Small Exchange Says It Plans to List Crypto Stock Index Futures Contract
Adds another dimension to the universe of derivatives products circling cryptocurrencies
Suzanne Cosgrove – John Lothian News
The Small Exchange said Thursday it has filed a notice with the Commodity Futures Trading Commission to list a stock index futures contract based on an index of 17 cryptocurrency-related publicly traded companies.
The index, which comprises companies behind various cryptocurrencies, not the cryptocurrencies themselves, includes Advanced Micro Devices (AMD), PayPal (PYPL) and Taiwan Semiconductor Manufacturing Company (TSM), as well as Coinbase Global Inc. (COIN), Riot Blockchain Inc. (RIOT) and Grayscale Bitcoin Trust (GBTC).
To read the rest of this story, go here.
Hits & Takes
John Lothian & JLN Staff
FIA IDX starts Monday in person, but the FIA will live stream several speeches and panels available without registration from its website.
You can watch and listen to the opening remarks of Walt Lukken at 09:30 BST / 4:30 a.m. ET on Monday. The Keynote Address from Natasha Cazenave, executive director of the European Securities and Markets Authority will be at 09:45 BST / 4:45 a.m. ET on Monday. Also, the UK Regulated Exchanges Panel will be Monday at 10:30 BST / 5:30 a.m. ET and the Landscape in the UK and EU discussion will be at 11:10 BST / 6:10 a.m. ET on Monday.
On Tuesday you can watch and listen to the keynote address of Chuka Umunna, Managing Director & Head of EMEA ESG, JP Morgan at 09:30 BST / 4:30 a.m. ET and the EU and US Regulated Exchanges panel at 10:00 BST / 5:00 a.m. ET. The Exchanges and the Roll Out of New Sustainability Products discussion will be at 12:00 BST / 7:00 a.m. ET.
Also, from Walt Lukken, this notice: “As you may be aware, in June, a dear friend and neighbor—Robert Holifield—passed away suddenly at the age of 43. He was an important colleague from our industry, having served in the role of chief of staff to the late CFTC Commissioner Bart Chilton and Senate Agriculture Committee Chair, Blanche Lincoln. He was one of the key individuals in the development and passage of Dodd Frank as well. To me, he was an incredible friend, my backdoor neighbor and drinking buddy in our alley where our kids would play.”
“We are hosting a fundraising benefit—Rockin’ for Robert—at Pearl Street Warehouse in Washington DC on Tuesday November 9th to remember the life of Robert Holifield and raise money for the educational funds of Robert and Kat Holifield’s young children—John, Mack, and Grace. Our weekend parent rock band, which includes me and former CFTC Commissioner Mark Wetjen, will headline the event. If people want to buy tickets, be a sponsor or donate, please go to our website at www.robertholifield.com/rockin
Thomas Thrall, Elmhurst, Illinois resident and former staffer at the Chicago Federal Reserve, has passed away. I learned this at a meeting at my church on Tuesday.
We had the first donation to the JLN MarketsWiki Education GoFundMe campaign raffle for five minutes of video production from John Lothian Productions. Mike Corley contributed $100 to the campaign. Thank you to Mike for your contribution and to all who have given and all who have yet to give.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
The American Financial Exchange (AFX), the electronic exchange for direct lending and borrowing created by Richard Sandor, and home of the AMERIBOR benchmark, has announced its commitment to be carbon-neutral. It will begin offsetting its emissions on a yearly basis starting January 1, 2020, with the support of Climate Vault, a non-profit founded at the University of Chicago. The move will make AMERIBOR the world’s first carbon-neutral interest rate benchmark, the exchange said.~SR
Catching up: The International Women’s Forum Chicago on Tuesday hosted a virtual discussion on the challenges of investing and financing cannabis industry businesses, as well as the related political landscape in the state of Illinois, where more than 200 new craft grower and dispensary licenses were recently awarded. Our friends from the consultancy Supercritical were among the speakers at the event, which had the tongue-in-cheek title, “Will the Money be Rolling Into Illinois From Weed?” As Supercritical co-founder Jay Caauwe pointed out, “this is all about building an industry,” and its ancillary businesses, many of which are not “plant-touching” and include sectors like construction, HVAC, packaging and POS software. The IWF just put a recording of the program online. You can listen here. ~SC
Wall Street Faces Tough Transition in Return-to-Office Push
Jennifer Surane – Bloomberg
Growing attendance brings therapy dogs, commuting gripes; ‘Can we shake hands?’ asks Citigroup CEO Jane Fraser
Wall Street’s return to the office is bringing with it confusion, anxiety and even puppies. Banking bosses are navigating a complex transition for weary employees who in many cases haven’t been at their desks for 18 months. For the hard-charging finance industry, it’s a balancing act of restoring normalcy while easing back into corporate life at a time Covid is still raging.
*****Stop pushing. ~JJL
Many Believe It’s Time To Do Away With Lawmakers Making Stock Trades
Deirdre Walsh – NPR
Members of Congress are privy to a lot of classified information. If they use that information to boost their own personal finances, say in the stock market, that could land them in prison. The Stock Act, as the law is known, requires lawmakers to disclose when they trade individual stocks. There’s a bipartisan trend lately, though. Members of Congress are ignoring that law or reporting trades late, sometimes several months after they make big investments. Here’s NPR congressional correspondent Deirdre Walsh.
*****I believe, I believe.~JJL
Trader Spent $50 Million on Options Betting on S&P 500 Rally
Lu Wang – Bloomberg
One trader just took on a massive bet that U.S. stocks will rally into the end of 2021. The flurry of trades with the SPDR S&P 500 ETF Trust (SPY) — which took place between 10:34 a.m. and 10:41 a.m. New York time — involved call spreads maturing in each of the next three months. The total cost was about $50 million. Should all the contracts be in the money by their respective expiration dates, they would be worth $136 million — for a profit of roughly 70%, according to an estimate from Chris Murphy, co-head of derivatives strategy at Susquehanna.
