The Worst of the Global Selloff Isn’t Here Yet, Banks and Investors Warn

Mar 23, 2020

First Read

Trouble at Ronin?
By Thom Thompson – John Lothian News

With everyone looking for the first big financial collapse of the coronavirus market meltdown, all eyes turned to Ronin, a Chicago-based proprietary trading firm, last Friday. Ronin is (was?) a direct clearing member of the CME. As of Sunday morning, though, there was no indication that the firm was failing, that its liabilities exceeded its assets or even that it was unable to pay (any of) its obligations.

On Friday the CME Group announced that it had auctioned off clearing member Ronin’s portfolios, saying:

  • The auction process was completed this morning, March 20, 2020. Though Ronin is a direct clearing member, it does not handle customer business; and no clients were impacted by the auction. The firm was unable to meet its capital requirements going forward.

To read the rest of this article, go here.


Hits & Takes
By John Lothian & JLN Staff

Friday saw the governor of Illinois follow in the footsteps of California and New York and tell people to stay home. Over the weekend, more states WSJ) joined the parade and asked citizens to stay home to help flatten the curve. In Germany, no more than 2 people are supposed to meet at a time. The number of cases of Covid-19 is now over 340K and deaths are over 15K CSSE)

The stock market had its worst week since 2008 BLMBG). Expectations are building for the worst unemployment number from the U.S. ever Yahoo). Goldman said to expect 2.25 million jobs lost in the weekly report and Morgan Stanley is expecting the U.S. GDP to drop 30% BLMBG).

The market turmoil, including the volatility in the volatility index VIX, helped bring down Ronin Capital Yahoo). The CME Group Friday morning stepped in CME), along with help from the DTCC, and held an auction of Ronin’s positions. As opposed to other failures, there were no customer funds involved as Ronin only traded for their own accounts.

The FIA, and other industry groups, exchanges and a guy named Lou, issued a statement FIA) urging the head of the Fed, CFTC and SEC to keep the U.S. markets open during this coronavirus outbreak. I concur with Lou and the others.

Senator Kelly Loeffler got caught up in the swirl of news on Friday around Sen. Richard Burr enough that ICE issued the following statement about it: “Intercontinental Exchange maintains a Global Personal Trading Policy that prohibits insider trading and discretionary trading of stocks by its employees without the prior consent of the company. With regard to recent media reports concerning securities transactions in the personal managed accounts for Intercontinental Exchange Chairman and CEO Jeff Sprecher and his wife, Senator Kelly Loeffler, Mr. Sprecher and Senator Loeffler have made clear that those transactions were executed by their financial advisors without Mr. Sprecher’s or Senator Loeffler’s input or direction.”ICE)

I will say this for Kelly, she is taking this issue on directly and not ducking it. But she is taking some big time heat. Another U.S. senator having a bad time is Rand Paul, who was diagnosed with the virus after working out at the Senate gym BLMBG)

CFTC Chairman (and Chief Executive) Heath Tarbert seemed to be auditioning for a job in cable television with his latest press release about the latest CFTC response to the coronavirus in the form of a video CFTC). The delivery in front of the price wall at the CFTC was impressive.


Stuck at home, as so many are, and feeling unable to do much, I have added my computer to the rapidly growing list of computers helping with the Folding@Home project. This is a distributed network of computers that, combined, equal the power of a supercomputer.

The project has been running for many years as a means to fold proteins and solve other biomedical problems which require huge amounts of computing power. Basically, individuals like you and me run a small program on our home PC and it will use your PC’s resources to help process problems when you are not using your PC for something else (depending on how you set it up…you can view a quick primer on that HERE). You can even join teams (like your whole family or neighborhood or school versus others) to pool your efforts for bragging rights.

Recently the Folding@Home project has acquired so many participants that it is now, effectively, the fastest supercomputer in the world at 470 PetaFLOPS of raw computing power. That is twice as fast as Summit, the current world leader, and faster than the top seven supercomputers in the world combined. ~JB


Dr. Emily Landon, the chief infectious disease epidemiologist at the University of Chicago Medicine, had some blunt words about COVID-19. “A successful shelter in place means that you will feel like it was all for nothing. And you would be right. Because ‘nothing’ means that nothing happened to your family.” ~JB

I learned about a new type of order, a TACO. TACO stands for Basis Trade at Cash Open CME). This order type is now available for transactions on E-mini Nasdaq-100, and E-mini Russell 2000 futures will be listed for trading on CME Globex and for submission for clearing via CME ClearPort today. ~JJL

Chicagoans found a creative way to keep their spirits up and maintain a sense of connection with others after Governor Pritzker issued a “shelter-in-place” order this weekend to combat the spread of the coronavirus. A Chicago couple created a Facebook event called, “Chicago-Wide Window Sing-a-Long.” The event was a city-wide singalong to Bon Jovi’s “Livin’ on a Prayer.” People opened their windows, walked out to their balconies, and stood in their front yards singing the classic power ballad together to help each other keep their spirits up. Apparently, not only did numerous people from all over the country join in, but Bon Jovi himself joined in over Instagram.~MR


Joint Statement from Market Trade Associations on Keeping Financial Markets Open Amid Coronavirus
U.S. Chamber of Commerce
The U.S. Chamber of Commerce along with the undersigned market trade associations issued the following statement on the importance of keeping U.S. financial markets open: “The U.S. financial markets are critical infrastructure to our nation, and they continue to function as designed despite the volatility caused by the coronavirus. Keeping all U.S. financial markets open is essential to the well-being of the general economy and vital to maintaining and bolstering investor confidence, particularly once the economy recovers from effects of this pandemic.”



