What are the differences between ICE Brent and NYMEX WTI futures?

Jun 12, 2020

First Read

Hits & Takes
By JLN Staff

Today is a day of commentary, starting with the lead story today from Mike Wittner, head of oil market research at ICE, titled “What are the differences between ICE Brent and NYMEX WTI futures?” ICE is taking a major shot at the CME and the trouble their WTI contract had when prices went negative. ICE seems to sense blood in the water and is attacking with full force to show that Brent is the true global benchmark and a better contract to trade or invest with.

President of ICE Data Services at Intercontinental Exchange Lynn Martin has penned a commentary titled “Risk amid the rally” and posted it to LinkedIn.

ValueWalks’s Paul Noring has an article titled, “AMERIBOR’S RESILIENCE TO COVID-19 STRESS.” The capitalization is on purpose because this is important.

The recent primary election in the state of Georgia was called a “National Scandal” in a Huffington Post story. This will be something to watch closely as the election efficiency of the state could be a factor in the coming election featuring Sen. Kelly Loeffler

Flextrade’s Ivy Schmerken has a commentary on the FlexTrade Advantage Blog titled “Globally Distributed Teams Prove Vital in Pandemic.”

Today we have news that Seed CX is shutting down its futures exchange for derivatives trading and that the Quadriga scandal was really just a new fangled Ponzi scheme using cryptocurrency trading.

CME Group has 120 interns this summer who are all working remotely. OCC has hired about 20 interns. How many do you have? We want to know in order to determine if there are enough to make creating a summer MarketsWiki Education World of Opportunity program worthwhile.

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


Last week, the OCC cleared its second-highest number of contracts in a single day, breaking records they had just set in February. According to a representative of the OCC, yesterday they did it again – clearing 48,039,111 contracts in one day, its new second-highest benchmark. Their highest cleared volume ever was on February 20 of this year at 48,963,585.~MR

The Futures Industry Association (FIA) reported via email that worldwide volume in exchange-traded derivatives was 3.16 billion contracts in May, down 5.2% from the previous month but up 2.1% from May 2019. Year-to-date, volume in the first five months of the year was 17.90 billion contracts, up 30.7% from the first five months of 2019. Total open interest at the end of May was 951.7 million contracts, up 3.7% from the previous month and up 2.2% from a year ago. You can find other FIA data here.~SR

Downtown Chicago is not looking like itself these days. Streets are nearly deserted and many places of business are boarded up, mostly to prevent possible looting and vandalism springing from recent protest marches. Naturally, downtown stores and restaurants are hurting for customers, since so many in the financial industry are working from home. A story in Crain’s Chicago Business reported that Metra (suburban transit) has lost 97 percent of its riders since March and cut service in half. The Chicago Transit Authority has kept its full train and bus schedule but has seen more than three-quarters of its riders disappear. Some restaurants in the Loop are opening up for outside seating service, but lunch options have been whittled down. JLN’s Thom Thompson was downtown the other day and took these pictures of the area around our offices in the Chicago Board of Trade Building. The one of LaSalle Street leading up to the CBOT building was taken shortly after 5p.m. – what is normally rush hour.~SR


The Early Coronavirus Warning That Woke Up Wall Street; Before Covid-19 upended American life, the head of a $33 billion U.K. foundation told a collection of money managers how bad it was going to get. The alarm spread through the worlds of finance and business.
Juliet Chung – WSJ
The warning was stark. It was late January, and there were just six known cases of Covid-19 in the U.S. A leading infectious disease specialist who previously had battled Ebola and SARS had an alarming message for a group of money managers: It was about to get a lot worse. “In the 20 or 30 years I’ve been involved in emerging infections,” Jeremy Farrar told the managers on the January 31 call, “I’ve never seen anything that has been as fast or as rapidly moving and dynamic as this has been.”

****That would have been a nice call to have been on.~JJL


Houston on ‘Precipice of Disaster’ With Virus Cases Spreading
Joe Carroll – Bloomberg
Stay-home order may be revived, county and city leaders say; Threat-level sits at second-highest grade on four-tier scale
Houston-area officials are “getting close” to reimposing stay-at-home orders and are prepared to reopen a Covid-19 hospital established but never used at a football stadium as virus cases expand in the fourth-largest U.S. city. The announcement by Harris County Judge Lina Hidalgo and Houston Mayor Sylvester Turner on Thursday came a day after the Lone Star state recorded its highest one-day tally of new cases since the pandemic emerged.

*****Houston is the new Philadelphia.~JJL


Quadriga Downfall Stemmed From Founder’s Fraud, Regulators Find
Doug Alexander – Bloomberg
CEO Cotten basically operated a Ponzi scheme, OSC says; Collapse caused $125 million in losses for 76,000 clients
The collapse of crypto-exchange QuadrigaCX was the result of fraud by its founder Gerry Cotten, the Ontario Securities Commission concluded in an investigation. The Canadian securities regulator has taken the rare step of publishing its findings on its 10-month investigation into QuadrigaCX, whose collapse in 2019 caused at least C$169 million ($125 million) in losses for 76,000 investors in Canada and abroad. QuadrigaCX shut down in January 2019, weeks after Cotten died unexpected while on his honeymoon in India, leaving behind a mystery of what happened to the Bitcoin and other cryptocurrencies on the platform.

****A new twist on a Ponzi scheme.~JJL



CryptoMarketsWiki Coin of the Week: Monero (XMR)
The privacy-focused cryptocurrency Monero is being used to pay bail for those in pre-trial detention due to a software program called Bail Bloc. Bail Bloc, which was created in 2016, mines Monero to contribute to the National Bail Fund Network, and has seen a more than 20 percent increase since the recent protests over the killing of George Floyd.