*****I dislike the word bet, but this was a good one.~JJL
The Future of Work Should Mean Working Less
Jonathan Malesic – NY Times
A dozen years ago, my friend Patricia Nordeen was an ambitious academic, teaching at the University of Chicago and speaking at conferences across the country. “Being a political theorist was my entire adult identity,” she told me recently. Her work determined where she lived and who her friends were. She loved it. Her life, from classes to research to hours spent in campus cafes, felt like one long, fascinating conversation about human nature and government.
****** Should is a silly word. Hard work, smart work will always be part of the formula for success. Now, if success is working less, then make sure you find some good, rich and indulgent parents.~JJL
Thursday’s Top Three
Our top story Thursday was Bloomberg’s Robot Crypto Traders Are the New Flash Boys, about front-running in cryptocurrency. Second was the job openings page at DRW, its second time in the top three. Third was How Coinbase is making compliance a driver of innovation, from the Coinbase blog.
26,621 pages; 235,893 edits
China Bans Crypto Transactions, Vows to Stop Illegal Mining
Crypto currencies can’t be circulated, PBOC says in statement; Planning agency says crackdown important to meet carbon goals
China banned all crypto transactions and vowed to stop illegal crypto mining, delivering the toughest blow yet to the trillion-dollar industry. Crypto-related transactions will be considered illicit financial activity, including services provided by off-shore exchanges, the People’s Bank of China said on its website. It added that cryptocurrencies, including Bitcoin and Tether, are not fiat currency and cannot be circulated.
U.S. ‘pink sheets’ in shakeup as securities regulator looks to stamp out fraud
Michelle Price and John McCrank – Reuters
As many as 2,000 companies could disappear from the off-exchange “pink sheets,” long a favorite of retail investors, when a new rule aimed at stamping out fraud in this notoriously risky enclave of U.S. equities markets comes into effect next week.
‘Flash Boys’ exchange IEX ramps up effort to cater to Reddit retail crowd, forms broker committee to improve stock-market structure
Mark DeCambre – MarketWatch
Upstart trading platform IEX Exchange is aiming to draw in more business from retail investors, and in the process is set to convene regular meetings of some of the biggest brokerages in an effort to enhance equity trading for retail investors that some critics have described as impaired.
The Burner Phone That Dialed Up a French Insider-Trading Probe
Gaspard Sebag – Bloomberg
Investigators used phone data to trace steps of suspects; Case is at risk of imploding as judges weigh privacy complaint
In November of 2014, Alexis Kuperfis boarded a plane in Paris to catch a few warm days in his Porto Vecchio villa on the Mediterranean island of Corsica. An intense week lay behind him, but also one that would prove hugely profitable, so there was reason to decompress.
China expands crackdown by declaring all crypto activities ‘illegal’; Country’s central bank seeks to stop residents trading on overseas exchanges
Eleanor Olcott and Eva Szalay – FT
China has expanded its crackdown on cryptocurrencies by declaring that all activities related to digital coins are “illegal”. The People’s Bank of China, the country’s central bank, specifically targeted overseas cryptocurrency exchanges on Friday, declaring that it was illegal for them to provide online services to residents in China.
The Return of Empty Shelves and Panic Buying; Supply chain issues are leaving supermarket shelves empty. Shoppers might yet make things worse.
Andrea Felsted – Bloomberg
Walk around a supermarket in the U.S. or Europe and you will see some empty shelves once more. This isn’t due to people panic-buying toilet paper, as they did early on in the pandemic; rather it’s because supply chains are clogged at almost every stage between Asian factories and grocery stock rooms.
A Perfect Storm Threatens to Engulf the Bank of England; The “Old Lady of Threadneedle Street” faces a tough challenge as forces threaten to drive the economy into stagflation.
Mark Gilbert – Bloomberg
All of the world’s major central banks face a tricky test as they contemplate slowing and unwinding the various stimulus packages introduced to ameliorate the economic impact of the pandemic. But a combination of domestic factors threatens to make life harder for the Bank of England than for its peers.
Gazprom Says Accusation of Withholding Gas Is Absurd
Olga Tanas – Bloomberg
Company’s exports were up 17% in first 8 1/2 months of year; Other main suppliers to EU cut exports in Jan.-June: Gazprom
Gazprom PJSC rejected accusations that it has been withholding natural gas supplies from Europe as the region battles its worst energy crunch in decades. Data on Gazprom’s production and exports to Europe and Turkey prove that “it’s absurd” to accuse the state-run company of under-supplying the region, Sergey Komlev, head of contract structuring at Gazprom Export, said in an in-house magazine on Friday.
How China Is Cracking a Window for Its Bond Investors
Alice Huang – Bloomberg
China is taking another step to loosen its capital controls and in the process is giving onshore investors greater access to a previously hard-to-reach bond market. The so-called southbound link of the Bond Connect program will help draw capital from the mainland to bonds available in Hong Kong, which are currently a challenge to buy due to regulatory restrictions. The new channel could serve to check excess strength in China’s currency by balancing money flowing from overseas funds into Chinese assets. It also could help buttress Hong Kong’s status as a financial hub.
Gas crisis shows how climate change is getting real for investors; Impact of a simmering planet is now having a direct effect on asset allocation decisions
Katie Martin – FT
Europe’s gas crisis is a warning that climate change is rapidly morphing from a faraway prospect for investors to a direct input into asset allocation decisions. The transition away from the dirtiest fossil fuels is not the only reason for the spectacular rally in UK natural gas prices, which have almost tripled this year.
