US regulator fines Citadel Securities over trading breach; New York Sees Push to Tax Stock Trades With Revenue in Free Fall

Jul 21, 2020

First Read

Hits & Takes
By John Lothian & JLN Staff

Today is the last day to register your interns, college students, or yourselves for the MarketsWiki Education World of Opportunity virtual event to be held tomorrow. Click on the link above to register. All are welcome.

Happy 10th anniversary to Dodd-Frank. On July 21, 2010, President Barack Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), P.L. 111-203, to promote the financial stability of the United States, improve accountability and transparency in the financial system, protect the American taxpayer, and protect consumers from abusive financial services practices. I can’t help but wonder how we would have fared during the volatility of this spring without the structural changes and protections of Dodd-Frank.

Our friends at Trading Technologies and SGX, along with CNFirst, are holding a webinar titled “Gaining Alpha Through Commodities Arbitrage Strategies,” on Wednesday at 2pm GMT/8am CT. The webinar explores investment and trading opportunities in the geographical arbitrage of iron ore. The hosts will go through how to structure the trade on TT and discuss the main intricacies that traders should be aware of. Register HERE

ChartIQ has rebranded as Cosaic

Crain’s Chicago Business has a Bloomberg article titled “Airlines face end of business travel as they knew it.” Because of the catastrophic loss of passengers during the pandemic, carriers are confronting a once-unthinkable scenario.

I shot an interview yesterday with Scott Morris of Blackthorne Capital Management. He has a new fund he is about to launch through Efficient Capital Management. The interesting thing is the program uses “sentiment momentum” and they use data from SMA and Predata. Stay tuned for this interview.

How bad is tourism in London? For the first time in 500 years, the Beefeaters who guard the Tower of London are facing job cuts.

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


On July 28 from 12:00 p.m. – 1:15 p.m., Women in Listed Derivatives and CME Group’s employee networking groups WIN and WIT are hosting an interactive discussion on the impact of COVID-19 on the workplace and the leadership role women can play in redefining the future of work. The time zone is not listed, but since it is the CME Group, I’m guessing that’s Central Time. You can go here for more information and to register. Registration ends July 24.~SR


Joyce Selander – MarketsWiki Education Open Outcry Traders History Project

Joyce Selander is a former open outcry trader and one of the few women who found a home in a trading pit of men much bigger and stronger than her. But she found a niche and had friends in the trading pit who would help protect her from the organized chaos that was pit trading. She became one of the “guys” in the trading pit over time.

Watch the video »


A Few Wall Street Traders Stayed When Everyone Fled the Office; Some had to go in. Some chose to, even if they weren’t supposed to. Others did it out of loyalty. At least one forgot how to set up his home office.
Elena Popina – Bloomberg
He rides the elevator alone. Sits at the desk alone. Eats lunch alone. But mostly Michael Beth works nearly alone inside a glass high-rise on the Hudson River. Since the coronavirus hit, Beth never really stopped coming to work at WallachBeth Capital, even as most office workers across America holed up at home for the pandemic.

*****There are lots of unsung heroes.~JJL


Trump Escalates Tensions With States and Cities Over Police Surge
Chris Strohm and Josh Wingrove – Bloomberg
Critics see election year ploy to help shore up Trump’s base; Portland deployment seen as test case for Chicago, New York
President Donald Trump is escalating tensions with state and local authorities by seeking to deploy more federal agents into cities gripped by protests and spikes in crime, a policy that appeals to his base ahead of the election but faces legal challenges.

*****This scares me. Seriously scares me.~JJL


How remote work divides America
The shock of the pandemic has spared no one, but the costs have not been evenly distributed. Office workers who can telecommute have generally been able to retain their income, while many blue-collar workers who have to be on site to work are among the tens of millions of Americans who lost their jobs as the country went into lockdown.

*****Just what we needed, something to divide America another way.~JJL



Monday’s Top Three
Our top story Monday was the video from 2007 of the Nymex floor with commentary from Robert Downey Jr., on YouTube. How did we not know this existed before? Second was CME sticks to trading as rivals diversify, from Crain’s Chicago Business. Third was the “About Us” page from Exchange Analytics.


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Lead Stories

US regulator fines Citadel Securities over trading breach; Market-maker traded ahead of customer over-the-counter orders over 2-year period
Richard Henderson – FT
The US financial industry regulator has fined Citadel Securities $700,000 for trading ahead of customer orders, dealing a blow to the market-making firm that has benefited from a big rise in retail trading this year.

New York Sees Push to Tax Stock Trades With Revenue in Free Fall
Martin Z Braun – Bloomberg
Stock transfer tax would raise $13 billion annually for state; Ascendant progressive lawmakers are more amenable to tax
Democrats in New York, the world’s financial capital, may finally have the right moment to resurrect the state tax on stock trades. One-fifth of the state’s revenue is disappearing, leaving a projected four-year deficit of $61 billion. Progressive Democrats are on the ascent in the state legislature. Stock trading has surged. And taxing it would raise $13 billion a year to avert painful cuts to government services during a pandemic that’s exaggerating economic and racial inequality.

Brexit will split financial markets, says Bank of England appointee
Huw Jones – Reuters
Brexit will make markets less efficient but it won’t be disastrous for Britain’s economy, an appointee to the Bank of England’s Financial Policy Committee (FPC) said on Monday.

Robinhood Shelves U.K. Launch, Puts Global Expansion on Hold
Nour Al Ali – Bloomberg
Robinhood Markets Inc. said its global expansion plans are on hold for now, and is postponing its U.K. launch plans indefinitely, according to an email sent to those on the waiting list on Tuesday. “We’ll be closing our waitlist and taking down our U.K. website shortly,” the Menlo Park, California-based firm said in the email. It added that it is adapting to changes that the world has gone through “over the past several months”.

