Robinhood Effect Is Starting to Shake Up a Stuffy ETF Market; Florida Virus ‘Out of Control,’ Los Angeles Is on the Brink

Jul 20, 2020

First Read

Hits & Takes
By JLN Staff

Wednesday is the day for our MarketsWiki Education World of Opportunity virtual event. Just a couple of days left to register. Click on the image above.

Larry Israel of Exchange Analytics Inc. announced that Joe Adamczyk has bought the firm. Adamczyk for the last five years was at Options Clearing Corporation, mostly in the Chief Compliance Officer role overseeing OCC’s compliance risk management and governance. He has also worked at the CME Group, among other firms. Congratulations to Larry on a great run and good luck to Joe taking over the firm. We wish you well!

The economic research department of the Chicago Fed has a new addition. Ketan B. Patel will join the department on July 21 as policy advisor and head of financial markets risk analysis in the financial markets group. Patel will report to vice president Alessandro Cocco. Patel will be responsible for analyzing the public policy implications of risks in financial markets and financial market infrastructures. The group’s research on financial market institutions, technology and infrastructure helps inform and foster stable and efficient national monetary, financial and payments systems.

Have you seen the video about the Long Term Stock Exchange with Michelle Greene?

Hat tip to the STA: On this day, Apollo 11: Neil Armstrong becomes the first person to step on the moon.

Have you ever watched the Youtube video of Robert Downey, Jr. visiting the NYMEX back in the day and then commenting about it? It is not to be missed, but be careful with the sound and sensitive ears.

We have delivered most of the order of our “The World Needs Journalists” JLN hoodies that people ordered and the JLN team gifted to key contacts. But we ordered one extra in each size. If there is enough demand, we will place another order. If you are interested in buying one, contact me

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

The FIA released its first half 2020 data on futures and options volume trends, including: Global futures and options trading grew by 32% to a record-setting 21.9 billion contracts in the first half of 2020 compared to 2019. In the second quarter, the total number of traded contracts was 10.46 billion, down 8.4% from the record-breaking 11.41 billion contracts traded in Q1 2020, but up 21.8% from the second quarter of 2019. Second quarter volume was higher than any other quarter in the history of the industry aside from the first quarter of 2020. Open interest did not track the change in trading activity, however. Total open interest at the end of June was 915 million contracts, up 3.4% from June 2019. For more FIA statistics, you can go here.~SR


The Spread: Home, Sweet Home

This week on The Spread, Cboe and the CME Group announce new “mini” products, LedgerX announces a new volatility index for bitcoin, and more.

Watch the video »


The CryptoMarketsWiki Podcast Episode 13: Digital Assets to Scale

Magnus Almqvist is a technology, compliance, and market surveillance expert, and the head of exchange development for Exberry, a software development platform designed to help its customers create sophisticated new trading platforms fast, and with the ability to easily scale after launch. In this episode, Almqvist discusses what makes Exberry unique, how the company has coped with the ongoing pandemic, institutional demand for digital asset products, central bank digital currencies (CBDCs), and more.

Listen to this podcast »


CME sticks to trading as rivals diversify; While its competitors grow and branch out, making their businesses less captive to trading, CME clings to its core business. Here’s why that’s a problem.
Lynne Marek – Crain’s Chicago Business
CME Group’s trading engine drives the company, but it’s sputtering now, with no signs of revving up soon.
Chicago-based CME, the biggest U.S. exchange operator, had expanded trading volume every year since 2012. It slipped last year by a fraction of 1 percent.

*****I have seen this before: holding the steering wheel straight while others move theirs to navigate the changing seas. Will it work?~JJL


‘Bulge Bracket’ Brings Wall Street’s Asian-American Faces to TV
Yueqi Yang – Bloomberg
Lives of minority junior bankers portrayed in Amazon comedy; Director partly inspired by wife’s experience at Credit Suisse
When Christopher Au’s wife landed a job at Credit Suisse’s investment banking division in 2009, the couple moved to New York where she began logging 100-plus-hour work weeks. “We were living together, but I felt like I never saw her,” Au, 39, said in an interview from the San Francisco Bay Area, where the couple now live. “One exception was on Saturdays. She wouldn’t have to go into the office until after lunch, and we would go on these brunch dates and catch up about our week.”

*****More things to binge watch.~JJL


With Budgets Under Pressure, Colleges Cut Country-Club Staples Like Golf and Tennis; Sports lose varsity status in wake of Covid-19 cash crunch; schools rethink optics of costly, overwhelmingly white teams
Melissa Korn – WSJ
Colleges eager to cut costs amid a financial crisis brought on by the coronavirus pandemic have settled on an easy target: low-profile sports that don’t draw many spectators, attract a disproportionate number of white or foreign athletes and are relatively pricey to operate.

*****As the Orson Welles character said in the movie “The Magnificent Amberson,” ‘the only honorable thing for a man to be is a yachtsman.’~JJL


Summer Camps Bring Ominous Virus Warning in Test Run for Schools
Rachel Adams-Heard – Bloomberg
‘They did everything right,’ parent says of shut camp in Texas; Increasing rates of infected American children and teenagers
Summer camps in parts of the U.S. are closing as children and counselors test positive for Covid-19, a troubling sign as the country debates whether schools should start in-person instruction as soon as next month.

