Rise of the retail army: the amateur traders transforming markets

Mar 9, 2021

First Read

$31,126/$300,000 (10.4%)



Hits & Takes
John Lothian & JLN Staff

Virtu founder, former NYMEX chairman and serial entrepreneur Vincent Viola has placed his New York mansion for sale at a modest price of just about $60 Million. Business Insider says Viola’s Manhattan mansion has a panic room, a pool, and a Versailles-inspired dining room. No word on if the panic room also housed his trading desk.

Phillip Capital is looking for a futures compliance manager. You can find the details HERE.

Why have I not received an invitation to the exclusive, invite only Clubhouse app? I guess I am just not cool enough…..so far. How about you? Are you a Clubhouse member?

Yesterday was National Proofreading Day. You read that right.

There were no new donations to the JLN MarketsWiki Education GoFundMe campaign yesterday. Do you have a story to tell? There is more than one way to give to the campaign. Telling your story and experience about the development of electronic trading, or your experience on the trading floors, can be an even greater gift. Contact me if you are interested.

Thank you again to Ajay Jain for his donation to the GoFundMe campaign. Ajay left the CME in February. Our apologies for the error.

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


Mark your calendar: The Security Traders Association announced that its Washington, D.C. update will take place on Wednesday, April 21. STA said the one-day virtual conference will address legal and regulatory issues that may be affected by the change of administration, including what it described as “new priorities” at the SEC and CFTC. Confirmed speakers include Joe Mecane, head of execution services at Citadel Securities, Hope Jarkowski, head of equities at NYSE, and Jonathan Kellner, CEO of MEMX. ~SC



CME Group Foundation Awards Over $2.2 Million in Grants to Support College and Career Success for Illinois Students
CME Group
CME Group Foundation today announced that it has awarded over $2.2 million in grants to further support higher education and career initiatives across Chicago and Illinois. “Every stage of the pipeline from classroom to career has been impacted by the ongoing pandemic,” said Kassie Davis, Executive Director of the CME Group Foundation. “It is more important than ever to support organizations that help low-income students get to college or post-secondary training, graduate and get a strong first job.”

*****Good work by the CME Group is timely and needed. Their own version of the CARES Act.~JJL


CME Group Announces New Micro E-mini Equity Index Futures Trading Volume Records
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that Micro E-mini Equity Index futures reached record trading volume of 5.1 million contracts on March 4 across all four indexes – the S&P 500, Nasdaq-100, Russell 2000 and Dow Jones Industrial Average Indexes. These new highs surpassed the prior record of 4.4 million contracts set on February 26, 2021.

*****There are so many Micro E-Mini records occurring, they are starting to make Antman look small.~JJL


A Deeper Dive into the NYSE Group Retail Liquidity Programs
We recently discussed the ways in which exchanges can compete for retail order flow, including price improvement opportunities via their Retail Price Improvement (RLP) programs . Below we share additional details of RLP activity, using the last week in January as a case study for RLP activity in active stocks with substantial off-exchange trading interest. We also highlight the overall depth of the NYSE Group RLP program.

*****This looks like a forward dive in the pike position with a twist and spin before a perfect splash of liquidity.~JJL


BNP Paribas Appoints Gustavo Arruda Head of LatAm Research
BNP Paribas
BNP Paribas Markets 360 today announces the following appointment; Gustavo Arruda, Head of LATAM Research, Markets 360, BNP Paribas
Gustavo joined the BNP Paribas Economics team in Brazil in 2011. In his new expanded role, Gustavo will lead the Latin America Markets 360 team, both in strategy and economics, while continuing to cover the Brazilian economy.
*****I like the name Gustavo, it means “staff of the gods.”~JJL


Maybe Mom’s job is cool after all; Derivatives get a bad rap, but they help keep hamburgers affordable
Dawn D. Stump – Rollcall.com
Explaining what I do for a living to their teachers, classmates and friends is a struggle for my kids. If I was a YouTube star or a TikTok influencer, they could impress their friends. But alas, I am a commissioner at a regulatory agency with a really long (and confusing) name — the Commodity Futures Trading Commission. To my kids, my job is unrelatable, which loosely translates to “boring.”

*****CFTC Commissioner Dawn Stump, stumping for burgers and derivatives is something to relish.~JJL


Bitcoin Has Zero Intrinsic Value. Some People Are OK With That; But not Willem Buiter, former chief economist of Citigroup, who likens it to Schrodinger’s cat.
Peter Coy – Bloomberg
Critics of Bitcoin say it has no intrinsic value, but defenders … well, actually … a lot of its defenders agree. Which might make you nervous if you’re sitting on a big investment in Bitcoin or considering wading in for the first time. Johns Hopkins University economist Steven Hanke tweeted Feb. 20, “Just remember—Bitcoin is no more than a highly speculative asset with a fundamental value of ZERO!” This is a common criticism. On March 8, American Enterprise Institute visiting fellow Jim Harper responded to Hanke with a blog post that essentially said, yeah, that’s true, but no other asset has any fundamental value, either.

*****Bitcoin is priced over $50,000 currently. What is its value? Another question.~JJL


Monday’s Top Three
Our top story Monday was Bloomberg’s A Hack Like This Could Start the Next World War, about Chinese-backed operatives exploiting vulnerabilities in Microsoft’s Exchange Server. Second was our MarketsWiki page for Bryan Durkin, who is one of eight new members inducted by the FIA into the 2021 Futures Hall of Fame. (Other new members showed up further down in our list of top stories.) Third was Bloomberg’s Citi Sees the Days of Traders Slamming Phones Coming to an End, which is about Citigroup’s efforts to include more women in executive roles.


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Lead Stories

Rise of the retail army: the amateur traders transforming markets; Once dismissed as a quirky sideshow the growth of retail trading is forcing mainstream investors to take note
Katie Martin in London and Robin Wigglesworth – FT
When newcomers discover Robinhood, and decide to use the zeitgeist US trading platform to punt around in stocks, many of them have questions. Chief among them, it seems, is “what is the stock market?”. Along with “what is the S&P 500?”, that is one of the most commonly visited educational pages on the broker’s website, according to a new paper by academics at Oklahoma State and Emory universities. But what Robinhood’s army of untrained investors lacks in market knowledge, it more than makes up for in enthusiasm and impact.

