The 20 Minutes That Broke the U.S. Oil Market; Coronavirus pandemic will cause global famines of ‘biblical proportions,’ UN warns

Apr 27, 2020

First Read

Hits & Takes
By John Lothian & JLN Staff

Today’s first story in Leads is a must read: “The 20 Minutes That Broke the U.S. Oil Market.” One of the issues that contributed to the negative prices was the breakdown of the trade at settlement process, as prices moved to the maximum discount and no buyers emerged.

Also read about how it was not the USO oil fund in the May contract but a Chinese bank-related fund offered to retail investors in China. Additionally, some of the quotes from experienced traders in the article mirror mine, or those I have experienced when faced with other dramatic market moves. Am I really seeing these prices? This price action is “mind bending.”

Friday, JLN published the first of a two-part interview with former CME Chairman Jack Sandner, part of the MarketsWiki Education Open Outcry Traders History Project. Jack starts the interview with the story of being invited to a holiday party thrown by Leo Melamed by the then-president of the CME Everett Harris. He was not allowed in and the rejection turned into fisticuffs with Jack knocking out one of the CME members trying to block his entrance. Jack was a golden glove boxer in his youth and still threw a good punch.

He also tells the story about how during the Hunt brothers silver corner, the brothers were also long cattle. As newly elected chairman of the CME, Sandner had to give the order for them to liquidate their positions, despite the fact that he was long a limit position of live cattle futures himself. If you love exchange history, with some trading stories mixed in, you will love listening to Sandner share his story.

Somehow it has been deemed a good thing to challenge former FIA Futures For Kids gala kilt challenge participants to wear their kilts again in support of the organization, including yours truly. Jeremy Grant, the initiator of the challenge, went for a spirited walk in Mile End Park in East London. Being quarantined in the suburbs of Chicago with no immediate access to hire a kilt, I am at a loss for how to participate.

Stay Safe!~JJL


Marex Spectron announced record full year results for 2019, with gross revenues up 43% at $554.9 million and net revenues up 19% to $349.9 million from
$294.7 million in 2018. 2020 saw net revenues up 41% over last year and PBT for the quarter up over 50% of the full year 2019. EBITDA was up 36% to $70.5 million, compared with $52.0 million in 2018 and $39.6 million in 2017.~SR


Jack Sandner – Open Outcry Traders History Project – Part One

John F. (Jack) Sandner is a boxer, lawyer, trader and former CME chairman who served as a director of CME Group from July 2007 to February of 2018.

Sandner sat for an interview with John Lothian News for the MarketsWiki Education Open Outcry Traders History Project. The interview is broken into two parts to help tell the tale of a long and storied career in the Chicago futures markets.

His first encounter with CME members turned into a fist fight at a holiday party, but he would go on to become a member of the CME, a board member and chairman.

He tells the story of talking his way into law school at Notre Dame and how he had to give the order to liquidate the Hunt Brothers out of the cattle market while chairman and while he was himself in a limit long position.

Over the course of his career, he served as CME chairman for three separate terms. He was a member of the CME for more than 45 years. He currently serves on the boards of Virtu Financial and the National Futures Association.

Sandner stepped down from the CME Group board of directors at the end of his term in May 2018. Following his retirement, he served as a consultant for two years. He joined the board in 1978.

Watch the video »


The Spread: Oil Tanks

This week on The Spread, oil markets go contango, Quantitative Brokers releases a timely futures and options trading algorithm, FIA cancels more events, and more.

Watch the video »


The GRACE Act: One Way to Flatten the Curve of the Financial Pandemic
James Angel – Georgetown University – Department of Finance
The pandemic-induced shutdowns are leading to a financial pandemic. When the unemployed worker or small business can’t pay the rent, then the landlord can’t pay the mortgage. Even when a creditor provides forbearance on a loan, the borrower’s credit is damaged for years. What is needed is a way to stop the chain reaction and give everyone enough breathing room to recover without costing the taxpayer trillions of dollars.

*****We should take a hard look at this proposal.~JJL


Avocados Are In, Pork Bellies Out in the Era of Pandemic Eating
Marvin G Perez, Anuradha Raghu, and Isis Almeida – Bloomberg
‘Health halo’ lifts demand for veggies, even as snacking booms; ‘Traditionally, food has a comforting role,’ analyst says
The pandemic has totally transformed the way the world eats. There is no trend, exactly, other than this: People want comfort. They also want to eat their way to stronger immune systems. They’re stress baking, but they’re also eating healthier than they would have at restaurants. Avocados are in. Pork belly out. Frozen pizzas and instant noodles are selling out.

*****Have you heard the joke, “When I was young we had Bob Hope, Steve Jobs and Johnny Cash. Now we have no hope, no jobs and no cash? Please let nothing happen to Kevin Bacon.”~JJL


How Goldman’s vampire squid gave way to BlackRock; The sway held by the group extends far beyond its function as a vast asset manager
Patrick Jenkins – FT
Does the world have a new vampire squid? Ten years ago, that was how Rolling Stone magazine famously described Goldman Sachs, reflecting the way the bank was “wrapped around the face of humanity”. For years the label stuck. Goldman’s grip on global finance, through its own commercial operations and the influence of its alumni, seemed unshakeable. But as banking has changed, so the prestige of the Wall Street giant has declined.

*****How much blood can you suck from a black rock?~JJL


Trump attacks AT&T CEO after company announces retirement
John Hendel – Politico
President Donald Trump took a public swipe at AT&T CEO Randall Stephenson on Friday, shortly after the company disclosed the executive’s retirement plans.

*****Stephenson is the former president of the Boy Scouts of America.~JJL


Friday’s Top Three
Our most-read story Friday was Crain’s Chicago’s piece on Craig Donohue selling his home in Kenilworth for $8.75 million, currently the third highest priced home for sale in Kenilworth. Second was JLN’s video interview with Jessica Hehmeyer, A Little Stress Relief for the Coronavirus Countdown. Third was Bloomberg’s Intercontinental Exchange Says Crypto Chief Exits After 4 Months, about Mike Blandina resigning as chief executive officer of Bakkt.


