Citadel Posts Record Revenues for Hedge-Fund, Securities Operations

Jan 6, 2023

First Read

Hits & Takes
John Lothian & JLN Staff

Yesterday we published the first part of a three part Open Outcry Traders History Project interview with Gilbert Leistner, the man who ran a trading group at Rosenthal Commodities and taught me all about options when I was at Rosenthal affiliate First American Discount Corporation back in the 1980s. Leistner is a great storyteller and has some good ones to share, including about mispriced options models, Les Rosenthal and more. We will publish Part Two on www.johnlothiannews.com later today.

Our friends at ABN AMRO Clearing Chicago are changing their name. Henceforth, they shall be named “ABN AMRO Clearing USA.” This reflects the growing reach of their business, which is not just Chicago anymore. Here is a statement from the CEO:

AAC-USA’s Chicago-based CEO, Boudewijn Duinstra said, “I am excited to start the new year with this change to our company’s name. Chicago has long been a hub for trading and continues to be our home base. Now, our clients trade from around the country and often even from around the world, and we want our corporate name to better reflect that reality.” ABN AMRO Clearing USA LLC currently holds offices in both Chicago as in New York city.

The Stuart School of Business at Illinois Tech’s Career Conversations featured alum Matthew Scharpf, who wrote a piece titled “Humility and Kindness in the Workplace.” That sounds exactly like the kind and talented Mr. Scharpf.

The Federal Trade Commission is proposing a rule that would prevent employers from blocking employees from going to work for rivals. This would kill non-compete agreements that some firms force employees to sign as a requirement of employment, The New York Times reported. The New York Post says the rule would boost pay for employees by $300 billion.

The Independent has named Dorset’s Anchor Inn as England’s best pub. You are welcome to bring your dogs, but you must keep them off the furniture. You may only deal with staff with kindness, the website says. Sounds like a place to stop in and have a pint or two or six. The Anchor Inn website is theanchorinnseatown.co.uk

However, before you order that brew, you might want to check the price. I am not picking on Anchor Inn, rather The Wall Street Journal is reporting that beer sales have dropped since October as consumers balked at higher prices. Beer demand fell at the end of 2022 after a strong run that defied inflation, until it didn’t.

The Wall Street Journal is reporting that the AI tool I experimented with to write a couple of stub wiki pages for MarketsWiki is looking at a valuation of $29 billion. The title of the story is “ChatGPT Creator in Investor Talks at $29 Billion Valuation.” That would make it one of the most valuable AI enterprises. I guess this AI thing is something.

Offering a different view on AI and ChatGPT, there is a podcast on The New York Times titled “A Skeptical Take on the A.I. Revolution. The A.I. expert Gary Marcus asks: What if ChatGPT isn’t as intelligent as it seems?

The Trade’s Fireside Friday chat is with Tim Beckwith, who is head of commercial and business development at Cboe Clear Europe.

Imane Kabbaj has a new role as director of Responsible Investment at Man Group.

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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Options trading is far from slowing down. Cboe Global Markets on Thursday reported its December monthly and full year 2022 trading volume statistics and projected rate per contract/net revenue capture for Q4 2022. The highlights include: In U.S. options, total options volume was 3.4 billion contracts in 2022, the third consecutive record-breaking year. Total options ADV reached a new all-time high of 13.6 million contracts traded per day in 2022. Total index options volume set a new annual record of 714.7 million contracts in 2022. For the year, a record 558.4 million S&P 500 Index (SPX) options contracts were traded, with an ADV of 2.2 million contracts, beating the previous high of 371.3 million contracts in 2018. You can see more data here. ~SR

The Security Traders Association (STA) has an Open Call video that focuses on an SEC proposal titled “Disclosure of Order Execution Information”, aka Rule 605 and how it interacts with one of the SEC’s other proposals introduced on December 14: Regulation Best Execution. The presenter of the Open Call is Mark Davies, co-founder & CEO of S3. You can read more about it and watch the Zoom video here.~SR

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Gilbert Leistner – Open Outcry Traders History Project Interview – Part One
JohnLothianNews.com

Gilbert Leistner is a good storyteller and he shared many stories during an interview for the Open Outcry Traders History Project that JLN has broken into three parts. The stories are about his difficulties with the feudal specialist system at the AMEX, coming to Chicago and trading on all three Chicago exchanges, dragons and princes, trading models that don’t work, and figuring out one that changed the way futures options trade.

Watch the video »

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Eden Global’s David Nealis Talks About Opportunities in Vietnam at FIA Expo 2022
JohnLothianNews.com

David Nealis, president of Eden Global Capital, sat down with John Lothian News for a video interview at FIA Boca 2022. Eden Global, a private investment firm based in the British Virgin Islands, is currently focused on the Vietnamese market, Nealis said.

Watch the video »

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Bed Bath & Beyond Prepares to File for Bankruptcy Within Weeks
Jodi Xu Klein, Soma Biswas and Suzanne Kapner – The Wall Street Journal
Bed Bath & Beyond Inc. is preparing to file for bankruptcy within weeks after the home-goods retailer came up short on sales during the critical holiday season, according to people with knowledge of the matter. The retailer is in the early stages of planning for a chapter 11 bankruptcy filing and the discussions could extend into February, these people said. Bed Bath & Beyond warned earlier Thursday that it might file for bankruptcy protection and that it has substantial doubt it can stay in business after enduring another quarter of deep losses and slumping sales.
/jlne.ws/3VKyXsx

***** This place has had bad karma for me since my wife had her purse stolen from a shopping cart while shopping there years ago.~JJL

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Chase cuts its Loop branch presence nearly in half
Steve Daniels – Crain’s Chicago Business
As downtown Chicago’s fitful recovery from the pandemic lingers, JPMorgan Chase is significantly reducing its brick-and-mortar presence in the Loop and environs. The area’s largest commercial and retail bank, Chase in the past year has shuttered or is in the process of closing four of 10 downtown locations. That leaves six for a banking colossus that offered downtown customers 13 branches as recently as mid-2018, according to Federal Deposit Insurance Corp. data.
/jlne.ws/3Gi6rsx

****** Fewer office workers equal less need for bank branches. Simple as that. ~JJL

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FTC Proposes Banning Noncompete Clauses for Workers; Move would allow former employees to take jobs with rival companies or start competing businesses
Dave Michaels – The Wall Street Journal
The Federal Trade Commission on Thursday issued a plan to ban noncompete clauses, a proposal that would allow workers to take jobs with rival companies or start competing businesses but raises the prospect of legal opposition from companies that say the practice has a legitimate purpose. The FTC said noncompete clauses constitute an exploitative practice that undermines a 109-year-old law prohibiting unfair methods of competition. Noncompete clauses, which typically bar employees from joining a competitor for a period after they quit, affect nearly one in five American workers, according to the agency.
/jlne.ws/3im6o76

****** This would be a big win for workers and create more loyalty towards workers, including higher pay.~JJL

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This ethical hacking course bundle is on sale for 99% off; Learn to out-hack the bad guys.
StackCommerce
The 2023 Complete Cyber Security Ethical Hacking Certification Bundle(opens in a new tab) is on sale for pounds 20.93, saving you 99% on list price. Though most of us are aware that crime is on the rise, there’s a different kind of security we all take for granted day after day. Cybercriminals will only continue to be a bigger threat as more aspects of our lives go online. And while there are certain steps you can take to mitigate risks, ultimately every type of business is vulnerable.
/jlne.ws/3Iuzr2Y

****** Learn to fight fire with fire, just don’t get burned.~JJL

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Thursday’s Top Three
Our most read story Thursday was The Wall Street Journal’s Celsius Network Wins Ownership Rights to Customer Crypto Deposits. (Celsius Network was also our MarketsWiki Page of the Day on Thursday.) Second was Business Insider’s Just 1% of applicants make it into Lazard’s summer internship program. The boutique bank’s head of campus recruiting shares 5 tips for aspiring financiers looking to ace the interview. And third was Christine Murphy’s announcement on LinkedIn that she is starting a new position as University Talent Acquisition Lead at DRW.

