Post-Flash Crash Fixes Bolstered Markets During Coronavirus Selloff

May 5, 2020

First Read

Hits & Takes
By JLN Staff

Former Millburn Ridgefield Corporation Co-Chairman and Co-CEO George Crapple has passed away. Crapple was a former National Futures Association (NFA) Director and Executive Committee Chairman and Managed Funds Association (MFA) Chairman.

Larry Tabb has a new job. After the closing of the TABB Group, he has been hired by Bloomberg Intelligence at Bloomberg LLP as head of market regulatory research. This is called landing on your feet and sticking the landing.

FTSE Russell has a webinar scheduled for May 12 at 10 AM ET on “US Small Caps Volatility and The Global Pandemic.” They will be joined by special guest Jefferies US Small & Mid Cap Equity Strategist Steven DeSanctis and index derivatives partners Cboe Global Markets and CME Group to examine the current state of the US small cap equity market and practical strategies and tools for managing through unprecedented levels of market volatility. Register HERE.

One of my Eagle Scouts, who traveled to Japan with my daughter Katherine for the World Scout Jamboree back in 2015, has begun an internship with West Monroe Partners. He was scheduled to work out of their Seattle office, but instead will be working from home for a shortened summer schedule. David Cooke will work as a data engineer for the firm. Readers of this newsletter were gracious enough to help send David to Japan, for which I am forever grateful.

Speaking of Scouting, The Pathway to Adventure Council of the Boy Scouts of America just cancelled all summer camps at Camp Betz, Camp Napowan, and Owasippe Scout Reservation, and Cub Scout Day Camps. It was a hard decision to make, but the right one given the circumstances.

Weronika Slomka has recently joined ICE in their London office as a communications associate. She was previously in a similar position with the World Federation of Exchanges

Jelena C. Nedelka has joined the press office of the London Stock Exchange Group. Formerly, she was with Lansons Intermarket in London.

We have turned down the speed of our internet service in the office we are not currently using in the CBOT Building. Thank you to Comcast for this option to save us some money.

Nicholas Francis De Cicco, former member of the Chicago Board of Trade from 1973 – 2006 who served on the corn pit committee and soybean oil pit committee, has passed away. ~JJL

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Presidential Tweets Drive Volatility in Interest-Rate Options; Options market shows more sensitivity to announcements by the president on the social-media platform than in September
Julia-Ambra Verlaine – WSJ
President Donald Trump’s tweets are increasingly driving swings in the $25 trillion market for using options to bet on U.S. interest rates. Interest-rate options markets are 60% more sensitive to tweets from President Trump than back in September, according to JPMorgan Chase JPM -1.19% & Co. analysts who launched a proprietary index tracking what drives volatility in the options contracts.
/jlne.ws/3fnymJe

*****Extraordinary popular delusions and Madness of Tweets!~JJL

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Internal Chinese report warns Beijing faces Tiananmen-like global backlash over virus
Reuters
An internal Chinese report warns that Beijing faces a rising wave of hostility in the wake of the coronavirus outbreak that could tip relations with the United States into confrontation, people familiar with the paper told Reuters.
/jlne.ws/2Wyf9vE

*****China is preparing for war with the U.S. The arrival of the murder hornets in the U.S. was the tipoff this was coming.~JJL

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Some retailers too broke to go bankrupt
Chris Isidore – CNN
Store-closing sales are crucial to the nation’s retail economy: They help liquidate slow-to-sell inventory, and in many cases, they fund a company’s operations through bankruptcy. Without liquidation sales, retailers would find it much tougher, if not impossible, to stay in business during a reorganization.
/jlne.ws/2L4l9Hc

*****Get ready for negative prices.~JJL

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Monday’s Top Three
Our top story Monday was Reuters’ Special Report: How a corporate PR machine is trying to kill a Wall Street tax. Second was Your Air Travel Experience Will Never Be the Same, from Bloomberg Opinion. And third was This pregnant Goldman Sachs trader says Wall Street will never be the same after the coronavirus.

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Lead Stories

Post-Flash Crash Fixes Bolstered Markets During Coronavirus Selloff; Abrupt plunge in 2010 prompted effort to shore up stock market’s electronic underpinnings
Alexander Osipovich – WSJ
A decade ago, the flash crash of May 6, 2010, rocked markets. What followed was a broad effort by regulators and Wall Street to fix the complex electronic systems that underpin the U.S. stock market—moves that appear to have paid off in the recent coronavirus-induced nosedive. The March turmoil caused the S&P 500 to suffer its swiftest-ever decline from a record into a bear market. Despite the meltdown and extreme volatility, the market’s plumbing held up, a largely unsung success that drew little notice among Americans focused on the pandemic.
/jlne.ws/3b5GVVB

Wall Street’s Elite Bond Club Is Cracking at the Worst Possible Time
Emily Barrett – Bloomberg
Many argue the Fed needs to rethink role of primary dealers; Pimco goes further, arguing asset managers should join group
On the eve of the biggest boom in U.S. bond sales since World War II, cracks are appearing in the exclusive Wall Street club responsible for ensuring the market functions smoothly. For decades, the firms, known as primary dealers, have sat at the nexus of the Treasuries market, buying newly issued bonds to disseminate throughout financial markets and trading directly with the Federal Reserve. This relationship has helped the Fed implement its policy goals, yet the implosions of recent months suggest that the group is under duress.
/jlne.ws/2WssIgn

‘Risk Based’ Social Distancing Is Key to Reopening; Some mitigation measures, such as closing schools, offer a poor mix of costs and benefits
Greg Ip – WSJ
When French Prime Minister Édouard Philippe announced plans last week to reopen the French economy, he warned: “It is a fine line that must be followed. A little too much carelessness, and the epidemic restarts. A little too much caution, and the entire country sinks.”
/jlne.ws/3dn5lLJ