Refinitiv Launches Term SONIA Reference Rate Prototype to Facilitate Industry Transition from LIBOR
Refinitiv today announced the launch of a prototype Term SONIA (Sterling Overnight Index Average) Reference Rate. The Refinitiv Term SONIA will leverage the firm’s extensive experience in administering benchmarks to create a British Pound Sterling (GBP) forward-looking term risk-free rate that is published daily prior to noon. The rate will be available in one-month, three-month and six-month tenors.

The Inside Story of How Europe Landed Its Massive Stimulus Plan
Ian Wishart, Viktoria Dendrinou, and John Follain – Bloomberg
Rutte clashed with colleagues through four days of talks; Merkel, Macron at heart of negotiations on plan they devised
On Friday morning Angela Merkel and Emmanuel Macron were sipping mineral water on a sunlit terrace overlooking Brussels as negotiations began on a 750 billion-euro ($860 billion) European stimulus package they’d sketched out two months earlier.

Wall Street Firms Consider Moving Jobs from NYC, Study Says
Henry Goldman – Bloomberg
Some in finance, professional services may trim footprint 20%; Partnership for NYC, which oversaw study, is composed of CEOs
Work from home and the reduced need for employees in New York’s financial and professional-services industries have prompted some companies to consider paring their presence in the city by at least 20%, according to a study on the economic impact of Covid-19.

Euro Is Turning Into ‘Credible’ Safe Haven After EU Rescue Deal
John Ainger, Olivia Konotey-Ahulu, and Theo Golden – Bloomberg
Currency could rise to $1.30 for first time in 6 years: Mizuho; ‘Massive’ pool of bonds to challenge Treasuries premier status
Europe’s landmark recovery deal is just what the euro needs to press on with a rally that could send the common currency to multi-year highs, according to strategists. Having been in the doldrums since the euro area sovereign debt crisis nearly ripped the bloc apart less than a decade ago, strategists see the common currency roaring back in the coming months, potentially as high as $1.30.

China Is Getting Closer to Its Lehman Moment; Seizing the country’s fourth-largest insurer is an indicator of contagion hitting a system made more fragile by Covid-19.
Anjani Trivedi and Shuli Ren – Bloomberg
Wall Street’s movers and shakers are largely seen as part of the solution to the coronavirus-ravaged economy. Chastened by the collapse of Lehman Brothers and the great recession over a decade ago, they were forced to scale back businesses considered risky and clean up their balance sheets. In this crisis, they’re no longer the problem.

What China’s Newest Tech Bourse Has Achieved So Far
Bloomberg News
While China has some of the world’s biggest technology companies, many are listed in the U.S. and Hong Kong. A new trading venue launched last year in Shanghai is making it easier for them to access funding at home. The Nasdaq-style SSE STAR Market has relatively relaxed rules on listing and trading that have drawn the attention of big names including Jack Ma’s Ant Group and Semiconductor Manufacturing International Corp. The result has been at times wild, demonstrating why authorities were so keen to build a testing ground before unleashing new rules on other exchanges.

Billionaire Commodity Trader Daniel Mate Retires From Glencore
Javier Blas – Bloomberg
Mate is Glencore’s fifth-largest shareholder with a 3.4% stake; Nick Popovic is taking over as head of zinc and lead trading
Daniel Mate, the billionaire metals trader and Glencore Plc executive, is retiring from the company and handing over trading of zinc and lead to Nick Popovic, according to people familiar with the matter. While the transition is expected to last some time, Mate, who is Glencore’s fifth-largest shareholder, has already handed over most of his responsibilities, said the people, who asked not to be identified ahead of an official announcement. Last week, Mate resigned from the board of Volcan Cia Minera SAA, a Latin American mining group in which Glencore has a big stake, and was replaced by Popovic, according to a regulatory filing.

No Mifid equivalence for UK at end of Brexit transition; Footnote reveals assessment delay beyond January 2021, piling pressure on London-based firms
Samuel Wilkes –
The European Commission will not initiate an assessment vital to preserving cross-border trading between the European Union and UK, citing an incomplete legal framework that prevents EU authorities from starting the process.

UBS’s Viral Immunity Isn’t Shared; The Swiss bank has proved resilient so far, but its large European rivals are likely to suffer more.
Rochelle Toplensky – WSJ
UBS UBS -0.41% Group is well-positioned for the current crisis. Investors should be cautious in reading those results across to other big European lenders.

Regulators in ‘advanced talks’ to delay Settlement Discipline Regime to February 2022;Advanced discussions are underway among EU regulators to propose a delay, The TRADE understands, though confirmation of this could still be months away.
Joe Parsons & Jonathan Watkins – The Trade
European regulators are set to table a proposal to push the controversial Settlement Discipline Regime (SDR) back to February 2022, a move that would be hugely welcomed across the capital markets, The TRADE understands.

UBS’s Focus on Wealthy Clients Cushions Against Losses; Majority of the Swiss bank’s lending is either to the global rich or to households and companies in Switzerland
Margot Patrick and Pietro Lombardi – WSJ
UBS Group AG UBS -0.41% said it could start buying back stock again later this year despite the shadow over markets from the coronavirus pandemic. The Swiss bank reported higher credit losses for the second quarter, at $272 million, but said net profit fell only 11% to $1.23 billion, a better performance than at large U.S. banks, where credit charges reflecting a deteriorating economy wiped out more than half their quarterly profits. The bank, whose main business is wealth management, said it expects credit losses to remain elevated but to be lower in the second half than in the first six months of 2020.

‘Blank-cheque’ blitz: Michael Klein leads Wall St charge into Spacs; Former Citigroup banker has raised $2.5bn from these shell companies and gone on a dealmaking spree
Arash Massoudi and Ortenca Aliaj – FT
Michael Klein has spent much of a long career on Wall Street courting chief executives, big corporations and governments with the promise of sage advice on their biggest decisions.

