Hits & Takes
By John Lothian and JLN Staff
The U.S Treasury Secretary Steve Mnuchin did his best Game of Thrones John Snow impersonation yesterday (You Know Nothing!) when he suggested shortening trading hours as a way to alleviate some of the recent price volatility. He also ONLY discussed it with NYSE and the banks, forgetting about major players like CME Group, Nasdaq and Cboe Global Markets. The CME Group quickly responded to this dis with a press release saying don’t be stupid. OK, they did not say that, but reading between the lines, that is what I heard.
Our markets are global and risk does not disappear because the markets are closed. Somewhere around the world, there is an expression of price discovery that is related to our markets, and risk management will move to those markets quicker than you can say, “Mnuchin who?”
What the markets need is liquidity and the liquidity providers, some of whom are principal trading groups, need capital help to deal with all this volatility. They often have matched positions, but because of differences in derivative types and the massive moves, cash is needed to fund the margins. As the banks moved out after Dodd Frank, these traders moved in. Just look at some of the names of firms on the floor of the New York Stock Exchange. Those are not banks, they are principal trading groups or hedge funds with broker-dealer operations. Maybe they need to buy a bank to get help from the Fed. Let’s hope not.
Europe’s leaders decided to shut down borders because it is the thing they should have done weeks ago. Is your activity non-essential? Then don’t do it. Aussie leaders are singing the same tune, but are behind the curve with a 500 person limit. The number of coronavirus cases worldwide hit 200,000. Cases of the virus in New York jumped by 100 in a day and the coronavirus is now in all 50 U.S. states
The U.S. Treasury market cratered yesterday when ideas of fiscal stimulus, including sending checks directly to each U.S. citizen, were discussed and gained more ground in a few hours than former Democratic Presidential candidate Andrew Yang achieved in a month of campaigning on the same proposal. World leaders have pledged trillions to fight the impact of the virus. In the U.S., Treasury Secretary Mnuchin said unemployment could hit 20% if no stimulus package passes.
In Chicago, beside Ceres shutting its doors indefinitely, the Union League Club of Chicago is also closed until at least March 30. If I were Ceres, I would convert into a hand sanitizer producer, which at least would allow them to unload all the booze they have stored.
I went to my primary care doctor yesterday for a long scheduled annual physical. I was greeted at the door of the facility by four nurses in masks taking temperatures and asking screening questions. They let me in the door, but the doctor told me all non-essential medical activity should be stopped, including physicals, elective surgeries and even follow-up visits. He was rather subdued as we have a pandemic and he is largely sidelined. He suggested he might be on the front lines when the test kits finally arrived.
On another note, I checked my home router and firewall after installing a new one and I had 13 cases of attempted intrusion from Russia. ~JJL
The crypto consortium R3 sent out an email update regarding the COVID-19 crisis. They’re cancelling all events, making working from home mandatory, and stress-testing their communication capabilities to ensure they can keep their business running remotely.~MR
Jim Downs: Connamara – and the Markets – a Year Later
Connamara’s CEO Jim Downs discusses what’s new at the company since we spoke with him at FIA Expo last year. It turns out it’s a lot! Connamara’s EP3 platform has gained traction since then and they have signed a Swap Execution Facility (SEF) that will be transferring to the company’s technology in the next few months. They have also taken on clients in the healthcare area, including one that is applying to trade derivatives on healthcare. Connamara also had their first client outside capital markets and are adding the ability to do RFQs. Downs also discusses market resiliency in the face of the Coronavirus.
The Lehman Echoes Are Getting Steadily Louder; The coronavirus saga is starting to follow the outlines of the 2008 credit crisis.
John Authers – Bloomberg
The coronavirus looks ever more like a subprime mortgage. To a man with a hammer, everything looks like a nail. And to a man (or woman) who lived through the credit crisis, every other financial disturbance looks like 2008.
******John Authers really knows how to depress a guy.~JJL
Intercontinental Exchange Update on Global Operations of Exchanges, Clearing Houses, and and Data Services
Platforms operating and functioning normally; Contingency plans of exchanges and clearing houses working as designed; Measures enacted globally to protect health and safety
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, is sharing this operational update for customers and other constituents as global financial systems manage through extraordinary volatility amid the spread of COVID-19.
****Maybe ICE is smart to keep the floor open, based on the story from Thom Thompson yesterday about the closing of Ceres and expectations from traders and clerks that the length of disruption from the virus could keep the floors closed forever.
American Financial Exchange Announces One-Day Record Volume; AMERIBOR Futures Open Interest Sets Overnight Record
American Financial Exchange
The American Financial Exchange (AFX), an electronic exchange for direct lending and borrowing for American banks and financial institutions, announced a record volume trading day on Monday, March 16. A record $3.195 billion were traded across all AFX products, surpassing the previous record of $3.035 billion traded on September 19, 2019. This marks a 5.27 percent increase from the previous record.
