The Shakeout in the ETF Industry Is Accelerating

Aug 25, 2020

First Read

Hits & Takes
JLN Staff

The Security Traders Association 2020 Market Structure Conference, which is being held virtually this year rather than in Washington, DC, will kick off with a fireside chat with Cboe Executive Chairman, President and CEO Ed Tilly and Cboe EVP, Head of Markets Bryan Harkins. The conference is to be held on October 7 and 8. The cost for the three day event is $295, though employees of sponsoring firms and government employees are welcome at no cost. You can register HERE.

Yesterday Zoom crashed as millions of students around the world all went to virtual online school. However, it was quickly restored and classes resumed. What a great way to get out of school.

Today we have the fireside chat with author, lawyer and former regulator Eileen Flaherty from the July 22 MarketsWiki Education World of Opportunity event. Her book, The Perilous Step, is now available on Amazon.

It was 10 years ago I had my last tetanus shot, September of 2010. Amazing how consistent I am in needing a new booster shot. Sunday, I stepped on a nail while working on a project.

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


Richard Sandor, CEO of the American Financial Exchange, wrote a piece for Crain’s Chicago Business published Monday, titled “Expand lending to minority entrepreneurs and businesses to grow the economy.” In Sandor’s words, it is a “call to action for the financial services industry” to focus on providing minority-owned businesses with access to capital. You can read it here.~SR

Bitcoin mining manufacturer Bitmain recently signed a $17.7 million deal with Riot Blockchain to purchase 8,000 Bitmain Antminer S19 Pros, some of Bitmain’s most advanced mining machines. Bitcoin mining is increasingly hard to profit from these days; aside from the price volatility of bitcoin and other cryptocurrencies, the price of electricity is a factor, and miners eat up a lot of electricity. Beefing up one’s processing power by buying a lot of powerful mining machines may be the only way for some firms to do it.~MR


Eileen Flaherty: MarketsWiki Education World of Opportunity 2020

The final entry in JLN’s MarketsWiki Education 2020 World of Opportunity virtual event was John Lothian’s interview with Eileen Flaherty, who has had a long career as a financial services attorney and more recently published a novel called The Perilous Step. Flaherty often operated at the top of the industry. Her introduction to futures came as a staff attorney for the National Futures Association before she landed at the CME, working with Globex in its infancy. She also worked for the CFTC as a division director for a couple of years as the agency implemented the Dodd-Frank Act. Her novel, which is available on Amazon and elsewhere, draws on her experience rising from humble beginnings to a top job on merit in Washington, D.C. and her senior roles in the derivatives and securities industry.

Watch the video »


Wall Street cop amps up sleuthing to ferret out spoofing Trades
Matt Robinson – Bloomberg News
Wall Street should be put on notice: the government has new tools to look over traders’ shoulders in close to real time to spot misconduct. The main U.S. derivatives regulator, after years of relying on exchanges and whistle-blowers for tips on financial fraud, is beginning to reap benefits from an effort to bolster surveillance to help root out rogue trading. The U.S. Commodity Futures Trading Commission is touting the first fruits of a three-year project to enhance its ability to more closely watch how traders are buying and selling in the US$558.5 trillion global derivatives market, making it easier to move quickly against illegal tactics. New tools that help the regulator rapidly analyze trades and detect suspicious transactions were credited with helping bring an enforcement case against Bank of Nova Scotia this week.

*****We missed this story from last week.~JJL


Politicizing Medical Science Will Cost American Lives; Sowing doubt about the safety of treatments will imperil the fight against coronavirus in the months and years to come.
The Editorial Board – NY Times
The Food and Drug Administration is no stranger to political interference. Special interests have played as much of a role as actual data in the approval of questionable cancer drugs and faulty medical devices for almost as long as the agency has existed. Yet the latest breach of principle by the F.D.A. feels far more perilous than earlier ones — in part because of the number of lives and livelihoods at stake, but also because it’s part and parcel of a systematic undermining of the nation’s premier scientific institutions.

*****See my comments from yesterday.~JJL


In the Hamptons, some hosts are paying for rapid coronavirus tests for guests
Faith Karimi – CNN
Dr. Asma Rashid goes to a lot of exclusive parties in New York these days — but for a different reason. Hosts pay her to administer rapid coronavirus tests to guests at social events in the Hamptons, where the wealthy fled to seek refuge from the pandemic. The tests have become a common feature before guests can be allowed into parties at the affluent seaside communities — and cost up to $500 per person, says Rashid, who runs a members-only medical concierge service.

******May I take your coat and temperature? And please spit into the tube.~JJL


Monday’s Top Three
Our top story Monday was Running list: Chicago-area restaurants closed permanently due to coronavirus pandemic economic woes, from Crain’s Chicago Business. A few of our favorites are on that list and we will miss them very much. Second was news about another city – London – in the Financial Times’ City employers plan for lasting switch to remote working. Third was Euronext, CDP group bids for Borsa Italiana bond platform unit: sources, from Reuters.


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Lead Stories

The Shakeout in the ETF Industry Is Accelerating; A record 188 exchange-traded products have closed, while launches are at their lowest number since 2013
Michael Wursthorn – WSJ
Asset managers have closed more exchange-traded products than they have launched this year, a sign of how market gyrations have accelerated an industry shakeout. So far this year, 188 exchange-traded products, including funds and notes, have been shut down, the most on record, according to FactSet. The closures occurred at big and small asset managers alike, including BlackRock Inc., BLK 1.27% which manages the popular suite of iShares ETFs; JPMorgan Chase & Co.; Invesco Ltd. IVZ 4.54% ; ProShares and Direxion.

Zoom Restored After Outage Brings Down Virtual Meetings, Classrooms; The videoconferencing company said it has identified and resolved the issue that prevented users from joining meetings or remote classes
Sarah E. Needleman – WSJ
Users of videoconferencing app Zoom reported problems with the service Monday morning, just as many students in the U.S. returned to school for virtual classes dependent on the technology. Zoom Video Communications Inc. ZM -2.55% said on its website that it identified and resolved an issue that prevented users from starting and joining meetings and webinars. The company said users also were unable to sign up for paid accounts, upgrade, or manage their service on its website. The outage lasted for several hours Monday.

