Market Narratives Have Pushed Aside Fundamentals

Jun 18, 2021

First Read

$46,041/$300,000 (15.3%)


Hits & Takes
John Lothian & JLN Staff

We have a new and improved version of The Spread today. We have overhauled our approach to this video series and have the whole JLN team contributing to it. Suzanne Cosgrove has been named the “producer” for the series. The new The Spread features different segments from Suzanne and myself in this first episode. It also includes a segment called “Term of the Week,” which are short videos from industry players explaining key option terms. If you are interested in appearing in one of these Term of the Week videos, please reach out to me or Suzanne. This new format is a work in progress and we will be adding other new features and segment types. Stay tuned.

We are migrating MarketsWiki to a new version of MediaWiki and PHP today around 1 p.m. If you are an editor, please don’t make any additions to the site today. The new version does not have some of the old functionality. We believe we have resolved many of the issues, but there are still some to address. Some we know of and some we don’t. If you see an issue on the site, let us know. Also, CryptoMarketsWiki’s transition to MarketsWiki is almost complete and the site will be decommissioned next week.

The FIA has a webinar coming up on June 22 from 12 p.m. to 1 p.m. ET titled “Enhancing the clearing ecosystem: post trade processing and clearing.” it will be moderated by Emily Castello, vice president, ABN AMRO Clearing and feature Patricia Hergenrother, vice president operations, Deutsche Bank Securities; Phousa Khounpachamsy, listed derivatives clearing, Credit Suisse Securities; Jason McDonnell, head of ETD and OTC Clearing – North America, UBS; and Steve Rand, director, Societe Generale. Sign up HERE.

The LME has two webinars coming up. The first is on July 14 at 9 a.m. to 5 p.m. (British Summer Time) and it is titled “Introduction to the LME and Hedging: Three Days (Virtual).” Sign up HERE.

The second LME webinar is titled “Introduction to LME Warehousing and Physical Trading: One Day (Virtual),” and is scheduled for Thursday, July 15 from 9 a.m. to 5 p.m. (British Summer Time). Sign up HERE.

The NFA has several job openings in compliance. Four of them are listed on LinkedIn. —LinkedIn

Congratulations to Deutsche Börse Group on their Group Sports Challenge and Pride month. The Cork Sports and Social Club hosted a Colour run yesterday. For every employee that registered for the Group Sports Challenge, a sum of money was added to our 2021 charity fund. Also, Deutsche Börse Group noted on LinkedIn that by “wearing the pride colours with our GSC t-shirts we also visually represent the pride movement, express inclusivity and show support to our LGBTQ+ employees, friends and family!” — LinkedIn

Cboe’s Henry Schwartz noted on LinkedIn that the options industry set another record yesterday for total listings. He wrote: Single stocks with options surpassed 4k for the first time this week, 4971 stocks, etfs and indices have traded options available today- 16% above year-ago levels.” — LinkedIn

MIAX is extending its zero exchange fees for SPIKES futures for another three months.

We had no new donations to the JLN MarketsWiki Education GoFundMe campaign yesterday. Support industry history by giving to our GoFund me campaign.

I am very proud of the readership for clicking on The Obesity Code link yesterday. It is a great book that really helped me understand my body, diet and exercise. I even mentioned it to some of my doctors and they took note of it. Everyone has an interest in good health, which can lead to improvements in all aspects of your life, personal and business.

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


As more companies return to their workplaces, we checked in with Cboe Global Markets on the long-planned move of Its Chicago office on LaSalle Street to a new space at the Old Post Office building on Van Buren. A spokeswoman said construction is complete and the offices “are move-in ready.” However, the space currently remains closed and most Cboe staffers continue to work remotely. “We will initially open the space to associates who would like to return to the office on a voluntary basis, with health and safety guidelines in place,” the spokeswoman said, adding that Cboe has not yet established a required return-to-office date for its associates.~SC


The Spread – June 18, 2021

Inflation really is a thing; Small traders are still big; John Lothian weighs in on the current trading landscape; and Nasdaq wins the May options market share race. All in this and the debut of the options “Term of the Week” in The Spread.

Watch the video »


Investors Leap at Chance to Double Their Money in 1,387 Years; Money pours in after the Federal Reserve raises its interest rate to 0.05% (from zero).
Peter Coy – Bloomberg
Want to know how sensitive investors are to tiny differences in interest rates? Look at what happened after the Federal Reserve decided June 16 to raise the rate it pays on its overnight reverse repurchase facility to 0.05% from 0.00%. You’d need 1,387 years to double your money at that puny rate. Still, it was enough to draw in $756 billion in funds on June 17, a 45% increase from when the Fed was paying a flat zero.

***** Capital preservation is just as important as capital appreciation.~JJL


Reflation trades pummelled as Fed’s shift resets markets; Commodities and value stocks hit while dollar surges after US central bank brings forward dates for raising rates
Robin Wigglesworth, Tommy Stubbington and Colby Smith – FT
The “reflation trade” that has dominated financial markets since the emergence of coronavirus vaccines last year has been pummelled after the Federal Reserve unexpectedly signalled a shift in its stance on inflation.

*****For those of you who thought there was no volatility lately, we had some yesterday. It would normally take the end of a drought to see this kind of bloodbath in the grains.~JJL


Netherlands offers free herring as Covid jab incentive
Jon Henley – The Guardian
After Russia offered cars, Washington state spliffs, Indonesia live chickens and Hong Kong the chance of a £1.2m apartment, the latest country to reward people who show up for their Covid shots is the Netherlands – with soused herring. Early batches of Hollandse nieuwe, or new-season Dutch herring, a traditional delicacy consumed to the tune of 75m a year, are being distributed to vaccination centres around the country as an encouragement for people to get their jabs.