*****This is the week my former Scout units are at Camp Freeland Leslie. Part of me misses being there and another part of me is glad not to have to deal with this.~JJL



Friday’s Top Three
Our top story on Friday was An Intern’s Guide to the Market Structure Galaxy, an informative primer on equity markets from Nasdaq’s Chief Economist Phil Mackintosh. Second was China’s Attack On Its Biggest Stock Wipes Out Record $25 Billion from Bloomberg, about China’s biggest liquor company. Third was another primer, Cannabinoids: A Brief Excursion Into Neuropharmacology, from JLN’s Thom Thompson.


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Lead Stories

Robinhood Effect Is Starting to Shake Up a Stuffy ETF Market
Ksenia Galouchko – Bloomberg
Retail investor fingerprints seen in Europe’s thematic funds; Region traditionally dominated by institutions like pensions
Retail investors riding cannabis and video games are loosening the stranglehold of institutions on Europe’s $1 trillion exchange-traded fund market. In a tell-tale sign of rising retail activity, exchange trading volumes of so-called thematic ETFs have more than doubled this year from the same period in 2019, according to Bloomberg Intelligence. About 9.4 billion euros ($10.8 billion) of the equity products, which track investing themes like marijuana, robotics and AI, have been bought and sold.

Florida Virus ‘Out of Control,’ Los Angeles Is on the Brink
Emma Court and Tony Czuczka – Bloomberg
Shalala says state needs to shut down again to control Covid; Blames White House, Florida governor for too-hasty reopening
Florida’s Covid-19 outbreak is “totally out of control,” according to a Democratic representative, and the mayor of Los Angeles said his city is “on the brink” of new restrictions, comments that suggest the country’s months of trade-offs between the health of the community and the economy are far from over.

CFTC’s Technology Advisory Committee applauds flexibility in electronic trading proposal; Wide-ranging meeting also includes presentations on cybersecurity, data protection and digital assets
Jeff Reeves – FIA
The U.S. Commodity Futures Trading Commission’s Technology Advisory Committee held a wide-ranging public meeting via teleconference on July 16. TAC subcommittees offered several short presentations on topics including the recently proposed electronic trading risk principles, cybersecurity, data security, virtual currencies and distributed ledger technology.

Former Wall Street Trader Seeks to Make Sense of Crypto World
Vildana Hajric – Bloomberg
Hunter Merghart is head of U.S. operations for Bitstamp; Cryptocurrency exchange has more than 4 million users globally
Hunter Merghart comes from a traditional finance background, having spent over a decade on equity trading desks in New York at investment banks including Credit Suisse Group AG and Barclays Plc. But, like many of his peers, he became interested in the crypto market and made the transition to that world in 2018.= “I really saw it — even then — as a new emerging asset class and market to develop,” says Merghart, 36. He joined Luxembourg-based Bitstamp, one of the oldest cryptocurrency exchanges, as head of U.S. operations in April 2019, helping to open its New York office.

FIA Releases First Half 2020 Data On Futures And Options Volume Trends
Global futures and options trading grew by 32% to record-setting 21.9 billion contracts in the first half of 2020 compared to 2019, according to figures released today by FIA.

Ant Financial poised for one of 2020’s biggest IPOs; Alibaba payments arm was last valued at $150bn and plans to list in Shanghai and Hong Kong
Ryan McMorrow, Henny Sender, and Mercedes Ruehl – FT
Alibaba’s payments arm Ant Group, which has most recently been valued at $150bn, has announced its long-awaited public offering with a dual listing in Shanghai and Hong Kong.

Headhunting: the rise of the post-MiFID II trader; As the investment industry continues to grapple ongoing headwinds, Hayley McDowell speaks with senior recruiters and consultants to explore how the talent landscape has changed for buy-side traders in recent years.
Hayley McDowell – The Trade
An outsider would be forgiven for thinking that the role of the buy-side trader is under threat. As active asset management continues its battle with increasing industry pressures, we know that in many cases it can be the traders that find themselves in the firing line when investment firms are looking to cut costs. While we are yet to see how headcounts and processes will be affected by the coronavirus pandemic, it’s clear that buy-side trading recruitment was already in the midst of substantial change.

Bernanke and Yellen Refocus Blame on Hedge Funds; The former Fed chiefs offer a reminder about the origins of March’s Treasury market meltdown.
Brian Chappatta – Bloomberg
Just a reminder from your friendly neighborhood former Federal Reserve Chairs: Hedge funds probably blew up the world’s biggest bond market in March and helped usher in unprecedented central bank action. Ben S. Bernanke and Janet Yellen, who combined led the Fed for more than a decade, delivered testimony last Friday to the House Select Subcommittee on the Coronavirus Crisis. Much of their remarks focused on the urgent need for Congress to take further fiscal action to offset the economic shock caused by the pandemic. However, in their writing on the Brookings Institution website, they also took some time to lay out their thoughts on steps taken by their successor, Jerome Powell, and his fellow central bankers.