Thursday’s Top Three
Our top story Thursday was the Financial Times’ America is losing the stomach to fight Covid-19. Second was the press release CQG Licenses Software Assets from Blue Trading Systems (BTS) to Deploy Exclusive, Robust Suite of Custom Algorithms, Low-Latency Spreader Environment. Third was Here’s what working in the Loop is like now that it’s slowly reopening, from Crain’s Chicago Business.


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Lead Stories

What are the differences between ICE Brent and NYMEX WTI futures?
Mike Wittner, Head of Oil Market Research, ICE
The world oil market is in the midst of a massive collapse in demand, driven by the impact of the coronavirus, combined with severe oversupply. As a result, there has been a rapid buildup in crude oil and refined product inventories, which has driven market fears of running out of storage space. Oil prices have staged a tenuous recovery in May, as the markets see signs of firming fundamentals ahead. However, during March and April, crude prices were under severe downward pressure. This was underscored by the collapse of NYMEX May WTI prices to negative values on April 20, 2020, the day before the contract expired. So what are the differences between ICE Brent and NYMEX WTI? Could the same thing happen to ICE Brent prices?

Seed CX to Close Exchange, Focus on Settlements in Company Shift; Crypto derivatives platform Seed CX will be axing its exchange arm to focus solely on settlements, while also teasing additional funding from Bain Capital.
Sebastian Sinclair – Coindesk
Crypto derivatives platform Seed CX will be axing its exchange arm to focus solely on settlements. Announced Thursday, Seed CX intends to focus on its Zero Hash product, the company’s custody and settlement service. Zero Hash began offering back-office settlement functions for bitcoin forwards contracts in September of last year.

Airbus set to drop plans for derivatives trading market; Skytra due to be venue for airline industry to hedge against volatile ticket prices
Philip Stafford and Peggy Hollinger – FT
Airbus is set to ditch its planned derivatives market for the airline industry to hedge against highly volatile ticket prices as the European aircraft manufacturer moves to conserve cash amid one of the deepest downturns in the history of global aviation.

Chesapeake’s Demise Marks End of Shale Model That Changed the World
David Wethe and Joe Carroll – Bloomberg
Drilling pioneer never escaped burden incurred by late founder; CEO Lawler running out of rescue options amid perpetual glut
It will go down as wildest of the shale wildcatters, the overreaching pioneer of fracking techniques that minted vast fortunes and, now, have left behind ruin. At long last, financial reality has caught up with Chesapeake Energy Corp., avatar of the boom and subsequent bust of North American shale.

European regulator accepts virus could delay futures rules; Industry behind schedule on ‘open access’ changes due to be implemented next month
Philip Stafford – FT
Europe’s markets regulator has accepted that sweeping new rules for futures markets are unlikely to come into effect next month, as planned, because the turbulence caused by the coronavirus pandemic has left the industry struggling to meet the deadline.

Why Robinhood Day Traders Are Greedy When Wall Street Is Fearful; Pandemic, recession, social unrest—it’s a buying opportunity!
Justina Lee, Vildana Hajric – Bloomberg
Americans are applying for jobless benefits by the millions, the economy is in recession, and cities across the U.S. have seen some of the largest protests in decades in response to police violence. Covid-19 deaths have topped 110,000, and the virus is still very much with us, not only in the U.S. but across the world.

Treasury’s Record Cash Pile Is Jerome Powell’s $700 Billion Headache
Liz McCormick and Alex Harris – Bloomberg
Government’s buffer is nearly double its target for end-June; It’s the ‘gorilla in the room’ for funding markets: BMO’s Hill
The U.S. Treasury is sitting on a near-record $1.5 trillion pile of cash, and what it does with it has become the biggest wild card for funding markets as quarter-end approaches. The department’s initiative to ensure it always has enough money on hand to pay its bills is once again making it harder for the Federal Reserve to gauge how reserves in the banking system will unfold at a crucial juncture.

Aluminum Glut Revives Financial Crisis-Era Storage Trade; Wall Street banks and investors are looking to hoard aluminum, a way to carve out returns at a time of historically low rates
Joe Wallace – WSJ
Wall Street banks and investors are joining commodity traders in stockpiling aluminum, an unconventional way to make money at a time when returns on bonds are historically low. The pandemic hit the aluminum market hard by triggering a downturn in the auto and aerospace industries, two big buyers of the metal. A surfeit of metal pushed benchmark aluminum prices down 12% this year, to $1,589 a metric ton on the London Metal Exchange.

Bankrupt Hertz Wants to Sell Up to $1 Billion in New Shares; The car-rental company, whose shares surged earlier this week despite its May bankruptcy filing, wants to capitalize on the rally
Becky Yerak – WSJ
Rental-car company Hertz Global Holdings Inc. wants to capitalize on the rally in its stock seen earlier this week by selling up to $1 billion in shares, despite a bankruptcy that threatens to wipe them out.

Bond Issuers Are Living in the Land of Milk and Honey; Syndicated bonds are booming in Europe, making this a golden moment for governments raising money and for the investment banks that run the sales.
Marcus Ashworth – Bloomberg
European sovereign debt issuers are in the land of milk and honey, racing to get as much as possible of this year’s issuance completed before the summer lull. With so much monetary stimulus sloshing about, governments even have an eye on getting ahead of next year’s budget plans as well.

Venezuela on Brink of Famine With Fuel Too Scarce to Sow Crops
Fabiola Zerpa, James Attwood, and Nicolle Yapur – Bloomberg
Millions without enough food, malnourished in oil-rich nation; Corn demand expected to be four times what country can produce
Venezuelan farmer Roberto Latini fears his window to plant this year’s crop is quickly closing. He’d hoped to seed corn, but couldn’t find the fuel to operate his trucks and equipment before the dry season ended. So he set his sights on rice, which can be planted even in heavy rains. Weeks later, fuel is still short and “as time goes by, it’s getting too late to sow,” Latini said.


