Oil Crash Crushes Individual Investors, Prompts Trading Overhaul; How Wall Street internships are going virtual

Jul 6, 2020

First Read

Cboe Betting U.S.-Style Equity Derivatives Trade, Clearing Translates to Europe
By Suzanne Cosgrove – John Lothian News

Cboe Global Markets executives on Thursday touted its European clearinghouse acquisition, announced July 1, saying the exchange holding company aims to unlock the potential of pan-European derivatives business.

In a call with investors and analysts, Edward Tilly, Cboe president and CEO, said the deal with EuroCCP marked “a major milestone” for the company. “Ownership of a leading European clearinghouse not only enhances Cboe’s European equity business, but also provides opportunity to diversify our business into trading and clearing derivatives,” Tilly said.

To read the rest of this story, go here.

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Hits & Takes
By John Lothian & JLN Staff

July 4th was won not by the musical Hamilton on Disney+, but by the Japanese Ambassador to the US, Yamanouchi Kanji, playing the Star Spangled Banner on guitar, in the style of Jimi Hendrix

Did it seem like there were a lot of fireworks going off on the 4th of July in the U.S.? Check out this video of Los Angeles from the sky on the evening of the 4th.

Ceres Accelerator, a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy, has issued a report “Addressing Climate as a Systemic Risk: A call to action for U.S. financial regulators” that outlines 50 key action steps financial and insurance regulators can take to protect financial markets from the ongoing climate crisis. Here is the report.

JLN has its tradition of publishing the list of grievances known as the Declaration of Independence on July 4th, but Josh Brown of The Reformed Broker has his own tradition (since 2013) of publishing the story of “The Broker Who Save America.”

I am opting out of my contract to watch major league baseball this year because of concern of becoming a couch potato.

Not only was my summertime trip to the Ooberammergau passion play cancelled, but now the EU won’t allow US citizens entry anyway. I knew I was taking a chance putting down money on something that has run every 10 years since 1634.

There is a study that says money can buy happiness. Who knew?

Bloomberg is reporting “Suspected Bubonic Plague Case Reported in China’s Inner Mongolia.”. Put this in the category of “Not Good News.”

Congratulations on surviving the first six months of 2020, a year we shall never forget, if we live through it.

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

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Trading Technologies Enters into Multi-Year Agreement with TP ICAP for Implementation of TT OMS
Trading Technologies International, Inc.
Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, infrastructure and data solutions, and the Institutional Services division (IS) of TP ICAP, the world’s largest interdealer broker, today announced the two firms have entered into a multi-year agreement whereby TP ICAP will utilize TT’s new Order Management System (OMS) solution. Through this agreement, TP ICAP IS will replace 85 trading screens in London, Paris and New York with TT’s award-winning TT Pro trading screen.
/jlne.ws/31REmWe

*****Eighty-five screens at a time wins the world.~JJL

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Marex Spectron Appoints Ram Vittal as Head of North America
Marex Spectron
Marex Spectron today announced the appointment of Ram Vittal as Chief Executive Officer, Marex Spectron North America, reporting to Ian Lowitt, Group Chief Executive. Ram will be based in New York.
/jlne.ws/2VPyEjX

****Jason Manumaleuna, CEO of the Marex Spectron RCG Division, now reports to Vittal.

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Martin Wolf: ‘Democracy will fail if we don’t think as citizens’; Coronavirus has exposed frailties in our economic and social model. This FT series examines how it is forcing a rethink of the role of citizens, the state and business
Martin Wolf – FT
“It is clear then that the best partnership in a state is the one which operates through the middle people, and also that those states in which the middle element is large, and stronger if possible than the other two together, or at any rate stronger than either of them alone, have every chance of having a well-run constitution.” Aristotle, Politics
Covid-19 has been a global shock. But will it be a transformative one? The answer is that it might be a transformative event for a number of western societies, notably the US and UK.
/jlne.ws/3e1toQr

*****Get a big cup of coffee and take the time to read this latest Martin Wolf masterpiece.~JJL

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Degree Becomes a Must-Read on the Economy; Subscribers to Nathan Tankus’s newsletter, Notes on the Crises, aren’t bothered by his lack of diplomas.
Peter Coy – Bloomberg
Nathan Tankus, 28, hasn’t finished his bachelor’s degree at New York City’s John Jay College of Criminal Justice. He has, however, mastered enough knowledge of economics and finance to become a widely followed commentator on the Federal Reserve. A newsletter he launched this year has followers at the Fed, the Securities and Exchange Commission, the Office of the Comptroller of the Currency, and the Department of the Treasury. He’s also followed on Twitter by journalists, economic think-tankers, and Wall Street economists.
/jlne.ws/38u6GPX

*****He gets $1000 per year for his newsletter and has 450 clients, or $45,000 in revenue. I am guessing after this publicity he will have more subscribers.~JJL

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Walmart is converting 160 store parking lots into drive-in theaters
Jordan Valinsky – CNN
Two of the most classic pieces of Americana are coming together this summer: drive-in theaters and Walmart. Beginning in August, the retailer is converting 160 of its US store parking lots into drive-in movie theaters. As the pandemic continues, drive-in theaters have been making a comeback as a safe alternative to the traditional movie theaters that remain closed in much of the country.
/jlne.ws/3f7fgXo

*****If you can get a COVID-19 test at the same time, this will be a winner.~JJL

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Thursday’s Top Three
Our top story Thursday (we didn’t publish on the Friday holiday) was The Financial Times’ The lockdown death of a 20-year-old day trader, about the suicide of Alex Kearns and the ramifications for online brokerages. Second was the Wall Street Journal’s Wall Street Knows It’s Too White. Fixing It Will Be Hard. Third was Hedge Fund Star John Paulson Calls It Quits, also from the Wall Street Journal.

