: News Releases
SGX
Meets investor demand to gain greater exposure to the liquid and fast-growing Asia ex-Japan REIT market; Solidifies Singapore’s position as the most international REIT hub in the world
Singapore Exchange (SGX) is pioneering Asia’s first international real estate investment trust (REIT) futures based on indices tracking diverse REITs listed in Singapore, Hong Kong, Malaysia and Thailand, on the back of rising global investor demand for real estate related investment products and trading solutions.
/jlne.ws/2XsZFKL

OCC To Lower Costs for Users of U.S. Equity Derivatives Markets
Announces Fee Reduction, Projected Year-End Refund for Clearing Member Firms
Press Release via Business Wire
As part of its commitment to deliver operational excellence to the users of the U.S. equity derivatives markets, OCC, the world’s largest equity derivatives clearing organization, today announced a reduction in clearing fees, a projected year-end refund for clearing member firms, and its intention to seek regulatory approval from the U.S. Securities and Exchange Commission (SEC) to amend its Capital Management Policy with a persistent minimum amount of “skin-in-the-game.”
/bwnews.pr/2EDsBsT

SocGen’s Oudea Ousts Top Deputies After Worst Loss in Decade
Alexandre Rajbhandari – Bloomberg
Shakeup reverses a structure put in place only two years ago; It may give CEO Oudea more time to refocus the investment bank
Societe Generale SA’s Frederic Oudea ousted two of his top deputies as the embattled chief executive officer seeks more time to turn around the trading business following the lender’s worst loss since the financial crisis. Severin Cabannes, the deputy CEO in charge of investment banking, will leave his post at the end of this year, while Philippe Heim, who oversaw international retail banking, is stepping down immediately, the bank said Tuesday. Both were named to the roles only two years ago in a reshuffle that bought Oudea, one of the longest-serving bank executives in Europe, another four-year term following the exit of heir apparent Didier Valet.
/jlne.ws/3i7Hana

Ex-CEO’s Taste for Risk Proved His Undoing at French Bank Natixis
Donal Griffin and Alexandre Rajbhandari – Bloomberg
CEO is ousted as losses from equity derivatives deepen; His replacement suggests ‘significant strategic repositioning’
Francois Riahi never quite managed to put out the fires in an abbreviated two-year tenure as Natixis SA chief executive officer. Just six months into his stint, a trading meltdown in Asia landed the French lender with a $300 million loss. High-risk trades helped to end his career atop the French lender on Monday, when he was ousted following deepening losses from equity derivatives.
/jlne.ws/31lpJc5

Commerzbank’s New Chairman Faces Investor Unrest Amid CEO Search
Steven Arons – Bloomberg
Vetter appointed despite strong objections from Cerberus; German lender likely to become a takeover target again
Commerzbank AG’s chairman-elect Hans-Joerg Vetter has drawn shareholder ire even before he tackles the tricky task of finding a new chief executive officer for an ailing bank notorious for its warring factions of investors.
/jlne.ws/2Xr4YdU

U.S. Will Borrow Estimated $2 Trillion in Second Half of 2020, Treasury Says; Estimate assumes Congress will pass $1 trillion of additional stimulus
Kate Davidson – WSJ
The U.S. expects to borrow an additional $2 trillion in the second half of the year as federal spending ramps up to combat the coronavirus pandemic, the Treasury Department said Monday.
/jlne.ws/3k7cOD0

Coronavirus

BP halves dividend as Covid-19 turmoil pushes oil major to loss; FTSE 100 group cuts shareholder payout for first time since Deepwater Horizon disaster
Anjli Raval – FT
BP cut its dividend for the first time in a decade as the coronavirus crisis prompted chief executive Bernard Looney to accelerate an overhaul of one of the world’s largest oil and gas companies.
/jlne.ws/2EFHIlB

Ex-Trader Stephen Diggle Bets Big on Oxford’s Tiny Vaccine Maker
Bei Hu – Bloomberg
Diggle’s family office is Oxford Biomedica’s top shareholder; Gene and cell firm has entered the spotlight after Covid-19
Stephen Diggle’s conviction in unpopular volatility trades helped him mint money during the 2008 financial crisis. The former hedge fund manager’s patience is now paying off again, this time with a biotechnology firm that could play a key role in combating Covid-19.
/jlne.ws/2ESvAy1