SEC Ramps Up Whistleblower Awards; Over $64 million given out in first seven months of fiscal year—more than in any full year but one
Dave Michaels – WSJ
The Securities and Exchange Commission has stepped up the awards it pays to whistleblowers after years of complaints that it has been slow to compensate them for the risks they take to help spot fraud.
/jlne.ws/2YzKukf

Oil’s cruellest month has forced a rethink on production; Dive into negative prices triggered pullback that helps set scene for rebound
David Sheppard – FT
The oil industry has just endured one of the most testing months in its history. It is difficult to imagine an immediate recovery. Oil executives are rightly cautious. But look beyond the wasteland and there are a few signs that the oil market is, if not quite recovering, at least stabilising.
/jlne.ws/2xBijXf

German court calls on ECB to justify bond-buying programme; Bundesbank told to halt participation unless central bank shows policy ‘proportionate’
Martin Arnold and Tommy Stubbington – FT
Germany’s constitutional court has called on the European Central Bank to justify its vast purchases of public sector debt and threatened to block new purchases of German bonds unless it does so within three months.
/jlne.ws/3cirs6h

BNP Paribas Profit Drops as Structured-Products Business Takes Hit; Firms cutting dividend payments hits French bank’s equity derivatives unit
Noemie Bisserbe and Pietro Lombardi – WSJ
BNP Paribas SA BNPQY -1.32% reported Tuesday a drop in first-quarter net profit as France’s largest bank set aside new provisions to prepare for a flood of customers to default on their loans because of the coronavirus pandemic.
/jlne.ws/2KZJdef

Who pays the bill? The coming deluge of pandemic litigation; Lawyers are counting the cost of the lockdown, but public compensation funds might prove more useful
Alex Barker, Kate Beioley and Jane Croft – FT
When disaster and tragedy strike America, Ken Feinberg is usually the man left holding the purse. As a so-called “special master” of compensation funds, the 74-year-old has distributed more than $20bn over his unique career, somehow putting a dollar price on incalculable loss and suffering.
/jlne.ws/2zVQsSg

Virtu Appoints Molluso, Fairclough as Co-Presidents
Julie Ros – P&L
Virtu Financial today announced the appointments of Brett Fairclough and Joseph Molluso as co-presidents and co-chief operating officers. Molluso re-joins Virtu after a brief period away from the company.
/jlne.ws/3dg3EzV

Charles Schwab is launching fractional stock-trading in June, making good on a promise that sent rivals Robinhood and Fidelity racing to offer slices of pricey shares
Rebecca Ungarino and Dan DeFrancesco – Business Insider
Charles Schwab is launching fractional stock-trading in early June, the firm plans to announce on Tuesday, marking an effort to attract newbie investors in what’s become a fiercely competitive arena for both new and legacy brokerage players.
/jlne.ws/2SDjnRP

Watchdog vows UK firms get pass for ‘unique, one-off, crazy’ impact of lockdown
Lucy McNulty – Financial News
City bosses struggling with their regulatory burdens during the Covid-19 lockdown will be shown leniency, the UK’s financial watchdog said.
/jlne.ws/2A1BBG4

Temperatures in April Matched Warmest on Record, Satellites Show; Switzerland and France reported extremely high temperatures, according to Europe’s Copernicus agency
Laura Millan Lombrana – Bloomberg
Temperatures in April were on par with the previous warmest April on record four years ago, with extremely high temperatures in some parts of Europe, Greenland and Antarctica.
/jlne.ws/2YDvKkq

France’s Macron says major foreign travel to be limited this summer
Reuters
French President Emmanuel Macron said it was unlikely that French people would be able to undertake major foreign trips this summer and that even trips within Europe may have to be limited in order to reduce the risk of a resurgence of the coronavirus epidemic.
/jlne.ws/3fomx5q

Global Oversupply of Crude Leads to Scramble for Storage Solutions and Alternatives
Brian Balboa – SPE.org
Front-month Nymex West Texas Intermediate (WTI) crude oil futures settled at a record low -$37.63/bbl on 20 April. The settlement was not driven lower only by weak demand and ample supply brought on by the COVID-19 pandemic. It was driven by a lack of storage capacity.
/jlne.ws/3foqqYj

The U.S. Would Benefit From a Sovereign Wealth Fund; A national investment portfolio would ease two persistent problems highlighted by the coronavirus pandemic.
Nir Kaissar – Bloomberg
To support businesses and individuals through the coronavirus lockdown, the U.S. could use a sovereign wealth fund, and there’s no better time to get started. A sovereign wealth fund is essentially an investment portfolio owned by the government. Scores of countries, and even some U.S. states, have one. They’re used for various purposes, such as stabilizing government revenue or saving for the future. Norway’s sovereign wealth fund, which is technically two separate funds, is the largest and best known, with assets of roughly $1.1 trillion.
/jlne.ws/3fmrrQE

Almar Latour Named CEO of Wall Street Journal Publisher Dow Jones; Company veteran and current publisher of Barron’s Group to succeed William Lewis on May 15
Jeffrey A. Trachtenberg – WSJ
News Corp NWS 2.16% tapped Almar Latour to become chief executive officer of Dow Jones and publisher of The Wall Street Journal, turning to a veteran news and business executive to steer the company through a difficult time in the media industry.
/jlne.ws/2YCE302

