Hits & Takes
John Lothian and JLN Staff
Today is the first day of FIA EXPO-V. EXPO is normally held in Chicago at the Hilton on Michigan Avenue. This year, it is being held in cyberspace and the FIA has put together a great program. As a reminder, I have some free passes to give away. Just email me at email@example.com and I will set you up.
The JLN team is being deployed across the EXPO-V program and will provide coverage of the different sessions and panels presented. If there are some speakers or industry leaders who would like to do a video interview after their panels with JLN, please reach out to me. We can conduct the interview over Zoom and publish it right here in JLN.
EXPO’s social events are normally the largest cocktail parties I ever go to, but this year we are keeping it safe. We will catch up soon enough. Enjoy EXPO and stay safe!
Nasdaq and a coalition of other exchange and trading platforms have put down a royal flush to the State of New Jersey’s pair of twos in the ultimate game of Texas holdem over the transaction tax controversy by agreeing to meet with Texas Governor Greg Abbott on November 20. New Jersey’s flop might just send their transaction tax plan down the river.
The list of exchanges and trading platforms includes Cboe Global Markets, Citadel Securities, data center operator Equinix, IEX, Members Exchange, New York Stock Exchange owner
Intercontinental Exchange, TD Ameritrade Holding Corp., Virtu Financial and UBS, according to a report in The Dallas Morning News (behind a paywall).
Moving the data centers to Texas would be a big blow to Wall Street and the East Coast, but would also mesh well with the huge data center business and technology hub in Texas. Austin in particular is an increasingly popular location for technology companies to locate, or co-locate.
The question is who will blink in this $10 billion game of Texas holdem, or better yet, Texas take them all in. Will New Jersey go all in, or fold their cards while they are still ahead?
Tom McCabe, former chief regulatory officer of OneChicago, is now a self-employed consultant. He is the CEO of Birdie Derivatives Consulting. McCabe also formerly worked for the CBOT, where he was a vice president of operations and quality assurance. He was one of those black coated people at the CBOT, who also happens to be one of the nicest people in the industry.
President-Elect Joe Biden would like to remind you that wearing a mask will save lives. Wear a mask!
There were no new donations to the JLN MarketsWiki Education GoFundMe campaign yesterday. We are just short of $15K. Who is going to take us over this number?
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
Miami International Holdings announced its trading results for October 2020 on Monday. The exchange group reports that it traded 73,320,613 options contracts, a 75.5 percent increase in options trade volume from October 2019, and an 83.5 percent increase in traded options average daily volume (ADV), which was 3,332,755. Volumes were generally down from September, but this was the case for the rest of the equity options industry as well.~MR
Illinois’ cannabis sales continue to roll higher, with October setting another monthly record with more than $75 million in adult-use sales. The state’s medical marijuana sales, which are reported separately, added $33 million, for a whopping total of about $108 million in combined sales for October. This may seem like Illinois-centric news, but politicians around the U.S. are clearly eyeing the trend given its potential for sales tax revenue. As JLN reported last week, voters OK’d the legalization of recreational and/or medical marijuana in all five states where it was put on the ballot on November 3. Illinois recreational sales data can be found here and medical sales were reported in this update.~SC
The Spread: Plenty of Options
This week on The Spread – record-high options trading volumes, new products from Intercontinental Exchange and HKEX, and more.
U.K. Sets Plan to Keep Up With New York as Financial Center After Brexit; Plan will review capital-raising requirements, boost green finance
Max Colchester and Simon Clark – WSJ
U.K. Treasury chief Rishi Sunak on Monday outlined a review of finance rules, including possible changes to make it easier for companies to raise money in London, aimed at keeping the country’s vast financial sector competitive with New York after Brexit. Over the past two decades, London cemented its position as a global financial-services launchpad in part because, once given a license by U.K. authorities, its banks, insurers and clearinghouses got automatic regulatory clearance to sell to clients across the European Union’s other members.
*****Is the UK going to move its server farm out of the London exurbs too by applying a transaction tax?~JJL
23,000 households reported income over $10 million last year. The IRS audited seven
Michael Hiltzik – Los Angeles Times
Since we’ll be spending the next day or so pondering America as it is and as we wish it to be, let’s take a moment to contemplate how tax avoidance and evasion have become facts of life for some of the richest Americans.
*****This list is called a lead list.~JJL
The Man Who Could Explain the $2 Billion Wirecard Mystery Is Missing; The company’s failure in June stunned Germany. And a key player has vanished.
Eyk Henning, Benedikt Kammel – Bloomberg
On a cool Saturday evening in March, Jan Marsalek headed across Munich for dinner at the home of a friend. It was a welcome respite for the chief operating officer of German payment processor Wirecard AG, as the previous few weeks had been particularly exacting. Allegations of accounting fraud at the fintech company were growing louder, and the press, auditors, and even Wirecard’s board wanted answers—from Marsalek. The small group, including a Russian diplomat, dug into a barbecue spread washed down with ample amounts of vodka, and by the end of the evening Marsalek had consumed two bottles by himself. Then things got weird.
*****This is no big deal. We are still looking for Jimmy Hoffa.~JJL
Corporate Tenants Dump Excess Office Space, Sending Shivers Through the Market; They offered a record 42 million square feet in the second and third quarters
Peter Grant – WSJ
More companies are looking to dump excess office space by renting it out to new tenants, flooding the market with additional supply that could depress U.S. office rents. With many employees planning to keep working from home for the foreseeable future, big corporate tenants in city centers say they have a surplus of office space. Most of those companies are locked into long leases of as long as 20 years and have little opportunity to get out of these agreements.
*****A lot more shivers are coming. Commercial real estate is being Zoomed.~JJL
Monday’s Top Three
Our top story Monday was SGX expands clearing relationship with CME Group, adding pan-Asia benchmark equity derivatives to Mutual Offset link, from SGX. Second was the NFA notice NFA orders Chicago, Ill. introducing broker Infinity Futures LLC to pay a $120,000 fine. Third was Bloomberg’s Oil-Rich Abu Dhabi to Start Trading Crude Futures From March, about the new ICE Futures Abu Dhabi exchange set to open on March 29.
