Buck Haworth, Mo Guilfoile, JB Mackenzie, Nancy Stern, Hollis Griffin, Thomas Jordan and Jan Waye.
Hits & Takes
Exchanges: Euronext was down due to technical issues, but has resumed. Coronavirus: India peaking, Sweden moving away from no-lockdown. World hits 400,000 new virus case record. World: Chicago is the “rattiest” city. China economy grows 4.9%.
Thank you to our newest contributors to the JLN MarketsWiki Education GoFundMe campaign. Contributors include retired Cargill Investor Services executive Jan Waye, an early newsletter subscriber. Also giving were Buck Haworth, founder and CFO of BornTec, Executive Director and Associate General Counsel at CME Group Mo Guilfoile, Allston Trading CEO Nancy Laethem Stern, Hollis Griffin (TBD), TD America executive JB Mackenzie and Jordan & Jordan President and CEO Tom Jordan. We also received another $500 anonymous donation. Thank you to those who have given and those who have yet to give.
Former CBOT member Ross Prio III has passed away at the age of 67. Prio grew up less than a half a mile from my family’s summer home in Williams Bay, Wisconsin and graduated from Williams Bay High School.
My local school district, number 205, decided to go back to remote-learning only after the coronavirus numbers in DuPage County surged recently.
I watched the Pete Souza documentary on MSNBC last night on the recommendation of my daughter, Katherine. The documentary was outstanding and I have great respect for Souza and his message.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
Women In Listed Derivatives (WILD) is holding an online auction for its “Next Generation Women in Finance Scholarship FUNraiser” starting October 16 – October 28 and culminating in “spooky Trivia fun” on 10/28. It is open to everyone and the bidding ends at 7pm on 10/28. 100% of the proceeds from the auction and the trivia event go to fund the Next Generation Women in Finance Scholarship. You can go here to register and here to learn more about it.~SR
The Spread: Remembering Joe Sullivan
This week on The Spread, a binary options fraudster is charged by the CFTC, the father of the VIX publishes a paper on leveraged ETPs, and we take a moment to remember the remarkable life of Joseph Sullivan.
Chicago is the ‘rattiest city’ in America for the sixth year in a row
Giulia Heyward and Ralph Ellis – CNN
Chicago is the six-time holder of a title that no city wants. The Windy City has topped the list of the rattiest cities in the United States for the sixth year in a row. Orkin, an Atlanta-based pest control service, ranks US cities based on the number of new rodent treatments from September 1 to August 31 of each year. The result is a list of 50 cities, with most changing spots each time the list is updated. Chicago, however, is still No. 1.
*****We are not the second city in rats.~JJL
Citadel Securities sues SEC; At issue: The agency OK’d an order type introduced by stock-exchange operator IEX. Says one industry analyst: “It’s a far step to sue your regulator. This will make rule-setting very difficult.”
Citadel Securities LLC sued the U.S. Securities and Exchange Commission over the regulator’s approval of an order type introduced by stock-exchange operator IEX Group Inc. “The SEC failed to properly consider the costs and burdens imposed by this proposal that will undermine the reliability of our markets and harm tens of millions of retail investors,” Citadel Securities said in a statement after the petition was filed Friday with the U.S. Court of Appeals in Washington.
*****It ain’t over until Citadel says it is over.~JJL
Tech’s Influence Over Markets Eclipses Dot-Com Bubble Peak; Companies that do everything from manufacturing phones to operating social-media platforms now account for nearly 40% of the S&P 500
Amrith Ramkumar – NY Times
Technology companies are set to end the year with their greatest share of the stock market ever, topping a dot-com era peak in the latest illustration of their growing influence on global consumers. Companies that do everything from manufacturing phones to operating social-media platforms now account for nearly 40% of the S&P 500, on pace to eclipse a record of 37% from 1999, according to a Dow Jones Market Data analysis of annual market-value data going back 30 years. Apple Inc., AAPL -1.40% which earlier this year became the first U.S. company to hit a $2 trillion market capitalization, accounts for more than 7% of the index on its own. Early last month, it accounted for 8% of the S&P, the largest share ever for any stock in data going back to 1998.
*****Ah, the good old days of the tech crash.~JJL
Friday’s Top Three
Our top story Friday was Cboe agrees to acquire BIDS Trading, from The Trade. Second was JLN’s Joe Sullivan’s Influence and Success, Part 2. Third was Pilots swap the cockpit for trading screens, from the Financial Times.
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|CryptoMarketsWiki, our archive of the cryptocurrency and blockchain world, is going strong and keeping pace as this area of finance grows and evolves.Recently Updated Pages
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Trading Ring That Survived Two World Wars May Succumb to a Virus
Mark Burton and Jack Farchy – Bloomberg
London Metal Exchange plans to keep Ring closed into next year; Ring dealers have seen sharp volume drop, rethinking staffing
Since the 1800s, the London Metal Exchange’s iconic trading floor endured world wars, scandals, ruinous defaults and the onrush of algorithmic trading that’s made other open-outcry markets obsolete. Yet after all that, it may not survive Covid-19. With coronavirus cases surging in the U.K. capital, the LME laid out proposals Monday to keep its floor, known as “the Ring,” closed until at least early 2021. It’s also considering technical tweaks that could stoke the debate about whether the usually raucous space, which underpins $50 billion worth of metals trades each day, should reopen at all.
Stock exchanges prepare to activate their Brexit contingency plans; Investors fear a split in share trading activity from January
Philip Stafford and Eva Szalay – FT
London’s biggest share trading venues are preparing to switch on their Brexit contingency plans, reflecting fears in the City that the UK’s departure from EU frameworks will trigger a radical reshuffle of where investors can buy and sell European stocks. The London Stock Exchange Group said last week that it planned to open the Amsterdam base of its Turquoise platform at the end of November, as a place to trade EU shares. On November 11, rival Aquis Exchange will add stocks to its French platform that were previously available only in London.
Euronext Stock Trading Resumes After Three-Hour Technical Outage
Albertina Torsoli, Viren Vaghela and Jan-Patrick Barnert – Bloomberg
Trading in all stocks and derivatives on Euronext NV markets shut down for three hours, the biggest outage to hit the exchange operator in two years. Stocks including L’Oreal SA, LVMH and Kering SA in Paris were halted as of 9:49 a.m. Paris time on Monday, with Euronext markets in Belgium, the Netherlands, Portugal and Ireland also affected. Companies on those exchanges make up about 22% of the components in the benchmark Stoxx Europe 600 Index. Trading in Euronext’s other market, Norway, wasn’t affected.
