Traders Poised to Win in Trump-Era Redo of Oil Speculation Rules

Jan 29, 2020

First Read

Sarao Sentenced to Home Detention
Thom Thompson – John Lothian News

Navinder Singh Sarao escaped possible detention in a U.S. prison for anywhere from 78 to 97 months when he was sentenced yesterday in Chicago to one year of detention to be served at his parents’ home in Hounslow, west London. The term of the sentence begins today.

Sarao pleaded guilty in November 2016 to spoofing the E-mini S&P 500 futures market for six years, from 2009 to 2015, from his childhood bedroom at his parents’ home where he still lived. Sarao admitted to making almost $13 million from his spoofing, on top of another $27 million in profits. The E-mini S&P 500 futures were not his first futures trading rodeo – the Department of Justice calculated that he had lifetime earnings of about $70 million. Sarao was 36 when he was arrested and stopped trading.

After his arrest at home in April 2015, Sarao was jailed in a London prison for four months as his lawyers and parents arranged bail for him. After he was granted bail his lawyers fought his extradition to the United States, where it was thought he would face harsher legal and prison conditions. He lost against the claim that he should be tried in the United States because, among other things, he had perpetrated his alleged crimes on an American market. In November 2016 Sarao was arrested and jailed for three nights after he arrived in Chicago and while he waited for his hearing before Judge Virginia Kendall.

To read the rest of this commentary, go here.

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Hits & Takes
By JLN Staff

Michael Shore has joined OCC as vice president of public relations, Shore, formerly of the CME Group and Magnetar, joins the OCC in a position that was elevated to a vice president role. Shore joins several former CME Group colleagues at the OCC, including Executive Chairman Craig Donohue, CEO John Davidson and Vice President and Chief Operating Officer Scot Warren. This was an excellent hire by OCC, as Shore is well respected among peers and the press. It is an excellent career move for Shore as he has deep ties to several key executives in the organization and he gets to work under one of the best public relations professionals in the industry in David Prosperi.~JJL

The Block has the startling news that Bakkt’s bitcoin options saw zero volume last week.~JJL

Brookings has a paper by Antonio F. Weiss and Laura Kawano about “A proposal to tax financial transactions.“~JJL

Trading Technologies has a blog post on Trade Talk by Michael Unetich titled “Crypto Corner: Autospreader® Tricks & Tools for Cryptocurrency Trading.“~JJL

The CME Group has joined TransUnion, the Federal Reserve Bank of Chicago, and many other Chicago-based banking and financial services companies in being awarded the Human Rights Campaign’s Best Places to Work for LGBTQ Equality 2020.~MR

The FIA is hosting a webinar today, Jan. 29, at 10:30 a.m EST./9:30 a.m. CST highlighting the main trends in trading activity in 2019 in the global exchange-traded derivatives markets. The webinar will use data released by the FIA on Jan. 17, which showed a 13.7% increase in trading volume and an 8.8% increase in open interest over the previous year. The webinar will break down the data by category and region and identify specific markets that contributed to the upsurge in trading activity. It will be moderated by Will Acworth. You can go here to register.~SR

Enterprise blockchain company R3 has released a report predicting the trends that will shape the blockchain space in 2020. Its top 3 takeaways: companies that learned from past mistakes and re-adjusted their production accordingly will be the most successful (no kidding); companies using the technology will start to better understand the technology, allowing for greater innovation; and finally, the needs of private companies will push banks to become more digital, driving adoption of DeFi (decentralized finance) technology like blockchain. You can read the report here.~MR

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A British trader who caused a ‘flash crash’ that sent the stock market into a trillion-dollar dive 10 years ago learned his fate in Chicago federal court
Robert Channick – Chicago Tribune
Ten years ago, trading futures from his parents’ suburban London home, Navinder Sarao shook up the investment world when his computer program set off the “flash crash,” causing the stock market to temporarily lose a trillion dollars in a matter of minutes before recovering.
bit.ly/2U8ojzl

*****This headline and story blaming Navinder Sarao for the flash crash is absolute baloney. Perhaps he should have read the CFTC-SEC Flash Crash Report. If our markets are so fragile that a trader in his parents’ house could crash the markets, we are all sunk.~JJL

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Melinda Gates wants more women involved in Chicago’s tech industry. And she’s putting money where her heart is.
Ally Marotti – Chicago Tribune
Melinda Gates’ investment company Pivotal Ventures is putting $50 million into Chicago and two other cities over the next five years to boost women’s involvement in the tech industry.
The initiative, called Gender Equality in Tech Cities, will work to increase the percentage of women graduating and working in computing-related fields, and boost the share of venture capital funding going to Chicago companies that have at least one founder who is a woman.
bit.ly/2u14EGW

*****Good news for Chicago. We need some, since weed sales dropped after the first day.~JJL

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The Market Is Trying to Put a Price on the Coronavirus Outbreak; Analysts are looking to the 2003 SARS epidemic for lessons, but this time may be different.
Michael P Regan – Bloomberg
Past performance, money managers warn us in countless marketing documents, is no guarantee of future results. Yet when a threat emerges to the value of investment portfolios, Wall Street’s market pundits rush to find an analogous past event.
/bloom.bg/2O6GgdO

***** What did the Dow Jones do during the plague?~JJL

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Tuesday’s Top Three
Our most read story Tuesday by a large margin was Thom Thompson’s reporting for JLN on the Sarao case, Life and Times of Navinder Sarao, which gives a brief history of Sarao and his alleged connection to the Flash Crash. In second place was a repeat from yesterday’s top three, Better Buy: CME Group vs. Cboe Global Markets from The Motley Fool. And more good news for Cboe in our third most read story, Judge dismisses Wall Street ‘fear gauge’ lawsuit against Cboe, from Reuters.

