Hits & Takes
By JLN Staff
In a related story, Business Insider reported that on Goldman Sachs’ First Investor Day, avocado toast and crab apples were served. I keep wondering when people will get over this craze and realize that avocados are mealy and tasteless. Now, crab apples, on the other hand…~SR
In 2013, the FBI shut down a website called, “The Silk Road,” one of the world’s biggest bitcoin-fueled peer-to-peer online marketplaces, which was primarily used to buy illegal items. The creator of The Silk Road, Ross William Ulbricht (who chose the online pseudonym “The Dread Pirate Roberts”) was arrested and is currently serving a life sentence. His conspirator, Roger Thomas Clark, recently pleaded guilty to “conspiring to distribute massive quantities of narcotics.” For more information, check out our CryptoMarketsWiki pages on The Silk Road and the Darknet.~MR
We are setting up our video interview schedule for the FIA Boca International Conference in March. Let me know if your firm is interested in participating.~JJL
Commodity Shipping Costs Fall 99.95% After Virus Slams Market
Outbreak in China may hurt demand for vessels hauling iron ore; Brazil’s Vale says that it’s port operations remain normal
The coronavirus crisis in China has hammered many markets this month: none may have felt a bigger impact than freight, reflecting consequences for raw materials including iron ore that are carried by sea.
***** That is a collapsing market.~JJL
China’s Financial Markets Will Reopen to Barrage of Selling
Sofia Horta e Costa and Tian Chen – Bloomberg
World’s second-largest stock market starts trading on Monday; Traders’ first chance since Jan. 23 to react to virus outbreak
Every other market has already reacted to the deadly virus threatening China’s economy. Soon it will be China’s turn, and it’s likely to be brutal. Stocks and commodities will almost certainly sink when financial markets reopen Monday for the first time since Jan. 23, while bond yields will drop. For equities, the declines are likely to be exacerbated by the amount of leverage in the market — near the highest in 11 months. That could create a downward spiral where steep losses become steeper as traders face margin calls.
***** Price discovery moved to other venues in the meantime, but there are still people who need to get out or unwind hedges.~JJL
Blue Ridge’s John Griffin Elected Next Chairman of Robin Hood Foundation
Amanda L Gordon – Bloomberg
Hedge fund founder to bring ‘risk-taking mentality’ to job; Poverty-fighting group’s board expanded beyond Wall Streeters
John Griffin, founder of Blue Ridge Capital, will be the next chairman of the Robin Hood Foundation, the poverty-fighting organization with Wall Street in its DNA. Griffin, 56, was elected Thursday for a two-year term, succeeding Larry Robbins of Glenview Capital Management.
*****A noble role.~JJL
Matthew Leising – Bloomberg
It’s a new crime but it isn’t new. It has a silly name but it’s no joke. Spoofing, a way to manipulate financial markets for illegitimate profit, is blamed for undermining the integrity of trading and contributing to the scariest crash since the financial crisis. Spoofers trick other investors into buying or selling by entering their own buy or sell orders with no intention of filling them. That creates fake demand that pushes prices up or down. Long considered disreputable but rarely dangerous, spoofing has emerged in an era of computerized trading as a threat to market legitimacy. Regulators, lawmakers and market authorities are struggling to define and control it.
*****Bloomberg’s Matt Leising takes some time away from writing his book about Ethereum to opine on spoofing.~JJL
CryptoMarketsWiki Coin of the Week: Bitcoin Cash (BCH)
Key Bitcoin Cash supporters proposed changing the Bitcoin Cash protocol last week to temporarily redirect 12.5 percent of newly-created BCH tokens to a development fund. The proposal caused such rancor in the BCH community that a significant number of miners threatened to withdraw their support from the system, a move that would have weakened the network’s computing power overall. Roger “Bitcoin Jesus” Ver announced via a blog post this week that his company Bitcoin.com, one of the biggest supporters of the Bitcoin Cash protocol “will not go through with supporting any plan unless there is more agreement in the ecosystem.” The Zcash community voted on a similar upgrade to the Zcash protocol this week, which was successful.
Thursday’s Top Three
Our top story on Thursday was our JLN video interview, Eileen Flaherty’s Perilous Road to Success, in which the former regulator and compliance officer discusses her against-the-odds life and the inspiration for her first novel. Next was a much shorter success story, Bloomberg’s Elon Musk Adds $2.3 Billion to His Fortune in 60 Minutes. In third was the semi-good news for bitcoin, Bitcoin Has Lost Steam. But Criminals Still Love It. from The New York Times.
171,546,042 pages viewed; 24,042 pages; 223,246 edits
|CryptoMarketsWiki, our archive of the cryptocurrency and blockchain world, is going strong and keeping pace as this area of finance grows and evolves.Recently Updated Pages
1,344 pages; 11,838 edits
WHO Declares Coronavirus Outbreak an International Emergency, U.K., Russia Flag Cases; Global Count Nears 10,000: Virus Update
The U.K. and Russia confirmed their first cases of the novel coronavirus on Friday, while the U.S. and Japan advised citizens to avoid traveling to China. The Kremlin may temporarily ban work visas for Chinese nationals. U.S. futures dropped alongside stocks in Europe and Asia.