Banks Eye Ditching Real Estate With Workers Wanting to Stay Home
Jennifer Surane – Bloomberg
Survey finds 61% of bank executives don’t expect everyone back; Traders say they miss informal dialogue and idea sharing
U.S. bankers are planning to cut back on real estate to prepare for a world in which fewer workers make a daily commute to the office. Roughly 61% of bank executives surveyed by Accenture Plc said they don’t expect all of their employees to be called back to the office, and more than 40% said they plan to reduce their real estate footprint as a result of the coronavirus pandemic and their new workforce strategies.

U.K. ‘Did Not Want to Know’ If Russia Meddled in Brexit, MPs Say
Kitty Donaldson and Alex Morales – Bloomberg
ISC says spies must review any moscow role in EU referendum; Government dismisses call for intelligence review on Brexit
The British government failed to investigate whether Russia interfered in the Brexit referendum and a full intelligence inquiry must now take place, a panel of lawmakers said.

FBI says private equity, hedge funds pose huge risk for money laundering; Law enforcement isn’t set up to monitor money laundering schemes within hedge funds, leaked FBI documents show
Matthew Rozsa – Salon
A leaked document reveals that the Federal Bureau of Investigation fears that the investment funds industry is a ripe target for money launderers, and could be a ticking time bomb in the private equity and the hedge fund sector.


How Deadly Is Covid-19? Researchers Are Getting Closer to an Answer; Research suggests the new coronavirus kills about five to 10 people for every 1,000 that it infects, though rate varies based on age and access to health care
Brianna Abbott and Jason Douglas – WSJ
Six months into the pandemic, researchers are homing in on an answer to one of the basic questions about the virus: How deadly is it? Researchers, initially analyzing data from outbreaks on cruise ships and more recently from surveys of thousands of people in virus hot spots, have now conducted dozens of studies to calculate the infection fatality rate of Covid-19.

Hong Kong Bracing for Worst Wave of Virus and It’s Not Ready
Jinshan Hong, John Cheng, and Felix Tam – Bloomberg
City’s testing capacity, hospital beds reaching limits; Median age of infected older than before, sparking concern
Hong Kong is facing its worst coronavirus outbreak, and the city is woefully unprepared for the surge. With local infections growing over 600 in about two weeks, the Asian financial hub has been taken off-guard by the sudden eruption of infections, close to half of which are untraceable. While other places in the region like Australia are also facing aggressive resurgences, their hospital bed vacancies and testing capabilities appear to outstrip those of Hong Kong’s. The city reported 58 additional local cases on Tuesday, 24 of which were of unknown origins.

U.K. Scientists Tap AI for Better Ventilation for Covid Patients
Jade Wilson – Bloomberg
The trial could help the NHS fight a second wave this winter; System uses algorithims to recommend settings to caregivers
A trial is underway in the U.K. exploring how artificial intelligence can be used to help monitor the lung physiology of Covid-19 patients to optimize ventilation treatments.

Undermining the CDC Puts Lives at Risk; The Trump administration has found a new way to sideline the country’s leading public health agency.
Michael R. Bloomberg – Bloomberg
In the midst of a devastating pandemic, President Donald Trump is destroying the CDC’s ability to discharge its most vital responsibility: to maintain active surveillance of diseases by gathering, analyzing and reporting data. Even by this president’s low standards, this is unconscionable.

U.K. Budget Deficit Swells to Record on Coronavirus Stimulus
Andrew Atkinson – Bloomberg
Government borrowed almost 130 billion pounds in three months; Debt at almost 100% of GDP but the cost of borrowing is low
The U.K. government borrowed over twice as much last quarter than it did in the whole of the previous fiscal year, amid the towering cost of supporting the economy through the coronavirus crisis.

Covid-19 has ravaged American newsrooms. Here’s why that matters;The irony is that while battering journalism, the pandemic has also underlined the need for reliable local news.
Damian Radcliffe –
Many newsrooms across the U.S. will be quieter places when journalists return to their workplace after the coronavirus lockdowns end. COVID-19 has ripped through the industry. In the United States alone, over 36,000 journalists have lost their jobs, been furloughed, or had their pay cut.

California reports nearly 12,000 COVID cases, biggest increase since pandemic started
Lisa Shumaker – Reuters
California reported a record increase of more than 11,800 new cases of COVID-19 on Monday, according to a Reuters tally of county data, as the Trump administration pushes for schools to reopen to help businesses return to normal.

It’s becoming clear why the US’ response to COVID-19 is terrible; Multiple reports make it obvious that facts aren’t driving pandemic management.
John Timmer – Ars Technica
The United States, already in possession of the largest number of infections in the COVID-19 pandemic, seems strangely committed to making things worse. As new infections have shot up to record levels, a major retailer made basic protective steps optional before reversing its decision, while the governor of Georgia is moving to block any local authorities from acting to protect their citizens. This is despite the fact that the head of the US Centers for Disease Control (CDC) has said: “If we could get everybody to wear a mask right now, I really think in the next four, six, eight weeks, we could bring this epidemic under control.”

Exchanges, OTC and Clearing

Hong Kong Exchanges and Clearing soars to become world’s largest exchange operator by market cap
Zhang Shidong – Yahoo News
Hong Kong’s stocks were on fire Tuesday, with the exchange operator’s shares surging to make it the world’s largest exchange operator by market capitalisation, following Ant Group’s plan to list in the city and Shanghai.
Alibaba Group Holding, to which Ant Group is affiliated, and exchange operator Hong Kong Exchanges and Clearing (HKEX) paced the gain after index compiler Hang Seng Indexes Co. announced plans to launch a gauge to track the biggest hi-tech stocks trading in the city next week. HKEX shot up 9.8 per cent for the biggest gain in five years, with trading volumes 63 per cent above the 20-day average. It closed at a record high of HK$380, bringing its year-to-date gain to 50 per cent.
HKEX is now valued at US$62 billion, while the London Stock Exchange, which rejected the HKEX’s overtures to buy it a year ago, is smaller, in fourth place.

