An age of real wealth destruction

Jun 16, 2022

First Read

Hits & Takes
John Lothian & JLN Staff

The U.S. Securities and Exchange Commission yesterday announced it is requesting information and public comment related to activities of certain “information providers,” i.e. index providers, model portfolio providers and pricing services. The commission wants to see what these providers do, whether they are providing “investment advice,” and whether they are registered appropriately.

SEC Chairman Gary Gensler and Commissioner Caroline A. Crenshaw issued statements about the request for information, which can be found here (Gensler) and here (Crenshaw).

Yesterday the SEC charged a “Millionaire Maker” author with selling securities in unregistered oil and gas offerings. The SEC charged Loral L. Langemeier and her company, Live Out Loud, Inc. (“LOL”), with selling securities in unregistered oil and gas offerings. This should have been easy to spot right away. Never invest in a company with the acronym “LOL” as the joke will be on you.

Late yesterday afternoon, ADMIS held a retirement party for outgoing CEO Tom Kadlec on the rooftop deck of the CBOT Building at a well attended event. ADM Chairman Juan R. Luciano spoke, as did John Stott, the man who is replacing Kadlec. Of course, Kadlec spoke as well, as did the man he reported to at ADMIS, Ray Young, the ADM vice chairman who oversees the ADMIS business. Kadlec was given a number of gifts, including the proverbial gold watch.

It was great to see the industry and ADM/ADMIS come out in force to celebrate Tom Kadlec, who is one of the stalwarts of our industry. When I was with The Price Futures Group, I lobbied to move our business to ADMIS as the MF Global problems were unfolding. Luckily for us, we were far along in our negotiations with ADMIS when MF Global went under and firms were told where to move their business. We just moved ours to where we wanted to go – to ADMIS with Tom Kadlec and his team. I knew Tom Kadlec long before that and had come to really admire his integrity, understanding of the business and appreciation for the responsibility he had. ADMIS has also been a longtime supporter of John Lothian News, for which we are grateful.

We have another addition to the remembrances page for former CIS CEO Hal Hansen, this one from AFX Chairman and CEO Richard Sandor. You can find all the remembrances of Hansen on this page, with Doc Sandor’s at the top.

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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Robinhood’s Stock Is Now Worth Less Than Its Cash on Hand
Annie Massa – Bloomberg
Robinhood Markets Inc. shares slumped to a fresh low on Wednesday, giving the beleaguered brokerage a market value that’s less than the cash on its balance sheet. After posting more than $3 billion of losses since its initial public offering in late July, Robinhood’s shares have plunged more than 80%, cutting its market capitalization to as low as $5.99 billion. The firm had $6.19 billion of cash and cash equivalents at the end of the first quarter.
/jlne.ws/3xTwCmm

****** For sale on Ebay, Risk-O-Meter, only used once, dropped once.~JJL

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El Salvador’s FM Says $40M BTC Loss Not Real as They Haven’t Sold Any Coins
Kingsley Alo – Tokenist
El Salvador’s finance minister Alejandro Zelaya downplayed fears that Bitcoin’s significant decline in value affected his country’s finances on Monday. He revealed that the ongoing crash posed minimal risk to El Salvador, which famously added Bitcoin to its state treasury. Speaking to reporters, Zelaya said economists who believed El Salvador was in danger were speaking from the point of ignorance. He added that such analyses were superficial, and also said “an alleged loss of $40 million has not occurred because we have not sold the coins.”
/jlne.ws/3MYDoeC

****** And the coins don’t really exist, so it is not a loss for that reason too.~JJL

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Hybrid Work Meetings Are Hell. Tech Is Trying to Fix Them; Colleagues in the conference room. Others in the living room. Hybrid work made meetings even worse. Now Microsoft, Google, Zoom and others are trying to solve the problems
Joanna Stern – WSJ
To the people I just had a very important meeting with:
I tried to take you all seriously. I really did. Except since I’m at home, watching you all crowded into a conference room, the effect was more like toy figures sitting around Polly Pocket’s kitchen table. I spent most of the time imagining picking you up with tweezers then zipping you into my change purse.
Please don’t call HR.
Best,
Me
Welcome to the hell of the hybrid meeting. Throw in the related side effects—office-people often ignoring the video-call people and that guy who always forgets to mute—and you’re left longing for the simpler times of toilet-paper shortages, double-masking and all-day Zoom.
/jlne.ws/3OgNwQZ

***** I have been to hell. Hybrid meetings are nothing like it.~JJL

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A Warming Arctic Emerges as a Route for Subsea Cables; So far, work is only possible in the summer months. But companies see the remote, fragile north as a future hub of crisscrossing digital infrastructure links
Isabelle Bousquette – WSJ
Northern countries are racing to build undersea communications cables through the waters of the Arctic, as shrinking ice coverage opens the region to new business opportunities and heightens geopolitical rivalries between Russia and the West. Planned cables by a group of Alaskan, Finnish and Japanese companies as well as by the Russian government are competing to create better digital infrastructure in a fragile yet increasingly vital area for defense and scientific research.
/jlne.ws/3O1rNgc

****** I can see some movies coming from this. Building a subsea cable at the Arctic and they discover….~JJL

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Wednesday’s Top Three
Our most clicked story Wednesday, in the top three for the third time, was JLN’s Remembrances of Hal Hansen, with some new additions. Second was Wall Street watchdog to laid-off crypto employees: work for us, from Reuters, about FINRA’s plans to increase its resources to understand and monitor cryptocurrencies. And third was 1,100 Coinbase employees learned they were losing their jobs when they were locked out of their work emails. CEO Brian Armstrong said it was to ‘ensure not even a single person made a rash decision that harmed the business’, from Business Insider. (Thanks to FINRA, those laid off employees now have at least one place to go next.)

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MarketsWiki Stats
26,855 pages; 238,857 edits
MarketsWiki Statistics

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Lead Stories

An age of real wealth destruction; Investors will need to seek real returns from ‘alpha’ as nominal rate hikes and monetary contraction pierce asset bubbles
Whitney Baker – FT
The writer is founder of the hedge fund advisory Totem Macro and former head of emerging markets at Bridgewater Associates; We’re at the sort of inflection that only strikes once or twice a century. That’s what makes it tricky
Most people alive today grew up alongside a simply historic rise in financial wealth. We know nothing but relentless asset appreciation, propelled by disinflation and falling rates. Liquidity outpaced the economy. So did asset prices. But violent financial and geopolitical regime change is upending that status quo and the bubbly valuations that hinge on it.
/jlne.ws/3Qqc8Zx

SEC Requests Information and Comment on Advisers Act Regulatory Status of Index Providers, Model Portfolio Providers, and Pricing Services; Commission Seeking Public Comments Regarding “Information Providers” Acting as “Investment Advisers”
SEC
The Securities and Exchange Commission today announced that it is requesting information and public comment on matters related to the activities of certain “information providers,” including whether, under particular facts and circumstances, information providers are acting as “investment advisers” under the Investment Advisers Act of 1940 (“Advisers Act”). The Request specifically focuses on index providers, model portfolio providers, and pricing services.
/jlne.ws/3xyLvJc

BitMEX Co-Founder Sentenced to Probation on U.S. Compliance Charge; Benjamin Delo also paid a $10 million fine after pleading guilty to violating anti-money-laundering law
Richard Vanderford – WSJ
Benjamin Delo, a co-founder of cryptocurrency derivatives exchange BitMEX, was sentenced to 30 months probation for violating U.S. anti-money-laundering law. Mr. Delo, who was sentenced Wednesday in federal court in New York, has also paid a $10 million penalty as part of a deal with prosecutors and the U.S. Commodity Futures Trading Commission. He pleaded guilty in February to a single count of violating the Bank Secrecy Act.
/jlne.ws/3zM6r2p