Coronavirus

1918 Pandemic Linked to Rise of Nazis, Study Shows
Catherine Bosley – Bloomberg
Sign up here for our daily coronavirus newsletter on what you need to know, and subscribe to our Covid-19 podcast for the latest news and analysis. In a warning for the potential political implications of coronavirus, a New York Federal Reserve paper has shown a link between the 1918 flu pandemic and the rise of the Nazi Party in Germany.
/jlne.ws/3dmyHdt

As Virus Deaths Grow, Two Rich Nations Keep Fatality Below 0.1%
Kevin Varley – Bloomberg
Qatar has lowest mortality among nations with major infections; 102-year-old Singapore woman survives after contracting virus
As the global death toll from the coronavirus pandemic exceeds 250,000, two tiny nations stand out with the lowest fatality rates among countries who are experiencing major outbreaks.
/jlne.ws/3dclCDg

U.K. Unions Tell Johnson It’s Not Safe to Increase Train Travel
Will Mathis – Bloomberg
Britons face a new obstacle in getting back to work following the coronavirus outbreak after unions called for train services to remain limited even as the government begins to plan for an easing of the lockdown.
/jlne.ws/2SD3rPm

Food Panic Recedes for Now as Nations Row Back Export Curbs
Megan Durisin and Agnieszka de Sousa – Bloomberg
Countries from Vietnam to Kazakhstan start to ease limits; Protectionist measures had emerged as pandemic risks escalated
The wave of protectionist measures on agricultural goods that emerged as the coronavirus spread around the world has already begun to recede. Of at least 17 countries that sought to limit food exports to protect local supplies, about half have backtracked all or some of the measures, according to a tracker from the International Food Policy Research Institute. That includes several major grain shippers such as Vietnam and Romania, although top wheat exporter Russia has kept its curbs in place.
/jlne.ws/2YCLBzB

Luxury Home Prices From Hong Kong to Vancouver Will Fall Sharply, Knight Frank Says
Dhwani Pandya – Bloomberg
Mumbai will drop 5% in 2020 and 3% next year, study shows; India is under world’s strictest shelter-at-home restrictions
Mumbai, Vancouver, Hong Kong, Singapore and Buenos Aires will see the prices of luxury homes fall steeply as the coronavirus outbreak hurts demand, according to a Knight Frank study.
/jlne.ws/2W4UAbn

Algorithmic economics might help recovery from Covid-19; Machine learning applied to economic modelling aims to generate novel insights for policymakers
John Thornhill – FT
We are going to need a lot of ingenuity to exit from our pandemic-induced economic slump. Can powerful machine learning systems, similar to Google DeepMind’s game-playing AlphaGo, help us out of the mess?
/jlne.ws/2L0Ofax

Philanthropic funding must fill the urgent coronavirus research gap; Donors can unlock multiple, sometimes radical approaches while tolerating failures
Alice Gast – FT
Academics at Imperial College in London are in the vortex of the global coronavirus storm. Epidemiologists led by Neil Ferguson have been central to the scientific response to the pandemic, advising governments around the world. Prof Ferguson’s team were among the first to raise the alarm as evidence emerged of a startlingly contagious and deadly new virus in Hubei province. Financial support, most notably from the UK’s Medical Research Council and global philanthropists like Community Jameel, enabled them to work quickly and openly from those first early weeks, with timely reports made available to the public in multiple languages.
/jlne.ws/2z8eCZB

U.S. Officials Warn of New Virus Surge as States Reopen; U.S. death toll could reach 135,000 by early August, according to one forecast that doubled its projection
John Lyons – WSJ
U.S. researchers and officials warned about the possibility of a new surge in coronavirus cases as more states and countries begin to open their economies and relax social-distancing rules. The U.S. death toll could approach 135,000 by early August, according to the University of Washington’s Institute for Health Metrics and Evaluation, which produces a Covid-19 forecast sometimes cited by the White House.
/jlne.ws/2W6742h

White House Disclaims Projection Showing Surge in Virus Outbreak
Alex Wayne – Bloomberg
Government document projects 2,500 deaths per day by June 1; Document includes “preliminary analyses” by Johns Hopkins
An internal U.S. government projection shows the nation’s coronavirus outbreak vastly accelerating by June to more than 200,000 new cases and 2,500 deaths per day — far more than the country is currently experiencing.
/jlne.ws/2W4lznd

Two quants use options pricing tools to model Covid-19 New tool aims to gauge wider cost of virus control measures
Rob Mannix – Risk.net
A pair of prominent finance quants have built a pandemic model that borrows techniques from machine learning and option pricing. And they think it can help politicians decide when to lift lockdowns.
/jlne.ws/2A1yi1C

Coronavirus Causes Damaging Blood Clots From Brain to Toes
Jason Gale – Bloomberg
Infection may spark formation of dangerous clots, doctors say; Clotting risk and symptoms may persist after infection clears
Another threat from the lung virus that causes Covid-19 has emerged that may cause swift, sometimes fatal damage: blood clots. Doctors around the world are noting a raft of clotting-related disorders — from benign skin lesions on the feet sometimes called “Covid toe” to life-threatening strokes and blood-vessel blockages. Ominously, if dangerous clots go untreated, they may manifest days to months after respiratory symptoms have resolved.
/jlne.ws/3dk5eko

Coronavirus and the Sweden Myth; The country’s approach to the pandemic sets a seductive example. But the United States shouldn’t copy it.
Ian Bremmer, Cliff Kupchan and Scott Rosenstein – NY Times
For countries battling the coronavirus pandemic, Sweden sets a seductive example. While the world’s biggest economies have shut down, one small, well-governed Scandinavian country has allowed most businesses to stay open. The strategy apparently relies on “herd immunity,” in which a critical mass of infection occurs in lower-risk populations that ultimately thwarts transmission.
/jlne.ws/35yONOa