China is falling short on its climate pledge; The world’s biggest carbon emitter needs to take more rapid action
The editorial board – FT
China’s pledge last September to become carbon-neutral by 2060 was one of the most striking advances in the climate change battle over the past year. The world had been waiting to see how its next draft five-year economic plan would put flesh on the bones of its commitment. Especially given China’s status as the world’s largest carbon emitter, the plan has turned out to be disappointingly short on substance.

Japan Risks Resuming Global Economic Irrelevance; Having reached the end of its rope with conventional monetary policy, the BOJ seems to have reached the limits of unconventional policy too
Mike Bird – WSJ
Next week, Japan’s central bank will formally review its monetary-policy strategy for the first time since 2016. Relatively little is expected from that review. Worse still, relatively little is expected of Japan. Even those skeptical of the oft-repeated talking point that central banks have exhausted their ammunition must admit that the Bank of Japan is at the very least out of ideas. Japanese bond yields are now marginally higher than they were at the beginning of 2020 across almost every part of the yield curve. Average interest rates on loans are functionally unchanged. Core consumer prices have been declining for six months.

Deutsche Börse expands innovative, centrally cleared crypto offering on Xetra to include Ethereum and Bitcoin Cash; New ETNs offer access to the performance of cryptocurrencies with physical collateral; Central clearing offers reduced risks and efficiency advantages in processing
Deutsche Börse
Exchange Traded Notes (ETNs) on the crypto currencies Ethereum and Bitcoin Cash are available to investors on Xetra for the first time today . Deutsche Börse is thus expanding its range of innovative, centrally cleared crypto ETNs.

U.S. Climate Change Disclosure Regulation is Inevitable, Here’s What To Do About It Now
Sarah Fortt and Margaret Peloso – Vinson & Elkins via CorpGov.com
Over the past few weeks, there has been a flurry of SEC ESG-related developments. As we predicted, the current SEC acting chair has wasted no time in indicating that the SEC’s 2010 climate change disclosure guidance is beyond dated. On February 24, 2021, Acting Chair Allison Herren Lee directed the SEC Division of Corporation Finance to focus on climate-related disclosures and use their insights to begin updating the 2010 guidance. On March 2, a climate bill was introduced in the U.S. House of Representatives revealing the new administration’s climate change goals, including a goal to fully decarbonize the economy by 2050 and proposed amendments to the ’34 Act to require the SEC to promulgate regulations for specific climate disclosures.

Hedge Fund Managers Are Getting Inside Information From Alumni Networks, Study Finds; Research shows hedge funds have a trading edge following university alumni “mixers.”
Christine Idzelis – Institutional Investor
Hedge fund managers are gathering private information from their alumni networks and using that trading edge ahead of merger announcements, a study found.

‘Hey, Hey, Money Maker’: Inside the $156 Billion SPAC Bubble; This Wall Street craze is stretching all the limits and involves flying taxis, bikini GIFs and a rapper with a taste for champagne.
Heather Perlberg – Bloomberg
Whenever greed meets reality and giddy markets collapse, Wall Street pros usually admit that they sensed the end was coming. The warning signs were so familiar, they belatedly confess, that it was difficult to believe anyone could miss them. The chain of fools was running out. This can’t last. Today those sober words are being whispered again in American finance, this time about one of the biggest money-grabs in the business, SPACs.

Singapore Tackles Corporate Scandals to Preserve Its Clean Reputation; The city-state wants to prove it’s safe not just for wealthy tycoons but for investors, too.
Chanyaporn Chanjaroen, Iskikia Mookerjee – Bloomberg
A series of scandals at Singapore-based companies has regulators tightening oversight and pushing for more disclosure. At stake is the city-state’s role as a global wealth hub, which has become all the more significant as Beijing tightens its grip on Hong Kong.

Libor Is Going Away for Real; Also a Banksy NFT, cancel culture, Goldman partners, electricity trades, Curve, Alkuri and GameStop.
Matt Levine – Bloomberg
Libor is canceled
I guess they were serious about that, huh: Regulators kicked off the final countdown for the London interbank offered rate Friday, ordering banks to be ready for the end of a much maligned benchmark that’s been at the heart of the international financial system for decades.

Goldman Weighs Plan for $29 Billion of Debt Set to Outlive Libor
William Shaw – Bloomberg
Large chunk of exposure is in fixed-to-floating rate products; Liability management actions among options available to firm
Goldman Sachs Group Inc. is evaluating what to do with about $29 billion of debt and preferred stock it issued that’s pegged to dollar Libor and doesn’t mature until after the discredited benchmark expires in mid 2023. The bank is considering buying back obligations via tenders and calls or swapping the securities through exchange offers, as well as amendments to credit agreements or triggering provisions that shift instruments to new benchmarks, according to a presentation released Monday.

‘I’m Innocent,’ UBS Bankers Say as $5 Billion Appeal Starts
Gaspard Sebag – Bloomberg
UBS Group AG’s appeal of a 4.5 billion-euro ($5.3 billion) penalty began with the Swiss lender and bankers in the case proclaiming their innocence. On the opening day of the three-week appellate trial Monday, the former UBS bankers all responded the same way when asked why they were contesting the guilty verdict in the case. “I appealed because I’m innocent of the charges,” said Hervé d’Halluin, who used to head UBS France’s Lille bureau. While he was the first defendant Presiding Judge Francois Reygrobellet quizzed, the others repeated more or less what d’Halluin told the court.

Top Irish Securities Firm Shuts Bond Desk as Scandal Ripples On
Peter Flanagan – Bloomberg
None of 16 involved in 2014 deal now at firm, company says; Central bank to slam Davy in front of lawmakers on Tuesday
Ireland’s top securities firm closed its bond desk and said all those involved in a deal which has plunged the company into controversy have now exited, as it sought to draw a line under the worst scandal to hit Dublin’s stockbroking community in decades.