Nasdaq earnings expected to benefit from tech rally
Nasdaq Inc (NDAQ.O) is expected to report higher second-quarter earnings on Wednesday as hopes of a rapid recovery from the coronavirus pandemic sent technology stocks surging, sending its benchmark Nasdaq 100 index .NDX to record highs.

Egypt Prime Minister Discusses Capital Market Updates With EGX Chairman Within COVID-19
Dr. Mustafa Madbouli, Egyptian Prime Minister and Dr. Mohamed Farid, Executive Chairman of The Egyptian Exchange, held a meeting to discuss measures taken for the sustainable development of the Egyptian capital market in light of the current state of the Coronavirus pandemic.

Borsa Istanbul: Removal Of Zero From The Index Go Live Date
All preparations and the member rehearsals regarding the Removal of Two Zeros from BIST Equity Indexes have been completed. In this context, the BISTECH trading system update, which includes the changes regarding the trading principles of Derivatives Market futures and options contracts, will go-live on July 27, 2020 as planned. Please click for the related Announcement.

BME And Barcelona Tech City Join To Create A Financial Hub In The Barcelona Stock Exchange
BME joins Barcelona Tech City as a Global Partner; The agreement reinforces the campus project with the creation of a Pier specialising in the fintech sector in the Barcelona Stock Exchange building; The alliance aims to facilitate access by startups to the resources of the capital markets
BME has joined Barcelona Tech City as a Global Partner. The alliance reinforces Barcelona Tech City’s commitment to the fintech sector through BME, which is one of the main financial players in the Spanish and European market, thereby showing its support for the sector’s innovative network.


Janus Henderson selects Charles River and MSCI for front-office investment solutions; Following its landmark merger, Janus Henderson Investors has selected the Charles River Investment Management Solution (IMS) alongside MSCI portfolio and risk analytics.
Annabel Smith – The Trade
Janus Henderson will integrate Charles River’s Investment Management Solution (IMS) alongside MSCI’s portfolio and risk analytics in a bid to create a unified investment platform, The TRADE can reveal.

IBM Works to Reshape Business as Coronavirus Uncertainty Lingers; Revenue and earnings fell in latest period though cloud business continued to show growth
Asa Fitch – WSJ
International Business Machines Corp. IBM 1.01% ‘s earnings declined in the second quarter against the backdrop of a pandemic that has roiled many of its corporate customers.

INTERVIEW: Fintech Company Coro to Launch Gold Payments App as it Prepares for Nasdaq Listing
John Jannarone – Yahoo Finance
For most investors, the only sensible ways to own gold are to buy ETFs like SPDR Gold Shares (ticker: GLD) and iShares Gold Trust (ticker: IAU) or perhaps put coins and bars in a safe. But none of those options can help turn gold into a currency that’s convenient for payments.

FCA pilots fintech sandbox to drive coronavirus recovery
Lea Nonninger – Business Insider
The regulator teamed up with the City of London Corporation earlier this year, and the two are now piloting a digital sandbox to drive recovery from the coronavirus, per a press release. The sandbox will provide financial institutions (FIs) and fintechs with a digital testing environment. It’ll focus on detecting and preventing fraud and scams, supporting vulnerable customers, and improving access to finance for small- and medium-sized businesses (SMBs) financially affected by the crisis. It’s unclear when the venture will fully launch.

QuantHouse And EliData Partner To Offer Market Data And Execution Capabilities To Financial Institutions Across Europe – 145 Exchange Data Feeds Integrated Into EliData’s Smart Order Router Delivering Arbitrage And Best Execution Capabilities
QuantHouse, the global provider of end-to-end systematic trading solutions including innovative market data services, algo trading platform and infrastructure products and part of Iress (IRE.ASX), today announced that EliData has partnered with QuantHouse to integrate QuantFEED market data into the EliData Smart Order Router (SOR).

LiquidityBook Taps Cash Lafferty to Head Business Development on West Coast
LiquidityBook, a leading Software-as-a-Service (SaaS)-based provider of buy- and sell-side trading solutions, today announced the hire of Cash Lafferty as Head of Business Development – West Coast.


Biggest South Africa Bitcoin Exchange Raises Funds for Expansion
Prinesha Naidoo – Bloomberg
VALR, South Africa’s biggest Bitcoin exchange by trading volume, raised 57 million rand ($3.4 million) to help fund further expansion. Proceeds from the capital raise will be used to explore new products for the South African market, including collateralized lending and derivative trading, and to broaden the company’s presence on the continent, Farzam Ehsani, VALR’s chief executive officer, said in an interview.

Senior Gemini exec set to leave the crypto exchange firm at the end of the week
Frank Chaparro – The Block
Jeanine Hightower-Sellitto, a former executive from the options trading world, is leaving her post at crypto exchange startup Gemini at the end of this week after nearly two years with the New York-based firm. As a managing director, Hightower-Sellitto was among the most senior employees at the exchange, responsible for covering its institutional business lines, including custody. Hightower-Sellitto reported directly to Gemini’s co-founders Cameron and Tyler Winklevoss. She joined the firm in September 2018.

Whale Alert Identifies 1.125 Million BTC as Satoshi’s Stash
William Foxley – Coindesk
New on-chain analysis from Whale Alert says Bitcoin’s anonymous creator Satoshi Nakamoto mined an estimated 1,125,150 BTC, now worth an estimated $10.9 billion. In a Medium post, researchers describe how Satoshi continued mining with the same rig until at least May 2010.