Hedge funds reap windfall by betting on specialist commodity markets; Firms such as Man Group have gained from spiking gas prices and sharp moves in iron ore
Laurence Fletcher – FT
Hedge funds that expanded into UK natural gas and German electricity have made big gains this year from the European energy crisis and sharp moves in specialist commodity markets with one fund soaring by more than 40 per cent.
An Insider Details the ‘Black Box’ of Money and Power in China; A memoir by a well-connected businessman offers insights into the Communist Party’s thinking as it tightens its grip on the private sector.
Li Yuan – NY Times
To build a logistics hub next to Beijing’s main airport, Desmond Shum spent three years collecting 150 official seals from the many-layered Chinese bureaucracy. To get these seals of approval, he curried favors with government officials. The airport customs chief, for example, demanded that he build the agency a new office building with indoor basketball and badminton courts, a 200-seat theater and a karaoke bar.
Delays in availability will impact overall market potential of recently approved COVID-19 vaccines in India, says GlobalData
India currently has six approved COVID-19 vaccines. However, Zydus Cadila’s, Johnson & Johnson’s, and Moderna’s vaccines are not yet available in India. Considering the gigantic vaccination drive in India, any delay in their availability will impact the overall market potential of the recently approved COVID-19 vaccines, says GlobalData, a leading data and analytics company.
Pfizer Clearance Sets Stage for Broader Booster Push in U.S.
Robert Langreth and Josh Wingrove – Bloomberg
Authorization allows additional dose for the most vulnerable; CDC panel to consider recommendations for third shot Thursday
People over age 65 and adults at high risk of severe Covid-19 who have previously taken the Pfizer Inc.-BioNTech SE vaccine can receive a booster dose, the Food and Drug Administration said, opening a new and more controversial phase of the U.S. immunization campaign.
Record Cases in South Korea; Thai Opening in Doubt: Virus Update
South Korea reported a record number of new coronavirus cases following the Chuseok Thanksgiving holidays. Thailand is considering postponing the planned reopening of Bangkok and four provinces due to low vaccination rates.
School Reopenings Falter as U.S. Kids Near 1 Million Covid Cases; States are resisting a return to remote learning even as the delta variant leads to higher numbers of Covid-19 cases among children and teachers.
Elise Young and Nic Querolo – Bloomberg
U.S. schools were counting on widespread vaccinations to help get all students back to in-person classes for the first time since early 2020. Mere weeks into the effort, signs of another taxing year are emerging amid scattershot safety rules and rising Covid-19 among children.
CDC chief overrules panel to back boosters for those in high-risk jobs; US health agency’s decision paves way for more people to get third dose of BioNTech/Pfizer Covid-19 jab
Nikou Asgari – FT
The Biden administration is set to launch a scaled-back version of its booster programme after the top public health agency’s director endorsed a third jab for the elderly and other people whose jobs or health issues put them at high risk of severe illness from Covid-19.
Exchanges, OTC and Clearing
IEX Exchange Assembles Advisory Committee on Retail Trading; IEX Retail Trading Advisory Committee (RTAC) to examine implications of market structure changes on retail trading
IEX Exchange announced today that it has convened leading retail brokerage firms to examine how market structure could change in response to the recent uptick in retail investor participation in the equities market.
Nearly a dozen retail brokers have joined IEX Exchange’s Retail Trading Advisory Committee, or RTAC, including, Betterment Securities, LLC, E*TRADE Securities LLC, Fidelity Investments, Inc., Interactive Brokers, LLC, Public.com (Open to the Public Investing, Inc), RBC Capital Markets, Inc., Robert W. Baird & Co., Robinhood Securities, LLC, TD Securities, Inc., TradeStation Securities, Inc., and Wells Fargo Securities, LLC.
Antin Infrastructure Partners lists on Euronext Paris
EUR550 million raised;Market capitalisation of EUR4.1 billion;150th listing on Euronext in 2021; 5th listing of a Large Cap on Euronext Paris in 2021
Euronext today congratulates Antin Infrastructure Partners, a private equity firm specialising in infrastructure, on its listing on Compartment A of its regulated market in Paris (ticker code: ANTIN).
Majorel lists on Euronext Amsterdam
Successful private placement resulting in a market capitalisation of EUR3.3 billion;Listing Majorel furthers strengthens Euronext’s position as venue-of-choice for global companies
Euronext today congratulates Majorel, a leading global provider of next-generation end-to-end customer experience (CX) solutions for top digital-native and vertical brands, on its listing on Euronext Amsterdam (ticker code: MAJ).
Uncleared Margin Rules and Fixed Income – firms should start clearing
With Phases 5 and 6 of the Uncleared Margin Rules (UMR) becoming effective in September 2021 and 2022, respectively, it is interesting to look at the impact this will have on fixed income as an asset class. We asked Phillip Simons, Global Head of Fixed Income Sales, Derivatives, Funding and Financing at Eurex Clearing, to provide us with some valuable insight.
EURO STOXX® Banks Index Options: Introduction of additional expirations and adjustment of strike price intervals
With effect from 11 October 2021, the Management Board of Eurex Deutschland has decided the following changes for EURO STOXX® Banks Options:Change of the strike price intervals, as outlined in the attached Contract Specifications, Change in terms availability, as outlined in the attached Contract Specifications.
Forfeiture of Unclaimed Interim Dividend for 2015
On 6 August 2021, Hong Kong Exchanges and Clearing Limited (“HKEX”) announced that, pursuant to HKEX’s Articles of Association, the interim dividend for 2015 of HK$3.08 per share, payable on 24 September 2015 and remaining unclaimed on 24 September 2021, would be forfeited and would revert to HKEX. Accordingly, the unclaimed interim dividend for 2015
amounting to HK$17,909,293.95 is forfeited and reverts to HKEX today
ICE Expands Global Natural Gas Liquids Complex with the Launch of a Liquid Petroleum Gas Houston to Chiba Freight Future Based on Baltic’s BLPG3 Assessment
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, announced that it plans to launch a new freight futures contract based on the Baltic Exchange’s liquid petroleum gas (LPG) assessment for the Houston to Chiba route on September 27.