SPAC Pioneers Reap the Rewards After Waiting Nearly 30 Years; Blank-check companies have raised more than $70 billion this year; their co-creator once feared the SPAC wouldn’t make it
Amrith Ramkumar – WSJ
The flashiest trend in finance traces back three decades to a pair of old law-school buddies. Now, they are finally cashing in. Investment banker David Nussbaum and lawyer David Miller —known to each other as “Nuss” and “Miller”—invented the special-purpose acquisition company in 1993 to give private firms another way to access everyday investors. SPACs were rarely used and obscure for much of their careers, but are now all the rage—attracting the biggest names in finance, technology and entertainment. Messrs. Nussbaum and Miller have never been busier.

Private Equity’s Time May Have Come for Bank Deals; Regulators seem to be more open to buyouts as one of the few options smaller European lenders have to shift their low valuations
Rochelle Toplensky – WSJ
Even as optimism about a vaccine-led recovery rips through global markets, European banks remain valued for a deeply uncertain future. There are no easy answers, but going private could be a solution for smaller ones.

Billionaire Vincent Viola’s New York Mansion to Sell for Roughly $60 Million
The townhouse, previously in contract to sell to Chinese oilman who disappeared, has a new suitor
Katherine Clarke – WSJ
The property, which last traded for $20 million in 2005, had been on and off the market for years. It first listed in 2013 for about $114 million, then underwent several price cuts. The property, which last traded for $20 million in 2005, had been on and off the market for years. It first listed in 2013 for about $114 million, then underwent several price cuts.

New European ESG Rules to Hit Fund Managers Around the World; Regulation aims to eradicate “greenwashing” for investment funds that raise money in the EU
Anna Hirtenstein – WSJ
The European Union is bringing rules into effect on Wednesday that seek to regulate the fast-growing sustainable-finance industry for the first time. Managers of funds that invest in line with environmental, social or governance considerations, known as ESG, will have to put forward a tangible, measurable plan for how they will do so. This will apply to all asset managers that raise money in the EU, whether they are based within its borders or not, from March 10.

Banks lose 7,500 years of analyst experience since MiFID II unbundling; Substantive Research report found European brokers and banks have lost 3,074 years of analyst experience in recent years.
Annabel Smith – The Trade
More than 7,500 years of experience has been lost across the institutional research market globally since the introduction of Europe’s MiFID II rules in 2018, a new report has found. The report from Research analytics provider, Substantive Research, found that European banks and brokers lost net 3,074 years of research analyst experience while US banks and brokers lost net 4,606 years.

SPACs Are Booming. So Is This Actively Managed Take
ETF Trends
So many special purpose acquisition companies (SPACs), so little time. Active management could be the way to go with blank-check companies. Enter the SPAC and New Issue ETF (SPCX). According to Tuttle, the most appropriate strategy for managing a portfolio of SPACs is through active management, as it can be more flexible in reacting to shifting market events. This is no place for an index fund based on a rigid set of rules. When looking at investing in a SPAC, focusing on the management team is key.

Itiviti’s Linda Middleditch wins Gender Equality / Diversity Award from WatersTechnology
Itiviti Group AB
Itiviti, a leading trading technology and service provider to financial institutions worldwide, today announced that Linda Middleditch, Chief of Product Strategy and Engineering at Itiviti, has won the Gender Equality/Diversity Professional of the Year Award (vendor) in the Women in Technology & Data Awards 2021. Organized by WatersTechnology, this award recognizes a person who has made a significant effort to improve equality and diversity in their organization.


Federal Reserve to close most Covid crisis emergency facilities; Central bank launched schemes at height of pandemic-induced tumult in 2020
Colby Smith and Brooke Fox – FT
The Federal Reserve is ending the bulk of the remaining emergency facilities it rolled out last year to support financial markets through the coronavirus crisis, in the latest sign that the economic recovery is gathering momentum.

Vaccinated Americans can socialise without masks, says CDC; Public health officials loosen guidelines for people who have been fully inoculated against virus
Kiran Stacey – FT
The US Centers for Disease Control and Prevention issued new guidelines on Monday saying that people fully vaccinated against Covid-19 can now meet each other indoors without social distancing or masks.

Russian Sputnik Vaccine to Be Made in Italy in First EU Deal
Alessandro Speciale – Bloomberg
Vaccine production to be carried out at plant in Milan area; Deal comes as Premier Draghi seeks accelerated vaccine drive
A Swiss biopharmaceutical company will produce the Sputnik V Covid-19 vaccine at its Italian facilities, marking the first European production agreement for the Russian shot.

Variant’s Spread in Florida Shows Threat to U.S. Covid Recovery
Jonathan Levin – Bloomberg
More hospitalizations in the Sunshine State as B.1.1.7 thrives; There’s no mask order, but residents report covering up anyway
A highly infectious Covid-19 variant is circulating widely in Florida, prompting concern that a resurgence of the virus is possible in the state and beyond, even as cases and hospitalizations drop dramatically. In Florida, as elsewhere in the U.S., Covid cases, hospitalizations and deaths have dropped significantly from recent highs, helped by progress in the vaccination campaign. But conditions aren’t improving quite as quickly in the Sunshine State, at least in certain key categories.

Advocates Fight Covid-19 Vaccine Concerns Among Agricultural Workers; Heavily Latino workforce is both among the most vulnerable to the coronavirus and reluctant to get vaccinated
Rolfe Winkler and Daniela Hernandez – WSJ
Luz Gallegos stood in a Hemet, Calif., orange grove last month and asked for a show of hands among the farmworkers assembled there: How many of you want a Covid-19 vaccine? No hands went up.

Scientists underestimated the coronavirus — and are racing to keep up with evolution; Variants of the virus have become a global preoccupation — and a potential threat to vaccines
Carolyn Y. Johnson – Washington Post
Evolutionary biologist Jesse Bloom knew it was only a matter of time: The coronavirus would turn into an even more formidable foe, able to dodge the disease-fighting antibodies that protect people after being infected or vaccinated.