Coronavirus will constrain U.S. meat supply despite Trump order: Tyson Foods
Tom Polansek, Uday Sampath Kumar – Reuters
The coronavirus crisis will continue to idle U.S. meat plants and slow production, Tyson Foods Inc said on Monday, signaling more disruptions to the U.S. food supply after U.S. President Donald Trump ordered facilities to stay open.
/jlne.ws/2A4CiP3

Exchanges, OTC and Clearing

Intercontinental Exchange Reports April Statistics; Energy ADV +45% y/y, OI +24% y/y
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today reported April 2020 trading volume and related revenue statistics, which can be viewed on the company’s investor relations website at https://ir.theice.com/ir-resources/supplemental-information in the Monthly Statistics Tracking spreadsheet.
/jlne.ws/2WouM92

NYSE Board Advisory Council Welcomes Eight New Members; Council connects diverse board candidates with NYSE-listed companies seeking new directors
Intercontinental Exchange, Inc.
The New York Stock Exchange (NYSE), a wholly-owned subsidiary of Intercontinental Exchange (NYSE: ICE), welcomed eight new members to the NYSE Board Advisory Council, which identifies and connects diverse board candidates to NYSE-listed companies seeking new directors.
/jlne.ws/3fh16mZ

Tradeweb Reports Robust April Trading
Tradeweb on FT
Tradeweb Markets Inc. (Nasdaq: TW), a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, today reported average daily volume (ADV) of $763.4 billion (bn) in April, an increase of 14.6 percent (%) year over year (YoY).
/jlne.ws/3fkQi7f

AFX AMERIBOR Benchmark Sets Monthly Volume Record in April Surpassing March 2020 Levels by 4.32 Percent
Press Release via Mondovisione
The American Financial Exchange (AFX), an electronic exchange for direct lending and borrowing for American banks and financial institutions, announced a monthly volume record of $58.240 billion traded during April across all AFX products. This surpasses a record of $55.829 billion set in March 2020, marking a 4.32 percent increase.
/bit.ly/35wdafC

Adjustment of New World Development Structured Products, Futures and Options
HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) has announced the arrangements for the adjustment to New World Development Company Limited (New World Development) structured products, futures and options to account for New World Development’s share consolidation.
/jlne.ws/2A4mLid

CME Group to Introduce Enhanced 3-Year U.S. Treasury Note Futures
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it will introduce an enhanced version of its 3-Year Treasury Note futures contract on July 13, 2020, pending regulatory review. New features will include a more robust basket of deliverable treasuries and reduced tick size.
/jlne.ws/3dgZmIw

CME Group Reports April 2020 Monthly Market Statistics
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today reported April 2020 market statistics, showing it reached average daily volume (ADV) of 17.8 million contracts during the month. Open interest at the end of April was 119.7 million contracts. Market statistics are available online in greater detail at https://cmegroupinc.gcs-web.com/monthly-volume.
/jlne.ws/2Wr65bY

MarketAxess To Expand Open Trading In Emerging Markets
Markets Media
MarketAxess, the electronic platform for fixed income trading and reporting, is going to extend Open Trading to some markets in Latin America and Asia this year as the protocol had record volume in the first quarter of this year.
/jlne.ws/2WtuE87

NYSE Eyes ‘Safe’ NY Floor Reopening as Research Shows Value of Open Outcry; NYSE COO Michael Blaugrund looks ahead to a potential reopening of the exchange’s iconic New York trading floor, and describes why NYSE believes it’s appropriate to reopen the Arca Options floor earlier, and the role of DMMs in reducing volatility.
Max Bowie – Waters Technology
The New York Stock Exchange (NYSE) is focusing on preparations to reopen its New York trading floor as soon as it is safe to do so, and will use the upcoming reopening of its NYSE Arca Options floor in San Francisco as a blueprint for reopening the NYSE floor, though reopening plans will differ because of the specific circumstances affecting each city during the coronavirus pandemic.
/jlne.ws/2YzfLE4

Miami International Holdings Reports April 2020 Trading Results and Market Share Records for MIAX Exchange Group; Rules Become Effective to List Proprietary Commercial Real Estate Index Products
Miami International Holdings, Inc. (press release)
Miami International Holdings, Inc. (MIH) today reported April 2020 trading results for its three fully electronic options exchanges – MIAX, MIAX PEARL and MIAX Emerald (together, the MIAX Exchange Group). The MIAX Exchange Group collectively executed over 63.8 million equity option contracts in April for a combined average daily volume (ADV) of 3,038,841 contracts, representing a total U.S. equity options market share of 12.37%.
/jlne.ws/3divT0H

Cash market sales statistics for April
Deutsche Börse Group
A trading volume of EUR 172.8 billion was achieved on the cash markets of Deutsche Börse in April (previous year: EUR 120.9 billion). Xetra accounted for EUR 141.9 billion of this (previous year: EUR 107.8 billion), bringing average Xetra daily sales to EUR 7.1 billion. EUR 5.3 billion was traded on the Frankfurt Stock Exchange (previous year: EUR 2.8 billion) and EUR 25.6 billion on the Tradegate Exchange (previous year: EUR 10.3 billion).
/jlne.ws/2yxT7Bp

Fintech

Thiel-Backed Firm Helps Ultra-Wealthy Trade Hedge Fund Holdings
Sonali Basak – Bloomberg
Bloomberg’s daily technology newsletter is chronicling the impact of Covid-19 on the global tech industry. Sign up here. Addepar Inc., a Silicon Valley firm whose clients handle almost $2 trillion of wealth-management assets, created a way to more easily trade investments in hedge funds and private equity funds.
/jlne.ws/2L2rMtD