SGX named Commodity Exchange of the Year at Energy Risk Awards
Award comes amid turbulent year for global commodities, marked by intense price volatility across energy, freight and bulk commodities; SGX receives accolade for fourth time, highlighting leadership in innovating and delivering comprehensive risk-management solutions for industry
Singapore Exchange (SGX) has been named “Commodity Exchange of the Year” at the Energy Risk Awards 2021, recognising its leadership in energy risk management across the global commodity supply chain and service to producers, physical and financial traders, as well as consumers.
Change in Application Procedure for Additional Trading Memberships, etc.
Tokyo Commodity Exchange, Inc. (TOCOM) will change the procedures for adding trading membership for trading participants, and partially revise the trading rules for Crude Oil and Petroleum-related Futures to improve the convenience of the market.
— Clearing Sustainable Clearing Verification Process – Effective September 27, 2021 — CME
— Performance Bond Requirements: Agriculture, Energy, FX, and Metal Margins – Effective September 24, 2021 — CME
— 2022 Soybean Meal Futures and Soybean Oil Futures Delivery Differentials — CME
— Performance Bond Requirements: Energy – Effective September 24, 2021 — CME
— Product Modification Summary: Amendments to FOB Santos Soybeans Financially Settled (Platts) Futures Minimum Price Increment to allow Reduced Tick Spreads – Effective October 04, 2021 — CME
Former BofA director joins Broadridge to oversee derivatives clearing product management; New global product manager of derivatives clearing previously spent 30 years at Bank of America.
Annabel Smith – The Trade
A former Bank of America derivatives specialist has joined Broadridge Financial Solutions to head up the product management of its derivatives clearing business globally. Mike Johnson joins Broadridge after serving at Bank of America for over 30 years, spending half of that tenure in exchange-traded derivatives and 10 years in repo trading.
Reducing the settlement cycle presents global post-trade challenges
The recent announcement by the Depository Trust and Clearing Corporation (DTCC) advocating that the settlement cycle for US cash equities should be shortened from two days to one (T+2 to T+1) is not revolutionary, as globally there have been markets operating on same day settlement (T+0) and a T+1 basis for decades.
Fintech Lender Affirm Leans on Investors to Fund Rapid Growth
Kristin Broughton – WSJ
Fintech lender Affirm Holdings Inc. is relying more on financing from investors instead of lenders to fund its growth as its “buy now, pay later” installment plans are becoming more popular.
“Buy now, pay later” loans often appeal to customers who don’t qualify for credit cards or prefer fixed-payment plans. Consumers spent between $15 billion and $20 billion using such loans on e-commerce purchases in 2020, up from $6 billion to $9 billion in 2019, according to estimates from credit ratings firm DBRS Morningstar.
It turns out fintech is worth as much as SaaS
Alex Wilhelm – TechCrunch
Fintech startups are having one hell of a week.
On the heels of Boston-based software-and-payments company Toast’s strong IPO pricing, Remitly priced shares in its own debut above its proposed range yesterday evening. The Seattle-based fintech company sold 12,162,777 shares (7,000,000 primary) at $43 apiece. The company had previously targeted a $42 per-share max price for its IPO equity.
Biden cybersecurity leaders back incident reporting legislation as ‘absolutely critical’
Justin Doubleday – Federal News Network
Senior Biden administration officials are backing congressional efforts to enact new cyber incident reporting requirements for critical infrastructure operators and other companies, as well as other efforts to further entrench the Cybersecurity and Infrastructure Security Agency at the center of the civilian executive branch’s digital security apparatus.
During a Senate Homeland Security and Governmental Affairs Committee hearing today, CISA Director Jen Easterly and National Cyber Director Chris Inglis offered support for incident reporting legislation put forth by Chairman Gary Peters (D-Mich.) and Ranking Member Rob Portman (R-Ohio). The bill would require critical infrastructure operators to report significant cyber incidents on their networks to CISA.
Artificial Intelligence: The Future Of Cybersecurity?
Steve Durbin – Forbes
A technology-led revolution, dubbed Industry 4.0, is gathering pace in the industrial world where traditional processes and legacy technologies are being replaced by smart devices, automated machines and advanced forms of computing. The rise of Cyber Physical Systems (CPS), owing to exponential growth in technologies like the Internet of Things (IoT), artificial intelligence (AI), cloud, robots, drones, sensors, etc., is helping manufacturers improve efficiencies, productivity and the autonomous operation of production lines. Businesses are pouring billions of dollars in AI and automation, and the Industrial IoT (IIoT) alone is set to become a $500 billion market by 2025.
Biden Cybersecurity Officials Support Breach Incident Reporting Mandate
Rebecca Kern – Insurance Journal
The head of the U.S. cybersecurity enforcement agency “is a huge supporter” of bipartisan legislation to mandate that operators of critical infrastructure report data breaches to the government.
Jen Easterly, director of the Cybersecurity and Infrastructure Security Agency, said she backs draft legislation from the Senate Homeland Security and Governmental Affairs Committee to require certain private companies, federal agencies and government contractors to report cyberattacks to the agency.
Florida lawmakers ask why $30 million allocated for cybersecurity hasn’t been spent
Lawrence Mower – Miami Herald
Florida lawmakers assigned $30 million this year for a host of cybersecurity measures in a one-time attempt to shore up the state’s defenses.
Months later, not a penny has been spent.