Exchanges, OTC and Clearing

ICE Mortgage Technology Launches Experience 2021; The Mortgage Industry’s Leading Event Starts March 8, 2021
Intercontinental Exchange, Inc.
ICE Mortgage TechnologyTM, a division of Intercontinental Exchange, Inc. (NYSE: ICE) and the leading cloud-based loan origination platform provider for the mortgage industry, announced today that the virtual doors have opened to the industry’s most anticipated user conference for digital mortgage education, collaboration and innovation at Experience 2021.

Liberum hires former ITG electronic trading executive as volumes surge; Duncan Higgins joins Liberum with Charles Taylor to develop its European equities trading platform, T-REX.
Annabel Smith – The Trade
A former electronic trading executive at agency broker ITG has joined investment bank Liberum to oversee the development of its retail platform as volumes have tripled in the last year. Duncan Higgins joins Liberum alongside Charles Taylor as a senior advisor to its execution services business, focusing on the T-REX (Turquoise Retail Execution) European equities platform.

TMX Group Equity Financing Statistics – February 2021
TMX Group today announced its financing activity on Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV) for February 2021.

Performance Bond Requirements: Energy and Interest Rate Margins – Effective March 09, 2021
CME Group
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below.

Product Modification Summary: Expansion of the Listing Schedule of the Cobalt Metal (Fastmarkets) Futures Contract
CME Group
Product Modification Summary: Expansion of the Listing Schedule of the Cobalt Metal (Fastmarkets) Futures Contract

Application for Spot Call Butter Regularity
CME Group
Pursuant to Regulation 1203.C. notice hereby is given that Lineage Logistics has applied to the Exchange for a declaration of regularity in Spot Call Butter at the following location:

Application for Spot Call Butter Regularity
CME Group
Pursuant to Regulation 1203.C. notice hereby is given that Lineage Logistics has applied to the Exchange for a declaration of regularity in Spot Call Butter at the following location:

Effective Dates for Spot Month Position Limits in the April 2021 Core Products
CME Group

Notice of Disciplinary Action
CME Group
MEMBER: Wells Fargo Commodities, LLC
CME RULE VIOLATIONS: Rule 539 Prearranged, Pre-Negotiated and Noncompetitive Trades
Prohibited (in part)
C. Parties may engage in pre-execution communications with regard to transactions executed on the Globex platform where one party (the first party) wishes to be assured that a contra party (the second party) will take the opposite side of the order under the following circumstances:
2. Parties to pre-execution communications shall not (i) disclose to a non-party the details of such communications or (ii) enter an order to take advantage of information conveyed during such communications except in accordance with this rule.
Rule 433 Strict Liability for the Acts of Agents
Pursuant to Section 2(a)(1)(B) of the Commodity Exchange Act, and notwithstanding Rule 432.W., the act, omission, or failure of any official agent, or other person acting for any party within the scope of his employment or office shall be deemed the act, omission or failure of the party, as well as of the official, agent or other person who committed the act.
PENALTY: In accordance with the settlement offer, the Panel ordered WFC to disgorge total profits in the amount of $8,600.

Notice of Disciplinary Action
CME Group
CME RULE VIOLATIONS: Rule 575 Disruptive Practices Prohibited
All orders must be entered for the purpose of executing bona fide transactions. Additionally, all non-actional messages must be entered in good faith for legitimate purposes.
A. No person shall enter or cause to be entered an order with the intent, at the time of order entry, to cancel the order before execution or to modify the order to avoid execution.
PENALTY: In accordance with the settlement offer, the Panel ordered Han to pay a $10,000 fine and suspended Han from all direct and indirect access to any designated contract market, derivatives clearing organization, or swap execution facility owned or controlled by CME Group Inc. for 25 business days. The suspension shall begin on March 8, 2021, and continue through and include April 9, 2021.


‘Big’ Data Can Be 99.98% Smaller Than It Appears; A Harvard statistics professor warns about non-random sources of data.
Peter Coy – Bloomberg
It seems obvious that the opinions of 2.3 million people would be more representative than the opinions of a randomly selected 400. In reality, it depends entirely on how the bigger data set was put together.

BidFX launches FX trading analytics suite; The suite from BidFX allows banks, hedge funds and asset managers to manage client-specific liquidity streams and monitor composite rates across FX products.
Annabel Smith – The Trade
FX platform provider BidFX has unveiled a new data and analytics suite aimed at providing institutions better FX pricing and liquidity insights. Named BidFX Data and Analytics, the new suite will allow traders to manage collection and storage of data relating to liquidity streams on the cloud, while also monitoring rates across FX products.

Fintech trade groups merge, recruit more members
Miriam Cross – American Banker
Fintech companies are joining a new trade group called the American Fintech Council to lobby Washington lawmakers and set standards for their industry.
The group, which debuted March 3, added 10 new members to its roster on Monday, including Varo and Green Dot. It also launched a Community Advisory Board intended to help promote responsible practices in the fintech industry.

FinTech Ins & Outs: an X-ray of your envisaged investments and partnerships
The financial industry is changing rapidly; traditional players are going through digital transformation and new companies are out to disrupt the market.
For the incumbents, it can be a great challenge to align risk-driven internal procedures with the fast-moving mindset of FinTechs. On the other hand, FinTech startups, as well as tech companies with an interest in finance, face the same challenge but from the reverse perspective: They operate in highly regulated environments, while their focus is on technology and moving fast. Incumbents can help them face this challenge.

Fintech Startup AeroPay Raises $5M to Help Cannabis Companies Go Cashless
Ellen Glover – Built In
AeroPay, a Chicago fintech company that powers bank transfers for cannabis retailers and other businesses, announced Monday it raised $5 million in fresh funding. The round was led by Chicago Ventures (which just launched a new $63 million fund to back “overlooked” startups last week), with participation from Continental Investors and various unnamed cannabis and retail industry professionals.

