$7 Trillion Worth of Stocks Are Exposed to Crypto Risks

Oct 15, 2021

First Read

$53,806/$300,000 (17.9%)

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Morningstar Scaling Up Against Industry Dominators
Chicago Index Firm Sees Growth in ESG and Delivering Value to Clients
John Lothian – John Lothian News

The index business is dominated by three big companies: Dow Jones Indexes, FTSE Russell, and MSCI; but there is a Chicago index company that has big plans to advance and scale up its business to bring more value to index clients and leave more money in the pockets of investors. Former FTSE Russell executive and now Morningstar Index Managing Director Ron Bundy is charged with the evolution and growth of Morningstar Indexes.

Morningstar has been in the index business for about 20 years, said Bundy, who joined the firm in December of 2019. Bundy said Morningstar is leveraging its well-respected research capabilities to develop investable products like ETFs and mutual funds. Bundy’s plan is to bring Morningstar’s already immense index capabilities to scale to be able to offer a full suite of beta benchmarks. He wants to scale Morningstar’s intellectual property and bring “exceptional value” to customers. Already, Bundy says, Morningstar is one of the fastest growing index firms in the world.

To read the rest of this story, go here.

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CME Clearing Project Seeks Sustainable Solutions
Suzanne Cosgrove – John Lothian News

Investor interest in sustainable investments is expanding rapidly. A survey of 179 global asset owners published by FTSE Russell on October 7 found that more than 84% are implementing or evaluating sustainable investments in 2021, up from 53% in 2018. But with uniform criteria of those investments’ “green” attributes a work in progress, CME Group has jumped into the fray with its Sustainable Clearing Project.

CME Group’s Owain Johnson, global head of research for the exchange operator, says the Sustainable Clearing Project, launched on September 27, is a solution to a problem futures commission merchants increasingly face as governments and corporate clients tighten up their regulations around ESG (environmental, social, and governance) investments.

To read the rest of this story, go here.

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Hits & Takes
John Lothian & JLN Staff

Verena Ross has been confirmed by the Council of the European Union as the chair of ESMA, the European Securities and Markets Authority. Congratulations to Ms. Ross on her confirmation. — ESMA

The World Federation of Exchanges has issued a call for papers for the WFE’s Clearing and Derivatives Conference 2022. The WFE’s 39th Annual Clearing and Derivatives Conference, hosted by the Malta Stock Exchange, is to be held in Valletta, Malta on April 27-29 2022. — WFE

CFTC Commissioner Dawn Stump will participate in a panel at a New York Law School virtual event on Monday, October 18 at 4 p.m. to 6 p.m. EDT. — CFTC

Euronext Paris CEO Delphine d’Amarzit and Euronext Amsterdam CEO Simone Huis in ‘t Veld have been named to the Financial News list of the 100 most influential women in European finance. Congratulations to them and Euronext for this honor. — LinkedIn

James Brown of Source 360 Ltd and formerly of Deutsche Boerse, Eurex and NYSE Euronext, is walking 100 miles in a charity walk along the Grand Union Canal from Tring to Birmingham from October 14 -17 in remembrance of his friends Graham Threader (GT) and Amelia Roberts.

Graham Threader passed in July of 2018 from leukemia. Amelia Roberts suffered a fatal seizure called Sudden Unexpected Death from Epilepsy (SUDEP).

The charities Brown and his group of 50-something-aged friends are supporting are the UCLH Hematology Cancer Care and The Epilepsy Society. You can learn more and donate HERE.

The FT has published an independently recommended and externally produced review of FT Correspondent Robin Wigglesworth’s book Trillions titled “Trillions by Robin Wigglesworth — tracking the index fund; The story of how a low-cost means of investment democratised finance and perhaps even changed capitalism.” — FT

A WILD representative reported to JLN that WILD received several applications to be board members after yesterday’s mention by Sarah Rudolph here in JLN and in JLN Options.

There were no new donations to the JLN MarketWiki Education GoFundMe campaign yesterday.

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

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The Reddit crowd has found a new tactic in the war against Wall Street: cutting brokers out altogether; ‘When the music stops, there aren’t enough shares to go around…retail investors are trying to stop the music’
Thornton McEnery – MarketWatch
A percolating theme among retail investors came to a boil on Thursday and some meme stocks ended the day simmering Since being knocked out of January’s short squeeze by online brokers trying to avoid margin calls, retail investors have been seeking alternatives to their multi-front war on short selling hedge funds, and after months of research they appear to have found it. Cutting the brokers out altogether.
/on.mktw.net/2YLq3Dc

*****Yes, you can hold your stock at the firm where the stock is held. But you can’t trade it efficiently or when you want. But there are advantages to direct registration for long-term holders.~JJL

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Charting the Trust Deficit in Leaders and Institutions; We’re increasingly skeptical of many of the people and places providing our information, according to new research from Edelman.
Dorothy Gambrel – Bloomberg
Since 2012, Edelman, a Chicago-based public-relations company, has been asking people around the world whom they trust—and whom they don’t. The results from Edelman’s latest Trust Barometer show more things in the latter category than the former. Faith in media is at an all-time low. Trust in companies has declined across all sectors, falling furthest in technology, fashion, and automotive, as well as among all types of societal leaders, especially scientists and community figures. Scientists do remain among the most trusted leaders, with 73% of the survey’s 33,000 respondents expressing confidence in them, whereas government leaders are the least trusted authorities, at only 41%. Here’s a closer look at the survey’s findings:
/bloom.bg/3lHz4Gd