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Lead Stories

The 20 Minutes That Broke the U.S. Oil Market
Bloomberg News
A perfect storm drove prices into negative territory; Among the hardest hit: retail investors halfway across world
It was evident from the very beginning on April 20 that the oil market was headed for trouble. Frantic sell orders had been pouring in overnight and any traders who connected to the Nymex platform that morning could see a bloodbath was coming. By 7 a.m. in New York, the price on a key futures contract — West Texas Intermediate for May delivery — was already down 28% to $13.07 a barrel.

Coronavirus pandemic will cause global famines of ‘biblical proportions,’ UN warns
Rob Picheta, CNN
The world is facing multiple famines of “biblical proportions” in just a matter of months, the UN has said, warning that the coronavirus pandemic will push an additional 130 million people to the brink of starvation.

Negative Oil Prices Were a Warning, Not an Anomaly; If oil producers don’t cut supply, negative prices will come back to force them.
Julian Lee – Bloomberg
Crude oil’s collapse into negative prices on Monday was a clear warning of just how scarce storage space for oil is getting. Prices below zero are the market’s way of telling producers to stop pumping, now.

Bank of China Clients Said to Lose $1 Billion on Oil Bets
Bloomberg News
Estimate of losses rises 11-fold on data from more branches; Over 60,000 customers invested in WTI-linked product: Caixin
Bank of China Ltd.’s estimate for the carnage to retail investors from the collapse in a product linked to U.S. crude oil futures surged 11-fold to more than 7 billion yuan ($1 billion) as it consolidated reports from its nationwide network, according to people familiar with the matter.

What Negative Prices Tell Us About the Future; Oil prices falling below $0 are merely the weirdest illustration of the destruction of demand in the economy
James Mackintosh – WSJ
Focus in closely and oil prices turned negative this week because of technicalities in the futures market and storage capacity in Oklahoma. But zoom out and negative oil prices are merely the weirdest illustration of the destruction of demand in the economy—and fit with two longstanding negative prices in Europe, for money and for electricity.

Oil is not the only negative price coming to you; Minus prices are not uncommon, even if they suggest infinite losses and generate horror
Robin Harding – FT
There are not many things you have to pay to get rid of: hair, rodents, industrial waste, teenage children and, as of this week, crude oil. On Monday, the price of West Texas Intermediate for delivery in the month of May fell as low as minus $40.32 a barrel, becoming negative for the first time in history.

Icahn Bought Cheap Oil in Monday’s Plummet to Historic Lows
Erik Schatzker – Bloomberg
Billionaire investor used opportunity to supply refiner CVR; Glut caused by pandemic caused futures to trade negative
When on Monday it seemed the whole world was selling oil, a familiar name was buying: Carl Icahn. “We made some money on it,” Icahn said in an interview Friday with Bloomberg Television. “We did get a fair amount.” The billionaire raider-turned-activist took advantage of the historic collapse in crude futures to supply his Midwestern refiner, CVR Energy Inc. He said CVR tried to purchase 1 million to 2 million barrels of oil when prices went negative in a technical quirk of futures trading that temporarily forced sellers to pay to have contracts taken off their hands.

SEC takes enforcement action against 23 companies for claims relating to COVID-19
Ciara Linnane – MarketWatch
The Securities and Exchange Commission has taken enforcement action against 23 companies in connection with statements made relating to COVID-19 and is warning investors to beware of fraud, illicit schemes and other misconduct during the pandemic. The latest moves came Wednesday, when the SEC halted trading of Salt Lake City, Utah-based Predictive Technology Group Inc. US:PRED and New York-based SCWorx Corp. US:WORX over questions regarding the accuracy of public information about their plans to sell COVID-19 tests.

*****There is a special place in hell for those who are guilty of this.~JJL

China’s Biggest Bank Halts Retail Products in Commodities
Bloomberg News
Industrial & Commercial Bank of China Ltd., the nation’s largest lender, suspended sales of more products that allowed retail investors to speculate on swings in commodities after many were burnt by the unprecedented crash in crude oil.

Goldman Sees Global Oil Testing Storage Capacity in 3-4 Weeks
Dan Murtaugh – Bloomberg
The global oil market is on track to test storage capacity limits in as little as three weeks, requiring the shut-in of nearly 20% of global production, according to Goldman Sachs Group Inc. The world has reached an inflection phase in the pandemic where rebalancing is starting to occur, but it will likely take 4-8 weeks for commodity markets to carve out a bottom in demand, Goldman analysts including Jeff Currie said in an April 24 report.

When oil became waste: a week of turmoil for crude, and more pain to come
David Gaffen – Reuters
The magnitude of how damaged the energy industry is came into full view on April 20 when the benchmark price of U.S. oil futures, which had never dropped below $10 a barrel in its nearly 40-year history, plunged to a previously unthinkable minus $38 a barrel.

World’s Biggest Wheat Supply Dries Up When Some Want It Most
Anatoly Medetsky and Megan Durisin – Bloomberg
Russian exhausts grain-export quota two months ahead of plan; Russian ban could benefit rival suppliers like the EU and U.S.
For the first time in a decade, the world risks being cut off from Russian wheat at a time when some key buyers are rushing to import it.

The Next Chapter of the Oil Crisis: The Industry Shuts Down
Javier Blas – Bloomberg
U.S. output set to drop significantly after negative prices; Oil refiners to curtail processing as fuel demand remains weak
Negative oil prices, ships dawdling at sea with unwanted cargoes, and traders getting creative about where to stash oil. The next chapter in the oil crisis is now inevitable: great swathes of the petroleum industry are about to start shutting down.

Singapore Coastline Packed With Ships Full of Oil No One Wants
Elizabeth Low – Bloomberg
About 60 ships idling off Singapore, up from usual 30-40: IHS; Fuel hoarded in wider area of Malacca Strait up 45% m/m: Kpler
A narrow waterway off Singapore has become even more congested as oil-laden tankers wait out a slump in global fuel consumption that’s crimped demand and boosted the use of ships to store cargoes.

