FirstFT: Today’s top stories

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The heads of Robinhood, Citadel, Melvin Capital and Reddit, along with Reddit day trader “Roaring Kitty”, testified before the US House regarding the short squeeze in GameStop shares last month that was fuelled by online traders.

Robinhood chief executive Vlad Tenev — the main target for recriminations — admitted to the House Committee on Financial Services on Thursday that the trading platform would not have been immediately able to meet a $3bn capital call from its equity clearinghouse on January 28. The admission appeared to contradict earlier comments he had made that the company did not have a liquidity issue.

Robinhood ultimately restricted trading in several securities to reduce the capital it needed to post to the clearinghouse. Tenev apologised for the events surrounding its suspension of trading in what he called a “black swan” event.

Lawmakers returned throughout the hearing to the practice of payment for order flow, under which market makers such as Citadel Securities pay retail brokers to execute their customers’ trades.

Ken Griffin, Citadel Securities’ chief executive, defended the practice, saying payment for order flow was an “important source of innovation in the industry” in the drive towards zero-commission trading.

He also adamantly denied that his company and Robinhood had co-ordinated when the app limited trading in GameStop and other heavily shorted stocks. “Let me be perfectly clear, absolutely not,” Griffin said. (FT)

Line chart of Share price ($) showing GameStop shares slide as hearing progresses

Coronavirus digest

Tim Harford asks, can we afford to pay for catch-up tuition for children learning remotely during the pandemic? Telling staff to “buck up” during lockdown is bound to backfire, writes Lucy Kellaway. Keep up to date with our coronavirus live blog.

In the news

UK to launch science research agency An £800m agency to back “high-risk, high-reward” scientific research championed by former Number 10 adviser Dominic Cummings will be formally launched on Friday. The agency will be charged with funding “cutting-edge areas of research” to give Britain a lead in the industries of the future. (FT)

Millennium becomes top hedge fund investor in Spacs Izzy Englander’s Millennium Management increased its investments in blank-cheque companies almost six-fold last year to $4.4bn, making it the top hedge fund buyer of such vehicles. (FT)

ECB squashes Deutsche Bank bonus plans The European Central Bank has shot down Deutsche Bank’s plans to increase its bonus pool by more than a third after Germany’s largest lender reported a small profit for the first time in six years. (FT)

China’s clampdown on Jack Ma’s Ant boosts rivals China’s crackdown on Jack Ma’s Ant Group has boosted rival lenders that charge higher interest rates, raising fears that Beijing’s drive to lower credit risk could spur a wave of defaults. Six online lending platforms told the FT they experienced an uptick in business after Ant’s $37bn IPO was pulled. (FT)

Column chart of Outstanding credit lent by internet finance platforms to consumers (Rmb tn) showing Online consumer lending in China has exploded

Apollo appoints ex-SEC chair The appointment of Jay Clayton is the latest in a series of governance reforms that the Wall Street group has taken as it attempts to quell investor disquiet over professional ties between its billionaire co-founder Leon Black and the late Jeffrey Epstein. (FT)

US open to Iran nuclear talks Washington has offered to attend joint talks with Iran on its nuclear programme as the Biden administration seeks to deliver on its promise to rejoin the 2015 accord. Joe Biden also spoke with Israel’s prime minister for the first time since taking office. The US president’s relationship with Riyadh has been complicated by last week’s aerial attack by Yemen’s Iran-aligned Houthi rebels. (FT)

Nasa’s ‘Perseverance’ lands on Mars The most sophisticated vehicle sent from Earth to the red planet has landed successfully. For the next two years, the car-sized vehicle will search for signs of life, launch a helicopter and prepare the way for human visits. (FT)

One of the first images sent back from the surface of Mars soon after the craft landed on Thursday One of the first images sent back from the surface of Mars soon after the craft landed on Thursday © NASA/AFP via Getty Images

The days ahead

Economic data The UK’s public finances will be under scrutiny on Friday as government spending continues to rise on falling tax revenues and the high cost of pandemic support schemes. Chancellor Rishi Sunak will announce that he is delaying a final report on a review of business rates. Surveys of purchasing managers are expected to point to a recovery in the US but a recession in the eurozone. (FT, WSJ)

Column chart of Public sector net debt excluding public sector banks as % of output, UK, financial year ending March showing UK debt to GDP has reached levels last seen in the early 1960s

Boris Johnson hosts G7 At the virtual gathering on Friday, the UK prime minister will push for Covid-19 vaccine distribution in “every single country” around the world. The summit will be Joe Biden’s first multilateral meeting as US president. (Independent)

Earnings round-up Deere & Company, Hermès, Renault, NatWest, and Allianz are set to report. (FT)

Niger run-offs Niger’s presidential election is headed to a run-off on Sunday after the country’s ruling party candidate failed to secure enough votes in the first round. (DW)

What else we’re reading

Bill Gates: My green manifesto The billionaire philanthropist writes that in conversations about climate change, one question often comes up: “How can I help?”. He outlines four bold ideas to help businesses make a measurable difference. John Thornhill argues that it is ironic that Gates, foremost among techno-optimists, bets that revolutionary hardware can save the planet. (FT)

Bill Gates: ‘The problem is simple: we can’t afford to release more greenhouse gases’ Bill Gates: ‘The problem is simple: we can’t afford to release more greenhouse gases’ © Cerro Dominador Solar Project #1, Atacama Desert, Chile’ (2017), by Edward Burtynsky

London landlords’ burden of buy-to-lets Across the UK, the appeal of buy-to-let purchases has waned as residents left central London in droves, either moving to more suburban areas or back in with family during the pandemic, delivering a blow to the once-thriving market. (FT)

Investing in Europe To investors, continental Europe can sometimes present a face only a mother could love, writes Martin Sandbu. But there is a bullish case to be made. Transformations are afoot in the bloc that will have a strong impact on fundamental drivers of the economy and stock market valuations. (FT)

Big Tech versus journalism In trying to force a settlement between the news industry and Big Tech, did the Australian government save journalism — or break it? With Facebook and Google taking radically different approaches, the consequences are unclear for other news groups. (FT)

Facebook and Google's rapid growth in Australia

Why the glut of live football is a lockdown lifesaver Average audiences for BT Sport’s Premier League matches are up 13 per cent, while viewing numbers across all the channel’s sports events are up 51 per cent. Matches, and online discussions of them, have taken on added significance for fans stuck at home. (FT)

Podcast of the day

Rachman Review: The world in review In a special retrospective episode, Gideon Rachman looks at some of his favourite podcast conversations that illuminate the state of geopolitics, asking whether the pandemic has permanently changed the world. (FT)

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