LiquidityBook Hires Stephanie Minister to Head Business Development for LBX Connect FIX Network
LiquidityBook, a leading Software-as-a-Service (SaaS)-based provider of buy- and sell-side trading solutions, today announced that Stephanie Minister has joined the firm as Managing Director of Connectivity Services. In this role, she will lead a newly created arm of the LiquidityBook corporate structure.


Crypto Havens Lure Firms Fleeing Regulator Angst in South Africa
Loni Prinsloo and Roxanne Henderson – Bloomberg
Domestic credibility dented by world’s biggest Bitcoin scam; Authorities move to declare digital assets financial products
The world’s biggest cryptocurrency scam of last year was a jolt to South Africa’s regulator — and not everyone will wait to see how it shakes out. As major financial hubs like Singapore redraw legislation to lure crypto firms and with the U.K. government facing calls to embrace digital currencies, South Africa’s burgeoning exchanges say they are having to move headquarters abroad due to uncertainty over potential government regulation. Behind the frustration is a lack of oversight and limits on marketing to potential customers. Revix, a Cape Town-based operator specializing in bundles of different coins, is shifting its head office to the U.K. and planning another location in Germany to fuel growth. Luno, Africa’s largest digital-currency platform, is registered in London and has a presence in Singapore.

Coinbase Is Said to Be Valued at $90 Billion in Private Auction
Crystal Tse and Katie Roof – Bloomberg
Cryptocurrency exchange’s shares privately traded at $350 each; Direct listing this month is set to be big first for Nasdaq
Coinbase Global Inc. shares changed hands at a roughly $90 billion value last week, in what could be the final chance for investors to trade its private stock before the cryptocurrency exchange goes public, according to people familiar with the matter.

PayPal to Acquire Curv to Further Its Push Into Cryptocurrencies
Jennifer Surane – Bloomberg
PayPal Holdings Inc. said it will acquire the cryptocurrency firm Curv as it seeks to beef up its talent pool for handling digital currencies. PayPal, which didn’t disclose financial terms of the deal, has been building out a new unit dedicated to furthering its efforts in cryptocurrencies after it began allowing consumers to buy, sell and hold certain digital currencies in its wallet in recent months. Curv, with about 40 employees, will join that team, the payments giant said Monday in a statement.

Should You Buy a Bitcoin-Inspired Image of Lindsay Lohan?; Crypto artworks featuring the likes of Biden, Trump and a cartoon cat are all the rage. Here’s what you should know about such collectibles, called NFTs.
Katharine Gemmell – Bloomberg
Great art usually defies easy explanation. Perhaps that’s why it’s seemingly inexplicable that the surge in Bitcoin and other cryptocurrencies has given rise to its own world of masterworks. Lindsay Lohan starred in a beloved piece of art — “Mean Girls” — 17 years ago, but these days she’s minting and selling her image for thousands of dollars through another artform: non fungible tokens, or unique digital collectibles. Musician Grimes (and partner of Bitcoin fan and mega-billionaire Elon Musk), Dallas Mavericks owner Mark Cuban as well as scores of other famous and non-famous people around the world are getting in on the action around such NFTs.

Taco Bell just launched and sold out a collection of taco-themed NFTs
Saniya More – The Block
If you were hungry for tacos — more specifically, digital tacos on the blockchain — you’ll have to stay hungry a little longer. Popular fast-food chain Taco Bell has released and already sold out its first set of taco-themed non-fungible tokens (NFTs). The restaurant chain released the tokens late Sunday on NFT marketplace Rarible. Taco Bell created five different NFTs, selling them in collections of five. The tokens were initially put on sale for 0.001 ETH ($1.79), with the highest bid going up to 0.4 WETH ($700).

Hedge fund Manager Alan Howard Leads $25M Raise for Crypto Custodian Komainu
Tanzeel Akhtar – Coindesk
Digital asset custodian Komainu has closed a $25 million Series A fundraise led by billionaire hedge fund manager Alan Howard. According to an announcement Tuesday, other participants in the fundraising round included Galaxy Digital, NOIA Capital and Nomura Research Institute, which have now become strategic partners to the firm. Komainu was established in 2018 as a joint venture between Japan’s Nomura bank, digital asset security firm Ledger and crypto investment firm CoinShares – which all contributed to this latest round of financing.

First Insured Bitcoin Fund Opens for Southeast Asian Markets
Tanzeel Akhtar – Coindesk
A regulated and insured bitcoin fund has been launched in Malaysia to serve the region’s institutional investors. According to an announcement Monday, the BCMG Genesis Bitcoin Fund-I (BGBF-I) falls under the oversight of the Labuan Financial Services Authority in Malaysia and is said to be the first insured bitcoin fund in Southeast Asia. The fund will be administered by Alpha Calibration, while Hong Kong-based HLB Hodgson will be responsible for the auditing. Labuan-based IBH Investment Bank is to serve as the primary fund advisor.

Ripple says its partnership with Moneygram has ended
Michael McSweeney – The Block
Distributed ledger company Ripple said Monday that its partnership with money transfer firm Moneygram is coming to an end. “Together, Ripple and MoneyGram have made the decision to end our current partnership agreement,” Ripple said in a blog post on the matter.

Binance Leads $2M Funding Round for Crypto Exchange Aggregator OpenOcean
Tanzeel Akhtar – Coindesk
Binance, the world’s biggest cryptocurrency exchange by trading volume, has led a $2 million funding round for crypto exchange aggregator OpenOcean. Other participating investors included Multicoin Capital, LD Capital, CMS, Kenetic and Altonomy, OpenOcean said Tuesday. The investment will be used to grow OpenOcean’s aggregation ecosystem of centralized and decentralized exchanges.

Why Bill Gates Is Worried About Bitcoin; It’s all about the carbon footprint.
Andrew Ross Sorkin, Jason Karaian, Michael J. de la Merced, Lauren Hirsch and Ephrat Livni – NY Times
Bitcoin is continuing to climb — its price is now above $54,000, giving it a market cap of more than $1 trillion — and draw more fans in corporate America. But skeptics are increasingly asking whether it’s worth the huge environmental cost, Andrew writes in his latest column.