Celsius Is Crashing, and Crypto Investors Are Spooked; ‘Looking back, it seems too good to be true.’ People with Celsius accounts are no longer able to withdraw their money.
Gregory Zuckerman, Vicky Ge Huang and Hardika Singh – WSJ
What’s your outlook on crypto investments? Join the conversation below. Mr. Washburn, a 35-year-old plumber in Otsego, Minn., had $100,000 in an account at Celsius Network LLC, one of the largest lenders in the cryptocurrency world. Recently widowed, Mr. Washburn said he and his two children moved in with his parents, and he planned to buy a house with his savings. The Celsius account offered him yield higher than would a traditional bank account, and the company was well-known in the crypto community. On Sunday evening, though, Celsius said it was no longer allowing customers to withdraw cash from their accounts. On Tuesday night, The Wall Street Journal reported that Celsius hired restructuring attorneys to help handle its mounting financial problems.
/jlne.ws/3HvWBDj

Market Madness Sets Up Another Strong Quarter for Banks’ Trading Desks; Bankers expected trading activity to slow down by now, but it hasn’t happened
David Benoit – WSJ
Wild markets are the gift that keeps on giving for Wall Street banks’ trading operations. First it was the pandemic, which sent stocks down sharply in early 2020. A massive infusion of government cash arrested the decline and fueled a swift recovery. Everything went up. Meme stocks, a boom in public offerings and the crypto craze followed. Now, inflation and recession fears are sending everything back down again.
/jlne.ws/3b3IVmS

European Gas Surges 24% as Russian Cuts Escalate Energy Crisis; Gas curbs coincide with Scholz, Draghi visit to Ukraine; Germany says Moscow’s move is ‘politically motivated’
Verity Ratcliffe – Bloomberg
European gas prices surged as Moscow tightened its squeeze on crucial gas flows to the continent, forcing consumer nations to confront the prospect of keeping their economies running without Russian gas. Benchmark futures increased as much as 24%, adding to a 46% rise already this week. The cuts are rippling through Europe with companies including Eni SpA, Engie SA and Uniper SE saying they’re getting less supply. Germany has called the reductions through the Nord Stream pipeline “politically motivated” and aimed at unsettling markets, challenging Gazprom PJSC’s statement that the halt was due to technical issues.
/jlne.ws/3O0oAgX

Russia Says Sanctions on Key Market Link Won’t Hit Eurobond Plan; Finance Minister reiterates goal to pay via unsanctioned banks; Grace period on sovereign coupon runs out at end of month
Bloomberg News
Russia will push on with a plan to pay foreign creditors in hard currency after the US and EU tightened sanctions before a deadline at the end of the month that could tip the nation into default. Speaking at the St. Petersburg International Economic Forum, Finance Minister Anton Siluanov reiterated the government’s goal of getting dollar and euro payments to bondholders via banks that have so far avoided sanctions over Russia’s invasion of Ukraine. At the same time, he gave no details on whether the plan had been presented to investors, or when it might be rolled out.
/jlne.ws/3MWXCFP

Putin’s Broken Market Link Puts Trades Worth Billions in Limbo
Giulia Morpurgo and Lyubov Pronina – Bloomberg
Russia’s central bank is keeping a close watch on a key piece of market infrastructure targeted by European Union sanctions. Asked after Friday’s interest-rate decision whether the Bank of Russia would join potential lawsuits to fight a freeze on the National Settlement Depository, Governor Elvira Nabiullina said officials are “working on the best strategy and tactics.” Few institutions better represent Russia’s sudden financial isolation since the invasion of Ukraine than the NSD. After the attack, more than a hundred billion dollars’ worth of stocks and bonds were left blocked after the world’s biggest settlement systems froze its accounts, according to estimates by the ITI Capital brokerage in Moscow.
/jlne.ws/39qAZf5

Crypto Winter Is Here. The Weak Will Die, and the Strong Will Eat Their Bones
David Z Morris – Coindesk
Don’t miss CoinDesk’s Consensus 2022, the must-attend crypto & blockchain festival experience of the year in Austin, TX this June 9-12. It has been a week of whiplash for us here at CoinDesk. On the one hand, we just scored an immense triumph as an organization with Consensus 2022, which wrapped up on Sunday. The conference was a sprawling, frenetic four days that proved how intense and broad the interest in crypto is. It also, if I can pat my fellow CoinDeskers on the back, proved once and for all that we are the media organization at the center of it all.
/jlne.ws/3OaGXje

Robinhood, the Gen Z Brokerage, Close to the Danger Zone; The Brokerage of millennials and Gen Z suffers from disaffection with cryptocurrencies and meme stocks.
Luc Olinga – The Street
The ongoing crash of cryptocurrencies and mainly Bitcoin has led observers to identify the collateral victims of this debacle. There are of course the retail investors who have seen the value of their portfolio melt away. Some testimonials on social networks even speak of financial ruin suffered by some individual investors. Crypto billionaires like Changpeng Zhao, founder of cryptocurrency exchange Binance.com, Brian Armstrong, co-founder of Coinbase (COIN) – Get Coinbase Global Inc Report, have lost tens of billions of dollars.
/jlne.ws/3nbtwUJ

Swiss Prosecutor Sees Millions Laundered Via Credit Suisse; Illicit transfers constitute aggravated laundering: prosecutor; Credit Suisse says former manager acted alone; didn’t launder
Hugo Miller – Bloomberg
A prosecutor has identified more than $60 million that he believes was laundered through Credit Suisse Group AG, in the precursor to what would be just the second Swiss criminal indictment ever against a major local lender. Geneva’s top financial-crime prosecutor, Yves Bertossa, identified a series of 8 transactions the bank failed to prevent between 2008 and 2014 at a hearing last week, which he said constituted aggravated money laundering by the Swiss lender, according to people familiar with the investigation.
/jlne.ws/3xTzOhQ

JPMorgan Hires LSE Executive for Emerging Markets Listings Role; US bank names Mani as head of EMEA emerging markets ECM; Appointment comes amid boom in Mideast IPO activity this year
Swetha Gopinath – Bloomberg
JPMorgan Chase & Co. has appointed Gokul Mani as head of equity capital market transactions in emerging markets across Europe, the Middle East and Africa amid a listings boom in the Persian Gulf. Mani will join the US bank later this summer from the London Stock Exchange Group Plc, where he was head of the Middle East and Africa for the capital markets team, according to an internal memo seen by Bloomberg News. A representative for JPMorgan confirmed the contents of the memo.
/jlne.ws/3NX0HHd

Bitcoin miners stung as fallout from price collapse widens; Share prices of companies that validate crypto transactions have tumbled over the past month
Eva Szalay, Scott Chipolina and Joshua Oliver – FT
Bitcoin miners are scaling down production as sinking cryptocurrency prices and rising energy costs squeeze profits and slam their shares. Miners, which use powerful computers to create new units of bitcoin and validate transactions on blockchains, have been forced to change tack as tumbling crypto prices threaten to undermine their heavy investment in technology.
/jlne.ws/3Ok7kmy