192,315,137 pages viewed; 24,518 pages; 226,706 edits
|CryptoMarketsWiki, our archive of the cryptocurrency and blockchain world, is going strong and keeping pace as this area of finance grows and evolves.Recently Updated Pages
1,468 pages; 13,029 edits
Popular Trading Platforms Sideline Users With Technical Difficulties as Stocks Surge; Companies including Charles Schwab and TD Ameritrade say customers experienced technical problems
Caitlin McCabe and Mischa Frankl-Duval – WSJ
Customers of popular online brokerages struggled to trade from their accounts Monday, sidelining many investors who hoped to capitalize on an exuberant market rally that sent stocks soaring. Companies across the investment landscape, from titans such as Charles Schwab Corp. SCHW 9.31% to newcomers like Webull Financial LLC, said they had technical glitches as morning trading kicked off. Several of the platforms attributed the problems to extreme trading volumes and activity as investors rushed to buy and sell shares.
Biden’s Election Win Was a Big Bet for These Wall Street Executives; The president-elect’s major financial donors are likely to get access but not the same payoffs bankers reaped in the past
Gregory Zuckerman and Liz Hoffman – WSJ
A new administration produces a new cast of Wall Street players with lines into the White House. But Joe Biden’s backers in the industry are unlikely to share the close access enjoyed by the coterie of financiers who had the ear of President Trump. Wall Street overwhelmingly put its money behind Mr. Biden in this election, and donations have always bought some level of access to the Oval Office. Hedge-fund investors Donald Sussman and James Simons and investment bankers Blair Effron and Roger Altman were among the biggest financial backers of the president-elect.
Fed Says Coronavirus Remains a Top U.S. Financial Risk; The Federal Reserve’s financial stability report highlights uncertain outlook
Andrew Ackerman – WSJ
The coronavirus pandemic remains a top risk to the U.S. financial system, the Federal Reserve said in a report released Monday, warning that uncertainty over the course of the virus and its economic and financial consequences remains unusually high.
Markets Gone ‘Rogue’ on Vaccine News Face Tough Questions
Joanna Ossinger – Bloomberg
Promising Pfizer Covid-19 shot still has hurdles to clear; Global stock rally spurred by release of trial data cools
After a frenzy of vaccine optimism lifted global stocks to a record and sent havens into a tailspin, some strategists said the moves may have gone too far and that tough questions remain unanswered. News that the inoculation developed by Pfizer Inc. and BioNTech SE was more than 90% effective in preventing Covid-19 infections sparked a flood of bets Monday on stocks such as cruise operators and airlines that have struggled during the pandemic. Refuges such as Treasuries, gold and the yen slumped.
TD Ameritrade, Fidelity and Other Brokerages Hit By Outages During Rally; Websites crashed, live prices failed to load and trades took longer than expected in the wake of positive news about a Covid-19 vaccine.
Charlie Wells – Bloomberg
Several online trading platforms around the world broke down or were unavailable on Monday as individual investors tried to take advantage of heavy trading after the announcement of positive data from a Covid-19 vaccine candidate. More than 85% of S&P 500 companies climbed and shares in industries beleaguered by the pandemic — ranging from travel to leisure — shot up on optimism about a vaccine that prevented more than 90% of symptomatic infections in a trial of tens of thousands of volunteers.
Day Traders Say They Told You So in Market Bending to Their Will
Sarah Ponczek, Vildana Hajric, and Claire Ballentine – Bloomberg
Retail’s favorite stocks have more than doubled since March; Trading volume soared Monday, causing technical difficulties
The caveats are too numerous to list. One trial isn’t definitive. Vaccines take months to distribute. However good the news is, stocks are priced for better. Don’t get ahead of yourself, warns Wall Street. But for the hordes of newbie investors who’ve been storming its gates all year, the skepticism doesn’t track.
The First Global U.S. Presidential Election; It is striking how much the entire planet paid attention to both the results and the reaction.
Tyler Cowen – Bloomberg
Was last week’s U.S. presidential contest between Joe Biden and Donald Trump the first global election? America’s presidential election has always attracted an outsized share of the world’s attention, of course, especially in recent years. Still, it is striking how much the entire planet seems to have taken part in both the proceedings and the reaction this year. Across Europe there have been church bells ringing, fireworks and celebrations, along with some degree of dismay. My friends there have e-mailed me with their opinions, congratulations and questions about what happens next.
DHL, FedEx and UPS Are Ready to Save the World; The logistics industry faces a mammoth task to safely deliver billions of vaccine doses. Those shipments could further juice the industry’s profits.
Chris Bryant – Bloomberg
In normal times, globe-spanning logistics groups such as Deutsche Post AG, FedEx Corp. and United Parcel Service Inc. quietly keep the economy humming. Covid-19 has recast that unassuming role in a more heroic light. When the pandemic history is written, the logistics industry will deserve a volume. “UPS-ers are essential workers,” the U.S. company’s boss Carol Tome told investors recently.
Masayoshi Son’s Personal Stake in SoftBank Trading Unit Draws Fire
Pavel Alpeyev – Bloomberg
SoftBank poured about $20 billion into stocks and derivatives; Son owns one third of the unit responsible for trading
SoftBank Group Corp.’s already controversial stock and options trading program is drawing fresh fire from investors because of Masayoshi Son’s personal stake in the trading. Son faced a barrage of questions about the transactions on a late-evening call with analysts and fund managers after an earnings announcement Monday, according to people who took part in the briefing. SoftBank has poured about $20 billion into tech stocks and derivatives through a unit in which the billionaire personally holds a one-third stake.
How the Covid Crisis Calls for a Makeover at the Fed and ECB
Stephanie Flanders – Bloomberg
In his first year in office U.S. President-elect Joe Biden has an opportunity to remake the leadership of the Federal Reserve: the current terms of Chairman Jerome Powell and both his two vice chairs expire by 2022. But what the Fed and other central banks need most in a post-Covid world is not new leadership, but a fresh understanding of what they were put on this Earth to do.
US banks in line for windfall after Covid-19 vaccine progress; Profitability boosted by steeper yield curve in wake of vaccine results from Pfizer and BioNTech
Robert Armstrong and Laura Noonan – FT
US banks stand to reap a rapid and large windfall from an early vaccine for Covid-19 after positive trial data from Pfizer and BioNTech sent long-term interest rates sharply higher.
