Wall Street Quants Are Turning Their Skills to the Virus Fight; The Federal Reserve Is Changing What It Means to Be a Central Bank

Apr 28, 2020

First Read

Hits & Takes
By John Lothian & JLN Staff

Happy birthday to the Cboe. Their executive chairman and CEO Ed Tilly penned a blog post to commemorate the Cboe’s 47th anniversary. More details below.

Today JLN has an interview with ChartIQ Chief Commercial Officer Julie Armstrong. In this interview I conducted over Zoom and Julie shot with her cell phone, she talks about the challenges presented by the COVID-19 outbreak for clients, prospects and ChartIQ. She talks about solutions from ChartIQ that are finding new opportunities in the challenges clients are experiencing while working at home on all kinds of different devices and screens. She also talks about keeping connected to clients in this remote working environment.

We are making progress on putting together a discussion about the move by the CME to the Bachelier options model for some products. Stay tuned.

If your company is doing something special to help with the response to this medical and economic emergency, feel free to let JLN know. We want to make sure you get a shout out for your good deeds. There are so many good things people are doing to help other people, from donating medical equipment like Cboe or SGX, to holding online musical performances for charitable groups in desperate need of financial support. A particular hat tip to Matt Scharpf of Eurex for his performances on behalf of A Leg To Stand On.~JJL


In a new blog post Monday, Cboe CEO Ed Tilly reflected on the 47th anniversary of the company’s founding and some lessons learned as Cboe continues to operate its markets through the coronavirus pandemic. Sunday, April 26, marked the 47th anniversary of Cboe Global Markets’ founding.

Tilly also announced that Cboe Global Markets plans to donate 70 “patient isolation units,” to U.S. and UK medical facilities in Kansas City, Chicago, New York and London as part of Cboe’s efforts to serve its communities and help stem the spread of the coronavirus.

The units are designed to protect healthcare workers by containing and isolating infected individuals. A Cboe spokeswoman said the exchange plans to deliver the first shipment to New York – where there continues to be the most immediate need – by the end of this week. The New York donations will be used by the NYC Fire Department Hazmat unit and NYC Police Department Emergency Services unit. Cboe did not disclose the costs of the units.

In the blog, Tilly also said the temporary transition of Cboe’s trading floor to all-electronic trading during Illinois’ stay-at-home orders was “seamless,” but added he looked forward to the reopening of the floor “and its eventual move to its new home in the 141 W. Jackson building in 2021.” ~SC


ChartIQ’s Julie Armstrong on the Challenges of the COVID-19 Outbreak

Julie Armstrong is the chief commercial officer of ChartIQ. She talks with John Lothian News about the challenges of firms adapting to working and home and the opportunities for firms like ChartIQ. She also talks about connecting to clients in the work at home environment.

Watch the video »


Reflecting on 47 Years of Defining Markets
Ed Tilly – Cboe blog
Sunday, April 26, marked the 47th anniversary of Cboe Global Markets’ founding. But this global pandemic has shown that even after 47 years, the core purpose of our business has not changed: we remain committed to providing a forum for investors to express their views on the market and manage their risk.

*****Happy birthday to the Cboe and and the beginning of a wave of innovation in the derivatives markets.~JJL


Why Chris Giancarlo Considers A Digital Dollar Mission Critical For The World
Jason Brett – Forbes
Below is an in-depth interview with J. Christopher Giancarlo, Senior Counsel at Willkie Farr and Gallagher and former Chairman of the U.S. Commodity Futures Trading Commission, in which he reveals his vision for a ‘true digital dollar.’ In his new role as Co-Founder of the Digital Dollar Project, a partnership between Accenture and the Digital Dollar Foundation to advance exploration of a United States Central Bank Digital Currency (CBDC), Giancarlo envisions the creation of a digital dollar as a mission-critical move for the United States that will provide benefits around the globe.

*****Don’t get in the way of Chris Giancarlo and the digital dollar. He is a man on a mission.~JJL


Those who’ve lost work or pay from the virus still broadly support stay-at-home measures
Philip Bump – The Washington Post
Millions of Americans have lost jobs or been furloughed since most states enacted stay-at-home policies meant to slow the spread of the novel coronavirus. Week after week, the number of people filing for unemployment has shattered records, with some 26 million having done so in the past five weeks of claims reports. The economic hit in the second quarter of 2020 will be the largest since the Great Depression, an adviser to President Trump said Monday morning.

*****Self-preservation is a powerful thing.~JJL


Having trouble with the IRS site? Try all caps — yes, really
Jessica Roy – LA Times
Getting a “payment status not available” error when you’re trying to learn the status of your IRS coronavirus stimulus check? Try this one weird trick that really works: Enter your street address in all caps.



Monday’s Top Three
Our top story Monday was The 20 Minutes That Broke the U.S. Oil Market, from Bloomberg News. Second was the JLN video Jack Sandner – Open Outcry Traders History Project – Part One conducted by John Lothian. Third was Coronavirus pandemic will cause global famines of ‘biblical proportions,’ UN warns, from CNN.