Platts says Asia’s biggest energy meeting APPEC will be virtual
Asia’s largest energy industry gathering, the Asia Pacific Petroleum Conference will this year take place virtually because of the coronavirus pandemic, S&P Platts said on Thursday.

Worried About Social Distancing When Traveling? Join the Crowd and Rent an R.V.; Recreational vehicles were gaining in popularity before the pandemic. Now, with travel restrictions loosening, a surge of travelers is drawn to the relative solitude that R.V.s offer.
Elaine Glusac – NY Times
Travel and travel planning are being disrupted by the worldwide spread of the coronavirus. For the latest updates, read The New York Times’s Covid-19 coverage here.
Since selling their home in Fort Collins, Colo., in September 2018, Tom and Mona Mesereau have logged 18,000 miles through 30 states in their 32-foot Class A recreational vehicle, running their public relations business from the road.

Delhi accused of under-reporting coronavirus deaths; Doctors claim fatalities exceed official figures as cemeteries overflow
Stephanie Findlay and Jyotsna Singh – FT
New Delhi’s regional government has been accused of under-reporting coronavirus deaths as the country eases its strict lockdown in an attempt to kick-start the economy.

UK equity sales top £10bn since pandemic struck; At least 69 companies have issued equity valued at £5m or more since middle of March
Camilla Hodgson – FT
UK-listed companies have tapped shareholders for more than £10bn since the Covid-19 pandemic took hold, with some looking to top up acquisition war chests and others raising emergency funds to ride out the deepest recession for centuries.

Corona Cycleways’ Become the New Post-Confinement Commute; As European cities emerge from quarantines, bicycles are playing a central role in getting the work force moving again.
Liz Alderman – NY Times
As France eased one of Europe’s toughest coronavirus lockdowns last month, a small army of street workers fanned out across Paris in the dark of night. They dropped traffic barriers along car lanes and painted yellow bicycle symbols onto the asphalt. By morning, miles of pop-up “corona cycleways” had been laid, teeming with people heading back to work.

Pandemic heightens chance Japan slides back into deflation: Reuters poll
Kaori Kaneko – Reuters
The coronavirus pandemic has raised the chance Japan’s economy will slip back into deflation as social curbs to halt the spread of the disease hits businesses and consumers, a majority of analysts polled by Reuters said.

Covid-19 Hospitalizations Surge in Some States; Some U.S. states that were largely spared during the early days of the pandemic are now seeing record admissions
Eliza Collins and Elizabeth Findell – WSJ
Some U.S. states that were largely spared during the early days of the Covid-19 pandemic are now seeing record hospitalizations, causing some experts to fear that loosened restrictions and the approach of summer led many Americans to begin letting down their guard.

Formula One Cancels Singapore, Japan and Azerbaijan Races Due To Pandemic
Faris Mokhtar – Bloomberg
Decision made due to ongoing restrictions, organizer says; Night race in Singapore has been ongoing for last 12 years
Formula One has canceled races in Singapore, Japan and Azerbaijan for the 2020 season due to the coronavirus pandemic, which has forced countries into lockdowns and scuttled international travel plans.

U.K. Economy’s 20% Record Plunge Adds Pressure for More Stimulus
David Goodman and Andrew Atkinson – Bloomberg
Downturn came across the board, with construction falling 40%; Data round off difficult week for Boris Johnson’s Government
The U.K. economy shrank a record 20.4% in April as businesses and workers reeled under the lockdown designed to control the coronavirus pandemic. The contraction means the nation has effectively seen almost 18 years of growth wiped out in two months. While a rebound is likely as businesses start to reopen, the grim figures will increase the pressure on the government and Bank of England to do more to support the recovery.

Delta rolling out COVID-19 testing for all employees
Delta Air Lines Inc next week is launching a program to test employees for active COVID-19 and antibodies under a partnership with the Mayo Clinic and Quest Diagnostics Inc, Chief Executive Ed Bastian said in an employee memo on Thursday.

Italians embrace coronavirus tracing app as privacy fears ease
Angelo Amante, Elvira Pollina – Reuters
Italy, the first major European country to roll out a smartphone app to trace COVID-19 infections that does not rely on a centralized database, has already seen 2.2 million downloads in 10 days, a sign Italians are setting aside privacy concerns.

Can U.S. Universities Make a Comeback? A Debate; Higher education was in trouble before the coronavirus shut campuses. The challenges are even bigger now.
Tyler Cowen and Noah Smith – Bloomberg
The coronavirus pandemic forced almost all U.S. colleges and universities to cancel classes in March and resort to remote learning for the rest of the spring semester. But the lockdowns also brought to a head long-simmering issues: Was the four-year on-campus experience worth the exorbitant cost, which many students could only afford by taking out huge loans? And how sustainable is the entire model, with tuition increases that outpace inflation and ever-more extravagant amenities offered in a bid to lure students? Bloomberg Opinion writers Tyler Cowen and Noah Smith met recently online to debate the future of American higher education.

Mnuchin Says U.S. Can’t Shut Economy Even If Virus Resurges
Saleha Mohsin – Bloomberg
‘You create more damage, not just economic damage,’ he says; As restrictions are lifted, there are signs of a second wave
Treasury Secretary Steven Mnuchin said the U.S. shouldn’t shut down the economy again even if there is another surge in coronavirus cases. “We’ve learned that if you shut down the economy, you’re gonna create more damage — medical problems that get put on hold,” Mnuchin said Thursday on CNBC. “We can’t shut down the economy again.”