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Lead Stories

Traders Poised to Win in Trump-Era Redo of Oil Speculation Rules
Benjamin Bain – Bloomberg
CFTC plans softer constraints than those proposed under Obama; Commodity position limits have long faced industry opposition
U.S. regulators are poised to issue long-delayed restrictions on excessive speculation in oil and metals markets after tougher proposals stalled during the Obama administration, said three people with direct knowledge of the matter.
/bloom.bg/2u2fixb

‘Flash crash’ trader avoids further jail time
Kadhim Shubber and Claire Bushey – The Financial Times
Navinder Singh Sarao, the British trader implicated in the 2010 stock market “flash crash”, avoided further jail time on Tuesday as his sentencing in Chicago brought a years-long legal drama to a close. The 41-year-old west London-based trader, who has autism and lives with his parents, was sentenced to a year of home imprisonment after he pleaded guilty to “spoofing” charges and subsequently co-operated with an ongoing US crackdown on abusive trading practices.
/on.ft.com/2U3APQN

Wall Street’s London Outposts Are Braced for a Brexit Beating
Viren Vaghela, Silla Brush, and Harry Wilson – Bloomberg
Wall Street titans have come to dominate London finance. Now they have the most at stake as they face Brexit’s final reckoning — and with less influence than they are accustomed to. Banks such as Goldman Sachs Group Inc. and JPMorgan Chase & Co. use London as their base for doing business with European Union clients. Now, they are torn between the impulse to keep a big presence in the financial hub and their frustration at the U.K.’s go-it-alone approach as it prepares to leave the bloc on Friday.
/bloom.bg/2U1hiR4

Goldman Sachs Is Remaking Itself (Again); After a tough few years, the bank is hoping its first “investor day” on Wednesday will help it return to Wall Street favor.
Kate Kelly – NY Times
Goldman Sachs is going to do something unusual this week: talk openly with investors. The 151-year-old investment bank has earned a reputation as the impenetrable (and very profitable) black box of Wall Street. But on Wednesday — in a bid to overcome that secretive mantle and convince the outside world that it is ready for a new era of accountability — Goldman Sachs will open its doors to shareholders, analysts, the media and even regulators for its first “investor day.”
/nyti.ms/38I9tnk

Goldman abandons discretion to sell investors on firm’s new future
Aaron Elstein – Crain’s NY Business
For decades Goldman Sachs operated under the assumption that the better part of valor is discretion. Indeed, the firm’s name doesn’t appear on its Lower Manhattan headquarters building.
But times are changing at Goldman. Wall Street’s great money-making machine has posted two consecutive disappointing quarters. Last year revenues were flat, even as the stock market soared by 31%. The firm’s stock price has gone nowhere in the past three years, and investors are questioning like never before what sort of future Goldman has.
bit.ly/2U4uuV7

Make the punishment fit the white collar crime; The US has experimented with huge fines but these are falling out of fashion
Brooke Masters – FT
Last week, the Swiss banking regulator announced it had punished a local bank chief for insider trading using privileged information obtained at work. Finma said it is confiscating 730,000 francs ($752,000) in ill-gotten gains and banned the executive from managing a bank for four years.
/on.ft.com/38KNigr

Palladium’s Biggest Miner Takes Steps to Cool Red-Hot Market
Elena Mazneva and Yuliya Fedorinova – Bloomberg
Norilsk Nickel to supply more ingots to provide market relief; Company says speculators have created palladium ‘bubble’
Financial speculators have created a bubble in palladium that’s bad for the industry, according to MMC Norilsk Nickel PJSC, the world’s biggest producer of the metal.
/bloom.bg/2RWgKJu

Global Currency Markets Show Signs of Ignoring the Coronavirus
Vassilis Karamanis – Bloomberg
Fall in haven Swiss franc suggests traders are moving on; Australian dollar options, Japanese yen, signal lack of panic
A sense of apathy about the coronavirus appears to be taking root in global foreign exchange markets. Haven currency the Swiss franc slipped to nearly a three-week low against the dollar on Wednesday, even after Hong Kong initiated travel bans to contain the disease. The Japanese yen, another traditional refuge for investors, has failed to gain since then, while the Australian dollar is showing signs of weathering the outbreak.
/bloom.bg/2vwtLSB