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Lead Stories

Oil Crash Crushes Individual Investors, Prompts Trading Overhaul
Amrith Ramkumar, Joe Wallace and Frances Yoon – WSJ
For decades, regular people didn’t trade commodities. But electronic trading and new investment products prompted amateur investors to start buying and selling oil. When prices crashed in April, that foray turned into a disaster, spreading billions of dollars in losses to ordinary people. Many of them then missed out as oil surged in May and June, posting its best quarter in 30 years.
/jlne.ws/31Nl9F7

How Wall Street internships are going virtual; US banks are redesigning one of their oldest rites of passage for the Zoom era
Laura Noonan – FT
Zoom etiquette classes, digital job shadowing and online scavenger hunts await the thousands of students who begin Wall Street’s first year of virtual internships on Monday. Goldman Sachs, Citigroup and JPMorgan Chase all welcome their summer cohorts this week and will seek to capture the essence of one of Wall Street’s oldest rites of passage — in a world where interns cannot step foot in their offices.
/jlne.ws/38tSCWq

Marex Spectron hires from JP Morgan for CEO of North America role; Ram Vittal joins Marex Spectron after previously leading client management for treasury services at JP Morgan, and building out Goldman’s asset management business in India.
Hayley McDowell
Marex Spectron has confirmed that JP Morgan’s former head of treasury services client management has been appointed chief executive officer for its business in North America.
/jlne.ws/2ZGztwz

First Black Fed President Warns of Systemic Racism’s Economic Toll; National upheaval coincides with shifting focus at central bank; ‘We are a different Fed,’ Atlanta’s Raphael Bostic says
Nick Timiraos – WSJ
Raphael Bostic, the Federal Reserve Bank of Atlanta’s president, is shining a light on how economic and social upheaval have changed how the central bank talks and thinks about racial and economic inequality. Mr. Bostic, an economist whose work has focused on racial disparities in access to capital, has helped lead those public discussions as the first Black president to lead one of the 12 regional reserve banks in the system’s 106-year history.
/jlne.ws/31NjZJL

Hedge fund launches seize up in tough markets; Just 84 funds got going in the first quarter, while 304 were liquidated
Laurence Fletcher – FT
The coronavirus crisis has made life even tougher for start-up hedge funds around the world. While some of the biggest names in the industry, such as DE Shaw and Baupost, have been able to take in investor assets during the crisis, some smaller names and new launches are struggling to gain investors’ attention.
/jlne.ws/2CdLUYs

Court ruling ties SEC’s hands over investor fraud; New restrictions on regulator’s power to force fraudsters to repay illegal gains will affect victims of insider trading
Chris Flood – FT
US regulators face new restrictions on their powers to force fraudsters to repay illegal gains after a Supreme Court ruling that will affect victims of insider trading, market manipulation and accounting fraud. The Securities and Exchange Commission wins disgorgement orders — repayments from wrongdoers — worth more than a billion dollars a year from federal courts. The SEC can also impose fines as punishment.
/jlne.ws/2NXO2X7

Singapore advances probe of LSEG’s Refinitiv takeover; The competition commission in Singapore has raised concerns about the deal’s impact on key FX benchmarks owned by Refinitiv.
Hayley McDowell – The Trade
Singapore’s competition authority has advanced its probe into the London Stock Exchange Group’s (LSEG) takeover of Refinitiv due to concerns it could harm competition in index licensing.
/jlne.ws/2ZL7oUK

Lloyds CEO Horta-Osorio Will Step Down Next June
Stefania Spezzati – Bloomberg
Britain’s biggest mortgage bank also names Budenberg chairman; Horta-Osorio is leaving after a 10-year tenure at the lender
Lloyds Banking Group Plc Chief Executive Officer Antonio Horta-Osorio announced his surprise resignation after a decade at the British lender. In a leadership overhaul, the bank also tapped former investment banker Robin Budenberg as its new chairman, according to a statement Monday. He replaces Norman Blackwell, who had previously said he would leave the bank before the 2021 annual meeting.
/jlne.ws/2VRQD9s

Elly Hardwick appointed to the board of directors for Itiviti
Itiviti
Itiviti, a leading technology and service provider to financial institutions worldwide, today announced that Elly Hardwick had been appointed to its board of directors to further growth and technology-driven innovation plans for the company.
/jlne.ws/2VSpxyO

Why the Fed thinks Goldman is America’s riskiest bank; Annual capital review finds that New York bank would struggle in a deep recession
Laura Noonan – FT
Goldman Sachs has a new title it may have to live with: America’s riskiest big bank, according to the Federal Reserve. This week the Fed slapped Goldman with a total capital requirement higher than any other US bank, thanks to a large “stress capital buffer” the regulator wants all banks to maintain to see them through the severest of shocks. The resulting requirement for tier 1 common equity — largely generated from retained profits and share sales — is at least 13.7 per cent of Goldman’s risk-weighted assets.
/jlne.ws/38vUEoW

Credit Suisse to pay $75,000 in Australia for trading violations; Australia’s regulator said traders were inadequately trained and surveillance systems failed to prevent the violations at Credit Suisse.
Hayley McDowell – The Trade
Credit Suisse has paid a $75,000 penalty to comply with an infringement notice after authorities in Australia found it had violated trading rules.
/jlne.ws/3gysUTo

Refinitiv launches low-latency data feed for Spot Matching; The Refinitiv FX Binary Multicast Feed 5ms is designed to improve liquidity and market-making for Spot Matching clients.
Annabel Smith – The Trade
Data and infrastructure provider Refinitiv has launched a low-latency market data feed for its FX trading platform that increases market transparency through near real-time data and price discovery.
/jlne.ws/2ZHZ3Bq

TRADE Calls: BNY Mellon Pershing – The evolution of trading in uncertainty
Kiays Khalil – The Trade
Mike Horan, head of EMEA trading at BNY Mellon Pershing, joins The TRADE to share his thoughts on the evolution of the trader during this economic uncertainty, and explains how advancements in technology have made working from home feasible for traders.
/jlne.ws/31PpGqw

For Zimbabwe Investors, Stock Exchange Closing Is the Last Straw
Antony Sguazzin, Brian Latham, and Ray Ndlovu – Bloomberg
Shares used by many wealthy Zimbabweans as an inflation hedge; Inflation is surging, fuel is scarce, the currency is crashing
When Zimbabwe suspended trading on its stock exchange last week, James Hove was left with no access to the funds he needs to conduct his business. Like many wealthy Zimbabweans, Hove invests in the local stock market. Not for the value he sees in the companies whose stocks trade on it, but as a hedge against surging consumer prices: while annual inflation is running at 786%, the benchmark Zimbabwe Stock Exchange industrial index has risen sevenfold this year. The authorities halted trade because they say speculation, and the use of dual-traded stocks as an indicator of the future exchange rate, are undermining the nation’s currency.
/jlne.ws/3f6MKoO