The inflation risk from Joe Biden’s stimulus plan is exaggerated; The challenge is to fight the economic crisis by raising demand
Chen Zhao – FT
Rising US bond yields show that financial markets fear Joe Biden’s $1.9tn fiscal package may stimulate the US economy too much and lead to unwanted inflation. But will it? I don’t think so.

Switzerland Warns of Significant Rise in Debt Due to Pandemic
Catherine Bosley – Bloomberg
The Swiss government is bracing for a rise in indebtedness due to the pandemic, with a deficit of 3.5% of output this year. Officials in Bern said on Tuesday the shutdown to control the second coronavirus wave would likely cost the government 23 billion francs ($25 billion), and tax revenues were likely to decline.

Biden Faces Tougher Obstacles for Broad Relief Bill Sequel
Steven T. Dennis and Erik Wasson – Bloomberg
President Joe Biden’s soon-to-be-unveiled longer-term economic stimulus package is set for far tougher obstacles in Congress than the pandemic-relief bill that’s on the verge of squeaking through without a single Republican’s backing. The “build back better” program that the White House says will be announced after Biden signs the $1.9 trillion aid bill — heading for final passage as soon as Tuesday — will be far more expansive than its predecessor. Spanning measures to address infrastructure, climate, health care, inequality and much more, and costing trillions of dollars over a decade, the initiative is far more complex. And Republican opposition to tax hikes will make it all the harder to fund the initiative.


More ESG Shareholder Proposals Could Reach Ballots Under New SEC Leadership; SEC guidance under the Trump administration emboldened some companies to block shareholder resolutions on environmental and social issues
Dieter Holger – WSJ
Shareholder resolutions on environmental and social issues could find more support from the Securities and Exchange Commission’s new leadership, some investors and former SEC officials say, potentially creating headaches for large companies that have to publicly respond to investor demands.

Bank Regulation Tweak Unlikely to Be Cure-All for Treasurys; Extending a pandemic rule enabling banks to hold more Treasurys may have a limited impact on rising yields
Telis Demos – WSJ
Sometimes the arcana of bank regulation becomes a matter of market fascination. Often it ends up not being quite as important as everyone had hoped. The latest example is whether or not the Federal Reserve will extend an emergency pandemic policy to exclude cash and Treasurys from banks’ supplementary leverage ratios, a key regulatory measure. Doing so would give them more capacity to gather deposits and buy government bonds. If the Fed doesn’t extend this after it is set to expire on March 31, the argument goes, there might be even more upward pressure on yields in the Treasury market.

OTC Transparency API Changes
On Friday, February 19, 2021, FINRA introduced a new Historical Data API via the FINRA API Developer Center (developer.finra.org). The OTC Transparency Weekly Summary will be the first dataset available via the Historical Data API and will be named WeeklySummaryHistoric. This change is designed to facilitate those API users who are downloading large amounts of historical data, defined as data older than one year. The fields returned in the WeeklySummaryHistoric dataset are the same fields that are returned in the existing WeeklySummary dataset.

FINRA Promotes Stephanie Dumont to Head Market Regulation and Transparency Services
FINRA announced today that it has promoted Stephanie Dumont, formerly Senior Vice President and Director of Capital Markets Policy for FINRA’s Office of General Counsel, to the role of Executive Vice President and Head of Market Regulation and Transparency Services, effective immediately. Dumont will report to President and CEO Robert W. Cook and join FINRA’s Management Committee.

National Futures Association: Proposed NFA Compliance Rule 2-50 andrelated Interpretive Notice entitled NFA Compliance Rule 2-50: CPO
Notice Filing Requirements
Dear Mr. Kirkpatrick: Pursuant to Section 17(j) of the Commodity Exchange Act (“CEA”), as
amended, National Futures Association (“NFA”) hereby submits to the Commodity
Futures Trading Commission (“CFTC” or “Commission”) the proposed adoption of NFA
Compliance Rule 2-50 and the related Interpretive Notice entitled NFA Compliance Rule
2-50: CPO Notice Filing Requirements. On February 18, 2021, NFA’s Board of
Directors (“Board”) unanimously approved the adoption of the proposed rule and
Interpretive Notice.

PRA and FCA consult on bilateral margin requirements for uncleared derivatives
The Prudential Regulation Authority and FCA have launched a joint consultation on amending certain onshored Technical Standards. These relate to margin requirements for non-centrally cleared derivatives.

FCA publishes equity transparency results
The annual transparency calculations for UK equity and equity-like financial instruments take effect on 1 April 2021.

SIFMA: Senior Security Act Would Enhance Efforts to Protect Senior Investors
SIFMA today submitted a letter to Congressional leadership expressing support for H.R. 1565, the Senior Security Act of 2021, introduced by Rep. Josh Gottheimer (D-N.J.) and Rep. Trey Hollingsworth (R-Ind.). This bipartisan bill creates a “Senior Investor Taskforce” within the Securities and Exchange Commission charged with identifying problems senior investors encounters.

Podcast: Catching Up on the CAT
In the latest in SIFMA’s podcast series, SIFMA president and CEO Kenneth E. Bentsen, Jr. is joined by Ellen Greene, SIFMA managing director, equity and options market structure and Joe Corcoran, managing director and associate general counsel to talk about the current state of the Consolidated Audit Trail, or CAT.

Investing and Trading

Bailey highlights BoE concerns about post-pandemic inflation risk; Bank would need evidence price rises sustainable at 2% target before raising rates, says governor
Chris Giles – FT
Andrew Bailey has signalled renewed concern about the possibility of rising inflation as the UK recovers from the coronavirus crisis, saying the risks are now “increasingly two-sided”.