A Trader Without Information Is a Dangerous Thing; With China’s real economy practically shut down but markets opening, investors are left parsing sparse clues about the coronavirus outbreak.
Shuli Ren – Bloomberg
When Sleeping Beauty pricked her finger on a spinning wheel, the rest of the kingdom went to sleep along with her. Not so in China. As an epidemic rages, many provinces have extended their Lunar New Year holiday by weeks, but financial markets – from commodities and stock exchanges to bond clearing houses – will resume operating Monday. The Hong Kong Stock Exchange has been in business since Wednesday.
Probe Ordered After Sterling Jumps Ahead of Rate Decision; British currency climbed as high as $1.3062 in seconds before Bank of England announced decision to hold interest rates
Anna Isaac and Caitlin Ostroff – WSJ
U.K. authorities are investigating a sudden rise in the value of the British pound minutes before the Bank of England on Thursday disclosed its decision to hold the interest rate steady.
Brexit day: Britain quits EU, steps into transition twilight zone
Guy Faulconbridge – Reuters
The United Kingdom leaves the European Union on Friday for an uncertain Brexit future, the most significant change to its place in the world since the loss of empire and a blow to 70 years of efforts to forge European unity from the ruins of war.
It Takes an Epidemic to Show Markets Are Efficient; The Wuhan virus just provided a natural experiment in financial theory that medical researchers could only dream of.
John Authers – Bloomberg
Making sense of the last few days in markets requires some of the skills of a doctor. The patient has some severe symptoms, some of which can plainly be attributed to a disease. But is some other medical condition also at work? It can be difficult to tell, particularly as doctors, like those who work in capital markets, don’t have the ability to perform a controlled experiment. But we need to try.
The Robots Are Coming for Fund Management Jobs; Japan’s GPIF is harnessing artificial intelligence to help oversee its $1.6 trillion of assets.
Mark Gilbert – Bloomberg
Remember Aibo, the computerized dog Sony Corp. started selling in 1999 as the first personal robot? Hiro Mizuno, the chief investment officer of Japan’s Government Pension Investment Fund, does. So he asked Sony’s computer science lab unit to build him a cyberhound using artificial intelligence to help oversee the external fund managers who manage GPIF’s $1.6 trillion in assets.
Traders seek seven-hour European market open hours; AFME and the IA have called for a 90-minute reduction in European market hours as the LSE’s consultation nears closure.
Hayley McDowell – The Trade
Buy- and sell-side traders are urging stock exchanges across Europe to reduce the market opening hours by 90 minutes to seven hours a day, as the London Stock Exchange (LSE) prepares to close its consultation on the issue.
Buy-side heavyweights continue to snub FX Global Code of Conduct; Vanguard, Allianz Global Investors and AXA Investment Managers among the large buy-side firms still not committed to the FX Global Code of Conduct.
Hayley McDowell – The Trade
The Bank for International Settlements (BIS) markets committee has thrown shade at larger asset managers for continuing to avoid adoption of the FX Global Code of Conduct.
U.S. Regulators Propose Removing Limit on Banks’ Ownership of Venture Capital Funds; The move, led by the Federal Reserve, is the latest step in easing postcrisis Volcker rule
By Andrew Ackerman – WSJ
Banks in the U.S. would no longer face limits on ownership stakes in venture capital funds under a proposal put forth on Thursday by regulators including the Federal Reserve.
Terrified about global warming? Finally, here’s some good news
Brett Arends – MarketWatch
Australia is on fire. Antarctica’s “Doomsday Glacier” is melting. Last year was the second hottest year on record. The six hottest years in all of recorded human history? The last six.
Scientists are scrambling to find ways to slow — let alone reverse — the damage caused by human pollution and fossil-fuel emissions. So here’s some moderately good news in the era of climate change. Wind, solar and other “clean” energy sources are now as cheap or cheaper than dirty fossil fuels at the industrial level, even without taxpayer assistance. And the gap is getting wider.
Former CFTC Chairman J. Christopher Giancarlo Discusses Accomplishments, Relationships With Other Regulators and the CFTC’s Approach to Rulemaking (Part One of Two)
Robin L. Barton – Hedge Fund Law Report
J. Christopher Giancarlo was sworn in as a CFTC Commissioner on June 16, 2014, and later served as Chair until the end of his five-year term in July 2019. As Chair, he oversaw regulation of the futures, options and swaps derivatives markets, focusing on regulatory guidance for emerging technologies, such as blockchain and cryptocurrencies. For example, Giancarlo oversaw the first bitcoin futures products entering the marketplace and applied a “do-no-harm” regulatory approach toward blockchain technology. As a result of his embracing technological developments, Giancarlo earned the nickname “Crypto Dad.”