*****Doc makes headlines and I get hungry for barbeque.~JJL
Treasury and IRS to delay tax payment deadline by 90 days
Darla Mercado – CNBC
Taxpayers will get a three-month reprieve to pay the income taxes they owe for 2019, Treasury Secretary Steven Mnuchin said on Tuesday at a news conference.
As part of its coronavirus response, the federal government will give filers 90 days to pay income taxes due on up to $1 million in tax owed, Mnuchin said in Washington. The reprieve on that amount would cover many pass-through entities and small businesses, he said.
R.J. O’Brien Taps John H. Porter for New Strategic Advisory Role; Veteran Chief Investment Officer and Chief Economist Brings Market Expertise to RJO Clients Globally
R.J. O’Brien & Associates
Chicago-based R.J. O’Brien & Associates (RJO), the oldest and largest independent futures brokerage and clearing firm in the United States, has tapped John H. Porter to take on a new strategic advisor role. Porter will be the lead macro-economic speaker at RJO conferences worldwide, will share his analysis of market and geopolitical conditions with the firm’s global client base, and will serve on the firm’s Investment Committee.
*****Not the John Porter I know who taught me to sail.~JJL
Tuesday’s Top Three
Our top story Tuesday was JLN’s Ceres Hit Hard By Restaurant Ban, about the beloved restaurant in the Chicago Board of Trade building. Second was the link to the main page of our web site, which may possibly have been an attempt to access our new video interview of Walt Lukken, which is here. Third was, once again, the video from CNN of a penguin touring the emptied-out Shedd Aquarium in Chicago. When times get tough, we turn to penguins.
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U.S. Plans to Keep Markets Open, Considering Shorter Hours
Saleha Mohsin – Bloomberg
NYSE says it has no current plans to shorten trading day; Mnuchin says ‘absolutely’ believes in markets staying open
The Trump administration plans to keep U.S. stock markets open despite volatility, though trading hours may be shortened, Treasury Secretary Steven Mnuchin said.
Chicago trading firms seek more capital; They’re urging banks to make more capital available for clearing trades as they seek to help stabilize the financial markets amid the coronavirus rout.
Lynne Marek – Crain’s Chicago Business
Some Chicago trading firms that provide liquidity in the financial markets are urging banks that have benefited from Federal Reserve actions in recent days to make more capital available for clearing trades amid the coronavirus turmoil.
Rescue Pledge Triggers Biggest Treasury Bond Rout Since 1982
Emily Barrett – Bloomberg
Promise of $1.2 trillion fiscal plan boosts long-term yields; Government needs to act ‘to avoid a depression,’ says BMO Hill
The Treasury market buckled Tuesday at the prospect of a flood of U.S. spending to fend off an economic nightmare. Yields at the long end of the curve shot higher on Treasury Secretary Steve Mnuchin’s proposal for a $1.2 trillion stimulus package. Rates on 10- and 30-year bonds shot up more than 36 basis points, their biggest one-day increases since 1982, while an iShares ETF tracking Treasuries maturing in 20 or more years sank a record 6.7%. The U.S. 10-year yield, the world’s borrowing benchmark, is now more than 70 basis points above the record low set last week.
Some Top Asset Managers Argue Financial Markets Should Close; On a call with Bank of England governor, asset managers were split on whether to close markets
Justin Baer – WSJ
Executives from some of the biggest asset managers told the Bank of England’s new governor on Monday that financial markets should close for two weeks as the world confronts the coronavirus pandemic, people familiar with the matter said.
Helicopter Money Would Help People, Not Endangered Businesses; A check from Washington might not arrive quickly enough to ease the current crisis.
There’s a rush of interest in handing out $1,000 to every adult American—or some variant of that gambit—to soften the economic harm of the Covid-19 pandemic. Advocates of showering money on the public include fiscal conservatives such as Senator Mitt Romney, the Utah Republican, and Gregory Mankiw, the Harvard economist who was a chief economic adviser to President George W. Bush. The Trump administration wants to send out checks soon, possibly in amounts greater than $1,000 each, as part of a stimulus that could total $1.2 trillion.
US government to give citizens emergency financial aid
Richard Partington – The Guardian
Donald Trump has dramatically stepped up the US government’s response to the coronavirus outbreak by announcing plans to send cheques directly to American citizens to give them emergency financial aid, while agreeing to purchase up to $1tn (£830bn) of corporate bonds.
The White House said it was preparing to send the payments to Americans within two weeks as part of a vast stimulus package to shore-up confidence in the world’s largest economy as the efforts to contain the disease threaten a global recession.
Federal Reserve to Launch Commercial Paper Funding Facility Amid Coronavirus Uncertainty
‘This facility should encourage investors to once again engage in term lending in the commercial-paper market.’