FOMO Sweeps Bond Markets as Borrowers Look to Beat Rising Rates
Davide Scigliuzzo – Bloomberg
Surging Treasury yields prompt firms to revamp issuance plans; Investors still betting on earnings growth, low defaults
As the fear of rising Treasury yields takes hold across markets, one thing has become clear to large U.S. companies: The time to borrow is now. A jump in long-end rates to levels last seen roughly a year ago is fueling concerns that a historic window to borrow may soon be closing. That fear of missing out is pushing some firms to accelerate their debt issuance plans, whether to refinance upcoming maturities or lock in funding for acquisitions.

Global Bond Rout Noticeable But Manageable for Euro Area
Maeva Cousin – Bloomberg
Euro-area yields have risen sharply since the start of February, raising concern at the European Central Bank. Yet Bloomberg Economics’ analysis gives reason for calm — borrowing costs would need to jump by four times as much to push debt servicing burdens back to the levels seen in the aftermath of the euro-zone crisis. The main risk would be if higher yields prompted an unhelpful focus on fiscal sustainability at a time when supporting the recovery should be the priority.

Bond sell-off is a foretaste of things to come; Government debt simply cannot provide the kind of safe harbour it once did
Thushka Maharaj – FT
For many in bond markets, the sell-off across fixed-income assets since the start of year might appear a bracing foretaste of things to come. Markets are undergoing a pivotal shift. Where extraordinary support from central banks was a key driver for markets over the past nine months, economic fundamentals will take the lead this year. And bond market repricing sits at the nexus of this transition.

ETF ownership of Tesla climbed to 7% after it joined S&P 500; Passive investment in the carmaker has been partially driven by its ESG score, which is now under threat
Elena Losavio – FT
ETF ownership of Tesla rose to about 7 per cent of its market capitalisation last year, after it was added to the S&P 500 and its weighting increased on other popular indices. Assets invested in Tesla through exchange traded funds rose to $48.5bn by the end of December with 518 ETFs holding Tesla shares, data from TrackInsight show.

Overheard in the Clubhouse at 11am; Izzy and Jamie will be experimenting in Clubhouse talking markets, ETFs and stimulus. Join them.
FT Alphaville – FT
FT Alphaville is taking a stab at some experimental Clubhouse chitter chatter. Join us if you can. We’ve not used the medium before, so please be patient with Izzy’s techno challenged status. It will be a markets themed discussion mostly focused on testing the platform. Insight not necessarily guaranteed at this stage.

Environmental, Social and Corporate Governance

Wells Fargo Targets Net-Zero Emissions After Rivals Set Goals
Hannah Levitt – Bloomberg
Bank will also deploy $500 billion in sustainable financing; Follows similar efforts by Goldman Sachs, Morgan Stanley
Wells Fargo & Co. joined rivals in pledging to achieve net-zero greenhouse gas emissions in the coming decades. The fourth-largest U.S. lender said Monday it aims to reach that goal, which includes its financed emissions, by 2050. It will also deploy $500 billion in financing to sustainable businesses and projects by 2030.

Nomura Dealmakers See ESG Focus Boosting M&A Transactions
Takashi Nakamichi and Takako Taniguchi – Bloomberg
Nomura Holdings Inc.’s dealmaking team expects more mergers as governments and investors put mounting pressure on companies to improve their standing on environmental, social and governance scores.

Robust Demand for EU’s Social Bonds Defies Rout for Global Debt
John Ainger and Priscila Azevedo Rocha – Bloomberg
Bloc gets over 61 billion euros of orders for 15-year sale; Italy’s green debut also bucked recent trend of weak sales
The European Union’s latest offering of social bonds looks set to avoid the collapse of demand seen in recent sovereign debt sales. The bloc pulled in over 61 billion euros ($73 billion) of orders for a 9 billion-euro sale of 15-year debt via banks Tuesday, with the proceeds to be used to help fund a jobs program in the region. Still, it was about half as much as a previous deal for the same maturity in November. Since then global bonds have suffered a sharp selloff.

Europe Takes Aim at ESG Greenwashing
Anna Hirtenstein – WSJ
The European Union is bringing rules into effect on Wednesday that seek to regulate the fast-growing sustainable-finance industry for the first time. Managers of funds that invest in line with environmental, social or governance considerations, known as ESG, will have to put forward a tangible, measurable plan for how they will do so. This will apply to all asset managers that raise money in the EU, whether they are based within its borders or not, from March 10. “Today there’s quite a bit of variability, too much variability” in how ESG investments are defined, said Jeff McDermott, managing partner of Nomura Greentech, a sustainable-infrastructure-focused investment bank that is part of Japanese financial services conglomerate Nomura Group. “Investors think they’re investing behind a manager doing ESG, but when you peel back the onion, it’s a different story.”

How Pathstone’s Latest Deal Will Boost Its ESG and Impact Investing Power
Ross Snel – Barron’s
Pathstone is certainly no stranger to ESG and impact investing, which are fast becoming must-have offerings for firms serving wealthy and ultrawealthy clients. But the Englewood, N.J.-based multifamily office announced a deal last week that will further bolster its capabilities for clients who desire to use their investments to spur change. Pathstone acquired Cornerstone Capital Group, a New York-based RIA focused on socially conscious investing. Cornerstone’s founder and CEO, Erika Karp, is a prominent expert on ESG and impact investing.


Apollo to merge with Athene creating $29bn conglomerate; Move transforms alternative asset manager into something more akin to financial group
Mark Vandevelde, Sujeet Indap and Ortenca Aliaj – FT
Apollo Global Management is to merge with Athene Holding, the life insurance company it created at the height of the financial crisis, transforming the alternative asset manager into a financial conglomerate with a market capitalisation worth almost $30bn.

Greensill files for administration and warns of GFG ‘defaults’; Finance group has ‘no conceivable way’ of repaying Credit Suisse loan, lawyers say
Kaye Wiggins, Robert Smith and Sylvia Pfeifer – FT
Greensill Capital has filed for administration, warning it is in “severe financial distress”, unable to repay a $140m loan to Credit Suisse and hit by “defaults” from its key customer GFG Alliance.