******Covid improves herring?~JJL


The importance of diversity of thought as firms navigate data democratization across people, processes, and platforms
Kate Chatzopoulos – Symphony
The value of diversity of thought in business is well-established: Companies where 30 percent of executives or more are women are nearly 50 percent more likely to outperform financially, and 67 percent of candidates when evaluating job offers. A range of backgrounds and experiences facilitates creativity, problem-solving and positive outcomes.

***** Don’t put all your eggs in one basket when investing or picking the gender or background of your employees.~JJL


The Chicago Venture Summit will resume this fall
Katherine Davis –
The Chicago Venture Summit, an annual event for venture capitalists to connect with the city’s startups, will return this fall after being canceled last year due to the Covid-19 pandemic. The two-day event, hosted by World Business Chicago and ChicagoNEXT, is scheduled for Sept. 28-29 at 167 Green St. in Fulton Market.

*****Chicago is the greatest venture capital city in the history of Illinois.~JJL


An Updated Intern’s Guide to the Market Structure Galaxy; Today we focus on market participants, IPOs, the rise of retail and automation. We also explain some of the core concepts about how markets work.
Phil Mackintosh – Nasdaq
As summer starts, we thought it was a perfect time to update our “Intern’s Guide to the Market Structure Galaxy.” This short introduction has plenty of links for interns looking to take a deeper dive into the topics mentioned.

*****Where can I get my copy? ~JJL


Thursday’s Top Three
Our top story Thursday was U.S. financial executive dies by suicide as firm faces fraud claims, from Reuters via Yahoo Finance. Second was the John Lothian News video Walt Lukken And Nick Solinger Explain Fia Tech Investor Deal. And third was the page for the book “The Obesity Code,” which John Lothian mentioned in Hits & Takes.


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Lead Stories

Market Narratives Have Pushed Aside Fundamentals; Logic and mathematics once made up the basic laws of investing. No more.
Barry Ritholtz – Bloomberg
Filmmakers use the phrase “Narrative Is Everything” to emphasize the importance of storytelling to their craft. They understand how a good storyline communicates to the viewer, draws them in and makes them root for the protagonist. Without a good narrative, even the best casts inhabiting the most wonderful characters risk failing to entertain. Great narratives can terrify you, warm your heart, or compel your attention.

It Isn’t Just AMC. Retail Traders Increase Pull on the Stock Market; Data shows amateur investors have been upending everything from trading volume to large investors’ bets
Caitlin McCabe – WSJ
Nonprofessional investors are continuing to upend financial markets and build on their forceful entrance into the arena last year. In the first half of 2021, new brokerage accounts opened by individual investors have already roughly matched the total created throughout 2020, hitting more than 10 million, according to estimates from JMP Securities.

SEC Investigating Former Chair of Auditing Industry Regulator; The recently dismissed head of the PCAOB is under scrutiny for the handling of internal complaints
Dave Michaels and Jean Eaglesham – WSJ
The Securities and Exchange Commission is investigating whether the recently dismissed chairman of the auditing industry’s oversight board violated any rules in his handling of internal complaints at the regulator, according to people familiar with the matter.

Micro Bitcoin Futures (/MBT) Adoption and Bitcoin (/BTC) As A Hedge
TDA Network
Micro bitcoin futures (/MBT) have traded almost 800K contracts since launching last month, says Tim McCourt of CME Group. He says you can manage your risk in a more precise way with the bitcoin micro futures, which is 1/10 of one bitcoin and 1/50 of one /BTC contract. The lower price profile is more attractive to investors, he adds. Time will tell how the correlation between bitcoin and gold and the Dollar play out. Tim gives his thoughts on bitcoin as an inflation hedge.

Market offers clues to the future of work; Some of last year’s pandemic winners have lost their shine as bosses urge staff back to the office
Tom Braithwaite – FT
A lot hinges on the pace and extent of the great migration back to the office: from the solvency of city-centre sandwich sellers to the health of senior management morale. Severely hurt by the realisation that their presence is irrelevant to workforce productivity, many chief executives are urging staff to return. Previously quiescent employees, such as at Apple, are resisting mandates to spend even three days a week in the office.

Athens Stock Exchange: New strategy with emphasis on development sectors; Attracting new companies and privatizations are ATHEX’s goals – Green energy, tourism, agricultural production and real estate companies in the foreground
The Economist
Supporting the development of the Greek economy, through the promotion of “crown jewel” companies, the emphasis on development sectors such as green energy, tourism, agricultural production, and real estate, the increase of negotiable securities and derivatives through new products and partnerships with smaller stock exchanges are among the new goals and strategy of the ATHEX, according to Socrates Lazaridis, CEO of the Athens Stock Exchange.

When Will The CFTC Get New Leadership?
Erika Kelton – Forbes
The most important regulator most people have never heard of has become one of the most neglected. The Commodity Futures Trading Commission has been without a permanent chair since President Joe Biden took office in January, leaving it rudderless. The CFTC also has a number of unfilled positions in senior leadership, including director of the Enforcement Division and general counsel. And one of the two Republican CFTC commissioners whose term has expired, Brian D. Quintenz, needs to be replaced. He announced last year that he would leave once a successor was confirmed.

TP ICAP details plans to develop Liquidnet
Luke Jeffs – FOW
TP ICAP has detailed its plan for Liquidnet less than three months after the London-based broker bought the $700 million (£504m) equities market, suggesting credit trading, new protocols and the inclusion of dealer liquidity are among its priorities.

Christine Lagarde Prescribes Grit, Quotas and Smiles for Women in Finance
Katharina Rosskopf – Bloomberg
European Central Bank President Christine Lagarde has some advice for young women in finance: “Don’t underestimate yourself, ever,” she said in an interview published in a Politico podcast late on Thursday. The first female ECB president also supports gender quotas on boards of banks.