***** Evidently we have used up the trust surplus and have a deficit in trust.~JJL

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How Donald Trump, Elon Musk, and Gwyneth Paltrow Short-Circuit Your Ability to Think Rationally; The sketchy rhetorical tricks of politicians, celebs, and con men—and how they work.
Eric Roston – Bloomberg
If a version of this message sounds familiar, it’s because it contains some of the most common techniques deployed by the authoritarians, con men, bosses, and questionable cultural figures swirling around us. Donald Trump. Turkey’s Recep Tayyip Erdogan. Even Barstool Sports’ Dave Portnoy, Elon Musk, and Gwyneth Paltrow have inadvertently used some of these methods. (Respectively, prejudice, scare tactics, and faux intimacy.)
/bloom.bg/3BKjKOF

***** Interesting story about the power of propaganda and how some people use it. Well worth the read.

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What My Brain Scan Revealed About the Science of Persuasion
Neuroscientists have come a long way in understanding how and when people come around to a different point of view.
Sarah McBride – Bloomberg
What exactly happens when we change our mind? Pursuing this question is how I found myself, one recent morning, lying in a fancy brain scanner known as an fMRI machine and watching cartoons at the Waisman Center at the University of Wisconsin at Madison. On the other side of a glass screen, a technician and two neuroscientists watched me—or, more accurately, watched my brain.
/bloom.bg/3BNcYrs

***** Do the scientists know something about persuasion that I don’t? How can I trust them? See the two stories above.~JJL

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Thursday’s Top Three
Our most-read story Thursday was Reuters’ EXCLUSIVE U.S. SEC opens inquiry into Wall Street banks’ staff communications -sources. Second was Bitcoin Fans Flock to the Futures Market, from The Wall Street Journal. Third was JLN’s Analysis: What Can We Learn From The DOJ’s Latest Spoofing Conviction?, a guest column from Renato Mariotti and Holly Campbell of Thompson Coburn’s White Collar Defense and Investigations group, which was our top story Wednesday.

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MarketsWiki Stats
26,635 pages; 236,026 edits
MarketsWiki Statistics

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Lead Stories

$7 Trillion Worth of Stocks Are Exposed to Crypto Risks
Michael P. Regan – Bloomberg
Exposure ‘creeping’ into institutional investor portfolios; Blockchain, crypto expertise appears in short supply on boards
Attention institutional investors: Whether you’re a bonafide and laser-eyed true believer or a skeptical holdout, the risks from cryptocurrencies could be steadily “creeping” into your portfolio, according to MSCI Inc. At least 52 companies representing $7.1 trillion in market capitalization have some exposure to cryptocurrencies, according to an analysis by MSCI. They range from all-in players like Coinbase Inc. to Bitcoin balance-sheet “hodlers” like Tesla Inc. and MicroStrategy Inc. to those dipping a toe into crypto-market services such as JPMorgan Chase & Co.
/bloom.bg/2YPE0QH

Wall Street, Companies May Have to Give Up More to Settle With SEC; New policy would break from ‘no admit, no deny’ pattern of settlements
Dave Michaels – WSJ
Wall Street regulators said Wednesday they plan to require companies in some cases to admit wrongdoing when they settle civil enforcement actions. The announcement is a return to a policy started during the Obama administration that the Securities and Exchange Commission largely abandoned during the Trump administration. The SEC has historically allowed companies and individuals to settle enforcement probes without admitting or denying the agency’s allegations, a practice that has made some liberal critics question the value of its policing efforts. The Obama-era policy resulted in few settlements involving admissions of wrongdoing.
/bit.ly/30weNLR

How to think about the unstoppable rise of index funds; They deserve scrutiny, not panic
The Economist
The history of modern finance is littered with ideas that worked well enough at small scale—railway bonds, Japanese skyscrapers, sliced-and-diced mortgage securities—but morphed into monstrosities once too many punters piled in. When it comes to sheer size, no mania can compare with that for passive investing. Funds that track the entire market by buying shares in every company in America’s s&p 500, say, rather than guessing which will perform better than average, have attained giant scale. Fully 40% of the total net assets managed by funds in America are in passive vehicles, reckons the Investment Company Institute, an industry group. The phenomenon warrants scrutiny.
/bit.ly/3FRTXGQ

Stablecoin investors may be due a wake-up call; The critical attention being paid to companies such as Tether is a welcome development
Gillian Tett – FT
A dozen years ago, during the 2008 financial crisis, it occurred to me that the best way to make a financial system safe, amid wild innovation, was for investors and regulators to suffer regular, small “wake-up” calls. These events, like the porridge in the Goldilocks tale, would be just “hot” enough to hurt, but not so scorching that they created permanent burns.
/on.ft.com/3j1wmcT

Fed’s Embarrassing Ethics Scandal Spurs Calls for More Oversight
Craig Torres, Steve Matthews and Christopher Condon – Bloomberg
The Federal Reserve’s most embarrassing ethics scandal in years has cast a harsh spotlight on the world’s most powerful central bank and the arm’s-length governance of its 12 regional branches. Their chiefs are among America’s most influential public officials, helping to set borrowing costs for the $23 trillion economy.
/yhoo.it/3aEC5kw

The World Federation of Exchanges Publishes the Call for Papers for the WFE’s Clearing and Derivatives Conference 2022
WFE
The World Federation of Exchanges (“WFE”), the global industry group for CCPs and exchanges has published a Call for Papers for the WFE’s Clearing and Derivatives Conference 2022. The World Federation of Exchanges is organising its 39th Annual Clearing and Derivatives Conference, hosted by the Malta Stock Exchange, to be held in Valletta, Malta on 27-29 April 2022. If a physical meeting is not possible, the meeting will be held virtually as in 2021.
/bit.ly/3by4ZEI