China’s Regulators Prepare to Roll Out New Antimonopoly Rules; New rules targeting online platforms could constrain internet companies such as Alibaba, Tencent
Liza Lin – WSJ
China has released new draft antimonopoly rules for its online platforms, signaling an increased appetite by Beijing authorities to rein in its dominant technology companies. China’s State Administration for Market Regulation said Tuesday it would seek feedback on rules covering a host of potential anti-monopolistic practices on the country’s digital platforms, including offering different prices to different consumers for the same product.
ESMA prepares for no-deal Brexit with plans to delay MiFID II calculations; The period of suspension will include essential MiFID II calculations including?DVCs, SI regime, and bond liquidity determination.??
Annabel Smith – The Trade
Vital datasets needed to comply with MiFID II will not be published for two months from the end of this year in the event of a no-deal Brexit, the EU markets watchdog has confirmed.
Potential job cuts at TP ICAP as broker prepares cost cutting programme; TP ICAP is hoping to achieve cost savings of £35 million by the end of next year, which could lead to possible job cuts across the broking business.
Hayley McDowell – The Trade
Jobs may be cut at interdealer broker TP ICAP after the institution outlined plans to reduce costs following a decline in revenues in the third quarter as trading volumes diminished.
Vaccine Jolts Markets in a Way Biden and Trump Couldn’t; Presidential race mattered to investors but other things matter more—especially the Fed and a Covid-19 vaccine
James Mackintosh – WSJ
Obama, Trump, Biden—who cares? The vaccine news shows markets have bigger things to think about. The same investment formula that has worked for the past decade worked again in 2020, and then proved the best approach to election week too as Joe Biden took the White House: Big Tech and other expensive growth stocks won, and cheap and small stocks underperformed.
Understanding the New IBOR Fallbacks Opening Remarks
Katherine Tew Darras, General Counsel, ISDA
Hello everyone, and welcome to Understanding the New IBOR Fallbacks. Thanks for joining us today for this virtual event, and thank you to our speakers.
ISDA Response to ESMA Consultation on Fees for Benchmark Administrators Under BMR
On November 6, ISDA submitted a response to the European Securities and Markets Authority’s (ESMA) consultation on fees for benchmark administrators of critical and third-country benchmarks under the Benchmarks Regulation (BMR). Following the implementation of a review by the European Supervisory Authorities, ESMA will have direct supervisory responsibilities on these benchmarks and their administrators. Throughout its response, ISDA notes that the application cost and minimum annual fee could act as a barrier to entry for firms that do not derive a large portion of their income from EU activity and therefore may conclude that registering does not make financial sense.
OCC Reports Key Risks, Effects of COVID-19 in Federal Banking System
Office of the Comptroller of the Currency
The Office of the Comptroller of the Currency (OCC) today reported the key issues facing the federal banking system and the effects of the COVID-19 pandemic on the federal banking industry in its Semiannual Risk Perspective for Fall 2020.
China Vaccine Trial Halted in Brazil After Serious Adverse Event
Rachel Chang and Simone Iglesias – Bloomberg
Sinovac’s vaccine has already been administered widely; Brazil trial volunteer died, unrelated to vaccine: researcher
The final-stage trial of a Chinese frontrunner vaccine candidate has been halted in Brazil due to a serious adverse event, the first time that any of the Asian nation’s rapidly developed Covid-19 shots have met with such a setback.
Covid Deaths in England and Wales Reach Highest Since Early June
David Goodman – Bloomberg
Deaths linked to Covid-19 in England and Wales rose to the highest in almost five months in the final week of October. Fatalities where the disease was mentioned on the death certificate totaled 1,379 in the period, the Office for National Statistics said Tuesday. That’s up more than 40% from 978 in the previous week.
Mink Threat Isn’t Going Away, Denmark’s Top Covid Scientist Says
Morten Buttler – Bloomberg
Mink farms pose a serious threat to human health in the age of Covid, and will continue to do so even if individual mink mutations of the virus are fought back, according to Kare Molbak, Denmark’s top epidemiologist. The arrival of Covid-19 in the Nordic country was a clear “game changer” for its mink farmers, Molbak told newspaper Politiken in an interview published on Tuesday. Maintaining the industry now “represents far too high a national health risk,” he said.
Does a vaccine against Covid-19 herald the end of the pandemic? More data is needed on the efficacy of treatment as the world faces challenge to vaccinate the 7.8bn global population
Azra Ghani – FT
Excitement swept the globe on Monday with the announcement of the stellar — but early — results from a vaccine candidate against Covid-19. In its press release, the drug company Pfizer announced that its vaccine had been shown to be “more than 90 per cent effective in preventing Covid-19 in participants”. Does this mean that the end of the pandemic is in sight?
Brazil suspends trial of Chinese-developed Covid-19 vaccine; Beijing suffers setback in effort to use pharma sector for post-pandemic diplomatic outreach
Christian Shepherd and Bryan Harris – FT
Brazil has suspended final-stage trials of a Chinese-made coronavirus vaccine, dealing a blow to Beijing’s efforts to use medical diplomacy in the wake of the pandemic.
Mink slaughter seeks to save Denmark from being a new Wuhan; A preventive Covid cull of 17m minks sets a crucial health precedent: the importance of overreacting
Anjana Ahuja – FT
Denmark is desperate not to become the next Wuhan. The country’s Social Democrat-led minority government has sought a mass cull of its mink population after a mutated form of coronavirus was found in both animals and mink farm workers.
Pfizer Covid-19 Vaccine’s Next Big Challenge: Giving It to Enough People; News about the pharmaceutical giant’s vaccine turns attention to how to inoculate a majority of the population fast
Max Colchester and Drew Hinshaw – WSJ
With Pfizer Inc.’s Covid-19 vaccine on track to be authorized as early as next month, Western governments are facing an enormous logistical challenge: getting enough people shots of new vaccines. While previous vaccination programs have spread over years and focused on specific demographics such as children or the elderly, governments are hoping to do something they never have done before and inoculate a majority of the population in a matter of months.
