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
Don’t miss the AFM Virtual Panel Discussion: Technology Innovation on February 26, 2021 at 13:00 – 14:00 CET. The panel will explore the impact that COVID has had on the technology that market professionals have previously taken for granted – is it ahead of the game or has it lagged behind compared to the products developed for the retail market, has technology enabled a wider product set to be taken to market either by the markets directly or through the input of ISVs and other significant connectivity providers and has 2020 seen (will 2021 see) any truly innovative market developments that have taken advantage of the advances that have been made in the use and availability of technology?
The multi-talented Clive Furness of Contango Markets, UK will moderate and the panelists are Louisjan Bonthuys, STT South Africa, Mauricio Eduardo Perez Y Sosa, Planetagro, Mexico, Pat Kenny, CQG, Martyn Bain, Avenir Technologies, Michael Gatny, Connamara and a representative of MATBAROFEX. For registration, please send an email to firstname.lastname@example.org.
The World Federation of Exchanges issued a report, “Full Year 2020 Market Highlights.” The report offers the first opportunity to study the impact of the events of 2020 on markets holistically and looks across market capitalisation, listed companies, IPOs, volumes and value traded in multiple assets classes including equities, derivatives futures, options and ETFs.
Garry Jones posted to LinkedIn a paper by John R. Bryson, Professor of Enterprise and Economic Geography at the University of Birmingham, titled “London’s Continued Future As A Global Financial Centre.”
Andre Cappon, Leon Bitton, Ricardo Angulo of The CBM Group, New York NY have published a commentary titled “Derivatives Exchanges In Emerging Markets: Key Success Factors.”
I really liked the Congressman yesterday who could not pronounce Citadel (“Sight-a-Dell”) correctly and read an unanswerable question to Ken Griffin. When asked to clarify the question, the Congressman just read the question again, which utterly showed he had no idea of the inanity he was asking.
Some Texans are using their 2021 Ford F-150 trucks to power their homes during the storm-induced power outages. The trucks come with a very handy portable generator function.
John Sodergreen, the publisher of Scudder Publishing Group and managing editor of Enelyst.com, is the latest to give to the JLN MarketsWiki Education GoFundMe campaign. Scudder Publishing is home to The Desk, a widely circulated weekly digital newsletter, and its companion publication, Early View. Scudder is a leading energy news and information publishing company founded in 1997. I have a lot of respect for the work John does and given the problems of the Southern U.S. right now around energy, John’s company’s work is that much more important. Thank you to John and all who have given and all who have yet to give. Support our efforts to preserve industry history by donating to our GoFundMe campaign.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
Rana Foroohar, an associate editor for the Financial Times and global business columnist, is joining the lineup of keynote speakers at this year’s virtual FIA Boca conference, Boca-V. She is expected to speak about the shifts occurring in globalization, the political economy, and the digital economy and offer analyses on emerging markets, women in the workplace, education, and the disruption of big tech. To register for Boca-V, go here.~SR
Also, the 2021 Options Industry Conference has announced two of their keynote speakers for the conference, which takes place virtually from April 28-29 2021. SEC Acting Chair Allison Lee will be the keynote speaker for day one of the conference. The keynote speaker for day two will be Randal Quarles, Vice Chair for Supervision, Board of Governors of the Federal Reserve System. You can find out more about the conference and register here. ~SR
People in Bermuda will soon be able to buy rum with digital currency. Canadian fintech firm Bidali and Bermuda rum company Gosling’s Limited have announced a new pilot program allowing customers to buy rum with Bermuda’s digital dollar. Gosling’s will accept digital Bermuda dollars through the Stellar Network, and the first phase of the project will reportedly be coordinated by Canadian and Bermudan tech consultant Penrose Partners. Bermuda seems to be quickly becoming a hub of digital asset business. This puts Miami International Holdings (or MIH, the holding company of MIAX) in a fairly advantageous position if they plan to get more into digital assets; MIH acquired a controlling stake in the Bermuda Stock Exchange (BSX) in November 2019, and then one hundred percent ownership last December. Both press releases announcing these moves touted Bermuda’s blockchain-friendly laws, like the Digital Asset Business Act of 2018. BSX and MIH also launched the Hashdex Nasdaq Crypto Index ETF last September.~MR
No, Virginia, There is no Santa Claus; He Was Demutualized
Thom Thompson – John Lothian News
If you are, like me, someone who has never bought even a single datum let alone have multiple subscriptions with multiple vendors, Acuiti’s newest report on market data makes for fascinating reading. The most amazing thing in the whole report was this statement on page 7: “Over two-thirds of bank respondents reported their data fees to be in excess of $250,000 per month.”