SEC Set to Allow Bitcoin Futures ETFs as Deadline Looms
Katie Greifeld, Vildana Hajric and Ben Bain – Bloomberg
The Securities and Exchange Commission is poised to allow the first U.S. Bitcoin futures exchange-traded fund to begin trading in a watershed moment for the cryptocurrency industry, according to people familiar with the matter.
/yhoo.it/30kzoCC

Bitcoin Is Jumping. A Futures ETF May Finally Be Here.
Barron’s
A Bitcoin exchange-traded fund has long been seen as the Holy Grail for crypto enthusiasts. The wait may finally be over. The Securities and Exchange Commission is set to allow the first U.S. Bitcoin futures ETF to begin trading next week, Bloomberg reported early on Friday. The proposals by ProShares and Invesco are based on futures contracts, differentiating them from those previously rejected, the report noted.
/bit.ly/3mZK01q

Baltic Tech Hub Plans Sweeping Crackdown on Crypto Firms
Aaron Eglitis – Bloomberg
Estonia’s anti-money laundering chief vows tougher supervision; Crypto transactions equivalent to 40% of cross-border flows
After riding the initial wave of the digital-currency revolution half a decade ago, Estonia is cracking down on the ballooning industry in a cautionary tale for would-be crypto hubs. With a key review of its anti-money laundering enforcement policies by the Council of Europe slated for early next year, the government of the Baltic nation is weighing firmer oversight of what’s become a popular European center for digital coin trading and the accompanying infrastructure.
/bloom.bg/3vdAjQG

Tax officials tighten their grip on crypto; Investors tempted to try evading tax should beware of the authorities’ growing reach
Emma Agyemang and Eva Szalay – FT
In the past four years, the island of Puerto Rico has quietly become a centre for cryptocurrency billionaires and other digital asset holders for one reason: tax. A US territory, the island has made a play for a piece of the tax haven pie since 2012, when it passed two laws that resulted in a drastic reduction in rates.
/on.ft.com/3BRAEva

Finastra and Bakkt announce plans to enable crypto trading for community banks and credit unions; The strategic partnership enhances digital banking services with digital asset marketplace and wallet functionality
Finastra and Bakkt
Finastra and Bakkt today announced plans to make Bakkt’s digital marketplace and wallet available through Finastra’s open developer platform and app store, FusionFabric.cloud. Through the partnership, Bakkt, the trusted platform that enables consumers to buy, sell, store and spend a range of digital assets, including bitcoin, will be available to customers of community banks and credit unions, as part of Finastra’s Fusion Digital Banking solution. The app, which will soon be available, will enable financial institutions to offer their account holders access to the growing crypto market without having to leave their existing, trusted banking environment.
/prn.to/3mZkHMT

Libor deadline prompts surge in CLO issuance; The loan-backed securities will be pegged to a new interest rate benchmark from 2022
Joe Rennison – FT
Managers of bonds backed by pools of risky loans to indebted companies are rushing to get deals done before the Libor interest rate benchmark underpinning the market begins to fade away next year.
/on.ft.com/3p1Cgid

Verena Ross appointed Chair of the European Securities and Markets Authority
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, next Chair will be Verena Ross. The appointment was confirmed by the Council of the European Union at its meeting today in Brussels. Ms Ross will take up her position on 1 November 2021.
/bit.ly/3FM7P5w

The World’s Rich and Powerful Are Stashing $500 Billion in This Tax Haven; South Dakota has no members in the Bloomberg Billionaires Index of the world’s richest 500 people, yet it shelters some half a trillion dollars of wealth in trusts.
Anders Melin – Bloomberg
There’s no telling where the vast fortunes hide on tree-softened Phillips Avenue here in Sioux Falls. No billionaires in Brioni tuck into the gravy-drenched roast beef sandwich at the Diner. No dark-windowed Escalades cruise past the Child’s Play Store, where the owner sports a pin that proclaims her a “glow getter.”
/bloom.bg/3BDYKt3

Making Fuel From Straw Is About to Become a Thing in Europe
Rachel Graham – Bloomberg
Swiss chemicals maker wants to license its fuels technology; Clariant technology could be used in chemicals and aviation
Turning bales of straw into ethanol is about to become a highly profitable venture in Europe, according to a firm that just opened a production site in the continent. Clariant AG, a Swiss chemicals maker, just opened a facility in Romania to make so-called advanced biofuels, which use agricultural waste or non-edible crops to make fuels that can be blended into gasoline and diesel. That’s environmentally better than so-called first-generation ethanol currently on the market, which is made from foodstuffs like sugar or corn.
/bloom.bg/2YXt6Zp

Re-thinking liquidity: Study reveals shift in relationship between buy-side and liquidity providers; The buy-side need optionality to ensure maximum access to the liquidity available, and new factors such as remote working, technology and innovations have led them to rethink their sell-side relationships.
Charlotte Decuyper – The Trade
The lessons learnt during the pandemic look set to reshape the liquidity providers of the future. Remote working, greater reliance on cloud technology and the high volatility witnessed early in the pandemic have impacted how the buy-side accesses liquidity. Asset managers are looking to benefit from a wider, and more diverse, pool of counterparties to create greater optionality in how they can execute their investment strategies.
/bit.ly/3FLOrpr