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Lead Stories

Wall Street Quants Are Turning Their Skills to the Virus Fight
Justina Lee – Bloomberg
Statistical methods in finance unleashed in the ‘data crisis’; Rotella Capital, Coolabah, ex-AQR AI chief ramp up research
Everyone on Wall Street is an armchair epidemiologist these days, but a motley crew of quants is taking it to a whole new level. Hedge fund managers, market academics and risk experts are channeling their data-mining smarts to the world of clinical sciences to model the trajectory of this once-in-a-century pandemic.

The Federal Reserve Is Changing What It Means to Be a Central Bank; By lending widely to businesses, states and cities, the Fed is breaking taboos about who gets money to prop up a frozen U.S. economy
Nick Timiraos and Jon Hilsenrath – WSJ
The Federal Reserve is redefining central banking. By lending widely to businesses, states and cities in its effort to insulate the U.S. economy from the coronavirus pandemic, it is breaking century-old taboos about who gets money from the central bank in a crisis, on what terms, and what risks it will take about getting that money back.

The Secret Group of Scientists and Billionaires Pushing a Manhattan Project for Covid-19; They are working to cull the world’s most promising research on the pandemic, passing on their findings to policy makers and the White House
Rob Copeland – WSJ
A dozen of America’s top scientists and a collection of billionaires and industry titans say they have the answer to the coronavirus pandemic, and they found a backdoor to deliver their plan to the White House.

The Central Bank That Ate Japan; The Bank of Japan buys the entire economy to fight Covid-19.
The Editorial Board – WSJ
This is a busy week in central banking with meetings at the Bank of Japan, the Federal Reserve and European Central Bank. Thank Tokyo for going first, and delivering a warning about the limits, and dangers, of firing monetary bazookas at the coronavirus crisis. The Bank of Japan unveiled a raft of new measures Monday. Governor Haruhiko Kuroda will buy government bonds in unlimited quantities, up from an annual cap of ¥80 trillion ($746 billion). The BOJ also increased its limits on purchases of longer-term corporate bonds and short-term commercial paper by ¥15 trillion, to a total of ¥20 trillion, and doubled its annual limit on purchases of exchange-traded funds and real-estate investment trusts to EUR12 trillion and EUR180 billion.

Oil Crisis Prompts Call to Bolster World’s Top Carbon Market
Ewa Krukowska – Bloomberg
France seeks carbon floor price and stronger supply controls; EU energy chief wants key role for Green Deal in recovery
The oil market collapse is opening a new debate in Europe about strengthening the carbon market, a key tool in the region’s bid for climate neutrality.

In Global Electricity Slump, Coal Is the Big Loser; When generators cut power, coal plants are typically the first ones to go.
Will Wade, Chris Martin, and Mathew Carr – Bloomberg
As silent factories and deserted offices hobble demand for electricity worldwide, the biggest loser is coal. In the U.S., coal’s share of power generation has dropped more than 5 percentage points since February on the nation’s biggest grid while output from natural gas plants and wind farms held steady. In Europe, it’s down 2 points. Even in China and India, where coal still dominates, it’s losing market share during the pandemic.

US crude prices tumble as world’s largest oil ETF cuts stake; West Texas Intermediate settles 25% lower a week after sub-zero dive
Harry Dempsey, Philip Stafford and David Sheppard – FT
US oil prices fell sharply on Monday after the world’s largest oil-backed exchange traded fund began offloading all its short term contracts on fears of another plunge into negative territory. West Texas Intermediate, the US oil price benchmark, fell below $0 last week for the first time ever in response to the slump in global demand for fuel triggered by the coronavirus pandemic.

China’s biggest bank halts investment in products linked to oil; ICBC’s move follows outcry over losses from Bank of China ‘crude oil treasure’ product
Don Weinland, David Sheppard and Thomas Hale – FT
China’s biggest bank by assets has suspended new retail investments in products linked to oil and other commodities, as pressure mounts on banks to protect small investors following heavy losses linked to recent swings in US crude prices.

How This Chief Trader Is Embracing Working From Home
Divya Balji – Bloomberg
AGF’s Christofilos learns to love trading from his living room; Cautious on the outlook, he says a retest of lows is possible
For years, John Christofilos would wake up at 4:09 a.m. and jump on the elliptical machine in his basement for a quick workout while scanning emails and market news, before heading into his office in downtown Toronto. The Covid-19 lockdown has changed his morning routine in two respects. First, the chief trading officer at AGF Management Ltd. gets to sleep in for an extra 40 minutes, waking at 4:49 a.m. (nine is his lucky number). Then, after his trip to the home gym, he heads to the trading desk in his living room.

‘Black Swan’ funds enjoy rare chance to spread their wings; Funds that seek to profit from collapses have gained 57.2% so far this year
Laurence Fletcher in London and Robin Wigglesworth – FT
Crisis-hunting hedge funds enjoyed blowout returns in March, but investors say the strategy of waiting years for markets to crumple is still unlikely to draw new fans.