Gunman attacks house of judge overseeing Deutsche Bank lawsuit; Esther Salas’s 20-year old son was shot dead at their New Jersey home
James Politi – FT
A gunman shot and killed the son of a federal judge overseeing a lawsuit against Deutsche Bank linked to disgraced financier Jeffrey Epstein.

German Finance Watchdog Defends Agency Amid Wirecard Scandal
Tim Loh – Bloomberg
BaFin’s Hufeld tells Welt am Sonntag that his team did its job; Hufeld tells newspaper lawmakers need to review tech scrutiny
The head of Germany’s financial watchdog defended the agency amid growing criticism over Wirecard AG’s collapse. BaFin is doing exactly what German lawmakers asked, with a mandate that only allowed it to supervise small parts of the payments company, Felix Hufeld, the agency’s president, said in an interview with the Welt am Sonntag newspaper. It’s up to lawmakers to improve the regulation of tech firms, where there are lots of gray areas, he said.

Arthur Samberg, Founder of Hedge Fund Pequot, Dies at 79
Yueqi Yang and Daniel Taub – Bloomberg
Samberg’s firm was once of the world’s largest hedge fund; ‘He never forgot where came from,’ billionaire Cooperman says
Arthur Samberg, the founder of Pequot Capital Management Inc., once the world’s largest hedge fund, has died. He was 79. Samberg died on July 14, according to a notice published in the New York Times. He had leukemia, according to an obituary on the Beecher Flooks Funeral Home’s website.

‘Less Optimistic’ and ‘More Cautious’: Top C.E.O.s Fret as Virus Cases Rise; Many of the nation’s business leaders are steeling themselves for a period of prolonged economic disruption and the prospect of a slow, halting recovery.
David Gelles – The New York Times
With coronavirus cases around the country on the rise and states rolling back their reopening plans, many of the nation’s top business leaders are steeling themselves for a period of prolonged economic disruption and the prospect of a slow, halting recovery.


Tiny U.K. Company’s Stock Soars 373% as Drug Cuts Covid-19 Risk
Joe Easton – Bloomberg
Synairgen product lowers need for ventilation, chance of death; Shares up 2,581% in 2020, giving a $296 million market value
Shares of Synairgen Plc, a tiny pharmaceutical firm born out of a U.K. university, soared as much as 373% after the company said its experimental drug cut the risk of developing the worst symptoms of Covid-19.

Hong Kong Sees 66 New Local Virus Cases in Surging Wave
Jinshan Hong – Bloomberg
Almost half are of unknown origin as spread is not controlled; Health officials consider lockdown if cases continue to grow
Hong Kong reported 66 new local virus cases, alarming health officials who are contemplating a possible lockdown as the city is running out of isolation beds and testing capacity. Of the additional local cases, almost half — 27 — were of unknown origins, said the city’s health department on Monday. Officials have now detected 560 local infections in 16 days, with about a third of infections unlinked to confirmed cases or existing outbreaks, signaling that hidden chains of transmission are widespread.

EU leaders in push to unlock deal on coronavirus recovery fund; Euro hits four-month high as members to discuss EUR390bn in grants when marathon talks reconvene in Brussels on Monday
Sam Fleming, Mehreen Khan and Jim Brunsden – FT
EU leaders will try to strike a deal on Europe’s financial response to the coronavirus pandemic on Monday following a fraught weekend of talks in which they argued over the size of a recovery fund for the bloc.

Universities to cut thousands of academics on short contracts; Higher education faces upheaval after sharp drop in income during pandemic
Bethan Staton – FT
UK universities are cutting the jobs of thousands of academics on short-term contracts as the sector prepares to make sweeping cuts in the wake of coronavirus.

U.S. States Report Record Covid-19 Counts but Trump Plays Down Threat; North Carolina, Louisiana and Kentucky reported record case counts on Sunday
Stella Yifan Xie – WSJ
More American states reported record high tallies of coronavirus infections on Sunday, further straining health care resources, as the country struggled to contain the fast-spreading pandemic that has infected nearly 3.8 million people in the U.S. and over 14 million world-wide.

Older Children Spread the Coronavirus Just as Much as Adults, Large Study Finds; The study of nearly 65,000 people in South Korea suggests that school reopenings will trigger more outbreaks.
Apoorva Mandavilli – NY Times
In the heated debate over reopening schools, one burning question has been whether and how efficiently children can spread the virus to others. A large new study from South Korea offers an answer: Children younger than 10 transmit to others much less often than adults do, but the risk is not zero. And those between the ages of 10 and 19 can spread the virus at least as well as adults do.