Runaway ETNs Trap Traders in ‘Wild West’ of Index Investing; High-profile implosions sap demand, spurring a wave of ETN closures by the issuing banks
Michael Wursthorn and Mischa Frankl-Duval – WSJ
Jesper Lannung lost more than $100,000 in August after getting trapped in a zombie investment product. An exchange-traded note that he bet against was delisted over the summer by Credit Suisse Group AG CS -0.10% , relegating the note to the highly illiquid over-the-counter market. Mr. Lannung, a 38-year-old event planner in Milwaukee who layered a speculative trade on an already complex product, was forced to cover his short position after the note inexplicably surged in price.
What People Really Love (and Hate) About Remote Work; Seven months into the pandemic, many professionals say they like flexible schedules—’I actually eat real food now’—but miss colleagues and clients and cite frustrations such as Zoom fatigue.
Kathryn Dill – WSJ
For the millions of Americans working remotely since March, it has been a year of challenges, opportunities, and getting really, really comfortable with Zoom. Some have found unprecedented flexibility, fitting in workouts and lunch breaks where they couldn’t before, or moving to new places. Others have struggled to balance the demands of virtual school with back-to-back video conferences. Even those eager to keep working remotely in a post-pandemic future miss catching up with co-workers in the elevator and chatting in person with clients. Here’s how some of their lives have changed:
Euronext halts trading due to technical issue; Trading in Euronext’s cash equities markets has been halted until further notice due to a technical issue, the exchange has said.
Hayley McDowell – The Trade
Euronext has halted trading in cash equities across its five European venues until further notice due to a technical issue. The pan-European stock exchange said on social media that the issue had impacted all of its products. Euronext has cash equities markets in operation in Amsterdam, Brussels, Dublin, Lisbon and Paris.
Joining forces on multi-asset; When Unigestion formed a cross-asset solutions team several years ago, Eric Champenois and his team were tasked with evolving the trading desk. Here, Hayley McDowell finds that while the shift to multi-asset operations was challenging, it has since paid dividends.
Hayley McDowell – The Trade
Integrating trading of new asset classes in a straight through processing (STP) model is no mean feat. As buy-side trading desks continue to migrate towards multi-asset operations, harmonising workflows and ensuring talent across instruments being traded are at the same high standards can be a real challenge.
Hong Kong’s Exchange to Hold Hearing on Ant IPO After Green Light From Chinese Regulator; The Stock Exchange of Hong Kong will hold a listing hearing Monday to determine whether the financial technology giant can proceed with its planned initial public offering
Jing Yang and Stella Yifan Xie – WSJ
China’s securities regulator cleared the way for Ant Group Co. to proceed with its Hong Kong listing, one of several regulatory nods the financial technology giant needs before it can go public. The Stock Exchange of Hong Kong will hold a listing hearing Monday to determine whether Ant’s initial public offering can proceed in the city, people familiar with the matter said, after the company received a notice from the China Securities Regulatory Commission early Monday.
European Banks Await Green Light for Cash Dividend Payments; Bank chief executives say resumption of cash dividend payments will help relieve pressure on their share prices
Simon Clark – WSJ
The chief executives of some of Europe’s biggest banks are hoping regulators will soon let them resume cash dividend payments, easing pressure on their flagging share prices. Spanish lender Banco Santander SA SAN 2.13% is even planning to pay a dividend in shares this year as an alternative.
Funds’ hidden currency costs run to hundreds of millions of dollars; New analysis suggests investors continue to overpay for forex trades
Eva Szalay – FT
Investors continue to pay vastly over the odds on their currency trades, more than a decade after a group of pension funds took their banks to court over excessive charges, new research shows. Analysis of almost 2,000 funds showed that the cost of swapping dollars into currencies such as sterling lops 3.2 percentage points a year off the returns that would have been available from the underlying assets.
US banks warn bonuses will not keep pace with profits; Citigroup, JPMorgan Chase and Bank of America wary of big payouts after booking loan loss charges
Laura Noonan and Stephen Morris – FT
Citigroup, JPMorgan Chase and Bank of America have warned staff their bonuses will not keep pace with blowout performances in areas such as fixed-income trading and debt and equity underwriting, setting the scene for a record gap between payouts and profits.
What no-deal Brexit means, how it might happen, and how it might affect daily life in the UK
Daniel Capurro, James Crisp, Asa Bennett, and James Rothwell – Telegraph
After six months of negotiations and a stalemate over key issues, on Friday 16 October, Boris Johnson said the UK must be prepared for a no trade deal with the EU from January, in a strong sign that negotiations with Brussels are coming to an end. While the Prime Minister appears to be taking a hard line on trade, further negotiations with the Head of the EU Task Force Michel Barnier are expected to take place on Monday.
China Economy Grows 4.9% as Rest of World Struggles With Coronavirus; Result was lower than a 5.3% median forecast expected by economists polled by The Wall Street Journal
Jonathan Cheng – WSJ
Chinese officials said Monday that gross domestic product expanded by 4.9% in the third quarter from a year earlier, putting China’s economy back toward its pre-coronavirus trajectory half a year after the pandemic gutted its economy.
With Covid-19 Under Control, China’s Economy Surges Ahead; Exports jumped and local governments engaged in a binge of debt-fueled construction projects. Even consumer spending is finally recovering.
Keith Bradsher – NY Times
As most of the world still struggles with the coronavirus pandemic, China is showing once again that a fast economic rebound is possible when the virus is brought firmly under control.
U.S. government agencies to use AI to cull and cut outdated regulations
David Shepardson – Reuters
The White House Office of Management and Budget (OMB) said Friday that federal agencies will use artificial intelligence to eliminate outdated, obsolete, and inconsistent requirements across tens of thousands of pages of government regulations.
Robinhood just had another controversial week that frustrated users. Here’s what went down.
Matthew Fox – Business Insider
Robinhood, the digital brokerage app that has soared in popularity with millennials during the COVID-19 pandemic, dominated the headlines this week after a number of developments were reported that may have jolted investors one way or another.