Hong Kong’s hidebound brokers face coronavirus reckoning; Viral outbreak has sped shift to online platforms, squeezing many traditional outfits
Primrose Riordan – FT
For more than a century, Hong Kong’s legion of stock brokerages have traded through world wars, epic market busts and the former British colony’s handover back to China. But the coronavirus pandemic could pose the gravest threat yet.

Pump-and-dump stock trading needs new rules for the digital age; Regulators should force promoters to hold their positions after touting them
Marc Cohodes – FT
The fairness of capital markets is under threat due to the rise of digital media. We live in an era where some stock promoters and short sellers open large positions prior to publishing market-moving information about a company, and rapidly close those positions after inducing a buying or selling frenzy.

A Lot Has Changed Since the Day the World Changed; In normal times, meetings of the three biggest central banks would dominate global markets. We’re still far from normal.
John Authers – Bloomberg
Normal life hasn’t vanished completely. This week brings a reminder of that, with one of those calendar combinations that in normal times would dominate international markets. In quick succession, the world’s three biggest central banks — the Federal Reserve, the European Central Bank and the Bank of Japan — meet to discuss monetary policy.

Wall St warns rescue scheme will exclude many companies; Experts say midsized US firms will struggle to qualify for $600bn lending plan
Robert Armstrong – FT
A swath of midsized US companies will be excluded from a government programme to help them through the Covid-19 crisis if rules capping their debt levels are not made more flexible, bankers, lawyers and analysts say. The Main Street Lending Program — which will be managed by the Federal Reserve and backed by the US Treasury — is a pillar of the US economic response to the coronavirus pandemic. It is designed to help medium-sized companies across America access liquidity in the coming months.

IG Group staff set for big bonuses as online platform rides trading boom; Market volatility stemming from coronavirus pandemic entices thousands of new customers
Antonia Cundy – FT
Staff at online trading IG Group are on track to share a bumper bonus pool after the market turmoil unleashed by coronavirus prompted thousands of new customers to sign up.

BoE warns bank loan reserves risk choking business funding; Regulators fear conservative planning for defaults will restrict much-needed credit to companies
Stephen Morris and Matthew Vincent, and David Crow – FT
The Bank of England has warned UK lenders against booking huge charges on souring loans amid fears it would curb their ability to support struggling companies.

Regulators must now look at commodity trading ; Traders sit at the intersection between financial and physical markets
Natasha White – FT
Earlier this month, the commodity trading industry was rocked by its latest scandal. One of Singapore’s largest fuel oil traders, Hin Leong Trading, filed for bankruptcy protection revealing hidden losses to the tune of almost a billion dollars.

Revising Initial Expectations: CFTC Proposes Substantial Amendments to Form CPO-PQR and Related Requirements
Wendy Cohen, Gary DeWaal, Christian Hennion, Carl Kennedy, Lance Zinman – Katten
The Commodity Futures Trading Commission (CFTC or Commission) proposed to materially simplify reporting obligations for commodity pool operators (CPOs) during the CFTC’s first virtual open meeting on April 14 and potentially enable CPOs to satisfy common reporting obligations to the Commission and the National Futures Association (NFA) using a single form — NFA Form PQR.


Bill Gates’s Coronavirus Vaccine Could Be Ready in 12 Months
Lucca De Paoli – Bloomberg
Billionaire Bill Gates’s foundation will focus all of its resources on fighting the coronavirus, according to the Financial Times. The philanthropist and founder of Microsoft Corp. said that the Bill & Melinda Gates Foundation, with an endowment exceeding $40 billion, will give “total attention” to the pandemic that has killed more than 200,000 and is roiling economies around the world, he said in an interview with the newspaper.

Scientists fear the hunt for a coronavirus vaccine will fail and we will all have to live with the ‘constant threat’ of COVID-19
Adam Bienkov – Business Insider
Scientists fear that it may prove impossible to produce a working coronavirus vaccine and believe the world may have to simply learn to adapt to the permanent threat of COVID-19.

U.S. Could Be Weeks From Meat Shortages With Shutdowns Spreading
Michael Hirtzer and Tatiana Freitas – Bloomberg
Brazil sees its first major closure; U.S. turkey plants idled; Sick USDA inspectors add to fears over more infections
Plant shutdowns are leaving the U.S. dangerously close to meat shortages as coronavirus outbreaks spread to suppliers across the nation and the Americas. Almost a third of U.S. pork capacity is down, the first big poultry plants closed on Friday and experts are warning that domestic shortages are just weeks away. Brazil, the world’s No. 1 shipper of chicken and beef, saw its first major closure with the halt of a poultry plant owned by JBS SA, the world’s biggest meat company. Key operations are also down in Canada, the latest being a British Columbia poultry plant.

Coronavirus Shutdown Weighs on Higher-Risk Muni Issuers; Investors are rattled as low tax revenue, big payouts and underfunded pensions add to strain
Heather Gillers – WSJ
Though some municipal bonds have rebounded alongside other markets in the past few weeks, the economic impact of the coronavirus pandemic is weighing down some higher-risk issuers, increasing strain on muni borrowers and rattling some long-time investors.

Wall Street Tries to Figure Out How to Get Back to the Office
By Jennifer Surane and Michelle F Davis – Bloomberg
Goldman, JPMorgan are drafting detailed plans to reopen towers; Banks may set up new commutes, on-site testing, masks at desks
Inside Citigroup Inc.’s headquarters in Manhattan, executives are trying to solve a problem bedeviling much of Wall Street: How to get employees up elevators.

Bank accounting an early casualty of Covid-19; Rules designed to resolve the tests of the last financial crisis have already flunked this one
Jonathan Ford – FT
Here is a little problem the coronavirus lockdown has exposed in the accounting standards developed for banks in response to the last financial crisis.