IMF Warns Ukraine May Not Recover From Virus Slump Until 2024
Daryna Krasnolutska and Marton Eder – Bloomberg
Next year’s rebound from 8.2% contraction seen at just 1.1%; Lender says reform progress has been repeatedly undermined
Ukraine’s recovery from its coronavirus-induced slump may take four years, the International Monetary Fund warned, after approving $5 billion of aid for the eastern European nation this week.

Exchanges, OTC and Clearing

SIX successfully completes acquisition of controlling stake in BME; The Combined Group Will Be The Third Largest Operator Of Financial Market Infrastructure In Europe By Revenue
SIX has acquired a total of 77,899,990 BME shares for EUR 2,569,141,670, representing 93.16% of the equity share capital. The combination of BME and SIX, both leaders in their domestic financial markets, will create a more diversified group with a strong presence across Europe. SIX is committed to preserving and strengthening BME’s position in Spain.

Nasdaq-listed 360 Finance may kick off HK listing end-2020: sources
Nasdaq-listed 360 Finance Inc (QFIN.O) may kick off its Hong Kong listing process as soon as December, two sources familiar with the matter said, as U.S.-listed Chinese firms pursue dual listings amid uncertain Sino-U.S. relations.

Cboe Global Markets Announces Date of Second-Quarter 2020 Earnings Release and Conference Call
Cboe Global Markets, Inc.
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world’s largest exchange holding companies, today said it will announce its financial results for the second quarter of 2020 before the market opens on Friday, July 31, 2020. A conference call with remarks by the company’s senior management will begin at 7:30 a.m. Central Time (CT), 8:30 a.m. Eastern Time (ET).

Euronext announces quarterly review results for the CAC® Family indices
Euronext today announced the results of the quarterly review for the CAC® Family indices. The changes due to the review will be effective from Monday 22 June 2020.


Facebook Tries to Friend Small Businesses Crippled by Coronavirus; Social network is offering more e-commerce tools to companies after years of a deliberate pace; ‘we have to get it right’
Jeff Horwitz – WSJ
Enrique Marquez stopped advertising his dog-obedience classes on Facebook FB -5.20% during the pandemic, and instead started using the platform to live-stream sessions and conduct training via chat.

SEC Launches Virtual Meetups for Fintech Industry Players
Benjamin Pirus – CoinTelegraph
FinHub, a fintech arm of the U.S. Securities and Exchange Commission (SEC) will now host digital meetings for industry players amid COVID-19 lockdowns.
“To facilitate ongoing communications, FinHub will host a series of thematically-based virtual P2P meet-ups over the next few months,” the commission said in a June 11 statement, adding:

Eventus hires Jeff Gale to lead EMEA sales
Luke Jeffs – FOW
Eventus Systems, a US surveillance and risk management tech firm, has hired former Icap broker and CurveGlobal consultant Jeff Gale to lead sales in Europe, the Middle East and Africa. Gale joined Eventus Systems in London on June 1 as its sales director for EMEA, where he will work with Roger Chandler, Eventus’ senior sales engineer for EMEA who joined the firm in March after stints at Bloomberg and Fidessa. Gale reports to Eventus Systems’ global head of sales Scott Schroeder.

For Online Learning, Business Has Never Been Better; Demand for Chegg roughly doubled when schools shut down, but its chief executive, Dan Rosensweig, now needs to figure out how the company will adapt.
David Gelles – NY Times
Around the world, students are learning from home. For Chegg, the online learning company, that has meant unprecedented demand for its services.

PayPal pledges over $500 million to support minority-owned U.S. businesses
Anna Irrera – Reuters
PayPal Holdings Inc (PYPL.O) said on Thursday it was pledging $530 million to support black and minority-owned businesses in the United States and foster diversity, amid worldwide protests over racial injustice.


Why the Fed Keeps Denying Its Role in Increasing Inequality
Nathaniel Whittemore – Coindesk
The Federal Reserve expects low inflation, says rates will stay close to zero through 2022 and keeps lying about the role of central banks in increasing inequality.

Pentagon Documents Reveal The U.S. Has Planned For A Bitcoin Rebellion
Billy Bambrough – Forbes
Bitcoin has struggled to find support in the U.S. government, with president Donald Trump, along with Treasury secretary Steven Mnuchin, leading the criticism. Now, it’s been revealed the U.S. Department of Defense has wargamed scenarios involving a Generation Z rebellion that uses bitcoin to undermine and evade “the establishment.”

*****The government has contingency plans for pretty much everything. FEMA even has a plan if a zombie apocalypse ever happens somehow.~MR

Gemini hires former Goldman Sachs exec for Asia expansion, plans to get licensed in Singapore
Yogita Khatri – The Block
Gemini is expanding into the Asia Pacific region. The New York-based crypto exchange and custodian has hired former Goldman Sachs executive Jeremy Ng as managing director of the region. Ng worked for Goldman Sachs for over seven years in two stints, according to his LinkedIn profile. He was head of Goldman’s securities division for Hong Kong and Singapore regions before leaving the company. Ng has previously also worked for Morgan Stanley, Deutsche Bank, and structured financial products firm Leonteq.

Xapo Suspends Credit Card Crypto Purchases, Shifts Operations to Gibraltar
Sebastian Sinclair – Coindesk
Crypto wallet and bitcoin custodian, Xapo is discontinuing support for credit card payments for digital asset purchases. In an emailed announcement on Friday, Xapo said its users would not be able to add funds to their account through credit cards beginning June 11. Additionally, bank transfers will only be supported above a certain minimum amount, depending on the user’s location. “If you make a transfer, the app will detect your country of residence and specify the minimum amount,” the company email said.