Ukraine Invasion

U.S., Allies Pledge New Help to Ukraine Against Russia Amid Growing Strains; NATO countries and 20 others commit more weapons to Kyiv as differences grow over how to balance fighting against diplomacy
Daniel Michaels and Nancy A. Youssef – WSJ
The U.S. is sending $1 billion in new military assistance to help Ukraine repulse Russia’s invasion, in response to urgent pleas from Kyiv for better weapons and amid growing strains among Western capitals. The package, which includes artillery, ammunition and coastal defense systems, is intended to support badly outgunned Ukrainian forces in the Donbas region and blunt Russia’s naval advantage in the Black Sea. “We remain focused on Ukraine’s needs,” said U.S. Defense Secretary Lloyd Austin, who hosted a meeting in Brussels on Wednesday of roughly 50 countries contributing to Ukraine’s war effort. “We’ll stay focused on it for as long as it takes.” He cautioned that for soldiers in battle receiving the supplies, “it’s never enough.”
/jlne.ws/39uIfH0

Ukrainian Farmers Poison Russian Troops With Spiked Cherries as Guerrilla War Terrifies Invaders
Allison Quinn – Daily Beast
Russian authorities have gone all out to tighten their grip on cities taken over by Putin’s troops in eastern Ukraine, but ordinary citizens are fighting back—with arson attacks and poisoned fruit. The latest surprise for Russian troops came in Melitopol, where Mayor Ivan Fyodorov said local farmers had caused “mass illness” among Russians by poisoning cherries.
/jlne.ws/3O1c5Sg

Turkey says Ukraine grain ships could avoid mines, Russia offers safe passage
Tuvan Gumrukcu and Michelle Nichols – Reuters
Russia on Wednesday said it has offered “safe passage” for Ukraine grain shipments from Black Sea ports but is not responsible for establishing the corridors and Turkey suggested that ships could be guided around sea mines.
/jlne.ws/3Hw9ywU

US fears ban on insuring Russian tankers will drive up oil prices; Washington is working on ways to stabilise the market once EU and UK sanctions take effect
Sam Fleming, James Politi and Jim Pickard and David Sheppard – FT
The US is urging European capitals to seek ways of easing the impact of their ban on insuring Russian oil cargoes, arguing the measure could cause global crude prices to soar. The EU and UK agreed to prohibit insurance on tankers carrying Russian oil at the end of last month, in one of the most far-reaching sanctions yet imposed in response to the war launched by President Vladimir Putin in Ukraine. The EU has now put its ban into law, subject to a delay before it comes into force, and officials play down the idea that it can be adjusted. The UK, which agreed to mirror Brussels’ insurance prohibition, has yet to lay out its own measures.
/jlne.ws/3xSElRB

Exchanges, OTC and Clearing

London Stock Exchange Group appoints new head of digital assets
The new hire comes from a private equity background and has a wealth of data and technology experience.
Laurie McAughtry – The Trade
London Stock Exchange Group (LSEG) has brought in Peter T. Golder as its new head of group digital assets, The TRADE can reveal. Golder will report to Murray Roos, group head of capital markets, with a reporting line to Daniel Maguire, group head of post trade.
/jlne.ws/39sRG9T

DTCC achieves automation of the voluntary corporate actions lifecycle to help industry navigate rising risks and costs; Newly automated Voluntary Reorganization service is a critical step in the firm’s ongoing journey to eliminate manual touchpoints in the corporate actions process.
DTCC
The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, announced that its subsidiary, The Depository Trust Company (DTC), successfully processed the U.S. market’s first-ever, fully-automated voluntary reorganization ISO 20022 instruction as part of its newly automated Voluntary Reorganization service. With the launch of this new automation, DTCC moves towards completion of its journey to fully automate the corporate actions lifecycle from end-to-end, helping clients reduce the rising costs and risks associated with the corporate action process.
/jlne.ws/3NWORwy

CME Group Inc. Announces Second-Quarter 2022 Earnings Release, Conference Call
CME Group
CME Group Inc. will announce earnings for the second quarter of 2022 before the markets open on Wednesday, July 27, 2022. Written highlights for the quarter will be posted on the company’s website at 6:00 a.m. Central Time, the same time it provides its earnings press release. The company will also hold an investor conference call that day at 7:30 a.m. Central Time, at which time company executives will take analysts’ questions.
/bit.ly/3OfheWL

Amendments to the CME Globex Matching Algorithm for Monday and
Wednesday Silver and Copper Weekly Option Contracts
CME Group
Effective Sunday, August 7, 2022 for trade date Monday, August 8, 2022, and pending all relevant CFTC regulatory review periods, Commodity Exchange, Inc. (“COMEX” or “Exchange”) will amend the CME Globex matching algorithm for the Monday and Wednesday Silver and Copper Weekly Option contracts (the “Contracts”) from K to FIFO as noted in the table below (the “Rule Amendments”). The CME Globex matching algorithm in connection with the Friday Silver and Copper Option contracts shall remain unchanged at FIFO.
/bit.ly/3MXP15R

Amendments to the Special Price Fluctuation Limits and Daily Limits Table and Application of Dynamic Price Fluctuation Limits to CBL Global; Emissions Offset Futures and CBL Nature-Based Global Emissions Offset Futures Contracts
CME Group
Effective Sunday, July 10, 2022, for trade date Monday, July 11, 2022, and pending all relevant CFTC regulatory review periods, New York Mercantile Exchange, Inc. (“NYMEX” or “Exchange”) shall amend the Special Price Fluctuation Limits and Daily Price Limits table (the “Table”) provided in NYMEX Rule 589. (“Special Price Fluctuations Limits”) and adopt Rules 1269102.D. and 1258102.D. (“Special Price Fluctuation Limits”) of the CBL Global Emissions Offset Futures and CBL Nature-Based Global Emissions Offset Futures contracts (the “Contracts”), respectively, to apply dynamic price fluctuation limits to the Contracts with a dynamic variant of 10% of the dynamically calculated reference price for the Contracts (collectively, the “Rule Amendments”). https://bit.ly/3NWMSbN

Expansion of the Block Trade Reporting Window for Gold, Silver, and
Copper Futures Contracts such that the Reporting Window for all
Metals Futures and Options Contracts Shall be Fifteen (15) Minutes
CME Group
Effective on Sunday, July 31, 2022 for trade date Monday, August 1, 2022, and pending all relevant CFTC regulatory review periods, Commodity Exchange, Inc. (“COMEX” or “Exchange”) will expand the block trade reporting window for the Gold, Silver, and Copper futures contracts from five (5) minutes to fifteen (15) minutes as set forth below.
/bit.ly/3NYFZqt

Change in Interest Rate on USD Cash Balances
CME Group
Effective June 16, 2022, CME Clearing will modify the interest rate paid on USD cash balances on deposit by clearing members accordingly:
o The interest rate paid on USD cash balances on deposit by clearing members to meet customer and house (proprietary) performance bond requirements associated with products in both the Base waterfall and in the Cleared Swaps IRS waterfall will change from the current rate of Interest on Reserve Balances (“IORB”) less 22 basis points to IORB less 25 basis points.
o The interest rate paid on USD cash balances on deposit by clearing members to meet guaranty fund requirements associated with products in the Base waterfall and in the Cleared Swaps IRS waterfall will increase from the current rate of 63 basis points to 135 basis points.
/bit.ly/39xFsNi

Unscheduled changes to SDAX and TecDAX
Deutsche Börse Group
STOXX Ltd., the global index provider of Qontigo, has announced unscheduled changes in the SDAX and TecDAX indices.
/bit.ly/3Hrk4FZ

EEX Group Press Release – EEX Group: Five years of successful development of CSEE power markets
EEX
EEX Group looks back on five years of successful development of power markets in the Central and South Eastern European (CSEE) region. Five years ago today, on 15 June 2017, EEX extended its product portfolio to Central and Eastern Europe by adding power derivatives products for the Czech Republic, Slovakia, Hungary, Poland and Romania. This step became possible after the integration of the Prague-based Power Exchange Central Europe (PXE) which joined EEX Group in mid-2016.
/bit.ly/3NX0hk1