Big volatility options trade points to mystery investor ’50 Cent’
April Joyner – Reuters
Large options trades some people have attributed to the mysterious investor known as “50 Cent” have become more profitable in recent days, as fears of the economic impact of the coronavirus injected volatility back into stock markets.
/reut.rs/2U4wbSv

Fed’s Repo Response Isn’t Fueling the Stock Market; Equities are being driven by low rates and a healthy economy, not central bank T-bill purchases.
Bill Dudley – Bloomberg
During the past few months, the U.S. stock market has surged as the Federal Reserve bought hundreds of billions dollars of Treasury bills to add reserves to the banking system and calm the repo market. Are the two connected? Or is the stock market going up for other reasons? The answer is important because the Fed’s large T-bill purchases will end soon. If the central bank’s balance-sheet expansion is truly lifting stocks, then the market is vulnerable when these purchases cease.
/bloom.bg/38PDHoE

Why Brexit Opponents Lost the Vote and the Argument; Opponents of Brexit had their chances to reverse the referendum and change the course of history. But they never had a compelling message.
Matt Singh – Bloomberg
Britain will leave the EU at 11 pm London time on Friday, following Boris Johnson’s victory at last month’s general election. Much has been written, including in this column, about the results of the election, and in particular how the Labour Party lost it so badly. But Brexit also means another postmortem – why did the efforts to stop Brexit fall short?
/bloom.bg/2RZOUfy

Sixteen Leading Quants Imagine the Next Decade in Global Finance
Justina Lee – Bloomberg
Humans beating back the machines. Value rising from the dead. Factor funds dethroning the bond kings. If the world’s top quants are right, get ready for another decade of disruption across investing strategies, business models and the very structure of markets.
/bloom.bg/2U5B8KX

The Biggest ESG Funds Are Beating the Market
Mathieu Benhamou, Emily Chasan and Saijel Kishan – Bloomberg
Nine of the biggest ESG mutual funds in the U.S. outperformed the Standard & Poor’s 500 Index last year, and seven of them beat their market benchmarks over the past five years
/bloom.bg/2O9GUrc

Exchanges, OTC and Clearing

Nasdaq Reports Fourth Quarter and Full Year 2019 Results; Delivers Strong Revenue Growth in Non-Trading Segments(1)
Nasdaq
Nasdaq, Inc. (Nasdaq: NDAQ) today reported financial results for the fourth quarter and full year 2019. 2019 net revenues were $2,535 million, an increase of $9 million from $2,526 million in the prior year. The full year increase in net revenues included a $112 million positive impact from organic growth in the non-trading segments, partially offset by a $29 million organic decrease in Market Services, a $39 million negative net impact from acquisitions and divestitures and a $35 million unfavorable impact from changes in foreign exchange rates.
bit.ly/3aOi4GV

Nasdaq Announces Quarterly Dividend of $0.47 per Share
Nasdaq
The Board of Directors of Nasdaq, Inc. (Nasdaq: NDAQ) has declared a regular quarterly dividend of $0.47 per share on the company’s outstanding common stock. The dividend is payable on March 27, 2020 to shareholders of record at the close of business on March 13, 2020. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by the Board of Directors.
bit.ly/2O9tZp1

Eurex expands Total Return Futures offering to include Collateral Index TRFs
Eurex
Building on the recent expansion of their Total Return product suite into Equity & Basket TRFs, Eurex has today announced the launch of Collateral Index TRFs. The construction of the index for Collateral Index TRFs is specifically designed to represent generic index financing or collateral baskets.
bit.ly/3aQeFr9

LCH targets hardwired pre-cessation triggers; Proposal aims to align transfer pricing for cleared and bilateral markets in the event of split on ‘zombie Libor’ triggers
Helen Bartholomew – Risk.net
The largest clearer of interest rate swaps is proposing to automatically flip cleared Libor swaps to alternative fixings if regulators deem the ailing benchmark to be non-representative of underlying markets.
bit.ly/2U7O2s2

Fintech

Cloud9 and GreenKey Partner to Enable Next-Gen Voice Trading
Press Release
Cloud9 Technologies (“Cloud9”), a leader in cloud-based communications, and GreenKey Technologies (“GK”), a leader in AI-powered conversational analytics, have teamed up to provide the institutional marketplace with an innovative solution that will enable a more efficient and secure extraction of voice trading data. The collaboration will leverage Cloud9’s C9 Trader voice collaboration platform and GreenKey’s speech recognition (ASR) and natural language processing (NLP) engine within IPC’s Connexus™ Cloud financial ecosystem.
/prn.to/2RCWLRj

The TRADE 2020 Algorithmic Trading Survey launches; Buy-side respondents have until the 28 February to rate algo providers, with high performers due to be recognised at this year’s Leaders in Trading ceremony in November.
Hayley McDowell – The Trad
Institutional investors and asset managers are invited to rate the features and capabilities of their algo providers in The TRADE’s 2020 Algorithmic Trading Survey.
bit.ly/2tYV6fL

Fintech (Financial Technology) Market to hit $460 billion by 2025
Yahoo Finance
The “Fintech (Financial technology) Market by Type (Application Program Interface (API), Data Analytics, Artificial Intelligence, Blockchain, and Others), By Applications (Banking and Payments, Financial Management, Financing, and Insurance), and By Region, Global Forecast 2018 to 2025” study provides an elaborative view of historic, present and forecasted market estimates.
/yhoo.it/2RXtvUe