Seed CX is closing its exchange business to focus on settlement infrastructure
Aislinn Keely – The Block
Seed CX is shutting down its exchange business to focus on its settlement product, according to an announcement from the company. Tomorrow will be the final day of trading on the firm’s order book. The Chicago-based exchange began shifting its focus to settlement earlier this year as it failed to attract liquidity on par with other larger U.S. crypto-native exchanges. As The Block reported, while large exchanges like Coinbase regularly cleared over $200M in daily volume, Seed CX traded between $4M to $8M on a given trading day, according to sources.

Congressman calls for more transparency from the Fed on central bank digital currency work
Michael McSweeney – The Block
U.S. Representative Tom Emmer said Thursday that the U.S. Federal Reserve should be more open about its research and development efforts focused on a central bank digital currency, or CBDC. Emmer’s comments came during an appearance of the House Financial Services Committee’s The Task Force on Financial Technology, which met to discuss topics like the digital dollar in the emergency payments made during national crises like the COVID-19 pandemic.

Ousted Bitmain co-founder reportedly takes control of company factory in Shenzhen, suspends shipments
Yilun Cheng – The Block
The dispute between Bitmain’s co-founders, Micree Zhan and Jihan Wu, has taken a new turn as the former reportedly took control over the company’s Shenzhen factory and prevented Bitmain from shipping mining equipment to paying customers. Following a recent decision by the local justice bureau to support Zhan’s side of the battle, the ousted co-founder has been making a series of personnel changes while Wu continues to deny Zhan’s legal rights to do so.

Not Every Crypto Gain Is Created Equal
Shehan Chandrasekera – Forbes
The tax code does not treat every stream of income the same way. If you are a cryptocurrency user, it is important to know about these different types of income because they can dramatically impact your post-tax return on your investment. With the right knowledge, you can carefully plan your investment decisions around these income types and save on taxes as well.

Investment manager Vanguard completes first phase of securities digitization pilot with Symbiont
Michael McSweeney – The Block
Investment management giant Vanguard announced Thursday that it had finished the initial phase of an ongoing pilot focused on the digitization of asset-backed securities, a project undertaken in conjunction with blockchain startup Symbiont. The firms said in a press statement that the initiative “successfully modeled the full lifecycle of an ABS settlement on distributed ledger technology (DLT) network by replicating end-to-end transaction flows.”

Ontario securities regulator publishes investigative report on crypto exchange QuadrigaCX
Aislinn Keely – The Block
The Ontario Securities Commission has published the findings of its investigation into the collapse of QuadrigaCX, the now-defunct crypto exchange in Canada. Investigators cited the exchange’s collapse and subsequent bankruptcy to fraudulent activities on the part of its CEO and co-founder, Gerald Cotten. The OSC first said it would investigate QuadrigaCX after the exchange’s failure led to losses of at least $169 million spread among tens of thousands of customers. According to the OSC’s statement, about 40% of these investors were Ontarians.

Pandemic pushes central bank digital currencies into top gear
Huw Jones – Reuters
The coronavirus pandemic is accelerating the development of central bank digital currencies (CBDCs) as it has prompted millions of people to turn to cashless payments, central bank officials said on Thursday.


Joe Biden gaining ground in key US swing states; Pollsters say Trump has been hurt by response to coronavirus and police killing of George Floyd
Courtney Weaver – FT
Joe Biden is gaining ground in six critical swing states won by Donald Trump in 2016, according to new Democratic party polling, boosting the Democrats’ hopes of wresting back the White House.

America’s allies should prepare for a Biden presidency; The approach of the November election is not a time for Europeans to sit on their hands
Philip Stephens – FT
No predictions, but once in a while it is useful to imagine the news getting better. Look beyond the summer and two potentially game-changing events come into view. Scientists tell us a vaccine and/or treatment for Covid-19 could map a pathway out of the pandemic. As to the second possibility, my friends in the foreign policy community have taken a vow of silence. Whisper it ever so quietly, but the US may choose a new president.

US cities need more than ‘Kumbaya’; George Floyd protesters won’t be satisfied by gestures of solidarity
Patti Waldmeir – FT
Flint, Michigan, has long been a symbol of the failure of American capitalism: a city so poor that even the water was poisoned. Now it has a new claim to fame: former US president Barack Obama singled out this economically depressed city in the American rust belt as a beacon of hope for US race relations after one of the area’s top police officers took off his riot gear and joined protesters during an antiracism march on May 30.

Companies Make Big Pledges Toward Initiatives on Race; Businesses including Apple, Google and Hasbro have announced changes meant to promote racial justice
Bowdeya Tweh, Patrick Thomas and Sebastian Herrera – WSJ
Businesses ranging from tech titans Apple Inc. and Google to toy maker Hasbro Inc. announced new measures and big-dollar initiatives to promote racial justice, as company leaders race to show their commitment to change amid the national outcry stemming from George Floyd’s killing.

Twitter Takes Down Chinese Government-Linked Accounts It Says Pushed Propaganda; Suspect accounts spread messages around coronavirus, Hong Kong protests
Robert McMillan – WSJ
Twitter Inc. TWTR -6.00% said it removed from its platform about 174,000 accounts it labeled as fake and operated by the Chinese government to push its narratives about the coronavirus, Hong Kong protests and other topics.

Group of West Point graduates warn that alumni in Trump administration ‘betray public faith’
Nicole Gaouette, CNN
Days before President Donald Trump is due to speak to graduates at the United States Military Academy, a group of graduates have issued their own message to the class of 2020 outlining concerns that “fellow graduates serving in senior-level, public positions” are undermining the credibility of an apolitical military and betraying their “commitment to Duty, Honor, Country.”

