Montréal Exchange Launches CORRA Futures

Jun 16, 2020

First Read

Hits & Takes
By JLN Staff

The FIA has gifted JLN 50 passes to the upcoming IDX-V, or virtual IDX, for JLN readers. This is due to our strong relationship with the FIA and our enthusiasm and ongoing support for FIA events. Typically there are more JLN journalists at EXPO or Boca than any other organization. And it has been the same for IDX for some years too.

To get one of these passes, all you have to do is email me at johnlothian@johnlothian.com and ask. I will even give you more than one if you ask nicely. If you tell me a joke, who knows how many you can get.

All JLN passes for the IDX-V are for the front row of all sessions. You will have the best view of anyone attending the virtual conference. You will be a JLN VIP, that is JLN Virtual International Person.

Who would have guessed a picture of me in a sweatshirt would be the most clicked on item in JLN yesterday? We have decided to sell these sweatshirts to interested parties and will be placing an order next week, so let me know if you are interested in buying one.

JLN will soon be running a new demographic survey. It has been a while since we have done one. We are going to give away five of these sweatshirts in a drawing of participants in the survey to encourage participation. Winners may instead choose a charity of their choice to receive a donation. Look for the survey coming soon.

It is official, Taraneh Derayati has been appointed as chief executive officer at Vermiculus Financial Technology. JLN previously reported this when Derayati changed her LinkedIn profile, but now the company has issued a formal press release.

Is anyone looking for a third year law student for a virtual internship this summer? I have a high quality candidate with a lot of industry experience. Let me know.

The American Financial Exchange (AFX) announced yesterday that Unity National Bank, the only African American owned bank in Texas, joined the exchange.

Happy belated birthday to EEX, who on June 15th 20 years ago executed its first trade on the then small power exchange based in Leipzig.

Also, London Stock Exchange celebrated AIM’s 25th anniversary as well. Happy anniversary to LSE and AIM.

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

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Cboe Options Exchange resumed pit trading Monday as planned. About half the usual number of traders came back to a reconfigured trading floor designed with social distancing and stringent health and safety protocols, the exchange said, returning the S&P 500 index options and VIX pits to their hybrid format of open outcry and electronic trading. The Cboe floor had been closed since March 16 due to precautions around COVID-19. In a statement, a Cboe Global Markets spokesperson said, “We remain vigilant in monitoring developments around COVID-19 and are continuing to closely monitor trading in this new trading floor environment.” ~SC

Brian Chappatta of Bloomberg has a rebuttal to the Atlantic story from Frank Partnoy we had in yesterday’s JLN about the purported danger of CLOs. The rebuttal is titled, “CLOs Are Not CDOs, Not Even During a Pandemic.” You can find it in our Investing & Trading section below.~SR

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Sponsored Content

 


No travel required – IDX-V: virtual sessions examining the state of the cleared derivatives industryFIA has reimagined its International Derivatives Expo as a series of virtual sessions – IDX-V. FIA will broadcast three half-days of programming from 23-25 June starting at 14:00 BST / 9:00 EDT daily. Skip the hassle and expense of traveling and tune in from your home or office.

IDX-V programming features:

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Vermiculus Financial Technology – The Road Ahead
Mondovisione
Vermiculus Financial Technology, VFT, is a new, independent, global provider of high performing technology to exchanges and clearing houses. A group of former leaders from Cinnober Financial Technology established Vermiculus in 2020 as a response to the huge gap between supply and demand in the market for Independent providers of best in class technology. As of today, the company has 25 employees and is growing fast. Employees will be the majority owners. Vermiculus is not only a traditional vendor, but a partner.
/bit.ly/2AE1fRK

****Here is the first real information about Vermiculus, the new venture from Nils-Robert Persson.~JJL

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London Stock Exchange Celebrates AIM’s 25th Anniversary
London Stock Market Group
MTS expands access to Mexican bond markets through BondsPro; MTS launches new unsecured money market trading platform, MTS Depo; Over 3,800 companies admitted to AIM since launch, raising £118bn in equity capital; AIM supports SMEs access capital to create jobs, innovate and drive the UK economy; New Grant Thornton research shows AIM companies directly contributed £33.5bn to UK GDP and supported more than 430,000 jobs in 2019
Almost 60% of the UK-incorporated AIM businesses are based outside London
London Stock Exchange celebrates the 25th anniversary of the launch of AIM this week. Since its inception in June 1995, AIM has admitted over 3,800 companies from across the globe, raising a combined £118 billion in equity capital. Supporting companies throughout changing business and economic cycles, AIM has become one of the world’s most successful growth market.
/bit.ly/3fuQccm