Most would-be crypto investors unaware of UK regulator’s warnings; FCA finds that understanding of cryptocurrencies has dropped as popularity of digital assets has increased
Joshua Oliver – FT
Fewer than one in 10 potential buyers of cryptocurrencies have heard warnings from the UK financial regulator about the dangers of betting on digital assets, while the number of adults who hold them has risen sharply.

FXall to connect to LCH for FX OTC trade clearing; Connectivity will enable FXall buy-side users to streamline and accelerate their access to clearing of FX OTC trades through LCH
Refinitiv FXall (FXall) is expanding FX traders’ access to cleared workflows for FX OTC trades by building connectivity to LCH. This new solution will provide FXall users a streamlined and quicker way of clearing NDF trades through LCH’s ForexClear service. The solution is expected to go live in Q4 2021 subject to regulatory approval.

What Banks Can—and Cannot—Do for Climate Transition Process (Bloomberg Law)
Jones Day
President Biden’s executive order on climate risks seeks to create a strategy for how the financial industry can brace for environmental threats. Banks are already addressing climate challenges, but they can’t work magic, say Joshua Sterling and Amanda Dollinger, writing for Bloomberg Law. U.S. policymakers should be mindful of industry limitations, use carrots instead of sticks, and resist temptation to criticize efforts if financial institutions don’t move fast enough, they write.

Deutsche Bank to hire 3,000 techies globally
Mini Tejaswi – The Hindu
Deutsche Bank said it plans to hire more than 3,000 techies this year to strengthen technology centres in India, Russia, Romania and U.S. The bank would hire more than 1,000 people in India, including 300 engineering graduates of various disciplines from 30 different campuses of NITs and IITs. These freshers are expected to come on board in July.

Many Companies Want Remote Workers—Except From Colorado; After a new state law that requires employers to disclose salaries for open positions, some are advertising jobs available anywhere in the U.S. but Colorado
Chip Cutter – WSJ
Big companies are hiring for remote positions that can be performed in any state across the U.S. except one: Colorado. At issue is a new Colorado law that requires companies with even a few employees in the state to disclose the expected salary or pay range for each open role they advertise, including remote positions. The rule’s aim is to narrow gender wage gaps and provide greater pay transparency for employees. To avoid having to disclose that information, though, some employers seeking remote workers nationwide are saying that those living in Colorado need not apply.

Thieves Find Money That Grows on Trees: ‘Avocados Are the Green Gold’;l Global demand has spurred brazen nighttime heists and defensive measures from barbed-wire fences to infrared cameras to security teams and tracking dogs
Alexandra Wexler – WSJ
Avocado farmer Mark Alcock has motion-activated infrared cameras dotting 170 acres of groves that send intruder alerts to his phone. The beeps typically wake him at least once an hour, every night.

Supreme Court Rules Cargill, Nestle Can’t Be Sued in Child-Labor Case; Justices say allegations of abuse in Ivory Coast don’t have enough connection to the U.S.
Jess Bravin and Brent Kendall – WSJ
WASHINGTON—The Supreme Court ruled Thursday that Nestlé USA and Cargill Inc. can’t be sued in U.S. courts for abuses allegedly committed in Ivory Coast, where plaintiffs accused the food-processing giants of obtaining cocoa from plantations that relied on the forced labor of children.

FSA Seeking Public Comments on FIEA-related Partial Revision of Cabinet Orders
FIA Japan
On May 20, FSA has announced on its website that it is seeking public comments on a proposed revision of Cabinet Orders related to the Financial Instruments and Exchange Act (FIEA). The announcement is available in Japanese only and public comments should be submitted by June 21. This revision proposal comes after FIA Japan submitted a Letter to FSA in April 2021 requesting clarification of the law with regards to commodity derivatives products regulated under FIEA, following the migration of some of the TOCOM products onto OSE in July last year. This Letter was prespared by the FIAJ Commodity Committee and its contents were approved by the FIAJ Board (see PDF English tranlation below).


The coronavirus is surging in Missouri’s tourist region.
NY Times
A tourist-friendly section of Missouri has emerged as a worsening hot spot for the coronavirus. The number of Covid hospitalizations in Missouri’s southwestern region has nearly doubled in a few weeks. On Wednesday, the state health department reported over 200 hospitalizations in the state’s southwestern region alone, a figure that was just over 100 at the end of last month.

COVID-19 Special: Poverty and vaccination reluctance
There are areas across the globe COVID-19 vaccines are struggling to reach. Some of the world’s poorest countries and communities are also some of the most jab-wary — in part due to historic inequality.

Germany Warns on Delta Risk After Hitting 50% Vaccine Milestone
Iain Rogers – Bloomberg
Health minister says variant threatens pandemic progress; Nearly a third of all Germans have been fully vaccinated
Germany reached a milestone in its effort to overcome the coronavirus pandemic with more than half of the population at least partially inoculated, but warned it needed to keep up the pace to stave off the fast-spreading delta variant.

Covid Counts Hit Zero in U.S. Hospitals Once Overrun by Victims
Carey Goldberg – Bloomberg
Facilities begin shift, cautiously, to pre-pandemic operations; Muted joy among health workers: ‘We all know it’s not over’
The first pandemic surge flooded Boston Medical Center with coronavirus patients: 229 at last spring’s peak, filling nearly two-thirds of its beds. This week, the Covid-19 count hit zero. There were precisely no patients with the virus in the entire sprawling urban hospital, which had borne a heavy load through the pandemic.

Israel to Send 1 Million Vaccine Doses to Palestinian Authority
Yaacov Benmeleh and Fadwa Hodali – Bloomberg
Israel agreed to send about one million Covid-19 vaccine doses to the Palestinian Authority in an exchange deal, after being criticized for not helping to quell the virus in the occupied West Bank and Gaza.