Billionaire Louis-Dreyfus’s Holding Company Falls in Value Again
Jack Farchy and Andy Hoffman – Bloomberg
Louis Dreyfus Holding paid high dividends despite losing money; Accounts show trading house reduced stake in Luckin Coffee
Louis Dreyfus Holding BV, the parent company of the agricultural-trading giant, saw its equity value decline again last year as it continued to pay high dividends despite losing money.
/jlne.ws/2CdVU3Z

Banks Are Ditching London Offices and Not Just Because of Covid-19
Jack Sidders and Donal Griffin – Bloomberg
Lenders have cut six million square feet of space since 2011; Headcount is dropping at fastest rate in at least six years
The giants of Wall Street and European banking are giving up their stronghold on London. In the coming months alone, Barclays Plc may ditch its investment bank’s headquarters in the capital; Credit Suisse Group AG is offloading nine floors of office space; and Morgan Stanley is reviewing its entire London footprint.
/jlne.ws/2NUNX6C

Why the World Is Getting Angrier, and What That Says About the Economy
Tracy Alloway and Joe Weisenthal – Bloomberg
The world has gotten angrier in recent years, and the coronavirus crisis seems likely to have accelerated the trend. So what does this say about the economy, and what does it mean for policy going forward? On this episode, we speak with Eric Lonergan, a macro hedge fund manager, and the co-author of the new book Angrynomics about his study of the emotion of anger — why it exists, what purpose it serves, and what it can tell us about the future of economic policy.
/jlne.ws/2vuLxSX

‘Black Wall Street’: The history of the wealthy Black community and the massacre perpetrated there
Tom Huddleston Jr. – CNBC
Nearly a century ago, thousands of Black Tulsa, Oklahoma residents had built a self-sustaining community that supported hundreds of Black-owned businesses. It was known as “Black Wall Street.” This summer marked the 99th anniversary of the Tulsa race massacre, a tragic event perpetrated on Black Wall Street, which has been described as “the single worst incident of racial violence in American history.”
/jlne.ws/2ZCqV9Y

BOE Governor Warns Over Negative Interest Rates, Times Reports
Colin Keatinge – Bloomberg
The governor of the Bank of England, Andrew Bailey, has warned lenders of the challenges negative interest rates would bring, the Sunday Times reported. Bailey said in a letter sent last month that adapting to a move into negative territory would be a “significant operational undertaking for firms,” according to the newspaper.
/jlne.ws/2ZEeQkA

Canada’s biggest banks join boycott of Facebook platforms
Nichola Saminather – Reuters
Canada’s biggest lenders confirmed on Friday they had joined a widespread boycott of Facebook Inc begun by U.S. civil rights groups seeking to pressure the world’s largest social media platform to take concrete steps to block hate speech.
/jlne.ws/31NJlHB

Fears of a Brexit crash-out return to haunt the City; If negotiators fail to reach an agreement, City firms could lose access to the European markets overnight and find themselves unable to serve their EU clients from London
Lucy McNulty, Shruti Tripathi Chopra – Financial News
Fears of a no-deal Brexit are gripping the City after Britain and the European Union failed to reach an agreement last week over future trade relationships between the two sides. Finance bosses in the UK are bracing for “regulatory warfare” with the trading bloc as the clock ticks down to the end of Britain’s post-Brexit transition period on 31 December.
/jlne.ws/2BHIygD

Why Hong Kong cannot be another Singapore; The rule of law is threatened by Communist party authority
Gideon Rachman – FT
Some years ago, I was talking to a government minister in Singapore. In a moment of frankness, he acknowledged that his government deliberately made life difficult for its political opponents — and then added with a faint smile: “But here in Singapore we use dental tools. In China, they use a sledgehammer.”
/jlne.ws/31K3Kxc

Coronavirus

As Coronavirus Cases Rise, the Federal Work Force Heads Back to the Office; Federal employees are being ushered back to office buildings under inconsistent and conflicting reopening plans, against the wishes of leaders in the nation’s capital.
Zach Montague – NY Times
As coronavirus cases surge around the country and epidemiologists urge caution, the federal government is heading back to work, jeopardizing pandemic progress in one of the few regions where confirmed infections continue to decline: the nation’s capital.
/jlne.ws/2O14824

The Fullest Look Yet at the Racial Inequity of Coronavirus
Richard A. Oppel Jr., Robert Gebeloff, K.K. Rebecca Lai, Will Wright and Mitch Smith- NY Times
Teresa and Marvin Bradley can’t say for sure how they got the coronavirus. Maybe Ms. Bradley, a Michigan nurse, brought it from her hospital. Maybe it came from a visiting relative. Maybe it was something else entirely.
/jlne.ws/2DhAnZ3

Coronavirus Hits Nation’s Key Apple, Cherry Farms; Mounting Covid-19 cases in a Washington county underscore the difficulty of keeping farmworkers safe
Jesse Newman – WSJ
A surge in coronavirus cases in one of the country’s top regions for apples and sweet cherries is challenging agricultural operations already limited by rules aimed at preventing such outbreaks, underscoring the difficulty of keeping farmworkers safe.
/jlne.ws/3iyRc1s

Vitamin D promoted as potential defence against coronavirus; Scientists caution that more research is needed to prove whether supplements can fight off Covid-19
Clive Cookson – FT
Calls are growing for people to take vitamin D supplements to reduce the risk of contracting coronavirus, as some research suggest they could be especially beneficial to those with darker skin.
/jlne.ws/2NY5Pxx

UK universities at risk of insolvency as pandemic shreds income; A dozen institutions vulnerable as student numbers drop and pension liabilities grow
Bethan Staton – FT
About a dozen universities could be at risk of insolvency because of the coronavirus pandemic, with a potential drop in the number of students and mounting pension liabilities leaving the sector facing an unprecedented financial crisis.
/jlne.ws/2Z2qfLZ