Coronavirus set to push 29m Latin Americans into poverty; Social damage could take 2 decades to repair, warns top UN official
Michael Stott – FT
Nearly 29m more people will fall into poverty this year in Latin America and the Caribbean because of the economic collapse triggered by the coronavirus, setting the region back more than a decade in its struggle to reduce inequality, a top UN official has warned.

Global coronavirus death toll could be 60% higher than reported; Mortality statistics show 122,000 deaths in excess of normal levels across 14 countries analysed by the FT
John Burn-Murdoch, Valentina Romei and Chris Giles – FT
The death toll from coronavirus may be almost 60 per cent higher than reported in official counts, according to an FT analysis of overall fatalities during the pandemic in 14 countries.

The U.S. Isn’t Protecting Enough Blue-Collar Workers; New Zealand demonstrates what a truly effective coronavirus lockdown looks like.
Joe Nocera – Bloomberg
My son Nick lives in New Zealand, which has done a remarkable job fighting the coronavirus. As of Friday, the nation of 4.8 million people had 1,456 confirmed cases and only 17 deaths. Prime Minister Jacinda Ardern’s government is now talking about not just containing the virus but eliminating it.

WHO warns against coronavirus ‘immunity passports’; Health agency says there is no proof recovered patients are shielded from the virus
Joshua Oliver – FT
The World Health Organization has warned governments against issuing “immunity passports” to allow people who show antibodies for coronavirus to return to work.

WHO Warns You May Catch Coronavirus More Than Once
Patrick Henry – Bloomberg
There’s ‘no evidence’ people recovered from disease are safe; World Health Organization comments on ‘immunity passports’
Catching Covid-19 once may not protect you from getting it again, according to the World Health Organization, a finding that could jeopardize efforts to allow people to return to work after recovering from the virus.

Why the World’s Highest Virus Death Rate Is in Europe’s Capital
John Ainger – Bloomberg
Belgium has reported more coronavirus fatalities than China; Figures linked to rigorously counting nursing-home deaths
In an art-deco building in the heart of Brussels, Belgium’s leading scientists gather daily to announce the country’s coronavirus toll. It’s been grim reading. Despite having only 11 million people, the country has reported more deaths from the disease than China. With some 57 fatalities per 100,000 inhabitants, it has the highest per-capita death rate in the world — almost four times that of the U.S.

How Coronavirus Will Forever Change Airlines and the Way We Fly; From air fares to destinations to cabin layouts, things may look very different once we start traveling again.
Angus Whitley – Bloomberg
Higher fares, fewer routes, pre-flight health checks and less free food: The coronavirus pandemic is ushering in a new era of air travel.

Ultraviolet light can be used against coronavirus — just not in the way Trump imagines
Jon Ward – Yahoo News
President Trump’s mention Thursday of treating COVID-19 with ultraviolet light was part of a rambling digression that included speculation about administering disinfectants to patients, prompting confusion and alarm from medical experts.

The Back-to-Work Math Gets Messy for America’s Newly Unemployed; Many see new benefits, health risks as reason to stay off work.
Shawn Donnan – Bloomberg
Riley Crutchfield, a hairdresser in Macon, Georgia, is nervous about going back to a job that requires her to touch people all day. In Houston, former Waffle House trainee manager Maxime Pierre has election-year politics and risk-reward tradeoffs in mind. In Angie Barksdale’s Michigan home, it’s the three kids without a school to go to.

What Could Be Worse Than Coronavirus? Plenty; A Q&A with Lawrence Wright, whose new novel saw a pandemic coming.
Tobin Harshaw – Bloomberg
As we deal with the deaths, disruptions and potential depression caused by the coronavirus pandemic, there’s an uncomfortable question that has to be asked: What if things were a whole lot worse?

In Another Hit for Farmers, Coronavirus Crushes Ethanol Market; Producers and farmers ratchet back output of fuel made from corn
Kirk Maltais – WSJ
Plummeting energy demand during the coronavirus pandemic has decimated the ethanol industry. The timing for U.S. farmers couldn’t be worse. Ethanol production has dropped to a record-low 563,000 barrels a day, the U.S. Energy Information Administration said Wednesday, and domestic inventories have reached a record 27.7 million barrels as of April 17.

StockTalk: How Aussie fintechs are responding to the COVID-19 economyStockhead TV
StockTalk is a new Stockhead video series featuring a roundtable of experts discussing a new investment topic each week. In this edition, host Dr Nigel Finch discusses how Australian fintechs are responding to the COVID-19 economy.

Exchanges, OTC and Clearing

Nasdaq Launches New Risk Modelling Service for the Insurance Industry
Reinsurers can now access multiple catastrophe risk models on one cloud-native SaaS-solution
Press Release
Today Nasdaq (Nasdaq: NDAQ) announced the launch of its upgraded Nasdaq Risk Modelling service, the first independent multi-vendor risk modelling service for the reinsurance industry. The cloud-based solution enables insurers, reinsurers, and brokers to unlock access to a broad range of best-of breed risk models from a number of providers through a single service, increasing ease of model accessibility and strengthening risk management programs.

Withdrawal of an Approved COMEX Aluminum, Copper, Lead, and Zinc Warehouse
From Registrar’s Office
CME Group
Please be advised that Access World (USA) LLC, an existing Warehouse for the storage of COMEX Aluminum, Copper, Lead, and Zinc, has requested from the Exchange that its facility located in Baltimore, Maryland be withdrawn from its status as an approved COMEX Aluminum, Copper, Lead, and Zinc warehouse. This location will no longer be available for the storage of COMEX Aluminum, Copper, Lead, and Zinc deliverable against the respective futures contracts.


FinTech veteran joins CLS as head of product; Keith Tippell, who has formerly worked at Droit Financial, SWIFT and Markit, will lead all new product development at CLS.
Kiays Khalil – The Trade
Foreign exchange settlement services provider CLS has hired FinTech expert, Keith Tippell, as its news head of product. In the role, Tippell will be responsible for overseeing CLS’s existing product suite and all new product development in the settlement and processing business lines. He has spent the past 20 years working with FX and OTC derivatives trade processing and G20 regulatory change.