*****The middle of June must be a good time to launch a new exchange.~JJL

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Huatai Futures and Trading Technologies Partner to Provide Connectivity to Chinese Derivatives Markets via the TT Platform
Trading Technologies Press Release
Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, infrastructure and data solutions, and Huatai Futures, the subsidiary of Huatai Securities Co. Ltd, headquartered in Guang Zhou, Guang Dong Province, China, today announced they have contracted to provide connectivity to the Chinese international derivatives markets through the TT platform.
/bit.ly/2MZPyYn

*****Always remember, Trading Technologies is Trading Technologies International, Inc.~JJL

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E*TRADE Announces $1 Million Donation to Advance Civil Rights, Social Action, and Advocacy; E*TRADE also establishes Belonging in FinTech scholarship fund to support diverse emerging talent
Business Wire
E*TRADE Financial Corporation (NASDAQ: ETFC) today announced two corporate social responsibility initiatives to advance social justice, address racial inequality, and further education in the communities where the company lives and works:
/bwnews.pr/30YOooj

*****E*Trade is stepping up. Who else will?~JJL

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Monday’s Top Three
Our top clicked “story” Monday was the photo of John in the new CNN-inspired “The World Needs Journalists” hoodie with the JLN logo. If you would like to buy one, let us know – we are placing a new order next week. Second was Coronavirus threatens Chicago’s last remaining trading pits from KFGO/Reuters. Third was Goldman Says Mom-and-Pop’s Stock Picks Are Trouncing Wall Street, from Bloomberg.

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Lead Stories

Montréal Exchange Launches CORRA Futures; Canada’s Derivatives Exchange Expands Fixed Income Product Suite to Support Newly Enhanced Canadian Benchmark
TMX
Montréal Exchange (MX), Canada’s derivatives exchange, today announced the launch of CORRA Futures, a new three-month futures contract based on the Canadian Overnight Repo Rate Average (CORRA) benchmark. The launch coincides with the Bank of Canada taking over the administration of the CORRA interest rate benchmark. CORRA is designed to measure the average cost of overnight general Government of Canada collateral repo transactions and serves as a representative measure of overnight funding rates.
/bit.ly/3hvs2Ap

Paul Hilgers to become new head of the cash market at Deutsche Börse; Paul Hilgers will become head of the cash market of Deutsche Börse on September 1 and will report directly to Thomas Book, member of the board of Deutsche Börse Group.
Deutsche Börse
From July 1st, Books’ area of ??responsibility for Trading & Clearing brings together all trading and clearing platforms of Deutsche Börse. In addition to the cash market, these are the derivatives exchange Eurex, Eurex Clearing, the currency trading platform 360T and the energy and commodity business of the EEX Group. The cash market includes Xetra trading, the Frankfurt stock exchange, primary market business and the Deutsche Börse Venture Network.
/bit.ly/3hv0Xxb

NYSE to reopen trading floor to some market makers; As part of the second phase of the reopening of the trading floor at NYSE, a subset of market makers will re-join the trading floor.
Hayley McDowell – The Trade
A subset of designated market markets (DMM) will be reintroduced to the trading floor with a limited number of staff at the New York Stock Exchange (NYSE) on 17 June.
/bit.ly/2AFr6Jc

Wall Street’s Best-Laid Brexit Plans Thrown in Disarray by Virus
Viren Vaghela, Stefania Spezzati, and Silla Brush – Bloomberg
U.S. banks are waiting to move staff to Europe, people say; Business flows through London instead of EU hubs, people say
Giant U.S. banks still have to deliver a Brexit plan to get staff across the English Channel, before a potential second wave of Covid-19 forces Europe’s doors shut again. JPMorgan Chase & Co., Morgan Stanley and Goldman Sachs Group Inc. have lost precious months during the pandemic lockdowns in moving employees to European Union financial hubs. With Brexit talks deadlocked and time running out before the year-end deadline, firms are finally reactivating long-held plans to shift staff from London — only to find they can’t move fast enough.
/bloom.bg/2UOtkNo

LSE offers no concessions to avert deeper EU probe of Refinitiv deal: sources
Foo Yun Chee, Pamela Barbaglia – Reuters
The London Stock Exchange (LSE.L) will not offer concessions to EU antitrust regulators reviewing its $27 billion bid for data and analytics company Refinitiv, two people familiar with the matter said, a move which will likely trigger a four-month probe.
/reut.rs/2YDxEQx