JPMorgan Chase among new backers for paperless voting fintech; Proxymity raises $20m in spinout from Citigroup as shareholder meetings go virtual
Laura Noonan – FT
JPMorgan Chase, HSBC and Deutsche Bank are among eight major financial services companies investing $20m in Proxymity, an online shareholder voting platform being spun out of Citigroup’s venture arm.
/jlne.ws/35vRPD2

Revolut on the hunt for acquisitions; UK fintech plans to use recent $500m fundraising to buy rivals hit by coronavirus pandemic
Nicholas Megaw – FT
British fintech Revolut is looking to use some of the proceeds of its recent $500m fundraising to buy rival technology companies that have been hit by the coronavirus pandemic.
/jlne.ws/2W6jQxQ

Cryptocurrencies

Bitcoin ‘Halving’ Coming Soon
John D’Antona Jr. – Traders Magazine
Get ready for Bitcoin halving. Bitcoin halving? Just what is it and what does “halving” mean? These are questions investors are now asking with Google searches increasing, and even at times exceeding, COVID-19. First, an education is in order here. Bitcoin is an unregulated digital currency with no central authority in charge, such as a government or central bank. Rather, it relies on a consensus between everyone to keep it running and determine value.
/jlne.ws/2W2Sxo1

Bitcoin Mining Difficulty Nears All-Time High in Final Adjustment Before Halving
Wolfie Zhao – Coindesk
Bitcoin mining difficulty – a measure of how hard it is to compete for block rewards – has neared an all-time high in the network’s last adjustment before the halving happens in roughly seven days. The world’s largest blockchain network by market capitalization just adjusted its mining difficulty to 16.10 trillion (T) at 4:05 UTC on Tuesday, close to the network’s all-time high of 16.55 T recorded in March. Tuesday’s upward surge follows the second-largest decline in the network’s history in late-March.
/jlne.ws/2yu1uOl

Telegram now tells US investors to leave its blockchain project and take 72% refund
Yogita Khatri – The Block
After delaying its blockchain project for one more year last week, Telegram is now telling U.S. investors to leave the project immediately by taking 72% refunds. In a new letter to Telegram Open Network (TON) investors on Monday, the company said American investors can’t wait for another year and are not eligible for a 110% loan refund option in April 2021.
/jlne.ws/3dgiNBa

Revolut on the hunt for acquisitions
Nicholas Megaw – FT
British fintech Revolut is looking to use some of the proceeds of its recent $500m fundraising to buy rival technology companies that have been hit by the coronavirus pandemic. Nikolay Storonsky, chief executive, told the Financial Times that Revolut had “a real opportunity” to benefit from the crisis, despite suffering a substantial hit to its revenues as lockdowns around the world caused a drop-off in card transactions.
/jlne.ws/2W6jQxQ

Report: Antminer S9s produce around 23% of bitcoin’s current hash rate
Celia Wan – The Block
Bitmain’s Antminer S9s produce around 23% of the total bitcoin hash power output, new research by Coin Metrics has found. The company’s research efforts assessed that S9s contributed as much as 78% of the total network hash power in 2018, when the mining hardware product was the best-seller on the market. However, that figure has seen a steady decline since then, while the network share of other miners has risen.
/jlne.ws/2SBT52j

Iran Issues License for Nation’s Biggest Bitcoin Mining Operation
Sebastian Sinclair – Coindesk
iMiner, a Turkey-based company, has been granted a license to mine cryptocurrencies in Iran. Local news source Tabnak news reported on April 28 that iMiner has the green light from the nation’s Ministry of Industry, Mine and Trade to operate up to 6,000 mining rigs in the city of Semnan. The mining company has so far spent 311 billion rials ($7.3 million) on setting up the biggest mining operation in the country to date. The ministry has also allowed the firm to begin offering cryptocurrency trading and custody from within the country, as per the report.
/jlne.ws/2xA67Wz

Crypto messaging platform Paradigm says it’s launched a ‘holy grail’ service for derivatives traders
Frank Chaparro – The Block
Trading messaging platform Paradigm is launching a new function for derivatives trades that aims to be a “holy grail” for the burgeoning corner of the market. Paradigm allows cryptocurrency traders to negotiate with counter-parties and then automatically execute trades to be settled on partner derivatives exchanges. Those negotiations can be conducted manually or via automated requests for quotes (RFQs), which are electronic messages sent between counter-parties that outline the terms of a trade.
/jlne.ws/2SGUSTM

IBM, Mastercard Join Digital Identity Project Building ‘Ecosystems of Trust’
Ian Allison – Coindesk
The highly specialized world of digital identity is opening itself to a wider audience. Announced Tuesday, the Trust over IP (ToIP) Foundation is backed by governments, nonprofits and private-sector firms. Key players include Mastercard, IBM and the Canadian Province of British Columbia. A vast ecosystem of public bodies and private companies, large and small, are working on establishing decentralized digital trust, using an array of technologies. The ToIP Foundation, which will live within the Linux Foundation, is a move to rein together core issues that matter to all of them, as well as creating appropriate technologies.
/jlne.ws/2xFHFTU

Ripple hit with yet another XRP class-action lawsuit
Amy Castor – Decrypt
A new class-action lawsuit has been filed against crypto giant Ripple and its CEO Brad Garlinghouse alleging securities laws violations regarding the sale and marketing of XRP. The lawsuit alleges that Ripple created the XRP cryptocurrency for the sole purpose of making its founders and a few other people rich. The suit, filed on Friday in the Northern California District Court, claims that XRP, the third largest cryptocurrency by market cap, according to data collected by Nomics, was marketed to the public to raise more than $1 billion. In order to drive demand, Ripple made “a litany of false and misleading statements regarding XRP,” the suit alleges.
/jlne.ws/2yx3epX