New Thinking on Covid Lockdowns: They’re Overly Blunt and Costly; Blanket business shutdowns—which the U.S. never tried before this pandemic—led to a deep recession. Economists and health experts say there may be a better way.
Greg Ip – WSJ
In response to the novel and deadly coronavirus, many governments deployed draconian tactics never used in modern times: severe and broad restrictions on daily activity that helped send the world into its deepest peacetime slump since the Great Depression. The equivalent of 400 million jobs have been lost world-wide, 13 million in the U.S. alone. Global output is on track to fall 5% this year, far worse than during the financial crisis, according to the International Monetary Fund.

Coronavirus Lifts Government Debt to WWII Levels—Cutting It Won’t Be Easy; Advanced economies no longer benefit from rapid economic and population growth of postwar period
Josh Zumbrun – WSJ
As countries world-wide boost spending to battle the new coronavirus, government debt has soared to levels not seen since World War II. Among advanced economies, debt rose to 128% of global gross domestic product as of July, according to the International Monetary Fund. In 1946, it came to 124%.

The Real Danger With $26.5 Trillion of U.S. Debt; For America’s creditors, the cost of servicing our borrowings took a back seat to questions about how our government operated.
James Clark – Bloomberg
As the U.S. Treasury Department’s Deputy Assistant Secretary for Federal Finance during the Obama administration, I spent a lot of time talking to the major buyers of our nation’s debt. When I left my job overseeing the government’s finances in 2017, the unpaid tab for the first 240 years of the “American Experiment” was $20 trillion. In less than four years, that number has risen to $26.5 trillion, the result of essential outlays on pandemic relief and completely non-essential tax cuts for the wealthy.

China Starts European Diplomatic Blitz to Counter U.S. Influence
Bloomberg News
Foreign minister Wang Yi begins weeklong Europe trip Tuesday; Beijing blames U.S. for damaging other bilateral relationships
China is looking to turn on the charm in Europe to push back against a U.S. campaign for allies to shun cooperation with Beijing. Foreign Minister Wang Yi kicked off a week-long Europe tour Tuesday, with planned stops in Italy, the Netherlands, Norway, France and Germany. The trip comes on the heels of U.S. Secretary of State Mike Pompeo’s two visits to Europe in as many months, in which he warned that China poses a greater threat than Russia.

IHS Markit Appoints Gay Huey Evans OBE to its Board
IHS Markit
IHS Markit (NYSE: INFO), a world leader in critical information, analytics and solutions, today announced the appointment of Gay Huey Evans OBE as an independent director to its board, effective August 21, 2020. She will also join the company’s audit committee. Following the appointment, 40% of the independent directors on the IHS Markit board are female.

Industry veteran and LME board chairman appointed to IHS Markit board; Gay Huey Evans OBE joins IHS Markit as an independent member of its board of directors as well as the company’s audit committee.
Annabel Smith – The Trade
Industry veteran and chairman of the board of directors of the London Metal Exchange (LME), Gay Huey Evans OBE, has been appointed an independent director on the board of IHS Markit. The data and analytics provider said that following the appointment, 40% of independent directors on the IHS Markit board are female. Huey Evans will also join the audit committee at IHS Markit.

Virgin Islands to subpoena Leon Black, Apollo over Epstein ties
Noah Manskar – NY Post
US Virgin Islands authorities will issue subpoenas to Leon Black and his private-equity giant Apollo Global Management, demanding that they fork over details of their ties to pedophile financier Jeffrey Epstein. Black, a billionaire buyout king who is chairman of New York’s Museum of Modern Art, has come under scrutiny for maintaining ties with Epstein — who killed himself last year while facing federal sex-trafficking charges — even after his 2008 guilty plea to procuring a minor for sex.

General Atlantic, Sequoia Capital Are Key Drivers in Oracle Bid for TikTok; Investment firms with large existing stakes in ByteDance pursue deal for app’s U.S. operations, as potential alternative to Microsoft
Rolfe Winkler, Miriam Gottfried and Cara Lombardo – WSJ
General Atlantic and Sequoia Capital, two major investors in TikTok’s Chinese parent company, are maneuvering to be part of a deal to acquire the U.S. operations of the popular video-sharing app as it seeks to avoid a ban by the Trump administration, according to people familiar with the discussions.

Bank Regulators Clarify Due-Diligence Requirements for Politically Exposed Persons; Five agencies said in a joint statement that the level of risk associated with politically exposed individuals varies
Mengqi Sun – WSJ
Banks and financial institutions need to assess money-laundering risks and conduct appropriate due diligence when dealing with foreign public officials and their families or associates, five regulatory agencies said. People who are considered politically exposed may pose higher risks because their funds may be the proceeds of corruption or other illicit activities, the banking regulators said in a joint statement. The agencies added, however, that risks associated with politically exposed individuals vary and not all of them are automatically higher risk. The agencies don’t include U.S. public officials in the politically exposed persons category.

Pakistan Is The Hot Asian Stock Market Hungry for Foreign Cash
Faseeh Mangi – Bloomberg
Pakistan’s key index is up 36% since March after rate cuts; Tundra Fonder, FIM Partners boost allocation to Pakistan
The rebound that’s helped make Pakistan equities Asia’s best performers since the end of March isn’t done yet, according to some money managers. The nation’s central bank has been among the most aggressive globally in cutting interest rates this year to cushion the economy amid the coronavirus pandemic. That has reduced the double-digit returns from fixed income and bolstered the bullish case for equities.

The Once-in-a-Century Impact of Covid-19 Deaths; The rise in mortality rates in the U.S. this year will likely be the worst since the 1918 influenza pandemic. In New York City, it may beat even that.
Justin Fox – Bloomberg
The Covid-19 pandemic has been traumatic for New York City. How traumatic, by historical standards? Well, city health authorities started keeping more or less consistent track of deaths in 1804. Every year, the city Department of Health and Mental Hygiene publishes a remarkable chart on the cover of its vital statistics report of mortality rates since then, labeled “The Conquest of Pestilence in New York City.” Although the full report for 2020 won’t be ready for a couple of years, there’s enough data available now to estimate how Covid-19 might rank among the pestilences that have beset the city through the centuries.