Herd Immunity? Or ‘Mass Murder’? A proposal to let people with low risk of infection live without constraint could lead to a million or more preventable deaths.
John M. Barry – NY Times
No matter their politics, people nearly always listen to those who say what they want to hear. Hence, it is no surprise that the White House and several governors are now paying close attention to the “Great Barrington Declaration,” a proposal written by a group of well-credentialed scientists who want to shift Covid-19 policy toward achieving herd immunity — the point at which enough people have become immune to the virus that its spread becomes unlikely.
Pressure on New York City Commercial Real Estate Worries Investors; Collapsing loan prices in Manhattan developments could be a sign of trouble ahead for commercial mortgage-backed securities
Julia-Ambra Verlaine and Sebastian Pellejero – WSJ
Signs of pressure on New York City’s commercial properties are fueling investor bets that trouble in the nation’s largest real-estate market could spread pain nationwide. Although stock markets are near records, assets whose fortunes are more directly tied to New York’s status as a heart of tourism and culture are showing acute sensitivity to the pandemic’s disruptions. Prices for debt backed by hotels and shops have fallen, new loans have slowed and lenders are more cautious, leaving bankers and the real-estate industry bracing for a hard hit.
Europe’s new Covid outbreaks raise threat of double-dip recession; Rising infections and lockdown measures could stymie recovery, warn economists
Martin Arnold – FT
Europe’s economy is sliding towards a double-dip recession, with economists warning that rising coronavirus infections and fresh government restrictions on people’s movement are likely to cut short the region’s recent recovery.
India has reached coronavirus peak, says government panel; Daily cases are falling but analysts are sceptical that the worst is over
Amy Kazmin – FT
An Indian government panel of experts says the country’s rampant coronavirus pandemic may have peaked and could be under control by February. But independent analysts are sceptical that the worst is over in a country that has reported more new coronavirus infections than any other nation since the middle of August.
Top infectious-disease expert says ‘the next 6 to 12 weeks are going to be the darkest of the entire pandemic’
Connor Perrett – Business Insider
A leading US infectious-disease expert warned Sunday that the next three months might be the “darkest of the entire pandemic,” citing what he described as a “major problem in messaging” related to COVID-19.
Sweden is moving away from its no-lockdown strategy and preparing strict new rules amid rising coronavirus cases
Adam Payne – Business Insider
After opting against lockdown measures throughout the coronavirus pandemic, Sweden is said to be shifting strategies toward the kinds of restrictive measures adopted by most of its neighbors.
Coronavirus Deals a Blow to Global Battle Against Poverty; Poor nations are hit harder by the global downturn and lack the financial resources to fight it
Josh Zumbrun and Yuka Hayashi – WSJ
After decades of progress against global poverty, world leaders are facing a setback due to the coronavirus pandemic and struggling to come up with a response that matches the scale of the problem.
These companies’ workers may never go back to the office
Alexis Benveniste, CNN Business
As the United States prepares for another wave of the coronavirus, some companies are making plans to keep their employees remote for the forseeable future. Here are some companies that might never go back to the structure of a traditional office.
Lockdowns in Europe are a warning to the United States
Julia Horowitz, CNN Business
The coronavirus is surging again in Europe, forcing harsh new restrictions in London and Paris as governments carefully weigh their next steps. That’s bad news for the region’s economic recovery — and puts the United States on notice ahead of a difficult winter.
Coronavirus Threatens to Push the Child-Care Industry Over the Edge; Day-care enrollment is down sharply. Some centers have closed. More could follow.
Christina Rexrode – WSJ
The coronavirus pandemic has plunged U.S. day cares into a financial crisis. Child-care centers across the country—big chains, tiny in-home operations, nonprofits—are teetering. Enrollment slumped in the spring and never fully recovered. Extra expenses, like protective gear and deep cleaning, are piling up. By some estimates, some 40% of U.S. day cares are closed. Many of those that are open have half the number of children they did in February, or less.
Applying to College During Covid: What Parents and Students Should Know; The pandemic has all sorts of financial implications that will affect where to apply, how to get aid, where to live and more
Jillian Berman – WSJ
Applying to college is an anxious financial experience for many students and parents. Now, throw in a global pandemic. Covid-19 has upended the college experience, socially and economically, for college students all across the country this year. And now, the uncertainty about what college will look like in the fall of 2021 is weighing on high-school seniors starting their college-application process—and parents trying to figure out how they will pay the tuition bill.
How Covid-19 May Be Unconsciously Affecting Your Financial Decisions; The pandemic has caused a dramatic shift in people’s ambient emotions. Those who are in or near retirement could pay a high price.
Shlomo Benartzi and John Payne – WSJ
e coronavirus pandemic may be affecting your financial decision-making in all sorts of hidden ways (or in ways you aren’t even aware of). The reason is what behavioral scientists call “ambient emotion” or background feelings. The impact of ambient emotions has gained attention this year, partly because events such as the Covid-19 pandemic have caused a dramatic shift in the underlying moods of millions of people. For some, these events have led predominantly to background feelings of fear, while others have experienced extended bouts of anger or sadness.
Why Covid-19 Is Spreading Again: Fatigue, Colder Weather, Eased Restrictions; Cases have ebbed in Sunbelt states like Arizona but have gone up throughout parts of U.S.
Jennifer Calfas – WSJ
New coronavirus cases hit their highest level since mid-August on Wednesday, a sign of a fall surge predicted by public-health officials. For the eighth time since October began, newly reported cases nationally ticked above 50,000, fueled by simmering outbreaks in every region of the country.
Russia shuns tough restrictions even as infections soar
It’s Friday night in Moscow, and popular bars and restaurants in the city center are packed. No one except the staff is wearing a mask or bothers to keep their distance. There is little indication at all that Russia is being swept by a resurgence of coronavirus infections.
How the Sturgis Motorcycle Rally may have spread coronavirus across the Upper Midwest; Within weeks of the gathering that drew nearly half a million bikers, the Dakotas, along with Wyoming, Minnesota and Montana, were leading the nation in new coronavirus infections per capita.
Brittany Shammas and Lena H. Sun – Washington Post
It had been a long ride back from Sturgis, S.D., so when he first felt an ache at the back of his throat, Kenny Cervantes figured he was just tired. He’d traveled the 400-some miles on his Harley, rumbling through wide-open farm and prairie land on his way home to Riverdale, Neb., where his girlfriend was waiting.