Cloud9 and GreenKey Partner to Enable Next-Gen Voice Trading
Cloud9 Technologies
Cloud9 Technologies (“Cloud9”), a leader in cloud-based communications, and GreenKey Technologies (“GK”), a leader in AI-powered conversational analytics, have teamed up to provide the institutional marketplace with an innovative solution that will enable a more efficient and secure extraction of voice trading data. The collaboration will leverage Cloud9’s C9 Trader voice collaboration platform and GreenKey’s speech recognition (ASR) and natural language processing (NLP) engine within IPC’s Connexus™ Cloud financial ecosystem.
/prn.to/2RCWLRj

Redline Trading Solutions Onboards 24 Exchange to Expand Support for Electronic NDF Trading
PRNewswire
Redline Trading Solutions, the premier provider of high-performance market data and order execution systems for automated trading, announced today that 24 Exchange, a new offshore, multi-asset class, over-the-counter (OTC) platform, is now supported by Redline’s InRush Ticker Plant and Order Execution Gateway for its FX clients.
bit.ly/2Gu3Dd4

Cryptocurrencies

Russian Bitcoin Suspect Charged in France After Greek Extradition
Gaspard Sebag – Bloomberg
Alexander Vinnik was charged with extortion, money laundering; Vinnik, detained since 2017, is also wanted by U.S., Russia
Alexander Vinnik, a Russian citizen accused by the U.S. of having supervised a digital-currency exchange that helped criminals launder billions of dollars, will probably remain in France to face cryptocurrency-related charges there, his lawyers said in Paris.
/bloom.bg/38I4AL0

Bitcoin Jesus Caves as Fight Over Fourth-Biggest Coin Heats Up
Olga Kharif – Bloomberg
Proposed developer support fund irks cryptocurrency purists; Project lost the most developers in first half of 2019
A proposal that threatened to tear apart Bitcoin Cash, the world’s fourth-largest cryptocurrency, appears to be on the rocks. On Jan. 22, a group of key Bitcoin Cash supporters proposed changing the cryptocurrency’s computer code to temporarily direct 12.5% of all newly issued coins to fund technology development — an idea that irked many purists who prefer the typical decentralized governance of most cryptocurrencies.
/bloom.bg/2RXiJgJ

I took out a loan with cryptocurrency and didn’t sign a thing
Stan Schroeder – Mashable
Last week, I took out a loan without meeting anyone, signing anything, or even interacting with a human being. I also invested in a variety of assets that earn interest of up to 5.9 percent a year. I did it all on my own, from my computer. All I needed was some cryptocurrency and a knowledge of how these systems work. The amounts were tiny: The loan was $30, and I had $95 worth of crypto earning interest. But I could’ve easily done the same with much larger amounts, at those exact same terms.
bit.ly/2uLmHRq

The Crypto Mogul Who’s Got the Ear of China’s Central Bank
Zheping Huang and Colum Murphy – Bloomberg
Tight government ties, strategy pivot secure Huobi’s survival; Exchange kingpin Leon Li helps shape China’s crypto blueprint
Leon Li is the rarest of Chinese crypto magnates — one who’s won Beijing’s backing. The founder of Huobi Group is now set to play a pivotal role in China’s effort to build a homegrown crypto-industry.
/bloom.bg/2RZJIIr

Bakkt’s bitcoin options saw zero volume last week
Yogita Khatri – The Block
Intercontinental Exchange (ICE)-owned Bakkt has seen a subdued performance of its recently launched bitcoin options. Last week, i.e. January 20-24, Bakkt saw zero trading volumes, according to data available on the ICE website. The last traded day for the options was January 17, when 20 lots got traded. However, according to data from Skew, Bakkt has seen no trading for its options in the last 10 days. This is because Skew has taken weekends as well into the picture; a more accurate way would be to look at trading days.
bit.ly/37A6GN2

Trend Continues For Countries Looking To Evade U.S. Sanctions Using Crypto
Jason Brett – Forbes
As recent as this Sunday, a report by Asharq Al-Awsat, an Arabic international newspaper headquartered in London, indicated how Iran looks to Bitcoin, the largest cryptocurrency by market capitalization, as a way of evading the impact of U.S. sanctions on its country.
The last two years have shown the U.S. economic sanctions to be effective in Iran, shrinking the Iranian economy by 10-20 percent. For Bitcoin, the policy direction indicates a worldwide crackdown on the anonymity of the cryptocurrency that is primarily driven by both Iran and Venezuela in evading the harsh impact of U.S. sanctions.
bit.ly/3aOhSaF

Opporty founder calls SEC’s ICO lawsuit ‘grossly overstated’ and ‘untruthful’ in an open letter
Yilun Cheng – The Block
Sergey Grybniak, founder of blockchain marketplace Opporty International, has pushed back against key claims included in a Securities and Exchange Commission (SEC) legal complaint against him and his company. The case in question surfaced on Jan. 21 when the SEC filed a complaint in court accusing Grybniak and Opporty International of allegedly conducting an initial coin offering (ICO) of unregistered digital asset securities.
bit.ly/37xvllf