Japan Braces For Launch Of Digital Yen Amid Rapidly Changing Technology
Jet Encila – Business Times
Not much media coverage has been given on Japan’s digital currency until now. It all started when at a recent finance seminar Masayoshi Amamiya, Bank of Japan deputy governor, disclosed that the country must be prepared to introduce a Central Bank Digital Currency if the need arises.
China’s Bigger Regional Banks Could Need Capital, S&P Says
Alfred Liu – Bloomberg
China’s banking system is facing greater risks than it seems as some bigger regional lenders are under pressure just like their smaller counterparts.
Seven Market Gurus Answer the Seven Big Post-Brexit Questions
Strategists from Goldman, Nomura to Deutsche on the new era; On pound recovery, investor confidence, cheap stocks and more
And just like that, the era in which traders grappled with late-night British parliamentary proceedings, epic volatility in the pound and capital flows on every twist and turn of the Brexit saga comes to a close.
Coronavirus Is More Dangerous for the Global Economy Than SARS
Seventeen years ago, China’s gross domestic product was 4% of the global total—it’s now 17%.
Uncertainty about the severity and duration of the coronavirus outbreak makes it impossible to form a definitive judgment about its economic impact. Still, with the markets anticipating the worst, it’s worth thinking through the risks for China, as well as the potential for global spillovers.
Exchanges, OTC and Clearing
Cboe Announces Launch Date for Cboe Market Close
Cboe Global Markets, Inc.
Planned for launch on March 6, 2020; New, cost – effective alternative to primary market closing auctions and off – exchange venues for execution of Market – on – Close orders
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world’s largest exchange holding companies, today announced it plans to launch Cboe Market Close (CMC) on the company’s BZX Exchange on Friday, March 6, 2020.
Nodal Clear Announces Wedbush Securities as New Clearing Member
Nodal Clear, LLC
Nodal Clear, LLC, the clearing house for Nodal Exchange, today announced that Wedbush Securities Inc. has been approved as a clearing member.
Annual load testing of Moscow Exchange trading and clearing systems
The next annual public load testing on production infrastructure of FX, Derivatives and Equity markets is scheduled for 21 March 2020.
OCC updates default auction rules to encourage buy-side bids
Costas Mourselas – Risk.net
The Options Clearing Corporation (OCC) is set to change its rule book in order to make it easier for buy-side firms to participate in default auctions. The equity derivatives clearing giant is working with the US Securities and Exchange Commission (SEC) on changes that would significantly simplify a lengthy document that clearing firms have to sign to allow their clients to make bids during default auctions.
OCC execs liable under new policy
FOW (subscription required)
Options Clearing Corporation (OCC) executives are “first in line” in the event of operational failure, Scot Warren, COO of the clearing house, told Global Investor. The Chicago-based clearing house received approval from the US Securities and Exchange Commission (SEC) for its new capital management policy on January 27, which states that OCC will contribute the funds held under its Executive Deferred Compensation Plan (EDCP) in the event of operational loss. “We very much thought it was important to align the economic interests particularly with the operational loss events, where we (executives) have day-to-day responsibilities,” Warren explained.
Exchange Publishes Results of Latest Review of Issuers’ Annual Report Disclosure
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Friday) published a report (the Report) on the findings and recommendations from its review of issuers’ annual reportsNote for the financial year ended between January and December 2018.
Exchange Publishes Consultation Paper on Corporate WVR Beneficiaries ; Proposal builds on recent reforms to enhance global competitiveness and encourage the development of innovative businesses
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Friday) published a consultation paper seeking public feedback on a proposal to allow corporate entities to benefit from weighted voting rights (WVR), subject to additional conditions and investor safeguards (Corporate WVR Consultation).
Oslo Børs: Green Loan Wave Yielded Bond Record
Never before have so many new loans been listed on Oslo Børs during the month of January. Record inflows of green bonds have contributed to the record high activity.
Eurex takes ESG derivatives to a global level
Zubin Ramdarshan, head of equity and index product design, and Christine Heyde, product manager for environmental, social and governance (ESG) derivatives, Eurex, explore the firm’s decision to expand its range of ESG futures on European and global indexes to meet growing demand, and why driving a change of behaviour is top of its priority list.
SMBC builds next generation e-FX and algo platform with Kx; SMBC is already live with phase one of the project and allegedly seeing tighter spreads and higher fill rates from the platform.
Hayley McDowell – The Trade
Japan’s Sumitomo Mitsui Banking Corporation (SMBC) is building an advanced forex trading platform to support electronic execution and algorithmic trading, with the help of software provider Kx.
UK drives record $8.5 billion FinTech investment in Europe; The UK accounted for seven of the largest FinTech investment deals in Europe in 2019, driving record growth across the region.
Hayley McDowell – The Trade
European FinTech investment attracted record funding throughout 2019 driven by a 38% surge from the UK, according to a report from industry body Innovate Finance.