South Korea vaccination surge adds impetus to Asia push; Region’s slow rollout has hobbled economic recovery but officials are making up lost ground
Song Jung-a and Edward White – FT
South Korea is on track to inoculate three-quarters of its 52m people against Covid-19 over the next three months as the vaccine rollouts of east Asian governments gather momentum after early delays.

CVS and Walgreens Were Reeling. Now They’re Riding a Covid-19 Wave; After struggling early in the pandemic, pharmacy chains say vaccines have been a boon to business
Sharon Terlep – WSJ
As the Covid-19 pandemic bore down last spring, America’s drugstore giants warned investors that the health crisis threatened their already tenuous turnarounds.

High Hopes for Johnson & Johnson’s Covid Vaccine Have Fizzled in the U.S.; Production problems and a brief pause on its use kept the one-dose vaccine from becoming the game changer that health officials across the country believed it would be.
Noah Weiland – NY Times
When Johnson & Johnson’s single-dose coronavirus vaccine was authorized for emergency use in late February, ?it was seen as a breakthrough for reaching vulnerable and isolated Americans, a crucial alternative to vaccines that require two shots weeks apart and fussier storage. It was soon popular on college campuses, in door-to-door campaigns and with harder-to-reach communities that often struggle with access to health care.

A Pill to Treat Covid-19? The U.S. Is Betting on It; A new $3.2 billion program will support the development of antiviral pills, which could start arriving by the end of this year.
Carl Zimmer – NY Times
The U.S. government spent more than $18 billion last year funding drugmakers to make a Covid vaccine, an effort that led to at least five highly effective shots in record time. Now it’s pouring more than $3 billion on a neglected area of research: developing pills to fight the virus early in the course of infection, potentially saving many lives in the years to come.

U.S. to Invest More Than $3 Billion in Covid-19 Antiviral Development; Medicines, which would be designed to be taken at home and treat early symptoms, expected to arrive by year’s end
Sabrina Siddiqui – WSJA
The Biden administration will invest more than $3 billion on developing and manufacturing antiviral pills to treat coronavirus, the Department of Health and Human Services said Thursday.

Exchanges, OTC and Clearing

Aramis Group lists on Euronext Paris
388 million euros raised – Market capitalisation of EUR1.9 billion; Second Tech large cap to join Euronext Paris in June 2021; 85th listing on Euronext’s markets in 2021
Paris – 18 June 2021 – Euronext today congratulates Aramis Group, which specialises in the online sale of used cars, on its listing on Compartment A of Euronext’s regulated market in Paris (ticker code: ARAMI).

Eurex Trade Entry Services (TES): Entry times for Additional Contract Versions (“flex trades”)
In order to optimize the end-of-day processing, Eurex Deutschland has decided with effect from 21 June 2021 to bring the end of off-book trading hours for Additional Contract Versions (“flex trades”) via the Eurex TES forward to 19:00 CET.

Amendments to the Connection Agreement, GTC to the Connection Agreement, Provider Connection Agreement and to Price List to the Connection Agreement, Provider Connection Agreement and STPIP/QTPIP Connection Agreement: Clarifications on on-site audits

Performance Bond Requirements: Energy, Agriculture, Interest Rates – Effective June 18, 2021
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.

Performance Bond Requirements: Agriculture, Energy, Equity, Interest Rate, and Metal Margins – Effective June 18, 2021
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.

EBS Market Integration Notice: New and Updated Content
CME Group
EBS Market Integration onto CME Globex
In Q4 2021, subject to applicable regulatory approvals, EBS Market’s Central Limit Order Book and eFix Matching Service will launch on CME Globex. You will receive subsequent notices with additional details and actions required to support the EBS Market integration onto CME Globex.

OSE to Launch Timestamp Data Service etc. due to Go-Live of J-GATE 3.0
We Osaka Exchange, Inc. will start providing time stamp data from September 21, 2021 (Tuesday), which is the scheduled Go-Live date of J-GATE 3.0, as part of the alternative data service. It is provided through the Public Cloud Environment (AWS) provided by Amazon Web Services. Full Order Information (ITCH data) distributed by J-GATE via ITCH protocol will be newly provided via AWS after changing from the previous CSV format to the binary format. (Note that the current FTP service and provision via JPX Data Cloud will be abolished.)


Clearlake Capital to Acquire Confluence from TA Associates; New Investment from Clearlake will Accelerate Growth and Enable Confluence to Continue Providing Innovative Software and Data Solutions to the Global Investment Management Industry
Confluence Technologies, Inc.; Clearlake Capital Group
Confluence Technologies, Inc., (“Confluence” or the “Company”), a global software and data solutions provider helping the investment management industry solve complex data challenges, today announced it has signed a definitive agreement for Clearlake Capital Group, L.P. (together with its affiliates, “Clearlake”) to acquire the Company from TA Associates (“TA”). Upon closing of the transaction, Clearlake will become the majority shareholder while TA will retain a minority equity stake. Mark Evans, CEO of Confluence, will continue to lead the Company supported by the existing management team.

A Wise Way to Transfer a Few Billion Dollars; The startup known formerly as TransferWise is doing a direct London listing. It may not be a fintech behemoth like Adyen, but it makes a tidy enough profit.
Alex Webb – Bloomberg
With each technology company that decides to list its shares in London comes the question, is this the one? Is this the company to make the British capital a legitimate tech hub? Wise, a money transfer startup known previously as TransferWise, raises the same question. Where it differs from food delivery platform Deliveroo Plc and cybersecurity firm Darktrace Plc, both of which went public in London this year, is the mechanism it’s using: a direct listing. The approach means that the bar is lower to deem the process a success.

Paytm to Ask Shareholder Nod for $1.6 Billion Sale of New Stock
Saritha Rai – Bloomberg
India digital payments startup preparing to raise funds in IPO; Shareholder meeting to approve IPO is slated for July 12
Digital payments startup Paytm will ask for shareholder permission to sell about $1.6 billion in new stock as part of what’s set to be India’s largest-ever initial public offering.