China Says It Can Boost Hong Kong Virus Testing by 20 Times
Jinshan Hong – Bloomberg
Increased capacity can process up to 200,000 samples daily; Political mistrust in city complicates China’s testing offer
China aims to boost Hong Kong’s coronavirus testing capacity to 20 times its current ability, said the leader of a support team sent from Guangdong province to aid the city in its worst outbreak ever.
/jlne.ws/31klVHJ

Covid Supercharges Federal Reserve as Backup Lender to the World; When the coronavirus halted the global economy, the U.S. central bank lent massively to foreign counterparts
Serena Ng and Nick Timiraos – WSJ
When the coronavirus brought the world economy to a halt in March, it fell to the U.S. Federal Reserve to keep the wheels of finance turning for businesses across America. And when funds stopped flowing to many banks and companies outside America’s borders—from Japanese lenders making bets on U.S. corporate debt to Singapore traders needing U.S. dollars to pay for imports—the U.S. central bank stepped in again.
/jlne.ws/31m1M46

Office Markets Under Pressure as Coronavirus Squeezes Cities; Companies rethink rented space as remote work takes hold; fears of urban malaise begin to swirl
Konrad Putzier and Mark Maurer – WSJ
Urban office markets and other commercial real estate in major cities are experiencing their worst stretch in decades, upended by the pandemic, changes in work behavior and struggling city economies.
/jlne.ws/3k9VPQm

Covid-19 Vaccine Front-Runners Impress Investors, but Concerns Exist; Gene-based vaccines from Moderna, Pfizer and its partner BioNTech are drawing early enthusiasm, but investors are hesitant to up stakes because valuations have soared
Gregory Zuckerman and Joseph Walker – WSJ
Investors are growing more convinced Covid-19 vaccines will work. They aren’t as sure shares of vaccine companies can keep soaring. The investors, along with analysts and others scrutinizing the results from early trials, say the most advanced vaccine candidates didn’t cause serious side effects and helped produce antibodies that may be sufficient to defend against the virus.
/jlne.ws/2DlEQKv

U.N. chief warns world facing ‘generational catastrophe’ on education
Michelle Nichols – Reuters
U.N. Secretary-General Antonio Guterres warned on Tuesday that the world faces a “generational catastrophe” because of school closures amid the coronavirus pandemic and said that getting students safely back to the classroom must be “a top priority.”
/jlne.ws/31hfBRt

There may never be a ‘silver bullet’ for COVID-19, WHO warns
Reuters
The World Health Organization warned on Monday that, despite strong hopes for a vaccine, there might never be a “silver bullet” for COVID-19, and the road to normality would be long.
/jlne.ws/2Dlpsh3

Exchanges, OTC and Clearing

CME Group Reports July 2020 Monthly Market Statistics
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today reported July 2020 market statistics, including average daily volume (ADV) of 13.6 million contracts during the month. Open interest at the end of July was 101 million contracts. Market statistics are available online in greater detail at https://cmegroupinc.gcs-web.com/monthly-volume.
/jlne.ws/3gFrS8Z

The twisted logic of reverse listings; Spacs are attractive for companies but investors should beware meagre information and dilution effect
Patrick Jenkins – FT
The postmortem is still ongoing. But when the forensic analysis of Wirecard’s demise is finally complete, longtime duped investors will be particularly focused on one question: quite when did the cancer that killed the German tech star really take root?
/jlne.ws/2Xrc1D6

OCC July 2020 Total Volume Up 52.5 Percent from a Year Ago
Third-Highest Month on Record; Highest July Ever
OCC
CORRECTION: Fourth paragraph, second sentence of release should read: Securities lending CCP activity increased by 2.8 percent in new loans from July 2019 with 117,997 transactions last month (instead of Securities lending CCP activity decreased by 85 percent in new loans from July 2019 with 117,997 transactions last month).
/jlne.ws/3k9NGLO

S.D.N.Y. Rules That Transactions on US Exchanges May Provide Jurisdictional Basis for Section 1782 Discovery
Lexology
Although federal law has long provided that American courts may order discovery of materials and testimony for use in a foreign proceeding pursuant to 28 U.S.C. § 1782, the exact scope of courts’ jurisdiction to do so has remained a point of significant dispute. Most recently, the Southern District of New York (S.D.N.Y.) in Pfaff v. Deutsche Bank 1 addressed the reach of federal courts’ power to order discovery from non-US companies under the statute.
/jlne.ws/2XrfC4m