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MarketsWiki Stats
27,123 pages; 242,221 edits
MarketsWiki Statistics

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Lead Stories

Citadel Posts Record Revenues for Hedge-Fund, Securities Operations; Hedge-fund business is said to have taken in $28 billion in revenue for 2022
Juliet Chung and Alexander Osipovich – The Wall Street Journal
Citadel’s winning streak continued in 2022, with Kenneth Griffin’s hedge-fund and electronic-trading businesses both posting record revenues even as markets swooned, people familiar with the matter said. Citadel, the hedge-fund operation with $54.5 billion under management as of Jan. 1, had about $28 billion in revenue, the people said. That far outstripped its prior record of $16.2 billion the year before. The separate Citadel Securities, one of the world’s biggest electronic-trading firms, had $7.5 billion in revenue, up from the prior record of $7 billion in 2021.
/jlne.ws/3ig9zgz

Crypto Lender Genesis Considers Bankruptcy, Lays Off 30% of Staff
Caitlin Ostroff, Alexander Saeedy and Vicky Ge Huang – The Wall Street Journal
Massive crypto lender Genesis Global Trading Inc. laid off 30% of its staff and is considering filing for bankruptcy, according to people familiar with the matter, the latest sign of financial turmoil at the crypto lender. The layoffs weren’t confined to one department and were across the company, some of the people said. Genesis has 145 employees left after Thursday’s layoffs. Genesis is working with investment bank Moelis & Co. to evaluate its options for the future, including a potential chapter 11 filing, said some of the people.
/jlne.ws/3InKT0e

U.S. Moves to Bar Noncompete Agreements in Labor Contracts; A sweeping proposal by the Federal Trade Commission would block companies from limiting their employees’ ability to work for a rival.
Noam Scheiber – The New York Times
In a far-reaching move that could raise wages and increase competition among businesses, the Federal Trade Commission on Thursday unveiled a rule that would block companies from limiting their employees’ ability to work for a rival.
/jlne.ws/3IsR4js

US Closes In on Bankman-Fried Inner Circle With Probe of FTX Chief Engineer; Prosecutors are investigating ex-FTX engineering director; Nishad Singh also facing scrutiny from the SEC and CFTC
Allyson Versprille – Bloomberg
US authorities are ratcheting up pressure on Sam Bankman-Fried’s inner circle as they scrutinize former close FTX associate Nishad Singh, according to people familiar with the matter. If federal prosecutors in Manhattan find Singh had a role in the alleged multiyear scheme at FTX and trading firm Alameda Research to defraud investors and clients, he could be charged as soon as this month, said one of the people. The Securities and Exchange Commission and the Commodity Futures Trading Commission are also probing Singh, said the person, who asked not to be identified discussing the matter.
/jlne.ws/3vJ29pa

LME Chair Huey Evans to Step Down in Wake of Nickel Crisis; Most senior departure since nickel short squeeze last March; Exchange faces lawsuits and regulatory reviews into its role
Mark Burton and Jack Farchy – Bloomberg
London Metal Exchange Chairman Gay Huey Evans is stepping down as the exchange continues to grapple with the fallout from the crisis in its nickel market last year. Huey Evans will not seek re-election and will step down once a new chair has been appointed, the exchange said in a statement, without giving a reason for her departure. She will continue to support the board and the executive during the transition, after which she will become a senior adviser to the commodities business of LME owner Hong Kong Exchanges & Clearing Ltd.
/jlne.ws/3Cv02sG

Major crypto players Genesis and Silvergate are feeling the impact of FTX’s collapse; The crypto companies are laying off workers in an attempt to stem losses
Ananya Bhattacharya – Quartz
The layoffs announced at crypto lender Genesis and crypto bank Silvergate Capital continue to show the knock off effect of crypto exchange FTX’s collapse. Yesterday (Jan. 5), Genesis laid off 30% of its staff, equivalent to around 60 roles. The news of the cuts, which was first reported by the Wall Street Journal, comes at the heels of interim CEO Derar Islam telling clients fixing the lenders’ issues is “a very complex process that will take some additional time.”
/jlne.ws/3il9J68

Celsius Co-Founder Sued by New York Attorney General; Alex Mashinsky made false statements to investors about the crypto lender, lawsuit alleges
Corinne Ramey and James Fanelli – The Wall Street Journal
New York Attorney General Letitia James filed a civil lawsuit Thursday against Alex Mashinsky, alleging the co-founder of bankrupt crypto lender Celsius Network LLC defrauded investors out of billions of dollars of digital currency. The lawsuit alleges that the former chief executive made false statements to investors about the soundness of Celsius’s financial condition then concealed its dire situation when the lender lost hundreds of millions of dollars in risky investments. Mr. Mashinsky falsely claimed that Celsius was safer than a bank and only lent assets to credible entities, the lawsuit said.
/jlne.ws/3X8TCHF

Bad news for thousands of crypto investors: They don’t own their accounts
Steven Zeitchik – Washington Post
More than half a million people who deposited money with collapsed crypto lender Celsius Network have been dealt a major blow to their hopes of recovering their funds, with the judge in the company’s bankruptcy case ruling that the money belongs to Celsius and not to the depositors.
/jlne.ws/3CvtC1j

The Winklevoss twins are in a big mess-and it has to do with crypto
Will Daniel – Fortune
The Winklevii-or Tyler and Cameron Winklevoss, to use their given names-first rose to fame in the mid-2000s when they sued Meta founder and CEO Mark Zuckerberg, claiming he had stolen their idea for Facebook when they studied together at Harvard. The 6-foot-5 brothers’ story was eventually detailed in the 2010 film The Social Network, including the part where Zuckerberg paid them millions to walk away.
/jlne.ws/3imFNqw

Billionaire Mark Cuban warns the next crypto implosion could come from ‘wash trades,’ report says
Brian Evans – Business Insider
After FTX’s collapse rocked the crypto sector, billionaire Mark Cuban thinks the next meltdown could stem from so-called wash trading schemes. “I think the next possible implosion is the discovery and removal of wash trades on central exchanges,” he told The Street. “There are supposedly tens of millions of dollars in trades and liquidity for tokens that have very little utilization. I don’t see how they can be that liquid.”
/jlne.ws/3ZkBFrM

Tensions Rise Between Crypto Lending Rivals Nexo and Vauld; Nexo is attempting to acquire troubled crypto lender Vauld; The industry has been hit hard by broader market downturn
Hannah Miller – Bloomberg
Tensions have escalated in a simmering dispute between two crypto lending rivals, both facing the steep downturn in the digital asset market. In an open letter Thursday, Nexo Capital Inc. accused troubled crypto startup Vauld of not acting in the best interests of its creditors. Nexo, which is attempting to acquire Vauld, said that the company was rebuffing it and pushing for a “questionable” deal with an affiliated fund manager. The letter said that this alternative arrangement “will most certainly result in the total loss of whatever little assets are still left on Vauld’s balance sheet through speculation and hefty management fees.”
/jlne.ws/3ZtKbor

French Nuclear Ramp-Up Aids Europe in Battling Energy Crisis; Reactors hit 73% availability, highest since February; Prices have trended lower on warm weather and improved fleet
Todd Gillespie – Bloomberg
France is ramping up the availability of its state-owned fleet of nuclear reactors after months of extended outages, in a sign of relief for Europe as it battles a historic energy crisis. The availability of Electricite de France SA’s 56 reactors hit 73% on Friday, according to grid data compiled by Bloomberg. That’s the highest since February and a strong increase from lows around 40% in August.
/jlne.ws/3vH6jh5

Digital Currency Group Closes Wealth Division Amid Trouble; DCG has been battling issues in its Genesis subsidiary; Genesis eliminated more than 60 positions, or 30% of workforce
Vildana Hajric and Olga Kharif – Bloomberg
Cryptocurrency conglomerate Digital Currency Group closed its wealth-management division, the latest sign of trouble amid a deep and prolonged slump in the crypto industry. The Stamford, Connecticut-based firm, which controls asset manager Grayscale Investments and brokerage Genesis, among others, is dealing with numerous issues: it had dismissed 10% of its staff toward the end of last year. Genesis also eliminated more than 60 positions in what amounted to 30% of its workforce.
/jlne.ws/3GHK8Oj