Soaring saving rates pose policy dilemma for world’s central bankers; Consumers’ pandemic cash stash could help drive economic recovery — or hold back growth
Chris Giles and Martin Arnold – FT
Households across the world have been saving up since the coronavirus pandemic hit the global economy, but their cash stash poses a dilemma for policymakers as they try to gauge the amount of stimulus needed to fuel a return to growth.
/jlne.ws/2Z6VDsZ

Tokyo Finds 102 New Virus Cases as It Tries to Avoid Blanket Curbs
Max Zimmerman
Governor Yuriko Koike has hinted at targeted restrictions; Cases have surged to their highest level in two months
Tokyo found 102 new coronavirus cases on Monday, NHK reported, marking the fifth consecutive day of more than 100 infections as the city tries to fend off a resurgence without resorting to widespread business shutdowns.
/jlne.ws/3f9Vt9O

How the Pandemic Is Changing the Outlook for Peak Oil
Will Kennedy – Bloomberg
One big question emerging from the pandemic is whether it will speed up the global shift away from oil. Life under lockdown gave a taste of a world that burns less petroleum, with consumption down by about a quarter and city dwellers from Los Angeles to New Delhi relishing the cleaner air. As restrictions eased, things weren’t exactly returning to normal. Many workers had given up on commuting and there was talk that air travel might never recover. On the other hand, rock-bottom oil prices and the desire to avoid crowded public transport had some people driving to work for the first time or taking road trips instead of flying.
/jlne.ws/3dZn3VP

Generation Z Is Bearing the Economic Brunt of the Virus
Emily Cadman and Sybilla Gross – Bloomberg
Quarter of young Australians don’t qualify for key job package; Fears rise of generational scarring without more intervention
Already scarred by the global financial crisis a decade ago, a generation of younger people is bearing the economic brunt of the coronavirus. Even billions of dollars in global fiscal stimulus is struggling to cushion the blow as the pandemic worsens generational inequality.
/jlne.ws/2AyDvhX

Low-Income American Households Suffer Inflation Shock From Virus
Simon Kennedy – Bloomberg
Bloomberg Economics says virus lifting grocery, housing costs; Economists says inequality in inflation poses challenge to Fed
The coronavirus is inflicting a price shock on low income Americans that risks further driving up inequality. In a study released this week, Bloomberg Economics estimated higher grocery and housing costs for lockdown necessities meant those households whose incomes are in the bottom 10% currently face inflation of 1.5% compared with 1.0% for the top 10% and the official 0.1% overall average recorded in May.
/jlne.ws/2BIWbvV

Patience May Be Key Challenge in Covid Fight
Rosalind Mathieson – Bloomberg
It’s a race where no one wants to hold the record. India has now overtaken Russia to have the third-highest number of Covid-19 infections. Iran, South Africa and Indonesia have had their worst death tolls, with recent record daily cases in America. Parts of Spain are back in lockdown. In Australia, a spike in infections has seen the two most populous states close their mutual border for the first time in a century.
/jlne.ws/31LfM9z

How the American Worker Got Fleeced; Over the years, bosses have held down wages, cut benefits, and stomped on employees’ rights. Covid-19 may change that.
Josh Eidelson – Bloomberg
Amazon.com Inc. fired Emily Cunningham a little before the end of Good Friday, though the human resources rep put it a little differently. “You have ended your relationship with Amazon,” Cunningham recalls being told an hour after her company email account stopped working. She’d been a software engineer at the Seattle headquarters for seven years. The HR rep didn’t cite any deficiencies in her work but said she’d violated company policies. According to Amazon, she’d been breaking its rule against “solicitations.” Cunningham says that’s a policy ignored on a daily basis when it comes to things like selling Girl Scout Cookies in the office.
/jlne.ws/3iDZBky

Exchanges, OTC and Clearing

HKEX kicks off trading of first tranche of 10 MSCI futures contracts tracking stock markets from Australia to Japan; Hong Kong stock exchange launched the trading of the futures contracts denominated in US dollars as part of a licensing deal for 37 such derivatives
Zhang Shidong – South China Morning Post
Hong Kong’s stock exchange on Monday launched the trading of 10 MSCI Index futures contracts tracking stocks from across Asia-Pacific markets, as the bourse seeks to cement its position as a leading global financial hub.
/jlne.ws/2C4xOJ3

Regulator’s Column: What SGX RegCo expects of Sustainability Reporting during COVID-19 times
SGX
Urgent action to deal with various business disruptions has characterised the first phase of corporate response to the COVID-19 pandemic. These include activating business continuity plans to comply with safe distancing measures, finding alternative supply chains amidst lockdowns globally, and navigating legal contracts and force majeure events.
/jlne.ws/2Ccw7Jr

SGX Orb Awards focuses on resilience of financial markets
SGX
Third edition of awards part of SGX’s efforts to foster financial education, empower investors; Special #Resilience category to focus on the role of financial hubs amid COVID-19
Singapore Exchange (SGX) today launched the third edition of its annual SGX Orb Awards to recognise excellence in financial journalism and content. Continuing the theme of “Connecting Perspectives and Inspiring Conversations,” this year’s special category focuses on the resilience of financial markets amid the COVID-19 pandemic.
/jlne.ws/2NW3e76

TSE to launch arrowhead System Stats Service
JPX
Tokyo Stock Exchange, Inc. (TSE) will launch a new paid service (“the Service”) as part of the Alternative Data Service, starting August 3, 2020, to provide various data regarding the cash equity trading system (arrowhead) which is not currently available (“System Stats”).
/jlne.ws/2AysmOh

ASX Monthly Activity Report – June 2020
ASX
/jlne.ws/3iCgko0

Euronext announces volumes for June 2020
Euronext
Euronext, the leading pan-European exchange, today announced trading volumes for June 2020. Monthly and historical volumes table are available at this address:https://www.euronext.com/en/investor-relations#monthly-volumes
/jlne.ws/2VPYu7z