Deloitte to shut four UK offices as COVID-19 entrenches remote working
Global accounting and consulting firm Deloitte will close four of its 50 British offices as it reviews its real estate portfolio in the coronavirus pandemic, but will retain the staff on work-from-home contracts, it said on Saturday.
Global coronavirus cases rise by one-day record of 400,000
Anurag Maan, Kavya B – Reuters
Global coronavirus cases rose by more than 400,000 for the first time late on Friday, a record one-day increase as much of Europe enacts new restrictions to curb the outbreak.
Ailments in Covid-19 Trials Raise Questions About Vaccine Method
By John Lauerman, James Paton, and Stephanie Baker – Bloomberg
Experimental shots from J&J, AstraZeneca based on adenoviruses; Past experiments with vectors include successes, failures
Two Covid-19 vaccines stalled by potential side effects have one key feature in common: Both are based on adenoviruses, cold germs that researchers have used in experimental therapies for decades with varying results.
Wall Street Executives Urge Another Round of Federal Stimulus
By Hannah Levitt – Bloomberg
The U.S. is ‘not out of the woods yet,’ Wells Fargo CEO says; Waldron applauds rapid response, says more needs to be done
Lawmakers must approve another round of fiscal stimulus to keep the U.S. economic recovery on track, executives from Goldman Sachs Group Inc. and Wells Fargo & Co. said Friday. Goldman President John Waldron applauded the federal government’s rapid financial response in the early months of the coronavirus pandemic, but said more needs to be done. The absence of additional stimulus could hamper the comeback, particularly in the U.S., he said during the Institute of International Finance annual
China Finds Active Covid-19 Virus on Frozen Food Packaging
By Charlie Zhu and Karoline Kan – Bloomberg
Sign up here for our daily coronavirus newsletter on what you need to know, and subscribe to our Covid-19 podcast for the latest news and analysis. China’s Center for Disease Control and Prevention said it found active Covid-19 virus on the outer component of refrigerated food packaging, adding that it showed the possibility of infection via such contaminated surfaces, according to state broadcaster CCTV.
Top Pandemic Doctor Explains Hong Kong’s Low Covid-19 Fatality Rate
By Jason Gale – Bloomberg
Hong Kong’s top pandemic doctor sees way out of intensive care; Combination of drug therapies increases chances of success
Hong Kong’s top pandemic doctor sees a way out of intensive care for thousands of Covid-19 patients: keeping them from entering in the first place. After sobering experiences 17 years ago with the outbreak of severe acute respiratory syndrome, Yuen Kwok-Yung is advocating early, aggressive hospitalization and treatment to minimize ravaging disease and death. Hong Kong’s 2% Covid-19 fatality rate as of Friday, well below the global average, lends weight to the approach.
The Film That Exposes Just How Badly The United States Mishandled COVID-19; See an exclusive clip from the new documentary “Totally Under Control,” which chronicles the Trump administration’s response to the coronavirus pandemic.
By Matthew Jacobs – Huff Post
While much of the United States was doing what it could to avoid COVID-19, Alex Gibney was busy making a documentary about the government’s failure to halt the spread of the coronavirus.
Exchanges, OTC and Clearing
The Failure of Equity Trading System on October 1, 2020
TSE would like to express our sincerest apologies to investors and the people related to the market for any inconvenience caused by the failure of the equity trading system, arrowhead on October 1, 2020. TSE has published a report on the sequence of events surrounding the incident, the cause of the failure, and measures we will put in place to prevent a recurrence.
UBS MTF Market Notice: Trading Resumed In Euronext Products
Please be advised that following the open on the Euronext cash markets at 11:45 BST, Euronext instruments are now available once more for trading on UBS MTF.
Euronext trading halt freezes markets in Paris, Amsterdam and Lisbon; Exchange operator says outage caused by ‘technical glitch’ affects ‘all products’
Adam Samson – FT
A technical glitch at exchange operator Euronext has halted equities trading in several major markets across Europe, including Paris, Amsterdam and Lisbon at the start of corporate earnings season. The exchange operator said the tech issue had affected “all Euronext products until further notice”.
Euronext Trading Halted in All Products on Technical Issue
Albertina Torsoli, Viren Vaghela, and Jan-Patrick Barnert -Bloomberg
Outage is biggest in two years for exchange operator; Resumption time for trading isn’t yet clear: Euronext
Trading in all stocks and derivatives on Euronext NV markets has been halted because of a technical issue, the biggest outage to hit the exchange operator in two years.
Change in Interest Rate on Euro (EUR) Cash Balances – Effective October 19, 2020
Effective October 19, 2020, please be advised that CME Clearing (CME) will be changing the rate that clearing member firms are charged for Euro (EUR) balances held at CME. The new rate charged will be 120 bps per annum and may be subject to change, based on
New Product Summary: Initial Listing of the Thailand Long Grain White Rice (Platts) Futures Contract – Effective November 23, 2020
Initial Listing of the Thailand Long Grain White Rice (Platts) Futures Contract
Product Modification Summary: Amendments to the Termination of Trading Time of the Monthly and Weekly Options on the Mexican Peso/U.S. Dollar (MXN/USD) Futures Contract – Effective November 16, 2020
Amendments to the Termination of Trading Time of the Monthly and Weekly Options on the Mexican Peso/U.S. Dollar (MXN/USD) Futures Contract
Notice of Disciplinary Action
MEMBER FIRM: Wedbush Securities Inc.
CBOT Rule: 982. RISK MANAGEMENT
All clearing members must have written risk management policies and procedures in place to ensure they are able to perform certain basic risk and operational functions at all times. At a minimum, the following areas must be considered in the firm’s policies and procedures, depending on the firm’s size and its business and product mix:
PENALTY: In accordance with the settlement offer, the Committee imposed a $50,000 fine.
Notice of Disciplinary Action
MEMBER FIRM: Credit Suisse Securities (USA) LLC
CBOT Rules: 930.D. ACCEPTANCE OF ORDERS
Clearing members may accept orders for an account provided sufficient performance bond is on deposit in the account or is forthcoming within a reasonable time. For an account which has been subject to calls for performance bond for an unreasonable time, clearing members may only accept orders that reduce the performance bond requirements of existing positions in the account. Clearing members may not accept orders for an account that has been in debit an unreasonable time.