Coronavirus

Why Many Black Americans Changed Their Minds About COVID Shots
Audra D. S. Burch and Amy Schoenfeld Walker – NY Times
By the time vaccines for the coronavirus were introduced late last year, the pandemic had taken two of Lucenia Williams Dunn’s close friends. Still, Dunn, a former mayor of Tuskegee, contemplated for months whether to be inoculated.
/yhoo.it/3mSM9vT

Thousands of Britons May Have Had False Negative Covid Results
Emily Ashton – Bloomberg
Government suspends testing operations at private laboratory; Some 43,000 could have had incorrect negative PCR test results
Around 43,000 people in the U.K. may have wrongly been told their coronavirus test was negative due to errors at a laboratory, the government said. Officials suspended testing at Immensa Health Clinic Ltd.’s laboratory in Wolverhampton, central England, following a probe into reports of people getting negative PCR test results after previously testing positive via lateral flow tests, the U.K. Health Security Agency said on Friday in an emailed statement.
/bloom.bg/3FP0q5t

Covid Scientists Are Under Threat
Jason Gale – Bloomberg
Scientists isolated SARS-CoV-2 and warned of a possible contagion. They developed diagnostic tests and vaccines for Covid-19, and figured out ways to mitigate its threat. Yet, the profession has never been so under siege. One in five scientists surveyed by the Australian Science Media Centre reported death threats or threats of physical or sexual violence after speaking to the media about Covid-19. A subsequent Nature survey of 321 scientists found 15% experienced death threats and 22% received threats of physical or sexual violence.
/bloom.bg/3DIVYDA

Congo Has Vaccinated Less Than 0.1% of its 100 Million People
Michael Kavanagh and Antony Sguazzin – Bloomberg
Nation is stepping up its coronavirus inoculation campaign; Low take-up due to vaccine hesitancy, apathy, WHO says
The Democratic Republic of Congo, a nation of 100 million people, is stepping up its coronavirus inoculation campaign amid concern that populations that aren’t immunized could spawn mutations that evade vaccines and spread more rapidly.
/bloom.bg/3AIiEll

Italy Introduces Strict Covid Rules for Workers Amid Pushback
Chiara Albanese – Bloomberg
Workers will be asked to show proof of vaccination, take test; Demonstrations are expected across Italy in coming day
Prime Minister Mario Draghi’s government introduced some of Europe’s toughest Covid rules for workers on Friday, sparking scattered protests across Italy. Demonstrations slowed transit at some key hubs. In Trieste, groups of workers arranged an illegal strike, and in Genoa, protesters blocked access to one of the city’s main streets. Overall, though, disruptions were minimal as of midday, with public transportation operating normally.
/bloom.bg/3BFKTm1

Why Pfizer has won the Covid vaccine race but isn’t getting credit; Company’s pandemic share price gains are dwarfed by those of its rivals despite its jab’s stunning success
Tom Braithwaite – FT
This time last year the race to develop Covid-19 vaccines was being run at full pelt, the contenders urged on by fearful citizens and desperate governments. Now it is over: Pfizer won.
/on.ft.com/3BMIy8O

‘Lurching Between Crisis and Complacency’: Was This Our Last COVID Surge?
Emily Anthes – NY Times
After a brutal summer surge, driven by the highly contagious delta variant, the coronavirus is again in retreat. The United States is recording roughly 90,000 new infections a day, down more than 40% since August. Hospitalizations and deaths are falling, too. The crisis is not over everywhere — the situation in Alaska is particularly dire — but nationally, the trend is clear, and hopes are rising that the worst is finally behind us.
/yhoo.it/3n2J50u

Data Concerns Drag Down U.S.-Listed Chinese Brokers; Shares in Futu and Up Fintech fall sharply, after Chinese state media says new privacy laws would pose challenges to them
Anniek Bao – WSJ
Shares in Futu Holdings Ltd. FUTU (-12.41%) and Up Fintech Holding Ltd. (TIGR -21.19%) fell sharply, after Chinese state media said the country’s tough new data-privacy laws would pose challenges for the brokerage firms. The two online brokers, which are listed on the Nasdaq Stock Market, said they placed a priority on legal compliance and protecting customer information.
/on.wsj.com/3j4nTpI

The Unvaccinated May Not Be Who You Think
Zeynep Tufekci – NY Times
Back when a viral pandemic killing millions around the world was just the plot of a scary movie, the film “Contagion” was lauded for how accurately it depicted the way such an outbreak would occur. On the science of viral contagion, it was quite sharp, clearly explaining things like R0 (the measure of how widely one infection could spread to others, on average).
/nyti.ms/3FPrxx7

Exchanges, OTC and Clearing

FEX Global Australia and Mysteel Announce Price Assessment Partnership.
FEX Global
FEX Global Australia and Mysteel today announced the signing of an agreement whereby FEX Global will seek to settle certain FEX benchmark contracts against the Mysteel IOSCO compliant price assessments, subject to regulatory approvals. Brian Price, FEX Global Executive Director, said “Mysteel has been assessing prices in the domestic Chinese metals market since 2000, and has built a reputation for producing fair and transparent price assessments.”
/bit.ly/2Z1ry0m