TRADE Calls: Nasdaq – Building platforms in a pandemic
Kiays Khalil – The Trade
Global head of execution and risk management solutions at Nasdaq, Carl Slesser, joins The TRADE to give an overview of the buy- and sell-side technology landscape in the current pandemic, and discusses the exchange group’s recent market technology agreement with Stifel Financial.
/jlne.ws/31m4J4G

MGEX Reports July Statistics
MGEX
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), reports a total exchange volume of 152,619 contracts for the month of July. The total exchange volume is up 7% compared to July of last year. Additionally, the total exchange volume for the calendar year is up 19% compared to this time last year.
/jlne.ws/3gvY5zu

Euronext Completes the Acquisition of VP Securities
Euronext
Euronext, the leading pan-European market infrastructure, announces today that it has completed the settlement of shares under its offer launched on 23 April 2020 to acquire 100% of VP Securities, the Danish Central Securities Depository. Euronext will now fully consolidate VP Securities’ accounts in its financial statements.
/jlne.ws/2DuUD9E

Cash market sales statistics for July
Deutsche Börse Group
A trading volume of EUR 147.1 billion was achieved on the cash markets of Deutsche Börse in July (previous year: EUR 124.8 billion). Xetra accounted for EUR 118.4 billion of this (previous year: EUR 112.1 billion), bringing the average daily Xetra turnover to EUR 5.1 billion. EUR 4.9 billion were traded on the Frankfurt Stock Exchange (previous year: EUR 2.9 billion) and EUR 23.7 billion on the Tradegate Exchange (previous year: EUR 9.9 billion).
/jlne.ws/31gEZXv

NOTICE OF SUMMARY ACTION
CME Group
XIN HUA SECURITIES (HONG KONG) LIMITED
During the period of October 1, 2019 through December 31, 2019, Xin Hua Securities (Hong Kong) Limited violated Rule 576 by submitting a Tag 50 ID used by multiple individuals.
/jlne.ws/2XsviEm

NOTICE OF SUMMARY ACTION
CME Group
XIN HUA SECURITIES (HONG KONG) LIMITED
During the period of October 1, 2019 through December 31, 2019, Xin Hua Securities (Hong Kong) Limited violated Rule 576 by submitting a Tag 50 ID used by multiple individuals.
/jlne.ws/2XsvBPw

CME RULE 552 (“DUAL TRADING RESTRICTIONS”)
CME Group
In connection with the reopening of the Eurodollars option pit on August 10, 2020, no contract months will be restricted for purposes of CME Rule 552. (“Dual Trading Restrictions”).
/jlne.ws/31gyZy6

Performance Bond Requirements: Energy and Interest Rate Margins – Effective August 04, 2020
CME Clearing
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.
/jlne.ws/33otVdF

CME OTC IRS Margin Model Parameter Change – Effective August 10, 2020
CME Clearing
CME Clearing has undertaken a review of the targeted volatility used in risk factor simulations for its interest rate swaps’ (“IRS”) margin computation, as well as the liquidity parameters for IRS as highlighted below. These changes will be available for testing in New Release environment as of August 4, 2020, with a production date of August 10, 2020.
/jlne.ws/31lOXH2

Performance Bond Requirements: Agriculture, Energy, and Equity Margins – Effective August 04, 2020
CME Clearing
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.
/jlne.ws/3k9FNpD

NOTICE OF SUMMARY ACTION
CME Group
BNP PARIBAS SECURITIES CORP
During the month of June 2020, BNP Paribas Securities LLC did not provide requested CFTC Forms 102A and 102B within the prescribed deadlines, in violation of COMEX Rule 561.
/jlne.ws/33CvRzt

NOTICE OF SUMMARY ACTION
CME Group
SG AMERICAS SECURITIES LLC
During the month of June 2020, SG Americas Securities LLC, inaccurately reported its open interest in the July 2020 WTI Crude Oil (CL) and July 2020 Henry Hub Natural Gas (NG) futures contract in violation of Rule 811.
/jlne.ws/31dN27t

Fed Funds and SOFR Maximum Maturity Extension to 51 years in Production
CME Clearing
CME is extending the maximum maturity of Fed Funds and SOFR OTC Interest Rate products eligible for clearing, pending completion of all regulatory review periods. All OTC swaps referencing Fed Funds and SOFR indices will be eligible to clear out to 51 years (currently 30 years) from the cleared date.
/jlne.ws/31gMyxx