Seattle mayor says illegal for Trump to send military to clear protesters
Gregory Scruggs – Reuters
The mayor of Seattle said on Thursday it would be unconstitutional and illegal for U.S. President Donald Trump to send military forces into the city to clear protesters occupying a neighborhood, as he has suggested.

Biden’s Brain Trust on the Economy: Liberal and Sworn to Silence; The presumptive Democratic nominee relies on veteran advisers with Washington roots and has begun sounding out other economists on the ideological left, but his campaign will not say who really has his ear.
Jim Tankersley and Thomas Kaplan – NY Times
Few aspects of Joseph R. Biden Jr.’s presidential campaign are shrouded in as much secrecy as the counsel he receives on the economy: which advisers have the most sway with the presumptive Democratic nominee, what ideas have the greatest currency, and what new policies Mr. Biden will ultimately embrace to address the racial inequities now animating protests nationwide.

Microsoft bans face-recognition sales to police as Big Tech reacts to protests
Jeffrey Dastin, Munsif Vengattil – Reuters
Microsoft Corp (MSFT.O) said on Thursday it would await federal regulation before selling facial recognition technology to police, making it the latest big firm to back away from the business following protests against law enforcement brutality and bias.

We Can Fight for Racial Justice While Tolerating Dissent; We cannot allow the present moment — one of such potential importance — to deteriorate into a McCarthy-like hunt for wrong-thinkers.
Stephen L. Carter – Bloomberg
We’re living at a dangerous intellectual moment. In the wake of the coldblooded police slaying of George Floyd on a Minneapolis street corner, people are marching for racial justice, a development that’s all to the good in our broken country. But when those demands turn to restricting the universe of permissible conversation, they cross a democratic line that’s worth defending.

Trump Defies Deepening Virus Alarm With Trip to Push Reopening
Justin Sink – Bloombereg
President travels to Dallas Thursday, weekend in Bedminster; Trump plans fundraisers and West Point commencement speech
President Donald Trump is setting off on a trip aimed at delivering a message to the American people: It’s time to get back to normal after the pandemic.

Apple Commits $100 Million to Racial Equity and Justice Program
Mark Gurman and Mark Bergen – Bloomberg
YouTube also starts $100 million fund for black creators; Apple CEO Cook says company wants to be a force for change
Apple Inc. said it is launching a $100 million Racial Equity and Justice Initiative, adding to the company’s response to the police killing of George Floyd last month. YouTube made a similar announcement.


Federal Court Orders Trading Advisor to Pay $890,000 for Defrauding Church and Community Members in Forex Scheme
The Commodity Futures Trading Commission today announced that the U.S. District Court for the Southern District of New York entered a consent order for permanent injunction and other equitable relief against defendant Brett G. Hartshorn of Sarasota, Florida, finding, among other things, that he fraudulently solicited at least 13 individuals to trade off-exchange foreign currency derivatives (“forex”) and misappropriated funds of at least two of those clients. The order requires that he pay restitution of $890,000 and imposes permanent trading and registration bans.

Kansas City Fed’s Annual Symposium Will Be Virtual Event
Christopher Condon – Bloomberg
The Federal Reserve Bank of Kansas City’s annual economic policy gathering, normally staged in Jackson Hole, Wyoming, will this year be held online due to the coronavirus pandemic and live streamed to the public. The event will take place on Aug. 27-28, with the theme, “Navigating the Decade Ahead: Implications for Monetary Policy,” the bank said in a statement Thursday.

Fake Financial Services Register link
We are aware that there has been an attempt to reproduce our Financial Services Register on a non-FCA website.

Scam alert: fake endorsements misleading investors
ASIC is aware of scammers taking advantage of people during the COVID-19 (coronavirus) pandemic.

ASIC amends financial advice and capital raisings COVID 19 instruments
ASIC has today registered an amending instrument to specify an end date for three COVID-19 related instruments.

Industry funding: ASIC publishes Cost Recovery Implementation Statement 2019-20 for feedback
ASIC today published its draft Cost Recovery Implementation Statement (CRIS) 2019-20. The CRIS details ASIC’s actual regulatory costs for 2018-19 and provides an estimate of costs for 2019-20. The estimated costs are published to give industry an indication of what levy costs to expect. They are a guide only.

Info sheet 245: Board oversight and discretion in executive variable pay schemes
In 2019, ASIC conducted a targeted review of board oversight of variable remuneration schemes. The review covered 21 ASX listed companies across seven industry sectors and collectively representing $738 billion in market capitalisation (as at 10 June 2020).

SEC Charges Microcap Fraud Scheme Participants Attempting to Capitalize on the COVID-19 Pandemic
The Securities and Exchange Commission has filed an emergency action and obtained an asset freeze against five individuals and six offshore entities for an alleged fraudulent scheme that generated more than $25 million from illegal sales of multiple microcap companies’ stock, including four that were the subject of recent SEC trading suspension orders: Sandy Steele Unlimited Inc., WOD Retail Solutions Inc., Bioscience Neutraceuticals, Inc., and Rivex Technology Corp.

FinHub to Host Virtual Meet-Ups
The U.S. Securities and Exchange Commission’s Strategic Hub for Innovation and Financial Technology (FinHub) today announced the launch of virtual peer-to-peer meet-ups (P2Ps).

New York Regional Office to Host Educational Call for Investors on Avoiding COVID-Related Fraud
The Securities and Exchange Commission’s New York Regional Office will host an educational telephone town hall about avoiding scams related to COVID-19 on June 23, 2020, from 5 to 6 p.m. ET. The call is free and open to all investors and those planning for their financial future. Joining the high-ranking SEC officials to share their insights will be the U.S. Attorney for the District of New Jersey and the President of the Financial Industry Regulatory Authority Foundation. Please see the event invitation for more information about the speakers.