FIA joins trade associations and businesses to urge Trump Administration and Federal officials to keep markets open
FIA today joined Managed Funds Association, U.S. Chamber of Commerce, Securities Industry and Financial Markets Association, American Bankers Association, American Cotton Shippers Association, Bank Policy Institute, Cboe Global Markets, Inc., CME Group, Commodity Markets Council, Financial Services Forum, Institute of International Finance, International Swaps and Derivatives Association, Investment Company Institute, Nasdaq, Alternative Investment Management Association and World Federation of Exchanges in a letter to Treasury Secretary Steven Mnuchin, Federal Reserve Chairman Jerome Powell, CFTC Chair Heath Tarbert and SEC Chair Jay Clayton urging that they work to keep the financial markets open during the Coronavirus (COVID-19) outbreak.



Intercontinental Exchange Statement on News Reports Related to Transactions by Jeffrey Sprecher and Sen. Kelly Loeffler
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, has issued the following statement:
Intercontinental Exchange maintains a Global Personal Trading Policy that prohibits insider trading and discretionary trading of stocks by its employees without the prior consent of the company. With regard to recent media reports concerning securities transactions in the personal managed accounts for Intercontinental Exchange Chairman and CEO Jeff Sprecher and his wife, Senator Kelly Loeffler, Mr. Sprecher and Senator Loeffler have made clear that those transactions were executed by their financial advisors without Mr. Sprecher’s or Senator Loeffler’s input or direction.


Special Report – Risk Management: Financial Institutions
IMF markets chief on coronavirus response; what the crisis tells us about complacency risk; banks and insurers exposed on climate change; ransom attackers hit ‘big game’; women rise in specialism

******FT has a complete special report here that you should check out.~JJL


Microsoft can filter out the sound of you eating potato chips on a conference call
Ian Sherr – c|net
Just in time for us all to be working from home because of the pandemic coronavirus, Microsoft’s built new technology for its Teams software that can identify your voice and filter out any other sounds. That could be a leaf blower, a dog barking or even, yes, you rustling through a bag of potato chips.

***** Advancement, I think?~JJL


Gary DeWaal – Bridging the Week
My View: Since the first edition of what has become Bridging the Week on February 23, 2013, I have tried on an almost weekly basis to summarize legal and regulatory developments that I thought might be of interest to persons involved in the financial services industry, drawing on my own sense of what was important for me to know in my former capacity as Group General Counsel for Fimat/Newedge – one of the world’s largest brokers of exchange-traded derivatives and other financial products – from 1995 through 2012. Where there were particularly significant developments, I also added commentary based on my experience in the form of My View, Legal Weeds, Compliance Weeds or a host of other categories.


Friday’s Top Three
Our most-read story on Friday was Coronavirus Will Change the World Permanently. Here’s How., from Politico. Second was No, We’re Not All Going to Have to Stay Home for 18 Months from Bloomberg Opinion. Third was Trump Administration Asks States to Keep Quiet About Jobless Figures, from the Wall Street Journal.


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Lead Stories

The Worst of the Global Selloff Isn’t Here Yet, Banks and Investors Warn; Wall Street is only now coming to grips with the dislocation being wrought by the coronavirus
Anna Hirtenstein and Akane Otani – WSJ
The most brutal stretch for global markets since the financial crisis likely isn’t over yet, say investors and analysts who believe it is too early to assess the possible scale of economic damage from the coronavirus.

Margin Calls Hit Wall Street Like ’30 LTCMs Out There’ at Once
Yakob Peterseil – Bloomberg
Wells Fargo analysts cite memories of 1998 hedge fund collapse; Swings in bonds, Treasury futures, gold tied to margin demands
If you’re sensing market players are overcome with shoot-first-ask-questions-later palpitations, you’re not alone. Wall Street says margin calls are at work in this week’s market meltdown, and it’s stirring dark memories. Wells Fargo & Co. strategists join a growing chorus seeing “accelerating” broker demands for investors to post more collateral to cover losses in their leveraged accounts.

EU Watchdog Says Keeping Markets Open Is Vital for the Economy
Silla Brush – Bloomberg
A top European regulator said, keeping markets open amid the coronavirus outbreak is vital for economies and the financial system, echoing the view of hedge funds, money managers and banks.

As the stock market is in turmoil, here’s what experts are watching for as the NYSE operates without humans for the first time
Mark DeCambre – MarketWatch
The New York Stock Exchange is going all-electronic on Monday, marking the first time that the centuries-old exchange will operate in regular hours without its legion of trusted flesh-and-blood floor traders.

Even Before Coronavirus Outbreak, Fewer Traders Worked on Wall Street; The electronification of trading has squeezed out tasks once performed by human hands
Justin Baer – WSJ
Jim Maguire was on the floor of the New York Stock Exchange when the Dow Jones Industrial Average crashed in 1987, when it zoomed past 10000 in 1999 and when it tumbled in 2008.

Broken Markets Seeking Lifeline Struggle to Look Past Infections
Justin Carrigan – Bloomberg
Asia equity futures, Middle East stocks point to negative open; Analysts are looking for lower virus infections to bring calm
Look all you like at the stimulus packages and data releases. The reality is that traders probably have eyes for only one number: the infection rate.

‘Our number is bad’: Over a million small business workers could lose jobs amid coronavirus
Alexis Keenan -Yahoo Finance
A majority of U.S. unemployment benefit claims filed in the wake of the coronavirus outbreak could come from employees of small businesses, according to one estimate — further hurting a sector that has been losing ground to major corporations over the past several decades.

Top Economists See Echoes of Depression in U.S. Sudden Stop
By Rich Miller and Reade Pickert – Bloomberg
Key is length of contagion and the economic policy response; Economy seen headed for worst quarter in records back to 1947
The U.S. is entering a recession. The ultimate fear is that could turn into a protracted malaise that has some flavor of a depression.

Potential delay to LIBOR phase out due to coronavirus – reports; Will cease to exist at end of 2021
Ellie Duncan – InvestmentWeek
UK regulators are said to be considering the impact of the coronavirus outbreak on the London Interbank Offered Rate (LIBOR) transition deadline of end of 2021, according to reports.