Maximilian von Wallenberg joins Management Board of Boerse Stuttgart Digital Exchange GmbH
Boerse Stuttgart
Maximilian von Wallenberg (36) has become a member of the Management Board of Boerse Stuttgart Digital Exchange GmbH on 1 July 2020. He succeeds Dr Dirk Sturz, who has left the company at his own request to pursue a new career challenge. Beside von Wallenberg, Peter Großkopf is also a member of the Management Board of the company, which is the technical operator of Boerse Stuttgart Digital Exchange (BSDEX). Boerse Stuttgart Digital Exchange GmbH is a joint venture of Boerse Stuttgart GmbH, Axel Springer SE, finanzen.net GmbH and SBI Crypto Investment.
(NO LINK)

Fintech

TradingScreen Continues OMS Expansion on the Buy Side; The vendor firm will release enhancements to allocation, pre-trade compliance, and reporting and analytics in September.
Wei-Shen Wong – Waters Technology
While TradingScreen had started out as an execution management system (EMS) provider, last year it began a push into the buy-side order management system (OMS) space. Since then, it has onboarded hedge funds with assets under management ranging from $250 million to $8 billion, onto its OMS, which is part of its overall TradeSmart OEMS platform.
/jlne.ws/3f8GqwU

Wirecard’s core business has been lossmaking for years, audit shows; Operating performance in Europe and the Americas far worse than previously known, according to KPMG report
Olaf Storbeck – FT
Wirecard’s core business in Europe and the Americas has been lossmaking for years, casting doubt on the economic substance of the parts of the company not directly affected by its accounting scandal.
/jlne.ws/2Z2b4m5

Cryptocurrencies

Bitfinex Launches Over-the-Counter Paper Trading
Bitfinex
We’re pleased to announce that over-the-counter (OTC) paper trading is now available on Bitfinex. Paper trading is a new feature available on sub-accounts, enabling users to test strategies and trade Bitcoin in a simulated market environment without the need to deposit real funds.
/jlne.ws/2Z3iIwA

Increasing Presence Of High Frequency Trading In Crypto
Mondovisione
Bitcoin’s 30-day volatility has fallen to 27.6% over the past 30 days, according to data from blockchain analytics firm intoTheBlock. “The cryptocurrency markets continue to stay eerily calm as volatility drops and traders continue to expect a big move,” wrote Zack Voell in yesterday’s market report for Coindesk. The prolonged period of low volatility price consolidation in bitcoin that we’ve witnessed in recent months is a result of an increasing presence of HFT firms in crypto in recent months as Bitcoin demonstrates increasing maturity as an asset class, according to James Banister, CEO, Market Synergy, a Zug-based infrastructure provider.
/jlne.ws/31OWvEg

Crypto Long & Short: Crypto Markets Are Maturing, but Gen Z Is Rewriting How Markets Work
Noelle Acheson – Coindesk
Now, I have no idea how old you are, nor do I want to make any assumptions. I will assume, though, that since you are reading this, you have an interest in markets and/or crypto assets. And since this is a newsletter aimed at professional investors, I will assume that you care about a bit more than prices going up/down/sideways. That should put us on more or less the same page as to what we explore here.
/jlne.ws/3f8W1MY

Crypto proponents Brock Pierce and Kanye West running for US presidency
Yogita Khatri – The Block
Two cryptocurrency proponents ?— Brock Pierce, co-founder of EOS Alliance, Block.one, Blockchain Capital and Tether, and Kanye West, American rapper, song-producer, and entrepreneur — have declared that they are running for U.S. presidency.
/jlne.ws/38AtcGH

Research finds cryptocurrency startup Kuailian is a Latin BitConnect
Priyeshu Garg – Cryptoslate
Cryptocurrency research firm Tulip Research has found an alarming number of inconsistencies in Kuailian, a masternode startup that has raised more than $100 million from investors. The company mainly targets the Latin American market, offering a monthly ROI of between 6 and 17 percent for members of its ecosystem.
/jlne.ws/38CXBUT

Adjusted transaction volume for stablecoins hit new all-time high in June: data
Michael McSweeney – The Block
The adjusted transaction volume for stablecoins hit a new all-time high in June, according to data collected by The Block. The June’s total was $54.9 billion, which is a 13.9% increase over the previous month’s $48.2 billion. The development represents the fourth month in a row that the figure was above $40 billion, beating the previous high seen last month. Once again, that adjusted transaction volume was dominated by Tether.
/jlne.ws/3gxieEU

B21 Launches Cryptocurrency Investment and Portfolio Management App in India as Legalization of Crypto Trading Paves Way for Investment in Digital Assets
Mark Walker – The Fintech Times
B21 also partners with Minance to provide crypto investment services, research based market insights and additional features Digital asset investing company B21 (www.b21.io) today announced the launch of its B21 Invest app in India. B21 Invest makes it easy to purchase and manage a portfolio of cryptocurrencies including Bitcoin, Ethereum, and EOS straight from a mobile phone. B21 Invest supports investment for as little as INR 2,000 ($25) per transaction, which can be in a single asset like Bitcoin or across a customized investment portfolio.
/jlne.ws/2ZGdyWm

Three Months After Crypto’s Black Thursday, is BitMEX Back on Top?
Rachel McIntosh – Finance Magnates
The effect of the COVID-19 pandemic’s economic fallout on cryptocurrency markets has been felt across the cryptocurrency markets. However, now that more than three months have passed with “Black Thursday” in the rear-view mirror, things are starting to look – well, (almost) normal. Indeed, after the initial shock that the virus wrought on the global economy, the road to recovery has been somewhat steady, although looming doubts about the future are still on the horizon.
/jlne.ws/3f4DNME

More than $180 billion in bitcoin was transacted on-chain during 2020’s Q2
The Block
The value transaction on the bitcoin network saw a small increase between the first and second quarters of 2020. As shown in the chart below, in the second quarter of 2020, users transacted more than $180 billion in bitcoins. That amounts to an average of $1.98 billion per day. The data pointed was included in a second-quarter rundown of bitcoin network data compiled by The Block’s Steven Zheng. Read the full Q2 breakdown here.
/jlne.ws/3gIihxN