Indian payments group Paytm plans to raise up to $3bn in listing; Proposed share sale comes as company faces fierce competition from western rivals
Stephanie Findlay – FT
Indian payments group Paytm has called a shareholders meeting next month to approve an initial public offering that is being billed as the country’s largest with plans to raise up to $3bn.

Eventus Systems wins Best Market Surveillance Tool in WatersTechnology Asia Awards
Eventus Systems
Second WatersTechnology award this year for Validus platform
Eventus Systems, Inc., a leading global provider of multi-asset class trade surveillance and market risk solutions, has won the award for Best Market Surveillance Tool in the 2021 WatersTechnology Asia Awards. The honor is the second WatersTechnology award Eventus has earned this year and the company’s first award centered on the Asia-Pacific (APAC) region.
The WatersTechnology Asia Awards recognize excellence in the deployment and management of financial information and technology within Asia’s capital markets community.

IHS Markit integrates pre-trade bond and liquidity data into thinkFolio; Through connectivity with Lucera and Neptune Networks, mutual clients of the thinkFolio platform will gain access pre-trade data and liquidity signals.
Annabel Smith – The Trade
IHS Markit has established a connectivity with Neptune Networks and Lucera to add pre-trade data and liquidity signals to its investment management platform thinkFolio. The connectivity will provide traders with richer pre-trade insights and price discovery on thinkFolio, IHS Markit said, as the firm aims to bolster the platform’s front-office capabilities.

FX algos and auto-pricing on the rise as traders look to minimise market impact, says Bloomberg FXGO head; Bloomberg’s Tod Van Name said algos, automation for NDFs and options pricing and trading grids have risen dramatically in the last year.
Annabel Smith – The Trade
FX algorithmic trading and automated pricing has surged in the last year as traders seek best execution and minimal market impact, according to the head of Bloomberg’s FX electronic trading platform.

BlockFi adopts Duco to advance intelligent automation agenda
Duco, the global provider of cloud-based data integrity and reconciliation services, today announced that BlockFi, a financial services company dedicated to building a bridge between cryptocurrencies and traditional financial and wealth management products, has chosen to deploy the Duco platform globally and enterprise-wide, to advance its automation, control and scaling agendas.

Bakkt Partners with Wyndham Rewards to Expand Travel Offerings; Digital wallet will enable members to track and convert points while tapping into Bakkt ecosystem of digital assets
Bakkt Holdings LLC*
Bakkt Holdings LLC* (“Bakkt”), the digital asset marketplace behind the Bakkt App, announced a partnership with Wyndham Rewards®, the award-winning loyalty program of Wyndham Hotels & Resorts, to allow program members to link, view and redeem their Wyndham Rewards points within the Bakkt App soon.


Carnival Discloses Breach of Personal Data on Guests and Crew
Jonathan Levin – Bloomberg
Carnival Corp. detected unauthorized access to its computer systems three months ago, prompting the cruise operator to notify regulators and hire a cybersecurity firm to investigate. The investigation found there had been third-party access to personal data on customers, employees and crew for its Carnival, Holland America and Princess lines, as well as company medical operations. The breach was previously reported by Bleeping Computer.

The Vexing Tech Challenge of Fighting Ransomware: A Battle of Milliseconds
Jordan Robertson – Bloomberg
As quick as a blink, that’s the amount of time a new technology — developed by researchers from Australia’s national science agency and a university in South Korea — takes to detect that ransomware has detonated on a computer and block it from causing further damage. The finding seeks to address a vexing challenge that has stymied international efforts to stop such attacks. As hackers execute bolder attacks with bigger potential payouts, computer scientists are pushing the limits of software to make near-instantaneous decisions and save victims from ruin.

Lawmakers Urge Private Sector to Do More on Cybersecurity
James Rundle – WSJ
The private sector in the U.S. must do more to defend against cyberattacks, lawmakers from both major parties stressed Thursday as several senators introduced legislation designed to target hackers. The ransomware incident that brought operations at Colonial Pipeline Co. to a standstill for six days starting May 7, and resulted in fuel shortages across Southeastern states.


Why Crime Could Kill Crypto
Justin Lahart and Telis Demos – WSJ
The strongest argument against cryptocurrencies used to be that they had yet to show they were much good for anything. Now the strongest argument against them may be that they have become far too good at one thing: enabling crime.
Not long after the first of the private digital currencies, bitcoin, launched in 2009, crooks recognized its appeal. While law enforcement is proving increasingly adept at tracking bitcoin transactions and at times seizing ill-gotten money, the ability to make digital payments without financial intermediaries has facilitated activities such as the selling of illegal goods and services online and money laundering. In a 2019 paper, researchers Sean Foley, Jonathan Karlsen and Talis Putninš estimated that 46% of bitcoin transactions conducted between January 2009 and April 2017 were for illegal activity.

China is kicking out more than half the world’s bitcoin miners – and a whole lot of them could be headed to Texas
MacKenzie Sigalos – CNBC
China has long been home to more than half the world’s bitcoin miners, but now, Beijing wants them out ASAP.
In May, the government called for a severe crackdown on bitcoin mining and trading, setting off what’s being dubbed in crypto circles as “the great mining migration.” This exodus is underway now, and it could be a game changer for Texas.

FTX.US Opens Chicago Office to Bolster US Presence
West Realm Shires Services Inc (“FTX.US”), today announced the opening of its office in Chicago, Illinois. This move further solidifies FTX.US’ commitment to becoming the market leading US regulated cryptocurrency exchange. This new location for FTX.US marks yet another step forward as it continues developing its American presence and enhancing its US-based team. Chicago was chosen due to its status as a key financial hub and the office will be based in the vibrant West Loop neighborhood.