Health Experts Warn Against Basketball During Coronavirus. High Schools Are Playing It Anyway; Surging infections nationwide and the risks of playing a contact sport indoors haven’t deterred teams from proceeding
Rachel Bachman – WSJ
The Oct. 30 letter, addressed to school superintendents in the basketball hotbed of Kansas, is an urgent plea. It “strongly recommends that you do not allow indoor sports or activities such as basketball or wrestling, based upon the level of community transmission and consequently, the risks involved.” It’s signed by four officials with the unified health department overseeing Kansas City, Kansas and Wyandotte County.
Malls File for Bankruptcy or Shut Their Doors as Pandemic Pain Spreads; Glut of retailers struggling with lower sales will continue to haunt the mall industry even after Covid-19 eases
Esther Fung – WSJ
Mall landlords are starting to seek bankruptcy protection or shutting down, the latest signs that the pandemic is deepening a crisis that began before Covid-19. CBL & Associates Properties and Pennsylvania Real Estate Investment, two midsized publicly listed mall owners, said last week they were filing for chapter 11 bankruptcy protection after their earlier debt-restructuring efforts failed. Both companies said they have secured support from a majority of their respective bondholders entering the bankruptcy process and hope to emerge from it as soon as possible.
Many COVID-19 patients later develop mental illness, study finds
Kenneth Garger – NY Post
Twenty percent of coronavirus patients later develop a new mental illness, according to a study. The most common disorders experienced by COVID-19 survivors within 90 days of their diagnoses are anxiety, depression and insomnia, according to the study published in The Lancet Psychiatry journal.
Singapore to Make Covid Test Available to Anyone Next Month
Philip Heijmans -Bloomberg
Nation has about 600 clinics, providers that can conduct tests; Community virus transmission in city-state has been dwindling
Anyone in Singapore who requires a coronavirus test will be able to get one from an approved provider from Dec. 1 as the country seeks to resume more economic and social activities.
Exchanges, OTC and Clearing
October monthly figures at Eurex and EEX; Eurex enters autumn with positive results
OTC Clearing had a positive month with notional outstanding volumes up 53 % from 12,646 billion EUR in 2019 to 19,013 billion EUR in 2020. Total average daily cleared volumes increased 21% to 124 billion EUR. Average daily cleared volumes in long-dated Interest Rate Swaps grew by 87 %.
T7 Release 9.0: Important information for production start; Eurex Circular 086/20 T7 Release 9.0: Important information for production start
1. Introduction – Deutsche Börse Group will launch Release 9.0 of the T7 trading system on 23 November 2020.
The support window for T7 Release 9.0 will take place on Saturday, 21 November 2020, between 16:00 and 18:00 CET. Connectivity testing during the support window is strongly recommended for all Participants and Multi-Member Service Providers.
Intercontinental Exchange Announces Three Companies Agree to Explore Pricing US Crude Exports to Asia Using ICE Murban Futures
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of mortgage technology, data and listings services, announces that ICE Futures Abu Dhabi (IFAD) and the Abu Dhabi National Oil Company (ADNOC) have signed Memorandum of Understandings (MOUs) with Occidental Energy Marketing, Inc., a subsidiary of Occidental; Chevron U.S.A. Inc.; and Trafigura, under which each company has agreed to explore potential opportunities to price US crude exports to Asia off the ICE Murban Futures contract.
ICR and Nasdaq Host Third Annual Advancing Women Leaders Event; Speakers & Panelists to Share Insights on Fostering Diversity and Inclusion
ICR and Nasdaq today will host Advancing Women Leaders: Driving Diversity in the Boardroom, a virtual event presenting best practices and techniques for nurturing systemic diversity throughout an organization. The event will begin at 11:30 a.m. ET/ 8:30 a.m. PT and those interested can register here.
CME Group Chief Financial Officer and Global Head of Financial and OTC Products to Present at Bank of America Securities Future of Financials 2020 Virtual Conference
CME Group announced today that John Pietrowicz, Chief Financial Officer and Sean Tully, Global Head of Financial and OTC Products, will present at the Bank of America Securities Future of Financials 2020 Virtual Conference on Tuesday, November 10, at 8:50 a.m. (Eastern Time).
Product Modification Summary: Delisting of Five (5) Natural Gas (Platts IFERC) Futures Contracts – Effective November 09, 2020
Effective November 9, 2020, the New York Mercantile Exchange, Inc. (NYMEX or Exchange) delisted
the below Platts Natural Gas products from CME Globex and CME ClearPort. There is currently no open interest in these products.
Delisting of Five (5) Natural Gas (Platts IFERC) Futures Contracts
Effective today, Monday, November 9, 2020, New York Mercantile Exchange, Inc. (“NYMEX” or
“Exchange”) delisted five (5) natural gas (Platts IFERC) futures contracts (the “Contracts”) as set forth in
the table below. There is no open interest in the Contracts.
SGX reports market statistics for October 2020
Securities turnover edges higher alongside signs of economic recovery in Singapore; Market participants manage risk round-the-clock on SGX even during regional holidays
Singapore Exchange (SGX) today released its market statistics for October 2020. Turnover edged higher for stocks in the medical and protective-equipment industries, while market participants continued to manage risk across multiple asset classes on the exchange even during regional holidays.
First Oslo Derivatives & Fixed Income Dress Rehearsal Guidelines 14 Nov
Euronext will hold the first Dress Rehearsal for the Oslo Derivatives & Fixed Income Markets on Saturday 14 November 2020. Clients are reminded that participation in at least one of the two Dress Rehearsals for the Oslo Derivatives & Fixed Income migration is mandatory.
London Stock Exchange Group Response To Today’s Statement From The Chancellor Of The Exchequer
David Schwimmer, CEO, London Stock Exchange Group, in response to today’s statement from the Chancellor of the Exchequer said: “We welcome the broad set of measures announced by the Chancellor today. This year has clearly demonstrated that public markets have an important role to play in enabling companies to grow and flourish. We look forward to working closely with the taskforce on reforming the UK listings regime, to help identify areas where swift action can be taken, alongside longer term changes, to further enhance London’s reputation as a competitive and innovative place to list and raise capital. We also welcome the package on sustainable finance, in particular the commitment to a sovereign green bond, alongside levelling the playing field on mandatory TCFD-aligned disclosure and a UK green taxonomy. Comparable and relevant climate related data is key to encouraging investment in the transition to a sustainable economy.”