FTX’s Sam Bankman-Fried Pleads Not Guilty. Now What? (Podcast); Sam Bankman-Fried pleads not guilty as expected, trial date set for October.
Stacy-Marie Ishmael – Bloomberg
It’s the first This Week in Crypto episode of 2023. We’re kicking off the year with – can you guess? I’m sure you can! – the latest on Sam Bankman-Fried. The former FTX CEO had quite the wild holiday season. His companies filed for bankruptcy in November and he was arrested in the Bahamas in December. Bankman-Fried faces multiple criminal charges – and at least two of his closest colleagues and confidants are providing evidence against him.
/jlne.ws/3idWcgV

Europe’s Coming Bond Avalanche Will Test the ECB; Governments need to increase their borrowing this year at the same time as policymakers are tightening monetary conditions.
Marcus Ashworth – Bloomberg
European governments are set to unleash a deluge of bonds into markets this year. Investors will demand either a further shift higher in yields or a substantial improvement in the region’s inflation outlook to digest the coming wave of supply, adding to the already daunting monetary policy challenges facing the European Central Bank.
/jlne.ws/3iqx6v4

‘Principles for Navigating Big Debt Crises’ Review: Charting the Markets; The founder of Bridgewater Associates takes stock of major financial events from the past century. He keeps his own counsel.
Daniel Rasmussen – The Wall Street Journal
Ray Dalio’s “Principles for Navigating Big Debt Crises” is the work of a self-taught economist and self-made billionaire. The first 70 pages of the book, in which the founder of Bridgewater Associates introduces his theory of debt cycles, have no citations. He apparently stands on the shoulders of nobody.
/jlne.ws/3CuRvWV

Wall Street May Be Losing Its Stomach for Silvergate Stock in Crypto Rout
Jack Dento – Barron’s
Long a defender of Silvergate Capital, Wall Street may be losing its stomach for the group that has positioned itself as a key banker for the cryptocurrency industry. Given the stock price has just about halved this week, that pessimism is understandable.
/jlne.ws/3Gts7lE

Norway’s Wealth Fund Suggests Expanding Into Unlisted Equities; Norway may miss out on growth under current limits, fund says; Fund is already world’s biggest single owner of listed shares
Alastair Reed – Bloomberg
Norway’s $1.3 trillion sovereign wealth fund has recommended that the country should consider investing in unlisted equities in the longer term to boost returns. While the fund isn’t currently permitted to make such investments, “we’re seeing more and more indications that a larger share of value creation is taking place in the unlisted market,” Norges Bank Investment Management said in a letter to the Ministry of Finance, which was made public on Friday.
/jlne.ws/3QswCBl

Ukraine Invasion

Putin’s call for Orthodox Christmas truce in Ukraine greeted with scepticism
Pavel Polityuk and Herbert Villarraga – Reuters
Russian President Vladimir Putin called on Thursday for a 36-hour ceasefire in Ukraine to mark Orthodox Christmas, a move rejected by Kyiv which said there could be no truce until Russia withdraws its troops from occupied land. The United States and Germany made a joint announcement to supply Ukraine with armoured combat vehicles, a boost for Ukrainian President Volodymyr Zelenskiy who has urged Western allies to provide his forces with armour and heavy weapons for months.
/jlne.ws/3ZaPE39

U.S., Allies Say Armored Vehicles Will Give Ukraine’s Troops an Edge; Bradley Fighting Vehicles, German Marders, French AMX-10 will protect Ukrainian fighters speeding around the battlefield
Gordon Lubold and Daniel Michaels – The Wall Street Journal
The U.S., France and Germany have said they will send dozens of armored infantry vehicles to Ukraine, a significant deployment of Western support at a critical juncture in its war against invading Russian forces. President Biden said Thursday that the U.S. would provide Bradley Fighting Vehicles, a tracked vehicle that resembles a tank but with a smaller gun, fulfilling months of requests from Kyiv. The Bradleys are part of a new military-aid package-which officials said they expected to outline formally Friday-that would include other munitions, vehicles and weaponry.
/jlne.ws/3WOHWtL

Russia Looks to Press Big Firms for More Cash as War Costs Mount; Officials consider one-off fee from fertilizer, coal producers; Budget is under pressure almost year into war against Ukraine
Bloomberg News
Russia is planning to wrest more money from some commodity producers and state companies and trim non-defense spending, as the costs of the invasion of Ukraine mount. Proposals include higher dividends from state companies and a “one-time payment” by fertilizer and coal producers, under instructions issued to officials by Prime Minister Mikhail Mishustin in mid-December and seen by Bloomberg.
/jlne.ws/3ItRING

Exchanges, OTC and Clearing

Cboe Global Markets Reports Trading Volume for December and Full Year 2022
Cboe Global Markets
Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today reported December monthly and full year 2022 trading volume statistics and projected rate per contract/net revenue capture for the fourth quarter of 2022 across its global business lines. The data sheet “Cboe Global Markets Monthly Volume & RPC/Net Revenue Capture Report” contains an overview of certain December and full year 2022 trading statistics and market share by business segment, volume in select index products, and full quarter RPC/net capture, which is reported on a one-month lag, across business lines.
/jlne.ws/3icAVEo

CME Group Inc. Announces Fourth-Quarter and Year-End 2022 Earnings Release, Conference Call
CME Group
CME Group Inc. will announce earnings for the fourth quarter and full year of 2022 before the markets open on Wednesday, February 8, 2023. 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.
/jlne.ws/3jUg6Ok

SIX Exchange Regulation: Fine Against Swissquote Group Holding SA; The Sanctions Commission of SIX Group AG has sanctioned Swissquote Group Holding SA with a fine of CHF 75’000 for a negligent breach of the provisions on ad hoc publicity.
MondoVisione
SIX Exchange Regulation AG (SER) which is responsible for monitoring and enforcing stock exchange regulations concerning listed companies, opened an investigation against Swissquote Group Holding SA on 2 June 2022 after having conducted a preliminary inquiry. The reason hereof was the ad hoc announcement published on 16 June 2021 “Thanks to outstanding growth, Swissquote expects record half-year results”.
/jlne.ws/3VPsnRh

Xetra-Gold closes 2022 with a stock of 231 tons; Down six tonnes yoy; Europe’s largest gold security with physical deposit
Deutsche Boerse Group
The gold stock of the exchange-traded bearer bond Xetra-Gold (ISIN: DE000A0S9GB0 ) fell slightly to 231 tons at the end of 2022. That’s a drop of six tons over the year. At the beginning of January 2022, the inventory was 237.9 tonnes of gold. On a 5-year perspective, there is a plus of 56.8 tons, since December 2012 the stock has increased by 177.3 tons of gold.
/jlne.ws/3X5yWQO

ASX Group Monthly Activity Report – December 2022
Attached is a copy of the ASX Group Monthly Activity Report for December 2022. Release of market announcement authorised by: Johanna O’Rourke, Acting Group General Counsel and Company Secretary.
/jlne.ws/351gPmZ

EEX Customer Information – EEX discontinues trading of Wood Pellets cif NWE (Argus) Future and several EEX Baltic Panamax Freight Futures
EEX
Dear Trading Participants, As of 16 January 2023, EEX will delist the following Wood Pellets cif NWE (Argus) Future and following EEX Baltic Panamax Freight Futures. The entry for Trade Registration for these products will no longer be possible from that day onwards.
/jlne.ws/3ik2MT4

Derivatives Market Closed for Holiday (January 9, 2023)
JPX
The derivatives market will be closed with no holiday trading on Monday, January 9, 2023 (Coming of Age Day) due to a JPX Group-wide BCP testing (disaster recovery testing) which is planned to be implemented for January 7 through 9.
/jlne.ws/3QrVl92

Companies with highest number of complaints pending
NSE
Out of the companies whose securities are traded on NSE, there is one company with the number of complaints greater than or equal to 10, pending for more than 2 months OR the aggregate value of the complaints pending for more than 2 months is equal to or greater than Rs.5 lakhs for 5 or more complaints as on December 31, 2022.
/jlne.ws/3VZrJkA

TMX Group Consolidated Trading Statistics – December 2022
TMX
TMX Group Limited today announced December, 2022 trading statistics for its marketplaces – Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange (Alpha) and Montréal Exchange (MX).
/jlne.ws/3QmXcvu