Mark Cuban Calls for Stablecoin Regulation After Trading Token That Crashed to Zero; Even in crypto where huge drawdowns are the norm, 100% washouts in a single day are extremely rare.
Joe Weisenthal – Bloomberg
Here’s a chart you never want to see. It’s of the DeFi Titanium token, which in one day went from being valued around $60 to $0. Even in the world of crypto, where massive drawdowns are commonplace, 100% washouts are pretty rare, especially in such short a time.

AI-Driven Hedge Fund Rules Out Bitcoin for Lack of ‘Fundamentals’
Jonas Cho Walsgard – Bloomberg
Volt return last year was 4 times hedge-fund industry average; Investors include Bjorn Wahlroos, former Nordea chairman
A Swedish hedge fund that returned roughly four times the industry average last year using artificial intelligence won’t touch Bitcoin, based on an assessment that the cryptocurrency doesn’t lend itself to sensible analysis.

Hydro-Rich Chinese City Is Said to Clamp Down on Crypto Mining
Bloomberg News
A Chinese city with abundant hydropower is said to have begun a sweeping clampdown on crypto mining firms this week, following an earlier ban from the central government on such activities. At least one Bitcoin miner was told by an official with the Ya’an city government that the city promised the provincial authorities it would root out all Bitcoin and Ether mining operations within one year, said a person with knowledge of the situation.

81% Of Fund Managers Believe Bitcoin Is In A Bubble, New Bank Of America Survey Shows
Anifowoshe Ibrahim by –
According to the most recent Bank of America Global Fund Manager Survey, “long bitcoin” is currently the second most popular trade. Furthermore, the majority of investment managers feel Bitcoin is a speculative bubble and agree with the Fed that inflation is just temporary.

Bitcoin: The problem with El Salvador’s crypto law
Robert Hackett – Fortune
Salvadorian President Nayib Bukele is a savvy marketer.
In a prerecorded video that aired at the Bitcoin 2021 conference in Miami on June 5th, the Central American head of state announced, to ecstatic cheers, that he planned to establish bitcoin as legal currency in his country. Four days later, after minimal discussion and little pushback, his proposal cleared congress to become law.

The Rise of Shiba Inu Coin Shows Crypto’s New Dynamics
Avi Salzman – Barron’s
Much of the cryptocurrency world can feel like an inside joke. One coin that has become prominent in the past month seems even more obscure—like an inside joke about an inside joke.
Shiba Inu coin, created in August 2020 by an anonymous person calling themselves Ryoshi, is billed as an alternative to Dogecoin, which itself was created as a lighthearted option to Bitcoin. Shiba Inu feels as if it was willed into existence, and is now being listed on major crypto exchanges through the power of memes, crowds, persistence—and a cute dog.


Can the C.D.C. Be Fixed? Covid-19 has shown the glaring weaknesses of the world’s premier public health agency — and just how much work it would take to reform it. By Jeneen Interlandi. Illustrations by Brian Rea
NY Times
In November, an independent team of academics and public-health experts who called themselves the Covid Rapid Response Working Group gathered on Zoom to puzzle over what had by then become the pandemic’s most vexing challenge: how to make all schools safe for full-time, in-person learning as quickly as possible. Schools had not proved to be a hotbed of coronavirus transmission, but beyond that the research was complicated, and communities were divided about how to balance the risks. Some people wanted a full reopening, immediately, no exceptions. Others were terrified to return at all.

Americans Can Pack Bags for Europe, as EU Lifts Travel Curbs
Nikos Chrysoloras and Siddharth Vikram Philip – Bloomberg
U.S. added to Europe’s ‘white list,’ allowing leisure travel; Bloc is pushing the Biden administration to reciprocate
The European Union lifted travel restrictions for U.S. residents, in the latest step toward a return to normal flying despite concerns over the spread of potentially dangerous coronavirus variants.


Shell agrees to pay $1 million in fines over junior trader’s allegedly manipulative trading
Jasmin Melvin – S&P Global
Oversights in its compliance program and lax supervision of a junior trader will cost Shell Energy North America $1 million in combined penalties and disgorged profits, according to a Federal Energy Regulatory Commission order approving a settlement resolving natural gas market manipulation charges.

CFTC rule change sparks dealer-client margin scuffle; FCMs fear “race to the bottom” as funds lobby dealers for lower margin status
Costas Mourselas –
Clearing banks are up in arms after a seemingly arcane change to the way US regulations categorise their clients for the purposes of margining led to large funds lobbying for their requirements to be dropped by as much as 9% versus previous levels. On January 27, an amendment to US Commodity Futures Trading Commission (CFTC) Regulation 39.13(g)(8)(ii) – which governs the way clearing houses and futures commission merchants (FCMs) should treat clients when determining base margin requirements –

Commissioner Berkovitz to Participate on a Panel at the D.C. Bar

Commissioner Stump to Participate in a Fireside Chat at the “Shining a Light on Digital Assets Market 2021” Conference

ASIC extends licensing relief to all trustees of registrable superannuation entities for consistent treatment under the law
ASIC has extended existing licensing relief for public offer trustees to include all registrable superannuation entities to ensure that non-public offer trustees are regulated consistently with public offer trustees under the Corporations Act 2001.

Parliamentary Joint Committee on Corporations and Financial Services – Opening statement – 18 June 2021
Opening statement by ASIC Chair, Joe Longo at the Parliamentary Joint Committee on Corporations and Financial Services, 18 June 2021, Parliament House, Canberra.
Good afternoon Chair and Committee members.mnI am pleased to appear for the first time before this committee today as ASIC’s Chair. I am joined in Canberra by newly appointed Deputy Chair Sarah Court, Deputy Chair Karen Chester and Commissioner Cathie Armour, and from Melbourne by Commissioners Danielle Press and Sean Hughes.