LSEG bolsters new global FX business following Refinitiv takeover; The exchange has revamped the leadership within its newly acquired FX business including two new appointments from CME Group and Record Currency Management.
Annabel Smith – The Trade
The London Stock Exchange Group (LSEG) has bolstered its newly acquired FX business with two senior new hires and a leadership team reshuffle. As part of the reorganisation, the former head of Refinitiv’s FX trading execution platform, FXall, Jill Siegelbaum, will head up strategic development and partnerships, responsible for supporting the long-term growth of the FX business, in a newly created role.
/bit.ly/3p69YD6

Audacia lists on Euronext Growth Paris
Euronext
Euronext today congratulates Audacia, a leading private equity management company in France, on its listing on Euronext Growth Paris (ticker code: ALAUD).
/bit.ly/3DHZ0Yt

OVHcloud lists on Euronext Paris
Euronext
Euronext today congratulates OVHcloud, the primary European provider of cloud services, on its listing on Compartment A of the regulated market in Paris (ticker code: OVH).
/bit.ly/3FNoKEJ

Eurex Clearing enhances C7 with new Securities Clearing Service (SCS)
Eurex
The C7 clearing platform was designed to meet a changing regulatory environment. It offers the scalability and flexibility needed to meet evolving product opportunities and high-volume demand. A unique system designed to support the clearing of derivatives and securities on a common architecture.
/bit.ly/3FTr4ua

SGX and UOBAM partner to launch yield-focused iEdge-UOB APAC Green REIT index, supported by GRESB data
SGX
Index tracks the performance of APAC-listed high-yield REITs with positive environmental attributes based on the GRESB assessment framework; The launch comes as global investors increasingly consider environmental factors in investment decision-making while continuing to hunt for yield
Singapore Exchange (SGX) and UOB Asset Management (UOBAM) today jointly launched the iEdge-UOB APAC Yield Focus Green REIT Index that tracks Real Estate Investment Trusts (REITs) listed across the Asia-Pacific region with higher dividend yields and positive environmental attributes.
/bit.ly/3p289at

Fintech

Digital consultant West Monroe selling 50% stake; The deal values the Chicago-based company at about $2.5 billion.
Bloomberg
MSD Partners, the investment firm that grew out of Michael Dell’s family office, has agreed to take a 50% stake in digital consulting firm West Monroe. The deal values the Chicago-based company at about $2.5 billion, according to people familiar who asked to not be identified because that information wasn’t public.
/bit.ly/3oYZupa

Walmart, With Eyes on Amazon, Tries to Build a Fintech Startup
Sarah Nassauer and Peter Rudegeair – WSJ
Walmart Inc. is building a new weapon in its war with Amazon . com Inc.: a fintech startup.
The retail giant is helping launch a new company, helmed by two former Goldman Sachs Group Inc. executives, that aims to provide financial services for its millions of customers and workers. The firm is a joint venture with Ribbit Capital , known for investing in Robinhood Markets Inc. and other digital financial businesses.
/on.wsj.com/3j5k9nC

KBC AM fixed income dealer departs for Tradeweb product development role; New product development manager with Tradeweb’s AiEX and workflow solutions team has spent the last 15 years as a buy-side fixed income dealer at KBC Asset Management.
Annabel Smith – The Trade
A former buy-side fixed income dealer at KBC Asset Management has left the company after 15 years to join Tradeweb in a senior product development role. According to an update on social media, Joeri Wouters has left KBC to join the fixed income trading platform provider asa product development manager in its AiEX and workflow solutions team.
/bit.ly/3j513hH

Chinese online brokers Futu and UP Fintech face regulatory risks, People’s Daily website says
Samuel Shen and Emily Chow – Reuters
U.S.-listed Chinese online brokerages Futu Holding (FUTU.O) and UP Fintech Holding face regulatory risks as China’s new personal data privacy law takes effect on Nov. 1, the official People’s Daily said in an analysis on its website.
/reut.rs/3mYnO84

Cybersecurity

Cybersecurity Experts Sound Alarm on Apple and E.U. Phone Scanning Plans
Kellen Browning – NY Times
More than a dozen prominent cybersecurity experts on Thursday criticized plans by Apple and the European Union to monitor people’s phones for illicit material, calling the efforts ineffective and dangerous strategies that would embolden government surveillance.
In a 46-page study, the researchers wrote that the proposal by Apple, aimed at detecting images of child sexual abuse on iPhones, as well as an idea forwarded by members of the European Union to detect similar abuse and terrorist imagery on encrypted devices in Europe, used “dangerous technology.”
/nyti.ms/2YT2LLv

Google launches new cybersecurity defenses
Grant Gross – Yahoo News
With cyberthreats growing, Google has launched a Cybersecurity Action Team with the goal of “supporting the security and digital transformation of governments, critical infrastructure, enterprises, and small businesses,” according to the company.
Google wants the new group to be the world’s “premier security advisory team,” the company said in a blog post. While the team will support Google Cloud customers, its research, security blueprints, and other outputs will be available for those who aren’t customers as well, a company spokeswoman said.
/yhoo.it/3ne0LX5

Software engineers and developers among most in-demand cybersecurity roles
Security Magazine
The cybersecurity workforce extends around the globe, with countries placing emphases on the importance of securing the cyber landscape. Veriff has analyzed the global workforce, revealing the companies and countries leading the way in cybersecurity. The study also surveyed the most in-demand cybersecurity job roles.
The report, published in a blog titled “Companies Leading the Way in Cyber Security,” compiled data about the top cybersecurity companies, the highest revenue companies and in-demand cybersecurity roles, the data from which was found across global job boards.
/bit.ly/3n0vwP1