Oil Plunges Again After Sudden Index Shift Prompts Firesale
Sharon Cho and Alex Longley – Bloomberg
S&P Dow Jones will pre-roll all its June WTI contracts Tuesday; Funds also rolling contracts as risk of negative prices looms
Crude whipsawed near $11 a barrel after a major index tracked by billions of dollars in funds bailed out of near-term contracts for fear prices may turn negative again.

When the Big Get Bigger, Active Stockpickers Feel Even More Pain; Quants, who use computers to find an edge, have struggled to beat the simple strategy of buying and holding the largest companies.
Justina Lee – Bloomberg
In a crisis, large companies can have an edge. As the pandemic has forced the shuttering of local stores and restaurants, grounded consumers streamed Tiger King on Netflix, stocked up on groceries and supplies with Amazon, and gathered together on Zoom. Hardly any company is immune from the economic shutdown, but big business has more resources to weather the pandemic and, in some cases, may be able to gain market share.

Tanker rates boom as oil refiners turn to floating storage; Hiring a long-range product tanker is now more expensive than a very large crude carrier
Neil Hume – FT
Refiners are scrambling to secure tankers to hold surplus jet fuel, diesel and petrol, as the collapse in demand stemming from the coronavirus outbreak leaves the world awash in oil and oil products.

Federal Reserve meets as market measures point to deflation risks; Severity of economic blow from coronavirus pandemic raises possibility of falling prices
Colby Smith – FT
Market measures of short-term inflation expectations remain at the lowest levels since the financial crisis, putting pressure on the Federal Reserve to address deflation risks at its meeting this week.

A Pro-cyclical Problem
Scott O’Malia – ISDA
Regulators have typically tried to avoid putting in place measures that are explicitly pro-cyclical, but the recent bout of coronavirus-related volatility is resulting in a significant increase in trading book capital requirements that could impede the ability of banks to deploy capital in support of the economy.

Deutsche Bank Gives Us a View of the Credit Abyss; The evidence suggests that bailouts make recessions worse. It’s a Faustian bargain.
John Authers – Bloomberg
One of the most terrifying moments in all of music comes at the end of “The Damnation of Faust,” the opera by Berlioz. Faust sells his soul to Mephistopheles, who then takes him on a ride to the abyss, past screaming figures in pain, before he falls before Beelzebub’s army of devils. It is thrilling and blood-chilling. And you would think it would be the last piece of music to come to mind when reading the 22nd edition of Deutsche Bank AG’ s annual default study.

The World’s Economic Visionaries Can’t See Past Tomorrow; The Bank of Japan was once a monetary policy pioneer. Now it’s in crisis mode.
Daniel Moss – Bloomberg
As the world’s most powerful central banks meet this week, one thing is apparent: They’re in survival mode. Little else matters for economic policy beyond weathering the coronavirus pandemic. The risk is that policy makers commit to a range of measures without an exit strategy.


Business of Survival Fuels Race for New Skills to Stay Afloat
Lucy Meakin, Enda Curran, and Katia Dmitrieva – Bloomberg
Coronavirus shutdowns have also forced companies to reorient; Situation may rapidly accelerate an existing shift in work
Learning new skills is taking on greater significance at manufacturer Zero Point 8 in the U.K.’s industrial heartland. For workers, it’s about staying employed and healthy. For the company, it’s about keeping afloat. Social distancing rules that dictate production can only continue safely if workers are two meters apart means splitting them into two shifts. Some staff at the plant have had to rapidly retrain to cover the roles usually performed by others.

Virus Likely to Keep Coming Back Each Year, Say Top Chinese Scientists
Bloomberg News
New virus is different from SARS with symptom-free infections; Summer won’t necessarily lead to fewer cases: China expert
Chinese scientists say the novel coronavirus will not be eradicated, adding to a growing consensus around the world that the pathogen will likely return in waves like the flu.

Tokyo Head Sees Olympics Canceled if Virus Isn’t Under Control
Gearoid Reidy and Ayai Tomisawa – Bloomberg
The Olympic Games would be canceled instead of being further postponed if the coronavirus pandemic isn’t under control by 2021, the head of Tokyo’s organizing body said. Yoshiro Mori, president of the Tokyo 2020 organizing committee, told Nikkan Sports that a delay to 2022 wouldn’t happen, noting that during wars, the games have simply been canceled.

US small business rescue fund strained by rush of claims; Computer system processing loans crashes as applicants scramble for fresh $310bn in funding
Kiran Stacey and Laura Noonan – FT
The Trump administration’s small business bailout programme hit another hurdle on Monday when the computer system processing loan applications crashed after being overwhelmed with demand on the day the US fund reopened.