That’s according to Florida’s chief information officer, Jamie Grant, who told lawmakers Wednesday that his office is so short-staffed that it hasn’t come up with a plan to spend the money.
Robinhood muscles deeper into Coinbase’s territory with new crypto wallet feature
Lucas Matney – Techcrunch
The fervor around Dogecoin delivered big revenues for stock-trading app Robinhood, and the company announced Wednesday that it’s wandering deeper down the crypto rabbit hole, sharing that it will soon begin testing crypto wallets for its users.
China Declares Cryptocurrency Transactions Illegal; Bitcoin Price Falls; The move reinforces China’s tough stance, the strongest to date from a major economy against the use of digital currencies
Elaine Yu and Joe Wallace – WSJ
China’s central bank said all cryptocurrency-related transactions are illegal, reinforcing the country’s tough stance against digital rivals to government issued money. In a statement posted on its website on Friday afternoon, the People’s Bank of China said the latest notice was to further prevent the risks surrounding crypto trading and to maintain national security and social stability.
How crypto enables economic freedom
Brian Armstrong – Coinbase
The following is an internal memo that I shared with Coinbase employees this week and would also like to share publicly to help people see how we’re working toward our mission of increasing economic freedom in the world.
Tl;dr: Our core thesis is that greater adoption and usage of cryptocurrency will increase economic freedom in the world, because crypto solves many of the shortcomings of the current financial system that hinder economic freedom.
‘Dramatic’ increase in IRS capital-gains transactions as Biden administration considers raising tax rates on the wealthy
Andrew Keshner – MarketWatch
‘Dramatic’ increase in IRS capital-gains transactions as Biden administration considers raising tax rates on the wealthy
Through July, millionaires reported roughly $140.5 billion in combined capital gains and/or losses, up from $118.4 billion one year earlier.
Iowa Republican Senator Chuck Grassley to Run for 8th Term
Iowa Sen. Chuck Grassley, the longest-serving Republican senator, announced Friday that he will seek an eighth term in 2022. The 88-year-old, who has been in the Senate for 40 years, said in an announcement of his reelection bid posted on Twitter that there is “a lot more to do, for Iowa.”
Election of Japan’s Next Leader Shows Women Have Made Little Progress; Sanae Takaichi and Seiko Noda are vying with two men to become prime minister against a backdrop of rising female unemployment and missed targets for gender diversity in management jobs.
Yuko Takeo, Michelle Jamrisko – Bloomberg
Japan’s ruling party is set to choose the country’s next prime minister on Sept. 29. Although the leading candidate is a man, in a historic twist of events two of the four contenders are women, signaling potential cracks in the country’s durable glass ceiling.
What investors are looking for from the German elections; Berlin needs to raise public investment and fund the transition to a greener future
Erik Nielsen – FT
For investors, there is a lot riding on the outcome of the German elections on Sunday to select a new Bundestag that will negotiate a new government coalition and a new chancellor.
U.S. charges ex-Wall Street quantitative analyst with insider trading
Jonathan Stempel – Reuters
A former Wall Street quantitative analyst was charged on Thursday with insider trading for making nearly 2,900 trades after learning his employer would soon make the same trades for clients, known as front-running. The U.S. Department of Justice said Sergei Polevikov, 48, of Port Washington, New York, generated more than $8.5 million of illegal profit from trades he conducted from January 2014 to October 2019 through his wife’s brokerage account.
PRA chief vows to improve regulator’s diversity record; Sam Woods calls on Threadneedle Street to do better on diversity, but asks firms to step up too
Lucy McNulty – Financial News
The UK’s prudential regulator is “not making sufficient progress, or moving quickly enough” to diversify its ranks, its chief has said. Sam Woods, the Bank of England’s deputy governor for prudential regulation and head of its regulatory arm the Prudential Regulation Authority, has vowed to make “strenuous efforts to improve” its diversity and inclusion record in a series of prepared remarks released ahead of his speech to finance executives at the annual Mansion House dinner on 22 September.
Former Advisor Sentenced to 35 Years in Prison Over Massive Fraud
Andrew Welsch – Barron’s
Though barred from the industry more than a decade ago, Daryl Bank allegedly swindled hundreds of investors, many of whom were retirees, according to federal prosecutors.
SEC Will Demand Firms Eliminate Compensation Conflicts, Experts Predict
Tracey Longo – Financial Advisor
The salad days of broker-dealers and their registered investment advisors routinely maximizing compensation at investors’ expense will soon be coming to an end as the Securities and Exchange Commission (SEC) ramps up enforcement, two veteran industry experts said yesterday. The SEC and Finra will be moving from requiring firms to disclose their conflicted compensation, including 12b-1 fees and differential compensation, to actually requiring them to halt such practices or face enforcement consequences, Christine Lazaro, professor and director of the Securities Arbitration Clinic at St. John’s University School of Law, and Ron Rhoades, associate professor and director of the personal financial planning program at Western Kentucky University, said during a press call sponsored by the Institute for the Fiduciary Standard.
EQT Probed by Swedish Regulator Over Suspected Market Abuse
Charles Daly and Rafaela Lindeberg – Bloomberg
The firm is Europe’s biggest listed private equity company; The regulator said it is probing the release of information
EQT AB, Europe’s biggest listed private equity firm, is being investigated by the Swedish Financial Supervisory Authority for suspected market abuse. The shares fell as much as 8.1% in Stockholm trading. The financial watchdog said it is probing a $2.7 billion public offering that allowed several executives to sell shares. The announcement from the regulator comes exactly on the two-year anniversary of EQT’s initial public offering.
1MDB Casts Shadow on Ex-Swiss Bank CEO’s Money-Laundering Trial
Hugo Miller – Bloomberg
Client was separately convicted over role in 1MDB scandal; Former Falcon Bank CEO denies money-laundering allegations
The former boss of a defunct Zurich private bank that was mired in the multibillion-dollar 1MDB scandal faces a trial next week accused of money laundering for a Gulf businessman convicted in the affair.