Goldman Goes Main Street With Push Into Corporate Bank Accounts; Wall Street firm takes on big-bank rivals in $32 billion cash-management business
Liz Hoffman – WSJ
Goldman Sachs Group Inc. GS 2.25% —the go-to bank for complex trades and high-stakes mergers—is trying to become a player in the staid business of managing corporate cash. The firm will soon begin marketing new bank accounts for corporate treasurers and chief financial officers to manage and move their cash. It is Chief Executive David Solomon’s latest move to transform the bank, and it comes during a time of economic uncertainty and market turmoil that has clouded the outlook for companies big and small.
/on.wsj.com/3hy4ElN

Fed Outlines Proposal to Lend Money to Nonprofits; Bank proposes limiting loans to entities with endowments of $3 billion or less
Nick Timiraos – WSJ
The Federal Reserve outlined a proposal Monday to include nonprofit organizations in its previously introduced $600 billion lending program for small and midsize businesses disrupted by the coronavirus pandemic.
/on.wsj.com/3ftrhWD

Fortnite Maker Epic Games Nears Funding at $17 Billion Value
Katie Roof, Gillian Tan, Liana Baker, and Olga Kharif – Bloomberg
Epic owns Fortnite video game, Unreal Engine and Houseparty; T. Rowe, KKR, Baillie Gifford to participate in round
As people flock to video games and social networks to fight boredom during the pandemic, investors in the company that owns two of the biggest lockdown hits are betting that those habits will stick.
/bloom.bg/2UPBWTQ

Robinhood traders nailed the market bottom, debunking theory retail investors are the dumb money
Maggie Fitzgerald – CNBC
Robinhood investors piled into equities at the perfect time to cash in on stocks’ epic rally, according to Societe Generale. The Wall Street firm sorted through data from Robintrack, a third party aggregate of Robinhood trading data, and found that the Silicon-Valley stock trading app’s clients nailed the market bottom. Robinhood users total holdings increased in March, exactly when stocks bottomed and started their stunning trek upward.
/cnb.cx/3hyaHH1

Coronavirus

Germany launches coronavirus app as EU eyes travel revival
Douglas Busvine – Reuters
Germany appealed to the public on Tuesday to download a new smartphone app to help break the chain of coronavirus infections, one of several such apps that European governments hope will revive travel and tourism safely.
/reut.rs/2CcSYEZ

Coronavirus Accelerates Across Africa; The virus was slow to start in many African countries, but epidemiologists say the number of confirmed cases on the continent is now rising fast.
Ruth Maclean – NY Times
When Daniel Khan Mbuh died in a hospital in northern Cameroon, the hospital declared the cause of death to be Covid-19 — then released the body to the family instead of arranging for a safe burial, his daughter Stella said.
/nyti.ms/30OqPOS

Business Travel Won’t Be Taking Off Soon Amid Coronavirus; Executives rethink multiday trips and plan for less travel; some prefer Zoom—’Everybody has the same size box’
Chip Cutter – WSJ
Corporate America’s wings are clipped, and some CEOs say it is better that way. After months of doing their jobs from home, many executives and employees say all those hours in the sky and nights away from home may not be necessary going forward. Turns out, one-meeting trips to see a client face to face can be handled just as effectively via videoconference. Some executives plan to hold meetings with their lieutenants by video call from now on. In sales, there are professionals who say they have found that all-online meetings even give them certain advantages over face-to-face pitches of prospective clients.
/on.wsj.com/2Y5iy77

Countries should grab an old weapon in Covid fightback: annuities; This alternative to bonds can help both states and yield-deprived investors
Laurence Mutkin – FT
Last week’s promise from the US Federal Reserve to keep interest rates low for the foreseeable future, plus near-zero bond yields and very high sovereign borrowing — turbocharged by the Covid-19 crisis — is a telling combination. Governments should respond to it by issuing annuities, as well as selling bonds.
/on.ft.com/2Y7v7yZ

US companies near 2019 bond-issuance total with coronavirus binge; Record months in bond markets as companies seek safety and grab cheap debt
Joe Rennison – FT
Top-rated US companies have issued almost as much debt this year as they did in the whole of 2019, building large cash reserves to ride out the coronavirus pandemic and taking advantage of cheap borrowing costs in a market boosted by central bank assistance.
/on.ft.com/3dalUds

England and Wales Virus Deaths Fall for Seventh Straight Week
Eddie Spence – Bloomberg
Deaths involving coronavirus in England and Wales fell for the seventh week running, providing further support for the government’s decision to ease the lockdown and start reopening the economy.
/bloom.bg/2Aw79EM