What Ant Group’s massive IPO might mean for digital currency and blockchains
Mike Orcutt – The Block
Ant Group, the parent of China’s largest mobile payment company Alipay, has announced that it plans to list its public shares this year on both the Hong Kong stock exchange and the Shanghai stock exchange’s new STAR market. But while most of the coverage has focused on the Alibaba affiliate’s decision not to list on the New York Stock Exchange, the development also has implications for the future of digital currency and blockchain technology.

PayPal Picks Paxos to Supply Crypto for New Service, Sources Say
Ian Allison – Coindesk
PayPal, the fintech giant planning to bring crypto trading to its massive user base, has chosen Paxos to handle the new service’s supply of digital assets, according to two people familiar with the matter. It’s a plum assignment for New York-based Paxos, which last week launched Paxos Crypto Brokerage and announced its first customer in Revolut US, the American division of the U.K.-based fintech firm that offers bitcoin trading. A formal announcement of the PayPal relationship could come as soon as this week, one source said.

UK Government Moving to Restrict Cryptocurrency Promotions
Paddy Baker – Coindesk
The U.K. government is looking to increase oversight into cryptocurrency promotions in order to protect investors. HM Treasury said Monday it was looking to clamp down on “misleading and inadequate promotions” that endangered retail investors. Brought forward by John Glen, the City Minister responsible for the U.K.’s financial services sector, the proposals, published Monday, call for companies to pass through a “regulatory gateway” before being approved to promote cryptocurrency products.

Mastercard announces expansion of cryptocurrency efforts, inks card deal with Wirex
Michael McSweeney – The Block
Mastercard announced Monday an expansive bid for bringing more cryptocurrency and fintech companies into its card-issuance network. The payments giant said in a press statement that it was unveiling “the expansion of its cryptocurrency program, making it simpler and faster for partners to bring secure, compliant payment cards to market.” “Supercharging the partnership experience, cryptocurrency and crypto card partners are invited to join Mastercard’s Accelerate program for emerging brands and fintechs, giving them access to everything they need to grow quickly,” the company noted.

CoolBitX and Elliptic Team Up to Offer Crypto Firms Compliance Tools
Daniel Palmer – Coindesk
Blockchain security firm CoolBitX and on-chain analytics company Elliptic are now pooling their technologies in a bid to help cryptocurrency firms better meet the demands of regulatory hurdles like the Financial Action Task Force’s (FATF) Travel Rule.

Japan’s Biggest Bank Launches Proprietary Cryptocurrency This Year
Aziz Abdel-Qader – Finance Magnates
Japan’s biggest lender, Mitsubishi UFJ Financial Group (MUFG), will circulate its own cryptocurrency that has been in the works for several years in the second half of 2020. Dubbed “MUFG Coin,” the digital currency will be unveiled in partnership with HR firm Recruit Holdings. Reports in the Japanese newspaper Mainichi Shimbun said Mitsubishi UFJ would roll out its digital token through a smartphone payment app for member companies listed on Recruit’s website, according to bank President Hironori Kamezawa.

Japanese Financial Giant MUFG to Launch Digital Currency in 2020
Sebastian Sinclair – Coindesk
Japan’s largest banking firm, Mitsubishi UFJ Financial Group (MUFG), is set to issue a digital currency in the second half of this year.

Bitcoin And Other ‘Crypto-Assets” Excluded From Central Bank Experiments
Michael del Castillo – Forbes
The central bank of France is on the verge of conducting a series of sweeping experiments whose lessons could be used to change the way money works. Cryptocurrency won’t be included. In a statement from the Banque de France, the nation’s central bank, which works together with the European Central Bank to determine the monetary policy of the continent, the institution today released the names of eight participants in the experiments and the scope of the work.

Rari Capital launches a robo advisor for DeFi yield farmers
The Block
Decentralized finance (DeFi) users have a new best friend to help them farm yield. Rari Capital, founded by Jai Bhavnani, Jack Lipstone and David Lucid, hopes to become the go-to robo advisor for users looking to generate the highest return for their deposits. Prior to starting Rari Capital, Bhavani and Lipstone were working at Ethereum wallet provider MyCrypto. At MyCrypto they noticed an increasing interest among users around DeFi and wanted to build a tool to properly serve that interest.

CME Bitcoin Options Flatline After Record Growth in June
Zack Voell – Coindesk
Bitcoin options trading on CME has flatlined after the exchange experienced massive growth and a record-breaking expiry last month. CME’s bitcoin options open interest has grown barely 10% in July to $167 million at last check. Less than 0.2% of Friday’s aggregate bitcoin options trading occurred on CME, according to Skew. Open interest on Deribit, which represented 93% of Friday’s bitcoin options trading volume, has grown roughly 30% in July to $1.1 billion, down from $1.3 billion before the June expiry.

Bitcoin Cash and Litecoin to trade on public stock market for first time
Jeff John Roberts – Fortune
Grayscale Investments, a New York firm that makes cryptocurrencies available in the form of stocks, announced on Monday that regulators have given the go-ahead for the sale of two new cryptocurrencies to the public.


New Emails Show How Energy Industry Moved Fast to Undo Curbs; The messages, made public in a lawsuit, suggest the E.P.A. rescinded a requirement on methane at the behest of an executive just weeks after President Trump took office.
Lisa Friedman – NY Times
Not long after President Trump’s inauguration, the head of a fossil fuels industry group requested a call with the president’s transition team. The subject: Barack Obama’s requirement that oil and gas companies begin collecting data on their releases of methane.

Top Democrats ask FBI to brief Congress on disinformation threats
Jon Ward and Jenna McLaughlin – Yahoo News
Democratic leaders on Monday made public a letter they sent a week ago to the FBI requesting the agency brief all members of Congress about efforts by foreign governments to spread disinformation ahead of the 2020 election.