SEC Charges Investment Advisers With Cherry-Picking, Obtains Asset Freeze
The Securities and Exchange Commission today announced that it has obtained an asset freeze and other emergency relief, and filed fraud charges, against a Miami-based investment professional and two investment firms for engaging in an alleged “cherry-picking” scheme in which they channeled millions of dollars in trading profits to preferred accounts.

2021 FINRA Virtual Technology Conference
The 2021 FINRA Virtual Technology Conference showcases the latest technology offerings to our member firms. Technology is transforming the Financial Services industry and FINRA is dedicated to supplying our members with innovative technology designed to protect investors and ensure market integrity. Additionally, FINRA employs innovative technological solutions to carry out its mission. This one-day virtual conference is held online and focuses on technology tools for complying with FINRA rules, as well as sharing the innovative technology FINRA uses in its daily operations. The conference brings together experts, executives, and policy makers to share their specialized knowledge and experiences. The Technology Conference is designed to facilitate meaningful dialogue on a range of topics in an educational format and is designed for both compliance and technology professionals.

Diversity & Inclusion Report – 2020 Year in Review

Proposed Rule Change Relating to the Retirement of FINRA’s Order Audit Trail System
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change setting forth the basis for its determination that the accuracy and reliability of the Consolidated Audit Trail (“CAT”) meet the standards approved by the Commission in SR-FINRA-2020-024 for purposes of eliminating the Order Audit Trail System (“OATS”) rules in the FINRA Rule 7400 Series and FINRA Rule 4554 (Alternative Trading Systems — Recording and Reporting Requirements of Order and Execution Information for NMS Stocks) (collectively referred to herein as the “OATS Rules”). The proposed rule change also updates cross-references within FINRA rules to reflect the elimination of the OATS Rules.

FINRA Eliminates the Order Audit Trail System (OATS) Rules; Effective Date: September 1, 2021
Effective September 1, 2021, FINRA is amending its rulebook to eliminate the Order Audit Trail System (OATS) rules in the FINRA Rule 7400 Series and FINRA Rule 4554 (Alternative Trading Systems — Recording and Reporting Requirements of Order and Execution Information for NMS Stocks) (collectively referred to as the “OATS Rules”). FINRA has determined that the accuracy and reliability of the Consolidated Audit Trail (CAT) meet the standards approved by the SEC and has determined to retire OATS as of September 1, 2021.

Investing and Trading

Some Commodities Have Now Wiped Out All of Their 2021 Gains
Yvonne Yue Li and Marvin G. Perez – Bloomberg
For all the talk of a commodities boom, some markets have now wiped out gains for the year and several more are close to doing so. Soybean futures have erased their 2021 advance, sliding more than 20% from an eight-year high reached in May. Corn and wheat have also tumbled from multiyear highs. The Bloomberg Grains Spot Subindex slid the most since 2009 on Thursday. Other commodities that saw big rallies evaporate include platinum, while once-surging nickel, sugar and even lumber have faltered.

The House Always Wins in Online Gambling; Locked down sports fans were perfect targets for online betting companies, underlining why better rules are needed to protect children and problem gamers.
Lionel Laurent – Bloomberg
The return of international football tournaments in front of a live crowd is worth cheering, with the star power of Cristiano Ronaldo and Kylian Mbappe bringing fans out in droves to bars and pubs eager to make up for a lost pandemic year.

America Should Become a Nation of Renters; The very features that made houses an affordable and stable investment are coming to an end.
Karl W. Smith – Bloomberg
Rising real-estate prices are stoking fears that homeownership, long considered a core component of the American dream, is slipping out of reach for low- and moderate-income Americans. That may be so — but a nation of renters is not something to fear. In fact, it’s the opposite.

Markets Start to Suspect the Fed Has Cold Feet; A reversal in the 10-year yield and a move back into growth stocks both suggest the growth outlook has deteriorated.
John Authers – Bloomberg
What the Market Did Next
Second thoughts are proverbially best. Another 24 hours on from one of the more surprising Federal Reserve announcements in recent years (even if policy makers didn’t actually do anything), the market is still working out what to make of it. The reaction will be key to the long-term success of the Fed’s policy, so it needs to be monitored quickly.

Investors rush to stash cash with Fed after interest rate tweak; US central bank moved to ease money market pressure and prevent negative yields taking hold
Colby Smith – FT
Investors stashed a record amount of cash in an overnight facility at the Federal Reserve on Thursday, after the central bank started paying interest on the money to prevent negative rates taking hold in parts of the US financial markets.

Bond spreads collapse as investors rush into corporate debt; Fall in the premium demanded to hold higher-risk debt signals increasing confidence in the US economy
Joe Rennison and Eric Platt – FT
The premium between corporate debt and US Treasuries has dropped to its lowest level in more than a decade in a sign that investors are growing confident recent rises in inflation will not hinder the economic recovery.

Environmental, Social and Corporate Governance

Scott Morrison is the accidental architect of a carbon tax – whether he likes it or not
Richard Denniss – The Guardian
While Australia sticks to accounting tricks, calls by other countries are growing to impose a carbon price on our exports
Who would have thought that Scott Morrison would be the one to reintroduce a carbon tax? And who would have thought it possible to design a carbon tax on Australian polluters that delivered revenue to the treasuries of other countries? Welcome to the topsy-turvy world of “border tax adjustments” in which other countries get to decide the amount of tax that Australian polluters pay, and the way in which they will pay it.

Think Hard Before You Invest In a ‘Climate Bad Bank’; Bankers and executives are proposing new structures to manage unwanted fossil fuel assets, but it’s a stretch to call them green investments
Kate Mackenzie – Bloomberg
In the book New York 2140, Kim Stanley Robinson imagines what it would be like if financial markets were designed for trading risks such as sea-level rise or tidal surges. Another mildly dystopian climate-related trade is emerging much sooner: betting on the timing and cost of coal mine closures.