PENALTY: In accordance with the settlement offer, the Committee imposed a $100,000 fine.
Notice of Disciplinary Action
MEMBER FIRM: BofA Securities, Inc.
CBOT Rule: Rule 971. SEGREGATION, SECURED AND CLEARED SWAPS CUSTOMER ACCOUNT REQUIREMENTS
PENALTY: In accordance with the settlement offer, the Committee imposed a $75,000 fine.
Amendments to the CME and CBOT Rule 539.C. (“Pre-Execution Communications Regarding Globex Trades”) and the Crossing Protocols Table Relating to CME and CBOT Agricultural Products (Except Dairy Products)
Effective Sunday, November 8, 2020 for trade date Monday, November 9, 2020, and pending all relevant CFTC regulatory review periods, Chicago Mercantile Exchange Inc. (“CME”) and The Board of Trade of the City of Chicago, Inc. (“CBOT”) (collectively, the “Exchanges”) will amend the CME and CBOT Rule 539.C. (“Pre-Execution Communications Regarding Globex Trades”) amending language in the RFQ + RFC Cross (“RCross”) protocol section concerning agricultural products. The amendments are based on changes to the crossing protocol in all CME and CBOT agricultural futures and options products with the exception of CME Dairy futures and options.
OTC IRS Production – SOFR Discounting Transition Processing Completed
Please be advised that CME Clearing has successfully completed the SOFR Discounting Transition and Price Alignment Processing for USD Interest Rate Swap products in accordance with the process set out in Clearing Advisory 20-391 .
ERIS Swap Future Transition to SOFR Discounting Complete – Effective October 19, 2020
Please be advised that CME Clearing has successfully transitioned ERIS Swap Futures to SOFR discounting and price alignment.
Volue admitted to trading on Merkur Market
The cleantech company Volue has today been admitted to trading on Merkur Market (ticker code: VOLUE-ME). “We offer digital platforms and solutions to solve one of the greatest challenges of our time – the massive transition from fossil to renewable energy production”, states Volue on its homepage.
Appointment of independent non-executive director to AQSE Board
Aquis Exchange PLC
Aquis Exchange PLC (AQX.L), the exchange services group, is pleased to announce that it has appointed Lesley Gregory to the board of its subsidiary, Aquis Stock Exchange (“AQSE”), the primary market for growth companies, as an independent non-executive director (NED). The appointment has received approval from the FCA.
Nigerian Stock Exchange Set To Host 5th Market Data Workshop
The Nigerian Stock Exchange (NSE), in partnership with InfoWARE Limited, is set to host the fifth edition of the NSE Market Data Workshop on Friday, October 23, 2020. This year’s event will be held virtually in compliance with guidance around physical distancing occasioned by the COVID-19 pandemic.
HKEX Derivatives Suite Reaches a New Milestone
As a world-leading service provider for the global investment community, MSCI’s equity indexes are tracked by more than US$13 trillion* of assets worldwide. In a significant licensing agreement, HKEX plans to introduce 37 MSCI equity index futures and options contracts based on a suite of indexes on Asia and Emerging Markets**. This collaboration further anchors HKEX and MSCI’s commitment to their long-term product development and innovation programme in the region.
Nadex Temporary Outage
Pursuant to Section 5c(c)(1) of the Commodity Exchange Act, as amended (“Act”), and section §40.6(a) of the regulations promulgated by the Commodity Futures Trading Commission (the “Commission”) under the Act (the “Regulations”), North American Derivatives Exchange, Inc. (“Nadex”, the “Exchange”) submitted an emergency action to the Commission on October 16, 2020 providing notice that on trade date Friday, October 16, 2020, the Nadex trading platform was impacted when shortly after the 6:00pm ET open the Exchange experienced a technical issue that caused a temporary trading outage. The issue was corrected and service was restored at approximately 6:35pm ET.
Ant faces challenge in reviving global expansion; Chinese fintech controlled by Jack Ma seeks to tap funds from blockbuster IPO for overseas push
Mercedes Ruehl and Ryan McMorrow -FT
Nearly four years ago Ant Group’s then chief executive Eric Jing made going global a core mission, taking to a Davos stage to lay out a vision of building a worldwide customer base of 2bn people within a decade.
A public research cloud would stimulate innovation; Policymakers should open up access to data and AI to encourage a broader range of competitors
John Thornhill – FT
There are two schools of thought about the market impact of Big Data and artificial intelligence, although, paradoxically, both may be simultaneously true. The first says that only the biggest tech companies know how to swim in the deep end of AI. To build state of the art models requires massive amounts of data, computational power, expertise and capital. Only the likes of Google and Microsoft in the US and Alibaba and Tencent in China can ever hope to make a splash.
KGI Asia selects Itiviti’s multi-asset OMS solution to trade global markets
Itiviti, a leading technology, and service provider of electronic trading and connectivity solutions to financial institutions worldwide, today announced that KGI Asia (Hong Kong), one of the largest equity brokers in Hong Kong has selected Itiviti’s multi-asset order management solution for high and low-touch trading.
Wanted: Economist for Digital Currencies, Fintech as Bank of Canada Studies a Possible CBDC
Kevin Reynolds – Yahoo Finance
The Bank of Canada, posted a position for an economist, digital currencies and financial technologies, as the Canadian central bank continues to research how a central bank digital currency (CBDC) would work as well as the possible risks involved.
Silent Eight Announces New Funding Round As Demand Surges For Technology Solutions To Tackle Financial Crime
Silent Eight (or “the Company”), the global technology company using Artificial Intelligence (AI) to combat money laundering and terrorism financing, today completes a new round of early-stage funding from global institutional capital, bringing the company’s total capital raised to $15m. The investment round was led by OTB Ventures, the largest dedicated VC firm investing in technology businesses originating from Central and Eastern Europe. It was supported by, among others, Koh Boon Hwee, Chairman and General Partner of Altara Ventures, and SC Ventures – the innovation, fintech investment and ventures arm of Standard Chartered Bank – underscoring the importance of financial crime compliance for the global banking sector. All are existing investors of the company.