Collateral Limit Modifications – Effective August 03, 2020
CME Clearing
Changes to CME Clearing’s schedule of acceptable performance bond collateral.
/jlne.ws/33p2Bf7

DGCX Maintains Momentum Into Second Half Of The Year With Strong G6 Currencies Volumes And Successful Launch Of New FX Products
Mondovisione
The Dubai Gold and Commodities Exchange (DGCX) has maintained its momentum into the second half of the year, as it continues to provide investors with a wide range of derivative products that allow them to manage their risk effectively. In July, DGCX’s G6 currencies portfolio recorded year-on-year (Y-O-Y) volume growth of 357%. In addition, DGCX successfully launched the region’s first FX Rolling Futures Contracts (Euro, Pound Sterling and Australian Dollar), continuing the trend of innovative product development, whilst at the same time expanding the range of Indian Rupee/US Dollar contracts with the launch of a Weekly INR-US Dollar Futures Contract.
/jlne.ws/2DinRZw

EEX Response To European Commission’s Public Consultation On A Renewed Sustainable Finance Strategy
Mondovisione
EEX responded to the public consultation of the European Commission on it’s Renewed Sustainable Finance Strategy. EEX strongly supports the European Commission’s sustainable finance agenda. As the European Union moves towards climate neutrality, both the financial sector and real economy will undergo significant transformations. To scale up private investments in support of a sustainable recovery and the European Green Deal, long term visibility and predictability are essential.
/jlne.ws/2EFXVqX

EEX And EPEX SPOT Response To The European Commission’s REMIT Fee Design & Implementation Consultation
Mondovisione
EEX and EPEX SPOT jointly responded to the public consultation of the European Commission on fees due to ACER for tasks under REMIT. ACER should be given the proper resources to carry out its REMIT activities to ensure a high level of integrity and transparency of wholesale energy markets in Europe. A fee paid by the market itself should however be carefully designed. For this purpose, in our response, we highlight the most important principles to consider in the final fee design in order not to endanger market integrity, liquidity or transparency.
/jlne.ws/2D929qV

Fintech

Twitter Investigated by FTC for Alleged Misuse of User Data
Kurt Wagner and Ben Brody – Bloomberg
Company estimates probe could cost as much as $250 million; Issue relates to Twitter’s use of phone numbers and emails
Twitter Inc. is being investigated by the Federal Trade Commission for alleged privacy violations, another setback for a company that has struggled in recent years to protect private user data and account security.
/jlne.ws/3kaobtX

Women Are Leading Latin America’s Fintech Revolution – Crunchbase News
Crunchbase News
Finance services is an industry that has been particularly male-dominated, with women holding less than 10 percent of senior positions. Despite predictions that the fintech industry could disrupt the gender balance in the traditional finance sector, female leadership in fintech remains low in most of the world.
/jlne.ws/3i1hjgo

Singapore sets up research institute to boost fintech capabilities
Eileen Yu – ZDNet
A new research institute in Singapore will be established to help link up research, education, and entrepreneurship and boost the country’s capabilities in fintech. Slated to begin operations by year-end, the new facility will look to pool expertise across several areas, including payments, cloud computing, and artificial intelligence (AI).
/jlne.ws/2Xrem18

Simon Wilson-Taylor Leaves EBS to Launch Fintech Startup
Aziz Abdel-Qader – Finance Magnates
FX industry veteran Simon Wilson-Taylor has parted ways with CME-owned trading platform EBS, ending nearly five-year tenure with the FX business of the US futures exchange.
Simon had been Head of EBS Institutional since 2015. He joined the company after EBS BrokerTec acquired the firm he founded, Molten Markets, as part of the deal.
/jlne.ws/2DCxiCE

Virtu Financial rolls out TCA for FX algorithmic trading; The latest expansion of Virtu Financial’s analytics platform will see dedicated TCA for FX algo trading.
Hayley McDowell – The Trade
Virtu Financial has expanded its analytics platform to include transaction cost analysis (TCA) dedicated to foreign exchange algorithmic execution. The expansion follows the market maker’s move to extend its TCA services and market impact models to FX and fixed income markets late last year to provide more multi-asset analytics to clients.
/jlne.ws/39Vcxyh

AQMetrics onboards UK asset manager for MiFID II reporting; Marlborough Investment Management is the latest in a string of new clients for AQMetrics following regulatory reporting shut downs at CME and Deutsche Börse.
Hayley McDowell – The Trade
Irish risk and regulatory compliance platform AQMetrics has onboarded UK-based Marlborough Investment Management for MiFID II transaction reporting.
/jlne.ws/2DlQHYO