Total Is Said to Vie With Enel, RWE for RES’s French Wind Assets
Francois De Beaupuy, Will Mathis, and Alberto Brambilla – Bloomberg
Projects for sale may be worth about $950 million, person says; Britain’s RES is seeking firm bids for the assets next month
TotalEnergies SE is competing with utility Enel SpA in the bidding for a large portfolio of French wind farm projects from Renewable Energy Systems Ltd., people familiar with the matter said. German utility RWE AG is also pursuing the assets, according to the people, who asked not to be identified because the information is private. RES has asked the suitors to submit firm bids next month, the people said.


Swedish Riksbank Says Some Staff Traded Before Rate Decision
Ott Ummelas and Niclas Rolander – Bloomberg
Riksbank says some staff transactions broke its ethical rules; Central bank says updated rules to show what’s out of bounds
Sweden’s central bank says a number of staff made financial transactions that aren’t in line with its ethical guidelines, including equity trades just before interest-rate decisions. The Stockholm-based Riksbank said the infringements have prompted it to update its rules to ensure staff know exactly what kind of conduct is off bounds, according to a statement on Friday. It also noted that the employees in question reported the transactions, which were then caught during a routine review.

BlackRock aims to generate half of US ETF flows from adviser models; Packaged portfolios already accounted for a third of the managers net US ETF sales in 2020
Jackie Noblet – FT
BlackRock has set a goal for half of its US ETF flows to come from adviser models, executives have said, adding that the manager has been investing in the products, technology tools and distribution relationships to make that happen.

A 174-page report on banking predicts rise of Barclays, fall of big bonuses; Goldman Sachs will be the top investment bank, while the need to pay up for star traders is waning
Financial News
Goldman Sachs will be the top investment bank, Barclays is the one challenger to Wall Street’s dominance and paying big bonuses to traders is no longer a factor for success, according to a sweeping new report by JPMorgan analysts into the future of the industry.


Employers fear legal action if working from home made permanent
Simon Foy – Telegraph
Employers are bracing for a wave of legal action if the Government introduces new legislation that would make home working permanent post-pandemic. City lawyers warned that any move to make working from home the “default” option for employees had the potential to significantly increase employment disputes and litigation.

Methane Leak at 395 Tons an Hour Is Linked to Russian Pipeline; The company also took responsibility for four other big releases of the superpotent greenhouse gas in recent weeks.
Aaron Clark and Dina Khrennikova – Bloomberg
A massive methane plume detected earlier this month over Russia stemmed from emergency repairs that forced the partial shutdown of a Gazprom PJSC pipeline, the company said, taking responsibility for one of the energy sector’s most intense recent leaks of the superpotent greenhouse gas.

Danish Meme Stock Plunges as Failed FDA Bid Triggers Panic
Christian Wienberg – Bloomberg
Orphazyme didn’t win FDA clearance to market key treatment; Tiny Danish biotech was dubbed a meme stock just one week ago
Orphazyme A/S, a small Danish biotech firm that morphed into a meme stock last week, was dumped by investors on Friday after it failed to get a clear stamp of approval from U.S. authorities for its only viable treatment.

Forex Traders Body Asks Nigeria Dealers to Stop Hoarding Dollars
Tope Alake and Emele Onu – Bloomberg
Bureau De Change operators enforce rules across Nigeria; Central bank seeks to close forex arbitrage opportunities
Nigeria’s authorized currency traders’ association is asking its members to sell their stock of dollars in an attempt to narrow the spread between spot and illegal market prices.


As Boy Scouts Near Civil Settlement, Criminal Probe Looms; Michigan Attorney General Dana Nessel opened a criminal investigation into the sex-abuse scandal this month
Kris Maher – WSJ
After sex-abuse litigation pushed the Boy Scouts of America into bankruptcy last year, Michigan’s attorney general watched as the number of victims stepping forward climbed to 84,000, dwarfing similar allegations against the Catholic Church.

Boy Scouts Near Bankruptcy Deal With Largest Victims Group; Youth group is expected to pay out victims through a combination of cash and insurance policies
Kris Maher and Andrew Scurria – WSJ
The Boy Scouts of America are nearing a settlement with lawyers for sex-abuse victims that marks a major step for the youth group’s efforts to end the largest bankruptcy case ever filed over childhood abuse, people familiar with the matter said.

The Wall Street Journal will close its Greater New York section.
Katie Robertson – NY Times
“New York City Mayoral Candidates Spar in Heated Final Debate,” a Wall Street Journal headline announced on Thursday. Readers of the Rupert Murdoch-owned newspaper should expect much less of that kind of thing in the future.

How to build your personal brand and boost your career
Devexperts Blog
Some people hear the words “personal branding” and their skin crawls with the thought of Instagram influencers or LinkedIn gurus. But the truth is that crafting a personal brand is not something that belongs exclusively to social media stars.

John Lothian Newsletter

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Past JLN Newsletters

The Spread – July 30, 2021

The Spread – July 30, 2021

Earnings season in full bloom; Options lead year-to-date derivatives volume; Robinhood’s IPO; John gets real with Get Real VR: Conflicting factors underpin volatility; Cboe cleared for fall European competition; and the Cboe Options Institute’s Kevin Davitt talks about vega in this week’s “Term of the Week.”

The Four Biggest Ways That Robinhood Changed Investing

The Four Biggest Ways That Robinhood Changed Investing

First Read $51,906/$300,000 (17.3%) ++++ Options Continue to Lead Derivatives Volume Uptrend, but Q2 Lags, FIA Data Show Suzanne Cosgrove - John Lothian News Global futures and options volumes continued to trend higher in the first half of 2021 compared to both 2020...

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