The John Lothian Daily Update is a podcast turning the daily JLN hits and takes comments, our original content and the stories and quips in the top box of First Read into a daily podcast.
Hits & Takes
Last night Nasdaq VOLQ officially launched for trading on the CME. You can track it here. So far, there are no trades.
This volatility index alternative to the VIX is more complementary than challenger, giving traders a second volatility product to trade, and one that helps with the popular Nasdaq-100 index.
VOLQ uses at-the-money (ATM) options to calculate implied volatility, whereas VIX uses lots of out-of-the-money options. The VOLQ landing page at Nasdaq is HERE.
Signature Bank announced the pricing of subordinated notes, which would not normally be big news, but this time it is. The notes are the first Ameribor linked debt offering. There are trillions of dollars linked to Libor, but with this offering we have Ameribor linked debt for the first time. Congratulations to the American Financial Exchange and Dr. Richard Sandor for this achievement. It took Doc Sandor eating a lot of barbeque all across the U.S. to get to this point and this offering.
Matt Lisle on behalf of the Global Digital Asset & Cryptocurrency Association (Global DCA) respectfully disagreed with my opinion concerning the impetus behind the creation of cryptocurrency.
“We would make the following points to counter your opinion:
The primary purpose of cryptocurrency is not to facilitate money laundering but to, among other things,
prevent governments from (hyper) inflating currencies; and
- provide a payment mechanism that solves the “double spend” issue through a distributed ledger;
- Digital assets and cryptocurrencies provide payment mechanisms that do not need intermediaries like banks – which reduces the overall cost or tax of using the system. Two Billion of the Seven Billion global inhabitants are unbanked or underbanked and this results in higher costs when making payments and a tremendous lack of credit. It is hard for the first world to comprehend this fundamental disadvantage. However, think about what it takes for a domestic worker to send remittance payments back home without having a bank account: The person gets charged for cashing their paycheck and then gets charged for sending a portion of that paycheck back to Guatemala or Timbuktu. Those charges can run as high as 10% of the total amount. However, if you and the recipient have a cellphone, internet and an electronic wallet, you can convert the cash paycheck into cryptocurrency and send payment instantaneously almost anywhere. In fact, it’s already feasible to pay your workforce without involving a bank.
- Fiat currencies are controlled by governments and some governments use such controls to benefit the political elite and their cronies while harming their citizens – cryptocurrencies provide an alternative system free from political controls;
- Every transaction that occurs on the major blockchains can be seen on a publicly-accessible database. In fact, it is this transparency that is one of the fundamental benefits of blockchain-based finance. Yes, money launderers can disguise their wallet addresses. However, if a company complies with BSA or FATF requirements, the risk of money laundering is highly mitigated and in fact is the same as the risks inherent with established payment systems;The biggest issue with respect to digital assets and cryptocurrencies is the ambiguity inherent in the regulatory environment and there are serious questions whether certain participants have legal requirements or accountability to their counterparties. A lack of enforceable standards is quite an impediment to developing a stable efficient system. I would bring your attention to a nascent initiative aimed at addressing these issues.
The Global DCA has been founded to guide the evolution of the new technology within a regulatory framework designed to build public trust, foster market integrity and maximize economic opportunity for all participants by devising standards and consensus-based solutions that address the major challenges facing the industry.”
Also, the Global DCA is formally launching itself next Friday, October 9th from 10-12:30, at a virtually-hosted event featuring several leaders in the burgeoning digital asset and cryptocurrency marketplace. You can register for the event HERE.
I shared a more complete version of my theory with Matt and the Global DCA leaders and have yet to have a formal reply.
When I was a kid, I used to regularly read “Reader’s Digest.” One of my favorite pages was “Laughter is the Best Medicine.” Today in that spirit, the New York Times has an article titled “Laughter May Be Effective Medicine for These Trying Times.” I concur.