Cryptocurrencies

China’s new digital currency takes aim at Alibaba and Tencent; Tech giants have outsized role in digital payments in the country because of success of Alipay and WeChat Pay
Henny Sender – FT
The People’s Bank of China is hoping its new digital currency will reduce the dominance of Alibaba and Tencent in digital payments, according to several people familiar with the thinking of the central bank.
/jlne.ws/31fynbP

Crypto Venture Fund Raises $110 Million From Universities
Olga Kharif – Bloomberg
Electric Capital says it closed second crypto-focused fund; One third of the fund’s assets have already been invested
Electric Capital, a San Francisco-based venture fund, said it will use $110 million raised from university endowments and other nonprofits to invest in cryptocurrencies and related businesses.
/jlne.ws/2EFGSFt

Filecoin to Spur Decentralized Data Storage in New Internet Era
Matthew Leising – Bloomberg
Peer-to-peer data storage and network set for September launch; Grants totaling $1.6 million meant to encourage development
The goal of blockchain startups to build a decentralized version of the internet where no single authority is in control always depended on wresting data storage away from giants like Amazon and Google. That missing piece of the puzzle may be solved by distributed storage system Filecoin, which is set to be released publicly in September.
/jlne.ws/2D8JR9f

Bison Trails Hires Ex-Goldman Sachs VP as Legal Head
Nathan DiCamillo – Coindesk
Bison Trails has hired BlockTower Capital’s former legal and compliance director to be its first general counsel. Elizabeth Ralston will be in charge of all legal, risk, compliance and policy matters at the blockchain infrastructure startup. Prior to her time at BlockTower Capital, Ralston was a vice president at investment bank Goldman Sachs.
/jlne.ws/39S4VwD

Bitcoin Futures Interest Soars as Bond Yields Fall to Record Lows: Industry Exec
Omkar Godbole – Coindesk
Bitcoin futures are drawing record interest as investment opportunities in traditional markets dry up, said the co-founder of an institutional fund provider. Open interest or open positions in futures listed on major exchanges reached a new lifetime high of $5.6 billion on Saturday, surpassing the previous record of $5.36 billion in February, according to data source Skew. As of Monday, aggregate open interest was $5 billion – up 66% from the July low of $3 billion. Open interest in futures on the Chicago Mercantile Exchange (CME), synonymous with institutional investors, jumped to a record high of $828 million on Monday.
/jlne.ws/3kaxb2d

ETH trading volumes are rising faster than bitcoin volumes
Yogita Khatri – The Block
Trading volumes of ether (ETH) — both spot and futures — are rising faster than bitcoin (BTC) volumes, according to The Block Research. It means traders are trading ETH relatively more compared to BTC. One of the main possible reasons for the shift is the recent decentralized finance (DeFi) boom.
/jlne.ws/3hZXiXE

Canaan Creative adds four new directors to its board
Momina Khan – The Block
China-based bitcoin miner manufacturer Canaan Creative announced the appointment of four new independent directors today, while the tenure for five of its directors comes to an end. The directors departing the company include Kong Jianping and Sun Qifeng, whose contracts expired on July 31, as previously reported by The Block. In addition, other directors leaving the board include Hong Zhang, Xiaohu Yang and Mei Lou, whose contracts expired on August 1.
/jlne.ws/2XsqWx0

DeFi-Focused Derivatives Platform Hedget Raises $500K in Seed Funding
Sebastian Sinclair – Coindesk
Decentralized derivatives protocol Hedget has raised $500,000 in seed funding. According to a press release issued Monday, the round was led by FBG Capital and NGC Ventures, both Asia-based venture firms. Hedget is a new Ethereum layer two solution for decentralized options trading, allowing users to buy and sell derivatives using collateral to hedge risk when holding crypto. Users can also hedge on positions of debt taken up on lending protocols in the DeFi space.
/jlne.ws/31eVcg0

Huobi launches DeFi incubator, sets aside ‘tens of millions of dollars’ for investments
Saniya More – The Block
Huobi Group has announced the launch of Huobi DeFi Labs, a research and incubation platform focused on decentralized finance applications and projects. According to the announcement, Huobi’s DeFi-centric arm will focus on research, investments and the incubation of DeFi initiatives. Huobi Group itself will “allocate tens of millions of dollars to an initial investment fund, which will be managed by Huobi DeFi Labs,” according to the press statement.
/jlne.ws/2PpEgO5