Remote working sees cybersecurity questions soar on Stack Overflow
Mayank Sharma – TechRadar
Popular developer Q&A platform Stack Overflow has shared that the shift to remote work has prompted more cybersecurity questions across platforms than any breach.
To do their bid for the cybersecurity awareness month, Stack Overflow analyzed the cybersecurity topics across the developer collaboration platform to track the evolution of security conversations within the developer community.
/bit.ly/3aEXwBM

Cryptocurrencies

Crypto exchange Coinbase pitches regulatory overhaul
Kellie Mejdrich – Politico
Cryptocurrency giant Coinbase on Thursday unveiled a proposal that would place digital assets under an entirely new regulatory framework with oversight by a single agency, in what would be a dramatic shift from current policy in the United States.
/yhoo.it/3aGwMRq

Bitcoin futures premium doubles ahead of SEC’s potential approval of an ETF next week
Matthew Fox – Business Insider
The premium tied to bitcoin futures contracts has doubled this month as investors anticipate the SEC’s potential approval of several bitcoin ETFs over the next two weeks. The SEC is set to either approve, deny, or delay bitcoin ETF proposals from ProShares, Valkyrie Investments, Invesco, and VanEck, which were all submitted to the regulatory agency in August.
/yhoo.it/3BJXDrQ

What Jamie Dimon Doesn’t Understand About Bitcoin
Daniel Kuhn – Coindesk
On Monday, speaking at an event hosted by the Institute of International Finance, JPMorgan Chairman and CEO Jamie Dimon once again said the outlook for bitcoin is grim. At various times in the past Dimon has gone on record calling bitcoin “fool’s gold” and “a fraud.” Dimon doesn’t understand.
/yhoo.it/3AFkbbR

Bloomberg and Kaiko Issue First Financial Instrument Global Identifiers for Crypto Assets; FIGI enables interoperability, transparency, and efficiency between industry participants
Bloomberg
Bloomberg and Kaiko are pleased to announce the issuance of the first series of Financial Instrument Global Identifiers covering crypto assets. The Financial Instrument Global Identifier (FIGI) is an open standard of the Object Management Group (OMG), for the issuance of unique identifiers assigned to financial instruments including equities, derivatives, bonds, municipals, and currencies. In September 2021, FIGI was accredited as a U.S. national standard by the American Standards Committee, X9.
/bloom.bg/30qXA6y

Crypto is ‘not a fad’ says Morgan Stanley CEO Gorman, ‘It’s not going away’
Mark DeCambre – MarketWatch
It’s Jamie versus James. James Gorman, CEO of Morgan Stanley doesn’t know where prices of bitcoin or its ilk will be in the coming days but he knows one thing.
/yhoo.it/2YXrNtt

Coinbase Calls for a Crypto Czar to Oversee the Industry. That’s a Tall Order.
Daren Fonda – Barron’s
Coinbase Global, one of the largest cryptocurrency brokerages, is calling on Congress to create a new crypto czar that would oversee the industry. Coinbase (ticker: COIN) issued a policy proposal on Thursday, asking Congress to craft entirely new laws for the industry, including a definition of digital assets and a single regulator that would oversee “Marketplaces for Digital Assets,” or MDAs.
/bit.ly/3j6U9sd

Hundreds of Banned Crypto Miners Were Siphoning Power at China’s State Firms
Bloomberg News
Two provinces discover miners using SOE, university resources; Government broadened ban on crypto transactions last month
China’s drive to root out cryptocurrencies has uncovered hundreds of miners who were using electricity at public institutions, a development that comes as the nation struggles with a power crunch. Zhejiang and Jiangsu provinces recently started targeting miners who were consuming the resources of state-owned enterprises, government agencies, and universities and research institutes, according to a government statement and media reports that did not name the entities.
/bloom.bg/2XjlP5s

Bitcoin Futures Frenzy Erupts as Day Traders Pile Into ETF Bets
Justina Lee – Bloomberg
Premiums for bullish derivatives are rising across exchanges; SEC seen poised to allow a futures-based fund in coming days
Bitcoin-to-the-moon traders are back with a vengeance as demand jumps for bullish contracts across crypto exchanges. The world’s largest digital currency rose about 3% to more than $59,000 on Friday — taking this month’s rally to over 35% — after Bloomberg News reported the U.S. Securities and Exchange Commission looks poised to allow the country’s first futures-based cryptocurrency ETF.
/bloom.bg/2YSTFOR

DeFi Upstart dYdX Briefly Overtook Coinbase in Crypto Trading
Olga Kharif – Bloomberg
Perpetual futures, coin rewards fuel trading surge on platform; Coinbase co-founders invested in decentralized finance rival
In the blink-and-you’ll-miss-it world of decentralized finance, the cryptocurrency exchange dYdX stands out for more than just its unusual name, which is derived from the mathematical notation for a derivative.
/bloom.bg/3lJLhu5

Australian pension fund considers crypto investment; Other retirement vehicles including Canada’s CDPQ have also bought in to the digital asset space
Eva Szalay – FT
One of Australia’s largest pension funds has said it may make small investments in the cryptocurrency sector, in another sign that retirement vehicles are taking the digital asset space seriously despite the regulatory risks.
/on.ft.com/30jonl1

Bitcoin exchange traded funds on track for US debut; Funds to be based on futures contracts rather than the cryptocurrency spot price
Steve Johnson – FT
The first US-listed bitcoin exchange traded funds are on track to launch next week, marking the culmination of an eight-year battle to win approval from the Securities and Exchange Commission.
/on.ft.com/3j5uZtL