Coronavirus surge brings suffering to the impoverished, underresourced Mississippi Delta; “To everybody in town that I see posting on Facebook about how this isn’t real and that it’s a political scheme, I’m like, ‘Oh, my God, come intubate these patients.'”
Phil McCausland – NBC
INDIANOLA, Miss. — Chad and Kelsey Dowell, both doctors in this small, impoverished town in the Mississippi Delta, have cried a lot in recent weeks. The reason is the same every time: the coronavirus. Sometimes, they find themselves weeping when a patient carrying an oxygen tank is finally able to leave the South Sunflower County Hospital, where they work. Sometimes, they tear up on their back porch when they think of the few options left for another COVID-19 case. Sometimes, the couple, both 32, are overcome at the dinner table while their two young kids argue in the next room over what movie they want to watch.

Iran estimates up to 25 million virus cases since outbreak
Amir Vahdat – AP
Iran’s president Saturday estimated as many as 25 million Iranians could have been infected with the coronavirus since the outbreak’s beginning, and urged the public to take the pandemic seriously, the state-run IRNA news agency reported.

For first time, world records one million coronavirus cases in 100 hours: Reuters tally
Gayle Issa – Reuters
Global coronavirus infections passed 14 million on Friday, according to a Reuters tally, marking the first time there has been a surge of 1 million cases in under 100 hours.

Nordic Study Suggests Open Schools Don’t Spread Virus Much
Kati Pohjanpalo and Hanna Hoikkala – Bloomberg
Scientists behind a Nordic study have found that keeping primary schools open during the coronavirus pandemic may not have had much bearing on contagion rates.

Bonds Wave Red Flag on U.S. Economy While Stocks Show Green
Liz McCormick – Bloomberg
10-year real yields measured by TIPS slide for past six weeks; Rise in inflation outlook also pressuring real rates lower
The tea leaves of the world’s biggest bond market are producing a much-more foreboding reading than those of U.S. stock prices. America’s equity indexes are holding well above their pandemic-induced 2020 lows, yet the Treasury market increasingly is foreshadowing doubt over the pace of the economic rebound as new virus cases slow re-opening plans in many states. Ten-year real yields, considered a more-pure read on growth since they strip out inflation, have dropped for the past six weeks and hover at about -0.85%.

China Integrates Trading of $14 Trillion Local Bond Markets
Bloomberg News
China to link trading on two domestic bond platforms; Measure can attract more foreign investors: Everbright
China took a further step in integrating its fragmented bond markets, a move which analysts say could reduce complexity and attract foreign investors.

Exchanges, OTC and Clearing

European Commission halts probe into LSEG’s Refinitiv acquisition as it awaits data; The probe into LSEG’s takeover of Refinitiv has been halted by the European Commission while it awaits the delivery of requested data from both institutions.
Annabel Smith – The Trade
An investigation by European authorities into the London Stock Exchange Group’s (LSEG) landmark $27 billion acquisition of Refinitiv has been paused as both parties are yet to provide requested data.

Euronext receives clearance from the Danish Financial Supervisory Authority to acquire up to 100% of VP Securities, the Danish Central Securities Depository
Euronext, the leading pan-European exchange, today announces it has received the clearance from the Danish Financial Supervisory Authority to acquire up to 100% of VP Securities A/S1 (“VP Securities”) on 15 July 2020. Euronext welcomes this regulatory approval by the Danish FSA that was the only condition to complete the transaction.

Product Modification Summary: Amendments to the Options on the South African Rand/US Dollar (ZAR/USD) Futures and the Options on the Russian Ruble/US Dollar (RUB/USD) Futures Contracts – Effective August 17, 2020
CME Clearing

Product Modification Summary: Expansion of the Strike Price Listing Schedule of the Options on Bitcoin Futures Contract – Effective August 3, 2020
CME Clearing

SOFR Discounting Transition Client Election Fields Available on Account Reconciliation Files – August 3, 2020
From CME Clearing
Effective Monday, August 3, 2020, two new fields will be added as additional fields/columns to the end of the Account Reconciliation reports. These reports are already being delivered to firms via Secure FTP in .csv format with the following naming convention.

Amendments to the Daily Settlement Procedure Document for Bitcoin Futures Contract
CME Group

NYSE Member Firms Report First Quarter Results
New York Stock Exchange member firms that conduct business with the public reported a first-quarter 2020 after-tax profit of approximately $9.4 billion and revenues of approximately $60 billion, compared with approximately $4.5 billion after-tax profit on revenues of about $62 billion in the first-quarter of 2019.

DGCX Partners With American University Of Sharjah To Foster Next Generation Of Professionals Across Finance Sector
The Dubai Gold and Commodities Exchange (DGCX) today announced that it has partnered with American University of Sharjah (AUS) to foster the next generation of professionals across the finance sector.

SET Rolls Out 3 New Digital Services To Facilitate Investing In The New Normal Era
Digital Access Platform Company Limited (DAP), under The Stock Exchange of Thailand (SET) Group, has launched three new digital services in a move to integrate the Thai capital market ecosystem and respond to the new normal way of investment amid dynamic environment: (1) “NDID Proxy”, a proxy service connected to the National Digital Identification (NDID) system, going live on July 21, 2020 with a group of 19 pilot securities firms, asset management firms and life insurance firms. (2) “Citizen ID card verification with Thailand’s Department of Provincial Administration” service and (3) “Electronic Stamp Duty” service with the Revenue Department of Thailand. All these services are available on the digital platform to all business sectors aiming to not only simplify procedures and enhance efficiency for businesses but also widening investment opportunities for the public.