Eurex Exchange Readiness Newsflash | REMINDER: T7 Release 10.1 – Readiness Statement available
Eurex
Dear Eurex Participant,
With this Newsflash, we would like to remind you about the submission of the “Readiness Statement” that is required prior to the launch of T7 Release Eurex Exchange Readiness
/bit.ly/3HsVJzn

European benchmark index futures roll update
Euronext
Statistics of the current June roll
As we step into the final week of futures roll period, we are showing some statistics of the current June roll with a focus on Benchmark Index Futures.
/bit.ly/3xtjmDC

Equity Derivatives: Introduction of Equity Options, Single Stock Futures and Stock Tracking Futures; Eurex Circular 064/22 Introduction of Equity Options, Single Stock Futures and Stock Tracking Futures
Eurex
The Management Board of Eurex Deutschland took the following decisions with effect from 4 July 2022.
/bit.ly/3xTQxBs

Adjustments to FEX Power Product settings
FEX
In light of the recent movements in Power prices and decisions by the
Australian Energy Market Operator (AEMO), including to immediately suspend
the spot market, FEX Global has reviewed and determined that trading of FEX
Power products will continue to operate as normal.
/bit.ly/3zAQBrc

REMINDER – 2022 Annual Attestation and Inspection Programme – Self attestation of Compliance Questionnaire
HKEX
Reference is made to the circulars respectively dated 20 May 2022 (Ref. No.: MSM/006/2022) and 27 May 2022 (Ref. No.: MSM/007/2022) regarding the 2022 Self-attestation of Compliance
Questionnaire (the “Questionnaire”).
/bit.ly/3aYlifD

Final Settlement Prices
JPX
Special Quotations, etc. (Index Futures/Index Options/JGB Future)
/bit.ly/3vu1nNK

Cancellation of Nomination of Candidate for Governor
JPX
Japan Exchange Group, Inc. (JPX) today announces that it has decided to cancel the nomination of the following new candidate for governor which was announced in “Candidates for Directors, etc.” (published on April 26, 2022).
/bit.ly/3QsggZa

Fintech

LedgerEdge appoints former Nex Markets chief executive in strategic advisory role
New advisor at LedgerEdge previously served at Nex Markets, BrokerTec, ICAP, and currently serves as the chairman of the board at Tradefeedr.
Annabel Smith – The Trade
LedgerEdge has appointed the former chief executive officer of Nex Markets, the electronic execution division of CME Group’s Nex Group, as a new strategic advisor. Industry veteran Seth Johnson has joined LedgerEdge as a strategic advisor after almost four years with Nex. Prior to joining Nex, Johnson served as the chief of BrokerTec – also now part of CME Group – and in various roles across ICAP including as its head of strategy and global head of derivatives for ICAP Electronic Broking. He also currently serves as the chairman of the board at Tradefeedr.
/bit.ly/39v3wA8

Yes, Crypto Is Crashing Again. Blockchain Will Survive.
Maria Bustillos – NY Times Opinion
This week, the crypto market plummeted for the second time in a month, in tandem with a sharp drop in global stock markets. The collapse, not the first of its kind, showed again how the violent swings of a largely unregulated market warp the development of a transformative technology. But crypto is just one aspect of the larger blockchain universe. Its skeptics and fans alike must learn to see it as a technological experiment, instead of just a blatant scam or a speculative path to riches.
/jlne.ws/3b7rPos

Ukraine-based blockchain firm announces ‘we’re still hiring’ amid market downturn, war
Turner Wright – Cointelegraph
According to the CEO, Everstake had made preparations for a “special fund” to tide the firm over in the event of a bear market.
Sergey Vasylchuk, CEO of Ukraine-based decentralized staking provider Everstake, has said the company will continue to hire crypto professionals amid a market downturn and ongoing conflict in the country.
In a Wednesday Twitter thread, Vasylchuk said Everstake had hired 30 people since the Russian war against Ukraine started in February, and the firm still had more than 10 positions in marketing and development to fill. According to the CEO, Everstake is “not firing anybody” and had made preparations for a “special fund” to tide the firm over in the event of a bear market.
/jlne.ws/3zH4tQS

Cybersecurity

Cybersecurity Remains a Key Focus Area for the SEC and FINRA
Goodwin – JDSupra
Cybersecurity and technology governance remain a top area of focus for the SEC and FINRA, as the regulators continue to concentrate on improving the overall cybersecurity posture and resiliency of the financial sector. FINRA covered this in its 2022 Report on its Examination and Risk Monitoring Program. The SEC is also implementing a campaign to overhaul the agency’s expectations around cybersecurity and cyber incident reporting for the financial services industry and corporate America generally.
/jlne.ws/3MR0Yu1

45% of cybersecurity pros are considering quitting the industry due to stress
Help Net Security
Deep Instinct released the third edition of its annual Voice of SecOps Report, focused on the increasing and unsustainable stress levels among 1,000 C-suite and senior cybersecurity professionals across all industries and roles. The research found that 45% of respondents have considered quitting the industry due to stress, with the primary issues being an unrelenting threat from ransomware and the expectations to always be on call or available.
/jlne.ws/3xozgyY

Democratizing Cybersecurity
Tony Bradley – Forbes
The need for cybersecurity is a given at this point. Organizations of all sizes and across all industries understand that they are essentially under siege from cyber threats and that they need to have tools and processes in place to defend themselves. To allow organizations to get the right tools or the best tools for the job, we need to level the playing field and democratize cybersecurity.
/jlne.ws/3b37TTw

Cybersecurity And Risk Management In The Internet Of Things
Romil Bahl – Forbes
A broad and vast network of devices connected to the internet is the vision of the Internet of Things (IoT). In this vision, the IoT connects nearly every aspect of life—whether that’s cardiac rhythm monitoring in the home for greater health support, traffic management to alleviate congestion and air quality monitoring and decrease air pollution, sensors that track movement along the supply chain for efficiency, condition monitoring in agriculture for sustainability and optimization, predictive maintenance and enhanced productivity to make manufacturing sleeker and scalable or much more.
/jlne.ws/3O9nEqm

Cryptocurrencies

Inside a Corporate Culture War Stoked by a Crypto C.E.O.
Jesse Powell, who leads the crypto exchange Kraken, has challenged the use of preferred pronouns, debated who can use racial slurs and called American women “brainwashed.”
Ryan Mac and David Yaffe-Bellany – NY Times
Jesse Powell, a founder and the chief executive of Kraken, one of the world’s largest cryptocurrency exchanges, recently asked his employees, “If you can identify as a sex, can you identify as a race or ethnicity?”
He also questioned their use of preferred pronouns and led a discussion about “who can refer to another person as the N word.”
And he told workers that questions about women’s intelligence and risk appetite compared with men’s were “not as settled as one might have initially thought.”
/jlne.ws/39BHdsy

Crypto-SPAC Deals Stuck in SEC Limbo as Token Demand Plunges
Lydia Beyoud and Nicola M. White – Bloomberg
Crypto companies that have been trying to go public since last year’s boom remain stuck in a lengthy back-and-forth with US regulators, adding to the pile of challenges facing the industry. Bids to merge with blank-check companies are getting scrutiny from accountants at the Securities and Exchange Commission because the asset class raises fresh bookkeeping issues, according to people familiar with the matter. Dates for closing multibillion-dollar deals involving Circle Internet Financial Ltd., a stablecoin issuer, and exchanges run by Bullish Global and eToro Group Ltd. have all been pushed back multiple times.
/jlne.ws/3O9Lsuo