Rishi Sunak set to tighten UK financial regulations after Greensill scandal; Chancellor orders two reviews following report by Treasury select committee
Jim Pickard and Robert Smith – FT
Chancellor Rishi Sunak has ordered two immediate reviews of UK financial regulation related to the collapse of Greensill Capital as he accepted some recommendations from a report by a committee of MPs into the scandal.
US arrests finance chief of Russian natural gas group Novatek; Mark Gyetvay indicted on tax charges connected to $93m in offshore accounts
Stefania Palma and Nastassia Astrasheuskaya – FT
The US has arrested one of the most influential executives in Russia’s natural gas industry over alleged tax misconduct linked to tens of millions of dollars held in offshore accounts. The Department of Justice in a statement on Thursday said Mark Gyetvay, chief financial officer at Novatek, allegedly schemed to defraud the US by hiding ownership and control over “substantial offshore assets” that at one point were worth more than $93m. He was also accused of failing to file and pay taxes on millions of dollars in income.
U.S. Solicits Public Feedback on Anti-Money-Laundering Rules for Antiquities Dealers; Legislation passed by Congress directs FinCEN to extend requirements created by the Bank Secrecy Act of 1970 to the antiquities market
Dylan Tokar – WSJ
The U.S. Treasury Department has begun the process of extending anti-money-laundering requirements to antiquities dealers, part of an effort to plug a longstanding hole in U.S. laws that guard against financial crimes. The department’s Financial Crimes Enforcement Network, or FinCEN, issued a notice on Thursday asking the public for feedback about the prospective rules, which were mandated by Congress as part of an anti-money-laundering reform law passed in January.
ESMA orders UnaVista to pay EUR238k for EMIR data breaches; The fine relates to eight breaches of the regulation surrounding the trade repository’s failure to ensure the integrity of data and give regulators direct and immediate access.
Annabel Smith – The Trade
Trade depository UnaVista has been fined EUR238,500 by European Securities and Markets Authority (ESMA) for eight breaches of the European Market Infrastructure Regulation (EMIR).
Report on competition in the Australian funds management industry released
ASIC has today released a report on the state of competition in Australia’s funds management industry. ASIC commissioned independent research by Deloitte Access Economics (Deloitte) to examine competition between fund managers with a focus on outcomes delivered to investors in retail managed investment products. Report 702 Competition in funds management contains Deloitte’s findings.
SEC Charges Quant Analyst in Multimillion Dollar Front-Running Scheme
The Securities and Exchange Commission today announced charges against Sergei Polevikov, who worked as a quantitative analyst at two prominent asset management firms, for perpetrating a years-long front-running scheme that generated illicit profits of at least $8.5 million.
SEC Charges U.K.-Based Father and Son, and Two Others in Transatlantic Microcap Fraud Scheme
The Securities and Exchange Commission today filed two complaints in the United States District Court for the Eastern District of New York charging four individuals and five entities for their roles in an allegedly fraudulent microcap scheme that generated more than $10 million in unlawful stock sales. The SEC also is seeking an order to freeze the assets of seven of the defendants and one relief defendant.
SEC Charges Firm and Two Principals in First-Ever Actions Enforcing Rule on Duties of Municipal Advisors
The Securities and Exchange Commission today charged a Texas- and Colorado-based municipal advisor, Choice Advisors LLC, and its two principals, Matthias O’Meara and Paula Permenter, with violating their duties, engaging in unregistered municipal advisory activities, and related misconduct with respect to Choice’s charter school clients. The actions are the first-ever SEC cases enforcing Municipal Securities Rulemaking Board Rule G-42 on the duties of non-solicitor municipal advisors.
SEC Charges Principals of Subprime Automobile Finance Company with Fraud
The Securities and Exchange Commission today announced fraud charges against two former executives of a subprime automobile finance company for misleading investors about the subprime automobile loans that backed its $100 million offering.
SEC Issues Agenda for Sept. 27 Meeting of the Asset Management Advisory Committee
The Securities and Exchange Commission today released the agenda for the Sept. 27 meeting of the Asset Management Advisory Committee (AMAC).
SEC Charges World’s Largest Advertising Group with FCPA Violations
The Securities and Exchange Commission today announced that London-based WPP plc, the world’s largest advertising group, has agreed to pay more than $19 million to resolve charges that it violated the anti-bribery, books and records, and internal accounting controls provisions of the Foreign Corrupt Practices Act (FCPA).
ESMA Recommends To European Commission To Delay Buy-in Rules
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has written to the European Commission (EC) regarding the implementation of the Central Securities Depositories Regulation (CSDR), urging it to consider a delay of the mandatory buy-in regime.
ESMA consults on the review of the Short Selling Regulation
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today launches a consultation paper (CP) on the review of the Short Selling Regulation (SSR).
ESMA consults on proposals for a review of the MiFID II best execution reporting regime
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today launches a consultation on proposals for improvements to the MiFID II framework on best execution reports. These proposals aim at ensuring effective and consistent regulation and supervision and enhancing investor protection.
FINRA Firm Grouping Member Forum: Trading and Execution
FINRA Firm Grouping Member Forums are one-day free events designed to provide financial professionals associated with FINRA member firms the opportunity to engage in key discussions with FINRA staff and connect with industry leaders and peers. The forums also include thoughtful discussions around the future landscape of the financial services industry and provides opportunities to meet one-on-one with FINRA Risk Monitoring Analysts, Directors, and Single Points of Accountability (SPoA) to discuss firm-specific questions.