OneCoin Lawyer Fights Back Again Against Conviction Arguments
Aziz Abdel-Qader – Finance Magnates
A letter filed with the court reveals Mark Scott’s legal team continues to push back against the government’s arguments against the former lawyer of the crypto pyramid scheme OneCoin. In a motion submitted to the court on May 1, Scott lawyers argued that there was insufficient evidence presented to the court and petitioned for his conviction to be quashed. But this time they apparently try to lay a glove on Scott’s fellow money launderer, Gilbert Armenta.
/jlne.ws/2W4xTDY

Robinhood scores $280 million in Series F fundraise, and it’s promising to scale the platform
Frank Chaparro – The Block
Equities and crypto brokerage firm Robinhood announced Monday the completion of a $280 million Series F fundraise, following earlier reports on the firm’s latest raise via Bloomberg and the Financial Times. The fresh capital brings the unicorn’s valuation to $8.3 billion, according to an announcement of the raise.
/jlne.ws/3fmadma

Politics

Tax-Cut Era Has Come to an End, Guggenheim’s Millstein Says
Sonali Basak and Alix Steel – Bloomberg
The “investor class” will have to pay for the ballooning debt stemming from the Covid-19 crisis, according to Jim Millstein, the co-chairman of Guggenheim Securities who led restructuring efforts at the U.S. Treasury Department after the financial crisis.
/jlne.ws/3b2gOz3

White House Coronavirus Task Force Team Restricted From Congressional Hearings; Trump administration issues guidance that advisory team may not accept invitations to testify in May
Andrew Restuccia – WSJ
The Trump administration has issued new guidance that bars members of the White House’s coronavirus task force from appearing at congressional hearings this month, according to an administration official and document reviewed by The Wall Street Journal.
/jlne.ws/35zAARg

Regulation

FINRA Warns of Fraudulent Phishing Emails Purporting to be from FINRA
FINRA
FINRA warns member firms of a widespread, ongoing phishing campaign that involves fraudulent emails purporting to be from FINRA officers, including Bill Wollman and Josh Drobnyk (see Attachment A). These emails have a source domain name “@broker-finra.org” and request immediate attention to an attachment relating to your firm. In at least in some cases, the emails do not actually include the attachment, in which case they may be attempting to gain the recipient’s trust so that a follow-up email can be sent with an infected attachment or link, or a request for confidential firm information. In other cases, what appears to be an attached PDF file may direct the user to a website which prompts the user to enter their Microsoft Office or SharePoint password. FINRA recommends that anyone who entered their password change it immediately and notify the appropriate individuals in their firm of the incident.
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SEC Provides Temporary, Conditional Relief to Allow Small Businesses to Pursue Expedited Crowdfunding Offerings
SEC
The Securities and Exchange Commission today announced that it is providing temporary, conditional relief for established smaller companies affected by COVID-19 that may look to meet their urgent funding needs through a Regulation Crowdfunding offering. Today’s actions, which follow suggestions made by members of the SEC’s Small Business Capital Formation Advisory Committee, will expedite the offering process for eligible companies by providing relief from certain rules with respect to the timing of a company’s offering and the financial statements required. To take advantage of the temporary rules, a company must meet enhanced eligibility requirements and provide clear, prominent disclosure to investors about its reliance on the relief. The relief will apply to offerings launched between the effective date of the temporary rules and Aug. 31, 2020.
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SEC Awards Almost $2 Million to Whistleblower
SEC
The Securities and Exchange Commission today announced an award of nearly $2 million to a whistleblower whose information and assistance helped the agency bring a successful enforcement action and allowed investors to recover much of their money.
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CFTC Awards More Than $2 Million to Four Whistleblowers
CFTC
The Commodity Futures Trading Commission today announced a whistleblower award exceeding $2 million to be shared among four whistleblowers. The CFTC granted the whistleblowers’ award applications for both a CFTC action and related actions brought by another regulator. In issuing the award, the CFTC recognized the contributions of the whistleblowers, who jointly submitted a tip to the CFTC. Each of the whistleblowers also individually provided significant, ongoing assistance to the CFTC’s Division of Enforcement.
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Update of position limits for certain commodity derivative contracts
UK FCA
The Financial Conduct Authority (FCA) has today published updated position limits for certain commodity derivative contracts traded on UK trading venues. The limits have been established under the Markets in Financial Instruments Regulations 2017 (MIFI Regs).
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FCA’s stark warning: Insider traders will be caught during Covid-19 crisis; Mark Steward, the Financial Conduct Authority’s director of enforcement and market oversight, has said that the regulator is bracing for an uptick in market abuse cases in the coming months.
Lucy McNulty – Financial News
The City’s top market watchdog has warned insider traders that it will catch them, even during the coronavirus outbreak. Mark Steward, the Financial Conduct Authority’s executive director of enforcement and market oversight, told Financial News that the regulator was bracing for an uptick in market abuse cases in the coming months.
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U.S. SEC eases crowdfunding rules for firms due to coronavirus disruption
Katanga Johnson – Reuters
The U.S. Securities and Exchange Commission (SEC) on Monday said it would provide relief to smaller firms seeking to raise capital via online platforms to meet “urgent funding needs” due to the coronavirus-related disruption.
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Investing and Trading