Aquis Exchange PLC Collaboration With University Of Derby – University Announces Innovative Collaboration With Financial Technology Firm Aquis
The University of Derby has secured government funding for a new knowledge transfer partnership with a company at the cutting edge of the financial sector.


Big banks look to the cloud to accelerate digital shift; Goldman Sachs, Deutsche Bank and HSBC sign partnership deals in tech awakening
Patrick Jenkins – FT
As their booming share prices testify, technology companies have been brimming over with new business during the coronavirus pandemic. For banks, there has been a special tech awakening: to the merits of cloud computing. After years of foot-dragging, many have been abandoning their cautious approach to cloud-based services and signing up with gusto to outsource their storage of data and other activities that demand high-intensity computing power.

Career Reboot: She Followed Her Heart Into Data Analytics; Unhappy in her job at a law firm, a recruiter did research, learned skills and found her new career in tech
Ray A. Smith – WSJ
Martha Jones once had her heart set on a law career. “I thought I wanted to go to law school post-undergrad, but I wanted to get some experience working,” said the 27-year-old. After graduating from Temple University in Philadelphia, she moved to Washington, D.C., and worked first as a legal aide, then as a recruiter for a corporate law firm. By the fall of 2017, she said, “I realized I wasn’t happy at my job. I realized I didn’t want to go to law school. I just knew that wasn’t the career path for me.”

PPP: Meet the fintech bank that did more PPP lending than Citi
Jen Wieczner and David Z. Morris – Fortune
When the data for Paycheck Protection Program, or PPP, lending finally came out last week, there was plenty to gawk at: there were public companies, pro sports teams, the Ayn Rand Institute—and a slew of errors.
What caught my eye, however, was the list of the top 15 PPP lenders. There are, of course, the usual suspects—JPMorgan Chase and Bank of America, which each oversee trillions of dollars in assets, are at the top of the list, having made more than $25 billion in PPP loans apiece. But No. 12, punching far above its weight and coming in ahead of Wall Street mainstays like Citizens Bank and BMO Harris, was a little-known New Jersey institution called Cross River Bank.

Wirecard Fraud Is Risk Management Lesson For Fintech Companies
Gideon Pell – Forbes
A fintech blog commenting on the Wirecard scandal stated: “Valued at EUR24 billion and part of Germany’s prestigious DAX stock index, it surprised and disappointed everyone when its auditors announced on June 18 that more than $2 billion in cash had disappeared.” The German payments business subsequently filed for insolvency at the end of the June.

How to Create Auto-Updating Data Visualizations in Python with IEX Cloud, Matplotlib, and AWS
Nick McCullum – FreeCodeCamp
Python is an excellent programming language for creating data visualizations. However, working with a raw programming language like Python (instead of more sophisticated software like, say, Tableau) presents some challenges. Developers creating visualizations must accept more technical complexity in exchange for vastly more input into how their visualizations look.

Chinese fintech giant Ant to go public in dual Shanghai-Hong Kong IPO
Ryan Browne – CNBC
Chinese fintech firm Ant Group has begun the process of a concurrent initial public offering in Shanghai and Hong Kong.
Ant, an affiliate of e-commerce giant Alibaba, said Monday that it would list its shares on both the Shanghai stock exchange’s STAR — a Nasdaq-style tech board — and the Hong Kong stock exchange. The dual listing will help Ant “accelerate its goal of digitizing the service industry in China,” the company said.

SoftBank-Backed Fintech Startup Seeks $3.5 Billion Value in IPO
Saritha Rai – Bloomberg via Yahoo Finance
Online insurance platform Policybazaar aims to go public in 2021 at a valuation north of $3.5 billion, potentially becoming the first of India’s mega-startups to debut as its digital economy booms.
The startup plans to secure about $250 million in a round of financing at a $2 billion-plus valuation before a September 2021 initial public offering, co-founder Yashish Dahiya told Bloomberg News. Policybazaar is now selecting two to three IPO lead underwriters from a roster that includes several Wall Street banks, said Dahiya, chief executive officer of Policybazaar parent ETech Aces Marketing and Consulting Pvt.


Bitcoin scammers accessed personal information of Musk, Bezos, Obama and Kanye, says Twitter
Matthew Elmas – SmartCompany
Twitter has apologised to users and says it is “embarrassed” after the recent hack targeting verified accounts. The company has also revealed personal information of some of the world’s wealthiest people was leaked during the attack.

Twitter Says Hackers Downloaded Some Users’ Personal Data in Recent Attack
Euirim Choi – WSJ
Twitter Inc. said the hackers behind this week’s attack on its systems and high-profile users walked away with some personal information, indicating that the perpetrators carried out more than a cryptocurrency-related scam. In its fullest accounting so far of the hack, Twitter said late Friday the attackers targeted 130 accounts and reset passwords on 45 of those, enabling them to send tweets. Many of those posts encouraged Twitter users to transfer cryptocurrency to what appeared to be the attackers’ accounts.