College Students Are Facing Increased Homelessness and Food Insecurity Since the Coronavirus Closed Campuses
Charlotte West – Money
The high cost of housing in California was a challenge for Roshelle Czar even before the coronavirus hit the state. The 26-year-old Sacramento State University student had spent months looking for a job. Almost as soon as she was hired to scoop ice cream at Haagen-Dazs in downtown Sacramento, she was laid off due to the pandemic.
/bit.ly/3fuIdMB

Why a 2nd shutdown over coronavirus might be worse than the 1st — and how to prevent it
Holly Yan – CNN
It’s an outcome no one wants, but could become a “harsh reality”: a second wave of shutdowns.
Weeks after lifting stay-at-home orders, some states are seeing record numbers of hospitalizations from Covid-19 as thousands more Americans get infected every day.
/cnn.it/3fuxams

One in Five People at Risk of Severe Covid Due to Other Illness
Marthe Fourcade – Bloomberg
One in five people worldwide have an underlying health condition that puts them at risk for a severe Covid-19 illness if they contract the virus, scientists found.
/bloom.bg/30Pz4dk

Exchanges, OTC and Clearing

Former Optiver CEO appointed MD of cash markets at Deutsche Börse; Industry veteran Paul Hilgers will become managing director of cash markets at Deutsche Börse from September.
Hayley McDowell – The Trade
German exchange operator Deutsche Börse has hired the former CEO of Dutch market maker Optiver to lead its cash markets business. Paul Hilgers will take on the role at Deutsche Börse from 1 September overseeing the cash market, which includes Xetra, the Frankfurt Stock Exchange primary market business, and the Deutsche Börse Venture Network. He reports to Thomas Book, executive member of the board at the exchange.
/bit.ly/2UOgFKl

Unity National Bank, Only African American Bank in Texas, Joins American Financial Exchange(AFX)
The American Financial Exchange (AFX), an electronic exchange for direct lending and borrowing for American financial institutions, announced today that Unity National Bank, the only African American owned bank in Texas, joined the Exchange.
/bit.ly/3daTEY1

CME Group Inc. Announces Second-Quarter 2020 Earnings Release, Conference Call
CME Group
CME Group Inc. will announce earnings for the second quarter of 2020 before the markets open on Wednesday, July 29, 2020. Written highlights for the quarter will be posted on the company’s website at 6:00 a.m. Central Time, the same time it provides its earnings press release. The company will hold an investor conference call that day at 7:30 a.m. Central Time, at which time company executives will take analysts’ questions.
/bit.ly/2AFq7Zt

LME issues discussion paper on electronic warranting proposal
LME
/bit.ly/2YDkuD7

Revisions to the Index Guidebooks for TOPIX, etc.
JPX
The Index Guidebooks for total return indices and dividend indices calculated by TSE will be revised as below, based on the announcement “Change in Minor Adjustment Date Related to Ex-dividend for TOPIX, etc.” published on March 27, 2020.
/bit.ly/2UOo2S2

Revision to the Index Guidebooks for “JPX-Nikkei Index 400” and “JPX-Nikkei Mid and Small Cap Index”
JPX
The Index Guidebooks for “JPX-Nikkei 400 Index” and “JPX-Nikkei Mid and Small Cap Index” jointly calculated by Tokyo Stock Exchange, Inc. and Nikkei Inc. will be revised as below, based on the announcement, “Change in Minor Adjustment Date Related to Ex-dividend for “JPX-Nikkei Index 400” and “JPX-Nikkei Mid and Small Cap Index”” published on March 27, 2020.
/bit.ly/2AFuNyw

June 2020 Final Foreign Currency Settlement Prices
CME Clearing
Please find attached June 2020 Final Foreign Currency Settlement Prices.
/bit.ly/3htKj1b

Performance Bond Requirements: Agriculture, Energy, Equity, FX, and Interest Rate Margins – Effective Tuesday, June 16, 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.
/bit.ly/3fuOw2F

T7 Release 8.1: Important information for production start
Eurex
Deutsche Börse Group will launch Release 8.1 of the T7 trading system on 29 June 2020.
The support window for T7 Release 8.1 will take place on Saturday, 27 June 2020, between 15:00 and 17:00 CEST. Connectivity testing during the support window is strongly recommended for all participants and Multi-Member Service Providers.
/bit.ly/3hxN3dW