Fintech

ChatGPT Creator in Investor Talks at $29 Billion Valuation; Tender offer at that valuation would make OpenAI one of the most valuable U.S. startups
Berber Jin and Miles Kruppa – The Wall Street Journal
OpenAI, the research lab behind the viral ChatGPT chatbot, is in talks to sell existing shares in a tender offer that would value the company at around $29 billion, according to people familiar with the matter, making it one of the most valuable U.S. startups on paper despite generating little revenue. Venture-capital firms Thrive Capital and Founders Fund are in talks to buy shares, the people said. The tender could total at least $300 million in OpenAI share sales, they said. The deal is structured as a tender offer, with the investors buying shares from existing shareholders such as employees, the people said.
/jlne.ws/3Zj7eCf

TradeStation Celebrates 40 Years of Innovation
TradeStation Group, Inc. – PR Newswire
TradeStation Group, Inc. (TradeStation), which through its operating subsidiaries provides award-winning*, self-clearing online brokerage services for trading stocks, ETFs, options, futures and cryptocurrencies, is celebrating its 40th anniversary as an innovative fintech company known for its reliable, multi-asset trading platform. Founded in 1982, TradeStation aims to offer the ultimate trading experience.
/jlne.ws/3CmcivK

Don’t Write Off Low-Key Payments Giant FIS; Banking and payment services firm loses ground to upstarts but has several paths to a rebound
Telis Demos – The Wall Street Journal
Fidelity National Information Services might not be a household name, but investors might want to get to know it this year. The company’s software and services are part of many everyday financial activities, like checking your bank-account balance or paying with a card at big merchants. Known as FIS, its shares performed relatively steadily as the pandemic began. But changes in the payments landscape in recent years have caused growth and margins to come under pressure in the company’s merchant-payments business, helping to make the stock a laggard to many peers in 2022.
/jlne.ws/3GMbO4M

Western Digital, Kioxia Revive Merger Talks With Flash Memory Demand Sinking; Discussions follow 2021 push that failed to yield transaction; WD shares rise over 7% in pre-market; market cap $11 billion
Michelle F Davis, Liana Baker, and Ian King – Bloomberg
Western Digital Corp. has restarted talks with Japan’s Kioxia Holdings Corp. in a deal that could unite two technology storage providers, according to people familiar with the matter.
/jlne.ws/3jLQ1AU

Indian fintech KreditBee nears $700 million valuation in new funding
Manish Singh – TechCrunch
Indian fintech KreditBee has raised an additional $100 million in a funding round, it said, as the lender looks to scale its business in the South Asian market. The new cash infusion is part of the larger Series D funding, which KreditBee said has now closed at $200 million. The new funding, led by Advent International, values the Bengaluru-headquartered startup at about $680 million, according to a source familiar with the matter.
/jlne.ws/3CsWTtw

Cybersecurity

The Biden national cyber strategy is unlike any before it
Tim Starks – The Washington Post
The Biden administration is nearing publication of a national cybersecurity blueprint that for the first time embraces a major role for regulation.
The strategy, which is a sea change from past blueprints, will arrive in the aftermath of a series of major cyberattacks – such as the 2021 Colonial Pipeline ransomware attack, which sparked a fuel panic on the East Coast – that prompted the administration to rethink voluntary measures.
/jlne.ws/3ZjNGh5

Twitter Security Headaches Mount With User Data Leak Claim; Database posted on hacking forum is alleged to contain email addresses and handles for more than 230 million Twitter users.
Jack Gillum and Margi Murphy – Bloomberg
An anonymous user on a hacker forum has published a massive database that they claim contains basic information on more than 230 million Twitter users, such as email addresses and screen names. The database, which was posted on Wednesday, contains the names and email addresses of politicians, journalists and bankers, among others. The data was siphoned out because of a flaw in Twitter’s software, experts say, which has since been fixed. As of July, Twitter had 237.8 million daily active users, according to company data.
/jlne.ws/3X74fL8

US cybersecurity director: The tech ecosystem has ‘become really unsafe’
Daniel Howley – Yahoo Finance
The head of the nation’s top cybersecurity agency is warning that the current technology ecosystem, which underpins much of our lives, is at risk of being hacked by malicious actors.
In an interview with Yahoo Finance at CES 2023 in Las Vegas, Cybersecurity and Infrastructure Security Agency Director Jen Easterly explained that the tech industry, consumers, and government need to come together to help improve cyber safety in the U.S.
/jlne.ws/3GIr2aQ

Why Cybersecurity Should Be Top Of Mind In 2023
Ajay Jotwani – Forbes
As we dive into Q1, executives are thinking carefully about priorities for their operations, internal business processes and budgets. In many cases, cybersecurity will not top these lists. This could have serious consequences: Globally, the number of enterprise-level cyber attacks has risen exponentially in the past year; recent estimates put these numbers at around 500 million worldwide. In 2021, of the total number of entities attacked, 16% were hacked once, but 60% were hacked twice or more. In September 2022 alone, hackers successfully gained access to and compromised 35 million files, targeting companies’ “crown jewels” (flagship assets, highly sensitive files, or data).
/jlne.ws/3WUh3os

Cryptocurrencies

Bankman-Fried’s Alameda Research Joins Chorus Objecting to Binance Voyager Buy
Jack Schickler – CoinDesk
Alameda Research, FTX’s defunct trading arm that was controlled by Sam Bankman-Fried, has joined the list of protesters against a plan by rival exchange Binance’s U.S. affiliate to buy the assets of bankrupt crypto lender Voyager Digital, according to legal filings posted Wednesday with a New York bankruptcy court. The transaction has already been opposed by the U.S. Securities and Exchange Commission, which demanded more information on how Binance.US could afford the $1 billion deal, and by state securities and banking regulators from Texas, New Jersey, Vermont and New York.
/jlne.ws/3GGRbqv

FTX and Sam Bankman-Fried: Your Guide to the Crypto Crash; The founder of FTX was the paragon of crypto, then the cautionary tale. This guide will help you understand what happened.
Eric Wallerstein – The Wall Street Journal
Sam Bankman-Fried was heralded as the savior of crypto. Late last year, his empire collapsed. Here’s what you need to know about the unraveling of FTX. Mr. Bankman-Fried, often referred to as SBF, vaulted to celebrity with his attempts to make his crypto exchange a household name. The 30-year-old billionaire’s eccentric, unkempt appearance created an aura of genius. Venture capitalists got on board. High-profile athletes and musicians, and a wave of FTX ads, encouraged regular people to use the exchange to tap crypto’s moneymaking potential.
/jlne.ws/3X2T5as

Silvergate’s ‘Worst-Case Scenario’ Fuels Wider Concern on Crypto
Yueqi Yang – Bloomberg
Silvergate Capital Corp. made one of the US banking world’s biggest bets on crypto. Now it’s reeling from a run on deposits and a massive loss, intensifying fears the collapse of crypto exchange FTX may seep elsewhere into the financial system. “The worst-case scenario seems to have come to pass” for Silvergate, Jared Shaw, an analyst at Wells Fargo & Co., said in a note after the company’s announcement. Silvergate shares cratered a record 49%.
/jlne.ws/3ZjXZl1

Anyone Who Took Money From FTX Ought to Repay It
Daniel Kuhn – CoinDesk
In his testimony before the House Financial Services Committee, current FTX CEO Jay J. Ray III laid out the most convincing case that fraud was committed while former FTX CEO Sam Bankman-Fried held the reins at the bankrupt crypto exchange. Evidence strongly suggests FTX user funds were commingled, Ray wrote, in part to fund a lavish “spending binge” by the “FTX Group” beginning in late 2021. Some $5 billion alone was spent by SBF’s “hedge fund” Alameda Research, with billions more currently unaccounted for as Ray traces outflows from FTX, SBF and various shell companies. Some of that money – used to invest in startups, line politicians’ pockets and pay out personal loans to employees – conceivably came from profits made by the exchange and trading shop.
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As a crypto developer says some $3.6 million in bitcoin has been stolen, Tim Draper doubles down on world’s No. 1 digital asset hitting $250,000
Mark DeCambre – MarketWatch
This is Mark DeCambre, Editor in Chief at MarketWatch. Welcome to week No. 2 of 2023 and a fresh installment of Distributed Ledger. It has been another week of chockablock activity in crypto: digital-asset focused bank Silvergate revealed heavy withdrawals as the FTX implosion roiled the industry. And there appears to be a public spat between the Winklevoss twins, who founded Gemini, and Barry Silbert, another influential player in crypto.
/jlne.ws/3It18sM