Ex-PBoC Governor Urges China to Join Global Conversation on Libra
David Pan – Coindesk
A former senior official with the People’s Bank of China (PBoC) believes the nation should join a global conversation about regulating stablecoins, with a particular focus on the Libra stablecoin. Min Zhu, former deputy governor at the PBoC, said China should join other nations in regulating the Facebook-led Libra stablecoin, according to a report by South China Morning Post. “I think it’s critically important to join the discussions and take part in coordinated global regulation of Libra,” Zhu said, noting there is still no specific timeline to launching the digital yuan, which is also called Digital Currency Electronic Payment (DCEP), according to the report.
bit.ly/314g1tT

Another Swiss town now accepts bitcoin for tax payments
Yogita Khatri – The Block
The Swiss municipality of Zermatt now lets residents pay their taxes in bitcoin. The new payment option is being offered via crypto financial services firm Bitcoin Suisse, according to an announcement Wednesday. Zermatt is a small town with a population of nearly 6,000. Using Bitcoin Suisse’s point-of-sale solution, installed in the Zermatt town hall, residents can pay local taxes in bitcoin. For online payments, they will have to apply to the Zermatt Tax Office for a crypto payment solution. Taxes paid in bitcoin will then be converted into Swiss francs by Bitcoin Suisse and be transferred to the municipality’s bank account, per the announcement.
bit.ly/2vutwY5

Bitcoin’s use in darknet markets continues to grow: Chainalysis
Yogita Khatri – The Block
The use of bitcoin in darknet markets, such as for buying illegal drugs, has continued to grow, according to data from Chainalysis. However, its share on such markets accounts for less than 1% of all bitcoin transactions, according to Elliptic. In its new Crypto Crime Report, published Tuesday, Chainalysis said over $600 million worth of bitcoin was spent on darknet markets during Q4 of 2019. Bitcoin’s use in legal activities, such as for trading at crypto exchanges and merchant services, however, surpassed its use on darknet markets.
bit.ly/37BYZpj

Publicly traded bitcoin miner Hut 8 announces pending CEO departure, reworked deal with hardware maker Bitfury
Celia Wan – The Block
Hut 8, one of the few publicly-listed bitcoin mining companies, announced Tuesday that its CEO Andrew Kiguel is stepping down. The development was announced alongside the disclosure of an amended agreement with mining hardware firm Bitfury. In a Tuesday blog post, the Toronto-based mining firm said it will begin the search for a successor to replace Kiguel soon, who led the company to generate over $115 million in revenue amidst a fall in the price of bitcoin during 2018. Additionally, Hut 8 also negotiated itself a deal with Bitfury to reduce operating costs and provide “more autonomy to Hut 8 in managing its Canadian operations,” stated the post.
bit.ly/2vwHNUi

Swiss Company Gets Green Light to Incorporate for a Blockchain IPO
Daniel Palmer – Coindesk
In what’s being called a first for Switzerland, a company has been allowed to incorporate for an IPO offering of tokenized shares on a blockchain. In a press release Wednesday, the firm’s adviser Andriotto Financial Services said that Coldrerio, Switzerland-based Overfuture SA’s articles of incorporation directly reference “the digital nature of the shares (tokens) and the use of the blockchain as the technology to keep the shareholders registry.”
bit.ly/2O9gxS4

Crypto Ponzi OneCoin May Have Used Flood of Fake Reviews to Boost Ailing Image
Daniel Palmer – Coindesk
The OneCoin cryptocurrency project – accused by authorities of being a Ponzi scheme – attempted to boost its fortunes by using “inauthentic” accounts to place favorable reviews on TrustPilot and Quora, according to new research. The Digital Forensic Research Lab (DFRLab), an entity under U.S. think-tank the AtlanticCouncil, said in a report on its blog Wednesday that OneCoin launched the “astroturfing campaign” around the same time that its founder, Ruja Ignatova, disappeared following a number of legal cases against her and other members of the project in 2019.
bit.ly/2RCdmEB

Blockchain.Com Launches Full Banking Integration For Turkish Lira To Level Playing Field For Turkey’s Crypto Traders – Turkish Crypto Traders Can Now Buy And Trade Crypto Without The High Fees And Poor Service They’ve Become Accustomed To From Local Exchanges
MondoVisione
Blockchain.com, the leading provider of cryptocurrency products including the world’s most popular crypto wallet, has launched a full banking integration for Turkish Lira (TRY) to create a native payment gateway for users to deposit and withdraw Lira on the Blockchain.com Exchange. Turkish users can now go from account creation to buying crypto in as little as five minutes, without having to use a third-party payment processor.
bit.ly/2u29unn