Federal Reserve Unveils Major Expansion of Market Supports; Fed will buy unlimited amounts of Treasuries and mortgage securities
Nick Timiraos – WSJ
The Federal Reserve unveiled a major expansion of lending programs Monday that are designed to unclog credit markets that seized up last week, expanding its facilities to include certain types of corporate and municipal debt.

Bruised Hedge Funds Ask Clients for Fresh Cash to Buy the Dip
Nishant Kumar and Hema Parmar – Bloomberg
‘Liquidity and capital are king right now,’ one CIO says; Citadel, Coatue among firms seeking to seize on the sell-off
First they lost money. Now hedge funds want clients to risk even more cash on the bets that caused the pain.

BlackRock Bond ETF Plunge Shows How Fast Traders Can Be Spooked
Katherine Greifeld, Annie Massa and Matthew Leising – Bloomberg
A BlackRock Inc. exchange-traded fund that invests in short-term bonds suffered an unprecedented plunge on rumors the firm was restricting cash redemptions. The $6.2 billion iShares Short Maturity Bond ETF, one of the biggest exchange-traded funds that primarily holds debt maturing in less than three years, fell as much as 8.9% on Thursday — 34 times its biggest intraday drop in 2019. It pared the decline late in the day as BlackRock paid out cash redemptions, closing down 6.2%.

London Bankers’ Tax Scandal Verdict Shows That Inexperience Pays Off
Karin Matussek and Donal Griffin – Bloomberg
Bonn court in part acquitted trader on tax evasion charges;
Prosecutors are expected to fight that part of the judgment In the first landmark trial investigating dividend tax trades in Germany, the two defendants’ gamble to cooperate with authorities paid off because it kept them out of jail. But the junior ex-banker played another card: that he was simply too inexperienced to know that what he did was illegal.

The U.S. Depends On Service Jobs More Than Ever. Now They’re Evaporating.
Matthew Boesler and Shruti Singh – Bloomberg
Economy was dependent on jobs in services sector before virus; Unemployment claims now piling up at frantic pace in industry
For a decade the U.S. economy has been steadily drawing people into the workforce. Almost overnight, that machine crashed into reverse.

America’s Coronavirus War Has Only Just Begun; This will take patience and a whole lot of government cash.
Mark Gongloff – Bloomberg
So, how’s your week been? Ready for, say, seven more? To “flatten the curve” of the coronavirus pandemic, many of us have been hunkering down for the past five days, often with children and other loved ones piled on top of us. We’re losing jobs, retirement funds and sleep. Yet Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said today that we should expect “several more weeks” of this. If that sounds exhausting, that’s because it is.

Coronavirus Threatens More Than 15 Million U.S. Hospitality Jobs
Andre Tartar – Bloomberg
Waitresses, hotel housekeepers and casino dealers are among the more than 15 million hospitality jobs in U.S. cities at risk from restrictions being put in place to deal with the spread of Covid-19. This is based on a Bloomberg News analysis of the latest available U.S. Bureau of Labor Statistics data through May 2018 covering 40 occupations critical to America’s hospitality and gaming industries.

Coronavirus in N.Y.C.: Region Is Now an Epicenter of the Pandemic; New York City and its suburbs account for roughly 5 percent of global cases, forcing officials to take urgent steps to stem the outbreak.
Jesse McKinley – NY Times
Three weeks after its first coronavirus infection was discovered, the New York City region reached an alarming milestone on Sunday: It now accounts for roughly 5 percent of the world’s confirmed cases, making it an epicenter of the pandemic and increasing pressure on officials to take more drastic measures.

Top Indian Gold Seller Shuts Shops as Industry Grinds to a Halt
Swansy Afonso – Bloomberg
Demand already hurt by record prices, slowing economic growth; Industry group asks for import tax on gold to be lowered
India’s jewelry industry has come to a standstill as the government locked down much of the country to try and stem the spread of the coronavirus.

Glut of Jet Fuel Is on Brink of Overwhelming Global Storage
Alex Longley, Elizabeth Low, and Jack Wittels – Bloomberg
Just 20% of land storage available as airlines cut flights; Traders are rushing for ships to store excess supplies
The world is close to running out of space to store all the fuel that jets are no longer burning.

Big Business Has All the Advantages in the Pandemic; Even now, some of them are hiring and expanding while small companies are getting crushed.
Conor Sen – Bloomberg
Even if fiscal stimulus is successful in getting the U.S. economy back on stable ground after the Covid-19 crisis, the economy will inevitably be transformed. When it comes to the labor market, despite the best efforts of policy makers to help small businesses, we’re likely to see employment shift to larger companies, accelerating a trend that’s been in place for several years.

Exchanges, OTC and Clearing

European Exchanges will remain open
The FESE membership, comprising Exchanges across Europe, are not immune from the effects triggered by the rapid spread of Covid-19 and its impact on the economic environment. Whilst this situation is not without its challenges for exchanges, it is crucial that the markets remain open.

The World Federation of Exchanges responds to European Commission’s consultation on digital resilience
World Federation of Exchanges
The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has responded to the EU Commission’s consultation paper on Digital Operational Resilience Framework for financial services: Making the EU financial sector more secure.

The World Federation of Exchanges responds to European Commission consultation on crypto assets
World Federation of Exchanges
The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has responded to the European Commission’s consultation paper on the EU regulatory framework for crypto assets.

Deutsche Bank nominates Deutsche Börse chief for its board; Theodor Weimer’s arrival would put him in strong position to succeed Paul Achleitner as chairman
Olaf Storbeck – FT
Deutsche Bank has nominated Deutsche Börse chief executive Theodor Weimer for its supervisory board in an unexpected move that makes him a leading candidate to succeed embattled chairman Paul Achleitner.