A fortuitously-timed acquisition moved this Fortune 500 fintech’s strategy ‘years ahead’ during COVID
Lance Lambert – Yahoo Finance
Plenty of businesses have seen the pandemic decimate their prospects as entire industries shut down, or customers pare back. But a lucky few have seen the opposite: a strategy that was already underway before the pandemic now looks brilliant because of it. Such is the case with Fidelity National Information Services (FIS),the Jacksonville-based finch company which is ranked No. 303 on the Fortune 500. For most of its 52-year history, FIS focused on financial products and services.
Explainer: How does China’s digital yuan work?
Alun John – Reuters
China on Sunday concluded its largest pilot project to date for a central bank-backed digital yuan, with analysts saying the trial extended its lead in the global race to develop a central bank digital currency (CBDC).
Filecoin Miners Go On Strike One Day After Mainnet Launch, Prompting Early Reward Release
David Pan – Coindesk
Filecoin, a decentralized storage network launched by Protocol Labs, is off to a rocky start after a strike by miners just one day after its highly anticipated mainnet launch on Oct. 15.
Chasing the hottest trends in crypto, the EU works to rein in stablecoins and DeFi
Kirill Bryanov – CoinTelegraph
In cryptoland, the fall tends to be regulators’ open season. As unprecedented as it’s been, 2020 is no exception to this trend. Tensions are high on both sides of the Atlantic: As markets were still processing the news of the United States Commodity Futures Trading Commission cracking down on derivatives exchange platform BitMEX, the Financial Conduct Authority, the British financial watchdog, moved to ban retail investors from using cryptocurrency derivatives altogether.
The OKEx Drama Exposes a Weakness in Crypto Market Infrastructure
Noelle Acheson – CoinDesk
OKEx, one of the industry’s largest crypto-fiat exchanges, suspended all cryptocurrency withdrawals, saying one of the exchange’s key holders has “been out of touch” with the exchange because they are “currently cooperating with a public security bureau in investigations.”
Coming hard on the heels of the BitMEX indictments from a couple of weeks ago, this surely will focus the market’s attention on the security of the withdrawal protocols of large exchanges.
Bitstamp Adds Crypto Crime Insurance for Assets Held Online
Sebastian Sinclair – CoinDesk
Bitstamp, one of the world’s largest cryptocurrency exchanges, has introduced a new insurance policy that covers the theft and other losses of user funds held on its platform.
Developers are abandoning Bitcoin and Ethereum in favor of this little-known crypto platform
Barclay Ballard – TechRadar
There’s a new player in town when it comes to cryptocurrency app development, and it’s called Polkadot. The crypto platform is proving itself to be the first-choice for developers, drawn to its flexibility and its fast-growing community.
Nearly $900 million in VC went to crypto companies in the third quarter of 2020
MK Manoylov – The Block
During the third quarter of 2020, $897.7 million in venture funds were allocated across 212 crypto and blockchain startups, according to data compiled The Block Research.
Cryptocurrency Is Just a Minor Threat to the State
Steven McKie – Coindesk
Are cryptocurrencies a new form of money and, if so, do they threaten state power? Our friend Nic Carter has recently commented on these questions in dialogue with the Federal Reserve Bank of New York. We would like to add our perspective and thoughts on this, as we believe there is value to be derived from discussing these matters in depth. For better and worse, we believe that blockchains such as Bitcoin, Ethereum and Handshake (in which I am involved) have features that make them a novel threat to the powers that states derive from currency issuance — but only a very marginal threat. This fairly mild conclusion flows from more controversial premises.
These Young Investors Are Still Betting Big On Crypto — And Are Taking Harvard And Stanford Along For The Ride
Alex Konrad – Forbes
An aggressive Bitcoin trade got crypto VC shop Paradigm flying out of the gate. But Fred Ehrsam and Matt Huang aim to do more than just generate outsized returns for their blue-blooded backers — they want to take alt-currencies into finance’s mainstream.
Russian Information Attacks Keep Hitting the EU’s Weak Spots
Alberto Nardelli – Bloomberg
Experts say Russian disinformation is now more sophisticated; Russian-backed operations are increasingly local in nature
Since news first broke that Russian opposition leader Alexey Navalny had been poisoned with a nerve agent, some of the most popular coverage in Germany has come from Kremlin-funded outlets questioning Berlin’s efforts to blame Moscow for the attack.
Why Social Media Is So Good at Polarizing Us; Mathematicians are teaming up with political scientists to create models of how social media divides us, and results suggest at least one popular solution might actually make the problem worse
Christopher Mims – WSJ
Americans are more polarized than ever—at least by some measures. A growing body of research suggests that social media is accelerating the trend, and many political scientists worry it’s tearing our country apart. It isn’t clear how to solve the problem. And new research suggests that one often-proposed solution—exposing users on the platforms to more content from the other side—might actually be making things worse, because of how social media amplifies extreme opinions.
Loeffler, Warnock, Collins to have 1st Georgia Senate debate
Ben Nadler – Associated Press
Candidates in the special election for the U.S. Senate seat held by Georgia Republican Kelly Loeffler are set to square off in their first debate Monday afternoon. Loeffler faces a large field of opponents including Democrat Raphael Warnock and fellow Republican Doug Collins in a race for the seat she was appointed to 10 months ago. The debate is being held virtually, with candidates joining by video from separate locations because of the coronavirus pandemic.
Partisan Sites Posing as Local News Expand Ahead of Election; As local news outlets suffer cuts, political donors see an opportunity to influence coverage
Emily Glazer and Keach Hagey – WSJ
The Copper Courier in Arizona and the Decatur Times in Alabama both describe themselves as startup news sites helping to fill the void from the decline of local news outlets across the U.S. In fact, they are both the fruit of partisan efforts to shape the news narrative, from the left and the right, ahead of the 2020 election.
Biden Won’t Ban Fracking, But His Clean Grid Would Choke Gas
By Will Wade, Gerson Freitas Jr, and Jennifer A Dlouhy – Bloomberg
His clean-energy plan has little room for the fossil fuel; ‘Transition is going to happen more quickly’ than expected
During a town hall meeting Thursday, Democratic presidential nominee Joe Biden again assured shale producers that he wouldn’t ban fracking if elected. Then, in virtually the same breath, he touted his $2 trillion clean-energy plan, which aims to edge natural gas out of the power mix within 15 years.