Politics

McConnell Says GOP Doesn’t Have Votes to Block Impeachment Witnesses; Senate majority leader makes remarks in private Republican meeting
Rebecca Ballhaus, Lindsay Wise and Natalie Andrews – WSJ
Republican leaders said they don’t currently have enough votes to block witnesses in President Trump’s Senate impeachment trial, people familiar with the matter said, after his legal team concluded its efforts to counter Democrats’ charges that the president abused power and obstructed Congress.
/on.wsj.com/2U5626f

EU’s carbon border tax plan is risky but needed; US has warned it will react if climate scheme is seen as protectionism
The editorial board – FT
Most countries claim to have a serious plan to cut greenhouse gas emissions. The EU actually has one, a EUR1tn European Green Deal that aims to make the entire 27-nation bloc carbon neutral by 2050. It includes a measure that until now has been considered too unwieldy, provocative and legally troublesome for any nation to adopt: a carbon border tax. This is a necessary step, but it must be taken with care.
/on.ft.com/2O8oPtn

Germany’s $55 Billion Plan to Scrap Coal Clears Cabinet Hurdle
Brian Parkin and Patrick Donahue – Bloomberg
German coal exit may cost taxpayer over $55 billion by 2038; Over 40 gigawatts of coal power to close, fifth of capacity
Chancellor Angela Merkel’s cabinet approved legislation that sets out the timetable to close more than 100 coal power plants across Germany, entrenching the most important part of a program to green Europe’s biggest economy.
/bloom.bg/2O8c6H4

Huawei denies German report it colluded with Chinese intelligence
Reuters
Huawei [HWT.UL], the leading maker of telecoms network equipment, denied a newspaper report on Wednesday that alleged the German government was in possession of evidence that it had cooperated with Chinese intelligence.
/reut.rs/3aQVlKv

U.S. National Debt Will Rise to 98% of GDP by 2030, CBO Projects; Deficits will exceed $1 trillion a year for at least 11 years, budget office says
Richard Rubin – WSJ
The national debt and sustained federal budget deficits will hit the highest levels since World War II over the next decade, the Congressional Budget Office projected on Tuesday, following multiple rounds of tax cuts and continued increases in federal spending.
/on.wsj.com/2O8Hyp0

GOP establishment prepares to battle Doug Collins; Senior party figures are coalescing around Sen. Kelly Loeffler in any Georgia Senate race.
James Arkin, Melanie Zanona – Politico
Senior Senate Republicans and their allies fired off a warning shot to Rep. Doug Collins Tuesday: stay out of the Georgia Senate race. The Senate GOP and other party members are rallying behind Sen. Kelly Loeffler, who became the 9th female Republican senator after she was sworn in this year to replace Sen. Johnny Isakson.
/politi.co/38MUSXS

Regulation

‘Flash Crash’ Trader Avoids More Jail Time; Trader Navinder Singh Sarao will serve a year of home confinement in case related to stock-market drop in May 2010
Julie Steinberg – WSJ
Navinder Singh Sarao, the British trader accused of contributing to the 2010 stock-market “flash crash,” won’t serve any more time in jail, a federal judge ruled Tuesday, capping a multiyear saga that gripped markets and traders after one of the most dramatic stock plunges in history.
/on.wsj.com/2S02yix

ASIC cancels AFS licence of Australian Cricket Bat Willow Plantation Management Services
ASIC
ASIC has cancelled the Australian financial services (AFS) licence of Melbourne-based responsible entity Australian Cricket Bat Willow Plantation Management Services Limited (ACB).
bit.ly/2RYqH9d

ESMA announces open hearing on its Consultation on Internal Controls for CRAs
ESMA
The European Securities and Markets Authority (ESMA) will hold an open hearing in the context of its Consultation on Internal Controls for Credit Rating Agencies.
bit.ly/2vutz6d

SEC Issues Agenda for February 4 Meeting of Small Business Capital Formation Advisory Committee
SEC
The Securities and Exchange Commission today released the agenda for the Tuesday, Feb. 4 meeting of its Small Business Capital Formation Advisory Committee. During the meeting, the committee will continue to explore funding gaps that impede growth opportunities for entrepreneurs and job creators. To help analyze these gaps, the committee will explore detailed data on public and private companies, investors, funds, and investment activity to examine how entrepreneurs’ diverse capital needs are being met and where policy solutions may be needed. The afternoon session will feature speakers from two smaller regional funds as well as an entrepreneur.
bit.ly/3aRIo3a

CFTC Becomes First Federal Agency to Adopt NIST Privacy Framework
CFTC
In recognition of Data Privacy Day, the Commodity Futures Trading Commission today announced it will become the first federal agency to adopt the National Institute of Standards and Technology (NIST) Privacy Framework. The framework is a voluntary tool designed to improve privacy through enterprise risk management. The CFTC will integrate the framework into its enterprise risk portfolio and use it to better manage and communicate privacy risk throughout the agency.
bit.ly/2O8Dqp0

The SEC’s New Rules Will Move Companies Backward
Eleanor Bloxham – Barrron’s
Amid a long-running bull market, it can be easy to forget that trust in our market system is built on the subtle rules that guide interactions. Now, a crucial investor safeguard is under attack by the very institution whose mission it is to protect investors and promote transparency.
bit.ly/2RXshIB