Giving cryptocurrency users more bang for their buck
Rob Matheson – MIT News
A new cryptocurrency-routing scheme co-invented by MIT researchers can boost the efficiency — and, ultimately, profits — of certain networks designed to speed up notoriously slow blockchain transactions. Cryptocurrencies hold promise for peer-to-peer financial transactions, potentially making banks and credit cards obsolete. But there’s a scalability issue: Bitcoin, for instance, processes only a handful of transactions per second, while major credit cards process hundreds or thousands. That’s because the blockchain — the digital ledger cryptocurrencies are built on — takes a really long time to process transactions.
All Eyes on India as Supreme Court Crypto Case Advances
Rachel McIntosh – Finance Magnates
Despite its 1.3-billion-person population, its $80 billion remittance industry, and the fact that India has been identified as the land of opportunity for cryptocurrency and the global payments industry, the country has largely been a minor player on the cryptocurrency industry’s global stage.
Billionaire Novogratz Says Tesla Feels Like Bitcoin
Billionaire Bitcoin maven Mike Novogratz, Galaxy Investment Partners chief executive officer, explains why he is shorting Tesla Inc. He speaks during an interview with Bloomberg’s Erik Schatzker on “Bloomberg Markets.
Bitcoin Arbitrage Is Driving Demand for Cash, Crypto Lender Says
Olga Kharif – Bloomberg
Cash was king among hedge funds and miners looking to take advantage of arbitrage opportunities and add leverage during the fourth-quarter downturn in cryptocurrency prices. Genesis Capital said cash and equivalent loans as a percentage of outstanding loans increased significantly for a third consecutive quarter in the three months ended Dec. 31. The loans represented 37.2% of the New York-based lender’s active loan portfolio at the end of last quarter, up from 31.2% in the third quarter and 14% a year earlier. Loans in Bitcoin dropped to 47% of the portfolio, from 63% at the end of June, around when the largest cryptocurrency’s price peaked for the year.
Ethereum Dev Virgil Griffith Pleads Not Guilty to Violating North Korea Sanctions
Nikhilesh De – Coindesk
Ethereum developer Virgil Griffith pleaded not guilty to a charge of conspiracy to violate the International Emergency Economic Powers Act on Thursday. Griffith was arrested in November on allegations he spoke at a cryptocurrency conference in North Korea last year, where he allegedly taught his audience how to use cryptos to evade sanctions. A complaint published by the U.S. Attorney’s Office for the Southern District of New York claimed Griffith detailed how crypto could be used to launder money, and may even have tried to facilitate a transaction between the Democratic People’s Republic of Korea (DPRK) and South Korea.
Two firms partner to tokenize luxury cars, including Ferrari
Yogita Khatri – The Block
Investment platform CurioInvest and digital assets exchange MERJ have tied up to offer tokens backed by rare and luxury cars, including Ferrari. The tokens, dubbed “CT1,” will be listed on Seychelles-based regulated exchange MERJ, Bloomberg reported Friday. The exchange is licensed by the Seychelles’ Financial Services Authority as a securities exchange. CurioInvest and MERJ are planning to tokenize 500 collectible cars worth over $200 million onto the exchange. Ferrari F12tdf, worth about $1.1 million, will be among the first to be tokenized, per CurioInvest’s website.
Nomura Launching Benchmark for Japan’s Crypto Assets
Paddy Baker – Coindesk
Nomura Research Institute (NRI) will launch a benchmark rank and compare Japanese cryptocurrency assets on Friday. The Tokyo-based management consultancy and research firm said the “NRI/IU Crypto-Asset Index Family” – created in coordination with Intelligence Unit LLC (IU) – will be available through NRI’s financial information database, IDS, to domestic and overseas institutional investors, financial information vendors and crypto exchanges.
Bitcoin’s “halvening” won’t boost its price
Jemima Kelly – FT
Halvening is not a word. As I type it, my spell-checker helpfully underlines the offending (nay, offensive) gibberish with a red dotted line, to make sure that I don’t in fact mean “halving”. That would be a perfectly good word, but it’s not the one I mean. No — because I’m using a word born of a land where bunk and baloney thrive and reality, less so. That land is cryptoland. There, “halvening” has become a part of the vernacular, along with “HODL”, “rekt”, and “mooning” (not showing off one’s posterior, but instead the state of a cryptocurrency whose trajectory is skyward).
Bitfinex launches margin trading for gold-backed stablecoin
Yilun Cheng – The Block
Cryptocurrency exchange Bitfinex has added margin trading for tether gold (XAU?). Starting Jan. 30, the exchange will support margin trading for XAU? with trading pairs for the US dollar, USD, and bitcoin. The margin feature will require initial equity of 20% and offer up to 5x leverage, according to a press statement.