The Market For Cheese Has Changed in 2020 – OpenMarketsOpenMarkets
Jim Sullivan- Open Markets – CME Group
While Americans may not drink nearly as much milk as they once did, they have never eaten more cheese. According to the USDA, the United States produced 13.1 billion pounds of cheese in 2019, a new record. Forty percent, or 5.2 billion pounds, was of American cheese types with Cheddar making up the bulk at 28 percent, or 3.7 billion pounds, of total U.S. cheese production in 2019.
/bit.ly/2YAHWRo

Fintech

Refinitiv adds market spreads data to FXall trade performance analytics; Traders can monitor spreads quoted by liquidity providers as Refinitiv expands trade performance analytics on FXall platform.
Hayley McDowell – The Trade
Refinitiv has expanded the data accessible via its FXall trading platform to include spreads as buy-side traders continue to navigate FX markets amid the coronavirus pandemic.
/bit.ly/2ADL6vC

INTL FCStone adds NDFs workflow with Integral; INTL FCStone previously worked with Integral to develop its mobile trading app for institutional clients.
Hayley McDowell – The Trade
US securities and commodities broker INTL FCStone expanded its services to support trading in non-deliverable forwards (NDFs) through a new partnership with Integral.
/bit.ly/30MJ5bp

TRADE Calls: TradingScreen – Cloud Technology and the new normal
Kiays Khalil – The Trade
Chris Hollands, head of European and North American sales at TradingScreen, joins The TRADE for a discussion on buy-side adoption of cloud-based technologies, and how working from home due to the coronavirus has accelerated demand from market participants.
/bit.ly/3fuwRIt

Facebook launches WhatsApp-based digital payments service in Brazil; First nationwide rollout of WhatsApp Pay will allow users to send money without leaving platform
Hannah Murphy – FT
Facebook is forging ahead with plans to capitalise on emerging markets and bring ecommerce to its platforms, launching a WhatsApp-based digital payments service for the messaging app’s 120m Brazilian users.
/on.ft.com/2Bg7gnW

Bloomberg urges users to get set for negative US rates; Recommendation to switch pricing model comes as markets consider a Fed move below zero
Philip Stafford in London and Colby Smith – FT
Data provider Bloomberg has urged users to switch the way they price US dollar interest rate options — in case they are caught out by a move by the Federal Reserve to push rates below zero.
/on.ft.com/2Y7tXDD

Cryptocurrencies

Crypto Taxes Are Due July 15, but Be Careful — You May Need More Time
Robert W. Wood – CoinTelegraph
Tax day this year, like everything else, is different. The United States Internal Revenue Service has rescheduled it to July 15, but there’s little time left to get your records together and to file. Everyone knows the IRS is pushing hard to scrutinize crypto. A new IRS question appears at the top of Schedule 1 of your 2019 Form 1040 asking if you received, sold, sent, exchanged or otherwise acquired any financial interest in any virtual currency at any time during the year.
/bit.ly/3e9R8mj

Crypto Industry Entering New Era as Institutional Traders Get Invested
Kristin Boggiano – CoinTelegraph
Institutional interest in digital assets is growing as major financial players continue to enter the cryptocurrency space. A growing number of indicators suggest that institutional players are continuing to enter the digital asset markets, which have been dominated to date by high-net-worth individuals and actively trading crypto enthusiasts. Case in point: Crypto markets are seeing all-time highs in futures contracts’ open interest at entities such as the Chicago Mercantile Exchange. Widely known as one of the world’s largest financial derivatives exchanges, the CME enables sophisticated traders to trade in asset classes such as agricultural products, energy, metals and crypto futures and options.
/bit.ly/2B98qBs

US Supreme Court’s Computer Fraud Ruling Has Big Implications for Crypto
Andrew Hinkes – CoinDesk
Andrew Hinkes is an attorney with Carlton Fields and an adjunct professor at the New York University Stern School of Business and New York University School of Law.
This summer, the U.S. Supreme Court will consider how to interpret the 1986 Computer Fraud and Abuse Act, a key data protection law. The court’s decision could criminalize common but technically prohibited computer-related conduct, put limitations on a powerful law that punishes insider data theft and abuse like exchange hacks, or come down somewhere in the middle.
/bit.ly/2B7UaZH

CFTC Chairman Cautions Against ‘Overly Prescriptive Rules’ for Crypto
Kollen Post – CoinTelegraph
Chairman of the CFTC Heath Tarbert calls for principles rather than rules to dictate the government’s handling of digital assets. In a framework published in the Harvard Business Law Review on June 15, Heath Tarbert, Chairman of the Commodity Futures Trading Commission, broadly advocated financial regulation based on broader principles rather than specific rules.
/bit.ly/3dauV6i