Politics

White House Targeting Economic Risks From Climate Change
Josh Boak – AP
The Biden administration is taking steps to address the economic risks from climate change, issuing a 40-page report Friday on government-wide plans to protect the financial, insurance and housing markets and the savings of American families.
/bloom.bg/2YQKkaq

Brazil Covid inquiry set to recommend indictment of Jair Bolsonaro; Congressional probe alleges missteps and misconduct in deaths of 600,000 Brazilians during pandemic
Bryan Harris – FT
More than 40 Brazilian politicians and officials, including President Jair Bolsonaro, are expected to be recommended for indictment next week when a congressional inquiry into the government’s handling of the Covid-19 pandemic wraps up.
/on.ft.com/3FOewE8

Biden to Press Climate Agenda on Wall Street; White House lays out finance-related initiatives ahead of U.N. summit on climate change in Glasgow
Timothy Puko and Paul Kiernan – WSJ
Calling climate change a systemic risk to the financial system, the White House will release a report Friday outlining its strategy for new rules that could affect investment disclosures, insurance policies and home loans.
/on.wsj.com/3p71Fam

Regulation

UBS to pay $500,000 penalty for failing to retain certain audio recordings; About 2.76% of total US recorded volume during 8 July 2019 to 23 December 2019 was deleted prematurely due to an analyst’s error.
Wesley Bray – The Trade
The Commodity Futures Trading Commission (CFTC) has issued an order simultaneously filing and settling charges against UBS for failing to retain specific audio recordings for the time required under CFTC regulations. UBS, through the order, is required to pay a civil monetary penalty of $500,000 and to cease and desist from further violations of CFTC regulations, as charged.
/bit.ly/3p6pfUE

ASIC releases 2020 – 21 Annual Report
ASIC
In the 2020 – 21 financial year, Australia’s financial system faced almost unprecedented challenges as a result of the ongoing COVID-19 pandemic. During this difficult period, ASIC remained focused on its vision of a fair, strong and efficient financial system for all Australians.
/bit.ly/3DGCuiM

SEC Reopens Comment Period for Listing Standards for Recovery of Erroneously Awarded Compensation
SEC
The Securities and Exchange Commission today reopened the comment period on proposed rules for listing standards for the recovery of erroneously awarded compensation.
/bit.ly/3j6oyqn

CFTC Sanctions UBS AG $500,000 For Failing to Retain Certain Required Audio Recordings
CFTC
The Commodity Futures Trading Commission today issued an order simultaneously filing and settling charges against UBS AG, a provisionally registered swap dealer, for failing to retain certain audio recordings for the time required under CFTC regulations. The order finds that as a result of failures in UBS’s audio retention systems, the firm deleted over 1,000 hours of audio data after one day, including voice recording files that were required by CFTC regulations to be retained for one year. The order requires UBS to pay a $500,000 civil monetary penalty and to cease and desist from further violations of CFTC regulations, as charged.
/bit.ly/3FPvBxn

Investing and Trading

Big banks warn that Fed-induced market volatility is coming soon
Brian Cheung – Yahoo Finance
Market volatility has dipped since September, but the nation’s top bankers are warning that choppiness could be coming back soon — thanks to the Federal Reserve. In earnings calls this week, executives at the largest U.S. banks said price swings could be back as the central bank attempts to slow (and then reverse) its easy money policies launched last year to insulate the economy from the effects of the COVID-19 pandemic.
/yhoo.it/3pdjEf0

Glencore’s U.K. Gas Blowup Won’t Spoil Blowout Year; Difficulties at a British gas supplier are a blip compared to its giant copper and coal profits
Chris Bryant – Bloomberg
U.K.-listed miner and commodities trader Glencore Plc has fingers in many pies, so I wasn’t greatly surprised to learn it now also has a minor role in Britain’s ongoing energy crisis.
/bloom.bg/3p6e5iI

It Pays to Not Pay Your Debts; Also systems-first investment, ESG miscellany and Jake Gyllenhaal as Bill Gross.
Matt Levine – Bloomberg
The way business works is that you have some assets and they’re funded by some liabilities. The assets generate some income which you use to pay back the liabilities. You borrow some money, you buy a machine for your factory, the machine makes widgets, you sell the widgets, you get money, you pay back the money you borrowed, you have some money left over as profit, life is good. One way to make more profit is to make the assets worth more, to make them produce more income; if you can tune up the widget machine to make more widgets then you will have more profit.
/bloom.bg/3aDDzv9

Smart beta holds its own despite popularity of thematic ETFs; Factor-based ETFs’ US market share has remained at nearly 20% despite heavy marketing of some other strategies
Jackie Noblett – FT
Thematic strategies have become darlings of the ETF industry, with managers pumping out products that seek to combine outperforming stocks and a story that investors can easily understand.
/on.ft.com/3FNpuKb

Oat Rally Reaches Records Amid Drought; Severe dry weather hurts supply, driving up prices for breakfast staple and alternative-milk ingredient
Hardika Singh – WSJ
Drought has roiled power markets and lifted lumber prices. Now it is hitting breakfast. Oat futures have climbed to all-time highs thanks to the severe dry weather that has parched big growing regions, including North Dakota and the Canadian prairies. At around $6.30 a bushel on Thursday, oat futures are more than twice as expensive as they were this time last year and the year before.
/on.wsj.com/3j0jy6P