DTCC:Effective immediately, the Government Securities Division (“GSD”) of the Fixed Income Clearing Corporation (“FICC”) has ceased to act for Ronin Capital LLC, and account numbers 9633 and 9937, respectively, pursuant to Rule 21 of the GSD Rulebook. GTACO on E-mini Futures
Effective this Sunday, March 22 (trade date Monday, March 23), pending completion of all regulatory review periods, Basis Trade at Cash Open (TACO) transactions on E-mini Nasdaq-100 and E-mini Russell 2000 futures will be listed for trading on CME Globex and for submission for clearing via CME ClearPort.


Fintech Firms Lobby For Role In Sending Relief Funds To Small Businesses, Saying Government Can’t Move Quickly Enough
Elaine Pofeldt – Forbes
How to break $1M in revenue in a business staffed only by the owners
With many small business owners in danger of running out of cash as their businesses remain closed in the coronavirus crisis, fintech companies are lobbying to disperse government relief funds to them.

YCharts Adds Coronavirus Data to Help Investors Track Economic Impact; The newly-added data series will enable investors to effectively track cases, and analyze trends in how the coronavirus crisis is impacting security and market performance
YCharts, an investment research, analytics, and client communications platform, today announced the addition of several new coronavirus (COVID-19) crisis data series that will enable investors to more closely monitor its global impact.


Tezos Foundation had over $600M in assets as of January, 47% in bitcoin
Yogita Khatri – The Block
Switzerland-based Tezos Foundation had $635 million in assets as of January; Almost half of these assets were held in bitcoin at the time; The foundation raised $232 million worth of bitcoin and ether in an ICO in 2017
Tezos Foundation, a non-profit behind the development of the Tezos protocol, had $635 million in total assets as of January 31.

Silvergate’s clients experience outbound wire transfer issues tied to problems with Fedwire payments processor
Frank Chaparro and Ryan Todd – The Block
Clients of Silvergate, the popular San Diego-based bank known for servicing cryptocurrency firms, reported issues with certain money wires to the firm, several sources told The Block.

Gemini to offer clients NYFIX connectivity with Itiviti; Itiviti will provide Gemini’s cryptocurrency clients access to trade with its counterparts through its FIX-based order routing network, NYFIX.
Kiays Khalil – The Trade
Cryptocurrency exchange and custodian Gemini will roll out the ability for clients to trade with its counterparts through Itiviti’s NYFIX network.

Tezos Foundation to settle all class action lawsuits
Celia Wan – The Block
Tezos Foundation announced that it has entered into a settlement of all class-action lawsuits. The settlement, if approved by the court, will conclude the blockchain project’s prolonged Class Action dispute over its $232 million initial coin offering (ICO). “The Tezos Foundation chose to settle all claims because the Tezos Foundation believes it is in the best interest of the Tezos project and community as a whole.

Coinbase Broke Traffic Records and Saw Massive Volume During Market Collapse
Danny Nelson, Nikhilesh De – Coindesk
Coinbase saw record site traffic and a massive surge in 24-hour trading volume during last week’s coronavirus-driven market swings, CEO Brian Armstrong said in a statement shared with CoinDesk. The San Francisco-based crypto exchange said it processed $2 billion in crypto last Thursday and Friday (for comparison, Coinbase saw $394 million in volume over the past 24 hours, according to Bitwise). Last Thursday also beat Coinbase’s previous traffic record by over 50 percent, Armstrong said.

Zimbabwe U-Turns on Crypto, Looking to Stabilize Local Economy
Osato Avan-Nomayo – Cointelegraph
The Reserve Bank of Zimbabwe, the country’s central bank, is considering a regulatory sandbox for crypto companies in an apparent change from its previous anti-cryptocurrency stance. The proposed sandbox is reportedly part of a broader agenda by authorities in Zimbabwe to revamp the nation’s financial sector, which has seen massive hyperinflation since 2007.

Crypto hedge fund Adaptive Capital is shutting down after it ‘took a big hit’ during last week’s bitcoin price plunge
Frank Chaparro – The Block
Crypto hedge fund Adaptive Capital is shutting down, The Block has learned. In an investor letter reviewed by The Block, Adaptive said that it plans to return remaining capital to its Limited Partners following a steep drop in bitcoin’s price during the March 12-13 trading session. “Adaptive has made the decision to close operations and return the remaining funds to investors,” the firm wrote. “We are convinced that the risks of continuing operations in such an unstable environment outweigh the potential benefits.”

Monex Gifts Bitcoin to Shareholders with Coincheck Crypto Accounts
Rachel McIntosh – Finance Magnates
Tokyo-based financial services company Monex Group has announced that it will grant a small amount of Bitcoin as a year-end shareholder benefit for the fiscal year 2019. The BTC will only be gifted to shareholders who hold accounts at cryptocurrency exchange Coincheck, which is operated by a Monex subsidiary.

VC Tim Draper Eyes India Investments as Nation Enters Crypto ‘Renaissance’
Sebastian Sinclair – Coindesk
Billionaire venture capitalist Tim Draper plans to invest in India now the central bank’s ban on financial services for cryptocurrency companies has been overturned. On March 22, Draper tweeted that the recent decision by the supreme court in favor of crypto firms represented “a renaissance for India,” underscoring a change in sentiment for investors who can now begin investing in the local blockchain industry. In an interview with Inc42 on March 21, Draper said he had “met several bitcoin and crypto startups” during a trip to India in mid March, adding that he hoped to fund a number of them.

Bitfinex to further delist 87 trading pairs amid low liquidity
Yogita Khatri – The Block
Crypto exchange Bitfinex is set to further delist 87 trading pairs due to low levels of liquidity. The pairs being removed include several altcoins paired against both bitcoin (BTC) and ether (ETH), as well as against tether (USDT) and fiat currencies. Some of these pairs include altcoins of notable projects, such as token creation platform Bancor, blockchain-based AI marketplace project SingularityNET and adult industry-oriented blockchain project SpankChain, among others. Bitfinex said the removal, effective March 26, will help improve liquidity and the trading experience for users.