Working From Home Doesn’t Mean You Have to Work All the Time; Figure out when you’re most productive, clump your errands, and consider a “phone jail.”
Arianne Cohen – Bloomberg
The dream of working from home—no commute! No one heating up fish in the microwave!—has given way to a reality of early logins, evening signoffs, and frequent weekend hours. But what if we could reframe remote employment as an opportunity to strategically shorten your work days? Here are the smartest techniques for finishing up early:

Leon Cooperman Says Fed Fuels a Debt Binge the Economy Can’t Handle
Alan Mirabella – Bloomberg
The Federal Reserve has created a speculative bubble that has pushed debt levels beyond what the U.S. economy can support, Leon Cooperman said. “They have created a real speculative environment,” Cooperman said Monday on Bloomberg Television. “I am uncomfortable at the present time, not because of the virus, because I’m focused on something the market isn’t focused on. And that is the amount of debt that’s being created. Who pays for the party when the party is over?”


Exclusive: Fauci says rushing out a vaccine could jeopardize testing of others
Julie Steenhuysen, Carl O’Donnell – Reuters
The top U.S. infectious diseases expert is warning that distributing a COVID-19 vaccine under special emergency use guidelines before it has been proved safe and effective in large trials is a bad idea that could have a chilling effect on the testing of other vaccines.

Sweden has developed herd immunity after refusing to lock down, experts claim. Its coronavirus infection rate is falling
Rupert Steiner – MarketWatch
Leading Swedish health experts claim the country has a falling coronavirus infection rate because it was one of the few that didn’t go into lockdown and has rejected the use of masks.

Coronavirus Is Causing a Can Shortage; The pandemic has accelerated demand for food and drink cans, a trend can makers are betting will last despite sustainability concerns
Saabira Chaudhuri – WSJ
Demand for cans is booming during the coronavirus pandemic, propelling can makers to boost manufacturing capacity to prevent shortages and capitalize on a trend they bet will stick. As bars and restaurants closed across the U.S., consumers rushed to buy large packs of drinks—typically sold in cans—in supermarkets, say executives. Sales of canned food also jumped.

Connecticut school district to begin year online amid ‘serious’ COVID-19 outbreak
Kenneth Garger – NY Post
Public schools in Danbury, Connecticut will begin the year with remote learning amid a recent spike in coronavirus cases in the city, the superintendent announced Monday. Superintendent Sal Pascarella informed the school community of the decision in a letter posted to the district’s Facebook page.

University of Alabama records more than 500 coronavirus cases in less than a week
Kenneth Garger. – NY Post
The University of Alabama reported more than 500 new coronavirus cases from tests administered since classes resumed last Wednesday. The university’s main campus in Tuscaloosa registered 531 infections between students, faculty and staff, according to updated data posted on the school’s website.

The Ohio State University suspends 228 students for violating pandemic precautions even before classes begin
Annie Grayer, CNN
Even before classes began Tuesday, The Ohio State University temporarily suspended 228 students who it said broke guidelines around social gatherings during the coronavirus pandemic. The university, located in Columbus, is one of the largest in the country with nearly 70,000 students.

Purdue reopens, as 9% of 40K students await COVID-19 results to join ‘definitely really weird’ semester
Dave Bangert, Nikos Frazier – Lafayette Journal & Courier
When the moment Purdue’s been waiting for arrived Monday morning – after months of planning, reconfiguring and fresh coronavirus precautions: a reopened campus – sophomore Molly Coomes packed her coffee and headed to her first in-person class since the West Lafayette campus emptied midway through the spring semester to make way for a looming pandemic.

Flu Season Could Make Coronavirus Testing Delays Even Worse; The nation’s testing efforts will be further overwhelmed once influenza, R.S.V. and other seasonal viruses arrive.
Katherine J. Wu – WSJ
Come fall, the rise of influenza and other seasonal respiratory infections could exacerbate already staggering delays in coronavirus testing, making it easier for the virus to spread unnoticed, experts said.

F.D.A. ‘Grossly Misrepresented’ Blood Plasma Data, Scientists Say; Many experts — including a scientist who worked on the Mayo Clinic study — were bewildered about where a key statistic came from.
Katie Thomas and Sheri Fink – NY Times
At a news conference on Sunday announcing the emergency approval of blood plasma for hospitalized Covid-19 patients, President Trump and two of his top health officials cited the same statistic: that the treatment had reduced deaths by 35 percent. Mr. Trump called it a “tremendous” number. His health and human services secretary, Alex M. Azar II, a former pharmaceutical executive, said, “I don’t want you to gloss over this number.” And Dr. Stephen M. Hahn, the commissioner of the Food and Drug Administration, said 35 out of 100 Covid-19 patients “would have been saved because of the administration of plasma.”

As Child Covid Cases Rise, Doctors Watch for Potential Long-Term Effects; Most child cases of Covid are mild. But some kids have longer-term symptoms such as headaches, shortness of breath and gastrointestinal problems.
Sumathi Reddy – WSJ
As more children become infected with Covid-19, doctors are paying closer attention to potential long-term effects. In adults, one of Covid’s most troubling effects has been so-called long-haul cases, in which people whose illness initially seemed moderate end up having symptoms for months, sometimes getting worse over time. Now as doctors warn that children may be more vulnerable to the virus than initially believed, researchers are looking more closely at longer-term symptoms in kids, too.

Russia, Expecting Plaudits for Vaccine, Is Miffed by Its Cool Reception
Andrew E. Kramer – NY Times
It was with great fanfare that President Vladimir Putin and other officials announced this month that 1 billion doses of a Russian vaccine for the new coronavirus would soon be rolled out, supposedly putting an end to the worst pandemic in a century. But rather than taking a bow for saving the world with their vaccine, which they call Sputnik V, Russian health officials have found themselves on the defensive.