Coinbase Custody and Bison Trails join Proof of Stake Alliance, seeking to bring tax clarity
Yogita Khatri – The Block
The Proof of Stake Alliance (POSA) – a group of organizations dedicated to educating U.S. regulators on blockchains – has expanded its membership. Coinbase Custody and Libra Association member Bison Trails have joined POSA, bringing the total number of members at the alliance to 18. Other members include Tezos, Polychain Capital, Cardano Foundation and more.
Deribit to Launch Daily BTC Options as Regulated Competition Heats Up
Paddy Baker – Coindesk
Deribit is launching daily options as the exchange faces increasing competition in the crypto options market. Deribit announced this week it would begin offering daily bitcoin index options Feb. 3. Scheduled every day at 08:00 UTC, users will be able to begin trading options at a strike price of $125. Contracts expire two days after being listed.
Security token platform tZERO is moving ahead with broker-dealer plan, may raise external funds in the next year
Celia Wan – The Block
tZERO, the security token platform owned by online retailer Overstock, released today a review letter that summarizes its business performance over the past year and its plans for 2020. The review, penned by tZERO CEO Saum Noursalehi, focused on various elements, including a planned launch for a broker-dealer – dubbed tZERO Markets – “in the first half of this year.”
‘Key Milestone’ for Hyperledger as Fabric Blockchain Platform Reaches 2.0 Release
Paddy Baker – Coindesk
Enterprise blockchain project Hyperledger has released the most significant update of its DLT framework Fabric since launch in July 2017. The Hyperledger Foundation announced Thursday that Fabric 2.0 is designed to improve the usability and performance for the end user, with updates including new features such as decentralized governance for smart contracts and several enhancements for handling and sharing private data on the platform.
GOP Senators Appear Likely to Block Witnesses in Impeachment Trial; Senate to vote Friday on whether to introduce additional evidence
Andrew Duehren – WSJ
Senate Republicans appear likely to end President Trump’s impeachment trial without considering new witnesses or documents on Friday, moving closer to acquitting him of both impeachment articles.
China’s Funding of U.S. Researchers Raises Red Flags; Academics don’t always disclose the funding, adding to concerns about national security
Aruna Viswanatha and Kate O’Keeffe – WSJ
When officials at the Texas A&M University System sought to determine how much Chinese government funding its faculty members were receiving, they were astounded at the results—more than 100 were involved with a Chinese talent-recruitment program, even though only five had disclosed their participation.
No One Is Safe From Biased Reporting; The New York Times builds a false narrative aimed at discrediting me and tax reform’s opportunity zones.
Michael Milken – WSJ
A free and independent press is, and should always be, an impenetrable bulwark of our democracy. “Were it left to me to decide whether we should have a government without newspapers or newspapers without a government, I should not hesitate a moment to prefer the latter,” wrote Thomas Jefferson in a 1789 letter. The media’s hallowed role, embodied in the First Amendment, assures near-total freedom to report (and even misreport) the news.
The Republican Case for Elizabeth Warren; She has independence and integrity and is no socialist. She just wants the market to work for everyone.
Sheila Bair – WSJ
A cardinal rule of politics is don’t let your opponents define you. This has been a particular challenge for Sen. Elizabeth Warren, whose critics continue to insist that she is a left-wing radical. I am a Republican and have known and worked with Ms. Warren for many years. She is a capitalist and prairie populist, in the tradition of William Allen White and Teddy Roosevelt. She believes in a market economy. She just wants it to work for everyone.
ESMA consults on the new MiFIR and MiFID II regimes for third-country firms
The European Securities and Markets Authority (ESMA), the EU’s securities markets’ regulator, has launched a consultation on draft technical standards on the provision of investment services and activities in the European Union (EU) by third-country firms under MiFIR and MiFID II.
ESMA: update on governance and reporting obligations following the UK’s withdrawal from the European Union
The European Securities and Markets Authority (ESMA) is publishing this statement to clarify issues relating to its governance and the reporting obligations for UK entities from 1 February 2020 following the United Kingdom’s (UK) withdrawal from the European Union (EU).
HK regulator estimates 20-30% of bank branches to be closed temporarily due to coronavirus
Maria Nikolova – FinanceFeeds
Hong Kong’s banking sector has introduced a series of measures, including split-team arrangements and allowing staff to work from home where practicable.
ESMA: EU law will still apply to UK firms during Brexit transition period; By virtue of the withdrawal agreement, EU law will continue to apply to the UK, as if it were a Member State, during the transition period from February 1, 2020 to December 31, 2020.
Maria Nikolova – FinanceFeeds
The European Securities and Markets Authority (ESMA) today published a statement clarifying issues related to the reporting obligations for UK entities following Brexit, which is set to happen at 11pm today.
Statement of Commissioner Brian Quintenz in Support of Proposed Rule: Amendments for Certain Swap Execution Facility Requirements and Real-Time Reporting Requirements
I support today’s proposal that seeks to resolve through rulemaking three issues currently addressed in staff no-action letters. I believe this proposal is an important first step to provide market participants with much needed regulatory certainty while also promoting swap execution facility (SEF) participation, though regulatory certainty over additional current market practices is necessary as well.