Switzerland’s InCore Offers Banking Services to Kraken
Arnab Shome – Finance Magnates
Switzerland’s InCore has become the first financial institution in the country to offer banking services to cryptocurrency exchange Kraken. Announced on Friday, this integration will allow the crypto traders on Kraken fund their trading accounts with four fiats – Canadian dollar, Swiss franc, euro, and British pound. “Private and institutional clients who want to diversify their portfolio in an intelligent and innovative way with Kraken can transfer fiat assets via InCore Bank to the crypto exchange,” Mark Dambacher, CEO of InCore Bank, said.
/jlne.ws/2NWumTB

Russian Courts Can’t Agree on Whether Crypto Is Property
Anna Baydakova – Coindesk
Russian courts are making conflicting rulings on whether bitcoin and other cryptocurrencies count as property. In one new case, Saint Petersburg’s district court has refused to force bogus law enforcement officers to return cryptocurrencies extorted from a victim on the basis that digital assets are not legitimate assets. According to the press office Telegram channel for the Saint Petersburg courts, the district court convicted two men for extorting money from an unnamed cryptocurrency OTC trader on June 30.
/jlne.ws/2D71qG6

Chinese courts use blockchain-based electronic seals to secure properties
Yogita Khatri – The Block
Several courts in China have reportedly adopted blockchain-based electronic seals to monitor and secure sealed properties. The People’s Court in Haidian district (Beijing), and various courts in Jiangsu, Hunan, and Jiangxi provinces have used electronic seals, Global Times reported on Sunday, citing a report from Chinacourt.org.
/jlne.ws/38tEfBF

Politics

Trump Support Withering in Areas Where Virus Cases Are Rising
Mike Dorning and Gregory Korte – Bloomberg
Sunbelt and other Republican areas are now getting hit hard; Older voters most vulnerable are no longer supporting Trump
Coronavirus is skyrocketing in Republican-leaning Sunbelt and interior states, where shifting attitudes about the virus and President Donald Trump’s handling of it could spell more trouble for his re-election effort. New cases have exploded in particular in Arizona and Florida, battlegrounds Trump must retain to win re-election. Jacksonville, Florida, where the president relocated the Republican National Convention, had the fastest-growing rate of coronavirus of any metropolitan area in the U.S. for the week ended July 4, according to Evercore ISI.
/jlne.ws/3iBktsA

Dear China, Enjoy This Bull Market. Love, Donald; Escalating tension between Washington and Beijing has stirred up patriotic fervor, setting mainland stocks on fire.
Shuli Ren – Bloomberg
As a diplomatic tit-for-tat escalates between Washington and Beijing, millions of Chinese investors — defiant and patriotic — are once again engineering a fast and furious bull market on their home turf. The theme? Self-reliance.
/jlne.ws/3gx3pSM

JPMorgan Says Wall Street Is Too Negative About a Biden Win
Joanna Ossinger – Bloomberg
Bank cites benefits of potentially softer tariff rhetoric; Strategists say Biden win may be slightly positive for markets
Wall Street is too negative on prospects for the markets if Democratic candidate Joe Biden wins the U.S. presidential election in November, according to JPMorgan Chase & Co.
/jlne.ws/3gr44Vu

Regulation

Policy development update
UK FCA
The policy development update provides some information on our recent and upcoming publications but should not be regarded as comprehensive. We usually update this page on the first Friday of each month – this version is current as of 3 July 2020.
/jlne.ws/34juG4N

FCA publishes Decision Notice against former Worldspreads CEO for market misconduct
UK FCA
The Financial Conduct Authority (FCA) has today published a Decision Notice in respect of Conor Foley, the former Chief Executive Officer of Worldspreads, fining him £658,900 for market abuse and banning him from performing any roles linked to regulated activity.
/jlne.ws/2NZ1fyX

ESMA NEWSLETTER – Nº15
ESMA
Welcome to the 15th edition of ESMA’s newsletter. This month, ESMA has published its 2019 Annual Report, released an important video on cost and performance and approved the new Securities and Markets Stakeholder Group (SMSG). In this edition, we also take a closer look at our full list of ESMA staff webinars and catch up on publications from June.
/jlne.ws/2CecVen

Relief applications and documents to be lodged through ASIC Regulatory Portal from 27 July
ASIC
We are making changes to the way applications for relief and various fundraising and corporate finance documents are submitted to us. On 27 July 2020, the ASIC Regulatory Portal will replace the current submission channels as the primary method to submit these documents and applications.
/jlne.ws/2ZCgfIq

The role of super funds during COVID-19; Meeting trustee obligations and delivering for members
ASIC
The COVID-19 pandemic has presented new challenges across the economy, and the superannuation industry has been no different. How industry responds in the immediate future is critical. Jane Eccleston, ASIC’s Superannuation Senior Executive Leader, discusses the regulator’s focus and what it expects from industry in the current environment.
/jlne.ws/2BIPz0z

Credit Suisse pays $75,000 infringement notice
ASIC
Credit Suisse Equities (Australia) Limited (Credit Suisse) has paid a penalty of $75,000 to comply with an infringement notice given by the Markets Disciplinary Panel (the MDP).
/jlne.ws/2ZJVKcX

Investing and Trading

Our Cash-Free Future Is Getting Closer; The pandemic is propelling a shift toward a cashless society in ways that no other single event has. Experts say that’s not necessarily a good thing.
Liz Alderman – NY Times
On a typical Sunday, patrons at Julien Cornu’s cheese shop used to load up on Camembert and chèvre for the week, with about half the customers digging into their pockets for euro notes and coins.
/jlne.ws/2DeLnWY

Sitting on Bond Profits? Sell, Switch or Wait? For most cases, advisers say to sit tight. But there are exceptions.
Dan Weil – WSJ
Profits are a good thing, but that doesn’t mean it always makes sense to take them. If you’ve held bonds or bond funds over the past six, 12 or 18 months, you’re looking at a sizable capital gain. For example, Vanguard Total Bond Market ETF (BND) rose 7% in the one-year period through June 30, a hefty move for a bond fund.
/jlne.ws/2VO0nla