Hertz Prepares to File Bankruptcy If Monday Deadline Is Missed
Eliza Ronalds-Hannon and David Welch – Bloomberg
Hertz Global Holdings Inc. is preparing to file for bankruptcy as soon as Monday night if the company fails to rework its debt and can’t get lenders to extend a grace period on a missed payment.
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Oil Giant Total Targets Carbon Neutrality in 2050
Francois De Beaupuy – Bloomberg
French major cuts production outlook, increases cost cuts; Company keeps first-quarter dividend unchanged from year ago
Total SA set out bolder commitments to eliminate most of its carbon emissions by 2050, while curbing spending on oil and gas projects due to the crude-price slump.
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Hedge funds bet on gold as refuge from ‘unfettered’ currency printing; Big-name investors such as Elliott and Caxton act on concerns over debasement of money
Laurence Fletcher and Henry Sanderson – FT
Some of the world’s largest hedge funds are raising their bets on gold, forecasting that central banks’ unprecedented responses to the coronavirus crisis will lead to devaluations of major currencies.
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Wall Street ‘flying blind’ after companies scrap guidance; Profit forecasts ditched as coronavirus disrupts operations
Richard Henderson – FT
The number of US blue-chips offering full-year profit guidance alongside their first-quarter earnings has been cut in half, leaving Wall Street analysts struggling to assess the full impact of measures to contain the spread of coronavirus.
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Texas regulator drops effort to force oil production cuts; Railroad commissioner had called for using decades-old state rules to reduce output
Derek Browe – FT
A Texas regulator has dropped an effort to use decades-old state rules to force oil producers to cut output in order to boost crude prices after running into opposition from leading energy companies.
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Thermal coal prices collapse after virus lockdowns sap demand; IEA expects global consumption will decline 8% this year in largest drop since second world war
Neil Hume – FT
Coronavirus lockdowns have hit the market for thermal coal, where demand is expected to fall by the most this year since the second world war after factories power down.
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Oil Majors Delay Deals Amid Volatile Crude Prices, Lockdowns; With fluctuating oil prices and coronavirus restrictions, dealmaking has become an unexpected challenge for large energy companies
Sarah McFarlane, Ben Dummett and Benoit Faucon – WSJ
Before Covid-19 and the oil-price rout, most of the world’s biggest energy companies had planned to sell billions in assets to help pay down debt and maintain dividends. Now, those divestment programs are in jeopardy.
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Thomson Reuters cuts sales outlook, narrowly misses earnings
Nick Zieminski, Kenneth Li – Reuters
Thomson Reuters reported higher quarterly sales and operating profit that fell slightly short of Wall Street estimates on Tuesday, while cutting its full-year sales outlook due to disruption to the global economy from the coronavirus crisis.
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Dirt-Cheap U.S. Mortgages Thwarted by $5 Billion in Margin Calls
Shahien Nasiripour – Bloomberg
Rescue of housing market in March accidentally burned lenders; Variety of pressures keeping rates from going even lower
The Federal Reserve’s emergency rescue of the U.S. mortgage market should have set off celebration among lenders trying to keep up with demand from borrowers. Instead, executives at Quicken Loans got a hefty margin call.
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Planning for Survival: Holding On to the Cash You Have; What to do when not a lot of money is coming in and expenses are chugging along.
Robb Mandelbaum – Bloomberg
For most small businesses—at least the ones that have drastically scaled back operations or shut down altogether—the crisis triggered by the Covid-19 pandemic poses a long-term existential threat. There’s not a lot of money coming in, maybe none at all, but expenses chug along as if nothing has happened: Rent, loan payments, utilities, insurance, and other obligations still come due every month. Most small businesses don’t have the financial cushion to outlast a shutdown that could last for months. Indeed, a 2016 study by the JPMorgan Chase Institute of the bank’s small-business customers in major metro areas found that only half of them have banked enough money to pay the bills for a month. Only a quarter have two months’ worth of cash buffer.
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Institutions

BNP Paribas Warns on Profit After $1.2 Billion Virus Hit
Dale Crofts – Bloomberg
Bank follows rival SocGen with $200 million equity market loss; BNP setting aside $547 million for virus-related loan losses
BNP Paribas SA warned full-year earnings will take a pounding from the coronavirus outbreak after the bank followed Societe Generale SA in setting aside more cash to cover problem loans and posted a $200 million hit at its trading unit.
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BNP Paribas warns coronavirus could dent 2020 profits by a fifth; ‘Drastic revisit’ of outlook at French bank as dividend cuts and cancellations hit equities trading
David Keohane and Stephen Morris – FT
BNP Paribas warned coronavirus could knock a fifth off its 2020 profits as it revealed a EUR184m blow to its equities trading division after complex derivatives products suffered in volatile markets.
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Citi Executives Leave Mailroom for the C-Suite
Jennifer Surane – Bloomberg
Shareholders can cast proxy votes on firm’s digital platform; JPMorgan, Deutsche among investors that put up $20.5 million
Citigroup Inc.’s Dean Little and Jonathan Smalley learned the proxy voting process the hard way: in the mailroom. The two spent years inside Citigroup’s custody business managing various ways shareholders cast votes for an annual meeting — including by fax and old-fashioned mail. Fed up with a process that’s often manual and fraught with inefficiency, they came up with a digital platform — now known as Proxymity — allowing shareholders to vote in real time.
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Citi appoints markets head for central and eastern Europe; Richard Aby takes on the newly-created role as Citi looks to grow its markets and securities services division in the CEEMEA region.
Hayley McDowell – The Trade
US investment bank Citi has confirmed the appointment of a new markets head for central and eastern Europe, as it looks to drive growth in its markets and securities services (MSS) business division.
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Citigroup spins off investor communications platform Proxymity
Imani Moise – Reuters
Citigroup Inc said on Tuesday it was spinning off its investor communication platform Proxymity after a strategic round of funding from other banking giants.
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Hargreaves bids to shake off the Woodford affair; Customers lost millions as investment giant recommended failing fund. Will its new best-buy list serve them better?
Ali Hussain – The Times
Hargreaves Lansdown is to scrap its controversial Wealth 50 best-buy list just 16 months after it was launched and overhaul its fund recommendations. In a series of sweeping changes after the Woodford scandal, which led to accusations of a conflict of interest at Britain’s biggest investment platform, Hargreaves is to introduce a Wealth Shortlist.
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Regions