Dimon Says He’s Hopeful Biden Would Fix Some of America’s Issues
By Michelle F Davis – Bloomberg
JPMorgan CEO calls the candidate ‘a unifier’ by nature; Predicts Biden would be traditional negotiator if he wins
Jamie Dimon said he’s optimistic a Biden presidency could fix problems in the U.S. without damaging businesses. “I am hopeful,” the JPMorgan Chase & Co. chief executive officer said at a virtual conference Friday. “Joe Biden has been around the block, he knows a lot of people, he is a compromiser, a unifier in a good way by nature.”
SEC Releases Agenda for October 26 Roundtable on Regulation Best Interest and Form CRS
The Securities and Exchange Commission today announced the agenda and panelists for the October 26, 2020, roundtable where Commission staff and FINRA will discuss initial observations on Regulation Best Interest and Form CRS implementation. The event will be webcast to the public. No registration or pre-registration is required. The roundtable will be publicly viewable on Monday, October 26 at 1:00 p.m. ET on SEC.gov. Additionally, the roundtable will be recorded and archived to enable viewing at a later date.
SEC Updates Auditor Independence Rules; Amendments Reflect Staff Experience Applying the Auditor Independence Framework
The Securities and Exchange Commission today announced that it adopted final amendments to certain auditor independence requirements in Rule 2-01 of Regulation S-X. Informed by decades of staff experience applying the auditor independence framework, the final amendments modernize the rules and more effectively focus the analysis on relationships and services that may pose threats to an auditor’s objectivity and impartiality.
Notice of Filing of a Proposed Rule Change to Amend the FINRA Codes of Arbitration Procedure to Increase Arbitrator Chairperson Honoraria and Certain Arbitration Fees
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to amend the Code of Arbitration Procedure for Customer Disputes (“Customer Code”) and the Code of Arbitration Procedure for Industry Disputes (“Industry Code”) (together, “Codes”) to increase arbitrator chairperson (“Chair”) honoraria. Specifically, the proposed rule change would: (1) increase the additional hearing-day honorarium Chairs receive for each hearing on the merits from $125 to $250 and (2) create a new $125 Chair honorarium for each prehearing conference in which the Chair participates. Under the proposed rule change, these increases would be funded primarily by minimal increases to the member surcharge and process fees for claims of more than $250,000 or claims for non-monetary or unspecified damages. The proposed rule change would also increase filing fees and hearing session fees for customers, associated persons and members bringing claims of more than $500,000 or claims for non-monetary or unspecified damage.
Proposed Rule Change to Extend the Pilot Program Related to FINRA Rule 11892 (Clearly Erroneous Transactions in Exchange-Listed Securities)
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“Commission”) a proposed rule change to extend the current pilot program related to FINRA Rule 11892 (Clearly Erroneous Transactions in Exchange-Listed Securities) (“Clearly Erroneous Transaction Pilot” or “Pilot”) until April 20, 2021.
ESMA NEWSLETTER – Nº17
In September, ESMA has appointed its CCP Supervisory Committee staff, published the TRV and reviewed the Market Abuse Regulation. In this edition, we also take a look at our full list of ESMA staff external appearances taking place in October and finally catch up on the latest publications.
Federal Court imposes $75 million penalty on OTC derivative issuer AGM Markets and former authorised representatives OT Markets and Ozifin
On 16 October 2020, the Federal Court ordered that AGM Markets Pty Ltd (AGM), OT Markets Pty Ltd (OTM) and Ozifin Tech Pty Ltd (Ozifin) pay a total of $75 million in pecuniary penalties. AGM has been ordered to pay $35 million, while OTM and Ozifin have each been ordered to pay $20 million.
EU sets sights on money market fund reform; French and Irish watchdogs worried about how close products came to experiencing a liquidity crisis in March
European regulators are calling for reforms of the continent’s EUR1.4tn money market fund sector after it came close to buckling under the coronavirus-induced market stress in March, an event that would have had ripple effects across the financial system.
Investing and Trading
SPACs Could Be a Bubble That Never Quite Pops; Though they benefit from speculative froth, blank-check companies aren’t only a good deal for their sponsors
Laura Forman – WSJ
Sorry, haters: The SPAC could be here to stay. What seems like today’s hottest path to a public listing comes with a lot of baggage. The basic premise of a Special Purpose Acquisition Company is that a sponsor raises money in a public offering with the expectation that it will identify a target company for a merger or an acquisition within a specified period of time. As of the market close on Oct. 16, there have been 143 SPAC IPO transactions this year, according to SPACInsider, an online subscription database that tracks SPAC performance. There were 13 in all of 2016.
The costly fallacy of ‘asset class’ investment; Too many fund managers and alternative holdings are bad for pension beneficiaries
Jonathan Ford – FT
Pension funds and endowments have for years been pumping ever more of their cash into so-called alternative asset classes, such as hedge funds, private equity and infrastructure. By picking the very best managers in these opaque and high fee-paying areas, they hope to secure the increasingly demanding pension promises they have made.
Financial Questions Every Art Collector Should Ask (but Often Doesn’t) Among them: What happens to my art collection after I die?
Daniel Grant – WSJ
For many people who collect art, the financial issues are an afterthought. Sure, they don’t want to overpay for a piece of art, and they don’t want to lose money if they have to sell. But there are all sorts of other money questions that they don’t even think about. To better understand those issues, we asked financial advisers who specialize in art a simple question: What financial questions should art collectors be asking you, but often don’t?
Are investors getting smarter?
Joshua M Brown – The Reformed Broker
Ben says yes, investors are getting smarter. His evidence is the fact that a market sell-off of 35% brought in millions of new investors, arriving as they did, all at once, as though prompted by a divine thunderclap from the skies. It’s really quite remarkable that the reaction to a bear market was a speculative mania and a new generation of investors getting into the game all at once. The 2008 crash produced the opposite response – millions of people vowed they’d never trust or rely on the stock market ever again. So Ben says clearly something has changed.
Environmental, Social and Corporate Governance
Almost 60% of Mutual Fund Assets Will Be ESG by 2025, PwC Says
Alastair Marsh – Bloomberg
ESG investing is the most significant development in money management since the creation of the exchange-traded fund two decades ago and it will reshape finance just as passive funds have.
Fearless Forecasts On ESG From SASB Co-Vice Chair Bob Hirth – Part 1
Jim DeLoach – Forbes
Every CFO of a company that is either public or has plans to go public has kept a keen eye fixed on developments in environmental, social and governance (ESG) reporting. While financial reporting has been a primary focus of finance for a long time, one cannot ignore increasing investor and stakeholder interests in performance that reach beyond the top and bottom lines.