Federal Court Orders Trading Advisor to Pay $890,000 for Defrauding Church and Community Members in Forex Scheme
he Commodity Futures Trading Commission today announced that the U.S. District Court for the Southern District of New York entered a consent order for permanent injunction and other equitable relief against defendant Brett G. Hartshorn of Sarasota, Florida, finding, among other things, that he fraudulently solicited at least 13 individuals to trade off-exchange foreign currency derivatives (“forex”) and misappropriated funds of at least two of those clients. The order requires that he pay restitution of $890,000 and imposes permanent trading and registration bans.

Statement of CFTC Chairman Heath P. Tarbert on the European Commission’s Draft Delegated Acts
Commodity Futures Trading Commission Chairman Heath P. Tarbert issued the following statement in response to the three draft Delegated Acts published by the European Commission (EC) addressing the supervisory oversight of third-country central counterparties (TC-CCPs) by the European Securities and Markets Authority (ESMA), including by specifying the criteria to be applied by ESMA when determining a TC-CCP’s systemic importance to the financial stability of the European Union or one or more Member States:

CFTC Charges Unregistered Commodity Pool Operator and Its Chief Executive Officer with Solicitation Fraud and Misappropriation
The Commodity Futures Trading Commission today filed a civil enforcement action in the U.S. District Court for the Eastern District of New York against defendants Craig L. Clavin and his company Lighthouse Futures, Ltd., both of New York. The complaint charges the defendants with fraudulent solicitation of commodity pool participants, misappropriation of pool funds, commingling pool funds with other funds, and failing to register with the CFTC as a commodity pool operator, as required.

CFTC Charges Companies and Individual with Forex Fraud and Registration Violations
The Commodity Futures Trading Commission today filed a complaint in the U.S. District Court for the Northern District of Georgia against Silver Star FX, LLC d/b/a Silver Star Live (SSL), a former New Mexico limited liability company, Silver Star Live Software LLC (SSLS), a Florida limited liability company, and David Wayne Mayer of Roswell, Georgia. The complaint charges all three defendants with sales solicitation fraud and failing to register with the CFTC.

CFTC Charges Forex Trading Firm and Its Principal with Fraud and Misappropriation
The Commodity Futures Trading Commission today filed a civil enforcement action against Erik J. Hass and his company Simply Gains Inc., both of Junction City, Oregon, in the United States District Court for the District of Oregon, charging them with fraud, misappropriation, and failing to register with the CFTC as required.

Comment Letter: Re: RIN 3038—AE98: Amendments to Compliance Requirements for Commodity Pool Operators on Form CPO-PQR

Investing and Trading

Myths can make ‘smart money’ act dumb; Assumptions about valuations and economic indicators have more power than they should
Miles Johnson – FT
Those who earn a living analysing financial markets are enduring testing times. Many money managers have been left baffled as stocks have rallied to near all-time highs at a time of a global pandemic, civil unrest and mass unemployment during an awful recession.

The Stocks-Only-Go-Up Strategy Falls Into a $2 Trillion Ditch
Vildana Hajric, Lu Wang, and Claire Ballentine – Bloomberg
Companies that led the retail rally since March get crushed; After the selloff, the market is still nothing like a bargain
Recent converts to a one-way trading blueprint popularized on Twitter and in chat rooms have learned it is not quite the bullet-proof strategy it had recently seemed.

World’s Worst Stock Market Risks More Pain From Pension Selling
Oscar Medina and Ezra Fieser – Bloomberg
Colombia proposes allowing workers to tap retirement savings; Colcap index has dropped 40% as foreigners sold equities
The world’s worst-performing stock market this year is at risk of an even steeper drop from a proposal to let Colombians tap pension savings during the coronavirus crisis.

Billionaire Brothers Donate $101 Million to Oxford University
Benjamin Stupples – Bloomberg
The charitable foundation of David and Simon Reuben has donated 80 million pounds ($101 million) to Oxford University’s newest college. The gift will fund scholarships and research into areas like environmental change. The institute will be renamed Reuben College, according to a statement Thursday.

Traders Test Fed’s Power With Bets on More Currency Volatility
Susanne Barton and Robert Fullem – Bloomberg
Citi’s Fitzpatrick recommends 6-month euro-dollar call options; Expect ‘virus differentiation across economies’: Deutsche Bank
The market horizon is littered with risks that could trigger bigger moves in currencies even as the Federal Reserve and other central banks double down on the policies that have anchored volatility close to historic lows.

Only One Stock in the S&P 500 Finished Higher as Index Plunged
Katherine Greifeld – Bloomberg
Supermarket operator Kroger managed to gain 0.4% on Thursday; S&P 500 dropped almost 6% as second-wave fears hit markets
In the stock market’s worst wipeout since the height of the coronavirus panic in March, only one member of the S&P 500 Index managed to post a gain. Supermarket operator Kroger Co. finished in the green, eking out a 0.4% advance after BMO raised its price target for the stock. That’s in stark contrast to the benchmark equity gauge, which plummeted 5.9% as fears of a second wave of U.S. coronavirus infections gripped markets. More than 60 of the index’s members lost at least 10%.

Investors Are in a Race to Find the Best Models of Climate Risk; Nobody wants their assets to wind up underwater in 20 years.
Kate Mackenzie – Bloomberg
Sustainable finance is having a reasonably good pandemic. Environmental themed funds have had fewer outflows, and companies with better environmental, social, and governance ratings have tended to fare more lucratively than their peers.