Itiviti Named Best Low-Latency Trading Network; Recognized for Innovation and Connectivity Excellence at Buy-Side Technology Awards 2020
Itiviti, a leading trading technology and service provider to financial institutions worldwide, today announced that NYFIX, their Order Routing Network (ORN), has won the Best Low-Latency Trading Network category during the WatersTechnology Buy-Side Technology Awards 2020.
Sandboxes help fintech startups raise money
In 2015, the UK’s Financial Conduct Authority created a sandbox to give startups in the fast-growing fintech sector the chance to try out their products in a controlled testing environment.
Five years on, around 50 countries have followed the UK’s lead, prompting BIS to investigate the effect that sandboxes have on the firms that use them and the general fintech environment.
The race to be China’s top fintech platform: Ant vs Tencent
Rita Liao – TechCrunch
As Ant Group seizes the world’s attention with its record initial public offering, which was abruptly called off by Beijing, investors and analysts are revisiting the fintech interests of Tencent, Ant’s arch rival in China.
It’s somewhat complicated to do this, not least because they are sprawled across a number of Tencent properties and, unlike Ant, don’t go by a single brand or operational structure — at least, not one that is obvious to the outside world.
Goldman Sachs And AccessFintech Launch Derivatives Cash Payments Affirmation Service
AccessFintech, a leading fintech company evolving the financial operating model through data and workflow collaboration, announces the launch of a new derivatives cash payments affirmation service, working with Goldman Sachs.
Fintech startup Finch launches hybrid checking and investing app
Penny Crosman – American Banker
The fintech company Finch has gone live with an app that’s half digital checking, half digital investing. Its goal is to lower the barriers to investing for consumers between the ages of 25 and 35. “Three out of five don’t invest,” said Neel Ganu, founder and CEO of Finch. “A lot of them are particularly jaded from the financial crisis and not putting their money to work. The really good news is they are a long way out to retirement, and they have time to turn the ship around and start investing.”
BIS – Inside The Regulatory Sandbox: Effects On FinTech Funding
The rise of fintechs promises to spur competition in the financial sector. This could lead to sizeable efficiency gains, more choice for consumers, and enhanced financial inclusion. However, the potentially disruptive growth of firms offering novel products and services poses new challenges for financial stability and consumer protection. In response, policymakers around the world are creating “regulatory sandboxes” to foster innovation in the financial sector while keeping alert to emerging risks. One key objective of sandboxes is to facilitate start-ups’ access to capital. The UK Financial Conduct Authority pioneered the world’s first regulatory sandbox in 2015. To date, more than 50 countries have adopted sandboxes, but little evidence exists on whether they actually help innovative fintechs raise funding. And if so, why/how.
mBank selects kACE Treasury Pricing System for Forward Pricing and Publishing
kACE, a division of Fenics Software Limited, an entity within the BGC Partners, Inc. (NASDAQ: BGCP) (“BGC Partners,” “BGC” or the “Company”) group of companies, today announced it has signed up mBank, the first fully Internet-based bank in Poland, to utilize kACE’s treasury pricing system, kACE Treasury, to enable the bank to price and distribute FX products through its e-commerce platform and across the institution.
Blockchain-Based Crop-Trading Platform Starts for Commercial Use
Justina Vasquez – Bloomberg
Cerealia SA launched its blockchain-based physical agriculture trading platform for commercial use, allowing companies to trade wheat, sorghum and other commodities. The launch followed a series of pilot transactions beginning in 2018. Firms from Japan, Dubai, Ukraine, Turkey, Algeria and Brazil participated in a pre-launch period before the platform was released Tuesday to the general trading community, according to a company statement. Transaction volumes range as large as 20,000 metric tons of grain.
Busted Hedges, Alleged Fraud Bankrupt Crypto Firm Cred Inc.
Josh Saul – Bloomberg
Founder, ex-executive traded lawsuits over Cred Capital unit; San Mateo-based Cred Inc. owes customers about $140 million
Cryptocurrency investment firm Cred Inc. filed for bankruptcy Saturday after its founder and a top executive got into a bitter legal fight and the company’s Bitcoin hedging strategy foundered amid pandemic price fluctuations. Cred Inc. says it was defrauded by its former chief capital officer, who tried to take control of a unit of the company and later ran off with around $3 million in Bitcoin that was meant to help the company rectify its hedging strategy. Cred Inc. owes its users around $140 million, according to court filings.
UK Treasury to publish draft stablecoin regulations
Ryan Weeks – The Block
Chancellor Rishi Sunak has put stablecoins and central bank digital currencies (CBDCs) front and center of the U.K.’s efforts to remain a financial services hub post-Brexit. In a statement issued Monday, the U.K. Treasury said it would put forward proposals for regulating “relevant stablecoin initiatives” to ensure they are held to the same standard as rival payment methods. Sunak tweeted that the Treasury would “publish a consultation to ensure new privately-issued currencies, stablecoins, meet the high standards we expect of other payment methods.”
Fed researchers survey past literature on central bank digital currencies and highlight current issues
Aislinn Keely – The Block
Researchers from the U.S. Federal Reserve published a deep-dive into the past literature on central bank digital currencies on Monday — while also laying out critical considerations for the future of such initiatives. With a wholly digital dollar — whether from a private entity, the Fed itself or a mix of the two — potentially on the horizon, the Fed’s researchers say the most important consideration is whether a central bank digital currency (CBDC) would substitute fiat for currency, deposits or both.
Billionaire Hedge Fund Investor Druckenmiller Says He Owns Bitcoin in CNBC Interview
Danny Nelson – Coindesk
Billionaire U.S. investor Stanley Druckenmiller, who just weeks ago was said to be shorting the dollar, is long on bitcoin. Druckenmiller said on CNBC Monday he owns bitcoin, becoming the latest high-profile, ultra high-net-worth investor to get in on the benchmark digital currency. Though he said his gold position is “many, many more times” larger than his bitcoin allocation, Druckenmiller predicted his bitcoin would outperform.
Crypto Lender Celsius Surpasses $2.2 Billion in Cryptocurrency AUM
Aziz Abdel-Qader – Finance Magnates
Celsius, a cryptocurrency lending and borrowing platform, today said it has surpassed over $2.2 billion in total cryptocurrency deposits less than three years after launching its mobile app. This announcement comes on the heels of Celsius saying earlier this year it has acquired more than 200,000 active users worldwide and became the first crypto platform to surpass $1 billion in total assets.