Goldman’s Stephanie Cohen Says Firm Can Work With Financial Newcomers
Dan Reichl – Bloomberg
Goldman Sachs Group Inc.’s Stephanie Cohen said firms like Walmart Inc. that are planning to offer financial services represent an opportunity for the Wall Street giant which can work with some of the newcomers. “We’re hoping that there are going to be many, many companies that figure out how to better service their customers,” Cohen, co-head of consumer banking and wealth management, said Monday on Bloomberg Television. Goldman can “partner with them.”

Davy shuts bond desk after losing Irish government mandate; Treasury agency takes business from country’s largest broker after revelations senior staff sought to profit from deal
Laura Noonan – FT
Ireland’s largest stockbroker is closing its bond desk after losing its mandate to sell government debt in the wake of a damning regulatory investigation that had already prompted the resignation of three of the broker’s most senior figures.

Credit Suisse Releases 2021 Hedge Fund Investor Survey
Credit Suisse
Credit Suisse today released its 2021 Hedge Fund Investor Survey, entitled “A New Dawn,” which polled over 200 institutional investors globally representing $800 billion in hedge fund investments. Participants were surveyed on a number of topics, including key industry trends and forecasts, as well as strategy preferences and allocation plans for 2021.


Disease That Wiped Out Millions of Pigs Is Creeping Back in Asia
Bloomberg News – Bloomberg
China finds new variants which are milder but harder to detect; Resurgence may curb feed grain imports and boost meat buying
African swine fever is re-emerging in Asia, threatening to upend efforts to replenish national herds after the virus killed tens of millions of pigs in the region and created a huge shortage of meat protein. Fresh outbreaks have been reported in China and Vietnam this year, and the disease has even landed on Malaysia’s shores. While new cases are scattered and isolated, they’ve put governments on notice that the virus is alive and well and there could be dire consequences if it’s not kept under control.

Turkish Wealth Fund Chief to Leave in Policy Maker Shakeup
Kerim Karakaya and Cagan Koc – Bloomberg
Departure will follow that of head of the stock exchange; Both were appointed as Erdogan son-in-law Albayrak ran economy
The chief executive officer of Turkey’s sovereign wealth fund is set to step down, deepening a shakeup at top economic institutions that began with the resignation of the stock exchange head. Zafer Sonmez will leave his post as the Turkey Wealth Fund CEO, people familiar with the matter told Bloomberg, asking not to be identified as the decision isn’t yet public.

China Entrepreneurs Feel a Chill From Jack Ma’s Fall From Grace; The public thrashing of the nation’s most famous capitalist may slow Beijing’s drive to become a global leader in tech.
Peter Elstrom, Coco Liu – Bloomberg
In barely 40 years, China has dramatically opened up its economy and become one of the world’s primary growth engines. Now, President Xi Jinping is making ambitious plans to pull ahead of rivals by turning his country into a digital powerhouse. But Xi’s drive toward tech dominance is being threatened by an unexpected speed bump: China’s forceful crackdown on Jack Ma’s business empire.

Gupta’s Empire Warned of Insolvency Without Greensill Cash
Jack Farchy, Eddie Spence, and Jonathan Browning – Bloomberg
GFG ‘has started to default’ on obligations: Greensill filing;l Group employs 35,000 people, was Greensill’s largest customer
Sanjeev Gupta’s steel and aluminum empire told its biggest lender Greensill Capital that it too faces insolvency without its financing.
The impact of Greensill’s collapse on Gupta’s group of companies, known as GFG Alliance, which employs 35,000 people across 30 countries, has until now been unclear. But in a court filing on Monday, Greensill said that its largest customer by value has fallen into “severe financial difficulty.”

Top Carry Trade Gets Squeezed by Taiwan Dollar’s Advance
Lilian Karunungan – Bloomberg
Taiwan dollar implied yield 17 times more negative than yen; BNP favors offshore yuan-Taiwan dollar as its top carry trade
The Taiwan dollar is the world’s cheapest-funding currency for carry trades, beating out favorites like the euro and the yen and attracting recommendations from Goldman Sachs Group Inc. and BNP Paribas SA. Just watch out for that relentless appreciation.


Frost urged to cool tensions with Brussels over Brexit
Peter Foster, George Parker, and Jim Brunsden – FT
Business groups and UK exporters have called on Lord David Frost to step back from his abrasive approach to dealing with Brussels and seek to build a mutually beneficial trading relationship with the EU. Frost’s promotion to Boris Johnson’s cabinet as minister for EU relations has coincided with a fresh deterioration in relations between London and Brussels, particularly over the handling of Northern Ireland. Trade groups, whose members have already suffered millions of pounds of losses as a result of new red tape after Brexit, warned that if both sides did not seek to build consensus then lasting damage would be inflicted on the UK economy.

U.S., EU Reach WTO Tariff-Quota Pact Post Brexit, USTR Says
Ana Monteiro – Bloomberg
The European Union and the U.S. have reached an agreement after two years of talks on how to adjust so-called tariff-rate quotas that had to be renegotiated after the U.K. left the bloc. The negotiations took place under World Trade Organization procedures and will determine how to split TRQ quantities between the 27-nation region and the U.K., the office of the U.S. Trade Representative said in an emailed statement Monday. The parties will sign and implement the agreement after the EU completes “formal approval procedures,” the USTR said. It didn’t provide more detail about the pact. Tariff-rate quotas allow countries to export specified quantities of a product to other nations at lower duty rates, but subject all imports of the product above a pre-determined threshold to a higher duty, according to the USTR’s website.

Wanted: a long-term strategy for UK business
Helen Thomas – FT
Does the UK still have an industrial strategy? Even those unfortunate enough to read the 256-page white paper produced in 2017 would struggle to explain what it is — and indeed did at the time. Now it seems the whole notion is out of favour. The phrase did not get a mention in last week’s Budget. A promised “refresh” became a Plan for Growth. That’s being presented as a like-for-like swap, but is Whitehall code for a collection of initiatives led by the Treasury rather than a longer-term road map produced by the business (and industrial strategy) department. The Industrial Strategy Council set up in 2018, and chaired by Bank of England chief economist Andy Haldane, is being disbanded.

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