Bitcoin Price Falls Toward $20,000 as Cryptocurrency Rout Deepens; Retreat has wiped out roughly 1½ years of gains for bitcoin
Caitlin McCabe – WSJ
Bitcoin staved off a fall under $20,000, bolstered by a market rally after the Federal Reserve approved its biggest interest rate increase since 1994. Bitcoin settled at $21,685.02 on Wednesday, down 1.4% from its price at 5 p.m. on Tuesday, according to Dow Jones Market Data. In the morning, it traded as low as $20,111, threatening to fall below $20,000 for the first time since December 2020. It remains down, however, about 68% from its high of $67,802.30 reached in November 2021. The rout in cryptocurrencies has wiped out roughly 1½ years of gains for bitcoin, which started to soar at the end of 2020 as speculative fervor washed over financial markets.
/jlne.ws/3HtbNRF

Final Capitulation Fears Mount as Miners Send Record Amounts of Bitcoin to Exchanges
Martin Young – FX Empire
Bitcoin miners are an essential function of the network, but they also have a substantial influence over market movements. BTC prices have slumped a whopping 25% over the past seven days, and the pain may not be over yet. On-chain metrics have revealed that Bitcoin miners have been sending more of the asset to exchanges, with a new all-time high of 88,000 BTC sent on June 15, according to CoinMetrics.
/jlne.ws/3OgDkYJ

MicroStrategy CEO Michael Saylor defends the decision to turn his company’s stock into a highly levered bitcoin bet: ‘I can’t come up with a better idea’
Matthew Fox – Business Insider
MicroStrategy CEO Michael Saylor has no regrets in turning his company’s stock into a highly levered bet on the price of bitcoin, even as the cryptocurrency continued its 70% peak-to-trough decline to about $21,000 on Wednesday. In an interview with CNBC, Saylor defended his actions and said, “I can’t come up with a better idea,” adding that he feels that his company has a “fortress balance sheet” because it took out billions of dollars of debt at an interest rate of 1.8%, just before interest rates doubled.
/jlne.ws/3xwKuBx

USDC Issuer Circle to Introduce Euro-Backed Stablecoin in U.S.
Sandali Handagama – Coindesk
Circle Internet Financial, the issuer of the USD Coin (USDC) dollar-pegged stablecoin, is set to introduce a new token by the end of the month – this one backed by the single European currency.
/jlne.ws/3HtnbwY

Ethereum Mining Is Going Away, and Miners Are Not Happy; The shift from proof-of-work to proof-of-stake will cut power consumption sharply—and leave some expensive technology searching for new uses.
Olga Kharif and David Pan – Bloomberg
The Ethereum mining community is a diverse bunch, geographically and demographically. There’s a 28-year-old translator in Ukraine, running computing hardware on his balcony to earn cryptocurrency so he can buy clothing and other necessities. In Argentina, a retiree uses her gaming PC to double her monthly pension. A college student in Canada has mined enough to buy a BMW motorcycle and a modified 2006 Dodge Charger SRT—and pay for gas every month.
/jlne.ws/3mQDrPa

Huobi to Shut Thailand Crypto Unit as Regulator Revokes License
Anuchit Nguyen – Bloomberg
Huobi Technology Holdings Ltd., a Hong Kong-listed operator of a cryptocurrency platform, will shut its unit in Thailand after the local regulator revoked its license. The local platform will be shut “permanently” from July 1, according to a Huobi Thailand Co. statement on its website. Huobi Thailand will no longer have any connections nor legal bindings with Huobi Group after the closure, the statement said.
/jlne.ws/3tE1SDh

A crypto cliffhanger brought back from the brink; Looks like the blockchain can be forgiving after all.
Alexandra Scaggs – FT
While macro degens were watching the Federal Reserve on Wednesday, crypto degens were focused on another drama: a loan backed by roughly $250mn in ether narrowly avoided liquidation by a technical quirk and heaps of luck. In case you haven’t heard, “crypto winter” is here. Bitcoin is down more than 50 per cent this year, and ether has lost more than 66 per cent. Lender Celsius has frozen customer withdrawals and reportedly hired restructuring lawyers. Coinbase is laying off almost one-fifth of its sizeable workforce. The season may have its own publicity stunts.
/jlne.ws/3mQI2ko

Politics

Why Rural Americans Keep Waiting for Fast Internet, Despite Billions Spent; Flaws in government programs have left some residents behind
Ryan Tracy and Anthony DeBarros
The U.S. government has spent billions of dollars on several rounds of programs to upgrade internet speeds in rural areas over the past decade. Despite those efforts, many residents are still stuck with service that isn’t fast enough to do video calls or stream movies—speeds that most take for granted. Many communities have been targeted for broadband upgrades at least twice already, but flaws in the programs’ design have left residents wanting. Most U.S. households today have access to internet download speeds of at least 100 megabits per second and upload speeds of 10 Mbps, according to government data. Although the FCC’s programs have made progress, some rural Americans still can’t get 4 Mbps download and 1 Mbps upload speeds—the level of service that was the federal standard in 2011.
/jlne.ws/3HqcE5Q

Democrat senators led by Elizabeth Warren want to ban brokers from trading people’s health and location data
Isobel Asher Hamilton – Insider
A group of Democrat senators led by Elizabeth Warren is seeking to ban brokers from selling Americans’ health and location data, amid concerns that people visiting abortion clinics could soon be tracked and targeted by vigilantes. A bill introduced Wednesday by Warren, cosponsored by Bernie Sanders and several other Democrats, would ban data brokers from selling or transferring individuals’ location data and health data, according to a statement on Warren’s website.
/jlne.ws/3Hv6m4N

Joe Biden tells US oil refiners rising profits ‘not acceptable’ as war rages; President urges companies to supply more fuel as petrol prices top $5 a gallon
Derek Brower – FT
US president Joe Biden on Wednesday took aim at refiners for not producing more petrol, saying their rising profit margins “at a time of war” were “not acceptable”. In letters sent to seven oil companies including ExxonMobil, BP, Shell and Valero, Biden called for “immediate actions” to supply more fuel, and said the administration was prepared to use “all reasonable and appropriate” tools to help increase supply in the near term.
/jlne.ws/3xW43of

MPs warn against financial rules being weakened ‘inappropriately’; Treasury select committee signals concern about government’s desire for a lighter touch after Brexit
Laura Noonan – FT
MPs have warned the UK government against putting “undue pressure” on regulators to “inappropriately weaken” standards for banks, insurers and other financial services firms. The call by the Treasury select committee is an indication of its concerns about the risks of a post-Brexit shift to light touch financial regulation. It comes as regulators continue the long process of transposing or adapting EU rules into UK laws.
/jlne.ws/3Hwl6jK

Germany Tells EU to Prepare for Escalated Brexit Feud With UK
Jorge Valero and Michael Nienaber – Bloomberg
Germany told European Union nations that relations between the UK and the bloc reached a new low and they should be ready for a serious fight if London enacts the bill it proposed to tear up the Northern Ireland Protocol.
/jlne.ws/3mVjtD4

Regulation

Customer Advisory Encourages Older Adults to Stay Alert and Share Information About Fraud; World Elder Abuse Awareness Day is June 15
CFTC
The Commodity Futures Trading Commission’s Office of Customer Education and Outreach today issued the customer advisory, Be Alert and Share Information to Help Seniors Avoid Fraud, in recognition of World Elder Abuse Awareness Day. The advisory encourages older adults to stay alert to fraud—especially on social media—and to share information that could help others avoid fraud. Fraudsters commonly target older adults because they typically have acquired more assets over a lifetime of saving and investing. Tips in the customer advisory explain how to avoid becoming a victim of fraud, such as getting a second opinion before making an investment decision, checking credentials and backgrounds of financial professionals, and staying current on fraud trends. Even an intervention from a trusted family member or friend can help older adults avoid making a costly mistake.
/jlne.ws/3HuXhsB