PG&E Launches Hunt for $20 Billion for Bankruptcy Exit; California’s largest utility is selling debt and equity to raise money to pay off wildfire damages
Peg Brickley – WSJ
PG&E Corp. has won approval from a bankruptcy judge for an order allowing it to go to market to sell $20 billion worth of new debt and equity as it awaits approval of its plan to exit chapter 11.

U.S. Households’ Net Worth Had Record Fall in First Quarter; Fed report ties most of decline to plunging values of equities; early impact of pandemic is shown
Paul Kiernan – WSJ
The net worth of U.S. households saw a record decline in the first three months of this year as the coronavirus pandemic sent shock waves through the economy and caused equity prices to plummet.

The Equal-Weight S&P 500 Is at Risk of a Three-Day Correction
Lu Wang – Bloomberg
Recovery trade that has fueled broader rally is now in doubt; Cyclical shares, small-caps leading the market lower
As a proxy for the breadth of the recovery rally, nothing beat the equal-weight S&P 500, whose market-cap-agnostic structure let it benefit from giant gains in the most beaten-down stocks. But what worked going up is creating pain on the way down.


Barclays Lawyer Caught on Zoom Saying Staveley Was ‘Lying’
Jonathan Browning – Bloomberg
The difficulties with holding a live court case via Zoom landed Barclays Plc in hot water after a member of its legal team was heard to say that PCP Capital Partners Amanda Staveley was “obviously lying” while she was giving evidence.

Exclusive: Pershing Square’s Ackman eyes $1 billion-plus ‘blank-check’ company – sources
Joshua Franklin, Svea Herbst-Bayliss – Reuters
Billionaire investor William Ackman’s hedge fund Pershing Square Capital Management has filed confidentially with U.S. regulators for an initial public offering (IPO) of a blank-check investment vehicle that could raise more than $1 billion and be the biggest of its kind, according to people familiar with the matter.

Goldman Sachs Is Said to Try to Avoid Pleading Guilty in 1MDB Scandal; The bank has asked the U.S. to review demands that any settlement include a guilty plea to a felony charge, according to people briefed on the matter.
Matthew Goldstein – NY Times
Goldman Sachs is trying to get federal prosecutors to ease up on the bank for its role in a brazen scheme to loot billions of dollars from a Malaysian sovereign wealth fund.

Citigroup Plans to Return 5% of U.S., Canada Staff in Early July
Erik Schatzker and Jennifer Surane – Bloomberg
Some of bank’s traders will come back to New York headquarters; Firm may start ramping up toward 30% capacity in September
Citigroup Inc. has begun notifying 5% of its 64,000 U.S. and Canadian employees that they’ll be returning to the office on July 1 or 2, making it one of the first big banks to formally begin reopening after the worst of the coronavirus pandemic.


India Credit Market Has Been Stung by Bankruptcy Suspension
Anurag Joshi – Bloomberg
Local firms due to repay record amount of rupee bonds in 2020; Rupee note spreads jumped on suspension of bankruptcy filings
Since India announced last month that it would temporarily suspend filings under its insolvency law amid the pandemic, credit investors have grown concerned that some weaker borrowers may use the development as an excuse to delay or avoid debt payments.

Emerging-Market Debt Crisis Brews as State Firms Need Rescue
Michelle Jamrisko, Anirban Nag, and Karlis Salna – Bloomberg
Indonesia, India, South Africa under pressure to bail out SOEs; Fiscal deficits are already surging amid coronavirus pandemic
Emerging-market economies are grappling with a new dilemma as they begin the slow journey to recovery: how to rescue state-owned businesses without also triggering a debt crisis.

Refusing to be gagged, Myanmar journalists work from shadows
Hiding from Myanmar’s police, journalist Aung Marm Oo refuses to conceal his anger with the civilian government led by Nobel Laureate Aung San Suu Kyi as his country prepares for an election later this year.

Australia Fast-Tracks a $1 Billion Coal Mine
James Thornhill – Bloomberg
Valeria mine seen producing up to 20 million tons a year; Project in same state as Adani’s controversial Carmichael mine
A giant Glencore Plc coal project in Australia has been fast-tracked as the nation turns to its vast natural resources to lift the economy out of its first recession in almost three decades.

Tokyo’s First Female Governor Announces Run for Re-Election
Isabel Reynolds – Bloomberg
Koike gained support for her handling of virus crisis; Winner may host a delayed and scaled-back Olympics in 2021
Tokyo Governor Yuriko Koike, the first woman elected to govern the 14-million strong city, announced she would seek office again in a vote next month.

Germany Sees Work From Home as Chance for Greener, Better Life
Raymond Colitt – Bloomberg
Roughly a third of Germans expect fewer business trips and more video conferences in the years following the outbreak of the coronavirus, according to a study published on Thursday.


UK in U-turn on full post-Brexit border controls; Temporary light-touch customs regime planned with pressure from business not to compound Covid-19 chaos
Peter Foster and George Parker – FT
The British government has abandoned its plan to introduce full border checks with the EU on January 1 as ministers come under mounting pressure from business not to compound the chaos caused by coronavirus.

Britain and EU seek to break Brexit deadlock; Intensified rounds of talks to be agreed by Johnson and Von der Leyen to try and unlock deal
Jim Brunsden and George Parker – FT
Boris Johnson has agreed with Brussels on plans to hold “intensified” negotiations to try to unlock an EU/UK trade deal, building up to a moment of reckoning at the end of July.

John Lothian Newsletter

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Past JLN Newsletters

CME to permanently close most trading pits

CME to permanently close most trading pits

First Read $40,626/$300,000 (13.5%) Anonymous ++++ Hits & Takes John Lothian & JLN Staff Without fanfare or amplification from its executives, the CME Group shut the books on most -- but not all -- of its floor trading history Tuesday afternoon with the...

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