The Government Is Playing Around With a Hybrid Crypto Dollar
Courtney Linder – Popular Mechanics
One day, the U.S. dollar could look a lot more like Bitcoin.
Earlier this month, the National Science Foundation (NSF), an independent agency of the U.S. government, awarded a $225,000 research grant to KRNC, a Los Angeles-based blockchain startup. The goal is to create a new protocol that could add crypto features to our current fiat currency.
/bit.ly/37DpY4L

Capital One Patents AI Fact-Checker to Make Crypto Trading Safer
Paddy Baker – CoinDesk
A subsidiary of U.S banking group Capital One said its newly patented artificial intelligence (AI) system would save human crypto traders from potential pitfalls.
Capital One Services, which deals in credit cards and auto loans, says its system uses AI technology for “analyzing [the] credibility of cryptocurrency-related information.”
Humans face barely surmountable obstacles and pressures when they trade crypto, the filing states.
/bit.ly/2YaCMg9

OKEx Taps Paxful to Provide New Fiat-to-Crypto On-Ramps
Jaspreet Kalra – CoinDesk
Crypto exchange OKEx is partnering with peer-to-peer marketplace Paxful to enable new fiat on-ramps for its customers.
Paxful said in an emailed statement Monday the move would benefit its own users by providing better liquidity and ease of access. According to the statement, Paxful would work as a fiat-to-cryptocurrency ramp for OkEx and its services will allow users to buy bitcoin with over 160 different national currencies, including the euro, pound sterling, Indian rupee and Thai baht.
/bit.ly/3eaAHX4

Survey: Japanese Crypto Holders Prefer XRP Over ETH
Turner Wright – CoinTelegraph
A survey by Japanese crypto exchange BitMax shows 25% of traders prefer XRP, compared to only 9% in ETH and 26% BTC. Despite the fact Ether is currently the second largest cryptocurrency by market cap, Japanese crypto holders may prefer to hold XRP.
/bit.ly/2zzpznk

Politics

U.S. Slumps to 10th Spot in World Competitiveness Rankings
Michelle Jamrisko and Eric Martin – Bloomberg
Trade war hurts U.S., which fell seven places on IMD’s ranking; Singapore leads the list, while U.K. climbs to 19th spot
The U.S. tumbled further in a ranking of most competitive world economies, dragged down by the weight of President Donald Trump’s trade wars. After losing the top spot to Singapore in 2018, the U.S. dropped further down the list to 10th place from third, according to an annual ranking from the Institute for Management Development, a business school based in Lausanne, Switzerland. Singapore was the most competitive economy for the second year in a row, followed by Denmark and Switzerland.
/bloom.bg/3hxUqSE

Biden Must Avoid Obama’s Mistakes on the Economy; It’s not enough to stem a financial crisis; a president also must work to ensure the recovery.
Karl W. Smith – Bloomberg
Polls suggest Joe Biden is now the strong favorite to win the presidential election. If his lead holds through Nov. 3, he will be on track to inherit an economic crisis on par with the one he faced as vice president 12 years ago. That means he will also come up against the same trap that ensnared the Obama administration — the danger of focusing intently on the immediate crisis but neglecting the recovery.
/bloom.bg/2YE2rwx

China Loses Landmark WTO Dispute Against EU
Bryce Baschuk – Bloomberg
Retreat provides greater legal certainty for EU, U.S. tariffs; Bolsters U.S. claim that China has not become a market economy
China spent four years fighting for market-economy status, a designation that would give it stronger footing with commercial partners while also curtailing their ability to retaliate over trade disputes. This week, China quietly lost that battle.
/bloom.bg/30YT0uD

Trump Rally Not Welcome Here, Snaps Tulsa Newspaper Editorial; “We don’t know why he chose Tulsa, but we can’t see any way that his visit will be good for the city,” says the Tulsa World editorial board.
Mary Papenfuss – Huffington Post
A harsh, plain-speaking editorial in Tulsa’s largest newspaper Monday declared that President Donald Trump’s planned rally in the city Saturday will bring no benefit to the city — and will risk Oklahomans’ lives.
/bit.ly/2Aws7Du

Regulation

Complaints Scheme: our approach to remedies
UK FCA
This statement explains our current approach to deciding what we do when we agree that a complaint made about the FCA under the Complaints Scheme (the Scheme) is well founded. We aim to apply a consistent and fair approach to ensure remedies are appropriate and proportionate, based on the individual features of the complaint and what went wrong.
/bit.ly/30MLO4D