Nick Timiraos – The Wall Street Journal
The Federal Reserve said it would start making loans to American corporations, relaunching a crisis-era tool to help calm short-term debt markets that have faced intensifying strains in recent days. The Fed trained its sights Tuesday on dysfunction in the $1.1 trillion market for short-term corporate IOUs called commercial paper. Companies use commercial paper to finance their day-to-day business operations such as payroll expenses.
Traders Working at Home Get Break From U.K. on Phone Taping
Silla Brush and Steven Arons – Bloomberg
Financial Conduct Authority says to tape calls where possible; Firms should mitigate risks if staff out of office, FCA says
British bankers and traders working from home got some relief from the U.K. markets watchdog, which signaled it will give temporary leeway on rules requiring them to record calls with clients.
How Cash-Hungry Companies Could Bite $700 Billion Out of Banks
Yalman Onaran and James Crombie – Bloomberg
Fed moves to support market providing companies quick loans; That should ease potential pressure on credit lines from banks
What if companies across America pull harder on credit lines during this crunch than they did in the last one? During the depths of the 2008 financial crisis, companies served by U.S. banks bolstered themselves by drawing about 30% of their available credit, with some sectors going much further. If five industries now getting hammered by the coronavirus and oil-price slump were to, say, draw as much as 70%, all corporate clients together would extract a total of about $700 billion from the six biggest banks’ liquidity pools. That’s close to 16% of lenders’ cash-like holdings at the end of last year.
Merkel Says Germany Will Consider Joint Bonds to Fight Virus
John Follain, Alessandro Speciale, and Arne Delfs – Bloomberg
German finance chief will join discussion on coronavirus bonds; During euro crisis, Merkel never countenanced shared issuance
German Chancellor Angela Merkel said she’s ready to consider joint debt issuance to help contain the impact of the coronavirus, an opening that could transform the finances of the European Union.
How Currency Derivatives Show Dollar Funding Stress
Masaki Kondo and Ven Ram – Bloomberg
As stocks plunged and investors fled to U.S. Treasury bonds in the wake of the global coronavirus pandemic, the spotlight shifted to corners of the credit market that show signs of stress. Notable is the move in cross-currency basis swaps, which shows investor preference to hold dollars, rather than euros or yen.
Private-Equity Investors Try to Gauge Coronavirus Cash Crunch; Limited partners are hoping the stock-market declines don’t keep them from putting more cash into private equity
Chris Cumming and Preeti Singh – WSJ
Investors in private equity are hoping coronavirus-related stock volatility doesn’t force them to miss out on what could be a buy-low opportunity. With the Dow Jones Industrial Average losing more than a quarter of its value over the past month through Monday, private-equity investors are becoming concerned about the possibility of the so-called denominator effect hitting their investment portfolios.
Wall Street tempers begin to flare over coronavirus work-from-home policy
Imani Moise – Reuters
With New York city poised to follow San Francisco with a “shelter in place” order over fears of the coronavirus spreading, anxiety is rising inside major U.S. banks about differing work-from-home policies.
Exchanges, OTC and Clearing
CME Group lashes out against proposed shortened trading hours; CME Group issued a statement against proposed shortened trading hours from US Treasury Secretary Steven Mnuchin.
Kiays Khalil – The Trade
The chief executive of derivatives exchange operator CME Group has rejected a bid by US Treasury Secretary, Steven Mnuchin, to shorten US market hours due to increased market volatility amid the coronavirus pandemic.
Euronext CEO Sees No Reason to Close Markets Over Virus Woes
Ksenia Galouchko, Anna Edwards, and Tara Patel – Bloomberg
Euronext NV sees no need to shut stock markets during the coronavirus epidemic as they’re functioning efficiently and providing liquidity, Chief Executive Officer Stephane Boujnah said, echoing sentiments of many market leaders around the world.
Intercontinental Exchange Sets Date for 2020 Annual Meeting of Stockholders
ICE Press Release
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges, clearing houses and provider of data and listings services, will hold its 2020 Annual Meeting of Stockholders on Friday, May 15, 2020 at 8:30 a.m. ET at The St. Regis Atlanta*. The proxy statement and admission procedures will be available in late March for stockholders of record as of March 17, 2020. A live audio webcast and replay of the annual meeting will be available on the company’s website www.theice.com in the investor relations and media section.
Framework to confine Speculative Triggering: Measures partly postponed
HKEX Enhances Stock Connect with Planned Launch of Master SPSA Service for Fund Managers
New optional Master SPSA service allows pre-trade checking of China A shares on Northbound trading at a fund manager, or aggregate level, rather than at an individual fund level; HKEX committed to invest in the continuous enhancements of Stock Connect
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce today the latest enhancement in Stock Connect, its landmark mutual market access programme with the Mainland exchanges.
The London Metal Exchange: COVID-19 preparedness
The LME has robust business continuity procedures in place designed to deal with a wide variety of potential developments to ensure service resiliency, availability and stability across our platforms, during and around unforeseen events, crisis, or out-of-the-ordinary operating environments.