Vaccine Makers Fall With Covid Therapies in Political Crosshairs
Cristin Flanagan – Bloomberg
FDA plasma authorization stokes concerns about scope, timing; Shares of Novavax, Inovio Pharmaceuticals fall more than 15%
U.S. vaccine developers tumbled as competition from the U.K. and a focus on Covid-19 plasma treatments curbed investor enthusiasm for the stocks. Novavax Inc. and Inovio Pharmaceuticals Inc. each sank more than 15% on Monday. They’re among approximately 30 companies that have begun testing their vaccines in patients. More than 130 others are undergoing animal and laboratory testing, according to the World Health Organization.

Enough! Time to seriously loosen lockdown rules for restaurants and others
Karol Markowicz – NY Post
Every day there’s a new story about the death of New York, how we’re so broken, we can never be rebuilt. And every day brings a new crazy piece of news to a New York already on the brink to prove those people right. Our elected officials are crushing our city and state. Enough.

Covid-19 Worse for Puerto Rico Tourism Than Maria, Official Says
Jim Wyss – Bloomberg
Hotel occupancy on the island is at 20%-30% of normal levels; Puerto Rico instituted one of strictest lockdowns in the U.S.
How bad has the Covid-19 crisis been for Puerto Rico’s tourism industry? Worse than Hurricane Maria, the 2017 monster storm that was seen as a once-in-a-generation disaster, according to one top official. “Covid will likely have three times the impact on the local tourism industry than Hurricane Maria had,” said Brad Dean, the chief executive officer of Discover Puerto Rico, the island’s tourism promotion agency. “That was unimaginable six months ago, but those are the circumstances we face today.”

CDC drops 14-day self-quarantine recommendation for international and out-of-state travelers
Shannon McMahon – Washington Post
Since March, the Centers for Disease Control and Prevention has advised travelers to self-quarantine for 14 days after all international travel, and after domestic travel to states seeing a high rate of coronavirus cases. But the CDC has changed that stance, removing the directions for two-week quarantines from the “After You Travel” section of its coronavirus travel guidance.

Exchanges, OTC and Clearing

Boerse Stuttgart Group develops financing method for industrial capital goods on blockchain basis; Joint project with Bosch, Daimler Mobility and 51nodes // Digital tokens for investments in industrial goods // Repayment linked to actual utilisation
Boerse Stuttgart
In a joint basic research project with the Bosch research team “Economy of Things”, Daimler Mobility and technology partner 51nodes, Boerse Stuttgart Group has developed a flexible method for financing industrial capital goods on a blockchain basis. In addition to technical feasibility, the project, which has been running since May 2019, also covered legal and regulatory aspects.

MGEX Announces a Pair of Top 25 Records
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), reports that Friday, August 21st ranked as the 21st best day for daily total volume with a grand total of 23,482 contracts. In conjunction, Friday also entered into the record book as the 23rd best day for daily electronic volume with 20,928 contracts traded. At the close of market, open interest was recorded at 82,547 contracts.

MCX launches Bulldex; clocks Rs 215.10 cr turnover in first trading session
Economic Times
Multi Commodity Exchange of India on Monday launched the country’s first bullion index Bulldex and traded 2,650 lots worth Rs 215.10 crore in its first trading session. The index offers traders and investors a complete bouquet of products in gold and silver derivatives.

FTSE Mondo Visione Exchanges Index Closes At Record High
The FTSE Mondo Visione Exchanges Index reached a new record closing high on Monday, closing at 69,546.68.

Base price and daily price limits for newly listing ETF : Global X MSCI SuperDividend® Japan ETF and 1 other
The base price, etc. of 2 ETFs, including Global X MSCI SuperDividend® Japan ETF (Code: 2564), which are scheduled for initial listing on August 26, are as below.

Delisting of Certain Previously-Listed Contract Months and Subsequent Delisting of the UAN FOB NOLA Swaps (Clearing Only) Contract
CME Group
Delisting of Certain Previously-Listed Contract Months and Subsequent Delisting of the UAN FOB NOLA Swaps (Clearing Only) Contract

SIX begins operational integration of BME following EUR2.8 billion takeover; Plans to integrate Spain’s BME with Swiss exchange group SIX are underway following closure of the transaction in June.
Annabel Smith – The Trade
Swiss exchange operator SIX Group has commenced planning for the integration of Spanish stock exchange Bolsas y Mercados Españoles (BME) following its EUR2.8 billion acquisition. Upon announcing its first half 2020 results, SIX stated that the ongoing operational and strategic integration of the Spanish bourse will be a focus for the exchange throughout the rest of the year.


Riding Record Valuations, Fintech Companies Keep Hiring Lawyers
Brian Baxter – Bloomberg
Robinhood Markets Inc. and Stripe Inc. have recruited dozens of lawyers in 2020 as U.S. regulators recognize how financial technology is transforming financial services.
Both companies could also pursue initial public offerings that would increase their need for in-house legal and regulatory experts.

Fintech: what’s really in a name?
Well, as reported by Financial News’s Ryan Weeks in the Fintech Files of 20 August, quite a bit.
Why? If regulatory bodies around the world define fintech products and services in different ways, there is a risk of a “fragmented regulatory landscape”, according to the World Federation of Exchanges (WFE) in its response to the Financial Stability Board’s consultation on stablecoins (cryptocurrencies backed by low-risk assets).

Fintech needs better innovation than the blockchain
Konstantin Rabin – Finextra
It’s very hard to argue that there has been a better innovation in the fintech industry than blockchain in the last decade. This small but powerful technology has completely changed the understanding of money for many people. However, it is not the perfect innovation that the fintech world was looking for, nor did it ask for it.

Council Post: We Need To Pave A New Path For The SME Fintech World
Kobi Ben-Meir – Forbes
When a crisis hits, it’s best to have a fallback plan. Covid-19 took us all by surprise, and small businesses were hit the hardest. How can the new generation of small and medium-sized enterprise (SME) lenders help small businesses overcome a crisis of the magnitude of Covid-19?
In 2019, small businesses employed over 47% of the total U.S. workforce. Our economy is backed by small businesses. But most don’t have the resources to cushion this type of fall. They often work on a steady cash flow that is used for ongoing operation and wages.