Crypto Lender Genesis Lays Off 30% More of Its Staff
Tracy Wang – CoinDesk
Genesis Global Trading laid off more employees on Thursday, a spokesperson for the crypto-trading firm confirmed in a statement to CoinDesk. A person familiar with the matter said Genesis eliminated about 30% of its workers, taking it down to 145 employees. Genesis previously cut 20% of its workforce of 260 in August. The sales and business-development departments have been especially hard hit, the person added.
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Behind FTX’s Turbocharged Push to Attract Small Crypto Savers; FTX relied on partnerships, sports marketing to retail segment; Bankman-Fried has pleaded not guilty to US criminal charges
Annie Massa and Anna Irrera – Bloomberg
Early last year, cryptocurrency exchange FTX US was setting its sights on a vast pool of money: individual retirement accounts, or IRAs. “We have IRAs trading on FTX today, and are making a push to serve this segment,” Nate Clancy, FTX US’s vice president of business development, wrote in a March email to a New Jersey-based investment adviser, a copy of which was seen by Bloomberg News. Americans held more than $11 trillion in IRAs as of last year.
/jlne.ws/3WVK2rZ

Crypto Broker Genesis Eliminates 30% of Staff in Latest Cuts; Genesis has said it needs more time for lending unit solution; Genesis has 145 employees remaining following rounds of cuts
Vildana Hajric and Muyao Shen – Bloomberg
Genesis Global Trading Inc. has laid off more than 60 employees in its latest round of job cuts, amounting to roughly 30% of the troubled crypto-brokerage’s workforce. The dismissals follow a separate round of job eliminations last year that saw a number of key leadership departures, and signal further upheaval at the New York-based firm amid an extended rout in the digital-assets market. The company now has 145 employees remaining, according to a Genesis spokesperson.
/jlne.ws/3ZiMk5W

U.S. securities regulator probes FTX investors’ due diligence -sources
Chris Prentice – Reuters
The U.S. Securities and Exchange Commission (SEC) is seeking details about FTX investors’ due diligence, according to two sources familiar with the inquiry, as fallout from the crypto firm’s collapse spreads. The SEC has so far brought charges against three of FTX’s top executives, accusing them defrauding investors in the crypto trading platform that has since filed for bankruptcy. The SEC is now asking financial firms what diligence policies and procedures they have in place, if any, and whether they followed them when choosing to invest in FTX, the sources said.
/jlne.ws/3VSyzrI

Crypto firms off to rocky start in 2023 with outflows, layoffs and a lawsuit
Hannah Lang – Reuters
The crypto industry’s woes continued on Thursday as plunging deposits, layoffs and a lawsuit added to the tumult of 2022, which was dominated by sinking prices and high-profile bankruptcies. The fallout from the collapse of crypto exchange FTX and criminal charges leveled against its founder Sam Bankman-Fried weighed heavily on the sector this week. Among those hit were Genesis Global Capital, which laid off staff, and crypto-focused Silvergate Bank, which reported a large fall in deposits.
/jlne.ws/3XbtgVv

Crypto investments hit a 2-year low at the end of 2022
David Hollerith – Yahoo Finance
Venture capital investments in crypto startups hit a 2-year low in the fourth quarter of 2022, capping a year that witnessed a dramatic shift from start to finish. According to a new report from Galaxy Digital, investments into crypto startups totaled less than $3 billion on fewer than 400 deals in the fourth quarter of last year, the lowest for both measures since the fourth quarter of 2020.
/jlne.ws/3jX29iI

Bonk Inu Developers Burn All Their Team Tokens as Solana Ecosystem Frenzy Continue
Shaurya Malwa – CoinDesk
Developers behind Solana-based memecoin project Bonk Inu (BONK) burned over 5 trillion tokens, or 5% of the total supply, earlier on Friday, blockchain data shows. The move claimed to have effectively burned all tokens earmarked for developers of the project.
/jlne.ws/3GlK4SX

Kathleen Breitman of Tezos on 5 crypto trends that need to die-and 1 big reason for optimism
Kathleen Breitman – Fortune
As someone who’s worked in crypto since 2016, it was heartening to see the industry attract unprecedented amounts of attention and capital in the last two years. This felt like a long-awaited validation of the industry. Cryptocurrencies looked poised to compete with traditional financial services as capital flooded into the market, stodgy venture capital funds finally started to invest in the space, and acronyms like “NFT” became mainstream.
/jlne.ws/3WPf8Br

FTX Collapse May Claim Another Big Victim: Crypto Lender Genesis; The crypto lender is on the verge of bankruptcy, according to The Wall Street Journal.
Luc Olinga – The Street
For the crypto industry the year 2023 continues right along from the year 2022. It’s in step with the devastation caused by the fall of former crypto king Sam Bankman-Fried’s empire. This empire included the FTX cryptocurrency exchange and its sister company, Alameda Research, a hedge fund that also serves as a trading platform for institutional investors.
/jlne.ws/3Zsaco2

Who is Alex Mashinsky, the man behind the alleged Celsius crypto fraud?
John McCrank and Hannah Lang – Reuters
Alex Mashinsky, a co-founder of bankrupt crypto lender Celsius Network who prosecutors allege bilked investors out of billions, is a serial entrepreneur who has portrayed himself as a modern-day Robin Hood.
/jlne.ws/3vIxZSV

Politics

Congress Fight Puts Spotlight on Timing for Potential US Default; Government around $78 billion away from hitting borrowing cap; Treasury still has extraordinary measures available to deploy
Alex Harris – Bloomberg
Investors are intensifying their focus on just when the US government might run up against its statutory borrowing cap as the protracted fight over the House of Representatives speakership raises the risk that lawmakers will fail to agree on how to avoid breaching the ceiling this year.
/jlne.ws/3iczXrK

Former Celsius CEO Mashinsky Sued by New York State for Defrauding Investors
Jesse Hamilton – CoinDesk
New York state’s attorney general has sued Alex Mashinsky, the former CEO of Celsius Network, for defrauding hundreds of thousands of investors by making false statements between 2018 and at least June 2022 about the condition of the company to encourage money to keep coming in. Attorney General Letitia James said the state intends to ban Mashinsky from doing business there, in addition to seeking damages and restitution for harmed investors, according to a Thursday statement.
/jlne.ws/3ZdnxAh

A Month of Russian Oil Sanctions Puts the Heat on Putin; The recent export ban and price cap haven’t delivered a knockout blow, but they certainly ratchet up pressure on the president.
Julian Lee – Bloomberg
European Union sanctions on Russian crude exports and a parallel Group of Seven price cap came into effect a month ago today. So have they had any discernible impact? Seaborne crude flows from Russia in the four weeks to Dec. 30 were the lowest of any similar period in 2022. But the weather may have played a bigger role than sanctions, with the key port of Kozmino on Russia’s Pacific coast closed by storms for more than 11 days in December. So it could be tempting to look at the flows and conclude that the whole process has been an abject failure. It hasn’t.
/jlne.ws/3X9OZx7

Hong Kong Reopening With China Comes With 60,000-Person Cap; Daily quota is just a fraction of pre-pandemic travel flows; Hong Kong is important gateway between mainland and the world
Shirley Zhao and Jinshan Hong – Bloomberg
The border between mainland China and Hong Kong will gradually reopen from Sunday, paving the way for a restoration of economic and social ties that have been disrupted for three years. But recovery is likely to be slow, with Hong Kong setting a maximum limit of about 60,000 people allowed to travel into the mainland from the financial hub every day – a fraction of pre-pandemic flows. Those coming from the mainland will also need to show a 48-hour negative PCR test result, while some land border control points, including Lo Wu, will stay shut for now.
/jlne.ws/3jVB4MS