A $1 Trillion Manager’s Europe Boss Says ESG Stood the 2020 Test
Ksenia Galouchko – Yahoo Finance
Marie Dzanis, head of Northern Trust Asset Management for Europe, the Middle East, and Africa, had no idea how much environmental, social, and governance investing would be put to the test when she announced at a company press briefing in January that the 2020s would be the “decade of ESG.” What followed were months of market turbulence, a global economic crisis during a brutal pandemic, Black Lives Matter protests, and wildfires in the U.S. Almost every theory about why ESG matters and works has been played out before the world’s eyes this year.
ESG funds to hold most AUM by 2025
Lauren Mason – Investment Week
Sustainable and responsible investment funds are expected to manage EUR7.6trn across Europe over the next five years. ESG funds’ market share may rise to 57% in 2025, compared with the current 15%.
Jes Staley set ‘to stay on at Barclays for two more years’
Anna Menin – City AM
Jes Staley is reportedly set to stay on as chief executive of Barclays, despite the lender coming under pressure to replace the controversial American. The bank is not expected to announce any succession plans when it reports third quarter earnings on Friday despite activist investor Edward Bramson recently renewing his attack on Staley, The Telegraph reported.
Citi makes senior cuts within its EMEA equities business; Various cuts have been made to the equities team at Citi as part of organisational changes.
Joe Parsons – The Trade
Citi has made a number of senior cuts within its global equities team, including the head of its business dedicated to hedge funds, following the arrival of its new equities chief. nAmong the departures is Adam Herrmann, global head of prime finance, and Kiran Shah, head of equity derivatives, who will both leave their roles, The TRADE understands. More cuts are expected to be made in the EMEA business.
BlackRock plans huge expansion in Brazilian ETF market; Asset manager aims to cross-list up to 100 overseas funds by end of March
Steve Johnson – FT
BlackRock is planning to cross-list “up to 100” of its overseas exchange traded funds in Brazil to take advantage of a boom in investment sparked by plunging interest rates and market liberalisation.
Marching Orders for the Next Investment Chief of CalPERS: More Private Equity; The nation’s biggest public pension fund is consistently short of the billions of dollars it needs to pay all retirees their pensions. It seeks higher returns.
Mary Williams Walsh – NY Times
Ben Meng got the job of chief investment officer of CalPERS by convincing the trustees of the nation’s largest public pension fund that he could hit their target of a 7 percent annual return on investment by directing more of the fund’s billions into private equity.
Fund managers ignore diversity in investment decisions; Position at odds with industry’s outspoken stance on need for more women in top jobs
Attracta Mooney – FT
Fewer than half of asset managers evaluate gender diversity when researching potential investments, despite the fund industry’s increasingly outspoken stance about the need for more women in top corporate jobs.
Japanese pension funds may hold key to Chinese JGB puzzle; China has ramped up purchases of low-yielding Japanese government bonds
Leo Lewis – FT
China stormed back into Japanese government bonds over the summer with ¥2.2tn ($21bn) in purchases between June and August — the biggest three-month spree since Japan’s Ministry of Finance began compiling data in 2005.
China Gives Shenzhen Greater Autonomy to Attract Investment
City will start stock futures index, better protect IP rights; Shenzhen is home to Chinese tech giants Huawei and Tencent
China announced measures that will grant its southern boomtown Shenzhen more autonomy as Beijing seeks to raise the profile of the region as a tech and financial hub amid tensions with the U.S.
Johnson to warn ‘time running out’ to prepare for end of Brexit transition; Prime minister to launch ad campaign as polls show many companies not ready for new EU relationship
George Parker, Mehreen Khan and Peter Foster – FT
Boris Johnson will this week warn business leaders that “time is running out” to prepare for the end of Britain’s Brexit transition period on January 1, amid growing concern that chaos at the border with the EU is looming.
UK and Brussels fight over European mergers ahead of Brexit deadline; Regulators discuss oversight for deals such as Virgin/O2 and Aon/Willis Tower Watson
Kate Beioley and Javier Espinoza – FT
The UK competition watchdog is tussling with Brussels for control of some of Europe’s biggest mergers ahead of the December deadline for a Brexit trade deal.
Brexit Promises Catch Up With Johnson in Covid Hotspots; U.K. regions that helped put the prime minister in power are now rebelling against him as coronavirus infections jump.
Emily Ashton and Andrew Atkinson – Bloomberg
Celebrating his election victory at a hotel bar in Barrow-in-Furness, Simon Fell made a promise to supporters: as the northern English town’s new Conservative member of Parliament he’d make sure the leadership in London “listens to us.”
U.K. Prepared to Rewrite Lawbreaking Brexit Bill to Get EU Deal
Tim Ross – Bloomberg
Johnson’s Internal Market Bill faces battle in House of Lords; Rewriting contentious clauses could be part of EU accord
British officials are prepared to water down Boris Johnson’s controversial lawbreaking Brexit legislation in a move that could revive failing talks with the European Union, according to people familiar with the matter. The pound rose.
How Apprenticeship, Reimagined, Vaults Graduates Into Middle Class; Study of joint college-employer program suggests four-year degree isn’t only path to high salary
Josh Mitchell – WSJ
Not long ago, Ricky Brown, approaching 40 and wanting a raise, decided to go to college. After he earned a degree, his salary increased by 40%. Mr. Brown didn’t get a traditional four-year degree, though, or even a traditional two-year one. He went through an apprenticeship-style program in Kentucky. New research shows it is paying off big for graduates, who typically earn nearly six figures within five years of graduation.
As Local News Dies, a Pay-for-Play Network Rises in Its Place; A nationwide operation of 1,300 local sites publishes coverage that is ordered up by Republican groups and corporate P.R. firms.
Davey Alba and Jack Nicas – NY Times
The instructions were clear: Write an article calling out Sara Gideon, a Democrat running for a hotly contested U.S. Senate seat in Maine, as a hypocrite. Angela Underwood, a freelance reporter in upstate New York, took the $22 assignment over email. She contacted the spokesman for Senator Susan Collins, the Republican opponent, and wrote an article on his accusations that Ms. Gideon was two-faced for criticizing shadowy political groups and then accepting their help.