Horizon Software Shortlisted “Multi- Asset Trading System” At FOW Asia Capital Markets Awards 2020
Horizon Software (Horizon), provider of electronic trading solutions and algorithmic technology for capital markets players all over the world, today announced that it has been shortlisted by the FOW and Global Investor Asia Capital Market Awards in the ‘Multi-Asset Trading System of the Year’ category. The Asia Capital Market Awards is the largest financial services awards ceremony that recognises excellent performance by firms and individuals in the Asian capital markets.


Who’s been editing the Ripple CEO’s Wikipedia page?
Jemima Kelly – FT
Ripple is a cutting-edge Silicon Valley tech start-up with ambitions to one day be “to payments as Amazon was to books”. Its cutting-edge technology is supposed to allow financial institutions “to send money across borders, instantly, reliably and for fractions of a penny”, by the power of its immutable digital dream-ledger (aka blockchain, but for banker bros).

Why 2020 might be the year cryptocurrency goes mainstream
Catherine Coley – Fortune
I run an online platform that helps people buy and sell digital assets (like Bitcoin and other cryptocurrencies). In 2016, I knew little about the industry, and today I lead one of the foremost digital asset marketplaces in the U.S. I’m evidence that anyone can learn about crypto. For the most part, the world of crypto has operated in a strange lane all by itself, confined to Twitter and Telegram private chats. But in 2020—amid the coronavirus pandemic—interest in crypto has boomed. Whether it’s been TikTok cheering on DogeCoin or a twenty-something hacking into high-profile Twitter accounts and asking for Bitcoin, 2020 might just be the year everyone from teens to nonagenarians learns about cryptocurrencies and digital money.

*****If I had a nickel for each time I’ve heard that “this will be the year cryptocurrency goes mainstream,” I’d be able to pay off my student loans before I’m 80.~MR

Brazil’s central bank forms working group to study digital currencies
Yogita Khatri – The Block
The central bank of Brazil has set up a working group to study digital currencies, including their benefits and challenges. The central bank said online payments have been growing in recent years and a digital currency would allow Brazilians to interact with their money entirely online. A digital real would also help cut costs of issuing and maintaining banknotes and coins, said the central bank. The estimated cost of handling paper money in Brazil is around 90 billion reals (~$16 billion) per year, said the central bank, adding that it is usually between 1% and 2% of countries’ gross domestic product or GDP.

FTX launches perpetual contract tied to Uniswap’s top 100 liquidity pools
Yogita Khatri – The Block
Crypto exchange FTX has launched a perpetual futures contract tied to the top 100 liquidity pools of decentralized exchange (DEX) protocol Uniswap. The contract, dubbed UNISWAP-PERP, is an index future that is equal-weighted on the top 100 Uniswap pools, FTX founder and CEO Sam Bankman-Fried told The Block. “The Uniswap index price is the sum of the implied asset price of each of the pools,” said Bankman-Fried. Uniswap is currently the leading DEX protocol with most tokens listed on its platform. With the UNISWAP-PERP contract, users could obtain exposure to these tokens via the futures contract.

Hacker Stole 1,000 Traders’ Personal Data From Crypto Tax Reporting Service
Ada Hui – Coindesk
A hacker has stolen data on more than 1,000 users from CryptoTrader.Tax, an online service used to calculate and file taxes on cryptocurrency trades. The hacker broke into a CryptoTrader.Tax marketing and customer service employee’s account on a support center platform, according to a source who came across the hacker on a dark web forum. With this access, the hacker could see customers’ names, email addresses, payment processor profiles and messages sometimes containing cryptocurrency incomes.

Aave takes number one slot in total value locked, beats MakerDAO
Yogita Khatri – The Block
Decentralized lending and borrowing protocol Aave has taken the number one slot in total value locked (TVL), snatching that position from rival MakerDAO. Aave’s TVL, or the total amount of crypto assets deposited into the protocol for lending and borrowing purposes, is now $1.45 billion, according to tracker DeFi Pulse. MakerDAO’s TVL is a tad lower at $1.44 billion.

Aave has been granted an Electronic Money Institution license by the U.K. Financial Conduct Authority
Michael McSweeney – The Block
Aave’s U.K. business entity, Aave Limited, was issued an Electronic Money Institution license in July.
The approval factors into the project’s broader adoption goals, Aave said Monday.

Binance.US Expands Into Florida, Eyeing Millions of Potential New Traders
Danny Nelson – Coindesk
Binance’s U.S. affiliate has taken Florida off its cryptocurrency trading “no-fly list” and on Monday opened for business in the sunshine state. The expansion into America’s third-most populous state follows Binance.US’s July procurement of a Floridian money transmitter license under the name “BAM TRADING SERVICES INC.” Florida was one of the 13 states not included in Binance.US’s original game plan. When the exchange launched in 37 states last September, Binance.US avoided states whose licensure regimes required additional vetting.

DeFi project Bella Protocol raises $4 million in seed funding
Yogita Khatri – The Block
Beijing-based decentralized finance (DeFi) project Bella Protocol has raised $4 million in seed funding. The round was led by Arrington XRP Capital, with participation from several other investors including Consensus Labs, Alphabit, Coinbene, and Galaxy Digital’s David Namdar.

The trinity of financial innovation: debt, equity and ICOs
Jamie Powell – FT
It’s not often at FT Alphaville that we got to combine two of our favourite subject matters in one post to make an FTAV fusion, if you will. There’s been exceptions. There was that time time our Elon decided to tweet about Dogecoin. Or when the Tory grandee Michael Green Grant Schapps decided to dip his toe into blockchain. And who can forget when Neil Woodford invested in a cold fusion business that, quite literally, was making claims that were scientifically impossible. Yet, perhaps the greatest FTAV fusion is of the crypto chart crime flavour.

Crypto trading platform INX announces SEC Form F-1 approval
Saniya More – The Block
INX Limited announced today that the Securities and Exchange Commission (SEC) has approved its Form F-1 filing in connection with its initial public offering of up to 130 million INX security tokens. The Form F-1 is the official statement filed by foreign companies to register additional securities as well by private companies that are trying to go public through an initial public offering.