French Judge Orders Trial of Alleged BTC-e Operator Alexander Vinnik
Sebastian Sinclair – Coindesk
A Paris judge has officially ordered the trial of alleged BTC-e operator Alexander Vinnik to begin. In a report from the Moscow Times on Monday citing AFP, Vinnik’s lawyer and others said he will face charges of defrauding more than 100 people in six French cities from 2016 to 2018. Vinnik will also face charges of extortion, aggravated money laundering, conspiracy and harming automatic data-processing systems as the head of the now-shuttered crypto exchange BTC-e, an AFP source said. Billions of dollars-worth of bitcoin passed through BTC-e , some of which was allegedly used to launder money for criminals.
/jlne.ws/2XsI1Xv

Politics

TikTok and the splintering of the global internet; Forced sale of Chinese app in the US marks a turning point
The editorial board – FT
An app known mostly for teenagers posting videos of dance routines and comedy skits might seem an unusual subject of national security concerns. In the unfolding history of the online world, however, the forced sale to an American company of the US arm of TikTok, the first Chinese social media venture to become a global phenomenon, is a milestone. Coming after several western countries rejected Huawei’s 5G technology, it highlights that the bifurcation of the internet — indeed, its splintering into multiple regional internets — is not just inevitable, but already a reality.
/jlne.ws/2Xraxc0

ByteDance CEO Says Trump’s Real Goal Is to Kill Off TikTok
Zheping Huang – Bloomberg
U.S. doesn’t really want to see a sale to American buyers; Founder Zhang Yiming issues second letter in two days
A U.S. investigation into ByteDance Ltd.’s TikTok is really intended to smother a Chinese-owned app that’s become a sensation with Americans, founder Zhang Yiming told employees in China Tuesday.
/jlne.ws/2DjxBT9

China Won’t Allow a TikTok ‘Smash and Grab’ by U.S., State Media Warns
Kari Soo Lindberg – Bloomberg
China Daily calls a forced sale officially sanctioned theft; Editorial represents strongest defense yet of ByteDance
China’s state-run media has struck back in the war over TikTok, branding U.S. demands for the sale of the social media app’s American operations to Microsoft Corp. as “theft” and suggesting Beijing may block the transaction.
/jlne.ws/2D8HCTn

Regulation

Former financial adviser sentenced to six years’ imprisonment for dishonest conduct
ASIC
Graeme Walter Miller, a former financial adviser and director of Australian financial services licensee CFS Private Wealth Pty Ltd, was sentenced on 31 July 2020 to six years’ imprisonment for misappropriating $1.865 million of client funds, following an ASIC investigation.
/jlne.ws/3fwA9KF

ESMA is Seeking Secondary Market Experts to Join its Consultants Working Group
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, is today opening the call for expression of interest to renew the composition of the Consultative Working Group (CWG) of the ESMA Secondary Markets Standing Committee (SMSC). Experts are asked to send their application by 14 September. The members of the CWG are selected for a two-year renewable term.
/jlne.ws/3kaEAyx

FINRA TRAQS Errors
FINRA
FINRA has observed some TRAQS Web clients who continue to experience stop sign errors when attempting to access the TRAQS website. Closing all browser sessions and opening a new session will normally alleviate this problem.
/jlne.ws/2XpGbXB

Data Provision under the Civil Liability Act 2018
UK FCA
Section 11 of Part 3 of the Civil Liability Act 2018 (link is external)(the Act) imposes a duty on insurers to provide information to us about the effect that changes to the law under the Act will have on motor insurance premiums.
/jlne.ws/33rt4Jg

Scott A. Thompson Named Associate Regional Director in Philadelphia Office
SEC
The Securities and Exchange Commission today announced that Scott A. Thompson has been named Associate Regional Director for enforcement in the Philadelphia Regional Office. Mr. Thompson succeeds Kelly L. Gibson, who became Regional Director of the SEC’s Philadelphia office in February 2020.
/jlne.ws/3k4AUyl

Investing and Trading

Parched US shale patch crushes oilfield services sector; Schlumberger, Halliburton and Baker Hughes shift focus overseas as domestic revenues dry up
Myles McCormick – FT
As the US shale boom sent the country’s crude production soaring over the past decade, the oilfield services companies that do everything from drilling producers’ wells and laying pipes to maintaining roads and operating software reaped big rewards.
/jlne.ws/3k9S910