Notice to Clearing Members, Trading Members and Participants
The World Federation of Exchanges recommends ESMA ‘follows the liquidity’ in applying the obligation to trade shares transparently
The World Federation of Exchanges
The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has today responded to a significant European Securities and Markets Authority (ESMA) consultation on the EU trading and transparency rules for equity instruments. The WFE proposes refining the regime, such that it ‘follows the liquidity’.
Private Equity Is a Tantalizing Target for Ransomware Hackers; Scammers are looking for victims with weak security and deep pockets. Many companies owned by buyout shops fit that bill.
Neil Weinberg, David Voreacos – Bloomberg
Norm Hullinger was heading into work one day in October when he got a call that his company’s network was acting up. It was no simple glitch. Hackers had started freezing the data of Alphabroder, a sportswear distributor. They wanted more than $3 million to restore it. Grappling with whether to pay, Hullinger, the chief executive officer, embarked on a journey that’s increasingly familiar to law firms, hospitals, and cities that have found themselves on the other end of negotiations with ransomware criminals.
DriveWealth Forges First Partnership in Middle East and North Africa Region with UAE-Based Wealthface; Wealth Management Company Turns to DriveWealth for Technology, Brokerage Execution Services
DriveWealth, LLC, a U.S. based leader in global digital trading technology, announced today a new partnership with Wealthface LLC, an innovative UAE-based wealth management company and online investment platform. The agreement marks DriveWealth’s first initiative in the Middle East and North Africa (MENA) region, bringing the firm’s technology and brokerage execution services to one of the region’s first investment robo-advisors.
Bloomberg adds INTL FCStone as liquidity provider on FXGO trading platform; INTL FCStone will contribute pricing as an active liquidity provider on the Bloomberg FX electronic trading platform, FXGO.
Hayley McDowell – The Trade
US securities and commodities broker INTL FCStone is now active as a liquidity provider on Bloomberg’s multi-bank FX electronic trading platform, FXGO.
Fintechs Get Clearer Rules on Banking Licenses Under FDIC Plan; Proposal would impose new oversight on owners of industrial loan companies
Andrew Ackerman – WSJ
Financial-technology firms and other businesses seeking to offer banking services will have a clearer set of rules to follow under a proposal by the Federal Deposit Insurance Corp. The FDIC’s framework would impose new oversight on the owners of so-called industrial loan companies, which enjoy many of the same benefits as traditional banks but aren’t owned by a federally-supervised bank holding company.
DigitalPay Limited: Blockchain Technology Is Curing Coronavirus Concerns In China
Associated Press (press release)
Blockchain Technology is hitting the headlines because of the Coronavirus pandemic. Often associated with cryptocurrencies or trade finance, blockchains and other distributed ledger technologies are now seeing multiple uses, ranging from SME funding and data distribution to charitable organisations across China.
Steem community plans hard fork to expel Justin Sun’s Steemit
Yogita Khatri – The Block
The Steem community – a group of members claiming to represent the Steem blockchain – are planning a hard fork to remove Justin Sun’s Steemit Inc. The hard fork of Steem is planned for March 20 at 10 am EST, which will result in a new blockchain called “Hive,” according to SteemPeak, a front-end application for Steem. “Hive is a DPOS [Delegated Proof of Stake] governance blockchain created by implementing a hard fork of existing Steem code,” said SteemPeak, adding: “This new direction steps away from the burden of the Steemit Inc.”
Crypto custodian BitGo is now offering excess insurance on top of its $100M policy
Yogita Khatri – The Block
Cryptocurrency custodian BitGo is now offering excess insurance coverage to its clients, on top of its existing $100 million policy. The “Excess Specie Insurance” is being offered via Lloyds of London, Rodrigo Vicuna, CFO of BitGo, told The Block. BitGo’s existing policy is also provided via the same insurance marketplace. Vicuna said the move has been taken based on clients’ feedback as they wanted to have the ability to purchase their own dedicated excess limits. Crypto.com is the first firm to sign up for BitGo’s excess insurance policy.
Nvidia shareholder lawsuit over crypto sales lacking, judge rules
Nate Raymond – Reuters
Shareholders accusing Nvidia Corp of misleading them about the extent to which an unsustainable cryptocurrency was driving a computer chip’s sales have failed to show the technology company made any false statements, a federal judge has ruled. U.S. District Judge Haywood Gilliam in Oakland, California on Monday said the investors in the proposed class action failed to show Nvidia knowingly falsely represented that a spike in revenue for a chip marketed to videogamers was actually due to sales to cryptocurrency enthusiasts.
Mark Karpeles Accuses Plaintiff in Mt Gox Lawsuit of Attempting to ‘Thwart’ Court
Paddy Baker – Coindesk
The former CEO of Mt Gox has claimed the plaintiff holding him liable for losses incurred after the exchange collapsed breached precedent by changing the claims in his complaint. In a motion filed with the federal court of the Northern District of Illinois Monday, Mark Karpeles claims Gregory Greene, who first sued in February 2014, changed the underlying basis for his claim in an attempt to “thwart” a motion calling for summary judgment.