The great Bob Gibson, one of the fiercest baseball pitchers ever, has died at the age of 84. Gibson played for the St. Louis Cardinals and was a Hall of Fame member who won two Cy Young Awards and threw 56 career shutouts.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
Reminder: Registration for FIA Expo-V, which will be virtual, is open. Expo takes place this year
from November 10-12 and includes keynote addresses, 1:1 interviews with exchange leaders, the Innovators Pavilion fintech showcase and a virtual trade show. You can go here for more info and to register.~SR
In our “Cryptocurrencies” section today, we have multiple reports from The Block about digital asset trading volume. According to their reports, decentralized (“DEX”) exchanges made up about 13.9 percent of all trading volume in the cryptocurrency markets in September; one article says that cryptocurrency exchanges collectively facilitated $169 billion worth of trades, while $23.5 billion worth of digital assets were traded on DEX exchanges. Of course, it’s always a good idea to consider these reports with a big ol’ grain of salt.~MR
The Spread: Radio Killed the Video Star
This week on The Spread – election volatility makes options more expensive, the CME has a COVID scare, and more.
Exchanges Round the World Ring the Bell all Week for Financial Literacy in 2020; The World Federation of Exchanges initiative draws record support
The World Federation of Exchanges
Exchanges around the world have united to promote financial literacy and boost financial inclusion, ringing the bell in multiple countries on multiple days all week during World Investor Week (“WIW”) 2020. The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, is supporting the International Organization of Securities Commissions (“IOSCO”) WIW 2020, which runs from 5 October to 11 October 2020. WIW is a week-long, global campaign to raise awareness about the importance of investor education and protection and promote financial literacy.
*****JLN is all about financial literacy and we thank WFE for bringing all the exchanges together to promote it.~JJL
How Kelly Loeffler Went From Atlanta Elite to Trump Loyalist; Senator Loeffler, one of the richest people in Congress, has transformed herself from political moderate to “more conservative than Attila the Hun.”
Richard Fausset – NY Times
Kelly Loeffler is not just a United States senator and a successful businesswoman. She is also one of the social doyennes of Buckhead, the Atlanta neighborhood of the wealthy and aspiring rich, where she has often thrown open the gates of her $10.5 million European-style manse, known as Descante, for charity fund-raisers.
*****Big time New York Times profile of Sen. Loeffler and how she has changed.~JJL
JPMorgan opens UK apprenticeship scheme to aspiring investment bankers; On-the-job training programme includes funding to complete a degree in applied finance
Jonathan Moules – FT
JPMorgan is hiring the UK’s first investment banking apprentices, applying the on-the-job training method previously reserved for hairdressing and car mechanics to roles on its capital markets and dealmaking teams.
*****What is the investment banker version of plumber’s crack?”~JJL
Pope Francis Laments Failures Of Market Capitalism In Blueprint For Post-COVID World
Sylvia Poggioli – NPR
Pope Francis has presented his blueprint for a post-COVID-19 world, covering a vast number of issues from fraternity and income inequality to immigration and social injustice. The document, released Sunday, is his third encyclical — the most authoritative form of papal teaching. Its title is Fratelli Tutti, and it is a scathing description of laissez faire capitalism and a meditation on the coronavirus pandemic that has swept across the globe.
***** I wonder if anyone will listen?~JJL
Billionaire Ken Griffin drops extra $26.7M against Pritzker’s graduated-rate income tax amendment proposal. His total stands at more than $46.7M
Rick Pearson – Chicago Tribune
Ken Griffin, the billionaire founder and CEO of the Chicago-based Citadel hedge fund and investment firm, put another $26.7 million into the campaign against billionaire Democratic Gov. J.B. Pritzker’s ballot proposal to shift the state from a flat-rate income tax to a graduated tax with rates that increase with income. With Griffin’s latest investment, he has now given $46.75 million of the approximately $48.1 million million that has been received by the Coalition to Stop the Proposed Tax Hike Amendment. In August, Griffin gave the group $20 million.
*****There is a vote that Mr. Griffin would like to influence so Illinoisans’ taxes don’t go up.~JJL
Friday’s Top Three
Our top story Friday was Bloomberg’s The Stock Trading Revolution: How Robinhood and Its Rivals Are Changing Markets. Second was the Financial Times’s US regulators step up battle with spoofing, about the heavy fine on JPMorgan Chase. Third was another Financial Times story, US charges bitcoin exchange founders over money laundering.