CFTC Approves Two Proposed Rules at January 30 Open Meeting; Position Limits Proposal Advances After Long Delay
The Commodity Futures Trading Commission at its open meeting today approved a proposed rule on position limits for derivatives and a proposed rule amending certain Swap Execution Facilities (SEF) requirements and real-time reporting requirements.
ICYMI: Chairman Tarbert Discusses Position Limits on Bloomberg TV
Chairman Tarbert on the CFTC’s Proposed Rule on Position Limits for Derivatives
Dissenting Statement of Commissioner Dan M. Berkovitz Regarding Proposed Rule on Position Limits for Derivatives
I dissent from today’s position limits proposal (“Proposal”). The Proposal would create an uncertain and unwieldy process with the Commission demoted from head coach over the hedge exemption process to Monday-morning quarterback for exchange determinations. The Proposal would abruptly increase position limits in many physical delivery agricultural, metals, and energy commodities, in some instances to multiples of their current levels. It would provide no opportunity for the Commission to monitor the effect of these increases, or to act if necessary to preserve market integrity. The Proposal provides inadequate explanation for other key approaches in the document, including the use of position accountability rather than numerical limits for energy and metals commodities in non-spot months. The Proposal also ignores Congress’s mandate in the Dodd-Frank Act, and reverses decades of legal interpretations of the Commodity Exchange Act (“CEA”) by the Commission and the courts regarding the Commission’s authority and responsibility to impose position limits. It would require, for the first time, the Commission to find that position limits are necessary for each commodity prior to imposing limits.
Statement of Concurrence of Commissioner Rostin Behnam Regarding Proposed Rule on Swap Execution Facilities
I respectfully concur in the Commission’s proposal to amend certain swap execution facility (SEF) requirements and real-time reporting requirements. A little more than a year ago, the Commission issued a proposal that would have constituted a complete overhaul of the existing regulatory framework for SEFs. As I stated in my concurrence to the 2018 SEF proposal, I do not believe that such an overhaul is necessary.
Statement of Chairman Heath P. Tarbert in Support of Proposed Rule on Speculative Position Limits
I am pleased to support the Commission’s proposed rule on limits for speculative positions in futures and derivatives markets. Today’s proposal is a pragmatic approach that will protect our agricultural, energy, and metals markets from excessive speculation. But just as importantly, it will ensure fair and easy access to these markets for businesses producing, consuming, and wholesaling commodities under our jurisdiction.
Statement of Commissioner Brian Quintenz in Support of Proposed Rule on Position Limits before the Commission Open Meeting
I am pleased to support the agency’s revitalized approach to position limits. Today’s iteration marks the CFTC’s fifth proposed position limits rule since the Dodd-Frank Act amended the Commodity Exchange Act’s (CEA) section on position limits. This proposal is, by far, the strongest of them all.
FCA probes sterling spike ahead of UK interest rate decision; Bank of England makes second referral in two months to financial regulator
Eva Szalay, Chris Giles and Caroline Binham – FT
The Bank of England has referred to the UK markets watchdog a spike in sterling that happened just seconds before the central bank announced that it would leave its key interest rate unchanged.
Investing and Trading
IBM Shares Surge As Company Names Cloud Chief New CEO
Neer Varshney , Benzinga
The shares of the International Business Machines Corporation IBM surged in Thursday’s after-hours session as the company announced changes in top management. Ginni Rometty, who took over as the IBM CEO in 2011, is stepping down from the role, the company aid in a statement Thursday.
Cash May Not Be King, But It’s Still Royalty; Investors may be tempted to bet it all on digital banking. But there appears to still be a role for companies handling cash.
Telis Demos – WSJ
No cash? That might be a problem. The digital revolution in banking is one of the major investment themes of the young century, pushing big share-price and valuation gains for financial-technology upstarts like PayPal Holdings and Square, as well as network giants like Mastercard and Visa. Younger consumers have embraced cash-transfer apps like Venmo and, to an extent, cryptocurrencies. Some retailers have tried to ditch cash and take all payments in digital or card form.
Libor replacement jumble may hike hedging costs; Use of term rates and credit adjustments will create new basis risks that could be costly to hedge
Helen Bartholomew – Risk.net
Loan issuers are being urged to stick with standard Libor replacements and avoid the use of forward-looking term rates and credit spread adjustments, which may splinter the market and create new basis risks that could be costly to manage.
Reasons to worry about our addiction to loose money; In spite of central bank ‘petrol’, growth has been lower than economists might have expected
Gillian Tett – FT
Earlier this week, the Japanese government nominated Seiji Adachi to the board of the Bank of Japan. The news made few waves outside Japan, since Mr Adachi is little known.
How Amazon Keeps Defying Gravity
Why is this man laughing? It’s because Amazon reported another knockout quarter yesterday, sending its shares up 10 percent in after-hours trading, writes David Streitfeld of the NYT. The performance showed the power of Jeff Bezos’ internet juggernaut.