Alphabet locks in record-low borrowing costs in $10bn deal; Google parent leads charge into debt market as August issuance starts strong
Joe Rennison, Richard Waters and Eric Platt – FT
Google’s parent company Alphabet locked in some of the lowest borrowing costs ever for a US company on Monday, in a $10bn bond sale that was the largest of a rush of opportunistic fundraising deals to start the new month.
/jlne.ws/2XHEG7l

Big Bond Traders Double Down on Their Bet on Europe
Olivia Konotey-Ahulu and John Ainger – Bloomberg
Pimco is overweight Italian and Spanish sovereign debt; Axa says Italy’s 10-year yield could decline to 0.75%
Not even the calamity of disease, debt and Italy’s fiscal woes are enough to stop the world’s biggest money managers from a trade that’s at the heart of Europe.
/jlne.ws/3k8QtoH

Why Gold Prices Are Hitting All-Time Highs; A guide to the surge in the precious metal’s prices during the coronavirus pandemic
Joe Wallace – WSJ
Gold prices hit a record at the end of last week, notching a new milestone in a bull run that began in late 2018 and has gathered momentum during the coronavirus pandemic. The precious metal has soared roughly 30% in 2020 to stop just short of closing at $2,000 a troy ounce—which would be an all-time high in New York trading—as it outstrips the Nasdaq Composite Index of highflying technology stocks.
/jlne.ws/3k6mcXH

Environmental, Social and Corporate Governance

Sustainable funds must work harder to vet their investments; Boohoo shows that pseudo-scientific scoring systems are no substitute for thorough, time-consuming research
Sarah O’Connor – FT
It should have been a vindication for the sustainable investment industry. Shares in fast fashion retailer Boohoo lost a third of their value last month after allegations that workers in its UK supply chain were paid £3.50 an hour. Here was the proof that by avoiding companies exposed to environmental, social and governance risks you could also avoid losing money.
/jlne.ws/33ou00Q

Institutions

France suspends Morgan Stanley from its government debt sales; Move follows EUR20m fine last year for bank over alleged market manipulation
Tommy Stubbington and David Keohane – FT
French authorities have suspended Morgan Stanley from its prestigious role in handling the country’s government bond auctions following the alleged manipulation of markets that earned the bank a EUR20m fine last year.
/jlne.ws/2Dgwd3G

JPMorgan reshuffles activist division in anticipation of more campaigns; David Hunker leaving head of shareholder activism defence post after 16 years at bank
Ortenca Aliaj – FT
JPMorgan Chase is bringing dealmaking and capital markets expertise to its shareholder advisory group as part of a broader effort to help clients fend off activist investors, ahead of what is expected to be a busy period for campaigns.
/jlne.ws/31aDkCE

SocGen culls top ranks after EUR1.26bn loss; Two deputy chief executives to leave French bank amid focus on transformation
Owen Walker – FT
Société Générale has culled its top ranks, announcing the departure of two deputy chief executives, after the French bank slumped to its worst quarter for more than a decade.
/jlne.ws/31aCGFe

Killer Mike Wants to Save America’s Disappearing Black Banks; #BankBlack, a campaign promoted by Michael Render of Run the Jewels, has brought attention—and new customers—to the few remaining Black-owned financial institutions.
Lananh Nguyen – Bloomberg
Michael Render, the rapper and activist better known as Killer Mike, has been saying the same thing for years: America needs Black banks. But after George Floyd was killed by police in Minneapolis, Render is issuing another plea on behalf of the few Black-owned banks still standing. Once again, he’s urging fans to #BankBlack.
/jlne.ws/3k9pI3f

Beleaguered Public Pension Funds Make Record Gains in Second Quarter; Even so, annual returns for funds with June fiscal years were far short of long-term targets
Heather Gillers – WSJ
Public pension funds set a 22-year performance record in the second quarter, recovering some but not all of their losses from the first quarter. Double-digit stock gains pushed pension returns to a median 11.1% for the second quarter, according to Wilshire Trust Universe Comparison Service.
/jlne.ws/2XsE0Cp

HSBC to accelerate cost-cutting restructure with 35,000 job losses as profits plunge; Following a temporary suspension of its restructure due to the pandemic, HSBC confirms it will now speed up its transformation plans.
Hayley McDowell – The Trade
HSBC will accelerate its major cost reduction programme to overhaul the global markets and banking division and cut around 35,000 jobs, following a temporary suspension due to the coronavirus pandemic.
/jlne.ws/3gvBwLg