Taiwan Must Heed the Wake-Up Call From Ukraine; Extending compulsory military service only begins to address shortcomings in Taipei’s efforts to prepare for – and deter – conflict with China.
Clara Ferreira Marques – Bloomberg
Taiwan’s decision to shake up compulsory military service – extending it to one year, among other measures – has prompted generous commentators to argue that Taipei is finally getting serious about self-defense and deterrence, seizing the window of opportunity provided by Russia’s invasion of Ukraine to make a necessary but politically difficult move. The less magnanimous pointed out that the change has been a long time coming, and behind-the-scenes US arm-twisting may have focused minds.
/jlne.ws/3Z86ZcW

Regulation

Developer of ‘Mutant Ape Planet’ NFTs Arrested, Charged With Fraud for Alleged $2.9M Rug-Pull
Cheyenne Ligon – CoinDesk
The developer of the Mutant Ape Planet non-fungible token (NFT) collection – a knock-off of the popular Mutant Ape Yacht Club NFT collection – has been arrested and charged with fraud for allegedly perpetrating a $2.9 million rug pull. Aurelien Michel, a 24-year-old French citizen who lives in the United Arab Emirates, was taken into custody on Wednesday evening after landing at John F. Kennedy airport in New York.
/jlne.ws/3Z8M9tY

French Central Bank Head Wants Crypto Licensing Ahead of MiCA Standards: Bloomberg
Nelson Wang – CoinDesk
Bank of France Governor Francois Villeroy de Galhau is pressing for stricter regulatory requirements for crypto companies in France, according to a report from Bloomberg. This would be ahead of the European Union’s landmark Markets in Crypto Assets (MiCA) regulation, which would establish a bloc-wide licensing regime for crypto firms and is scheduled to be voted on in February for implementation in 2024.
/jlne.ws/3WQp9yx

SEC Charges Creator of Coindeal Crypto Scheme and Seven Others in Connection with $45 Million Fraud
SEC
On January 4, 2023, the Securities and Exchange Commission charged Neil Chandran, Garry Davidson, Michael Glaspie, Amy Mossel, Linda Knott, AEO Publishing Inc., Banner Co-Op, Inc., and BannersGo, LLC for their involvement in a fraudulent investment scheme named CoinDeal that raised more than $45 million from sales of unregistered securities to tens of thousands of investors worldwide.
/jlne.ws/3Gmgcpt

SEC Charges Former BlackRock Portfolio Manager with Undisclosed Conflict of Interest
SEC
The Securities and Exchange Commission today charged Randy Robertson, a former BlackRock Advisors, LLC portfolio manager, for failing to disclose a conflict of interest arising from his relationship with a film distribution company in which the fund he managed for BlackRock invested millions of dollars. To settle the charges, Robertson agreed to pay a $250,000 penalty.
/jlne.ws/3Cu86Ko

Investing and Trading

AMTD Digital Stock Surges, Rising About 200%
Josh Beckerman – The Wall Street Journal
The U.S.-listed shares of AMTD Digital surged on Thursday, recently up some 200% on heavy volume. The Asia-focused company’s operations include financial services, marketing, media and digital investments. It didn’t appear to issue any press releases or Securities and Exchange Commission filings on Thursday. The stock has posted several large daily moves since its July initial public offering, which priced at $7.80. Wednesday’s intraday low of $9.31 marked its lowest-ever trading price, while its all-time high was $2,555.30.
/jlne.ws/3X6eEY5

There’s Only One Investing Rule You Need to Know; Spoiler: There’s no such thing as a free lunch.
Mark Gongloff – Bloomberg
When I was in college, before settling into the ancestral family business of subsistence newslettering, I considered some get-rich-quick schemes. In one representative example, I tried to sell encyclopedias door-to-door. The alpha salesman was a real “I’m here from Mitch and Murray” type with a shiny apartment, shiny car and shiny suit. He promised I could have all that, too. But after a long day of cold-calling in a trailer park without a single sale, I went home, drank too much and threw up in my sample case.
/jlne.ws/3Cwgnxl

BlackRock’s China ETF Sees Massive Inflow on Pro-Growth Rally; $8.5 billion MCHI ETF sees surge after strong start to 2023; Chinese stocks in US extend gains in best start on record
Emily Graffeo – Bloomberg
Investors are flooding into the largest US-listed ETF tracking Chinese stocks as it roars higher on hopes the unwinding of China’s Covid Zero policy will resuscitate demand. The $8.5 billion iShares MSCI China (ticker MCHI) fund lured a net $134.1 million Wednesday, the largest one-day increase since November. The fund, which mostly invests in shares of Chinese companies listed in Hong Kong – including Alibaba Group Holding Ltd. and JD.com Inc. – has gained 9.3% since the beginning of the year.
/jlne.ws/3if8kOK

Financial Planning for Retirement: It’s More Accessible, but Be Careful; Financial planning and advice is no longer just for the wealthy. It can be especially important when planning for your later years.
Mark Miller – The New York Times
I’ve been writing and researching articles on finance and money for most of my career, and covering retirement for the past 15 years. But my wife and I haven’t picked a stock or mutual fund for our own retirement accounts since the late 1990s, or written our own retirement plan. For that, we rely on a financial planner.
/jlne.ws/3CsUYoO

Thought last year was bad for crypto? From FTX to Silvergate, the red flags are flying for the year ahead.
Phil Rosen – Insider
It’s no accident coffee’s among the world’s most traded commodities. It’s got a distinct taste and aroma, and people rely on its energizing effect. That’s almost the opposite of crypto, which can hardly be said to “exist” at all. Investors are realizing that, behind all of the marketing intrigue, there isn’t much there. The only thing propping up prices may just be the Greater Fool Theory – there’s always someone willing to buy at a higher price. Those realizations came to head repeatedly in 2022 as crypto hacks and a wintry bear market crescendoed with the collapse of Sam Bankman-Fried’s FTX.
/jlne.ws/3ILI0Xp

This ‘crazy’ retirement portfolio has just beaten Wall Street for 50 years; This strategy beats the market with less risk, fewer upsets and no ‘lost’ decades
Brett Arends – MarketWatch
You could call it crazy. You could call it genius. Or maybe you could call it a little of both. We’re talking about a simple portfolio that absolutely anyone could follow in their own 401(k) or IRA or retirement account. Low cost, no muss, no fuss. And it’s managed to do two powerful things simultaneously. It’s beaten the standard Wall Street portfolio of 60% U.S. stocks and 40% bonds. Not just last year, when it beat them by an astonishing 7 percentage points, but for half a century. And it’s done so with way less risk. Fewer upsets. Fewer disasters. And no “lost” decades.
/jlne.ws/3GlODN5

Environmental, Social and Corporate Governance

Without AI, we won’t meet ESG goals and address climate change; AI can be a game changer for managing ESG efforts.
Thomas Siebel – World Economic Forum
The current state of ESG programmes is not making an adequate difference for climate change fast enough. AI can help provide comprehensive ESG management solutions, reporting capabilities and actionable emissions insights. AI can ingest huge amounts of data, pull signal from noise and give companies a roadmap to meet ESG goals that make a real difference. https://jlne.ws/3CoHIBF

Green jobs are booming, but too few employees have sustainability skills to fill them – here are 4 ways to close the gap
Christopher Boone and Karen C. Seto – The Conversation
To meet today’s global sustainability challenges, the corporate world needs more than a few chief sustainability officers – it needs an army of employees, in all areas of business, thinking about sustainability in their decisions every day. That means product designers, supply managers, economists, scientists, architects and many others with the knowledge to both recognize unsustainable practices and find ways to improve sustainability for the overall health of their companies and the planet.
/jlne.ws/3idXM2l

The Current State of Play on Financing Loss and Damage
Preety Bhandari, Nate Warszawski and Chikondi Thangata – World Resources Institute
Since 2000, over 4 billion lives have been impacted and $2.9 trillion lost to disasters, the bulk of which are attributable to extreme weather events. This is the reality known as loss and damage, and its impact is set to increase drastically over the next two decades. The Intergovernmental Panel on Climate Change (IPCC) indicates that even if the world rapidly decarbonizes, greenhouse gases already in the atmosphere and current emissions trends will make some significant climate impacts unavoidable through 2040. While this shouldn’t discourage action or hope, it makes clear that any climate action package is incomplete without serious action and financing to address the loss and damage that has already been set in motion.
/jlne.ws/3WQtz8B