A guide to modern manners in the age of Zoom; The etiquette of video conferencing is sadly a work in progress
Pilita Clark – FT
The other day, a friend was working from home when an internet glitch forced him to drop out of a video call just as one of his colleagues began to speak. Afterwards, he sent me a stunned text about the colleague: “He was speaking when I logged out and he was STILL speaking when I finally tuned back in.”

Peter Johnson (Jump Capital) – Fintech Investing
Peter Johnson, Head of Fintech and Crypto Investing at Jump Capital joins the show. In this episode we discuss:


Swiss ‘Crypto Valley’ in Talks for More Financing Help
Leonard Kehnscherper – Bloomberg
The finance official for Switzerland’s “crypto valley” near Zurich is in talks with the federal government about setting up a 100 million Swiss franc ($102.7 million) fund, newspaper SonntagsZeitung reported citing an interview. The fund would consist of private investments, contributions from local governments and federal guarantees, Cantonal Finance Director Heinz Taennler was quoted as saying.

North Korea has amassed $670 million in bitcoin and other currencies through hacking |; UN report reveals how North Korea is stockpiling cryptocurrency in order to circumvent economic sanctions
Anthony Cuthbertson – The Independent
North Korea has amassed upwards of $670 million worth of bitcoin and other currencies, according to a panel of experts reporting to the UN Security Council. Their report, set to be published this week, revealed how North Korea is stockpiling cryptocurrency in order to circumvent strict economic sanctions.

US Regulator Clears Security Token Trading System to Launch
Danny Nelson – Coindesk
The Public Private Execution Network (PPEX), an alternative trading system (ATS) for exempted digital assets and other private securities, has regulatory clearance to launch in the U.S. The trading system’s parent, broker-dealer North Capital Private Securities, completed FINRA’s continuing membership application in February and received SEC approval on its Form ATS filing in March, said North Capital CEO Jim Dowd. Those greenlights were all his Salt Lake City firm needed, but it sat on the news until this past Thursday. Now, the company plans to launch with digital asset trading capabilities hardwired into its ATS.

Crypto exchange Bitfinex rolls out social network for its users
Yogita Khatri – The Block
Cryptocurrency exchange Bitfinex has launched a social networking platform called “Pulse” for its users. Pulse allows Bitfinex’s “verified customers” to share information and interact with each other, according to a statement shared with The Block on Monday.

Billionaire Mark Cuban reveals he owns Bitcoin. Here’s how much.
Andrew Hayward – Decrypt
Dallas Mavericks owner Mark Cuban says the team has taken in $130 of Bitcoin. The NBA team accepts Bitcoin for tickets and merchandise. Cuban, an outspoken critic, previously said he had no holdings of crypto.

Bitmain ‘strongly condemns’ co-founder Micree Zhan following lawsuit ruling
Yogita Khatri – The Block
Bitcoin miner making giant Bitmain has today published an official statement saying that it “strongly condemns” co-founder Micree Zhan after a court sided with Zhan in an ongoing lawsuit. “Zhan ignored the common interests of the company and all employees and filed a lawsuit maliciously during the period of the [coronavirus] pandemic, which interfered with the company’s normal operations and [affected growth],” said Bitmain in its official Weibo post on Monday.

The Netherlands’ AMLD5 Interpretation Appears to Be Killing Crypto Firms
William Foxley – Coindesk
The Dutch crypto market is seeing the first of most likely many small crypto exchanges get squeezed out following the passage of heavily criticized anti-money laundering (AMLD5) regulations. Announced Friday in a company blog, Bittr founder Ruben Waterman said his bitcoin exchange, launched in 2018, will shut down by April 28 as the one-man operation does not have the capital to meet the new regulations. The Dutch National Bank (DNB) estimates that registration alone costs $36,500, in addition to rolling compliance needs.

The US is home to the most DeFi startups, followed by the UK and Singapore
Yogita Khatri – The Block
Nearly half of decentralized finance (DeFi) or Open Finance (OFI) startups tracked by The Block are headquartered in the U.S. Out of the total 73 OFI firms in our database, nearly 50% are based in the U.S., followed by the U.K. and Germany, according to recent findings published by The Block’s Steven Zheng.

Crypto Industry Divided Over Introducing Circuit Breakers on Exchanges
Kyle White – Cointelegraph
Recent turbulence has brought traditional tools such as circuit breakers to the forefront of crypto community discussions. Since the inception of Bitcoin, volatility has been a part of the cryptocurrency narrative even before exchanges and the current mainstream mentions. Now that traditional markets are showing volatility further exacerbated than anti-fragile cryptocurrency during the coronavirus pandemic, the community is seeing how traditional marketplaces like the New York Stock Exchange handle equity and commodity volatility through circuit breaker implementation.

SEC, Kik Continue Court Clash Over $100M Kin Token Sale
Nikhilesh De – Coindesk
The U.S. Securities and Exchange Commission (SEC) and Kik Interactive are both doubling down on their desire for a speedy resolution to a nine-month-old legal case over whether Kik’s 2017 initial coin offering was a securities sale.

Binance, Coinbase were the most active industry hirers in 2020’s first quarter
Yogita Khatri – The Block
Exchanges Binance and Coinbase were the most active hirers in the crypto industry during the first quarter of 2020. Both exchanges posted at least six jobs during the quarter, according to research conducted by The Block’s Steven Zheng. Crypto wallet Ledger, custodian BitGo and Ripple also posted at least five jobs each in Q1 2020.

Bitfinex Launches ‘Bitfinex Pulse’, a Social Networking Platform
Rachel McIntosh – Finance Magnates
British Virgin Islands-based cryptocurrency exchange Bitfinex is today announcing the luanch of Bitfinex Pulse, a social platform that will reportedly “enable users to exchange ideas, interact with each other, and feel the pulse of the exchange’s growing community.” (See what they did there?)