Pandemic forces Brazil’s ‘Chicago boys’ to revise reform plans; Finance minister Paulo Guedes has had his liberal economic agenda sidelined by emergency measures
Bryan Harris and Andres Schipani – FT
Paulo Guedes spent much of his first year as Brazil’s finance minister expounding the need for liberal reforms and fiscal rectitude. In a country mired in debt and inertia, it was a platform that earned him international acclaim. Then coronavirus hit.

The pandemic could bring a global ceasefire; Several long-running conflicts are edging towards a temporary halt to hostilities
Gideon Rachman – FT
Could anything good come out of the coronavirus pandemic? Amid mass deaths, lockdowns and the prospect of another Depression, it is hard to find a bright side.

Largest US meat company warns food supply chain is breaking; Tyson chairman flags shortages as slaughterhouses and processing plants are forced to shut
Gregory Meyer – FT
The largest US meat company has warned of shortages for consumers, saying the country’s complex food chain was “breaking” as Covid-19 spreads to refrigerated packing plants.

This is how coronavirus will upend the economy over the next year
Natasha Bernal – Wired
Walk through the City of London, and know what it feels like to be the only person alive. There is no traffic. Gleaming steel and glass skyscrapers are deserted. The streets from Farringdon to Billingsgate are so quiet, you can hear birds chirping. The centre of the UK’s economy, once crammed with over half a million people a day churning out around £69 billion in revenue in 2018 alone, has become a ghost town.

Exchanges, OTC and Clearing

Unscheduled changes in SDAX and TecDAX; RIB Software SE leaves the indices; Stratec SE new in SDAX, Draegerwerk AG & Co KGaA new in TecDAX
Deutsche Börse Group
STOXX Ltd., Qontigo’s global index provider, announced unexpected changes in the SDAX and TecDAX index on Monday.

Exchange Extends Consultation Period for Consultation Paper on Corporate WVR Beneficiaries
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), has today (Wednesday) extended the consultation period on its proposal to allow corporate entities to benefit from weighted voting rights (Corporate WVR Consultation) to end on Sunday, 31 May1.

Nasdaq Announces 2020 Annual Meeting of Shareholders
Nasdaq (Nasdaq: NDAQ) has scheduled its 2020 Annual Meeting of Shareholders for May 19, 2020 at 8:30 AM ET. Nasdaq has adopted a virtual format for its Annual Meeting to protect the health and well-being of its employees, directors, shareholders and other stakeholders in light of the COVID-19 pandemic. Shareholders of record will be able to vote and ask questions online during the meeting. The virtual meeting website will be accessible 15 minutes prior to the meeting start by visiting: www.virtualshareholdermeeting.com/NDAQ2020.

Performance Bond Requirements: Energy Margins – Effective April 28, 2020
To Clearing Member Firms; Chief Financial Officers; Back Office Managers; Margin Managers
CME Group
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below.

Performance Bond Requirements: Energy, Agriculture and Interest Rates – Effective April 28, 2020
CME Group
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below.

Amendments to the NYMEX Rule 588.H. (Globex Non-Reviewable Trading Ranges) Table for the Palladium Futures and Micro Palladium Futures Contracts
CME Group

SGX and CITIC Securities seal wide-ranging agreement to collaborate across FICC, REITs and capital raising
Singapore Exchange Limited (SGX) and CITIC Securities Company Limited (CITIC Securities) yesterday signed a wide-ranging strategic cooperation agreement to collaborate across multiple areas, including fixed income, currencies and commodities (FICC), real estate investment trusts (REITs), as well as equity, debt capital markets and more.

Aid for COVID-19 Outbreak Response
We would like to express our sincere sympathies to everyone affected by the novel coronavirus (COVID-19) outbreak, and also to their families and related persons. We would also like to express our deepest gratitude to healthcare professionals and others who are devoting their time and energy toward preventing the spread of the disease.

AcadiaSoft Announces Partnerships with Margin Reform and Margin Tonic to Support Uncleared Margin Rules Compliance
Press Release
AcadiaSoft Inc., the leading industry provider of risk and collateral management services for the non-cleared derivatives community, today announced new partnerships with collateral management consultancy firms Margin Reform and Margin Tonic. The partnerships will assist clients with Uncleared Margin Rules (UMR) compliance.


Do you still need an Order Management System?
The Trade
Often seen as a reliable tool that sits on every trader’s desktop, the Order Management System (OMS) has been a core part of investment operations for years. Yet we regularly talk to buy-side firms who think about retiring their OMS and replacing it with an internally built database or another tool. In this piece we look at how the concept of the OMS became popular, what problems it sought to address, how today’s complex investment environment is testing the capabilities of the OMS and the alternative solutions available.

FIS launches $150 million fintech venture investing arm
Dan DeFrancesco – Business Insider
One of the world’s largest financial-technology companies is launching a venture-capital arm to make investments in newcomers in the space.
Fidelity National Information Services, better known as FIS, announced on Tuesday the creation of FIS Ventures with a target to invest $150 million into fintechs over the next three years.