Animals farmed
The Guardian
This series looks at how the animals that feed us live, and how the business of feeding us works. What happens to animals in the factory farming system? And what does it mean for the planet?
/jlne.ws/3VQhrTE

France’s Hottest Year Was Also Very Dry as Warming Angst Mounts
Francois De Beaupuy – Bloomberg
France experienced its hottest and second-driest year on record in 2022, putting pressure on the government to step up its fight against climate change that’s straining everything from energy to agriculture. Temperatures averaged 14.5 Celsius last year, the highest since record began in 1900, according to Meteo-France. Rainfall was the second-lowest since 1959 as a series of heat waves hit the country from May while a rare cold snap in early December was followed by a warm spell.
/jlne.ws/3Qj1eoI

India to Join Sovereign Green Bond Club With $2 Billion Issuance; India to sell bonds in two tranches of 80 billion rupees each; First green bond auction to take place on Jan. 25: RBI
Ronojoy Mazumdar – Bloomberg
India’s government will offer 160 billion rupees ($1.9 billion) of green bonds in its debut issuance as Prime Minister Narendra Modi steps up efforts to transform the fossil-dependent nation. The government plans to offer bonds in two tranches of 80 billion rupees each in auctions due on Jan. 25 and Feb. 9, according to a statement from the Reserve Bank of India.
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Investors defend ESG ‘materiality’ in expectation of more attacks; Republicans say they will be ‘responding robustly’
Ellen Meyers – Roll Call
The investment industry is pressing the importance of environmental, social and governance considerations in U.S. financial markets ahead of an expected pushback from Republicans as they take control of the House. Firms and funds with acute interest in ESG are adamant that issues such as climate change and human capital management are financially material, albeit non-traditional, issues. The fight against ESG may even add to the growing body of evidence that such factors are critical to investors, according to some.
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SEC Climate Change Rules Will Have Most Impact on Energy Markets
Victor Flatt – Bloomberg Law
University of Houston Law Center’s Victor Flatt analyzes how new regulations will alter the course of US energy markets. The recent SEC disclosure rules on climate financial risks will be the biggest impact, he says. In today’s regulatory environment, upstream, midstream, and downstream energy concerns face more information requests and more disclosure requirements. This year, the energy industry will grapple with government regulations around disclosing information relating to environmental impacts, particularly those related to climate change.
/jlne.ws/3jLLePW

Assessing the Impact of ESG on Fixed Income; Historical analysis suggests that improving the ESG profile of a fixed-income portfolio would not have undermined performance over the past decade.
Rob Sawbridge – Treasury and Risk
Fixed-income assets are the core allocation for many institutional investors. However, much of the academic research into how environmental, social, and corporate governance (ESG) factors influence investment performance has focused on listed equity markets rather than fixed income. There has been little independent research into the effect of applying ESG factors in fixed income.
/jlne.ws/3GkEeB9

Save Launches ESG Savings Product
Nasdaq
Investment advisor and banking solutions provider Save recently announced that it launched a savings product that is focused on ESG investing. The firm said in a recent press release that its “Market Savings program offers an option that provides a yield from iShares ESG Aware exchange-traded funds (ETFs) and other ETFs.” According to the press release, the ESG Market Savings portfolio aims to maximize environmental, social, and governance characteristics and exclude companies with certain practices.
/jlne.ws/3IqU7sD

5 Threats to Sustainable Investing in 2023; Sustainable investing is in the mainstream now but navigating ESG will remain a challenge in the New Year
Sara Silano – Morningstar
A term that went from euphoria to criticism. That has been the parabolic path of sustainable investing in recent years. Now, investors wonder what’s in store for environmental, social and governance (ESG) investing in 2023, and more importantly, what the threats to ESG might be.
/jlne.ws/3VRIXjx

Switzerland to implement sustainable fund label rules amid greenwashing concerns; Regulators globally are addressing ESG fund naming rules
Theo Andrew – ETF Stream
The Swiss Federal Council is set to implement new sustainable fund rules for asset managers which label their products “sustainable”, “green” or “ESG” in a bid to crack down on greenwashing. Under new proposals by the Swiss Federal Council, asset managers will be required to disclose how the fund meets the objective in order to offer investors a clearer picture of the sustainable investment landscape. It comes as financial regulators globally look to tackle the issue of greenwashing, especially around the naming of funds which has been described as a “powerful marketing tool” for asset managers.
/jlne.ws/3CvwACZ

Silicon Crash Shows China’s Relentless Domination of Solar; The price of polysilicon, the main ingredient in solar panels, has halved, offering relief to the renewable energy industry – but US-China tensions could still get in the way.
Liam Denning – Bloomberg
Bewildered oil and gas bulls can perhaps draw on some schadenfreude from the freefall in solar power’s version of the upstream. Since the start of December, the average spot price for photovoltaic-grade polysilicon, the main ingredient for manufacturing solar cells, has almost halved according to an index compiled by PVInsights.
/jlne.ws/3vH6PM3

Institutions

Danske Bank Forfeits $2 Billion After Pleading Guilty to Fraud
Bob Van Voris – Bloomberg
An agreement by Danske Bank A/S to pay $2 billion to end a long-running US probe into money laundering through its Estonia branch was approved by a judge, resolving criminal liability for the bank’s worst scandal in recent history. The Danish lender pleaded guilty in December to conspiring to commit bank fraud. The bank admitted it provided services to suspicious customers, including in Russia, through its branch in the Baltic nation, despite knowing of the money laundering risks, according to the US Justice Department.
/jlne.ws/3Iq6a9B

Citadel’s Market Maker Posts Record Revenue; Hedge Fund Surges; Market-making arm made a record $7.5 billion last year; The hedge fund division’s main vehicle rose 38% in 2022
Katherine Doherty and Katherine Burton – Bloomberg
Citadel Securities raked in a record $7.5 billion in 2022, capitalizing on last year’s volatility and raising its presence as one of the largest trading units in the US. Revenue for the market-making arm of billionaire Ken Griffin’s Citadel empire jumped 7.1% from the previous year’s $7 billion, a spokesperson confirmed. Citadel Securities has posted 12 consecutive quarters of net trading revenue in excess of $1 billion, he said.
/jlne.ws/3GJIjjI

China’s Biggest Securities Brokerage Stumbles in Global Push; CLSA has seen over 750 employees quit in the past two years; Trading income from major client BlackRock slumps 30%: person
Cathy Chan – Bloomberg
Citic Securities Co.’s dream of going toe-to-toe with Wall Street’s powerhouses in global finance is fizzling over troubles at its once free-wheeling Hong Kong operations. CLSA, acquired by Citic a decade ago to spearhead the Chinese broker’s international expansion, has seen more than 750 employees, or about a third of the staff, quit since 2021 after increasing clashes between its Beijing and Hong Kong workers, cuts in pay and budgets as well as management issues, said people familiar with the matter.
/jlne.ws/3QlzNL8

Buffett-Backed BYD Trounces Tesla as China Economy Reopens; BYD new-energy vehicle deliveries surpassed Tesla’s in 2022; Chinese carmaker seen as beneficiary of country’s reopening
Charlotte Yang and Jeanny Yu – Bloomberg
While shares of Tesla Inc. are melting down lately on demand concerns, Chinese rival BYD Co. is on a tear as investors applaud its record sales year and widening footprint in the world’s biggest electric vehicle market. The US-listed shares of Warren Buffett-backed BYD have gained 8.5% over the past month versus a 40% slump for Tesla. They’ve also beaten a gauge of global EV makers, which has fallen 12%, and outperformed domestic peers Li Auto Inc. and Nio Inc.
/jlne.ws/3GlScD0

No more free coffee and layoff warnings-Goldman Sachs workers experience a rude awakening
Chloe Berger – Fortune
Say hello to a lot of tired Goldman Sachs employees. Because instead of immediately letting go of Joe from sales, the investment bank is getting rid of its free cup of joe. A disgruntled employee recounted to the New York Post that when they went for their drip coffee in the office’s “Sky Lobby,” they were instead greeted with a different type of wake up call: ”a sign and a woman yelling at us that it was no longer complimentary.” They said they forked up $2.99 for a “sh-ty cup of Seattle’s Best.”
/jlne.ws/3jLOElK