FINRA Names Sarah Gill as Ombudsman, Cindy Foster as VP of MAP Program
FINRA today announced the appointment of Sarah Gill as Ombudsman and Cindy Foster as Vice President of the Membership Application Program (MAP) and Statutory Disqualification. As the new Ombudsman effective Oct. 4, Gill will handle issues, inquiries and complaints that arise from FINRA’s interactions with public investors, member firms, member firm employees, FINRA staff and other stakeholders. She succeeds Foster in the role. Foster, who had served as FINRA’s Ombudsman since 2009, was appointed to lead MAP, effective June 14.
Effective date for amendments regarding mandatory clearing and trade execution requirements for SDs
NFA Compliance Rule 2-49 provides that any NFA swap dealer (SD) Member that violates CFTC Regulation 3.3 or any Part 23 Regulation is deemed to have violated an NFA requirement. Compliance Rule 2-49 also provides NFA with authority to oversee and enforce SD Member compliance with these requirements. While most SD-related CFTC requirements are contained in CFTC Regulation 3.3 and the Part 23 Regulations, NFA also oversees SD Member compliance with the mandatory trade execution requirement under CFTC Regulation 37.121 and the mandatory clearing requirements in Part 50. Therefore, NFA has amended Compliance Rule 2-49 to provide that any SD Member that violates CFTC Regulation 37.12 or the Part 50 Regulations will be deemed to have also violated an NFA requirement. This amendment will become effective on September 30, 2021.
Stephen Allen sentenced to 28 months imprisonment for forging a trust deed
Stephen Allen has today been sentenced to 28 months imprisonment for forging a trust deed in an attempt to help his client minimise restitution payments owed to victims. A director disqualification order of 8 years was also imposed.
Sentor Solutions Commercial Ltd consumer warning
We have taken action against the authorised firm, Sentor Solutions Commercial Ltd, to prevent it carrying out any regulated activities without our prior written consent. This consumer warning explains the steps that we have taken to protect consumers and where you can go for advice if you are concerned about any investments made in Texmoore Limited, Fabcourt Developments Limited or interactions with Sentor Solutions. Any investments in Texmoore Limited and Fabcourt Developments Limited who Sentor Solutions undertook business for may not be protected under FSCS compensation schemes.
Investing and Trading
The Commodities Driving The $173 Trillion Global Energy Transition
The energy transition is in full swing, with electric vehicles supplanting gas guzzlers and solar panels and wind turbines replacing coal and oil as the world’s leading energy sources. The energy transition is driving the next commodity supercycle, with immense prospects for metals producers, technology manufacturers, and energy traders and investors.
Gas crisis a win for Centrica as energy investors see deal spree; The 250% surge in wholesale gas prices this year means big industry players may gobble up struggling suppliers
David Ricketts – Financial News
UK fund managers see the UK’s gas crisis as a boon to the largest listed energy companies. The gas crisis will spark consolidation and lead to more favourable policymaking that will boost their competitiveness, say big shareholders including RWC fund manager Ian Lance, whose holds British Gas parent Centrica across his Enhanced Income and UK Equity Income funds.
Mr. Market Is Offering Us a Second Bite at Value Stocks; They look compellingly cheap, thanks to Covid, and the opportunity may not last long.
John Authers – Bloomberg
Opportunity Knocks Again
Investing is about opportunism, as much as it is about hard work, discipline and patience. That is the founding creed of value investing. As laid out by Benjamin Graham almost 90 years ago, Mr. Market is a manic-depressive who will occasionally give you the opportunity to buy stocks for less than they are worth. Doing so is more easily said than done. But is it just about possible that Mr. Market is giving us a second chance to buy into value stocks at ridiculously cheap valuations?
Ultra-Rich Boom Is Fueling an M&A Frenzy for Wealth Advisers; The pace of deals is on track to be the most since the early 2000s as rich clients proliferate.
Scott Carpenter – Bloomberg
Almost from the day he started his wealth-management firm in 2014, Russ Charvonia would get unsolicited emails offering to buy the company. He’d send them directly to his trash folder.
Child-Care Crunch Could Trigger a Double-Dip Recession for Women; Moms without a diploma lag those who are college-educated in rejoining the labor force.
Catarina Saraiva, Payne Lubbers – Bloomberg
Shanique Green, a single mother living in Boston, had no trouble finding a part-time customer service gig this summer to supplement her income from her regular job at a call center. Lining up the child care she needed to make it all work has been much more of a challenge.
Environmental, Social and Corporate Governance
American Financial Exchange (AFX) and AMERIBOR® Announce Commitment to Being Carbon-Neutral with Support of Climate Vault, Setting New Standard for Financial Markets Industry
AFX via Businesswire
AMERIBOR® to Be World’s First Carbon-Neutral Interest Rate Benchmark
Climate Vault Extends Its Reach to Support Net-Zero Emissions for Financial Markets
AFX Partnered with Environmental Market Advisors Evolution Markets Inc., on Calculation and Offset Activity
The American Financial Exchange (AFX), an electronic exchange for direct lending and borrowing for U.S. banks and financial institutions, today announced its commitment to be carbon-neutral, offsetting its emissions on a yearly basis starting from January 1, 2020. With the support of Climate Vault, a non-profit founded at the University of Chicago with a mission to significantly reduce and eliminate CO2 emissions, AFX will calculate, then reduce or offset, all of its Scope 1, 2 and 3 emissions. These activities to address climate change will make AMERIBOR®, the oldest Libor alternative, the world’s first carbon-neutral interest rate benchmark.
China’s Power Cuts Widen Amid Shortages and Climate Push
Dan Murtaugh – Bloomberg
Power rationing and forced cuts to factory production in China are widening amid electricity supply issues and a push to enforce environmental regulations.