Fintech Europe Selects Ten Startups for its Fifth Batch
Yahoo Finance
Fintech Europe, Plug and Play’s fintech-focused innovation platform based out of Frankfurt, Germany, announced today the ten startups selected for its fifth batch. The platform has grown its partner base to 13 Financial Institutions since its inception in May 2018. Together with Deutsche Bank, TechQuartier, BNP Paribas, Nets Group, Nexi, UniCredit, Aareal Bank, Abanca, Danske Bank, DZ Bank, Elo, UBI Banca, and Raiffeisen Bank International, the program seeks to support innovation in the world of Financial Services.

Bank Of China Expands Tests of New Fintech Regulation to Six More Cities
Ting Peng – CoinTelegraph
Bank of China launched its first fintech innovation regulatory pilot project in Beijing last year. The bank announced plans to expand its regulatory pilot projects in six more cities and districts on April 27.
The bank plans to conduct pilot projects in Shanghai, Chongqing, Shenzhen, Hebei Xiong’an New District, Hangzhou and Suzhou. Ultimately, it aims to improve the financial services in general for the real economy.

DASH 360R’s hybrid approach allows customers to choose between on-premise or cloud deployment options
DASH Regulatory Technologies – the regtech-focused affiliate of capital markets technology and execution services provider DASH Financial Technologies – today announced the launch of DASH 360R, the next-generation of its industry-leading LDB platform for U.S. regulatory capital calculation and reporting compliance. The suite is available in both fully SaaS-based and on-premise deployment options, giving broker-dealers a choice between the scalability, security and flexibility of the cloud or the complete control offered by local deployment.


Two Weeks and Counting: Experts Warn Bitcoin Halving May Be a Nonevent
Shiraz Jagati – Cointelegraph
Due to the uncertainty surrounding the global financial sector at the moment, experts are still not sure of the impact that the upcoming halving will have on Bitcoin’s value. Over the course of the past month, the crypto world has understandably been abuzz with talks of the upcoming Bitcoin (BTC) halving event that is scheduled to take place in a little over two weeks. For starters, it is undoubtedly one of the most — if not the most — anticipated crypto events of 2020. However, due to the COVID-19 pandemic, many analysts are still not sure if the event will have a substantial impact on the monetary future of Bitcoin.

World Economic Forum Shares Roadmap for Deploying Blockchains in Real World
Danny Nelson – Coindesk
The World Economic Forum (WEF) is pitching blockchain as the savior of failing global supply chains and says its blockchain deployment toolkit, published Tuesday, is the roadmap to launch. Responding to the economic stresses of COVID-19, which has frozen global consumer demand and also exposed life-and-death holes in existing supply chains, the Swiss NGO best known for its glitzy Davos summit published “Redesigning Trust: Blockchain Deployment Toolkit,” a guide to building more resilient supply chains on distributed ledgers.

Top AI startup SenseTime inks deal with China’s digital currency research institute
Yogita Khatri – The Block
SenseTime, the world’s most-valued artificial intelligence (AI) startup with over $7.5 billion valuation, has signed a cooperation agreement with China’s digital currency research institute — a unit of the country’s central bank that is overseeing the development of digital yuan. Announcing the news on Monday, Hong Kong-based SenseTime said the agreement is aimed at accelerating the innovation and implementation of AI technology in China’s financial industry.

Congress Has Introduced 32 Crypto And Blockchain Bills For Consideration In 2019-2020
Jason Brett – Forbes
There appears to be no shortage of interest in cryptocurrency and blockchain policy in D.C. as Members in the House of Representatives and U.S. Senators have introduced a total of 32 bills in the 116th Congress. Thanks to Facebook’s introduction of Project Libra, ongoing efforts to achieve regulatory clarity for the industry, and the novel concept of a U.S. digital dollar, the level of interest on Capitol Hill appears to have grown beyond what has typically been just a handful of legislators.

Ether Futures Activity Grows Ahead of July Protocol Upgrade
Zack Voell – Coindesk
BitMEX announced an ether quarterly futures product Friday, which it described as “the only one of its kind available in the market.” Settled in bitcoin, the contract trades the ether-dollar pair, and expiry is in June. This coincides with the scheduled ETH 2.0 launch in July, which Ethereum researchers are confident will happen, as CoinDesk previously reported.

Payments processor Checkout.com joins Libra Association
Yogita Khatri – The Block
Checkout.com, a London-based payments processing platform, has joined the Libra Association. In a blog post on Tuesday, Checkout.com founder and CEO Guillaume Pousaz, said blockchain has the potential to bring several benefits to global transaction processing.

The Need for a New Reserve Currency Is More Prevalent Than Ever Before
Sinjin David Jung – Cointelegraph
The COVID-19 pandemic has revealed the necessity for a brand new reserve currency, and it is time for crypto. The ongoing COVID-19 pandemic has brought into focus the need for international cooperation and support. Coupled with a crumbling economy, it’s shown us that now is the time for a modern, accessible reserve currency. However, markets don’t exist in a vacuum of supply and demand — there are reasons why the United States dollar is the world’s reserve currency. To understand the structural value of an economy and different markets, you first must understand how different types of production operate in times of crisis.