Alarm signals of our authoritarian age; Martin Wolf reviews two important new books on Trump, strongmen leaders and the most disturbing political development of our times
Martin Wolf – FT
“No powerful political actor had set out to destroy the American political system itself — until, that is, Trump won the Republican nomination. He was probably the first major party nominee who ran not for president but for autocrat. And he won.”

Trump Reverses Course on Masks, Calling Them ‘Patriotic’ After Allies Split With Him
David R Baker and Margaret Newkirk – Bloomberg
Long resistant, president tweets photo of ‘Patriotic’ mask; Public acceptance can depend on the messenger, experts say
The mask may have reached a tipping point. President Donald Trump’s administration on Monday pushed to encourage mask-wearing, explicitly endorsing a measure widely seen as crucial to stemming the coronavirus pandemic, and potentially quelling a bitter debate that experts say costs lives.


UBS agrees to pay $10 million to the SEC to resolve bonds sale violation charges;UBS Financial Services will pay $10 million to the US Securities and Exchange Commission (SEC) after being accused of wrongfully allocating bonds intended for retail customers to ‘flippers’.
Kiays Khalil – The Trade
An investigation led by the US watchdog allegedly found a division of UBS was improperly allocating bonds. According to the SEC, UBS Financial Services was distributing bonds intended for the retail market to ‘flippers’, an investor who buys a stock or an IPO, to sell for a quick profit. The allegations claim the bonds were flipped and immediately resold to other broker-dealers at a profit.

ASIC suspends AFS licence of Union Standard International Group
ASIC has suspended the Australian Financial Services (AFS) licence of Sydney-based retail over-the-counter (OTC) derivatives issuer Union Standard International Group Pty Ltd (Union Standard) until 23 September 2020. Union Standard operates under the brand USGFX and held AFS licence 302792.

ESAs notify the European Commission about the outcome of the review of the PRIIPs key information document
The European Supervisory Authorities (ESAs) have informed the European Commission of the outcome of the review conducted by the ESAs of the key information document (KID) for packaged retail and insurance-based investment products (PRIIPs).

ESMA recommends supervisory coordination on accounting for COVID-19-related rent concessions
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has issued a Public Statement recommending coordination of supervisory action with regards to issuers’ accounting for COVID-19-related rent concessions.

SEC Charges Silicon Valley Start-Up and CEO With Defrauding Investors
The Securities and Exchange Commission today charged a Mountain View, California-based technology start-up and its chief executive officer with defrauding investors by making false and misleading statements about the company’s finances and sources of revenue.

UBS to Pay $10 Million for Violating Rules Which Give Priority To Retail Investors in Municipal Offerings
The Securities and Exchange Commission today announced that UBS Financial Services Inc. has agreed to pay more than $10 million to resolve charges that it circumvented the priority given to retail investors in certain municipal bond offerings.

SEC Charges Financial Advisor with Fraud for Stealing Millions from Investors
The Securities and Exchange Commission today charged former registered representative and investment adviser Michael Barry Carter with fraud for stealing from brokerage customers and an elderly advisory client.

CFTC Orders Florida Company to Pay $75,000 for Registration Violations
The Commodity Futures Trading Commission today issued an order filing and settling an enforcement action against Southwest Group, LLC of Fort Myers, Florida for acting as an unregistered retail foreign exchange dealer. The order requires Southwest Group to cease and desist from further violations of the Commodity Exchange Act and CFTC regulations, as charged, and to pay a civil monetary penalty of $75,000.

Coronavirus (COVID-19) Update—Extension to Relief from Fingerprinting Requirements
The CFTC’s Division of Swap Dealer and Intermediary Oversight (DSIO) recently issued Staff Letter No. 20-20 extending its temporary relief provided in CFTC Staff Letter No. 20-16. This relief was granted to registrants and applicants for registration listing a principal, and for applicants for associated person (AP) registration from fingerprinting requirements. The temporary relief, originally scheduled to expire on July 23, 2020, now extends through the earlier of September 30, 2020 or the date on which NFA notifies the public that it has resumed processing fingerprints.

Monetary Authority Of Singapore Proposes New Powers To Enhance Effectiveness In Addressing Financial Sector-Wide Risks
The Monetary Authority of Singapore (MAS) today issued a consultation paper proposing enhanced powers to deal with risks that can undermine the financial sector. The proposed new Act for financial services and markets will consolidate similar provisions for various classes of financial institutions [1] in the MAS Act into a single legislation. In addition, the new Act will include additional powers to prohibit unsuitable individuals from working in the financial industry, expand the scope of anti-money laundering and countering the financing of terrorism (AML/CFT) requirements to persons in Singapore who provide digital token services overseas, strengthen the framework for technology risk management, and enhance the effectiveness of dispute resolution.

Investing and Trading

A Crucial Macro Hedge-Fund Trade Is Getting Turned Upside Down
Carter Johnson – Bloomberg
Australian, Canadian dollars hold appeal to fund carry trades; Strong correlations with EM currencies should limit FX risk
A bread-and-butter source of returns for macro hedge funds is getting re-thought in the age of Covid-19. The Australian and Canadian dollars now rank among the most efficient for funding carry trades, in which investors borrow those currencies at low interest rates to fund purchases of higher-yielding assets in emerging markets. That’s a reversal of how these trades worked in the past, when assets in those two countries were popular purchases in carry trades.