I spent 30 of my pre-muckraking years working for global derivatives exchanges. For many of those years we heard complaints from our members and customers that data fees were eating them alive. But I had no idea that fees were rising to such levels.
Of course, part of the rise in the reported level of data charges to the banks results from the concentration of trading banks and brokerages. But more than $250,000? Per month. Wow.
Some data are still free for the public, and a little more data are free on exchange members’ trading screens. But even members will pay up for microsecond depth of book indications.
To read the rest of this commentary, go here.
FIA endorses industry led climate finance principles
FIA President and CEO Walt Lukken today made the following statement on the release of the pan trade financial industry associations statement of principles Financing a U.S. Transition to a Sustainable Low-Carbon Economy: “Climate change poses real risks to financial stability and our global economy. These risks include direct financial risks from extreme weather, as well as the transition risks associated with fundamental changes in how the world does business. FIA endorses today’s principles and commits to working with companies, other trade organizations and governments to address the pressing need of climate change.
*****Timely statement given the events in the Southern U.S. and their weather problems.~JJL
Bill Gates: My green manifesto; The billionaire philanthropist offers four bold ideas to help business take on the climate crisis
Bill Gates – FT
In the conversations I have about climate change, one question comes up more than any other: “How can I help?” Sometimes it’s an individual who simply wants to know whether to stop buying plastic straws. (Answer: it doesn’t do much for climate change, but it does help the environment in other ways.) Just as often, though, the question comes from someone working on a larger scale — for example, a chief executive who wants to know: “What can my company do that will really make a difference?”
*****I don’t like the word “manifesto.” It reminds me of the Unabomber.~JJL
FIA highlights CCP margin procyclicality concerns to European Regulators
Washington, DC–FIA today presented to the European Securities and Markets Authority (ESMA) on the issues experienced in the spring of 2020 when high volatility and procyclicality of margin requirements were experienced in the global clearing system. During this period, the high number and the large size of margin calls drove demand for liquid assets, just as those assets were scarce due to market stresses. Such a drive for liquid assets can contribute to the stress in the financial system. FIA’s presentation consisted of an analysis of data on margin requirements at several major derivatives clearinghouses, and it contained a set of recommendations aimed at mitigating the procyclicality of margin requirements. FIA first issued these recommendations in a white paper published in October 2020.
*****The word of the day is “procyclicality.”~JJL
SPAC Growth and Sector Trends
SPACs are the talk of the town today but until two years ago, few investors were even familiar with the term “Special Purpose Acquisition Company” (even though SPACs, sometimes thought of as “blank check companies,” have been around since the 1990s). So what exactly is a SPAC? It is an entity formed via a capital raising on the NYSE (or another exchange). The entity is formed by sponsors with particular expertise for the specific purpose of merging with an existing, typically late-stage, private company. The private company is not known to the SPAC investors or the SPAC sponsors at the time of the IPO. The SPAC typically has two years to find a merger candidate, or it is liquidated. In the meantime, the funds raised by the SPAC generate interest in an account. The event of the merger between the SPAC and the private company essentially makes the private company public, so the company needs to be ready for the requirements associated with being a listed entity.
*****NYSE offering some help to explain SPAC.~JJL
Thursday’s Top Three
Our top story Thursday was Bloomberg’s The Real Battle for the City of London. Second was John Lothian News’ Options Basics for Newbies: Mind Your Greeks, Professor Says, from Suzanne Cosgrove. Third was a repeat, Trading Technologies’ Trading Technologies Appoints New President, Chief Financial Officer, EVP Global Head of Sales and Chief Technology Officer.
CryptoMarketsWiki Coin of the Week: Bitcoin (BTC)
Bitcoin began trading at a price exceeding $50,000 per bitcoin this week for the first time ever – though some analysts, including strategists Nikolaos Panigirtzoglou from JPMorgan and Meghan Shue from Wilmington Trust, say that this price point won’t last.