Blow To Bitcoin As Russia Moves To Effectively Ban Crypto
Billy Bambrough – Forbes
The bitcoin and cryptocurrency community is reeling from the sudden market downturn in the face of the coronavirus crisis, with bitcoin prices swinging wildly over recent days. Earlier this month, many cheered India’s decision to permit banks in the country to trade cryptocurrency—something that was expected to boost the bitcoin price though the market collapsed amid coronavirus-induced panic.

Remittance firm Intermex says it won’t use Ripple solutions for ‘core’ markets like Mexico
Yogita Khatri – The Block
Nasdaq-listed remittance firm International Money Express (Intermex), which partnered with Ripple last month, has said that it won’t leverage Ripple solutions for its “core” markets like Mexico. In the latest earnings call, Intermex chairman, president and CEO Robert Lisy, said: “Ripple will not be an answer for places like Mexico.” This is because Intermex has already built relationships with key payers in the region, such as Bancoppel and Elektra. “We have very tight relationships that [are] strategically setting plans and objectives with those payers. And so you won’t really see us leveraging Ripple in our core markets,” said Lisy.

The Maker Foundation appears to be winning MKR auctions meant to cover a debt shortfall. The group says it’s helping bidders to participate
Celia Wan – The Block
On-chain data shows that the Maker Foundation has been participating in a series of auctions intended to cover $4 million in undercollateralized system debt created last week – and thus far, it appears to have won them all. The MKR auction was triggered when roughly $4.5 million undercollateralized debt was created after certain liquidators were able to win collateral liquidation auctions with 0 DAI, the Maker system’s stablecoin.


Michael R. Bloomberg ended his presidential campaign on March 4.
Reid J. Epstein and Alexander Burns – NY Times
Michael R. Bloomberg is abandoning plans to form a new super PAC for the presidential race and pay his field organizers through November, instead opting to give $18 million to the Democratic National Committee for the party’s battleground states program.

New York governor mandates all non-essential workers must stay home
New York Gov. Andrew Cuomo just announced that 100% of non-essential workers should stay home. Only essential businesses will be functioning. Cuomo is calling it “New York state on pause.”

Two US senators sold shares after receiving virus briefing; Richard Burr and Kelly Loeffler offloaded stock shortly before market tumble
Kadhim Shubber – FT
Two Republican senators offloaded millions of dollars in stock shortly before the US markets crashed in response to the coronavirus pandemic.

Virus Drug Touted by Trump, Musk Can Kill With Just Two Gram Dose
Bloomberg News
China recommended chloroquine for coronavirus a month back; Within days, it cautioned against severe side effects
The drug touted by the U.S. President Donald Trump as a possible line of treatment against the coronavirus comes with severe warnings in China and can kill in dosages as little as two grams. China, where the deadly pathogen first emerged in December, recommended the decades-old malaria drug chloroquine to treat infected patients in guidelines issued in February after seeing encouraging results in clinical trials. But within days, it cautioned doctors and health officials about the drug’s lethal side effects and rolled back its usage.

Biden Calls on CEOs to Refrain From Stock Buybacks for This Year
Ryan Teague Beckwith and Vildana Hajric – Bloomberg
Democratic presidential front-runner Joe Biden called on chief executives of U.S. publicly traded corporations to not buy back any company stock this year as the nation battles the coronavirus pandemic.

A national crisis and a president incapable of empathy
Paul Waldman – Washington Post
When President Trump decided to give daily news conferences during the coronavirus crisis, it was not because he alone knows enough to keep the American people properly informed during this trying time. The obvious intent was to demonstrate command and show the public that he is on top of the situation, so they can see their president actively confronting the biggest challenge of his time in office.

CREW Files Ethics Complaints Against Burr and Loeffler
Washington- Senators Richard Burr and Kelly Loeffler should be investigated for possible violations of the STOCK Act, insider trading laws and ethics rules when they sold millions of dollars in stock assets after receiving nonpublic briefings about the coronavirus outbreak, according to a Senate Ethics Committee complaint filed today by Citizens for Responsibility and Ethics in Washington (CREW). The Ethics Committee should also investigate any other senator if facts emerge of possible violations on their parts.

Senators Got a Coronavirus Briefing. Then They Sold Stocks. What Now?
Shane Goldmacher – NY Times
Richard Burr and Kelly Loeffler are among the senators facing criticism for offloading investments before the market tumbled. Here’s a look at the political consequences they might face.
Senator Richard M. Burr, Republican of North Carolina, and Senator Kelly Loeffler, Republican of Georgia, have come under fire for selling off stocks collectively worth millions of dollars ahead of the economic downturn that has coincided with the coronavirus pandemic.

Loeffler among senators whose stock trading during coronavirus raises questions
Tia Mitchell – AJC
U.S. Sen. Kelly Loeffler had been on the job less than three weeks when she attended a private, senators-only briefing on the spread of COVID-19.

World War II-Style Mobilization Order May Carry Legal Risks
Susan Decker and Christopher Yasiejko – Bloomberg
Companies may be called on to make products to fight pandemic; Patent owners can’t block use of inventions, can demand cash
Automaker General Motors Co. and Elon Musk, the CEO of Tesla Inc. and SpaceX, have offered to make hospital ventilators, and other manufacturers are being called upon by the Trump administration to quickly make 500 million N95 air-filtering respirator masks. But as companies help the government fight the coronavirus pandemic in a potential World War II-style mobilization, they are venturing into a legal minefield over patents.

Do More to Avert a Liquidity Crisis; Next steps for Congress, the Fed, the Treasury and the FDIC.
Hal Scott – WSJ
The Federal Reserve, Treasury Department and banking regulators deserve congratulations for their bold, necessary actions to provide liquidity to the U.S. financial system amid the coronavirus crisis. But more remains to be done.