Jeff Bezos Adds $13.2 Billion to His Fortune in Just Minutes
Tom Maloney and Tom Metcalf – Bloomberg
Jeff Bezos just got a whole lot richer. Shares of his Amazon.com Inc. surged 12% to $2,100 in extended trading at 4:16 p.m. Thursday in New York, after the largest U.S. e-commerce company reported fourth-quarter results that smashed Wall Street estimates.
Amazon Value Set to Top $1 Trillion, and Wall Street Says More to Come
Joe Easton and Kit Rees – Bloomberg
One-day delivery, cloud business seen as key bright spots; Amazon shares surge 8.7% in New York pre-market trading
Amazon.com Inc. was on course to exceed $1 trillion in market value again after results beat expectations, with analysts applauding the popularity of the e-commerce giant’s one-day shipping initiative and the performance of its cloud-computing business.
Crop Prices Dip Despite Trade Deals; Farmers say lower prices for corn and soybeans complicate planting plans
Kirk Maltais – WSJ
Crop prices have dropped since the signing of trade deals meant to buoy the farm economy, clouding the outlook for farmers working to secure financing for this spring’s planting season.
OPEC curbs, supply risks to buoy oil prices in 2020: Reuters poll
K. Sathya Narayanan – Reuters
Oil prices will remain supported near current levels this year as persistent geo-political risks and OPEC-led output curbs help offset growing supply from other producers, a Reuters poll showed on Friday.
Novogratz Earned a ‘Black Eye’ Shorting Tesla, Still Sees Bubble
Olga Kharif and Erik Schatzker – Bloomberg
Billionaire shorted shares of Tesla ahead of earnings report; Compares market enthusiasm over Tesla to Bitcoin mania
Billionaire investor Michael Novogratz says he earned a “black eye” after shorting Tesla Inc. because the surge in the share price resembles the Bitcoin bubble.
A Way to Halt Natural Gas Flaring Arrives on the Back of a Truck; Portable LNG plant chills gas into a liquid, making it easier to ship and store.
Anna Shiryaevskaya and Naureen S Malik – Bloomberg
Perched on the back of a semi-trailer is the latest weapon in tackling the problem of wasted natural gas that oil producers often vent into the air or even burn off at the wellhead.
After Falling for a $40K Phone Scam, His Bank Offered to Help—If He Stayed Quiet; Billions of robocalls are resulting in thousands of fraudulent wire transfers. Some banks make victims sign confidentiality agreements, which may limit public awareness of how widespread the scams have become.
Sarah Krouse – WSJ
Bank of America Corp. told a 92-year-old customer it would attempt to recover nearly $40,000 he lost to a phone scam—but only after the man signed legal papers promising not to discuss the fraud or sue the bank.
Why hedge funds are still searching for the next big thing; Today’s liquidity-drenched markets make it much harder to pick winners
Laurence Fletcher – FT
Stock markets are not making life easy for hedge funds. The discomfort looks likely to continue for some time.
Fund managers push London Stock Exchange for shorter trading hours; Eight-and-a-half-hour day is needlessly long, say customers
Philip Stafford – FT
Big banks and fund managers have urged the London Stock Exchange to push back its opening by an hour and a half, as the bourse considers trimming one of the longest trading days in the world.
Woodford Income Focus fund to reopen in February; £268m fund was frozen in October after stockpicker’s business imploded
Madison Darbyshire – FT
The last surviving fund from Neil Woodford’s defunct investment empire will reopen in February, ending a long period of uncertainty for investors.
Italy’s Consob orders blocking of more websites of unauthorized online trading entities
The number of websites blocked under the “Growth Decree” has thus risen to 131.
Maria Nikolova – FinanceFeeds
Italy’s Companies and Exchange Commission (CONSOB) has announced that it has ordered the blocking of access to seven more websites of online trading entities that are not authorized to offer financial services in Italy.
Carmakers Brace for Crisis as Virus Wreaks Havoc in China
Tara Patel, Masatsugu Horie, and Chester Dawson – Bloomberg
Chances of recovery from slump are dwindling due to epidemic; Tesla, Toyota, GM temporarily suspend manufacturing in China
Forget about clinging to hopes that China, the world’s largest car market, will recover from its unprecedented two-year slump anytime soon.
Johns Hopkins’ Toner Says China Is Too Late, Coronavirus Is Out of Control
Dr. Eric Toner, Johns Hopkins Center for Health Security senior scholar, discusses the efforts to contain the deadly coronavirus outbreak. He speaks with Bloomberg’s Scarlet Fu, Joe Weisenthal and Romaine Bostick on “Bloomberg Markets: What’d You Miss?” The Bloomberg School of Public Health is supported by Michael R. Bloomberg, founder and majority owner of Bloomberg LP, the parent company of Bloomberg News
WHO Declares Coronavirus Outbreak an International Emergency
The World Health Organization called the outbreak of coronavirus in China a global health emergency, citing the risk that the sometimes-deadly virus could expand to other countries beyond the smattering of cases outside China so far.