Are Stock Investors ‘Irrationally Exuberant’ Again? One of the current narratives about the market is that it’s being boosted by foolishly optimistic investors. The numbers don’t support that.
Mark Hulbert – WSJ
There’s a lot of talk these days about the return of “irrational exuberance”—the frothy stock market seen in the internet-stock bubble of the late 1990s. But a close look at the data suggests things are nowhere near that heated.
/jlne.ws/3iK2aS6

U.S.-Stock Funds Rose 23.5% in the Quarter; Funds investing in growth, science and tech stocks did the best. But bond funds are also up for the year and money is flowing there.
William Power – WSJ
When is a 23.5% rally in your stock fund not a cause to celebrate too hard? Right now might be a rare case. Because even though the average U.S.-stock fund rallied by that much in the second quarter, according to Refinitiv Lipper data, it was only a partial rebound from the horrendous first quarter. In that first quarter, as the coronavirus lockdowns weighed on the economy and the stock market, the average fund was down 24.6%.
/jlne.ws/3iK2r7A

The Benefits of Calling Yourself a ‘Trader’ for Tax Purposes; Filing for trader taxpayer status can save a lot of money—but it may not be a designation that’s easy to get
Nick Ravo – WSJ
Today’s neophyte day-traders make plenty of newbie errors, such as buying bankrupt companies or miles-out-of-the-money equity options. Many also aren’t aware of a certain tax-filing strategy that can save them a lot of money.
/jlne.ws/31NOX4w

‘Market Neutral’ Can Be a Positively Baffling Label; The term gives off a cozy feel, but the funds that use it are all over the place in composition and performance
Nick Ravo – WSJ
Few investment strategies aimed at Main Street are as baffling as the seemingly simple “market-neutral.” The term, affixed by the funds industry to dozens of mutual and exchange-traded funds, imparts a safe, Swisslike feel. It suggests a strategy closely linked to market performance, like index funds offer. But there is little uniformity among these products, and that is reflected in a disparity in their performance as well.
/jlne.ws/2VQbE46

Fed Is Getting Awfully Close to Backing Apple Stock; The central bank will purchase the company’s bonds, which were issued in part for share buybacks.
Brian Chappatta – Bloomberg
It doesn’t take much imagination to see the Federal Reserve supporting the stock price of Apple Inc. The central bank’s Secondary Market Corporate Credit Facility recently released details about its “Broad Market Index,” which is a roadmap for which individual bonds it will buy for its portfolio after changing the rules to avoid forcing issuers to certify they’re in compliance with the Coronavirus Aid, Relief, and Economic Security Act. Just looking at the 13 companies with weightings of at least 1%, 1 which collectively make up almost one-fifth of the index, a few things stand out. First, there are six automobile companies, with subsidiaries of Japan’s Toyota Motor Corp. and Germany’s Volkswagen AG and Daimler AG as the three largest issuers overall. In fourth is AT&T Inc., the largest nonfinancial borrower due in no small part to its $85.4 billion takeover of Time Warner Inc.
/jlne.ws/3iAG988

Environmental, Social and Corporate Governance

The Next Energy Battle: Renewables vs. Natural Gas; As coal declines and wind and solar energy rise, some are pushing to limit the use of natural gas, but utilities say they are not ready to do so.
Ivan Penn – NY Times
Dominion Energy, one of the nation’s largest utilities, in late June erected wind turbines off the Virginia coast — only the second such installation in the United States — as part of a big bet on renewable energy.
/jlne.ws/2DfiLwL

Why Investors Have Learned to Love Wind and Solar Power; Renewable energy has become cheap and now offers investors utility-like returns
Levelized cost of electricity*
Rochelle Toplensky – WSJ
After a stormy, dependent youth, the wind-and-solar-energy industries have matured into boring, profitable middle age. This year’s plunging interest rates make that a more appealing proposition than ever for investors.
/jlne.ws/2ZDUTKU

Dominion drops pipeline project and sells gas business to Berkshire Hathaway; US utility moves towards cleaner energy as Warren Buffett digs deeper into fossil fuels
Derek Brower and Myles McCormick – FT
Dominion Energy has scrapped a large pipeline project and sold its natural gas transmission business to Berkshire Hathaway, marking a big shift towards cleaner energy for the US utility — and another bet on fossil fuels by Warren Buffett.
/jlne.ws/3e5uydL

Black Attorneys Call Out Racism in U.K. Law’s World of Whiteness
Ellen Milligan – Bloomberg
Some 84% of BAME lawyers experience implicit racism, exclusion; Seventeen firms sign pledge to tackle racism, boost diversity
Black lawyers in Britain are speaking out about their experiences working in the U.K.’s justice system as the profession vows to confront the historic racism within their industry.
/jlne.ws/2NZJz6d

Institutions

Number of UK stockbroking complaints declined by over 74% in last 10 years
Justinas Baltrusaitis – Buy Shares
Measures put in place by the UK financial regulators on managing stockbroking seems to be paying off due to the reducing number of investor complaints. Over the last three years, complaints relating to stockbrokers have plunged to hit an all-time low in the past decade.
/jlne.ws/2BH6ukg

AXA’s head of trading departs for HSBC Global Asset Management; Former AXA heading of trading, Daniel Leon, joins HSBC Global Asset Management as global head of trading, treasury management, and global solutions.
Annabel Smith – The Trade
AXA Investment Managers’ (AXA IM) head of trading has departed the firm after just over five years to join HSBC Global Asset Management.
/jlne.ws/2ZCdvL8

Deutsche Bank’s new-found momentum is unlikely to last; A few good months for the German lender does not add up to turnaround
Patrick Jenkins – FT
It is more than a decade since Deutsche Bank’s glory days, when an investment bank that appeared to rival Wall Street’s finest was rewarded with a surging share price. The 2008 financial crisis and the regulatory changes that followed it proved that many big banks — and Deutsche possibly most of all — had feeble foundations. The German lender has not made an annual profit for shareholders since 2014.
/jlne.ws/3f4TQtV

Deutsche Bank job cuts slowed by coronavirus; German lender on track to hit financial targets despite the disruption, says finance chief
Stephen Morris and Olaf Storbeck – FT
Deutsche Bank’s chief financial officer has warned that coronavirus has left it racing to speed up redundancies to achieve a key pledge on job cuts, but said it remained on track to hit its financial targets this year despite the disruption.
/jlne.ws/2NZ0mX8