Libra Has a Flawed Crisis Model, Says Ex-IMF Economist
Paddy Baker – Coindesk
A former senior policy advisor to the International Monetary Fund (IMF) said Libra’s ill-defined relationship with the Federal Reserve has pushed it to adopt emergency protocols similar to the ones the U.S. ditched more than 100 years ago.

FTX is planning to launch a U.S.-based spot crypto exchange in May
Celia Wan – The Block
FTX, a cryptocurrency derivatives exchange that has mainly served the Asia market, is planning to launch a spot exchange in the U.S. FTX CEO Sam Bankman-Fried confirmed to The Block on Monday that the U.S. exchange is currently in beta testing and is aiming for an official launch in early May. According to the FTX.US website, the new exchange has already registered as a money services business (MSB) with the Financial Crimes Enforcement Network (FinCEN) and it is working to acquire state-level money transmitter licenses (MTL) from several states.

Binance Futures VP Aaron Gong on Strategy, Growth, & COVID-19
Rachel McIntosh – Finance Magnates
The effects of the coronavirus on the globe have been many, but the virus has also had a strange impact on time: all at once, COVID-19 seems to have to massively slow down certain aspects of life and our world, and to have sped up others. The latter seems to especially true for cryptocurrency markets and the crypto industry as a whole.

DeFi Project dForce Refunds All Affected Users After $25M Hack
Sebastian Sinclair – Coindesk
Digital assets stolen in a hack on crypto lending platform dForce last week have been returned to customers. As reported by CoinDesk, a hack on the decentralized finance (DeFi) protocol saw $25 million in cryptocurrencies exit its wallets over three hours on April 19. Curiously, the assets were returned two days later, for reasons that weren’t made fully clear. Most of the funds have now been used to pay back all users who’d lost crypto in the attack, according to a Monday announcement by dForce.


If Trump Won’t Lead the World, Others Must; The White House leaves a leadership vacuum in the midst of a pandemic.
Michael R. Bloomberg – Bloomberg
The gravest emergency to confront the U.S. in decades has fallen on the watch of a uniquely unfit president. At a time when the world should be looking to the White House for wisdom and leadership, it finds only Donald Trump’s characteristic blend of incompetence and dishonesty. His musings last week about killing the virus by ingesting disinfectant were a gift to comedians, but as always with Trump, the joke is on us.

Deadly Currency Protests Ratchet Up Pressure on Lebanon Premier
Dana Khraiche – Bloomberg
Protesters are angry at the sharp depreciation of pound; Lebanon facing its worst financial crisis in decades
Clashes between protesters and troops left one man dead in the northern Lebanese city of Tripoli, as mounting anger over the country’s currency crisis risked reigniting a broad anti-government movement that had subsided with the coronavirus outbreak.

Trump questions whether U.S. should aid ‘Democrat’ states; The president singled out Illinois in a tweet today after J.B. Pritzker repeatedly criticized his response to the coronavirus outbreak.
President Donald Trump questioned whether the federal government should provide financial assistance to “poorly run” states led by Democrats on Monday, again framing the U.S. response to the coronavirus outbreak in partisan terms.

Trump Questions Whether to Aid States in Next Coronavirus-Stimulus Legislation; President asks why taxpayers should bail out ‘poorly run states’ and cities, which he says are all controlled by Democrats
Natalie Andrews and Catherine Lucey – WSJ
President Trump said he is skeptical of providing funding for states in the next round of coronavirus relief legislation, throwing into doubt the administration’s support for hundreds of billions of dollars sought by Democratic leaders and state governors of both parties.

chancellor takes a scientific approach to her job while the U.S. president has been fast and loose with the facts.
Joshua Gallu, Arne Delfs – Bloomberg
Donald Trump and Angela Merkel were never destined to hit it off, but with the coronavirus sweeping the globe, the depth of their differences—in style and substance—has never been more apparent. The pandemic has amplified the two leaders’ most fundamental traits: for Trump, a proclivity to bask in the limelight and a loose relationship with the facts; for Merkel, the frankness and clarity of a scientist who takes comfort in data.


Ex-Apple Lawyer Calls Insider Charges Unconstitutional
Malathi Nayak – Bloomberg
Former in-house counsel says he didn’t violate criminal laws; Insider trading definition divined by judges, lawyer argues
A former Apple Inc. in-house attorney says his insider-trading prosecution is unconstitutional because no specific criminal law bars such conduct.

FCA tells banks advising on debt not to muscle into equity raising; UK regulator says it has seen ‘credible reports’ some lenders have pressured clients
Samuel Agini – FT
The UK markets watchdog has warned banks they must not pressure companies looking to secure debt financing into giving lenders an unwarranted role — and a portion of the fees — on equity capital raising.

ESMA publishes templates for quarterly non-equity systematic internaliser data
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has published the template for the publication of the quarterly non-equity SI data and clarifies that the annual non-equity transparency calculations will be made available through the Financial Instrument Transparency System (FITRS) and its Registers starting on 15 July 2020.