Filecoin’s storage power is back growing again amid FIL lending surge
Wolfie Zhao – The Block
The total storage power on Filecoin has grown over 40% since a Chinese miners’ standoff in mid-October, which resulted in an upgrade to the network’s block rewards and a surge in FIL lending. Data shows the decentralized storage blockchain, which went live on October 15, has now nearly 850 pebibyte (PiB) of effective storage, compared to 600 PiB seen around October 19 when a majority of Chinese Filecoin miners had halted their growth plan.
Ripple buys back XRP for the first time to support ‘healthy markets’
Yogita Khatri – The Block
Ripple for the first time bought $46 million worth of XRP in the third quarter of 2020, despite already owning nearly half of the digital asset’s supply. Ripple said the purchase was made to support “healthy markets,” possibly referring to creating interest around XRP and thereby raising its price.
Flaw in Bitcoin SV Multisig Wallet Puts Funds at Risk
Colin Harper – Coindesk
When Bitcoin SV (BSV) forked from Bitcoin Cash, its mandate to create a faster, payments-focused blockchain required gutting some of Bitcoin’s key technical features. In doing so, it gutted some of Bitcoin’s key features; now, it’s worse off for it. One of these features, the so-called pay-to-script hash (P2SH) function, allows a user to send a transaction by signing it to a “script” rather than a public key address. These scripts create special conditions that must be met in order to access the bitcoins sent to them, and they are most often used in multi-signature transactions – or, transactions that require more than one party to approve.
Cyber rights advocates are criticizing an EU proposal on access to encrypted messages
Saniya More – The Block
Digital rights advocates are expressing concerns over a proposal by European Union officials that would require communications companies to share encrypted messages with authorities, according to an Associated Press report. According to the EU release, which was first reported by Austrian public broadcaster FM4, European police and intelligence authorities are unable to easily access communication platforms that make use of end-to-end encryption, like Signal or WhatsApp.
Hong Kong’s Amber Group Picks BitGo Trust in Quest for Institutional Investors
Ian Allison – Coindesk
Crypto market maker Amber Group will service its clientele of institutional traders with the help of BitGo Trust, the custodial arm of the Palo Alto-based digital asset financial services firm. BitGo’s status as a qualified custodian should draw more high-net-worth investors to Amber from places like Hong Kong, Taiwan and Seoul, the companies said.
Biden Moves to Claim White House as GOP Backs Trump Legal Fight
Tyler Pager – Bloomberg
President-elect called on all Americans to wear masks; Republicans keep up roadblocks to formal transition process
President-elect Joe Biden is moving more forcefully to make the transition to the White House even as Senate Majority Leader Mitch McConnell and other senior Republicans give President Donald Trump cover to pursue his legal challenges to the outcome of the election.
Trump’s Legal Blitz Isn’t Contesting Enough Votes to Win
David Voreacos, Greg Stohr, and Mark Niquette – Bloomberg
Supreme Court may take up case that only involves 7,800 votes; Trump must overturn results in several states to beat Biden
President Donald Trump’s hopes of reversing the outcome of the 2020 election in the courts are running into the reality that the numbers just aren’t there in terms of votes he can dispute — at least not yet. In their most advanced legal challenge, the Trump campaign and the Republican Party are trying to have the U.S. Supreme Court toss Pennsylvania ballots that arrived after Nov. 3. But, with all but four of 67 counties reporting, state officials have only logged 7,800 such ballots, said Jacklin Rhoads, spokeswoman for Pennsylvania Attorney General Josh Shapiro.
US attorney-general authorises probes into possible election fraud; Biden campaign describes William Barr’s action as a ‘clumsy’ and ‘cynical’ partisan move
Kadhim Shubber – FT
William Barr, the US attorney-general, on Monday authorised prosecutors to investigate possible instances of electoral fraud in the presidential poll, a break from past practice that delayed such probes until after an election was settled. The move came as Donald Trump continued to make claims without providing evidence of fraud in the victory of his Democratic rival, Joe Biden.
DOJ’s election crimes chief resigns after Barr allows prosecutors to probe voter fraud claims; Barr on Monday issued a memo authorizing prosecutors “to pursue substantial allegations of voting and vote tabulation irregularities prior to the certification of elections.”
Dartunorro Clark and Ken Dilanian
The head of the branch of the Justice Department that prosecutes election crimes resigned Monday hours after Attorney General William Barr issued a memo to federal prosecutors authorizing them to investigate “specific allegations” of voter fraud before the results of the presidential race are certified. Richard Pilger, who was director of the Election Crimes Branch of the DOJ, sent a memo to colleagues that suggested his resignation was linked to Barr’s memo, which was issued as the president’s legal team mount baseless legal challenges to the election results, alleging widespread voter fraud cost him the race.
Growing Discomfort at Law Firms Representing Trump in Election Lawsuits; Some lawyers at Jones Day and Porter Wright, which have filed suits about the 2020 vote, said they were worried about undermining the electoral system.
Jessica Silver-Greenberg, Rachel Abrams and David Enrich – NY Times
Like many big law firms, Jones Day, whose roots go back to Cleveland in the late 1800s, has prided itself on representing controversial clients. There was Big Tobacco. There was the Bin Laden family. There was even the hated owner of the Cleveland Browns football team as he moved the franchise to Baltimore.
Georgia Senators Ask Election Official to Resign in G.O.P. Squabble; Senators David Perdue and Kelly Loeffler took an extraordinary step in urging Georgia’s secretary of state, Brad Raffensperger, to step down. His office has defended the integrity of the election.
Rick Rojas and Richard Fausset – NY Times
A rift among Georgia Republicans exploded into public view on Monday as the state’s incumbent senators, both locked in fierce runoff fights for their seats, lashed out at the Republican officials who oversaw last week’s election and leveled unfounded claims of a faulty process lacking in transparency.
Biden Transition Team Calls on Federal Agency to Declare Winner
Jennifer Epstein – Bloomberg
Declaration of winner usually made within day of race call; Trump appointee blocks access to millions in transition funds
President-elect Joe Biden’s transition team called Monday on the General Services Administration to designate him the winner of the presidential election so that it can begin accessing federal resources needed to make a smooth transition into the White House.