A financial system to support the recovery
UK FCA
Speech by Charles Randell, Chair of the FCA and PSR, to a virtual roundtable of bank chairs hosted by UK Finance.
/bit.ly/2UMBB4a

June 2020 update of position limits for some commodity derivative contracts
UK FCA
The Financial Conduct Authority (FCA) has today published updated position limits for certain commodity derivative contracts traded on ICE Futures Europe. The limits have been established under the Markets in Financial Instruments Regulations 2017 (MIFI Regs).
/bit.ly/2UOj1sF

ICYMI: Harvard Business Law Review Publishes Chairman Tarbert’s Framework for Sound Regulation; Excerpts from Chairman Tarbert’s Article: “Rules for Principles and Principles for Rules: Tools for Crafting Sound Financial Regulation”
CFTC
“The fundamental objective for any government agency overseeing financial markets and institutions should be sound regulation. And how we regulate is just as important as what we regulate. Every major financial regulator in the world employs, to varying degrees, two primary methods of regulation: principles-based and rules-based …
/bit.ly/3fuzQAF

Statement of the FINRA Board of Governors
FINRA
We are grieved by the senseless death of George Floyd and other recent acts of violence against members of the Black and African American communities. We stand together with the FINRA community in our personal commitment to the principle of equal justice under the law and to fight all forms of racism and prejudice.
/bit.ly/3hy3ZRr

Social Distancing and the Impact on Older Investors
FINRA
Today, social distancing is an important component of public health. However the isolation that results has important implications for financial decision making, fraud vulnerability, and cognition among older investors. Join this panel for a discussion of emerging research on these topics and steps you can take to further protect your clients.
/bit.ly/3frV7eg

ESMA publishes 2019 Annual Report and updates 2020 Annual Work Programme
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has published its Annual Report, which reviews the achievements from 2019 against its mission of enhancing investor protection and promoting stable and orderly financial markets in the European Union.
/bit.ly/2AGRIcD

Madoff Backer Merkin Claims $41 Million in 740 Park Fire Losses
Bob Van Voris – Bloomberg
J. Ezra Merkin, the hedge-fund operator who invested more than $2 billion of his clients’ money in Bernard Madoff’s Ponzi scheme, sued his home insurer for $41 million in artwork and other items damaged in a 2016 fire at his 740 Park Avenue duplex.
/bloom.bg/3e6smmZ

Investing and Trading

Investors Are Sitting on the Biggest Pile of Cash Ever; Amid head-spinning economic uncertainty and stock-market volatility, many investors have rushed into money-market funds
Gunjan Banerji – WSJ
Investors have rarely been this flush with cash. Grappling with the most economic uncertainty in decades and a head-spinning stretch of volatility in the U.S. stock market, many investors have rushed into money-market funds. Assets in the funds recently swelled to about $4.6 trillion, the highest level on record, according to data from Refinitiv Lipper going back to 1992.
/on.wsj.com/2YJ4oI0

Fed Gives Credit Market New Lease of Life Just as Rally Faltered
Lyubov Pronina and Finbarr Flynn – Bloomberg
Default risk for company debt falls most since April 9; Europe’s primary market reopens after zero day with 16 deals
European credit was in a buoyant mood Tuesday after the Federal Reserve announced plans to start buying corporate bonds, triggering rallies in debt markets around the world.
/bloom.bg/2Y7tph3

CLOs Are Not CDOs, Not Even During a Pandemic; The structured products have their problems but are hardly about to topple the banking system.
Brian Chappatta – Bloomberg
The collateralized loan obligation bogeyman is back. This time it comes in the form of a widely read article in The Atlantic, “The Looming Bank Collapse,” written by Frank Partnoy, a law professor who helped structure and sell CLOs and collateralized debt obligations at Morgan Stanley in the 1990s. CDOs, of course, were one of the key culprits behind the 2008 financial crisis. So, with the boom in CLOs during the last expansion, “we could be on the precipice of another crash, one different from 2008 less in kind than in degree,” Partnoy wrote. “This one could be worse.”
/bloom.bg/30MSiR1

Institutions

AJ Bell Appoints Clearstream For Third-Party Fund Processing
Mondovisione
AJ Bell has appointed Clearstream as its primary custodian for its fund processing activities.
Going forward, Clearstream will be AJ Bell’s primary custodian for funds custody, settlement and order routing for its Youinvest, Investcentre and Custody Solutions products in respect of open-ended investment companies (OEICs), unit trusts and hedge funds via its fully automated global fund processing platform Vestima.
/bit.ly/3fA2hNL