SEC Announces Investor Advisory Committee Meeting Focusing on COVID-19
The Securities and Exchange Commission’s Investor Advisory Committee will hold a public meeting on May 4, 2020, by remote means. The meeting will begin at 2 p.m. ET, is open to the public via live webcast, and will be archived on the committee’s website for later viewing.

Coronavirus (COVID-19) Update—Relief from Fingerprinting Requirements
Due to concerns regarding the spread of COVID-19, NFA temporarily suspended its fingerprinting services in March. NFA understands that this action, along with the measures taken by federal, state and local governments to restrict the movement of, and contact among, individuals, makes it difficult for individuals to obtain fingerprints and comply with both CFTC and NFA fingerprinting requirements. To address this issue, NFA filed a letter with the CFTC’s Division of Swap Dealer and Intermediary Oversight (DSIO) seeking temporary relief from these requirements.

FCA commences civil proceedings in relation to alleged unauthorised investment advisers
The Financial Conduct Authority (FCA) has commenced proceedings in the High Court against 24HR Trading Academy Ltd (24HTA) and its sole director, Mohammed Fuaath Haja Maideen Maricar. The FCA alleges that from 2017 onwards, 24HTA and/or Mr Maricar have been advising on investments and arranging deals in investments without FCA authorisation, and engaging in financial promotions without being an authorised person or having the promotions approved by an authorised person. The FCA alleges alternatively that Mr Maricar has been knowingly concerned in 24HTA’s contraventions.

Investing and Trading

BP Bolsters Financial Reserves as Pandemic Slashes Profit
Laura Hurst – Bloomberg
Company takes on new $10 billion credit facility, sold bonds; Worst of virus impact is yet to come; production seen falling
BP Plc bolstered its financial reserves as the initial stages of the coronavirus pandemic caused its profit to plunge and increased its debt. While earnings were hit hard in the first three months of the year, the worst of the virus-driven crisis is yet to come. The company expects the pandemic to reduce its production and have a material impact on refining in the second quarter.

The Pandemic Is Accelerating Coal’s Demise; Electricity in Europe, India, China, and parts of the U.S. is less and less reliant on coal.
Akshat Rathi – Bloomberg
You can add coal to the list of global commodities struggling during the pandemic. Prices haven’t yet turned negative (like oil), but coronavirus is accelerating the demise of the dirtiest fossil fuel.

U.S. Oil Producers Begin Storing Crude in Strategic Reserve
Stephen Cunningham – Bloomberg
In April, 1.1 million barrels delivered into SPR storage; Nine companies leased 23 million barrels of capacity
U.S. oil producers running out of space for storage amid an unprecedented slump in demand have started making deliveries to the nation’s emergency stockpile. This month, 1.1 million barrels have been delivered into Strategic Petroleum Reserve storage. The Energy Department has finalized contracts announced earlier this month for companies to rent about 23 million barrels of capacity in the SPR, according to an official.

Mortgage Chaos Threatens to Worsen Once It’s Time for Repayments
Joe Light – Bloomberg
Lenders warn of overload as borrowers try to repay forbearance; Fannie and Freddie finalizing option to streamline repayments
The mortgage market has been disrupted by millions of borrowers postponing payments because of coronavirus. But lenders and veterans of the 2008 financial crisis warn the real chaos won’t start until the pandemic passes. The problem is confusion over what will happen when borrowers have to make up those payments. Federal agencies that back most of the market have introduced policies, some of which could require documentation that overwhelms servicers, leading to lengthy wait times and, in extreme cases, foreclosures.

No Junk Debt Is Too Risky: How Fed’s Bailout Changed Everything
Davide Scigliuzzo, Craig Torres, and Lisa Lee – Bloomberg
Central bank pledge to buy risky company debt reignites market; Investors wager Fed will have their back if things go south
Long before the coronavirus pandemic would bring business to a standstill all across America, Surgery Partners Inc., a sprawling network of outpatient clinics, already had its share of financial problems.

BP earnings plummet by two-thirds as demand collapses; https://on.ft.com/3cSBGtMUK energy major maintains its dividend despite ‘brutal’ environment
Anjli Raval – FT
BP reported a 66 per cent drop in earnings and a rise in debt in the first quarter as the collapse in oil demand and crude prices triggered by the coronavirus crisis took their toll on its finances.

Fed extends municipal lending to smaller US cities and counties; Central bank broadens eligibility for $500bn facility as local governments come under strain
James Politi and Colby Smith- FT
The Federal Reserve has expanded the eligibility criteria for a $500bn lending facility set up to backstop municipal bond markets, in a move that will allow smaller US cities and counties to access liquidity from the central bank.