Facebook ‘Shredding Fabric of Democracy,’ Biden Spokesman Says
Sarah Frier – Bloomberg
A representative of U.S. president-elect Joe Biden lashed out at Facebook Inc., alleging that the social media giant is “shredding the fabric of our democracy” in the aftermath of the election. “In the days after Election Day, Facebook is flooded with thousands of calls for violence,” Bill Russo, a Biden campaign spokesman, said in a tweet. “Some of them are taken down, but many are left up for hours, if not days.”
ESMA updates Brexit statements for the end of UK transition period
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has updated three statements which address the impact on reporting under EMIR and SFTR and on the operation of ESMA databases and IT systems after 31 December 2020, the end of the UK’s transition from the EU.
SEC Publishes Notice of German Substituted Compliance Application and Proposed Order
The Securities and Exchange Commission today voted to publish a notice of a substituted compliance application by Germany’s Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) as well as a proposed order that would conditionally provide substituted compliance for German firms that are registered with the Commission as security-based swap dealers and security-based swap participants. These are the latest of a series of actions that the Commission has taken to stand up Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, including cross-border regulation.
Nikhil Rathi discusses the FCA’s pandemic response and his vision for the future
FCA Chief Executive Nikhil Rathi talks about starting his role during the coronavirus pandemic, and the FCA’s approach to the various challenges ahead
Chancellor Sets Out Ambition For Future Of UK Financial Services
The UK will remain an open, attractive international financial centre, and extend its global leadership in green finance and financial technology, under plans outlined by the Chancellor Rishi Sunak today (9 November).
Philippine Securities & Exchange Commission Recognises CISI Contribution To Anti Money Laundering Learning And Assessment During Investor Protection Week Awards Ceremony
The Chartered Institute for Securities & Investment (CISI) receives an award this week from the Philippine Securities & Exchange Commission (SEC) in recognition of its work in the area of ant-money laundering learning for the Philippine financial services profession.
Statement From Bank Of England Governor Andrew Bailey In Response To The Chancellor’s Statement On The Future Of UK Financial Services
“A strong and secure future for the financial services industry in the UK is a vital interest for all who rely upon those services, both in this country and across the world. The Chancellor’s statement today demonstrates the Government’s commitment to ensuring our financial centre remains open to the world, at the forefront in developing the ideas that will serve the UK and global economy long into the future.
Investing and Trading
Record Low Mortgage Rates Widen Historic U.S. Economic Divides; Minority homeowners are losing ground in the K-shaped recovery.
John Gittelsohn, Katia Dmitrieva, Michael Sasso – Bloomberg
Times are good for most U.S. homeowners, as record low interest rates spur a surge in refinancings and rising home prices. They’re not so great for Donnell Williams’ clients, most of whom are African American and don’t have the financial resources to compete with the well-heeled New York City buyers bidding up prices in his suburban Northern New Jersey territory. “We’re losing ground,” says Williams, president of the National Association of Real Estate Brokers, an industry association that promotes Black homeownership.
Vaccine-led interest rate spike could ripple through markets; Investors revisit assumptions about tech stock valuations and corporate borrowing costs
Colby Smith, Joe Rennison and Robin Wigglesworth – FT
Pfizer’s announcement that its Covid-19 vaccine was more than 90 per cent effective in preventing the virus behind the global pandemic was hailed by some analysts as a “game changer” for the global economy. The jump in long-term interest rates that followed the news could also be a game changer for global equity and credit markets.
Zoom Founder Drops $5 Billion as Vaccine Hits Covid Winners
Benjamin Stupples and Devon Pendleton – Bloomberg
Peloton, Netflix and Sea all slump on Pfizer vaccine report; Netflix’s Hastings, FedEx’s Smith also see drops in net worth
Eric Yuan is, in many ways, the poster child for the coronavirus economy. His Zoom Video Communications Inc. has hosted school lessons, family gatherings and business meetings for more than 300 million participants a day during the pandemic. The stock of the video conferencing site has soared more than 500% this year and Yuan, a Chinese-born immigrant to the U.S., was at one point worth $28.6 billion — the 40th wealthiest person on the planet.
Environmental, Social and Corporate Governance
Carney Says Carbon Market Should Grow 15-Fold to Curb Pollution
The market for voluntary carbon credits needs to grow by a factor of 15 or more in the next decade if government targets for limiting global temperature increases are to have any chance of being realized.
Wind Power to Run Giant Hydrogen Plant at BP Oil Refinery
Laura Hurst – Bloomberg
Electrolyser at Lingen refinery will be one of EU’s biggest; Orsted’s offshore wind farm in North Sea to power project
Two of Europe’s largest energy companies, BP Plc and Orsted A/S, said they’d join to develop a industrial-scale electrolyzer to make hydrogen as a green fuel at a major oil refinery in Germany.
Investors Bet Biden Will Accelerate Shift to Renewable Energy; Funds are buying renewable-energy stocks and shorting fossil-fuel companies in a bid to cash in on rapid changes
Scott Patterson – WSJ
One of the best ways to make money on Wall Street recently has been to bet against the fossil-fuel industry and buy renewable-energy stocks. Two well-regarded investors believe the trend will accelerate after President-elect Joe Biden takes office.
U.K. Requires Companies to Report on Climate Change by 2025; It is the first country to make disclosures about the business impacts of climate change mandatory
Dieter Holger and Emese Bartha – WSJ
The U.K. said that companies need to report the financial impacts of climate change on their businesses within the next five years, becoming the first country to make the disclosures mandatory as investors and governments demand corporations curb their greenhouse gas emissions.
How a Biden Administration Will Boost ESG and Impact Investing
Abby Schultz – Barron’s
The election of Joe Biden as the next president of the U.S. is expected to have wide-ranging implications for investors who care about the environment and society, even if Congress remains divided. Ironically, President Donald Trump ‘s approach to the environment and underserved populations is considered one reason why investment dollars have poured into strategies that seek to have a positive impact on environmental, social, and governance (ESG) matters over the last few years.