Be careful. Trump may exploit the coronavirus crisis for authoritarian ends
Andrew Gawthorpe – The Guardian
When he no can longer lie or deny, he’ll blame immigrants, journalists, people of color, liberals and other enemies
Donald Trump’s Oval Office address on coronavirus was terrifying because it revealed a man completely unmatched to the moment. Even though he was reading from a teleprompter, the president got the details of his major policy announcements wrong. He attempted no emotional connection with or comfort of the tens of millions of Americans whose lives are being upended by the threat of the disease. He didn’t even have anything useful to say about what his own top scientist has described as America’s “failing” testing regime, which has screened about as many people all year as South Korea does in a day. In a presidency accustomed to lows, this one was quite literally sickening.


CFTC extends UMR relief to ease pandemic disruption
Securities Lending Times
The US Commodity Futures Trading Commission (CFTC) has voted unanimously to finalise a one-year extension of the initial margin compliance deadline for market participants with the smallest uncleared swaps portfolios.
“There is universal agreement that this extension will mitigate rather than exacerbate risk,” says CFTC chairman Heath Tarbert.

UK regulators put work on hold to ease coronavirus burden; Bank probes paused to help financial services providers focus on their customers’ needs
Matthew Vincent – FT
Britain’s financial regulators have announced the postponement of “non-critical” regulatory work — on top of the cancellation of the 2020 bank stress tests — to allow financial services groups to focus on customers’ needs during the coronavirus disruption.

CFTC Issues Third Wave of Relief to Market Participants in Response to COVID-19
The Commodity Futures Trading Commission today announced that in response to the COVID-19 (coronavirus) pandemic, the Division of Swap Dealer and Intermediary Oversight (DSIO) has issued two additional no-action letters providing temporary, targeted relief to a large U.S. bank that helps finance America’s oil and gas sector and to those who operate commodity-focused investment funds the CFTC regulates.

CFTC Amends Agenda for Energy and Environmental Markets Advisory Committee March 24 Meeting
Commodity Futures Trading Commission Commissioner Dan Berkovitz, the sponsor of CFTC’s Energy and Environmental Markets Advisory Committee (EEMAC), today announced amendments to the agenda for the public meeting on Tuesday, March 24, 2020. The CFTC’s Division of Market Oversight Market Intelligence Branch (MIB) will present on recent developments in, and the operation of, the financial markets, with a focus on the energy derivatives markets.

SEC Enables Immediate Effectiveness of Proposed Rule Change to Facilitate NYSE Electronic Auctions in Light of Temporary Closure of Physical Trading Floor
The U.S. Securities and Exchange Commission noticed for immediate effectiveness a proposed rule filing submitted by New York Stock Exchange LLC (NYSE) to facilitate electronic auctions in light of its decision to temporarily close its New York trading floor.

SEC Provides Conditional Regulatory Relief for Registered Transfer Agents and Certain Other Persons Affected by the Coronavirus Disease 2019 (COVID-19)
SEC continues to closely monitor the impact of the coronavirus on investors and capital markets
The Securities and Exchange Commission today announced that it is providing conditional regulatory relief for registered transfer agents and certain other persons with regulatory obligations under the federal securities laws.

COVID-19 information
In coordination with the Council of Financial Regulators (CFR), ASIC is focusing its regulatory efforts on challenges created by the COVID-19 pandemic.

ASIC recalibrates its regulatory priorities to focus on COVID-19 challenges
In coordination with the Council of Financial Regulators, ASIC will focus its regulatory efforts on challenges created by the COVID-19 pandemic. Until at least 30 September 2020, the other matters that ASIC will afford priority are where there is the risk of significant consumer harm, serious breaches of the law, risks to market integrity and time-critical matters.

ESMA delays extension of tick size regime to SIs due to coronavirus; European regulators have been told not to prioritise supervision of the changes to systematic internalisers amid the coronavirus pandemic.
Hayley McDowell – The Trade
New rules in Europe that will see systematic internaliser (SI) trading venues fall under the tick size regime have officially been delayed, as the EU markets watchdog urges regulators to focus on handling the ongoing coronavirus pandemic.

Reviving research in an unbundled world; As the AMF in France looks to revive the declining research market in Europe under unbundling, David Whitehouse finds that providers who can supply high-quality ESG research could be the winners of an upcoming review of MiFID II.
David Whitehouse – The Trade
A recent move by the Autorité des Marchés Financiers (AMF) in France to create a virtual marketplace to improve the quality of financial research has drawn short shift from investors just starting to find ways of navigating the MiFID II regulations introduced in January 2018.

Pandemic forces FCA to request financial disclosures delay; Amid ‘unprecedented events’
Mike Sheen – InvestmentWeek
The “unprecedented events” surrounding the coronavirus pandemic have forced the Financial Conduct Authority (FCA) to request that companies delay the publication of preliminary financial statements, many of which were due over the coming days.

Investing and Trading

Weird price dislocations are shaping the $4.1tn US municipal bond market; Coronavirus and financial storms have changed which are the cheapest fixed income relative value products
John Dizard – FT
At times like these, those who need cash will let go of what they can sell, not what they should sell. The weird dislocations in pricing this can create are, arguably, nowhere more evident than in the $4.1tn US municipal bond market. The highest quality, AAA rated, state government bond issues are in some cases priced with yields 100 or 200 basis points above where they should be, based on pricing in the near past or on rational expectations.

Waiting game continues for pandemic bonds payout; Countries will not find out until April whether virus-fighting funds will be released
Anna Gross – FT
Poor countries affected by the coronavirus outbreak will have to wait until the middle of next month to find out if the World Bank’s specially designed “pandemic bonds” will release funds to help fight the disease. Some investors are questioning whether they will pay out at all.