Your Fang Stocks May Need Some Gold Fillings; Equities might offer a haven from financial repression, but there’s one asset that rises inexorably with lower real yields.
John Authers – Bloomberg
Maybe it hasn’t been such a bad year after all. Following promising news on Oxford University’s search for a Covid-19 vaccine (and even though the news wasn’t totally positive), the S&P 500 rose Monday, and at last closed in positive territory for the year. This was the first time this had happened since the spread of the coronavirus became apparent in February. Meanwhile, the dominant internet groups in the NYSE Fang+ index reversed recent declines to hit a new all-time high:

A $1 Trillion Glut of Bonds Is Dwarfing Central-Bank Demand
Stephen Spratt, Liz McCormick, and James Hirai – Bloomberg
Traders are betting on steeper yield curves as supply rises; Central banks may look to quicken the pace of bond purchases
The world’s major central banks aren’t purchasing debt fast enough, leaving almost $1 trillion of new sovereign bonds looking for buyers in the months ahead. The flood of fresh debt, sold by governments to fund pandemic-rescue packages, threatens to dwarf central-bank buying and swamp markets in the U.K., Canada and Australia, according to Bloomberg calculations. Policy-maker purchases will also lag issuance in the U.S. and Japan, where a continuing tilt toward buying short-maturity debt would risk allowing yields on longer-dated bonds to rise unchecked, hurting pension funds and life insurers that rely on these markets.

Investors Can’t Stop Dancing to the Market’s Tune; Prices are high and pros are anxious, but it’s hard to fight the Fed and an optimistic mood.
Michael P. Regan – Bloomberg
If the year 2020 wasn’t weird enough already, add this to the list: The U.S. is in the middle of a recession, yet some professional investors are worried that the stock market may be rallying itself right into a bubble.

The Future of Our Food Supply; From grocery stores and online delivery to farms and restaurants, how and where we get our food may never look the same.
Nicole Flatow – Bloomberg
If the early days of grocery shopping during coronavirus are remembered for empty shelves and flour hoarding, our present-day food system might be characterized by lines. Lines are a symbol of the burdens of the pandemic, as more people wind down blocks waiting for food aid. They’re also a sign of our adaptation, with socially distanced queues of people waiting to enter stores, and separate check-outs for delivery workers buying groceries on behalf of somebody else.

Dividends Come Crashing Down as Asian Companies Preserve Cash
Ishika Mookerjee – Bloomberg
About 23% of MSCI Asia Pacific Index firms cut or scrap payout; Chinese firms, consumer discretionary businesses lead declines
Companies in Asia Pacific are slashing dividends at the fastest pace in more than a decade as the coronavirus pandemic upends business plans and clouds the outlook for earnings.

Jeff Bezos Adds Record $13 Billion in Single Day to Fortune
Jack Pitcher – Bloomberg
Jeff Bezos added $13 billion to his net worth on Monday, the largest single-day jump for an individual since the Bloomberg Billionaires Index was created in 2012. Inc. shares surged 7.9%, the most since December 2018 on rising optimism about web shopping trends, and are now up 73% this year.

Negative Rates Lose Out to Zero Cost of Money in Opening Wallets
Ivan Levingston – Bloomberg
Zero interest rates can be a more effective tool for central banks to get individuals borrowing and making riskier investments than when the cost of money turns negative, according to a new study from a trio of researchers with Israel’s Ben-Gurion University.

Tesla share rally propels some early fan investors to riches
Tina Bellon, Hyunjoo Jin – Reuters
Convinced of Tesla Inc’s (TSLA.O) imminent meteoric rise, Orestis Palampougioukis, a Netherlands-based software developer, took out a 43,000 euro ($49,000) loan in early October to invest it all in the electric carmaker, which at the time was trading at around $230 a share.

Environmental, Social and Corporate Governance

Bank of the West Launches the 1% for the Planet Account; First and only checking account designed for climate action features a carbon tracking tool, biodegradable card, and will donate 1% of account revenues to environmental nonprofit partners of 1% for the Planet at no cost to customers; The new Bank of the West logo. (PRNewsfoto/Bank of the West)
Bank of the West, a subsidiary of BNP Paribas, today announced it has teamed up with 1% for the Planet to launch its first checking account designed for climate action. Bank of the West will donate 1% of net revenues generated from the account to support environmental non-profit organizations focused on creating a healthier planet. The first recipient of any funds generated by the initiative will be Protect Our Winters (POW).

Frackers Are in Crisis, Endangering America’s Energy Renaissance; Even before the pandemic, West Texas was reeling and Wall Street was running out of patience with the industry.
Bryan Gruley, Kevin Crowley, Rachel Adams-Heard, David Wethe – Bloomberg
Twenty years ago, before the U.S. oil industry became a global energy power that strikes fear into Saudi Arabia, brothers Dan and Farris Wilks started Frac Tech Services LLC in tiny Cisco, Texas. The company provided equipment for hydraulic fracturing, aka fracking, the breaking up of tight sedimentary rock by blasting water, sand, and assorted chemicals through horizontal bores at fantastically high pressure.

A Pipeline Is Quietly Ordered Shut in New Signal of Shale’s Woes
Catherine Ngai – Bloomberg
Bureau of Indian Affairs orders Marathon Petroleum link shut; The decision follows moves to halt Dakota Access, Keystone XL
Earlier this month, a federal judge stunned the U.S. energy sector with an order to shut down the Dakota Access pipeline. Environmentalists hailed it as the first time a fully operating system had been forced to close by a legal challenge.

Swarm of Locusts May Blow Into Brazil From Argentina, Somar Says
Fabiana Batista – Bloomberg
Wind currents on Wednesday may take the insects into Brazil; Winter crops in Rio Grande do Sul state could be threatened
Weather conditions may be forming to send a cloud of locusts in northern Argentina over the border to Brazil, threatening winter crops in the giant farming nation.