The Rise of ASICs: A Step-by-Step History of Bitcoin Mining
Christine Kim – Coindesk
Over the past decade, the machines that maintain the Bitcoin network have undergone rapid technological development. Mining equipment is a fundamental feature of the success of the bitcoin network because these machines determine whether or not it is profitable for miners to do what they do – that is, process the calculations needed to embed blocks of transactions on the blockchain.


Russia’s economic woes will clip Vladimir Putin’s wings; Pandemic combined with collapsing oil prices spells real hardship
The editorial board – FT
Vladimir Putin’s reputation as a master tactician has always been exaggerated. By any standards, however, his decision to trigger an oil price war with Saudi Arabia last month was disastrously timed. It came days before the coronavirus pandemic began forcing economies around the world into lockdown, cutting crude demand. Russia then succumbed to the virus itself. The Russian president has had to cancel a referendum to approve constitutional changes that would allow him to rule for another two presidential terms after 2024, and a Victory Day parade in Moscow next month where he hoped to host other world leaders.

Deutsche Bank refuses to give U.S. senators information on recent Trump dealings
Deutsche Bank has declined a request by prominent U.S. senators to provide information about the German lender’s recent business dealings with President Donald Trump and his family, according to a letter this week seen by Reuters.

EU Report Says China Deflected Blame for Pandemic
Apple Lam – Bloomberg
The European Union’s foreign and diplomatic wing said there’s evidence of a “coordinated push” by official Chinese sources to deflect blame for the coronavirus pandemic and promote its response to the virus.

Democrats Eye Cold, Hard Cash In Next Stimulus Round
Laura Davison – Bloomberg
Democrats look to expand cash payments to small businesses; Lawmakers juggle business, people, governments in next bill
Democrats are considering proposing a new round of direct cash payments to U.S. households and extending a similar benefit to the smallest businesses, as they struggle to get federal loans.

Coronavirus Has Exposed the EU’s Creeping Irrelevance; Europe’s nations were supposed to find a common identity and strength in unity. The pandemic has shown this to be a figment.
Andreas Kluth – Bloomberg
Covid-19 was only just arriving from Asia when the European Commission, with the technocratic equivalent of fanfare, announced a “Conference on the Future of Europe,” to be kicked off in May. Now, of course, the various seminars, committees and working groups are in lockdown limbo. And the conference title suddenly seems exceptionally ill-chosen. For it raises the question: Does the EU, in the long term, even have a future?

Can the U.S. Government Survive the Next Disaster? The coronavirus has exposed some alarming vulnerabilities in our governing institutions. It’s time to fix that.
Jonathan Bernstein – Bloomberg
Among the many political shortcomings that the pandemic has laid bare is that the U.S. suffers from constitutional and statutory gaps that make its democracy, and even its basic governing ability, vulnerable in an emergency. The good news? The hard thinking about this problem has mostly already been done. The bad news? No one who can do anything about it seems to care — and the incentives for undertaking the needed reforms are slim indeed.


CFTC Provides Additional 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 response to the COVID-19 (coronavirus) pandemic, it has issued additional targeted no-action relief 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.

SEC Forms Cross-Divisional COVID-19 Market Monitoring Group
The Securities and Exchange Commission today announced the formation of an internal, cross-divisional COVID-19 Market Monitoring Group. This temporary, senior-level group will assist the Commission and its various divisions and offices in (1) Commission and staff actions and analysis related to the effects of COVID-19 on markets, issuers, and investors—including our Main Street investors, and (2) responding to requests for information, analysis and assistance from fellow regulators and other public sector partners.

ASIC letters to general and life insurers in the current COVID-19 environment
ASIC is committed to working constructively and pragmatically with general and life insurers to help Australians affected by the COVID Pandemic to recover, and to aid the general functioning of the economy.

Schwarzenegger campaign pushes PPI mis-selling payouts to £38bn; Last-ditch adverts reached 32m people in UK and prompted rush of claims
Matthew Vincent – FT
Compensation for the mis-selling of payment protection insurance has soared to more than £38bn, after an advertising campaign featuring film star Arnold Schwarzenegger reached two-thirds of the UK adult population — prompting a rush of last-minute claims.

EU divided over reforms to maligned fund performance rules; European Commission and MEPs warn regulator over watering down Priips performance scenarios decried as misleading
Siobhan Riding – FT
EU lawmakers and regulators are at loggerheads over how to reform wildly misleading fund performance disclosures, dealing a blow to fund managers and consumer groups hoping for a reprieve from the much-maligned rules.

U.K. Market-Abuse Reports Rise as Virus Poses Another Threat
Gaspard Sebag – Bloomberg
RPC lawyer says manipulation found during market turbulence; Another law firm has said virus creates opportunity for abuse
Market manipulation is still on the rise in the U.K. even after a decade of crackdowns on schemes to rig foreign-exchange rates and other key benchmarks. And the coronavirus pandemic could make things worse.

Louis Gracia and Vanessa Horton Named Associate Directors of Investment Adviser/Investment Company Examination Program in Chicago Regional Office
The Securities and Exchange Commission today announced that Louis Gracia and Vanessa Horton have been named Associate Directors of the Investment Adviser/Investment Company (IA/IC) examination program in the agency’s Chicago Regional Office. Together, Mr. Gracia and Ms. Horton will oversee more than 70 lawyers, accountants, and examiners responsible for inspections of SEC-registered investment advisers and investment companies in Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, Ohio, and Wisconsin.

Offsetting a Regulatory Closing Imbalance
The New York Stock Exchange has been temporarily all-electronic since March 23. As we’ve noted before, DMMs can electronically open and close securities during this time, and auctions that cannot be facilitated electronically by DMM algorithms are currently facilitated by the NYSE’s exchange-facilitated-auction (EFA). While the Trading Floor is temporarily closed, D Orders, which comprise up to 40% of the NYSE Closing Auction, are not available. As a result, market participants have had to adjust behavior when trading in the Closing Auction. Below, we review the alternative functionality and share data on recent usage.