New Poloniex exec team seeks to make things right with traders who lost money from $CLAM liquidation
Frank Chaparro – The Block
Poloniex’s new leadership team is looking to make things right with clients who lost millions of dollars from a liquidation of clams in its market. No, not steamed clams, crypto CLAMs: a digital asset that’s on certain offshore crypto exchanges. On May 26 of 2019, $CLAM collapsed more than two-thirds of its value during the course of the trading day, resulting in the margin lending pool incurring a more than $13 million USD loss in today’s price of bitcoin. Now, Poloniex — which spun off from Circle last year — said it will be paying back clients for the losses incurred from the flash crash. Still, some clients will not be paid back the losses for all clients.
After India’s Supreme Court Crypto Victory, What’s Impeding Adoption?
Rachel McIntosh – Finance Magnates
Amid all the recent chaos brought about by the coronavirus, there has been perhaps some light for certain aspects of the cryptocurrency world. Following a landmark supreme court victory for the cryptocurrency industry in India, cryptocurrency exchange Binance made the decision to inject $50 million into India’s cryptocurrency ecosystem. Specifically, Binance put the $50 million into a ‘Blockchain for India’ fund that promises to invest roughly $100,000 in crypto industry startups based in India. The fund was co-launched with WazirX, an Indian cryptocurrency exchange that Binance acquired in November of 2019.
Ethereum Classic Collective board member resigns, withdraws funding support
Celia Wan – The Block
A board member of Ethereum Classic Collective (ECC) announced today that he decided to leave his post at the nonprofit research organization that focuses on the Ethereum Classic Network. “I regret to say that, as a matter of principle, I must resign from the Board, effective immediately, because of gross mismanagement. I have reluctantly concluded that the executive director, Bob Summerwill, lacks the integrity and judgment needed to build the organization,” the board member James Wo wrote in a statement.
Bitcoin’s price fall fails to tether stablecoins’ growing market cap
Chayanika Deka – AMB Crypto
Bitcoin’s losses last week had a devastating impact on the cryptocurrency industry. Undeterred by the chaos, however, was the stablecoin realm. These stablecoins, designed to minimize price volatility, continued to be actively used in the crypto-space, despite the market’s poor performance lately. Stablecoins were observed to have been frantically minted after the price drop on 12 March. This contributed to the market cap of stablecoins increasing significantly during this period. Skew markets depicted two consecutive sharp spikes on its ‘BTCUSD vs USDT Market Cap’ chart on the fateful day of 12 March.
Online retail giant Overstock received two further subpoenas from the SEC at the end of last year
Yilun Cheng – The Block
According to Overstock’s 2019 annual report, the online retailer received two more subpoenas from the Securities Exchange Commission (SEC) in Dec. 2019, as follow-ups to the agency’s investigation efforts that started in 2018 The most recent subpoenas requested Overstock produce documents related to the troublesome GSR deal, the alternative trading system run by its blockchain subsidiary tZERO, as well as the company’s insider trading policies and employment agreements Overstock’s net revenue declined by almost 20% from $1.82 billion in 2018 to $1.46 million, which the company attributed partly to the costly nature of handling litigations.
BlockFi Hikes Interest Yield on Bitcoin and Ether Deposits
Aziz Abdel-Qader – Finance Magnates
BlockFi, New Jersey-based provider crypto-backed lending products, is making changes to the interest paid based on the yield it generates from lending Bitcoin (BTC) and Ether (ETH), effective April 1. BlockFi’s new yields for those lending up to 5 BTC will be 6.0 percent. Right now, “Tier 1” customers loaning up to this amount see a yield of 3.6 percent. Likewise, ETH lenders will experience a rate increase to 4.5 percent on loans of up to 500 ETH from 2%-3.6% APY currently. Rates for Gemini dollar (GUSD) and USD Coin (USDC) will remain unchanged at 8.6 percent APY, according to BlockFi.
Caitlin Long’s Wyoming Crypto Bank Announces C-Suite, Including Bitcoin Core Dev
Nathan DiCamillo – Coindesk
One of the first prospective crypto banks in the United States is hiring its C-suite. Avanti Financial Group, the first firm to announce its application to be a special purpose depository institution in Wyoming, announced five new executive hires who will also be co-founders on Tuesday, including Bitcoin Core developer Bryan Bishop and Figure Technology’s Zev Shimko. “It was important to find people with experience in both crypto and traditional finance services because the two are so different,” Caitlin Long, CEO of Avanti told CoinDesk. “It’s hard to find an innovator in the core banking business, but we needed one because we’ll be integrating crypto with core banking software.”