Franklin Templeton completes $4.5 billion Legg Mason takeover; The merged Franklin Templeton and Legg Mason group now has a combined $1.4 trillion in assets under management.
Hayley McDowell – The Trade
US investment management firm Franklin Templeton has confirmed the completion of its acquisition of Legg Mason after announcing the takeover in February.
/jlne.ws/30sedMC

Regions

Foreign Investors Are Losing Interest in South African Bonds
Robert Brand – Bloomberg
Foreign investors continue to desert South Africa’s bond market in July, with their share of government debt falling to the lowest level in more than eight years. Non-resident bond holdings fell to 30.1% as of July 31, from 30.6% the previous month and as high as 37.3% in January, according to National Treasury data. Foreigners have sold a net 54 billion rand ($3.1 billion) of the debt this year, JSE Ltd. data show.
/jlne.ws/3iiALFV

Malaysia Open to Settling 1MDB Case Against Abu Dhabi State Fund
Anisah Shukry – Bloomberg
Proceedings against IPIC continue as countries hold talks: AG; Malaysia starts to see a few 1MDB cases head toward resolution
Malaysia is open to settling its legal battle with Abu Dhabi’s state investment fund over 1MDB, just weeks after clinching a multibillion dollar deal with Goldman Sachs Group Inc. over the troubled state fund.
/jlne.ws/2EOUTkq

Argentina Agrees to $65 Billion Restructuring Deal With Bondholders; Latin America’s third-largest economy reaches an agreement with three groups of creditors
Ryan Dube and Andrew Scurria – WSJ
Argentina’s government has reached an agreement with three groups of creditors to restructure its $65 billion debt, extending a wave of sovereign restructurings spurred in part by coronavirus shock.
/jlne.ws/31o3Fh0

Brexit

How Brexit may strengthen the west; A revived EU will be a stronger partner for the US
Gideon Rachman – FT
The Brexit vote of 2016 was ardently wished for in Moscow. Vladimir Putin’s belief was that Britain’s departure from the EU would weaken the western alliance.
/jlne.ws/2XsACrb

Tuesday briefing: Britons flee Brexit by the thousands
Warren Murray – The Guardian
Good morning, Warren Murray bringing you the headlines this Tuesday morning. The number of British nationals emigrating to other EU countries has risen by 30% since the Brexit referendum, to a level akin to a country experiencing “economic or political crisis”, experts have found. Analysis of data from the OECD and Eurostat shows the number leaving was 73,642 a year in 2016-18, with a 500% increase in those who then took up citizenship in an EU state. In Germany’s case 31,600 Britons have naturalised since the referendum – a 2,000% rise. The biggest jump in migration has been to Spain, followed by France.
/jlne.ws/2D9gfIU

The number of British people emigrating to the EU has risen 30% since the Brexit vote
Thomas Colson – Business Insider
The number of Brits emigrating to European countries has risen by 30% since the Brexit vote in 2016. A new study found that migration from the UK to EU countries rose from 56,382 people per year between 2008 to 2015, to 73,642 a year between 2016 and 2018. The authors of the study said the EU referendum vote had been the ‘dominant driver’ of British people’s immigration decisions since 2016. One author said: “These increases in numbers are of a magnitude that you would expect when a country is hit by a major economic or political crisis.”
/jlne.ws/39T5feq

EU eyes softening key state aid demand in Brexit talks: sources
Gabriela Baczynska – Reuters
The European Union is willing to compromise to rescue troubled Brexit talks by softening its demand that Britain heed EU rules on state aid in the future, diplomatic sources told Reuters.
They said Brussels could go for a compromise entailing a dispute-settling mechanism on any state aid granted by the UK to its companies in the future, rather than obliging London to follow the bloc’s own rules from the outset.
/jlne.ws/39SRqNf

Government urges post-Brexit drug stockpiles
BBC News
The government has urged pharmaceutical firms to have six weeks’ worth of drugs stockpiled, in readiness for the end of the Brexit transition period. In a letter to medical suppliers, the Department of Health said there would be no extension to the transition period after 31 December. The department acknowledged that global supply chains were under pressure because of the coronavirus crisis. But it said having reserve stocks would provide a buffer against disruption.
/jlne.ws/2ESLHeZ

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