Federal Court Orders California Man to Pay Over $600,000 for Commodity Pool Fraud; Defendant is an Associated Person of a Commodity Pool Operator
CFTC
The Commodity Futures Trading Commission today announced that the U.S. District Court for the Central District of California entered a consent order on June 7 for a permanent injunction, monetary sanctions, and equitable relief against Daniel Hewko of Fort Bragg, California. The consent order resolves the CFTC’s claims against Hewko in the CFTC action filed against him, his son, Daniel Adam Hewko, and Main & Prospect Capital, LLC, on November 13, 2019 [See CFTC Press Release No. 8078-19] alleging, among other things, fraud, misappropriation of investor funds, and failing to register with the CFTC as an Associated Person of a Commodity Pool Operator. The CFTC action against Daniel Adam Hewko and Main & Prospect Capital, LLC is ongoing. The order requires Hewko to pay $500,000 in restitution to victims of the fraudulent scheme and to pay a $107,500 civil monetary penalty. The order also permanently prohibits Hewko from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged, and imposes a permanent registration ban and a 10-year trading ban.
/jlne.ws/3HqcMlI

Keynote Address of Commissioner Christy Goldsmith Romero at the Chicago Bar Association’s Futures & Derivatives Law Seminar, Chicago
CFTC
Good afternoon. I want to thank the Chicago Bar Association for the warm welcome of me as a new CFTC Commissioner. I only wish I could join you in person. I started my law career in Chicago as a young associate at Jenner & Block with a view of the river from my office. I instantly fell in love with the city, including Gold Coast hot dogs, summer concerts at Ravinia, and baseball games. Although I won’t tell you which team because half of you will likely be upset.
/jlne.ws/3HqYscO

Concentrate on Concentration Risk
FINRA
A diversified portfolio tends to be harder to achieve than simply following the mantra to steer clear of putting all your investment eggs in one basket. This basic strategy can help, but it’s often not enough to avoid concentration risk—the risk of amplified losses that may occur from having a large portion of your holdings in a particular investment, asset class or market segment relative to your overall portfolio.
/jlne.ws/39xAUXe

TRACE Depository Institution Reporting Industry Call
FINRA
As announced by the Board of Governors of the Federal Reserve System in the Federal Register on October 28, 2021, FINRA will collect detailed data on depository institutions’ daily transactions of marketable U.S. Treasury securities and of the debt and MBS issued by U.S. federal government agencies including government-sponsored enterprises (agencies) via its Trade Reporting and Compliance Engine (TRACE).
/jlne.ws/3b4fod5

Statement on Request for Comment on Certain Information Providers Acting as Investment Advisers
Commission Caroline A. Crenshaw – SEC
Today, we have issued a request seeking comment on the activities of “information providers” – namely, index providers, model portfolio providers, and pricing service providers – and how our framework for registering and regulating investment advisers should apply to those providers (if at all). I want to encourage market participants to comment.
/jlne.ws/3zGdVDL

Statement on Request for Comment on Certain Information Providers
Chair Gary Gensler – SEC
Today, the Commission voted to issue a request for comment to help determine which “information providers,” such as index providers, model portfolio providers, and pricing services, might come under the Commission’s definition of an investment adviser. The role of these information providers in today’s markets raises important questions under the securities laws as to if they are providing investment advice rather than merely information. I am pleased to support this request because it will help inform our consideration of when—and under what facts and circumstances—these providers are giving “investment advice.”
/jlne.ws/3QCAS11

On the Spot: Remarks at “Regulatory Transparency Project Conference on Regulating the New Crypto Ecosystem: Necessary Regulation or Crippling Future Innovation?”
Commissioner Hester Peirce – SEC
The topic of today’s event is “regulating the new crypto ecosystem.” It is a hot topic of conversation in Washington, DC. The conversation reminds me of a book for toddlers, Are You My Mother?[1] In that book, a newly hatched bird searches for his mother. He asks a cat, dog, hen, cow, and front-end loader, each of which disappoints the baby bird with the news that it is not the baby bird’s Mom. Rest assured, baby bird and his actual mother are finally reunited. The crypto industry seems to be on a similar journey; only it is not looking for a mother, but is out looking for its regulator. In a bureaucratic twist on the story in the children’s book, in our story, every agency claims to be the regulator. So crypto is looking to Congress to decide who ought to regulate it. A bipartisan bill announced last week attempts to answer that question.[2] Some people in the crypto industry are celebrating the allocation of certain authorities to the Commodity Futures Trading Commission (“CFTC”) instead of the Securities and Exchange Commission (“SEC”). This view is likely rooted in a disappointment that the SEC has not used more proactively the authorities it already has to sensibly regulate crypto. I understand and share that disappointment, but I am hopeful that we can change course and use our existing and any prospective authorities wisely.
/jlne.ws/3b9xgTW

SEC Charges “Millionaire Maker” Author with Selling Securities in Unregistered Oil and Gas Offerings
SEC
The Securities and Exchange Commission today charged Loral L. Langemeier and her company, Live Out Loud, Inc. (“LOL”), with selling securities in unregistered oil and gas offerings, acting as unregistered securities brokers, and breaching their fiduciary duties as investment advisers by failing to disclose to clients financial conflicts of interests.
/jlne.ws/3HrhTCj

SEC Charges Louisiana Radio Host with Selling Securities in Unregistered Oil and Gas Offerings
SEC
The Securities and Exchange Commission today charged insurance agent and radio host Hollis P. Day, Jr. with selling securities in unregistered oil and gas offerings and acting as an unregistered securities broker.
/jlne.ws/3b4k0jp

SEC Halts Fraudulent Real Estate-Related Investment Offerings
SEC
The Securities and Exchange Commission announced that it filed an emergency action on June 14, 2022 to halt a multi-year investment fraud being run by Texas-based real-estate executive Blake Robert Templeton through three companies he controlled, Boron Capital, LLC, BC Holdings 2017, LLC, and United BNB Fund 2018, LLC.
/jlne.ws/3HwrHuU

SEC Charges Former Employee of Online Gambling Company with Insider Trading
SEC
The Securities and Exchange Commission announced insider trading charges against David Roda, a former software engineer at Penn National Gaming’s subsidiary Penn Interactive Ventures, in connection with the parent company’s $2 billion acquisition of Toronto-based Score Media and Gaming, Inc.
/jlne.ws/3y5nuv7

SEC Obtains Final Judgments Ordering Payment of Over $75 Million in Stock Manipulation Scheme
SEC
The Securities and Exchange Commission announced that it obtained final judgments against sixteen defendants and ten relief defendants based in China for their role in a stock manipulation scheme that generated more than $35 million of illicit profits on the illegal trading of stock in at least 3,000 U.S.-listed securities. The final judgments ordered the defendants to pay over $73.5 million and the relief defendants over $1.5 million.
/jlne.ws/3xTq5YQ

ASIC update at the Financial Services Council member webinar; Speech by ASIC Deputy Chair Karen Chester at the Financial Services Council member webinar, Thursday 16 June 2022.
ASIC
Good morning everyone.. Thank you to the Financial Services Council for the opportunity to speak with you today. I would like to begin by acknowledging the Traditional Owners’ ongoing connection to and custodianship of the many lands on which we virtually meet today, for me the Gadigal people of the Eora Nation, and to pay my respects to their Elders past, present and emerging. I extend that respect to Aboriginal and Torres Strait Islander people present today.
/jlne.ws/3mV3YL6