Trump Told Mnuchin to Go Big, and a $1 Trillion Stimulus Emerged
Justin Sink, Josh Wingrove, Saleha Mohsin, and Jennifer Jacobs – Bloomberg
Treasury secretary warned senators of 20% unemployment; U.S. businesses line up at White House for financial aid
Steven Mnuchin had an ominous message for Senate Republicans gathered Tuesday in a marble-clad meeting room in the Russell office building: we need to pass a virus stimulus bill, or the U.S. could be looking at a 20 percent unemployment rate.
Those $1,000 Checks Can’t Stop the Now-Inevitable U.S. Recession
Katia Dmitrieva and Reade Pickert – Bloomberg
Some economists warn of 10% contraction in the second quarter; Stimulus will support bank accounts but fail to save expansion
President Donald Trump’s plan to send $1,000 to every American, part of emergency stimulus of as much as $1.2 trillion to contain the economic hit from the coronavirus, is unlikely to stop a U.S. recession.
Trump’s $1.2 Trillion Won’t Do It. Try $2.5 Trillion; The coming slowdown might be so deep that nothing less will do.
Narayana Kocherlakota – Bloomberg
President Donald Trump’s administration proposed $1.2 trillion plan to counter the economic crunch brought on by the coronavirus. It is a step in the right direction. But we need a much bigger and much better targeted fiscal stimulus.
China lacks the appetite to save the world economy, analysts warn; Beijing adopts more conservative approach in tackling latest crisis compared with 2009
Don Weinland and James Kynge – FT
When capitalism seemed to be collapsing across the western world in 2009, demand from China for everything from iron ore to designer handbags helped lift the global economy out of the darkest days of the financial crisis.
Donald Trump urges Americans to support ‘war’ on coronavirus; President exhorts Americans to heed social distancing guidelines as cases grow
Demetri Sevastopulo and Katrina Manson – FT
Donald Trump on Tuesday warned that the US was fighting a “war” against the coronavirus pandemic, as the president urged Americans to heed the social distancing guidelines that his administration released earlier this week.
EU debates whether to harness crisis fund in coronavirus battle; Member states are divided over when to deploy the European Stability Mechanism
Sam Fleming and Jim Brunsden and Martin Arnold – FT
Eurozone member states are debating the highly sensitive question of when and how to bring the region’s powerful economic rescue fund into the fight against the fallout from coronavirus.
The Era of Small Government Is Over; We’re going to have to reach much deeper than stimulus and bailouts into the way we conduct business with each other.
Jamelle Bouie – NY Times
So far, none of the proposed stimulus programs coming out of Washington are enough to stop a recession.Credit…George Etheredge for The New York Times
To stop the spread of the coronavirus, state and local governments have shut down as much of communal life as possible. People are also social distancing, staying out of public spaces to slow transmission of the disease. But this has destroyed demand for goods and services, putting the United States on the path to a recession that could easily become an outright depression.
Temporary prohibition of short selling – 17 March
The FCA notifies that it temporarily prohibits short selling in the following instruments under Articles 23 (1) and 26 (4) of Regulation (EU) No 236/2012 of the European Parliament and of the Council of 14 March 2012. This follows a decision made by another EU Competent Authority.
Italy, France, Belgium Ban Short Selling Amid Coronavirus
Chiara Remondini and Alan Katz – Bloomberg
Three-month ban in Italy from March 18 applies to all stocks; France, Belgium bans are each set to last for one month
Italy’s market regulator banned short selling for three months as it seeks to curb volatility amid a sell-off caused by the coronavirus pandemic. France and Belgium imposed similar prohibitions for a month each.
FIA praises CFTC’s quick response amid global pandemic
Today, FIA President and CEO Walt Lukken made the following statement after the CFTC issued several no-action letters that give the derivatives industry flexibility to deal with the ongoing global pandemic.
The Commodity Futures Trading Commission today announced the Division of Market Oversight (DMO) has issued three no-action letters providing temporary, targeted relief to swap execution facilities (SEFs) and certain designated contract markets (DCMs) in response to the COVID-19 (coronavirus) pandemic.
France extends short selling ban to one month; The Autorité des Marchés Financiers has decided to extend a one-day ban on short selling imposed just yesterday to 30 days.
Hayley McDowell – The Trade
Regulatory authorities in France have decided to lengthen a one-day ban on short selling to 30 days with immediate effect, as the coronavirus pandemic continues to hit markets globally.
CFTC supports work from home efforts with regulatory relief measures; FIA has welcomed the CFTC’s rapid response to the coronavirus pandemic, which includes no-action relief from certain regulatory requirements.
Hayley McDowell – The Trade
US derivatives market participants have been handed temporary relief by authorities from certain regulatory requirements, as more traders shift to working from home in light of the coronavirus pandemic.