Companies Are Suspending Dividends at Fastest Pace in Years; Moves add up to savings of about $23 billion so far, according to S&P Dow Jones Indices
Paul Vigna – WSJ
General Motors Co. suspended its dividend earlier this week, part of a raft of moves to keep the company afloat in the midst of the coronavirus pandemic. It is far from alone. More companies have suspended or canceled their dividends so far this year than in the previous 10 years combined, with companies scrambling to preserve cash as the coronavirus pandemic saps revenue.


Is USO an actively managed fund now?
Izabella Kaminska – FT
The popularity of passive index funds is underpinned by the philosophy that rather than trying to beat the market, investors are often better off embracing it. By following a transparent investment formula about how and when they buy and sell securities, efficient markets hypothesis dictates passive funds, like ETFs, turn into neutral price-taking entities. This allows them a number of special regulatory dispensations in the market (such as an exemption from the uptick rule) because, from the perspective of regulators, the wider market can price in their flows ahead of time and adjust around them, rather than vice versa.

HSBC Sets Aside $3 Billion for Loan Losses as Profit Dives; U.K.-based bank says first-quarter profit fell 57% from a year earlier
Simon Clark – WSJ
HSBC Holdings HSBC 3.36% PLC said its net profit for the first quarter sank as Europe’s largest bank by assets significantly raised provisions against losses from borrowers hit by the coronavirus.

UBS Profit Jumps Despite Coronavirus Disruption; Swiss bank avoids the severe impact on earnings from coronavirus felt by other international lenders
Margot Patrick – WSJ
UBS Group AG UBS 3.93% said profit rose sharply in the first quarter as its focus on lending to the world’s wealthy and Swiss customers cushioned it from the blow felt by other global lenders from the coronavirus.

Former Bank of America research head joins Liquidnet as non-executive director; Industry veteran Simon Greenwell joins Liquidnet having most recently led European research at Bank of America.
Hayley McDowell – The Trade
Liquidnet has added the first investment research expert to its board with the appointment of former research head at Bank of America as non-executive director.


U.K. Oil and Gas Industry May Lose 30,000 Jobs Amid Coronavirus Slump
Helen Robertson – Bloomberg
Cash flow could turn negative this year, trade body says; The sector’s capital investment will fall 20%-30% in 2020
The U.K.’s oil and gas industry could lose as many as 30,000 jobs over the next 12 – 18 months and see drilling levels plunge by a third amid the coronavirus-led drop-off in investment and slumping energy prices.

Russia Goes Against the Grain With Wheat Restrictions
Megan Durisin – Bloomberg
Russia, one of the world’s top wheat shippers, was among the first nations that moved to guard domestic food supplies amid the coronavirus pandemic. The window closed swiftly on the sales abroad that it did allow. A 7 million-ton quota the nation allotted for grain exports through June was filled over the weekend — well before the quarter’s end. Traders rushed to get orders on the books for future shipments and some key importers have moved to bolster reserves. According to a Kommersant report on Tuesday, the Russian Bakers Union sent a letter to Minister of Agriculture Dmitry Patrushev asking for subsidies and tighter quotas on wheat exports.

Riksbank Governor Says Crisis QE May Grow to Exceed $30 Billion
Rafaela Lindeberg – Bloomberg
The governor of Sweden’s Riksbank, Stefan Ingves, said a record $30 billion bond-purchase program will probably grow as policy makers rely on quantitative easing rather than interest-rate cuts to fight the Covid-19 crisis.

Japan Considers Reducing Inflation-Linked Bond Issue
Emi Urabe and Yuko Takeo – Bloomberg
Japan’s Ministry of Finance is considering cutting the amount of inflation-linked bond issuance, as demand falls amid the coronavirus pandemic and plummeting oil prices.

Bank of Japan to tighten grip on corporate bond market; Central bank to increase holdings as it scraps ceiling for JGB purchases
Leo Lewis – FT
The Bank of Japan’s efforts to ensure liquidity for businesses and suppress yields in the corporate debt market could soon leave it owning almost half the country’s outstanding commercial paper and about one-sixth of its corporate bonds.


UK corporate profitability hit 10-year low in late 2019
David Milliken – Reuters
British companies’ profitability dropped to its lowest in more than a decade in the final three months of 2019, when concerns about Brexit and political uncertainty – rather than the coronavirus – were to the fore, official data showed on Tuesday. The net rate of return for private non-financial companies dropped to 9.3% in the fourth quarter from 9.8% in the third quarter of 2019, its lowest since the second quarter of 2009, when the economy was in the depths of the financial crisis. “A rise in the net capital employed coupled with a fall in the net operating surplus led to the downward movement in the net rate of return,” the Office for National Statistics said.


Harvard to Have a Fall Semester, but Details Unclear; University’s announcement could impact how other schools proceed in the fall
Douglas Belkin – WSJ
Harvard University announced Monday that, given the uncertainty caused by the coronavirus pandemic, it is leaving the door open for a fall semester without students on campus. “We cannot be certain that it will be safe to resume all usual activities” by autumn, university provost Alan Garber wrote in a note to the school Monday. “Consequently, we will need to prepare for a scenario in which much or all learning will be conducted remotely.”

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