Central Bank Digital Currencies — Design, Policy & Implementation | Full Webinar
The Block
On July 17th, The Block presented its Central Bank Digital Currencies – Design, Policy & Implementation webinar before a live audience. This webinar served as a prelude to The Block’s central bank digital currencies (CBDCs) whitepaper, set for release in the coming weeks. The webinar began with a brief presentation on the main concepts of central bank digital currencies (CBDCs) by The Block research analyst Ryan Todd.

Canada Crypto Exchange Coinsquare Accused of Wash Trading by Watchdog
Sebastian Sinclair – Coindesk
Canada-based crypto trading platform Coinsquare has been accused by the Ontario Securities Commission (OSC) of inflating its trading volumes in an illegal practice called wash trading. In a Statement of Allegations from the OSC, filed last Thursday, the regulator alleges Coinsquare’s CEO Cole Diamond, founder Virgile Rostand and executive Felix Mazer knowingly manipulated markets via fake trading volumes and “authorized, permitted or acquiesced in this conduct” by the firm’s staff.

PayPal has reportedly partnered with Paxos to launch its crypto service
Yogita Khatri – The Block
Payments giant PayPal is said to have partnered with Paxos Crypto Brokerage to launch its crypto service. CoinDesk reported the news on Monday, citing “two people familiar with the matter.” One source said the partnership could be announced as soon as this week.

A Top Pentagon Investigative Unit Wants To Spy On Worldwide Bitcoin And Crypto Transactions
Billy Bambrough – Forbes
Bitcoin, thrust into the international spotlight this week by Twitter hackers trying to defraud people of their bitcoin, is hard to track but by no means impossible. Bitcoin, cryptocurrency and blockchain analytics companies are able to forensically examine crypto transactions and are often able to pinpoint exactly who made the transaction, where and when.

$1.6 billion was invested in institutional-focused crypto custody services: research
Momina Khan – The Block
Between 2012 to 2020, $ 1.6 billion was invested over 46 deals in companies that offer institutional-focused custody services for cryptocurrencies. Of these, 24 deals (or 52%) were focused on early-stage, VC-backed companies, whose median investment size amounted to roughly $15.7 million.

Bitcoin Futures Trading Volume Slips to 3-Month Low on CME
Omkar Godbole – Coindesk
Trading activity in bitcoin futures listed on the Chicago Mercantile Exchange (CME) has cooled notably as the leading cryptocurrency languishes in the price doldrums. Daily trading volume fell to $87 million (via 1,895 contracts) on Friday to hit the lowest level since April 17, when the exchange-traded contracts were worth $77 million, according to data from crypto derivatives research firm Skew.

Half of institutional-focused crypto custody firms are domiciled in the U.S.
Momina Khan – The Block
Of the 28 companies providing cryptocurrency custody services to institutional clients cataloged by The Block Research, half of them are domiciled in the United States. After the U.S., Hong Kong, Switzerland and the U.K. are the most popular for domiciled firms, per the research findings.

Former Wall Street Trader Seeks to Make Sense of Crypto World
Vildana Hajric – Bloomberg
Hunter Merghart comes from a traditional finance background, having spent over a decade on equity trading desks in New York at investment banks including Credit Suisse Group AG and Barclays Plc. But, like many of his peers, he became interested in the crypto market and made the transition to that world in 2018. “I really saw it — even then — as a new emerging asset class and market to develop,” says Merghart, 36. He joined Luxembourg-based Bitstamp, one of the oldest cryptocurrency exchanges, as head of U.S. operations in April 2019, helping to open its New York office.

Mastercard Now Allows Crypto Firm Wirex to Issue Payment Cards
Paddy Baker – Coindesk
Mastercard, one of the world’s largest payments processors, says Wirex has become the first native crypto company to be able to directly issue payment cards to its customers. As part of an expansion of its cryptocurrency program, Mastercard said Monday it had granted Wirex principal membership status. Regulated by the U.K.’s Financial Conduct Authority (FCA), Wirex offers a payment facility that automatically exchanges crypto into fiat currencies.

Bank of Japan Forms New Team to Explore Central Bank Digital Currency
Sebastian Sinclair – Coindesk
The Bank of Japan (BOJ) has set up a dedicated team to explore the implications of central bank digital currencies. As reported by Reuters on Monday, the central bank is warming up to the possibility of a digital yen, given the recent rise in interest among other central banks. While details are limited, the new team will likely follow up on the BOJ’s 2019 research into central bank digital currencies (CBDCs), as well as the additional research it has been conducting with other central banks since January. The team will form part of the central bank’s payment and settlement department.