Close to 40% of U.S. Households Say They Face Financial Difficulties as Covid-19 Pandemic Continues; More than 30% of people say their situation is worse, survey finds; 19% of households have depleted their savings
Jennifer Calfas – WSJ
Nearly 40% of U.S. households said they faced serious financial difficulties in recent months of the Covid-19 pandemic, citing problems such as paying utility bills or credit card debt, according to a recent poll. About one-fifth have depleted all of their savings.
/on.wsj.com/3DHunm7

Environmental, Social and Corporate Governance

Shell’s head of gas and renewables to leave company after 25 years; Maarten Wetselaar’s departure comes as European oil majors shake up teams leading energy transition
Tom Wilson – FT
Shell’s head of gas and renewable energy is leaving the business after 25 years in the latest shake up in the teams leading the transition towards cleaner fuels at Europe’s energy majors.
/on.ft.com/3lJOLNb

The ‘Three Ds’ Driving the Energy Transition
Renewable Energy SmartPod
Bob Yeager, President of Emerson’s Power and Water Solutions, joins the show to outline the three Ds that will play a huge role in future of the energy industry: Decarbonization, Decentralization and Digitalization (3:41).
/bit.ly/3DKrEbK

Investors need to dig deeper into climate conundrum; BHP vote on climate plans shows up growing pressure on shareholders to increase their scrutiny
Cat Rutter Pooley – FT
The world of climate engagement is hotting up. Until now, companies have seemed to get credit just for offering investors a vote on climate change policies. Net zero plans have been waved through. Glencore, one of the world’s largest coal miners, received 94 per cent support for its proposals when it put them to a vote in April.
/on.ft.com/3j4Z8cU

Institutions

China Banks Embrace Derivatives That Burned European Rivals
Bloomberg News
Investors lured by bond-like annual returns of as much as 20%; Officials have tightened scrutiny of trades in recent months
A trade that’s already snared several European banks is now drawing the attention of regulators in China. China’s investment banks are rushing to sell a complex derivative — similar to the products that cost Natixis SA almost $300 million in 2018 — to the country’s institutions and wealthy investors. It promises a bond-like coupon linked to an equity index with double-digit returns as long as markets don’t crash.
/bloom.bg/3lJv748

Wall Street Bosses See Windfall Lasting, Fueling Pay and Hiring
Max Reyes – Bloomberg
Citi says it’s been adding dealmakers amid frenzy of takeovers; JPMorgan sees higher compensation costs to reward performance
The dealmaking and trading windfall that the pandemic unleashed on Wall Street firms just keeps piling up as the economy recovers — and U.S. banking leaders are pointing to signs that it’s far from over. A fresh round of earnings reports by five of the nation’s largest lenders included revenue hauls from investment banking at Morgan Stanley and Bank of America Corp. that were at or near record levels, and dramatic surges in equities trading across the industry, such as a surprising 40% jump at Citigroup Inc. Closely watched Goldman Sachs Group Inc. reports its third-quarter results Friday.
/bloom.bg/3aHSV1K

Fees come first when assessing fund managers; Charges are far easier to assess than skin in the game
Merryn Somerset Webb – FT
Should all fund managers in the UK have skin in the game? And should they tell us just how much skin? There are good reasons to believe they should. Think about how fund management companies make money. They all charge ad valorem — their fees are calculated as a percentage of the value of the assets they have under management and taken direct from your holdings every year.
/on.ft.com/3AIm33B

Execs peeved at Goldman CEO for moving to floors with ‘rank-and-file’ workers
Lydia Moynihan – NY Post
Goldman Sachs CEO David Solomon’s long-delayed initiative to move senior executives at the firm’s headquarters closer to the rank-and-file has finally come to fruition — and it’s rankling higher-ups and underlings alike, sources told The Post.
/bit.ly/2YRUKXU

Regions

China’s Central Bank Says Inflation Risks Are Controllable
Bloomberg News
China’s inflation risks are “controllable” and while rising costs may hurt small businesses, authorities have increased support for those types of firms, central bank officials said.
/bloom.bg/3lGEOQO

Miscellaneous

Simplifya Expands Footprint to 23 States with Launch of New Compliance Solutions for West Virginia Cannabis Owners and Operators ; Company’s Core Operational Compliance Solutions Help Cannabis Operators in the Emerging Medical Marijuana Market Stay Compliant
Simplifya
Simplifya (“Simplifya” or “the Company”), the leading regulatory and operational compliance advanced technologies and software platform serving the cannabis ecosystem, announced that its suite of essential compliance solutions for cannabis businesses is now available in West Virginia, expanding the reach of the company’s footprint to 23 states. The suite of cloud-based compliance services available includes Simplifya Standard Operating Procedures (SOPs), Simplifya Smart Cabinet and Simplifya Self Audit, and are designed to help cannabis operators remain compliant and manage risks in West Virginia’s emerging medical marijuana market.
/bit.ly/2YXMQMp

Review: In ‘The Lehman Trilogy,’ a Vivid Tale of Profit and Pain; The play, tracing the rise and fall of the fabled financiers, finally opens on Broadway after successful runs in London and at the Park Avenue Armory.
Laura Collins-Hughes – NY Times
Much of what happens in “The Lehman Trilogy” is invisible to the eye, which is not the way prestige drama usually works onstage. Directed by Sam Mendes, this British import, which reaches across 164 years of American history to trace the family saga behind the fallen financial powerhouse Lehman Brothers, was a scalding-hot ticket during a brief prepandemic run at the Park Avenue Armory. Yet it offers almost nothing in the way of spectacle, and only the slightest of costume changes: a top hat here, a pair of glasses there.
/nyti.ms/3mZ12Nc

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