Investing and Trading

Investment Association unveils cyber threat dashboard for buy-side; Powered by cyber security technology provider Anomali, platform will alert market participants to potential cyber hazards in real-time.
Hayley McDowell – The Trade
UK buy-side trade group the Investment Association has confirmed the launch of a real-time dashboard aimed at alerting investment managers of potential cyber threats and hazards.

DraftKings surges up to 16% in public market debut; Sports betting site’s listing comes at a time when most events have been cancelled
Miles Kruppa- FT
The sports betting site DraftKings rose as much as 16 per cent in early trading following the complex merger deal that has made it a public company — even as coronavirus suspends the live sporting events that provide much of its revenues.

ECB predicted to beef up asset purchases with shift into ‘junk’ bonds; After EU leaders fail to agree coronavirus recovery fund, central bank seen as still ‘only game in town’
Martin Arnold – FT
The European Central Bank will start buying riskier debt and expand the size of its bond-buying programme, economists predict, as it intensifies efforts to shield the eurozone economy and financial markets from the coronavirus crisis.

Oil Slump May No Longer Be a Curse for Renewable Energy
Laura Hurst – Bloomberg
Pandemic has hit fuel demand much harder than electricity; Oil majors are under big pressure to cut spending on projects
Low oil prices are usually a curse for green energy, but this time might be different. The collapse of the crude market has seen prices fall below zero for the first time in history. Yet Royal Dutch Shell Plc this month outlined a bold program to slash carbon emissions and invest in clean energy, while Eni SpA said Friday it’ll consider accelerating its ambitious climate plan.

Goldman Says Narrow Breadth in S&P 500 a Bad Sign for Stocks
Joanna Ossinger – Bloomberg
The narrowing group of winners in the S&P 500 doesn’t bode well for the future performance of U.S. stocks, according to Goldman Sachs Group Inc. The U.S. benchmark is around 17% below its February record, but the median stock trades 28% from its peak, Goldman strategists including David Kostin wrote in a note Friday. Meanwhile, the five largest companies make up 20% of the gauge’s market capitalization, exceeding the 18% level the measure reached in March 2000 and raising investor concerns about narrow market breadth, they said.

Stock Fire Sales of the Crisis Era Haunt Equity Bulls
Drew Singer – Bloomber
The prospect of a crush of new equity is a potential headache; The biggest year ever for equity sales came in the last crisis
With the biggest buyer all but ejected from the market, the prospect that a torrent of stock sales is about to be unleashed by cash-strapped companies is sowing anxiety for investors who remember the financial crisis.

Wall Street Is Bending to Pressure to Halt Arctic-Oil Loans
Jennifer A Dlouhy – Bloomberg
Activists pivot from lobbying Congress to lobby lenders; Pressure campaign is new challenge to ANWR oil exploration
The latest front in the war against drilling for oil in Alaska’s rugged wildlife refuge isn’t Washington — it’s Wall Street.

Battered and Bruised, Supply Chains Shift to Recover-and-Survive Mode; After the initial shock, companies are adapting to a global economy now beset with weak demand and widespread uncertainty.
Bloomberg News
When the timeline of the pandemic of 2020 is complete, March 24 will stand out as a day to remember for everyone from sports fans to anthropologists to cola drinkers.

Once in Sync, Loonie’s Historic Link With Oil is Breaking Down
Susanne Barton – Bloomberg
Crude plunged as much as 321% intra-day amid storage concerns; Household debt, weaker housing market may hit loonie later
During a historic week where crude oil futures plunged below zero for the first time ever, the Canadian dollar did something strange: it stood firm. Commonly seen as a petrocurrency, the loonie was resilient this week with a mere 0.7% slide against the greenback. That compares with the West Texas Intermediate price which slumped more than 7%, clawing back from losses that went as far as a whopping 321% to -$40 a barrel on Monday. Other oil-linked currencies had more pronounced responses: the Mexican peso plunged 5.1% this week and the Norwegian Krone dropped almost 3%.


Northern Trust appoints new chief technology officer for EMEA; Former Deutsche Bank and Goldman Sachs executive to lead the enterprise technology business unit across EMEA at Northern Trust as new CTO.
Jon Watkins – The Trade
Northern Trust has named a former Goldman Sachs and Deutsche Bank executive as its new chief technology officer (CTO) for Europe, the Middle East and Africa (EMEA).

Central Bankers Must Expand Their Imaginations; Japan is usually on the frontier of monetary policy experimentation. But it seems to be out of ideas.
Mike Bird – WSJ
The Bank of Japan announced a raft of new policies Monday, as the coronavirus punishes global growth. Unfortunately these initiatives are old wine in new bottles.

JPMorgan tops ranking as best-performing fund house in China; UBS drops to second spot while Invesco slips to third in Z-Ben analysis of investment market
Chris Flood – FT
JPMorgan Asset Management regained its position as the top-performing foreign fund house in China in 2019, leapfrogging its closest rivals UBS and Invesco in the fifth annual analysis of the Chinese investment market to be published by Z-Ben Advisors on Monday.

Alternative risk premia funds fail to live up to expectations; Popular funds’ performance woes compounded by coronavirus market sell-off
Siobhan Riding – FT
Popular funds that seek to replicate hedge funds returns in an instant-access format have lost about 6 per cent since the start of 2018, raising questions over whether the strategies once hailed as all-weather investments are delivering on investors’ expectations.

Deutsche Bank Warns of Loan Defaults After Surprise Profit
Steven Arons – Bloomberg
Bank sets aside half a billion euros for bad loans amid virus; Profit, revenue beat analysts’ estimates in first quarter
Deutsche Bank AG became the latest European lender to gird for mounting losses from the coronavirus pandemic, setting aside about 500 million euros ($542 million) to cover bad loans after a better-than-expected first quarter performance.