Lobbyist Jack Abramoff pleads guilty in AML BitCoin fraud case
Momina Khan – The Block
Political lobbyist, Jack Abramoff, pleaded guilty on Tuesday to charges of conspiracy and violating the Lobbying Disclosure Act in his involvement with the AML BitCoin scam. Abramoff admitted to misleading investors about AML BitCoin in a teleconference call with a federal judge in San Francisco as he answered questions related to his plea deal. In his plea, Abramoff admitted he was aware that information from AML BitCoin’s founder Marcus Andrade and others that the development and financial condition of the NAC Foundation and AML BitCoin project was incorrect.


As Trump Ignores Virus Crisis, Republicans Start to Break Ranks; President Trump continues to press for a quick return to life as usual, but Republicans who fear a rampaging disease and angry voters are increasingly going their own way.
Alexander Burns, Jonathan Martin and Maggie Haberman – NY Times
President Trump’s failure to contain the coronavirus outbreak and his refusal to promote clear public-health guidelines have left many senior Republicans despairing that he will ever play a constructive role in addressing the crisis, with some concluding they must work around Mr. Trump and ignore or even contradict his pronouncements.

Trump Did Nothing to Help the Economic Boom; If anything, the president’s actions were a minor drag on the recovery from the Great Recession.
Noah Smith – Bloomberg
The public gives President Donald Trump very low marks for his handling of the coronavirus pandemic and race relations. But as recently as the end of June, the public was still giving him slightly positive marks for his handling of the economy. That edge may now be eroding, but Trump’s numbers on economic policy are still much better than on other important issues:

US scientists rebuke Trump over coronavirus response and other affronts; Members of National Academy of Sciences sign open letter; News comes as White House seeks to block funding for testing
Emily Holden in Washington
More Than 1,200 members of the US National Academy of Sciences have rebuked Donald Trump’s “denigration of scientific expertise”, an unusual move for a community which has historically avoided the political sphere.


Working on the Front Lines of Investor Protection – The Importance of FINRA Rule 8210
Jessica Hopper – FINRA
In the last two years, FINRA has barred more than 730 brokers and associated persons. What was the most prevalent rule violation that resulted in these bars? You might think that the most brokers were barred for violating FINRA’s rule against misuse of customer funds (FINRA Rule 2150) or making fraudulent misrepresentations (Rule 2020) or, perhaps, for excessively trading customer accounts in violation of FINRA’s suitability rule (Rule 2111), but that’s not the case. The answer—FINRA Rule 8210. In fact, in the last two years, more than a third of the enforcement cases that resulted in individuals being barred from the brokerage industry involved violations of Rule 8210.

SEC Files Fraud Charges Against Co-Founder of IIG
The Securities and Exchange Commission today charged David Hu, the co-founder and chief investment officer of International Investment Group LLC (IIG), a former registered investment adviser, with fraud for his role in a $60 million Ponzi-like scheme. The SEC’s complaint, filed in federal district court in Manhattan, alleges that, from October 2013, Hu orchestrated multiple frauds on IIG’s investment advisory clients. According to the complaint, Hu grossly overvalued the assets in IIG’s flagship hedge fund, resulting in the fund paying inflated fees to IIG. In addition, through IIG, Hu allegedly sold at least $60 million in fake trade finance loans to other investors and used the proceeds to pay the redemption requests of earlier investors and other liabilities. The complaint alleges that Hu deceived IIG clients into purchasing these loans by directing others at IIG to create and provide to the clients fake loan documentation to substantiate the non-existent loans, including fake promissory notes and a forged credit agreement.

CFTC Extends Targeted Relief to Market Participants in Response to COVID-19
The Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (DSIO) today announced that, in light of the continuing challenges resulting from the COVID-19 (coronavirus) pandemic, it has extended the time period for the targeted no-action relief provided in CFTC Staff Letter No. 20-16 to registrants listing new principals and to applicants for registration as associated persons (APs) from the requirement to submit a fingerprint card for any such principal or AP registration applicant.

Investing and Trading

Citi Says It’s ‘Only a Matter of Time’ Before Gold Hits a Record
Ranjeetha Pakiam – Bloomberg
Loose monetary policy, low real yields are helping prices; Citi also bullish silver, with more stimulus talks this week
Bullish factors building in the gold market are set to see prices take out the record set in 2011, according to Citigroup Inc.

Rating agencies owe the market more transparency; In a crisis, investors want information about relative strengths and weaknesses not just downgrades
UK Sinha – FT
Fear has stalked global efforts to fight Covid-19 — fear of infection, unemployment and economic decline. But another fear has hamstrung policymakers trying to address these problems: that of sovereign rating agencies.

Wall St traders warn of slowdown after best quarter in a decade; Executives reflect on prime conditions created as coronavirus panic shook markets
Laura Noonan and Joe Rennison – FT
Wall Street’s top five banks have posted their best quarter for trading in a decade after the coronavirus pandemic led to frenzied market conditions and radical interventions from central banks.

Chevron to buy US energy group Noble in $13bn deal Tie-up expected to mark starting point of wave of energy sector M&A prompted by oil crash
Derek Brower and James Fontanella-Khan – FT
Chevron has agreed to acquire Noble Energy for $13bn, including debt, the first major energy industry deal since oil prices collapsed earlier this year amid geopolitical turmoil and the coronavirus pandemic.