World’s Top Shale Oil Field Is Still Spewing Methane by the Ton
Zachary Mider and Rachel Adams-Heard – Bloomberg
Flights over the Permian Basin reveal massive methane plumes; Almost half the methane detected came from persistent emitters
When researchers flew over an Energy Transfer LP facility in the Permian Basin of West Texas two months ago, a NASA-designed sensor on their airplane detected a colossal plume of methane pouring into the air.
Banks May Be Our Best Hope in Fighting Climate Change; Governments already use the industry against money laundering and criminal activity. It’s a more efficient way of changing behavior than imposing direct taxes.
Paul J. Davies – Bloomberg
Temperatures are rising and there’s lots of work to do to avert disastrous outcomes. Europe is looking at one quick and easy avenue to make change happen: Go through banks.
U.K.’s Green Bond Debut Is Too Costly for Largest Corporate Pension Fund
Greg Ritchie and Ronan Martin – Bloomberg
BT Pension Scheme says buying green can’t come at any cost; Ethical debt still usually sells at a premium for investors
The U.K.’s largest company pension fund didn’t buy into the nation’s debut green bond as it balked at the expensive price relative to normal debt.
Ex-Hedge Fund Manager’s Startup Hits $2 Billion Value
Yoolim Lee – Bloomberg
Advance Intelligence Group, a technology startup led by former hedge fund manager Jefferson Chen, topped $2 billion in valuation after raising more than $400 million from investors led by SoftBank Vision Fund II and Warburg Pincus.
Why Goldman Sachs just launched this ETF that will rival FAANG stocks
Brian Sozzi – Yahoo Finance
Goldman Sachs believes people are over invested in big cap tech names such as Facebook, Amazon, Apple, Netflix and Google [FAANG] that have minted fat profits and higher stock prices the past decade amid an explosion in tech advances.
Goldman Isn’t Taking Chances on Its Private Equity IPO; The investment bank has an enduring reputational interest in Petershill Partners trading strongly long after its debut.
Chris Hughes – Bloomberg
Goldman Sachs Group Inc. is wisely playing safe with the landmark initial public offering of its Petershill Partners Plc private-equity business. The valuation range mimics July’s successful listing of Bridgepoint Group Plc, a stock that’s already up over 50%. But investors eyeing a piece of this IPO shouldn’t assume it’s a giveaway on the same scale.
Broker Peel Hunt raises £112m to capitalise on dealmaking boom; Small and mid-cap stock specialist to use placing funds for expansion including into Europe
Daniel Thomas – FT
Corporate broker Peel Hunt has raised £112m in a flotation on the London stock market to capitalise on the boom in dealmaking and other corporate activity. The fundraising on Aim, London’s junior market, values the small and mid-cap stock specialist at about £280m. About £40m has been taken in new capital, while selling shareholders are expected to make about £72m, leaving a free float of 40 per cent.
Market Turmoil Greets China’s Southbound Bond Connect
The southbound link between China and Hong Kong opens Friday; Launch comes under shadow of market’s Evergrande concerns
A new channel for Chinese investors to purchase debt overseas is launching at a tumultuous time for the nation’s offshore market. The southbound link of the Bond Connect opens Friday, drawing capital from the mainland to the southern city of Hong Kong to complete the loop with a northbound program started in 2017. With 41 banks among those eligible to participate during the initial phase, analysts see it eventually boosting China’s offshore bond market and issuance of Dim Sum and ESG-compliant notes, as well as bringing offshore and onshore yields closer.
Why the China Evergrande Crisis Is Scaring Investors Around the World
Charlie Wells – Bloomberg
In China, a company called Evergrande promised to deliver apartments to some 1.5 million buyers, who are still waiting for their keys. Some of them have started protesting. They want Evergrande — the world’s most indebted property developer — to resume construction of the apartments they were promised, or give their money back.
China Lays Down the Law for Evergrande
David Rovella – Bloomberg
China’s financial regulators laid down the law for Evergrande Group. They told the struggling developer to do whatever it takes to avoid a near-term default on dollar bonds. Beijing also said the company should focus on completing unfinished properties and repaying individual investors. There’s no indication regulators offered any financial support for the bond payment, however.
Tycoons Make Billions From Russian Property in Pandemic Boom
Alexander Sazonov – Bloomberg
PIK, Samolet surge as Putin’s mortgage subsidies boost market; Gordeev of PIK saw fortune more than double to $8.9 billion
Russia’s property tycoons are minting vast fortunes after a government move to boost the market during the pandemic helped spur a housing boom.
Abu Dhabi’s Wealth Funds Weigh Turkey Investments Worth Billions
Ercan Ersoy, Asli Kandemir, and Kerim Karakaya – Bloomberg
Wealth funds in Abu Dhabi are on the prowl in Turkey, scouting for targets for billions of dollars in investments, according to people familiar with the matter.
Zimbabwe Threatens Black Market Traders Amid Free-Falling Dollar
Ray Ndlovu – Bloomberg
Vice president warns of unspecified action against speculation; The spread between official and parallel market has doubled
Zimbabwean Vice President Constantino Chiwenga issued a threat against the parallel-currency market traders, becoming the nation’s most senior official to acknowledge the risk that a resurgent black market poses to efforts to revive the beleaguered economy.
Steve Schwarzman Turns Central Park Into Wall Street Power Spot
Amanda L Gordon – Bloomberg
Goldman’s Philip, KKR’s Bae help celebrate Conservancy’s 40th; Outdoor gala is ‘what we need right now,’ says Martha Stewart
Central Park isn’t just a place for kids and dogs to frolic. It’s where titans of Wall Street get some work done. This includes the labor of putting on a tuxedo, and mingling and dancing to an orchestra as Steve Schwarzman did Wednesday night in the Conservatory Garden, helping raise $2.8 million to support the Central Park Conservancy.