Scaramucci’s SkyBridge hit with heavy redemption requests as fund fell: letter
Svea Herbst-Bayliss – Reuters
Investors in SkyBridge Capital asked for hundreds of millions of dollars back after the fund suffered a 23% loss in March when investments made by its debt-focused hedge fund managers soured, Anthony Scaramucci wrote in a letter to clients, saying he was “embarrassed” by the loss.

A Hedge Fund Manager’s Dream Just Crashed Into the Real World
Mikael Holter and Charles Daly – Bloomberg
Nicolai Tangen, the future chief executive of the world’s biggest sovereign wealth fund, says he wishes he’d been a bit less extravagant. In early 2018, the London-based hedge fund manager was planning what he hoped would be the event of a lifetime. Tangen compiled a list of attendees: the best and the brightest from the worlds of finance, politics and academia. He would call it, “Back to University.”


Franklin’s Stress Spurs RBI to Offer Funds $6.6 Billion of Loans
Anto Antony and Divya Patil – Bloomber
Mutual funds were seeing a flood of redemptions in March; The liquidity facility will be available to funds until May 11
India’s central bank opened a new credit facility for mutual funds to help money managers avoid distressed sales of assets and calm investor concerns after Franklin Templeton shut six of them last week citing a cash crunch.

Welcome to the Great Emerging-Market Schism: A Virus-Made Split
Netty Idayu Ismail, Karl Lester M Yap, and Sydney Maki – Bloomberg
Fidelity bets on emerging investment-grade sovereign debt; Central banks in Kazakhstan, Colombia, Kenya may cut rates
A two-track world is starting to establish itself in emerging markets. Not only are stocks, bonds and currencies of developing economies reacting to the Covid-19 pandemic in very different ways, but the fallout is quickly creating two distinct camps of winners and losers.

Luckin Offices Raided by Chinese Regulators as Scandal Widens
Bloomberg News
At least three Chinese agencies investigating startup; Company execs admitted to fabricating $310 million in sales
Chinese investigators raided the offices of Luckin Coffee Inc. as part of a multi-agency investigation into its finances, according to a person familiar with the matter, as pressure grows on the formerly high-flying coffee chain at the center of an accounting scandal.

BOJ Paves Way to Buy More Short-Tenor Bonds to Offset Supply
Chikako Mogi – Bloomberg
Move in line with BOJ aim of preventing rise in yields: Daiwa; BOJ earlier on Monday vowed to buy as many JGBs as needed
The Bank of Japan paved the way for itself to buy more shorter-end debt in May, seeking to mitigate the impact of increased government borrowing on markets.

Norwegian Proposes Debt Restructuring That Will Wipe Out Owners
Siddharth Vikram Philip and Luca Casiraghi – Bloomberg
Shareholders would be left with 5.2% before equity raise; Norwegian doesn’t expect normal operations until 2022
Norwegian Air Shuttle ASA, the low-cost carrier fighting to qualify for a bailout from its home country, presented a plan to relieve part of its heavy debt burden that would largely wipe out existing shareholders.

Euro Traders Are Too Worried About the Future to Mind the ECB
Vassilis Karamanis – Bloomberg
Euro’s relative hedging costs drop fast as tighter ranges seen; Investors remain concerned over the medium-term, options show
Traders are far from convinced that this week’s central bank meetings will be a game changer for the euro. Options gauges show that expectations ahead of the Federal Reserve and the European Central Bank reviews are low, even though policy makers are under pressure to do more to support their economies through the coronavirus recession.

Saudis Begin Curbing Oil Output Ahead of OPEC+ Start Date
Javier Blas – Bloomberg
Aramco begins cutting to level of 8.5 million barrels a day; Nation joins Kuwait, Algeria, Nigeria in reducing supply early
Saudi Aramco began reducing oil production earlier this week ahead of the May 1 start date for OPEC+ output cuts, according to a Saudi industry official familiar with the matter.


Boris Johnson Aide Attended Secretive U.K. Coronavirus Panel
Mark Landler – The New York Times
The British government came under heightened pressure to disclose details about a secretive scientific advisory group after a report on Friday that a top political aide to Prime Minister Boris Johnson had taken part in the group’s meetings on the coronavirus pandemic.

EU frustrated with sluggish Brexit negotiations
Deutsche Welle
EU chief negotiator Michel Barnier spent all of last week in conference calls with the British government discussing the future economic relationship between both sides. It was the second round of talks since early March, when the coronavirus outbreak threw a spanner in the works. Barnier is frustrated that Britain is slowing down the talks, yet also rejecting an extension of the Brexit transition period.

Boris Johnson’s lockdown is the latest target for the right’s angry culture warriors
Rachel Shabi – The Guardian
or weeks we have heard that merely asking questions about the government’s handling of the coronavirus outbreak is “politicising the crisis”. But now some people on the right are indeed making the pandemic political – firing up the culture wars forged in what now feels like the prehistoric age of Brexit.


Record Scotch Sale Postponed After Cyber Attack on Auctioneer
Kit Rees – Bloomberg
Auction of Richard Gooding’s collection postponed indefinitely; Collection includes rare bottles from names such as Macallan
A record online auction of rare scotch whiskies has been postponed following a cyberattack, according to a statement from the auctioneer’s website.

Goldman CEO David Solomon Lands Cameo on Showtime Series ‘Billions’
Sridhar Natarajan – Bloomberg
Add acting to David Solomon’s off-Wall Street repertoire. The Goldman Sachs CEO filmed a guest appearance for the latest season of “Billions” — the Showtime series chronicling fictional hedge fund outlaw Bobby Axelrod that’s drawn a cult viewership in the real industry. Solomon was roped into the gig at the end of last year and shot his cameo, playing himself, in early March.

US Journalists Seek to Help Colleagues Affected by Virus
The Associated Press
Journalists from around the U.S. are finding ways to help their colleagues simply pay rent or buy groceries as they face lost or reduced paychecks because of layoffs and furloughs caused by the coronavirus pandemic.

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