For Some Stocks, Bad News Is Now Good News; Coronavirus upends traditional relationships for aggressive, defensive stocks
Karen Langley – WSJ
The new coronavirus has upended expectations for the riskiness of individual stocks, a shift that has stoked major indexes’ recovery but that many investors now warn leaves the market vulnerable to reversals.

Experts warn of a gathering storm of corporate bankruptcies.
Michael J. de la Merced – NY Times
Since March, economic lockdowns have forced more and more companies — including well-known names like Hertz, J. Crew and Neiman Marcus — to file for bankruptcy protection. But the bankers and lawyers who help troubled companies repair their balance sheets and guide them through Chapter 11 reckon that the worst is still to come, as reported in today’s DealBook newsletter.

Environmental, Social and Corporate Governance

Investors Bet Europe’s Recovery Will Have Green Tint; Shares in companies that generate electricity from renewable sources and insulate buildings have outperformed the broad European stock market
Joe Wallace – WSJ
Europe’s plan to kick-start its economy while shrinking its carbon footprint is throwing up new opportunities for investors. Shares in renewable-energy companies and insulation providers have advanced this year, in contrast to the plunge in oil-and-gas companies’ stocks and a retreat in the broader market. Investors are betting these firms will benefit from the European Union’s ambitious proposal to stop damaging the environment by 2050, which the bloc aims to bake into its economic recovery plan.

EU’s greenhouse gas strategy fails to plug methane hole
Kate Abnett, Shadia Nasralla – Reuters
The European Union does not plan to crack down on planet-warming methane emissions from gas imports despite pressure from oil companies, activists and academics, according to its draft strategy and sources familiar with the matter.


Hedge fund Skye cuts through gloom with 34% gains; New York-based firm shows long-short strategies can work despite Lansdowne closure
Laurence Fletcher -FT
An equity hedge fund set up by former Third Point analyst Jamie Sterne has emerged as one of the best-performing this year, suggesting large gains are still available in long-short strategies despite the recent closure of Lansdowne Partners’ flagship fund.


China’s Cooling Oil Demand Has Asian Physical Prices Sliding
Sharon Cho – Bloomberg
ESPO premium more than halves; Upper Zakum at steep discount; Inter-month Dubai swaps in contango for first time in a month
The price of physical oil barrels traded in Asia has slipped after Chinese demand cooled following a record purchasing spree. Spot premiums of Russian ESPO crude — favored by Chinese refiners due to the shorter export time — have more than halved since last month, while medium-sour Upper Zakum oil from the U.A.E. recently sold at a steep discount. Inter-month Dubai swaps flipped back into contango on Friday, according to data compiled by Bloomberg, signaling concerns about potential over-supply.

Jack Ma’s Ant Seeks $200 Billion Value in Biggest IPO in Years
Lulu Yilun Chen – Bloomberg
Ant is planning to list on Shanghai’s STAR market, Hong Kong; Firm was valued at $150 billion in previous funding round
Billionaire Jack Ma’s Ant Group is seeking a valuation north of $200 billion as it goes public in Hong Kong and Shanghai, people familiar with the matter said, kicking off a landmark coming-out party for China’s leader in internet finance.


Johnson Faces Parliamentary Rebellion on Post-Brexit Trade Deals
Alex Morales – Bloomberg
Tory lawmakers push for parliament to be given veto in future; At least 11 Conservatives have put name to rebels’ amendment
Boris Johnson faces a rebellion from members of his own Conservative Party seeking to amend government legislation and give Parliament a veto on new trade deals. At least 11 Tories have put their name to an amendment to the Trade Bill to give the House of Commons and House of Lords each a say over whether to approve any new accord struck with another country. The legislation will be debated in the House of Commons on Monday.

Bank for UK farmers to launch amid Brexit turmoil; Oxbury Bank will open as sector grapples with uncertainty over subsidies and food markets
Judith Evans – FT
The UK will gain its first lender dedicated to agriculture in almost a century, as the newly licensed Oxbury Bank prepares to launch this autumn. Oxbury’s founders say they already have a pipeline of more than £50m of loans and will initially focus on short-term lending to farmers, replacing trade credit with agricultural suppliers.

Brexit Negotiators in Tense Standoff, Dashing Hope of Swift Deal
Ian Wishart – Bloomberg
Latest round of talks start Monday in London as time runs down; Confidence that an agreement will be rapidly reached is ebbing
When Prime Minister Boris Johnson held a video conference with the leaders of the European Union last month, officials on both sides came away optimistic that a deal on their post-Brexit relationship was in sight. That confidence is evaporating.

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Market Narratives Have Pushed Aside Fundamentals

First Read $46,041/$300,000 (15.3%) ++++ Hits & Takes John Lothian & JLN Staff We have a new and improved version of The Spread today. We have overhauled our approach to this video series and have the whole JLN team contributing to it. Suzanne Cosgrove has...

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