Investing and Trading

Commodity producers take currency hits from coronavirus;Worsening outbreak is expected to weigh on demand from China for industrial inputs
Anna Gross – FT
Commodity producers have suffered blows to the value of their currencies in the global sell-off after the coronavirus outbreak in China, which is expected to hit demand in the world’s second-largest economy and the wider region.
/on.ft.com/2OohUg7

Markets are much too complacent over the risk of inflation; Investors should find ways to protect portfolios while the cost of doing so is cheap
Peter Cramer – FT
We have not had to worry about inflation for 15 years, and in its absence, complacency has set in. Investors in the US are pricing in an average of 1.75 per cent inflation over the next 10 years, based on implied rates in the Treasury Inflation-Protected Securities market. That is frighteningly low. Investors should not underestimate the possibility of the improbable.
/on.ft.com/2S01KKx

For today’s oil market the real threat is to demand, not supply; Sharp fall in price after the coronavirus outbreak comes despite big outage in Libya
David Sheppard – FT
For a generation of oil traders, so-called geopolitical shocks once meant conflicts and social ruptures that threatened supplies in the Middle East, and which almost invariably sent prices spiralling higher.
/on.ft.com/2O8oDul

Institutions

Trapped Woodford investors told of steep losses; More than 300,000 UK savers have been stuck since June in the £3bn failed fund
Owen Walker – FT
Hundreds of thousands of investors trapped in Neil Woodford’s failed flagship fund face losses of at least a fifth on the bulk of their holdings following Europe’s biggest investment scandal for a decade.
/on.ft.com/2S22tuG

State Street vows to turn up the heat on ESG standards; Fund manager will vote against boards of companies that lag behind peers
Robin Wigglesworth – FT
State Street’s $3.1tn investment arm is planning to start voting against the boards of big companies that lag behind on environmental, social and governance standards, a threat that is likely to reverberate in many corporate boardrooms.
/on.ft.com/3aMXUx2

Credit Suisse Ignored Warning on $2 Billion Deal With Tycoon
Jonathan Browning and Matthew Hill – Bloomberg
Senior executive warned bank not to proceed on Mozambique deal; Credit Suisse, Abu Dhabi sheikh drawn into London lawsuit
Credit Suisse Group AG ignored warnings from its outgoing regional chief executive officer on the risks of lending $2 billion to Mozambique in a scandal that has landed the Swiss bank in a lawsuit and opened up questions about its due diligence.
/bloom.bg/2RWeiCV

JP Morgan-backed Wematch expands into ETFs; Wematch has previously gained investment from JP Morgan and Societe Generale for its matching technology and platform.
Hayley McDowell – The Trade
Multi-asset matching specialist Wematch has expanded its services to include trading protocols for exchange traded funds (ETFs) in Europe.
bit.ly/2O9tj2X

UBS electronic execution head Goodman named president of MTF; Mark Goodman rejoined UBS from Societe Generale in 2015 to lead the bank’s electronic execution services.
Hayley McDowell – The Trade
UBS has appointed Mark Goodman as the new head of its equities multilateral trading facility (MTF), following the departure of Richard Semark earlier this month.
bit.ly/2UcKX9M

Goldman vows to lift returns to catch up with Wall Street rivals; Bank unveils medium-term plans in much anticipated investor day
Laura Noonan – FT
Goldman Sachs has vowed to dramatically increase its returns to catch up with Wall Street rivals that have been more agile in their approach to shifts in capital markets that followed the 2008-09 financial crisis.
/on.ft.com/3aMcWTT

Goldman Sachs Presents on Strategic Evolution at Investor Day
Goldman Sachs
The Goldman Sachs Group, Inc. (NYSE: GS) will present today on the firm’s strategic direction and its path to achieve new medium- and longer-term financial targets. The firm believes that by growing and strengthening its existing market-leading businesses, diversifying the products and services offered, and operating more efficiently, Goldman Sachs is positioned to drive long-term growth and shareholder value.
bit.ly/2O5E71Z

JPMorgan Plans To Cut Hundreds of Jobs Across Consumer Division
By Michelle Davis – Bloomberg
JPMorgan Chase & Co. plans to dismiss several hundred workers from its consumer unit as the lender seeks to rein in costs, according to people briefed on the matter.
/bloom.bg/3aX56Hd

Regions

Australia’s bushfires drive sheep meat prices to record highs; The devastation has exacerbated supply shortages after years of drought
Emiko Terazono – FT
Australia’s bushfires have scorched millions of acres, devastating an agricultural industry suffering from years of drought and driving meat prices to record highs.
/on.ft.com/2O7p9ZC

How China is shaking up its interest-rate regime; Central bank prepares for reforms that should allow greater sway for market forces
Hudson Lockett – FT
The People’s Bank of China recently announced a new regime that will change the benchmarks for almost all loans. It will be a key step in policymakers’ push to liberalise a loan market that grew to about Rmb150tn ($21.6tn) in 2019, according to an estimate from Société Générale.
/on.ft.com/2U3CBBk