RNC Nominates Trump, Warns Against Biden Victory; Speakers at scaled-back convention hail coronavirus response by the president, who again decries mail-in ballots
Catherine Lucey and Andrew Restuccia – WSJ
Republicans nominated President Trump as their candidate at a scaled-back convention in North Carolina and Washington, with the president and his allies offering ominous warnings about electing Democrats in November. Throughout the daylong, two-city event Monday, speaker after speaker praised the president—particularly for his handling of the coronavirus pandemic and the economy—and painting of a grim picture if Democratic nominee Joe Biden wins, conjuring images of riots in the street, an uptick in crime and a flood of policies that could bankrupt taxpayers. The tone at times contrasted with the uplifting message that Mr. Trump’s campaign said would characterize the event.

New York Attorney General Investigating Trump Organization, President Trump’s Assets; New documents ask New York court to order the business and Eric Trump to comply with subpoenas
Deanna Paul and Rebecca Davis O’Brien – WSJ
The New York attorney general’s office is investigating whether the Trump Organization and President Trump improperly inflated the value of Mr. Trump’s assets in financial filings, according to court papers made public Monday that seek to compel company executives to comply with subpoenas. The state’s top prosecutor opened the civil investigation in March 2019, after Michael Cohen, the president’s former personal lawyer and a former senior executive of the Trump Organization, provided Congress with copies of Mr. Trump’s financial statements and testified that his assets were inflated to secure favorable loans and tax benefits, according to the filings in Manhattan state court.

N.Y. Attorney General Asks Judge to Order Eric Trump’s Testimony; The Trump Organization has stalled a state inquiry into the financing of four properties for months, Attorney General Letitia James said in court papers.
William K. Rashbaum and Danny Hakim – NY Times
The New York State attorney general’s office has stepped up its inquiry into whether President Trump and the Trump Organization committed fraud by overstating assets to get loans and tax benefits, asking a judge to order Eric Trump to answer questions under oath and the company to hand over documents, court papers show.

$1,000 ‘Baby Bond’ Proposed in N.J. in Bid to Narrow the Wealth Gap; A plan would set aside money at birth for children in most families, giving them a financial lift when they reach 18 and enter adulthood.
Tracey Tully – NY Times
Most children born in New Jersey would be entitled to a $1,000 state-financed nest egg under a proposal that Gov. Philip D. Murphy is set to announce on Tuesday in a bid to narrow a widening wealth gap.

Senator Chris Murphy Is Worried We’re Seeing Democracy’s Last Stand
David Marchese – NY Times
Before 2012, Chris Murphy was a relatively unheralded Democratic representative from Connecticut. Then, in December of that year, Sandy Hook happened. In the soul-crushing aftermath of our country’s second-deadliest school shooting, Murphy, who took office as his state’s junior senator less than one month after the attack, found his guiding moral purpose as a politician. Since then, his forceful advocacy for increased gun control has turned Murphy, who is 47, into a nationally prominent figure, though lately Covid-19 has forced a shift in the senator’s immediate priorities. “The pandemic has fundamentally changed the political landscape because it is the one issue that matters to everyone,” said Murphy, author of “The Violence Inside Us,” a forthcoming nonfiction book about America’s bloody obsession with firearms. “It touches everyone’s life. But that doesn’t mean that the other perennial concerns that Americans care about disappear.”

Highlights From the Republican National Convention: Night 1; On the first night of the convention, Republicans mounted a misleading defense of President Trump’s
Jonathan Martin, Alexander Burns and Annie Karni – NY Times
President Trump and his political allies mounted a fierce and misleading defense of his political record on the first night of the Republican convention on Monday, while unleashing a barrage of attacks on Joseph R. Biden Jr. and the Democratic Party that were unrelenting in their bleakness.

Michael Cohen records campaign ads against Trump: Don’t ‘believe a word he utters’;The president’s former lawyer, who was sentenced to prison, says his ex-boss thinks Americans are all “a bunch of fools.”
Dareh Gregorian
Michael Cohen, President Donald Trump’s former lawyer and fixer, has recorded a series of anti-Trump ads that are scheduled to run during the Republican National Convention painting his former boss as a fraud.

IRS stops sending tax bill notices to Americans because of mail backlog
Janna Herron – Yahoo Money
The pause affects three notices – the CP-501, the CP-503, and the CP-504 — all of which are automatic follow-up notices mailed to taxpayers if they don’t initially respond to the first balance-due notice, or the CP-14.

More than two dozen former Republican lawmakers endorse Joe Biden on first day of GOP convention
Chandelis Duster, CNN
Washington (CNN)More than two dozen former Republican lawmakers announced Monday they are endorsing Joe Biden for president. Former Sen. Jeff Flake of Arizona and former Rep. Charlie Dent of Pennsylvania are among those throwing their support behind the Democratic presidential nominee through “Republicans for Biden,” and the endorsements come on the morning of the first day of the Republican National Convention.

Why TikTok Will Lose
NY Times
TikTok is taking the U.S. to court
The Chinese-owned video app plans to sue the Trump administration as soon as today over its order to force a sale. It faces long odds, pressure from rivals and unrest within its ranks.


HKMA says banks need to take on climate risks and spells out expectations
Freshfields Bruckhaus Deringer LLP
The Hong Kong Monetary Authority(HKMA)’s offices sit on the 55th floor of the city’s glistening International Financial Centre, some 200 metres above Victoria Harbour and far beyond even the most pessimistic projections by climate scientists for rising sea levels. But a recent flow of HKMA papers shows that, even from this distant perch, Hong Kong’s banking regulator is keenly aware that the landscape it surveys is not immune from climate risks:

NFA orders former associated person Nicholas Charles Gunther to not reapply for NFA membership
NFA has ordered Nicholas Charles Gunther to not reapply for NFA membership or act as a principal of an NFA Member. Gunther was an associated person (AP) of former Chicago, Ill. NFA Member introducing broker Long Leaf Trading Group, Inc. (Long Leaf). The Decision, issued by an NFA Hearing Panel, was based on a Complaint issued by NFA’s Business Conduct Committee (BCC) and a settlement offer submitted by Gunther. The Complaint alleged that Gunther, while an AP of Long Leaf, among other things, made misleading sales solicitations that exaggerated profit potential and failed to disclose that over 95% of Long Leaf’s customers lost money.