U.S. Issues Level 4 Advisory Not to Travel to China
Bloomberg Markets TV
The United States is telling Americans not to travel to China after the World Health Organization declared the outbreak a global health emergency. Bloomberg’s Selina Wang reports on “Bloomberg Markets.”
Heatwave Ramps Up Wildfire Threat in Blaze-Ravaged Australia
Jason Scott – Bloomberg
Nation’s southeast again on high alert as temperatures soar; PM says Australians shouldn’t be taxed more to cut emissions
Dangerous wildfire conditions are returning to Australia’s southeast, with a weekend heatwave again putting stretched authorities on high alert.
Australia PM Seeks to Contain Bushfire Fallout With Energy Deal
James Thornhill – Bloomberg
Morrison’s A$2 billion deal with NSW targets climate projects; Pact includes New South Wales pledge to boost gas resources
Australian Prime Minister Scott Morrison, under fire for his climate policies amid a devastating bushfire season, announced a A$2 billion ($1.3 billion) energy deal with the country’s most populous state on Friday that will seek to reduce emissions and lower power bills.
German Banks Are Hoarding So Many Euros They Need More Vaults
Nicholas Comfort and Stephan Kahl – Bloomberg
Negative interest rates are encouraging lenders to hold cash; ECB stimulus is also landing top banks with other side effects
German banks are stuffing vaults with money to help offset the mounting cost of negative interest rates, and some of them are running out of space.
Swiss National Bank Pulls a Trick Last Used During the Crisis
Catherine Bosley – Bloomberg
SNB saw 6.5 billion francs of repo claims, most since 2012; SNB used repos to address tightess in interbank market
The Swiss National Bank resorted to a tool to steer short-term interest rates last month that has been virtually abandoned since the European debt crisis.
Investors flee Hong Kong stocks as coronavirus death toll rises; China-focused shares in the city have experienced their worst week in almost 2 years
Hudson Lockett – FT
Chinese stocks in Hong Kong suffered their worst weekly performance in almost two years as the death toll from the coronavirus outbreak rises.
Brexit Brings Slow Change in U.K. and an Overhaul in Brussels; At first, the divorce will be felt most deeply in the halls of EU institutions
Laurence Norman and Stephen Fidler – WSJ
The U.K. takes a historic step on Friday and leaves the European Union after 47 years. When Saturday dawns, few people will notice the difference.
Boris Johnson Won Brexit; Now He Has to Own It
Tim Ross – Bloomberg
At 11 p.m., Britain’s bad-tempered 47-year marriage to the European Union will formally end. The man who helped engineer the divorce — U.K. Prime Minister Boris Johnson — must now own it. It was the charismatic Johnson who transformed the fringe Brexit movement into an all-conquering referendum campaign back in 2016, upending the government and unleashing three years of unprecedented turmoil in Britain.
Boris Johnson’s Plan to Kill “Brexit”; The word “Brexit” is so loaded with emotion now that Johnson’s only hope of moving past conflict is changing the language. It won’t be easy.
Therese Raphael – Bloomberg
Shortly after his election victory in December, it was reported that Boris Johnson wanted the word Brexit retired. Not just retired, but expunged as a matter of urgency once the U.K. has left the European Union on Jan. 31.
Brexit Day latest: U.K. marks its final hours in the E.U.
William Booth, Karla Adam and Michael Birnbaum – The Washington Post
Well, that wasn’t easy. But after 1,317 days, three prime ministers, two blown exit dates, dozens of votes in Parliament and years of negotiation, Britain will finally leave the European Union on Friday.
Brexit Day — or Brexit Night? — is finally here. At 11 p.m. London time, or midnight in Brussels, Britain is officially out, after almost five decades with the closest of ties to Europe.
The United Kingdom will now go it alone — and either roar ahead with Prime Minister Boris Johnson’s vision for a can-do “Global Britain,” or the country will find itself diminished, economically, and as a solo player on the world stage.
Join the Lottery for a 55-Year Japanese Single Malt; Suntory’s Yamazaki taps into the worldwide popularity of whisky from Japan, which is facing shortages.
Lisa Du – Bloomberg
The newest bottle in the vaunted lineup of premium Japanese whiskies is more than 55 years old. Japan’s oldest distillery will release Yamazaki 55 this summer with a supply so limited that owner Suntory Holdings Ltd. will release only 100 bottles. The price: a mere 3 million yen ($27,600).
Avocado crime soars ahead of America’s Super Bowl; Gangs muscle in on Mexico’s lucrative ‘green gold’ fruit business
Jude Webber and Emiko Terazono – FT
As Americans prepare to tuck into their guacamole, a staple of Super Bowl viewing parties, ahead of this weekend’s football championship, avocado growers in Mexico are guarding against criminal gangs eager to cash in on a fruit dubbed “green gold”.