Societe Generale Securities Australia Pty Ltd charged with breaching client money obligations
On 17 March Societe Generale Securities Australia Pty Ltd (SGSAPL) appeared in the Downing Centre Local Court in Sydney on criminal charges, including two counts of failing to pay client money into segregated authorised bank accounts and two counts of failing to comply with requirements relating to a client money bank account.
ESMA issues positive opinion on short selling ban by Italian CONSOB
The European Securities and Markets Authority (ESMA) has issued an official opinion agreeing to an emergency short selling prohibition, for a period of three months, by the Commissione Nazionale per le Società e la Borsa (CONSOB) on all transactions which might constitute or increase net short positions on all shares traded on the Italian MTA regulated market, for which CONSOB is the relevant competent authority as well as to all related instruments relevant for the calculation of the net short position.
Podcast: The MAP Group: Gatekeeper to the Broker-Dealer Industry
Want to be a broker-dealer firm and conduct securities transactions in the U.S.? First, the firm and individuals need to register with FINRA, and that means working with FINRA’s Membership Application Program (MAP) Group.
Investing and Trading
Pound Traders Bet Against U.K. ‘Laissez-Faire’ Response to Virus
Vassilis Karamanis – Bloomberg
Currency slumps to $1.20 as U.K. action overtaken by peers; Options bets turn more negative on sterling’s prospects
Currency traders aren’t buying the U.K. government’s efforts to tackle the coronavirus. The pound has slumped more than 8% in the past six days and sentiment in the options market has turned the most negative on its prospects this year. Gauges of volatility have surged, as the U.K. looks slow in following other countries in limiting travel and social gatherings.
Shareholder Meetings Pushed Online to Avoid Covid-19; Investor activists have traditionally opposed corporate efforts to drop in-person meetings, but the pandemic has changed all that.
Emily Chasan and Andrea Vittorio – Bloomberg
Shareholder meetings are going virtual as companies adapt their mandatory annual gatherings to the coronavirus.
MBA Recruiters Rank Candidates’ ESG Experience Dead Last; Hiring runs counter to overwhelming interest in sustainability among students, schools, and companies.
Chris Stokel-Walker – Bloomberg
Visit any major business school these days, and you’ll find students like Juan Adorno. The 31-year-old former product development and strategy worker was drawn to the University of Vermont’s Grossman School of Business for the one-year sustainable innovation MBA it offers and the edge he felt it would give him in the workplace. “As environmental, social, and governance investing has increased in popularity and become so important for asset managers, it became a growing part of my world,” Adorno says. “I’m looking for an organization that is corporately socially responsible, that holds true to its mission, and has a sense of more than profit.”
Ruble’s Plunge Has Traders Weighing Bank of Russia’s Options
Aine Quinn – Bloomberg
Russian currency has already fallen 20% so far this year; Central Bank seen bucking trend of rate cuts to bolster ruble
Russia’s ruble tumbled the most in emerging markets on Wednesday, erasing a fifth of its value in the year so far as crude sank to $28 per barrel.
Seven-Figure Bonuses Rise This Season for Top Energy Traders; Natural gas market is booming, and a plunge in prices provided opportunities for traders to make money.
Lars Paulsson and Anna Shiryaevskaya – Bloomberg
More gas and power traders than ever will take home seven-figure bonuses after profiting from a deep slump in European energy prices.
Fed to lend against stocks and bonds in bid to stabilise markets; Revival of crisis-era credit facility is its third new intervention in 24 hours
James Politi and Brendan Greeley, Colby Smith and Joe Rennison – FT
The US Federal Reserve took aggressive new action to shore up liquidity in financial markets on Tuesday night by allowing approved dealers in government debt, including the largest banks, to borrow cash against some stocks, municipal debt, and higher-rated corporate bonds.
Oil storage to max out in months as coronavirus crushes demand; Supply glut is exacerbated by effects of Saudi-Russia price war
David Sheppard and Neil Hume – FT
The world could run out of oil storage capacity within months, according to the biggest energy traders, as the coronavirus pandemic crushes demand for fuel at the same time as the Saudi-Russia price war boosts supplies.
Extreme market stress puts $6.4tn ETF sector under acute pressure; BlackRock’s flagship high-yield ETF and State Street’s JNK suffer large asset declines
Chris Flood and Attracta Mooney – FT
Legendary corporate raider Carl Icahn warned that trouble was brewing in the fast-growing exchange traded fund industry when he locked horns with BlackRock chief Larry Fink in 2015.
Traders Bet on Falling ‘Fear Gauge’; Some investors are wagering on a rapid fall in the VIX after it closed at its highest level ever Monday
Gunjan Banerji – WSJ
The Cboe Volatility Index, or VIX, closed at its highest level in history Monday when U.S. shares recorded the steepest decline since the Black Monday stock-market crash of 1987. Some investors are already betting on its rapid fall.