TRADE Talks: FIFA rages and shorter market hours
Kiays Khalil – The Trade
In the sixth episode of the TRADE Talks podcast, the editorial team run through the top news they have covered recently, and catch up with Janus Henderson’s head of EMEA equity trading, Richard Worrell, to discuss the bid for shorter market hours.
/bit.ly/2AFr6Jc

Calpers bets big on private equity and leverage; Pension fund’s view is ‘too little liquidity can be deadly but too much is costly’
John Plender – FT
Asked how he is managing through the Covid-19 crisis, Ben Meng, chief investment officer of Calpers, is unequivocal. “We have a plan,” he says, “and we are sticking to it.” On the basis of a root-and-branch investment strategy review initiated last year the near-$400bn Californian public sector workers pension fund has been restructuring the portfolio better to reflect its structural advantages. The chief ones are sheer size and the ability of a perpetual fund to take a very long-term view.
/on.ft.com/3d9ONq6

Banks Face $300 Million Shortfall on Luckin Margin Loans
Cathy Chan – Bloomberg
Lenders to Luckin founder sold shares he pledged as collateral; They raised $210 million as prices plunged in April and May
Banks including Credit Suisse Group AG and Morgan Stanley face a $300 million shortfall on margin loans to the embattled founder of Luckin Coffee Inc.
/bloom.bg/3e8LoJp

Regions

Commodity exporters look to demand from China to boost recovery; Economics, not geopolitics, will ultimately determine the country’s import portfolio
David Fyfe – FT
Commodity traders are counting on China for a further recovery in natural resource markets. The country accounts for 30 per cent of the world’s key commodity imports, is two months ahead of the west in easing lockdowns and has used weak prices to stockpile through the crisis.
/on.ft.com/3e7YDu2

Metals authority probes Perth Mint over gold sourcing claims; Review follows allegations of tainted metal buying from small miners in Papua New Guinea
Neil Hume – FT
The body that oversees London’s $5tn gold market is investigating allegations that the Perth Mint, one of the industry’s biggest refiners, processed tainted metal from small-scale miners in Papua New Guinea.
/on.ft.com/2Y79dfc

Australia Blasts China for Creating ‘Disinformation’ in Pandemic
Jason Scott – Bloomberg
Foreign Minister Payne says liberal democracy being undermined; Comments may further inflame nation’s tensions with Beijing
Australian Foreign Minister Marise Payne criticized China for creating “disinformation” during the coronavirus pandemic, saying it “will cost lives.”
/bloom.bg/3hrMXo5

Swiss Flag Financial Risk With Economy in Deepest Dive Since 70s
Catherine Bosley – Bloomberg
The Swiss economy is expected to suffer its biggest contraction since the mid-1970s this year, with financial stability risks increasing globally due spiraling corporate and state debt. “The risk of upheaval on the financial markets and further upward pressure on the Swiss franc is high,” Switzerland’s the State Secretariat for Economic Affairs said in a statement on Tuesday.
/bloom.bg/2UQit5l

ECB Says Croatia, Bulgaria May Join Pre-Euro System This Year
Piotr Skolimowski – Bloomberg
Board member Panetta praises bold measures taken by countries; ECB official says 2023 is first window for euro adoption
Croatia and Bulgaria could join waiting room to adopt the euro this year, European Central Bank board member Fabio Panetta said, praising the countries’ efforts to switch to the common currency.
/bloom.bg/3fzNeDL

Brexit

Boris Johnson and EU pledge renewed vigour in trade talks; High-level meeting fuels hopes that a post-Brexit deal may be possible
George Parker and Jim Brunsden – FT
Boris Johnson on Monday set an end-of-July deadline for sealing a UK-EU trade deal, amid growing optimism in London and Brussels that a post-Brexit agreement might be possible.
/on.ft.com/2zCxT5Z

Miscellaneous

Business School Deans Live the Crisis, Not Just Teach About It; After scrambling online, schools delay admissions deadlines, scrap GMAT, plan for hybrid classes, and hear calls for tuition refunds.
Janet Lorin – Bloomberg
As the coronavirus spread around the world, business school deans suddenly found themselves in real-life case studies of crisis management leadership. “I remember exactly where I was sitting,” says Douglas Shackelford, dean of University of North Carolina Kenan-Flagler Business School, when he realized students weren’t coming back from spring break and the school needed to change everything. “The next two weeks, three weeks were just a blur.”
/bloom.bg/2YLacB4

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