Analysts point finger at ‘risk parity’ strategy in market rout; Funds are designed to perform well at all times but some say they exacerbate sell-offs
Robin Wigglesworth – FT
When financial markets were rattled across the board last week, some investors and analysts thought they knew where to point the finger. “The risk parity kraken has finally been unleashed,” one tweeted.

Why Many Bond ETFs Now Trading At Discounts
Lara Crigger –
market volatility began, bond ETFs big and small have persistently traded at discounts to net asset value (NAV). (Read: “Understanding Premiums & Discounts.”)

Stock Market Meltdown’s Historic Velocity Bruises Investors; As fast as the downturn has been, many fear the worst has yet to come
Amrith Ramkumar – WSJ
Markets have never unraveled as quickly as they did in the past month. Stocks are falling faster than they did during the financial crisis, the crash of 1987 or the Great Depression. Investors are retreating from corporate bonds at the swiftest pace ever. An index of raw materials is at all-time lows. And funding shortages around the world have fueled a race for dollars, powering the U.S. currency to a nearly 18-year high.

Big deals in limbo spell ‘arb-ageddon’ for hedge funds; Coronavirus-linked turmoil causes trouble for mergers such as EssilorLuxottica/GrandVision
FT reporters
Hedge funds that bet on the completion of pending mergers and acquisitions are nursing heavy losses, as the coronavirus outbreak wreaks havoc in global markets and puts many deals in jeopardy.

A Longstanding Fear About The Corporate Debt Market May Finally Be Coming True
Tracy Alloway and Joe Weisenthal – Bloomberg
For a long time, people have been warning that corporate debt could be the major source of vulnerability in today’s economy. And the market meltdown that we’ve been seeing since the beginning of March could make those fears a reality. On this week’s podcast, we speak with frequent Odd Lots guest Chris White of Viable Markets, on how the extreme search for yield in recent years, combined with massive issuance of debt, combined with the idiosyncrasies of the corporate debt market, could be a setup primed for disaster.

Real Estate Billionaire Barrack Says Commercial Mortgages on Brink of Collapse
Erik Schatzker – Bloomberg
Warns of cascade of margin calls, foreclosures, bank failures; White paper calls for banks, government to coordinate relief
Real estate billionaire Tom Barrack said the U.S. commercial-mortgage market is on the brink of collapse and predicted a “domino effect” of catastrophic economic consequences if banks and government don’t take prompt action to keep borrowers from defaulting.

Stocks Decline With U.S. Futures; Bonds Edge Up: Markets Wrap
Todd White – Bloomberg
Europe shares sink; S&P 500 contracts rebound from limit down; Spain, Italy suffer worst days of coronavirus pandemic deaths
Stocks dropped globally along with American equity futures after a weekend surge in the coronavirus death toll and a failure by U.S. Congress to agree on a $2 trillion stimulus plan. Government bonds rose, as a Federal Reserve official reiterated its willingness to unleash more support.

Coal Is Now the World’s Most Expensive Fossil Fuel
Dan Murtaugh – Bloomberg
Coal, the dirtiest and usually the cheapest option for energy, is now the world’s most expensive fossil fuel.

Refusing Free Money Is a Sign of Fear; A vital indicator of a dollar squeeze is flashing red. It means trouble for banks.
Andy Mukherjee – Bloomberg
Fear is when you want to pick up the shiny nickel lying in the road, but freeze at the sound of the approaching steamroller. The currency market equivalent of this is a widening basis swap — free money that banks are too scared to pocket. For the fourth time in the past decade, the fear gauge is starting to go wild.


Coronavirus Crisis Shows That Banks Need To Conduct More Strenuous Stress Tests Now
Mayra Rodriguez Valladares – Forbes
When President Trump’s own U.S. treasury secretary states that unemployment could reach 20%, unless legislators finally start implementing some type of fiscal stimulus, what more of a signal do you need to see that the U.S. is in trouble? We have not had 20% unemployment since 1935 during the Great Depression.

BankThink Speed matters during a crisis. Here’s how tech can help.
Daniel Gorfine – American Banker
Financial technology needs to be a part of the policy and economic toolkit as the world is at a near-standstill during this coronavirus pandemic, sending financial shockwaves through many businesses and households.

Man Group’s Draaisma notes inflation paradigm shift is possible
Izabella Kaminska – FT
Back in November 2008 when the world was falling apart and everyone was sell, sell, selling… there was one man who saw the potential of a major equity bull run taking off in a big, big, big way.

Citadel Launching New Fund to Take Advantage of Market Conditions; The multistrategy giant has created a relative value fund.
Stephen Taub – Institutional Investor
Ken Griffin’s Citadel is raising money for a new fund designed to take advantage of the market’s current volatility and selloff.The Chicago multistrategy firm disclosed in a regulatory filing it is launching the Citadel Relative Value Fixed Income Fund. It has not yet raised any money, according to the filing.According

If Ray Dalio Isn’t Making Money Now, Neither Will You; The coronavirus is upending traditional relationships between asset classes. Even the smartest money is failing the test.
Shuli Ren – Bloomberg
The coronavirus outbreak is costing hedge funds billions, as a massive dislocation across asset classes causes a breakdown in traditional relationships.

Deutsche Bank Says Five Ex-Board Members Probed Over Cum-Ex
Karin Matussek and Nicholas Comfort – Bloomberg
Scope of the investigation may be broadened, bank says; Report comes after two London bankers convicted in tax scheme
Deutsche Bank AG said five former management board members are under investigation for tax evasion, days after the first two bankers were convicted in Germany’s long-running Cum-Ex scandal.

Swedbank failings on EUR37bn of transactions revealed in report; Clifford Chance review reveals lack of controls to combat money laundering
Richard Milne – FT
Swedbank carried out EUR37bn of transactions with a high risk for money laundering over a five-year period, according to a damning report that shows the Swedish bank actively targeted high-risk individuals in the Baltic region and points to failings from both top management and the board.