CFTC Adds More Than 20 Unregistered Foreign Entities to RED List; New RED List Interactive Webpage Launched
As part of the Commodity Futures Trading Commission’s ongoing efforts to help protect Americans from fraud, today the CFTC added 22 unregistered foreign entities to its Registration Deficient List (RED List). The CFTC also launched a redesigned RED List webpage that provides more information about the listed entities and why the CFTC recommends individuals not engage in financial transactions with them. Launched in 2015 [See CFTC Press Release No. 7224-15], the CFTC’s RED List now contains 168 entities.

ASIC bans Adelaide adviser for five years
ASIC has banned Adelaide-based financial adviser Francesco Antonio (Tony) Romano from providing financial services and from being involved in the carrying on of a financial services business for five years.

ASIC issues guidance for Government’s enhanced regulatory sandbox
ASIC has today released guidance to assist innovative financial businesses test their products and services under the Government’s enhanced regulatory sandbox (ERS), scheduled to commence on 1 September 2020.

Royal Commission witness and former financial adviser Sam Henderson pleads guilty to dishonesty and defective disclosure charges
Former Sydney financial adviser, Mr Sam Maxwell Henderson, has today pleaded guilty to one ‘rolled up’ charge of dishonest conduct, an offence under section 1041G of the Corporations Act 2001 (Cth) and two counts of making a disclosure document available to a person knowing it to be defective, contrary to section 952D(2)(a)(ii) of the Corporations Act.

ASX Group Dealing Rules
In accordance with Listing Rule 12.10, attached is a copy of the revised ASX Group Dealing Rules which were approved
by the ASX Limited Board on 19 August 2020.

Better Markets Issues Joint Comment Letter on the CFPB’s Advisory Opinions Pilot Program
Better Markets
On Aug. 21, 2020, Better Markets and several other public advocacy groups submitted a comment letter on the Consumer Financial Protection Bureau’s proposal to establish am “Advisory Opinions Pilot Program.” As it is proposed, this program would allow industry insiders special access to the Bureau’s rulemaking process, allowing them to weaken consumer protecti

Investing and Trading

‘Divided’ investors caught in inflation confusion; Deflation and inflation are both on fund managers’ worry lists
Tommy Stubbington – FT
Investors are worried about deflation. That might sound odd, given that the opposite fear — of rising consumer prices — has grabbed attention and fired up assets such as gold.

So You Think You Can Time the Market? All it takes is a couple of lucky trades to end up with a false belief in one’s ability to jump in and out at the right times.
Barry Ritholtz – Bloomberg
Many investors like to think of themselves as pretty good market timers, able to consistently buy low and sell high. Some may get lucky from time to time, but those rare successes can lead to delusional over-confidence – “I saw that crash coming!” – along with some form of Dunning-Kruger metacognitive failure. Add to that a dollop of selective retention as to one’s past successes and you end up with a recipe for false belief in one’s ability to jump in and out of markets at the right times.

How Vail Resorts Could Wipe Out; Investors may be underestimating how challenging this ski season will be
Justin Lahart – WSJ
Investors who think Vail Resorts MTN 3.94% ‘ business will be anything close to normal in the coming ski season risk mistaking a mountain of trouble for a molehill. True, hitting the slopes this winter carries even more allure than usual. After spending so much time cooped up at home, plenty of people already have more than a touch of cabin fever. Time spent on the mountain seems like a good way to dispel it. Safe, too—it is an outdoor activity, after all. To judge by the rebound in Vail’s shares since this spring, that is what many investors are thinking.

Environmental, Social and Corporate Governance

Assets in ESG exchange traded funds and products top $100bn
Alf Wilkinson – FT
Global assets held in exchange traded funds and products invested according to good environmental, social and governance principles surpassed $100bn last month, according to research by ETFGI, a consultancy. The milestone was breached after $6.76bn of net inflows in July, which brought assets in globally listed ESG ETFs and ETPs to a total of $101bn, up from $88bn at the end of June. ESG vehicles domiciled in Europe accounted for 51.6 per cent of those assets, while US-based ETFs and ETPs held just over 40 per cent of the market.

Rio Tinto’s weak response to cave blasts will trigger stronger reaction: Russell
Clyde Russell – Reuters
Rio Tinto may have inadvertently triggered the law of unintended consequences with its blasting of an Aboriginal heritage site at one of its Australian iron ore mines, and the subsequent slap on the wrists for some senior executives.
The board of Rio cut the bonuses of three senior executives including Chief Executive Jean-Sébastien Jacques as part of the company’s review into the destruction of two historically significant caves in Western Australia state, against the wishes of the Aboriginal traditional owners.

Future-Proofing your Business: Analysing the MCA’s recommendations on Business Responsibility Reporting
Global trends towards a stakeholder-centric governance model have resulted in a structured movement towards responsible business conduct. Companies are expected to be driven not only by profitability but also the increasingly relevant non-financial parameters measured through impact on society and the environment, popularly referred to as the ‘triple bottom line’.

Advisers hamstrung by ‘poor’ ESG choice
Imogen Tew – FT Adviser
Advisers struggle with a lack of suitable environmental, social and governance investment products, research has shown, as tighter ESG regulation creeps ever closer.
Figures from Rathbones, published yesterday (August 24), showed nearly all advisers (92 per cent) felt the small number of suitable ESG products available was an issue.

Banks’ strategies lack integrated ESG criteria
Banks around the world have not yet fully integrated environmental, social and governance criteria (ESG) into their strategies. A report by Mazars reveals just three out of the 30 banks assessed demonstrate best practice across a wide range of sustainability factors, with 10 banks showing a sustainable approach across some factors and more than half (17) the number of banks showing limited evidence of a sustainable approach across most factors.


Fidelity veteran trader joins Federated Hermes in latest new hire; Shaun Copeman departs Fidelity after eight years to join the trading desk at Federated Hermes.
Hayley McDowell – The Trade
A fixed income and foreign exchange trader from Fidelity Investments has departed after eight years to join Federated Hermes as the asset manager’s latest addition to the trading desk.