Funds move to quell retail investors’ ire over halted $37bn Ant IPO; Mutual funds offer retail investors a route to reimbursement as outrage brews
Primrose Riordan – FT
Five mutual funds set up to offer exclusive access to Ant Group’s now-suspended $37bn listing are taking steps to offer angry retail investors a way to get their money back, but it may not be enough to quell the brewing outrage.
ETF investors set to perform volte-face on US Senate uncertainty; Recent move into value equities was based on having a clear path to fiscal stimulus
Steve Johnson – FT
ETF investors, caught out by the result of the US presidential election, look set to reverse a months-long move out of pricey US growth stocks.
investment platform as savers pile into buoyant stock markets
Siobhan Riding and Madison Darbyshire – FT
Hargreaves Lansdown, the UK’s largest investment platform, was rocked by severe technical problems on Monday after experiencing its busiest-ever trading day as savers piled into buoyant stock markets.
Swaths of European firms risk collapse despite subsidies, ECB warns; Spain worst-hit with 14% of workers in non-financial companies under threat
Martin Arnold – FT
One in seven Spanish workers are in businesses at risk of collapse, according to new research by the European Central Bank, excluding those who work for financial companies. This is the highest rate of all large eurozone economies, and comes despite the country’s national furlough scheme.
Schroders to invest in pandemic winners with new UK trust; British Opportunities seeks £250m to back companies in need of cash to grow
Daniel Thomas – FT
Schroders is seeking to raise £250m for a new investment trust preparing to float in London that will focus on promising companies that have prospered during the pandemic.
Argentina investors still nervous after state efforts to support peso; Fund managers forecast the currency will suffer further without broad reform plan
Benedict Mander – FT
Argentina has taken a series of steps to help steady its volatile currency in recent weeks, but investors still fear authorities will be forced into another devaluation of the official rate if they do not come up with a comprehensive and credible plan to revive the troubled economy.
South Korea’s financial groups look to raise billions via IPOs; Insurer Kyobo Life among those keen to cash in on share boom ahead of tough new regulations
Song Jung-a – FT
Financial groups in South Korea are seeking to raise billions of dollars through initial public offerings as part of efforts to cash in on booming share prices and to meet tough new regulations.
Sunak sets out ‘green’ post-Brexit financial services regime; Equivalence promise to EU and EEA as chancellor vows to keep UK ‘open and attractive’
Jim Pickard, Leslie Hook, Matthew Vincent and Philip Stafford – FT
Rishi Sunak has set out his post-Brexit vision for the City of London, hailing a “new chapter for financial services” with a heavy emphasis on green initiatives.
Trump’s Defeat Weakens Boris Johnson in Urgent Brexit Talks; As the European Union knows, the British prime minister can ill afford to threaten peace in Ireland, an issue close to the President-elect Biden’s heart.
Mark Landler and Stephen Castle – NY Times
Few world leaders have felt the fallout of President-elect Joe Biden’s victory more quickly than Prime Minister Boris Johnson. Mr. Johnson is in the final phases of trying to negotiate a post-Brexit trade agreement with the European Union, a complex challenge that just became more urgent with the defeat of his ally and ideological mate, President Trump.
Attempt to override Brexit deal is harming UK’s reputation, says John Major
John Major – The Guardian
Britain’s global reputation has been damaged and lawyers have been left “incredulous” by the government’s plan to override key elements of the Brexit deal, Sir John Major has said. The Conservative former prime minister lambasted the controversial move by Boris Johnson, describing it as “unprecedented in all our history – and for good reason”. Major said the UK internal market bill, which ministers have admitted will breach international law, had “damaged our reputation around the world”.
Boris Johnson Sets Up Unit to Attract Post-Brexit Investors to U.K.
Thomas Penny – Bloomberg
Prime Minister Boris Johnson announced the creation of a new unit to help attract international investment to the U.K. after it completes its departure from the European Union’s Single Market and Customs Union at the end of the year. Under the leadership of former Barclays Plc Chairman Gerry Grimstone, the Office for Investment will seek to smooth obstacles that might deter foreign companies, including “regulatory constraints and planning issues,” the Department for International Trade said Monday.
Johnson Presses on With Brexit Law-Break Plan After Lords Defeat
Joe Mayes and Thomas Penny – Bloomberg
The U.K.’s House of Lords rejected government plans to break international law over Brexit, putting the onus back on Prime Minister Boris Johnson, who immediately vowed to push ahead with the legislation. Peers voted late Monday to remove the most controversial parts of the Internal Market Bill, which gives ministers the power to unilaterally rewrite parts of the Withdrawal Agreement that Johnson signed with the European Union.
U.K. Carmakers Sink Almost $1 Billion Into Brexit Preparation
Siddharth Vikram Philip – Bloomberg
Carmakers in the U.K. have spent at least 735 million pounds ($970 million) preparing for Brexit and warned of a much larger loss in trade if negotiators are unable to reach an agreement with the European Union. Almost a third of the expenses have been borne this year, with the industry shelling out to prepare for new customs declarations and stockpiling parts, according to the Society of Motor Manufacturers and Traders. Leaving the EU without a deal could cost the sector as much as 47 billion pounds in lost trade of cars and vans over the next five years, the trade group said.
UK PM Johnson defeated in parliament on treaty-breaking Brexit laws
William James – Reuters
Prime Minister Boris Johnson suffered a heavy defeat in parliament’s upper chamber on Monday over proposed laws which would allow him to breach Britain’s EU exit treaty – a plan that has been criticised by U.S. president elect Joe Biden.
Brexit: NI leaders warn EU of ‘real threat’ to food supplies
John Campbell – BBC News
Northern Ireland’s first and deputy first ministers have written to the EU to urge flexibility in the operation of the new Irish Sea border. They warn there is a “real threat” to food supplies unless solutions are found. From 1 January, Northern Ireland will stay in the EU single market for goods but the rest of the UK will leave. That means some food products arriving in Northern Ireland from Great Britain will need to be checked.
The EBA Reminds Financial Institutions Of The Need For Readiness In View Of The Brexit Transition Period Ending On 31 December 2020
The European Banking Authority (EBA) reminds financial institutions affected by the end of the transition period to finalise the full execution of their contingency plans in accordance with the conditions agreed with relevant competent authorities before the end of the transition period on 31 December 2020. The EBA also reminds institutions to ensure adequate communication regarding their preparations and possible changes to any affected EU customers.