New Zealand investor confidence dips back to pre-COVID levels
FMA New Zealand
New Zealand’s financial markets has slipped back in the past 12 months, after last year’s record score, but overall, two-thirds of investors remain confident. The Financial Markets Authority (FMA) – Te Mana Tatai Hokohoko 2022 Investor Confidence Survey shows 66% of investors remain confident, compared to 72% in 2021. This year’s score is consistent with investor confidence levels recorded in 2019 and 2020, and has been impacted by the most recent COVID-19 uncertainty and global events.
/jlne.ws/3zKE0BJ

Investor warning: Goldridge Investment Limited
FMA New Zealand
The FMA recommends exercising caution when dealing with Goldridge Investment Limited and goldridgeinvestmentlimited.com (the website). We are concerned that they are operating a scam. They offer financial services and investment plans with unrealistically high returns.
/jlne.ws/3OgC5J3

Shaping the rules for a data-driven future
UK FCA
Speech by our Chief Executive, Nikhil Rathi, delivered at the Dutch Authority for the Financial Markets (AFM) 20th anniversary seminar.
/jlne.ws/39rN2cj

FCA tells lenders to support consumers struggling with the cost of living
UK FCA
The Financial Conduct Authority (FCA) is today writing to more than 3,500 lenders to remind them of the standards they should meet as consumers across the country are affected by the rising cost of living. With household bills expected to continue to rise into the autumn, it is important that firms act now to make sure borrowers struggling with payments and customers in vulnerable circumstances can access the help they need.
/jlne.ws/3xVx7wd

The FCA’s second phase of reform of the Listing Rules: Increasing transparency and encouraging more market participation
UK FCA
Speech by Clare Cole, FCA Director of Market Oversight, to The Regulation of Listed Companies Summit
/jlne.ws/3tE3Gw8

FSA Weekly Review No.493
FSA Japan
This page contains the latest in events, developments, and updates to the FSA website.
Publication of the “Cabinet Office Order to Amend the Cabinet Office Order on Special Measures for Strengthening Financial Functions” for public consultation
/jlne.ws/3Hs7rKC

SFC reprimands and fines China Everbright Securities (HK) Limited $3.8 million for breaches of anti-money laundering regulatory requirements
SFC – Hong Kong
The Securities and Futures Commission (SFC) has reprimanded and fined China Everbright Securities (HK) Limited (CESL) $3.8 million for failures in complying with anti-money laundering and counter-terrorist financing (AML/CFT) regulatory requirements (Note 1). The SFC found that CESL failed to implement adequate and effective systems and controls to guard against and mitigate the risk of money laundering and terrorist financing associated with third party deposits between January 2015 and February 2017.
/jlne.ws/3mTP9sm

Investing and Trading

U.S. Home Equity Hits Record of $27.8 Trillion; Soaring home prices have driven up home equity, but rising interest rates are making it more expensive to use
Orla McCaffrey – WSJ
Americans have more equity in their homes than ever before. Total U.S. home equity increased almost 20% in the first quarter to $27.8 trillion, a record high, according to the Federal Reserve. The increase is another consequence of a red-hot housing market. Double-digit price gains have driven some would-be homeowners out of the market. At the same time, rising home values are boosting the finances of the Americans who already own them. Still, rising rates have made it more expensive for homeowners to use that equity, the difference between the market value of a property and the mortgage balance. The Federal Reserve raised its benchmark rate by 0.75 percentage point Wednesday, its largest increase since 1994, in an effort to cool persistent inflation.
/jlne.ws/39s0SLM

So Now We Have Clarity. The World Has Changed; The Fed admits it has an inflation problem, and is prepared to raise rates to eliminate it, even if that means higher unemployment.
John Authers – Bloomberg
Days when the Federal Reserve announces a shift in monetary policy are usually dramatic. Those of us who have to chase daily developments have much excitement tracking the instant market reactions. I’ll try to avoid that, because the latest meeting of the Federal Open Market Committee was like none other in my experience.
/jlne.ws/39qBar2

Bank of England Joins the Scream-If-You-Wanna-Hike-Faster Gang; The UK central bank is aligned with its peers in prioritizing the need to curb inflation over averting a slowdown.
Mark Gilbert – Bloomberg
The Bank of England has become the latest central bank to suggest it’s poised to accelerate its tightening of monetary policy. After years of keeping their feet firmly on the loud pedal, policy makers everywhere are now stamping on the brakes. There’s a growing danger that they’ll crash their economies into recession — a risk they seem willing to take as representing the lesser of two evils.
/jlne.ws/3b96vit

ECB to design new bond-buying plan to tackle market turmoil; Emergency meeting addresses surging borrowing costs in eurozone countries such as Italy
Martin Arnold and Adam Samson – FT
The European Central Bank has sought to tackle fears that the eurozone is on the cusp of another debt crisis, saying it would speed up work on a new policy tool to counter surging borrowing costs in the region’s weaker eurozone economies. After an emergency meeting on Wednesday, the central bank’s governing council pledged to accelerate plans to create a “new anti-fragmentation instrument” — a nod to the widening gap in the cost of borrowing between more stable sovereigns such as Germany and more vulnerable member states.
/jlne.ws/3Hrieoq

Investors Bet One of the Biggest Trades on Wall Street Will Unwind; The Japanese yen has plunged to a 20-year low, prompting some to wager that the Bank of Japan won’t be able to stick to its ultraloose policy
Anna Hirtenstein, Julie Steinberg – WSJ
The rapid fall in the Japanese yen has been at the center of one of the biggest bets on Wall Street this year. Now a group of contrarian investors is pushing in the other direction, expecting a major reversal. The yen has weakened over 16% against the dollar this year, reaching a 20-year low on Wednesday.
/jlne.ws/3xXJszK

Environmental, Social and Corporate Governance

ESG in the credit agreement: a closer look at sustainability-linked loan mechanics
Andrew T. Budreika, Benjamin Stango and Elizabeth Goldberg – Reuters
June 10, 2022 – Environmental, social, and governance (ESG) issues continue to dominate business and investing news. In this article, after providing some recent context, we examine some key credit agreement provisions governing one of the hottest banking products in ESG — sustainability-linked loans (SLLs).
/reut.rs/3xXyUk8

Europe will fail to hit clean hydrogen targets without approval of projects; Former head of Italy’s gas grid operator issues warning
Neil Hume – FT
Europe will fail to hit its targets for clean hydrogen production unless the “action to ambition” gap is closed and large projects are sanctioned in the next couple of years, according to the former head of Italy’s gas grid operator. Marco Alverà, who left Snam, one of the world’s leading energy infrastructure operators, earlier this year, said boosting green hydrogen use from a standing start to 20mn tonnes by 2030 — the equivalent to 70bn cubic metres of gas — required a very steep acceleration from “now”.
/jlne.ws/3HrRLXT

Institutions

BTIG appoints two new managing directors as part of fixed income credit team expansion
Incoming managing directors will be based in London, joining from Citigroup and Seaport Global, respectively.
Wesley Bray – The Trade
Agency broker BTIG has expanded its fixed income credit team in London with the appointment of Christelle Girardie and Paras Shah as managing directors.
/bit.ly/3MYl1qq