Bundesbank to keep buying bonds after court challenge; German central bank to take lead from Berlin, which says requirements of ruling have been satisfied
Martin Arnold and Guy Chazan – FT
Germany’s central bank is set to keep buying sovereign bonds from next month, defusing an explosive ruling by the country’s constitutional court that had threatened to destabilise the European Central Bank’s flagship asset-purchase scheme.
/jlne.ws/2AyHQlf

Fed stress tests predict European banks’ high rate of loan losses; Forecast adds more pressure on region’s financial institutions to reduce US presence
Laura Noonan, and Stephen Morris, Owen Walker and Nicholas Megaw – FT
The Federal Reserve expects European banks to post the sharpest losses in key sectors hit by the pandemic, adding further pressure on their US operations which already have mixed shareholder support.
/jlne.ws/3gvfvLV

Quant Fund Gains 108% by Dumping China Stocks a Day After Buying
Bloomberg News
Shenzhen-based fund bets on high-frequency trading in A shares; Manager expects strategy to remain effective in second half
A Chinese quant-trading firm made 108% this year by selling every stock bought the previous day.
Zhang Ruiqi, the 34-year-old chairman of Shenzhen Qianhai United Fortune Fund Management Co., screens about a dozen mainland-listed stocks every day for their turnover, momentum and volatility. He then does it all over again the following day. That strategy, which he calls the “all-in-all-out” method, helped his flagship $5 million fund gain 108% this year through June, according to data provider Simuwang.com.
/jlne.ws/2ZEgPpe

And the No. 1 Stock-Fund Manager Is…; Morgan Stanley’s Dennis Lynch posted a 56.2% gain for the 12 months in his Institutional Discovery fund. A winning stock for managers was the Zoom videoconference app.
Suzanne McGee – WSJ
After enduring the most volatile market swings in the U.S. stock market in more than three-quarters of a century, even the best-performing mutual-fund managers might be forgiven for wanting to socially distance themselves from anything to do with stocks.
/jlne.ws/2VQpSlU

Regions

Bubonic Plague Is Diagnosed in China; An Inner Mongolia city put control measures in place after one confirmed case of the disease, which caused the Black Death in the Middle Ages.
Austin Ramzy – NY Times
A herdsman in Inner Mongolia was confirmed to be infected with bubonic plague, Chinese health officials said, a reminder of how even as the world battles a pandemic caused by a novel virus, old threats remain.
/jlne.ws/31KOMXP

China watchdog to purge bank sector of ‘illegal’ shareholders; Regulator names 38 stakeholders that will be forced to divest from lenders and insurers
Don Weinland – FT
Chinese regulators are publicly purging the banking sector of “illegal” shareholders, many of whom have been caught using financial institutions as ATMs to fund their own projects. The China Banking and Insurance Regulatory Commission for the first time has released a list of 38 illegal shareholders that will be forced to divest from banks and insurance companies.
/jlne.ws/2O05v1i

China Imposes Checks on Large Transactions After Bank Runs
Bloomberg News
Pilot program kicks off in Hebei province this month; China’s small lenders are struggling with surging bad debt
China imposed a program to keep large transactions in check amid heightened concerns over the state of its financial system as bad debt balloons in the wake of the coronavirus outbreak. The People’s Bank of China this month kicked off a pilot plan in Hebei province that would require retail and business clients to pre-report any large withdrawals or deposits, according to a statement. The two-year program will be expanded to Zhejiang and Shenzhen in October, encompassing more than 70 million people.
/jlne.ws/2C98nGe

China Stokes a Stock-Market Mania, Risking Repeat of 2015 Bubble
Bloomberg News
CSI 300 is most overheated since 2014 after gains accelerate; Brokerages surge as daily turnover tops 1.5 trillion yuan
The dramatic moves in Chinese stocks over the past week are inviting comparisons with a bubble that burst spectacularly five years ago. In many ways, the pace of gains matches the market’s melt-up that started in the final weeks of 2014. The CSI 300 Index has now added 14% in five days, the most since December that year. A gauge of momentum on the CSI 300 is also the strongest since late 2014. Shares of brokerages surged as daily turnover exceeded 1.5 trillion yuan ($213 billion) for the first time since 2015, indicating increasing participation from retail investors. Monday’s more-than-5% gain in stocks had only happened once before since the bubble burst.
/jlne.ws/2CdFKaM

Climate Change Fuels U.S. Dust Storms With Dire Health Consequences; Respiratory ICU admissions spike in the wake of such storms, which are becoming more common across the American Southwest.
Breanna T Bradham – Bloomberg
Dust storms—those billowing walls of sand and dirt often seen seen in the more arid regions of the world—doubled in the American Southwest between the 1990s to 2000s.
/jlne.ws/2YZFBAO

If You Want to See Where New York Is Heading, These REITs Offer a Clue; Empire State Realty, SL Green Realty, Paramount Group and Vornado have all taken big hits in recent months, reflecting the city’s woes
Randall Smith – WSJ
The pandemic has raised important questions about the future of New York City. Will residents flee its concentration of people? Will the need for closely packed elevators cripple city office towers? Can employees work as well from home?
/jlne.ws/3gsVs0P

Brexit

Brexit shutout looms for UK funds as market access talks falter; Missed deadline prompts warnings of disruption as fund groups already grapple with the pandemic
Siobhan Riding – FT
The risk of UK funds being frozen out of the European market at the end of the year has risen after Brexit negotiators missed a key milestone aimed at securing market access for the City of London.
/jlne.ws/3gzLP07

The Brexit Gang Is Back in Charge in Britain
Robert Hutton and Tim Ross – Bloomberg
U.K. prime minister delegates to team of trusted advisers; Maverick aide Cummings is ripping up the rule book again
The best way to get a decision out of Boris Johnson, according to those who work with him, is to persuade him to start talking. The British prime minister likes to think out loud, improvising his way to his conclusions as he goes.
/jlne.ws/2CdCFaI

John Lothian Newsletter

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