Alternative markets give edge to Florin Court strategy
By concentrating on exotic and alternative markets, Florin Court Capital Fund has sidestepped overcrowding and correlation to the main trend following commodity trading advisers, offering investors a diversified alternative to the standard systemic macro strategies on offer

Stifel sees potential 22% upside in ex-Woodford trust; Scope for share price recovery
David Brenchley – Investment Week
The Schroder UK Public Private Trust could finally see a positive re-rating, having been “left behind” despite a rally in funds investing heavily into the Covid-19 tech and healthcare boom, according to analysts at Stifel. Investors in the trust, formerly Woodford Patient Capital, have had a rough ride since the company floated on the stockmarket. Shares have lost 70% on their IPO price and 75% since their 119p peak five years ago, having become embroiled in the liquidity crisis at the ill-fated Woodford Investment Management.

A Huge Tesla Bet Pays Off Big for one British Fund
Joe Easton – Bloomberg
Scottish Mortgage a top FTSE 100 gainer after carmaker’s surge; But trimming stake in first quarter may have cost $170 million
A British fund that has grown more than seven times faster than peers this year has one big bet to thank. Scottish Mortgage Investment Trust Plc’s holding of 1.87 million shares in Tesla Inc. has increased in value by more than $2 billion since the end of March as the electric carmaker’s stock price has surged to a record. That, along with investments in other U.S. tech giants and stay-at-home winners, means the fund has provided a year-to-date return of 56% versus 7.5% for its peer group, according to data compiled by Bloomberg.


Citadel and Citadel Securities open Singapore office in Asia Pacific expansion; New office comes as Citadel and Citadel Securities expand in Hong Kong, and Citadel Securities also increases its presence in Shanghai and Sydney.
Annabel Smith – The Trade
US hedge fund Citadel and market maker Citadel Securities will open a new office in Singapore as part of a move to further expand into Asia Pacific. Alongside the new Singapore office, both firms will continue to expand in Hong Kong, with Citadel Securities also increasing its existing presence in Singapore and Sydney.

China Vows Continued Support for Hong Kong as Financial Hub
Bloomberg News
CBIRC told banks to offer services while complying with rules; More foreign financial firms applied to expand in China market
China’s banking regulator pledged its backing for Hong Kong as a finance hub and reiterated a commitment to opening up the Chinese financial sector amid a deepening standoff with the U.S.

Billionaire Ken Griffin’s Citadel Opens Singapore Office
Bei Hu – Bloomberg
Singapore office to be shared by hedge fund, securities units; Securities arm also to expand in Hong Kong, Shanghai, Sydney
Billionaire Ken Griffin’s finance companies plan to open a Singapore office this year in a fresh push to expand in Asia.The new office will be shared by his Citadel hedge fund business and the market-making Citadel Securities LLC unit, the Chicago-based firm said in an e-mailed statement Monday. Both will continue to grow their Hong Kong operations, and Citadel Securities is expanding in Shanghai and Sydney as it broadens trading activities, the company added.

German Town Fears Ruin by U.S. Effort to Stop Russian Pipeline; Three U.S. senators and the Trump administration want to halt Gazprom’s Nord Stream 2 pipeline by imposing sanctions on a Baltic port that is supplying the project.
Melissa Eddy and Steven Erlanger – NY Times
Sitting on the Baltic Sea, the small eastern German town of Sassnitz has been working for years to revive its enormous port, including taking on a role supporting a Russian pipeline being laid offshore to deliver natural gas to Germany.

With Hacks and Cameras, Beijing’s Electronic Dragnet Closes on Hong Kong; Under a new national security law, the police are targeting the social media accounts of executives, politicians and activists. American internet giants are struggling to respond.
Paul Mozur – NY Times
To get onto his Facebook account, the police used Tony Chung’s body. When officers swarmed him at a Hong Kong shopping mall last month, they pulled him into a stairwell and pinned his head in front of his phone — an attempt to trigger the facial recognition system. Later, at his home, officers forced his finger onto a separate phone. Then they demanded passwords.


The Irish Sea border means chaos looms, even with a Brexit deal
Polly Toynbee – The Guardian
Among thousands of lorries crossing the Irish Sea each day, I spotted Manfreight’s orange livery on the Birkenhead to Belfast ferry. Carrying just-in-time deliveries of short shelf-life food or Amazon parcels, they have just four more months of carefree border-crossing before the Brexit shutter slams.
“Over my dead body” will there be an Irish Sea trade border, Boris Johnson proclaimed this month with breathtaking mendacity. That’s the protocol he signed, the international treaty all his MPs voted for; no wriggling out now. Crossing the Irish Sea will require still-unbuilt checkpoints at ports; lorry parks; voluminous customs declarations; veterinary checks; and tariffs to be paid and reclaimed, with 50,000 extra customs officers as yet unrecruited.

Sterling traders relaxed on Brexit trade risks
Eva Szalay – FT
Currency traders have slipped up on Brexit many times over the past four years, but they are relaxed about the prospect of dropping out of the EU’s trade arrangements without a safety net this time around, even as negotiations flounder. The pound has recovered from the ugly blow it suffered against the dollar when coronavirus ripped through markets in March, hovering close to its highest point of the year just above $1.31. Meanwhile, the options market that companies and investors use to hedge against losses or to profit from exchange-rate shifts suggests sterling faces no big risks in the next six months, even as the clock ticks down to the December 31 exit from the EU’s single market and customs union.

Sterling slips after scant progress in Brexit talks
Joice Alves – Reuters
Sterling fell versus the euro and the dollar on Monday, amid lingering concerns over the lack of progress in talks between British and European Union Brexit negotiators. The two sides said they made no real progress in their latest talks on how their trade relationship may look like after a transition period expires at the end of December. British and EU chief negotiators blamed each other for the Brexit stalemate as time ticks down to the end-of-year deadline. Britain officially left the bloc in January, but was given a year to hold trade negotiations. Failure to reach a deal would leave Britain trading with the EU under WTO rules.

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