German Judges Give ECB 3 Months to Fix QE Program
Karin Matussek – Bloomberg
Court asks Germany to make sure program is proportionate; Judges give 7-to-1 ruling on program’s constitutionality
The European Central Bank can continue its bond purchases, but will have to justify its policies within three months after Germany’s top court expressed a number concerns with the program.
/jlne.ws/2SDIBzl

Hong Kong IPOs Pick Up the Pace as China Restarts
Julia Fioretti – Bloomberg
Initial public offerings are picking up the pace in Hong Kong after two wildly successful biotech listings improved sentiment in the financial hub.
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Why There’s a Looming Debt Crisis in Emerging Markets
Sydney Maki – Bloomberg
Solvency concerns in the developing world are nothing new. But as governments stare down the humanitarian and economic shocks of the coronavirus pandemic, some emerging markets with weak financial positions are at greater risk of defaulting on their debts. At least 102 nations have already asked the International Monetary Fund for help, and the Institute of International Finance is coordinating an effort to offer some relief to the poorest countries. Complicating matters, meaningful relief would need the backing of creditors ranging from multilateral organizations to bilateral lenders and private creditors.
/jlne.ws/2KYIgmH

China’s Kingsoft Cloud tests US market with biggest IPO in months; First New York listing by a Chinese company since Luckin Coffee debacle
Hudson Lockett – FT
Kingsoft Cloud, the Xiaomi-backed cloud services company, is testing US investor appetite for Chinese public offerings on the heels of the Luckin Coffee scandal with a listing that could raise more than $500m.
/jlne.ws/2L47aRI

Iran’s parliament backs move to cut 4 zeros from its currency; Rial to be changed to the toman after five decades of inflation
Najmeh Bozorgmehr – FT
Iran’s parliament has backed government plans to slash four zeros from the country’s currency, the rial, which has been battered by a fall in value as a result of US sanctions.
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Brexit

UK looks to align with securities finance reporting rules post-Brexit; Trade repositories will be able to register with the Financial Conduct Authority (FCA) following the end of the Brexit transition period.
Jonathan Watkins – The Trade
UK regulators have announced provisions for the Securities Financing Transactions Regulation (SFTR) to be implemented post-Brexit by allowing trade repositories to register in the country at the conclusion of its EU transition period.
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(Video) U.S., UK launch post-Brexit video trade talks
Reuters
The United States and Britain launch trade negotiations by videoconference on Tuesday following the UK’s exit from the European Union, as both allies struggle with the effects of the coronavirus pandemic.
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SNP in fresh call for two-year Brexit transition delay
BBC News
The SNP’s Westminster leader has repeated his call for the Brexit transition period to be extended for two years due to the Covid-19 crisis. Ian Blackford has written to opposition parties and urged them to make the pandemic “the sole focus of our collective efforts”. The UK left the EU on 31 January but a transition period is in place until the end of this year. Last week the UK government said it had “no intention” of changing the date.
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Brexit: MPs want greater scrutiny of NI protocol
John Campbell – BBC News
The chairs of nine Westminster committees have asked the government to give Parliament an ongoing role in scrutinising the Northern Ireland part of the Brexit deal. The NI “protocol” is due to come into effect at the end of this year. It will mean that NI continues to follow many rules of the single market while the rest of the UK will not. There will be new controls and checks on goods entering NI from elsewhere in the UK.
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Ireland sees crisis point in Brexit talks if no progress soon: Coveney
Conor Humphries – Reuters
Progress in trade talks between the European Union and ex-member Britain “has not been good” and the two sides will hit a crisis point unless there is progress in the coming weeks, Irish Foreign Minister Simon Coveney said on Tuesday.
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Miscellaneous

Performing Original Works in a Pandemic, Artists Turn to New Tools;Here’s a look at some of the pieces of theater, improvisation, and radio drama being created in a world under quarantine.
Joe Dziemianowicz – Bloomberg
Under Covid-19 lockdown, art still imitates life. Writer-director Richard Nelson recently presented What Do We Need to Talk About?, his fifth work in a series of dramas premiered by the Public Theater in New York City. In it, audiences eavesdrop on members of a family in Rhinebeck, N.Y., as they discuss what’s going on in their lives.
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The ‘Billions’ Cast on What They’ve Learned from Wall Street; “They’ll go against the entire market or the entire government, and it’ll be the distinguishing factor that makes them succeed. But… there’ll be a moment when you’re wrong”
Lane Florsheim – WSJ
When stay-at-home orders began, the cast and crew of Billions had finished seven of season 5’s twelve episodes, the first of which aired May 3. On a Zoom call with WSJ., some of the cast and crew’s most vital members were emotional about seeing each other’s faces again. “I’ll just say—looking at all of you right now, I’m very sad that we’re not together doing this,” said showrunner Brian Koppelman. “Whenever we can go back to work, we’ll finish the five remaining episodes, which are pretty much written.”
/jlne.ws/2yuhShN

Coronavirus blew up summer internships, forcing students and employers to get creative
Lauren Lumpkin – Washington Post
Dan Papscun had it all mapped out: By now, he figured, he’d have an internship lined up for the summer. He’d be settling into his new apartment in Glover Park. He’d be polishing up story pitches to send his new editor.
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