Bank of America aims to grow corporate cash management with new tool
Elizabeth Dilts Marshall – Reuters
Bank of America is rolling out a new cash management tool to U.S.-based clients, it said on Tuesday, in a bid to gain market share in the $300 billion cash management business for multi-national corporations. Transaction banking – which covers processing employee payroll, paying suppliers and collecting from customers – contributed roughly 8% of the bank’s total 2021 revenue, or $7.23 billion. The second-largest U.S. bank said it was extending its virtual account management (VAM) tool – already available in Europe – to the United States, where the COVID-19 pandemic has accelerated customers’ use of electronic payments.
/jlne.ws/3HvzclO

Goldman Buyback Desk Was Flooded With Orders During Stock Rout
Lu Wang – Bloomberg
While hedge funds were busy bailing from stocks at a record pace as the S&P 500 plunged into a bear market, Corporate America was furiously buying. As the benchmark index notched successive drops of more than 2.9% on Friday and Monday, Goldman Sachs Group Inc.’s unit that executes share buybacks for clients saw volume spiking to 2.8 times last year’s daily average on the first day and more than triple the average on the second. Each session ranked as the firm’s busiest of this year.
/jlne.ws/3HtLevO

Tiger Global Partner Behind Big Carvana Wager Leaves Hedge Fund
Gillian Tan and Hema Parmar – Bloomberg
Tiger Global Management has parted ways with Sam Harland, the partner responsible for the hedge fund’s bet on beleaguered used-car dealer Carvana Co., according to people with knowledge of the matter. Harland, 33, also led the firm’s wagers on remote talent marketplace Instant Teams, hiring platform WizeHire and Bravado, a networking platform for sales professionals.
/jlne.ws/3MYxJWb

Unscheduled component changes in SDAX and TecDAX
Press Releases – Qontigo
Qontigo’s global index provider STOXX Ltd. has announced unscheduled component changes in the SDAX and TecDAX indices.
Due to the breach of basic criteria (timely publication of Quarterly Statement or Quarterly Financial Report, as outlined in section 5.1.2 in the Guide to the DAX Equity Indices) Nordex SE will be deleted from the SDAX and TecDAX. In SDAX it will be replaced by Medios AG, in TecDAX it will be replaced by SMA Solar Technology AG.
These changes will become effective on 20 June 2022.
/jlne.ws/3zGklTn

Private Equity Faces ‘Crisis of Value’ Over Inflated Prices
Will Louch and Dani Burger – Bloomberg
Private owners of assets face a “crisis of value”, after years of prices being driven higher by rock-bottom interest rates, according to two senior private equity figures. “Right now in the private markets it has been a crisis of value,” Gabriel Caillaux, head of General Atlantic’s business in EMEA, said in a Bloomberg TV interview at the SuperReturn conference for investors in Berlin. “The excesses happened because valuations ran up and you had a whole new set of actors that came in who made the deal cycle a little bit too accelerated.”
/jlne.ws/3zEWcfY

Wellness Exchange

Fauci Tests Positive for Covid-19; Country’s top infectious disease expert has mild symptoms and is isolating
Talal Ansari – WSJ
Anthony Fauci, the country’s top infectious disease expert, has tested positive for Covid-19. The 81-year-old director of the National Institute of Allergy and Infectious Diseases has mild symptoms and is isolating, the National Institutes of Health said in a statement Wednesday. Dr. Fauci, who serves as President Biden’s chief medical adviser, will work from home, according to the NIH. “He has not recently been in close contact with President Biden or other senior government officials,” the NIH said. The federal agency said Dr. Fauci is fully vaccinated and has been boosted twice.
/jlne.ws/3aRZEcP

Covid-19 Disrupts Summer Plans as Variants Keep Case Numbers High; A year ago, the virus was fading, but Covid-19 is still sickening and sidelining people from work or social events as it continues to spread
Brianna Abbott and Jon Kamp – WSJ
Many people are embarking on a summer of vacations, concerts and weddings put off during the height of the pandemic. Covid-19 is still finding ways to disrupt some of those plans. Covid-19 isn’t causing acute illness and death on the scale it once did, thanks in part to protection built up by vaccines and prior infections. But Covid-19 is far from under control, epidemiologists say, and the virus is sickening and sidelining people from work or social events as it continues to spread.
/jlne.ws/3NWxBaQ

Regions

China-Hong Kong Wealth Link’s Slow Start Blamed on Travel Limits; Investor association cites difficulties connecting customers; Wealth Management Connect has been running since October
Denise Wee and Olivia Tam – Bloomberg
Hong Kong’s highly touted wealth link with the Chinese mainland is being hampered by travel curbs that make it hard for new customers to meet bankers. As of April, the program had attracted only 940 million yuan ($140 million), or about 0.3% of the total quota, since its inception in October. Marketing is restricted on the Wealth Management Connect scheme and strict quarantine measures make it difficult for bankers to travel in person in search of new business.
/jlne.ws/3NbbKLT

Russia needs export rethink but no capital controls, central bank chief says
Reuters
Russia needs to rethink the contours of its export-dependent economy to ensure that industry works for the domestic market but most capital controls should be scrapped, Central Bank Governor Elvira Nabiullina said on Thursday. Nabiullina, speaking at Russia’s flagship annual economic conference in St. Petersburg, said that a “substantial part” of Russian industry should start working for the domestic market, rather than rely on exports for revenue.
/jlne.ws/3Hwx5OE

UK secures extra winter gas from Norway via Centrica-Equinor deal; Contract to cushion against Russia supply shock is equivalent to heating 1.5mn households
Nathalie Thomas – FT
Centrica has secured enough additional gas from Norway to heat 1.5mn British households this winter, as the UK races to find alternatives to Russian supplies. The UK energy group, which is the country’s biggest supplier to homes, said on Thursday it had secured an agreement with Norwegian state-backed Equinor to deliver an additional 1bn cubic metres (bcm) of gas every winter for the next three years.
/jlne.ws/3OhuCJN

What crisis? Inflation and EU funds help Italy’s debt to ‘fall like a rock’; Past week has revived memories of more turbulent times, but there are big differences between then and now
Martin Arnold and Amy Kazmin – FT
Eurozone economists who have spent the past week dusting off their debt-sustainability models for Italy are feeling a slight sense of déjà vu. “All of a sudden, everyone has to have an opinion on Italian debt yields,” said Gilles Moec, chief economist at French insurer Axa. “It reminds me of 2012.” In an echo of the eurozone debt crisis that erupted 10 years ago, the European Central Bank said on Wednesday it was again preparing to launch a new bond-buying scheme to contain a sovereign debt sell-off that has hit more vulnerable countries such as Italy much harder than more stable ones such as Germany.
/jlne.ws/39tA79z

Israel and Egypt to boost gas deliveries to EU; New energy deal signed in Cairo as Brussels aims to reduce dependence on Russia
James Shotter and Heba Saleh – FT
Israel and Egypt will boost gas deliveries to the EU after the three parties signed a new energy agreement in Cairo on Wednesday as Brussels seeks to cut energy dependence on Russia. Recent discoveries in the Mediterranean have made the region a potential source of new imports. Under Wednesday’s memorandum of understanding, which follows similar deals between the EU and the US, and the EU and Qatar, Israeli gas will be liquefied at plants in Egypt, before being sent by tanker to the bloc.
/jlne.ws/3zHkYfv

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The Spread

Bears Picked Right Stocks to Short With Declines Twice the S&P’s

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Crypto: ‘Blockchain is hype’ – MPs warned

Crypto: ‘Blockchain is hype’ – MPs warned

First Read Hits & Takes John Lothian & JLN Staff Today we have two videos from my coverage of FIA's IDX in London, which I conducted in the Eurex branded lounge area outside The Brewery's doors. The first is with FIA Europe Head Bruce Savage, whom I literally...

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