Goldman Sachs spends $1bn to shore up two money market funds; Coronavirus crisis triggers rush of selling by institutional investors
Laura Noonan – FT
Goldman Sachs spent more than $1bn to shore up liquidity in two of its “prime” money market funds after a rush of outflows, in the second case of a big bank seizing on new Fed measures to stave off a liquidity crunch in its funds.

Goldman CEO Bucks Wall Street Trend With 20% Pay Bump for 2019
Anders Melin and Sridhar Natarajan – Bloomberg
Solomon’s raise comes before cost-cutting push in new strategy; Dimon got small raise, Gorman saw pay cut after record years
Goldman Sachs Group Inc. awarded Chief Executive Officer David Solomon $27.5 million in compensation for 2019, his first full year on the job.

Risk parity funds suffer worst week since 2008; Popular strategy was poleaxed by the decline of both equities and US Treasury bonds
Richard Henderson in New York and Robin Wigglesworth – FT
Risk parity funds, automated investment vehicles pioneered by the hedge fund manager Ray Dalio and designed to do well in almost any market environment, were among the big casualties of financial markets’ wild week, suffering their worst performance since the depths of the credit crisis and the second-worst on record.


New York City Has One-Third of U.S. Virus Cases, Mayor Says
Henry Goldman – Bloomberg
New York City now has roughly a third of all confirmed cases of Covid-19 in the U.S. and half of all cases in New York state, Mayor Bill de Blasio said. “We are now the epicenter of this crisis,” he said at a late Friday news conference.

Coronavirus in N.Y.C.: Region Is Now an Epicenter of the Pandemic; New York City and its suburbs account for roughly 5 percent of global cases, forcing officials to take urgent steps to stem the outbreak.
Jesse McKinley – NY Times
Three weeks after its first coronavirus infection was discovered, the New York City region reached an alarming milestone on Sunday: It now accounts for roughly 5 percent of the world’s confirmed cases, making it an epicenter of the pandemic and increasing pressure on officials to take more drastic measures.

Johnson Shuts U.K.’s Pubs, Restaurants and Gyms to Fight Virus
Tim Ross and Alex Morales – Bloomberg
Cinemas and betting shops will also close after patchy efforts; Ban on socializing will be reviewed every month, Johnson says
U.K. Prime Minister Boris Johnson ordered pubs, restaurants and leisure centers across the country to close from Friday night in a bid to slow the spread of the coronavirus pandemic.

Countries Roll Out Restrictions to Curb Coronavirus; Cases surge past 330,000 globally as New Zealand and parts of India plan lockdowns, while Australia shuts restaurants and bars
Natasha Khan – WSJ
Governments world-wide are increasingly imposing mandatory restrictions on residents to force people to keep their distance from each other, stepping up efforts to slow the global spread of the coronavirus as cases surged past 330,000.

Kurzarbeit: a German export most of Europe wants to buy; Subsidy system for workers on the verge of being laid off becomes a model
Guy Chazan and Richard Milne – FT
The US is facing a tidal wave of jobless claims as the economic impact of coronavirus spreads across rust-belt states and beyond. In Germany, the hope is that a tried-and-tested policy tool, designed specially for such economic downturns, will keep mass unemployment firmly at bay.

Wall Street Circles as China Brokerages Struggle for Returns
Bloomberg News
China securities firms had average 6% return on equity in 2019; Industry is ripe for consolidation as Wall Street moves in
China’s more than 130 brokerages, who have a $21 trillion market to trade and make deals in, aren’t very good at making money.

Vietnam’s Central Bank Says It’s Willing to Intervene to Calm FX Market
Xuan Quynh Nguyen, Nguyen Kieu Giang, and Nguyen Dieu Tu Uyen – Bloomberg
The State Bank of Vietnam says it has enough foreign currency resources to intervene in the foreign-exchange market if necessary, according to a posting on its website.

Swedbank $40 Billion Headache Adds to Pressure on Fired CEO
Charles Daly – Bloomberg
A fresh report shows Swedbank AB handled about $40 billion in dirty money, and raises new questions about top management’s culpability.

SNB Spent Nearly $6 Billion on Currency Interventions Last Week
Catherine Bosley – Bloomberg
The Swiss National Bank appears to have waged the largest barrage of foreign exchange interventions in four years as it sought to control its haven currency and provide liquidity to the market.


Cummings role under scrutiny over delay to UK suppression policy; Cobra scepticism and antipathy towards draconian measures help explain gradualist response
George Parker and John Burn-Murdoch – FT
Boris Johnson has warned that the UK is perhaps only two weeks behind Italy in the scale of its coronavirus outbreak, but the country still lags many European nations in its response. The question frequently put to the prime minister at press conferences is: why?


Spiritual Communion Onscreen: Houses of Worship Rush to Go Online; Services take place without congregants, singers use the mute button and a couple watches a service in bed as the coronavirus forces abrupt changes
Ray A. Smith – WSJ
Last Sunday, Denise Nicholson-Metz, a regular attendee of Sunday services at Ebenezer Baptist Church in Atlanta, worshiped—but not as usual. She and her husband were in bed, watching on a Microsoft Surface laptop.

Marriott, Hotel Owners Furlough Thousands of Workers, Cut Staff; Coronavirus impact worse than post-9/11 attacks, financial crisis combined, Marriott CEO says
Craig Karmin and Esther Fung – WSJ
?Marriott International Inc., the world’s largest hotel company, and a growing number of hotel owners are furloughing tens of thousands of workers or slashing staff in an effort to steer their companies through the coronavirus pandemic.

Thanks to the coronavirus, charity galas are being canceled and nonprofit groups are losing crucial funding
Kate Thayer – Chicago Tribune
In a time of vast cancellations for the good of public health, nonprofit organizations are feeling the burden. Organizations that rely on donors, often through large-scale galas or other events, have had to cancel or postpone planned fundraisers through the spring with the increased spread of the coronavirus that causes COVID-19.

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