Renewable Energy Seen Offering Australia a Quick Jobs Rebound
David Stringer – Bloomberg
Greener policies could add 76,000 posts, climate group says; Nation’s government focused on gas-fueled virus recovery
Bolstering adoption of renewable energy and other policies aimed at tackling climate change could add about 76,000 jobs in Australia over three years, according to an advocacy group.

Remote Outback Town to Host A$600 Million Solar Thermal Project
James Thornhill – Bloomberg
Location seen among best in the world to deploy the technology; Project aims to provide power to region’s mining operations
An isolated Australian mining community has been selected as the site for a A$600 million ($420 million) energy project, incorporating technology that allows heat from the sun to be stored for as long as 16 hours.


Former Goldman Sachs global markets executive appointed for Pershing operations role; Head of change for global markets at Goldman Sachs joins BNY Mellon’s Pershing as chief operating officer.
Annabel Smith – The Trade
BNY Mellon has confirmed the appointment of Emily Schlosser, the former head of change for global markets at Goldman Sachs, as Pershing’s new chief operating officer.

Goldman Hints Tokyo Exclusion Hurts Japan’s New Tourism Program
Toru Fujioka – Bloomberg
A new program from Japan’s government to help prop up the country’s ailing tourism industry will pack less punch because Tokyo residents have been excluded from using the subsidies, according to Goldman Sachs Group Inc.

Danske Seen Axing at Least 1,000 Jobs in ‘Significant’ Move
Christian Wienberg and Frances Schwartzkopff – Bloomberg
Danske Bank A/S may need to cut at least 1,000 jobs if it’s to meet its latest cost goals, according to analysts monitoring the lender. Danske’s chief executive, Chris Vogelzang, told Bloomberg on Friday that he’s planning “significant” staff cuts in an effort to bring expenditure under control.

UBS Signals Potential Return to Share Buybacks
Marion Halftermeyer and Patrick Winters – Bloomberg
Bank considers shifting balance between dividends repurchases; Wants payout ratio more in line with bank’s U.S. peers
UBS Group AG Chief Executive Officer Sergio Ermotti is looking at more share buybacks as a way to reward investors while keeping flexibility during the economic uncertainty caused by the coronavirus pandemic.

Global Banks Look to Taiwan Expansion in Shift Away From Hong Kong
Miaojung Lin, Samson Ellis, and Kiuyan Wong – Bloomberg
Taiwan’s Huang plans rule changes to improve competitiveness; Hong Kong turmoil raises concerns about talent, capital exodus
Taiwan’s top financial regulator said global banks are looking to expand on the island after China’s passage of a controversial security law in Hong Kong prompted some firms to rethink their Asian strategies.

Ex-Morgan Stanley Adviser Admits Stealing More Than $6 Million From Clients
Bob Van Voris – Bloomberg
A former Morgan Stanley investment adviser admitted stealing more than $6 million from clients and using the money to pay his mortgage, credit card bills and country club membership fees. Michael Barry Carter, 47, pleaded guilty Monday to wire fraud and investment adviser fraud for making at least 53 unauthorized transfers from client accounts to his own, Maryland U.S. Attorney Robert Hur said in a statement.

European banks won’t follow Wall Street’s $33bn trading gold rush; US banks have steadily come to overtake European peers, not just in markets and trading, but in the industry overall — and the pandemic has accelerated the trend
Paul Clarke – Financial News
When Goldman Sachs’ earnings report landed on 15 July, analysts were amazed. The bond trading unit posted its best quarter in nine years. The markets division almost doubled its revenues since last year, surging to $7.2bn.


Negative interest rates cannot save indebted economies; Setting the price of money below zero creates more problems than it purports to solve
Jacques de Larosière – FT
Can interest rates be eliminated to avoid servicing monumental debts? The Covid-19 crisis, exacerbated by the consequences of having hyper-accommodative monetary policy for too long, has led to entire economies becoming over-indebted.

China’s Ant Group Will Bestride Chinese Markets; Ant Group has an enviable competitive position in China. But the frenzy in Shanghai’s new tech board creates risks for would-be investors.
Jacky Wong – WSJ
Ant Group is named after a small creature, but it is shaping up to be a leviathan of China’s markets. Would-be investors must hope that is due to real heft, and not hot air. The company’s coming initial public offerings, concurrently in Hong Kong and Shanghai’s STAR market, will likely be the largest this year, and maybe ever. Ant owns Alipay, one of China’s two dominant mobile-payment networks. The company also sells financial services to its more than 900 million users on Alipay and manages one of the world’s largest money-market funds. Chinese e-commerce giant Alibaba owns a third of Ant.


Russian interference in UK the ‘new normal’, intelligence report warns; Long-awaited study says Kremlin has access to top British political and business leaders
George Parker and Helen Warrell and Henry Foy – FT
A long-awaited report into Russian interference in British politics has concluded that Moscow’s influence is “the new normal” with senior figures linked to the Kremlin enjoying access to top business and political leaders.

U.K. ‘Did Not Want to Know’ If Russia Meddled in Brexit, MPs Say
Kitty Donaldson and Alex Morales – Bloomberg
The British government failed to investigate whether Russia interfered in the Brexit referendum and a full intelligence inquiry must now take place, a panel of lawmakers said. Members of Parliament’s Intelligence and Security Committee accused ministers of deliberately avoiding the question because they did not want to know whether Russia had tried to interfere in the European Union referendum. The government dismissed the findings and refused to authorize a retrospective investigation into the 2016 vote on European Union membership.

Pompeo arrives in UK to discuss China, 5G and Brexit
Hannah McKay and Guy Faulconbridge – Reuters
U.S. Secretary of State Mike Pompeo arrived in the United Kingdom on Monday to discuss China, 5G and a Brexit free trade deal with Prime Minister Boris Johnson. Pompeo, who did not speak to reporters on the plane, was due to be greeted by U.S. Ambassador Woody Johnson shortly after landing.

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