China’s Health Scare Tempers High Hopes in U.S. Farm Markets
Michael Hirtzer – Bloomberg
Two weeks ago, the U.S. and China completed a phase-one trade deal amid almost immediate doubts that Beijing’s commodity purchase pledges were achievable.
/bloom.bg/3aNL1mB

Brexit

After Brexit, New Identity Crises Await the U.K.
Anne Applebaum – The Atlantic
One evening last week, I found myself dining in the House of Lords just as the “European Union (Withdrawal Agreement) Bill”—the law that will finalize Brexit—was wending its way through the final stages of the British legislative process. When I arrived, the debate was paused; at suppertime, formally speaking, the Lords “Adjourn During Pleasure.” The dining room was full, which is not always the case in the evenings. But that didn’t necessarily mean the formal proceedings attracted great interest. At some point, the screens scattered around the room showed that debate had resumed. At another point, they showed that it had ended for the evening (“House Up”). As far as I could tell, barely anyone got out of his seat.
bit.ly/31bebrm

No End to Brexit Blight for Economy as Britain Leaves the EU
Jill Ward – The Bloomberg
Brexit uncertainty could plague the British economy for years to come after the U.K leaves the European Union this week, new research claims.
In a report published Tuesday, the Research and Development Corporation called into question hopes that Britain finally quitting the EU after three years of political deadlock will unleash a wave of pent-up investment. The reason: Britain is about to embark on difficult post-Brexit trade talks with its largest trading partner. Prime Minister Boris Johnson, fresh from a decisive election victory, has just 11 months to strike a free-trade deal. If he fails, the U.K. will face a potentially disorderly Brexit at the end of the year when the planned Brexit transition period ends.
/bloom.bg/2vuukMB

Brexit: Access for goods within UK ‘protected post-Brexit’
BBC News
Cabinet Minister Michael Gove has said the government will ensure NI businesses will have “unfettered access” to the UK market after Brexit. He met the leaders of all the devolved regions in Cardiff on Tuesday. First Minister Arlene Foster and Deputy First Minister Michelle O’Neill raised concerns about the possibility of checks on goods crossing the Irish Sea. Mrs O’Neill said they were there “to show that we don’t want any barriers to trade for our local economy”.
/bbc.in/2RCyRW3

The EU Risks Tariffs on EUR47 Billion Without a Brexit Trade Deal
Demetrios Pogkas and Jeremy Scott Diamond – Bloomberg
It took 32 months, two prime ministers, and nearly 30 votes in Parliament to extricate Britain from the European Union—and the hardest part of the negotiations hasn’t even started. The two sides have until the end of this year to hammer out the terms of their future relationship. Because Britain is leaving the EU’s customs union, which allows the circulation of goods without duties, those talks will have to include a trade agreement.
/bloom.bg/2tbr7AW

Wall Street’s London Outposts Are Braced for a Brexit Beating
Viren Vaghela, Silla Brush, and Harry Wilson – Bloomberg
Wall Street titans have come to dominate London finance. Now they have the most at stake as they face Brexit’s final reckoning — and with less influence than they are accustomed to. Banks such as Goldman Sachs Group Inc. and JPMorgan Chase & Co. use London as their base for doing business with European Union clients. Now, they are torn between the impulse to keep a big presence in the financial hub and their frustration at the U.K.’s go-it-alone approach as it prepares to leave the bloc on Friday.
/bloom.bg/3aRbZts

EU citizens show their post-Brexit fears
David Bond – Financial Times
Over the past 30 days Google’s search data have recorded a noticeable spike in people in the UK looking online for information related to immigration and citizenship after Brexit. This is hardly an infallible guide — the top search topic was “Bong”, a reference, one assumes, to the heated debate this month over Big Ben and whether it can be brought back into action to mark Brexit day. Nevertheless, the number of queries on “freedom of movement”, “passport” and “visa” demonstrate a level of anxiety over what happens to EU citizens living in Britain after it leaves at 11pm (GMT) on Friday.
/on.ft.com/2Gyots8

What changes after Brexit Day on Jan. 31?
William Booth and Karla Adam – Washington Post
Brexit Day, or “Exit Day” as Prime Minister Boris Johnson would have it, is nearly upon us. On Friday, Britain will officially leave the European Union, after more than four decades with the closest of ties.
/wapo.st/38LRMTZ

Miscellaneous

Warren Buffett Is Giving Up on Newspapers; Lee Enterprises is acquiring Berkshire Hathaway Media Group’s publications for $140 million
Allison Prang – WSJ
Berkshire Hathaway is selling its newspaper operations to publisher Lee Enterprises Inc. for $140 million, expanding Lee’s daily newspaper portfolio by more than half. The deal includes Berkshire Hathaway Media Group and the Buffalo News, which Berkshire owns separately, Lee said Wednesday. Lee has run the group’s publications since July 2018, it said.
/on.wsj.com/38KRdd9

Toll rises to 21 from New Zealand volcano eruption
Reuters
The death toll from last month’s volcanic eruption on New Zealand’s White Island rose to 21 after another person died in hospital from injuries, police confirmed on Thursday.
/reut.rs/2O9bVeZ

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