After Bankers’ Party in Acapulco, a Coronavirus Case Emerges
Michael O’Boyle – Bloomberg
Banxico worker tests positive; won’t say if went to beach city; Bankers now say boozy bash at the beach was a bad idea
Mexico’s top bankers are on high alert as a central bank official tested positive for Covid 19 after attending a conference last week in the beach resort of Acapulco.
Deutsche Bank Gets Relief as Germany Lowers a Capital Buffer
Nicholas Comfort and Birgit Jennen – Bloomberg
Buffer to strengthen banks for bad times to be cut to zero; Move will free up more than $5.5 billion at lenders in Germany
Germany’s financial watchdogs eliminated a key capital requirement for the country’s banks to keep credit flowing and give flexibility to lenders such as Deutsche Bank AG and Commerzbank AG that have been hit hard by the recent selloff in stocks and credit risk.
Vanguard’s $55bn fixed income ETF hit by price dislocation; Gap between closing price and vehicle’s net asset value surged to a 6.2% discount last week
Chris Flood and Robin Wigglesworth – FT
Extremely volatile conditions across the US fixed income market because of the coronavirus pandemic have led to a highly unusual pricing dislocation in Vanguard’s $55bn total bond market exchange traded fund, one of the world’s largest ETFs.
Morningstar flags ‘repeated failures’ of risk management at H2O; Rating agency takes action after London-based fund manager suffers heavy losses
Robert Smith and Cynthia O’Murchu – FT
Morningstar has placed one of H2O Asset Management’s flagship funds under review, a decision the influential investment rating agency said stemmed from management’s “repeated failures to manage risk effectively”.
HSBC Falls Into a Safe Pair of Hands at Last; It took a brewing credit crisis for the bank to stop prevaricating and confirm 33-year veteran Noel Quinn in the job.
Nisha Gopalan – Bloomberg
Noel Quinn’s appointment as chief executive officer of HSBC Holdings Plc was all but inevitable. Europe’s biggest bank did itself no favors by taking seven months to make the decision. It’s good that it has acted at last: No lender the size of HSBC should be comfortable heading into a financial crisis with a caretaker CEO.
Australia Set to Tighten Restrictions on Indoor Gatherings
Ed Johnson – Bloomberg
Australia’s Prime Minister Scott Morrison will announce tighter restrictions on indoor gatherings on Wedneday as the government moves to contain the spread of the coronavirus.
The Saudis Have a High-Stakes Plan to Win the Global Oil War; The Russians may have started the price war, but Riyadh was waiting for the opportunity to jump in.
Javier Blas – Bloomberg
On March 4, Prince Abdulaziz bin Salman, the 59-year-old Saudi oil minister, was locked down in his suite at the Park Hyatt hotel in Vienna, preparing for what would turn out to be the most important meeting of his life.
SNB’s Virus Fallout Sees Franc Pushed to a Five-Year High
Catherine Bosley and Jan Dahinten – Bloomberg
Reduction of deposit rate to -1% record low can’t be ruled out; Swiss may announce measures to ensure enough liquidity
Pressure is intensifying on the Swiss National Bank to join policy makers around the world who’ve cut interest rates and increased stimulus in response to the coronavirus outbreak.
Japan Inc wrestles with the ‘unthinkable’ prospect of no Olympics; The 2020 games are destined to bathe national corporate sponsors in glory too
Leo Lewis – FT
Last Sunday, an excited, sizeable crowd ignored social distancing advice and clustered at the entrance of Tokyo’s Yoyogi Park to photograph the newly-installed, special edition 2020 Olympic commemorative manhole cover.
Johnson’s Brexit Faces Delay as Coronavirus Overshadows Talks
Ian Wishart – Bloomberg
With trade talks on hold, extension of transition period looms; Talks are sidelined as governments focus on combating virus
Remember Brexit? Hundreds of trade negotiators from the U.K. and European Union were due to meet in London on Wednesday to hammer out a trade deal.
U.K. Hospitality Expects Bookings Plunge of 40-50% Amid Pandemic
Layan Odeh – Bloomberg
The hospitality trade association expects bookings to decline in hotels, food and beverage as a result of social distancing and working from home, CEO says in a letter addressed to prime minister seen by Bloomberg.
Brexit transition deadline in doubt as talks called off
Sebastian Payne, Jim Brunsden, and George Parker – FT
The next round of Brexit negotiations has been cancelled as expectation grows in Brussels and London that the standstill transition period will be extended beyond its December 2020 deadline owing to coronavirus disruption. In a statement on Tuesday, the British government said: “we will not formally be convening negotiating work strands” on Wednesday as planned, although it intended to publish a draft free trade agreement “in the near future”.
U.S. Blood Supply Under Stress as Shutdowns Stop Blood Drives
John Tozzi – Bloomberg
Seattle blood bank warned that supply was ‘about to collapse’; Respiratory viruses don’t spread through blood, officials say
The broad shutdown of American commerce and social life caused by the new coronavirus pandemic has put the nation’s blood supply under stress it’s never before seen, blood-center directors say.