Hedge Fund Launches Hit Historic Low As Investors Position For Recession – Liquidations Steady, Also Near Historic Low – Outperformance Of Larger Funds Into Year-End Drives Asset Concentration
MondoVisione
New hedge fund launches in 3Q 2022 ticked lower than the prior quarter, reaching the lowest level since 4Q 2008 as investors navigated an uncertain and volatile tension between generational inflation and increased likelihood of an economic recession. Meanwhile, the HFRI Asset Weighted Composite Index gained +0.5 percent YTD through November, indicating larger managers have outperformed smaller funds, increasing asset concentration and contributing to a challenging new launch environment, according to the latest HFR Market Microstructure Report, released today by HFR®, the established global leader in the indexation, analysis and research of the global hedge fund industry.
/jlne.ws/3vGMYNa

Said Haidar Streaks Ahead of Macro Hedge Funds With 193% Gain; The performance is the best ever for the Haidar Jupiter fund; At one point in 2022 the fund was up 274%, before paring gains
Nishant Kumar – Bloomberg
Said Haidar is emerging as the biggest winner of 2022 among major macro hedge fund traders. His Haidar Jupiter fund soared 193%, marking the best ever annual gain for the New York-based hedge fund manager since he started the firm more than two decades ago, according to investor documents seen by Bloomberg. The fund managed $3.8 billion at the end of November.
/jlne.ws/3GnyoyV

Brevan Howard’s Biggest Hedge Funds Gain as Much as 28% in 2022; The $10 billion Brevan Howard Master fund gained 20%; Brevan Howard’s Alpha Strategies fund surged a record 28%
Nishant Kumar – Bloomberg
Brevan Howard Asset Management’s two biggest hedge funds posted double-digit returns last year, joining peers making the most out of soaring interest rates. The $10 billion Brevan Howard Master fund gained 20%, while the $12 billion Alpha Strategies fund recorded its best ever year with a 28% surge, according to people with knowledge of the matter, who asked not to be identified because the details are private.
/jlne.ws/3WPo6i1

Chris Rokos’s Hedge Fund Soars a Record 51% in Turn of Fortunes; The fund recovered from its worst ever decline of 26% in 2021; Rokos joins a group of macro peers producing outsized profit
Nishant Kumar – Bloomberg
Chris Rokos produced his best-ever gains last year in a dramatic change of fortunes for the hedge fund manager. The $15.5 billion Rokos Macro Fund he leads surged 51% in 2022, according to people with knowledge of the matter. The return was his best since 2015 when he began trading for his eponymous firm in London.
/jlne.ws/3VSWp6X

Wellness Exchange

China-Developed mRNA Covid Vaccine Starts Test Production; CanSino says the gene-based shot targets the Omicron variant that is behind the country’s current outbreak
Joyu Wang – The Wall Street Journal
Chinese drugmaker CanSino Biologics Inc. started trial production of a vaccine targeting new variants of Covid-19 that are behind the country’s current outbreak, which would be among the first developed in China using the mRNA technology that drove inoculation in the U.S. and other countries.
/jlne.ws/3ZkCxN4

No, Vaccines Aren’t Making New Covid Variants Worse; The omicron sequel XBB.1.5 is driving a new wave of infections – and misinformation.
Faye Flam – Bloomberg
A new Covid variant called XBB.1.5 is driving a new wave of infections. But susceptibility to it is not, as some contend, being fueled by vaccines. Still, the surges of ever more immune-evasive variants raise legitimate questions about whether vaccines and boosters are still protecting us from infection, or should only be recommended for their ability to prevent severe disease and death.
/jlne.ws/3GJWLbr

The US Keeps Offering China Its Covid Vaccines. China Keeps Saying No; The American outreach has been more extensive than reported; Despite criticism, China says it’s been open and transparent
Peter Martin and Jenny Leonard – Bloomberg
China has rebuffed repeated US offers to share advanced vaccines as Beijing battles a fast-spreading wave of Covid-19, a rejection that’s led to growing frustration among American officials concerned about a resurgence of the pandemic.
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Consumption of Marijuana Edibles Surges Among Children, Study Finds; The ingestion of edibles by children under 6 has risen rapidly since the start of the pandemic, contributing to a “significant increase” in hospitalizations, the study found.
Christine Chung – The New York Times
The accidental consumption of marijuana edibles, such as brownies and gummies, among children under the age of 6 has surged in recent years as more states have legalized the recreational use of pot, a new study has found. The study, published on Tuesday in the journal Pediatrics, analyzed reports of child exposure to edibles from 2017 to 2021. The authors concluded that there had been a “consistent increase in pediatric edible cannabis exposures over the past five years, with the potential for significant toxicity.”
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Regions

China’s Giant Chip Ambitions Fall Prey to Covid Turmoil; Beijing is moving away from lavish spending on chip projects; Future investment could focus on EVs and new chip techniques
Bloomberg
For years, China was the world’s biggest spender on chip incentives, a scale unmatched from Washington to Tokyo. Now, the effort to combat Covid and deal with the threat of a global recession is depleting state coffers and forcing Beijing to rethink that controversial approach. Surging Covid cases are hobbling the world’s No. 2 economy and forcing its government to pause mammoth spending on its domestic chip industry. In a market dominated by the US and its allies, costly subsidies have so far borne little fruit and led to several high-profile corruption investigations. Policymakers are now searching for other ways to help homegrown chip firms.
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Wine, Lobsters Could Be Next in China-Australia Trade Thaw; Curbs on Australian commodities may lift in unofficial manner; Wine producers to be cautious about re-entering China market
Keira Wright and Jinglu Gu – Bloomberg
China’s trade restrictions on Australian wine, lobsters and other commodities could be the next to ease amid a warming of diplomatic ties and expectations that Beijing will soon resume imports of coal. Curbs on commodity imports will probably be eased gradually and in an unofficial manner, said Hans Hendrischke, professor of Chinese Business and Management at the University of Sydney. While there’s some confidence that restrictions will be lifted, there’s currently no indication of timing, he said.
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China Buyers Face Race to Snap Up Australia Coal, Shipper Says; Exporter Coronado plans to conclude contracts by end of March; Easing of ban on Australia imports to support prices: CFO
Sybilla Gross – Bloomberg
Chinese buyers need to act fast to secure guaranteed supplies of Australian coal as a ban on imports is eased, according to a key shipper of the fuel. Negotiations for new long-term contracts for metallurgical coal – used in steelmaking – are already underway, meaning China’s consumers need to lock in orders before the end of March, or risk missing out because of a lack of supply in the spot market, said Coronado Global Resources Inc. Chief Financial Officer Gerhard Ziems.
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China Vows to Boost Prospecting, Reserves of Strategic Minerals; Nation looks to optimize incentives to bolster private capital; Commodity prices including iron ore and oil spiked last year
Bloomberg News
China is vowing to boost domestic prospecting and build strategic reserves to secure supplies of energy and key strategic mineral resources. “China will launch a new round of domestic prospecting operations, focusing on strategic bulk minerals that are in short supply,” Wang Guanghua, Minister of Natural Resources, was cited as saying in an interview with the official Xinhua News Agency.
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Nomura Says BOJ May Further Reduce Frequency of ETF Purchases; BOJ likely to place priority on controlling yields: Nomura; Yamaguchi appointment could lead to ETF concerns, note says
Aya Wagatsuma – Bloomberg
The Bank of Japan is likely to maintain its policy on exchange-traded funds while further decreasing the frequency of purchases as it focuses on controlling bond yields, according to Nomura Securities Co. Normalizing ETF buying is a low priority for the central bank given that market participants are growing less concerned about the policy relative to worries over the impact of its yield curve control, Nomura analysts Naoya Fuji and Yunosuke Ikeda wrote in a Jan. 6 research note. In addition, any revisions to policy would require “thoughtful dialogue” so as to not spur concerns over future sales and an exit strategy, they added.
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What to Watch as China Gives Commodities a Wild Start to Year; Beijing mulls property easing; virus wave batters demand; Raw materials just notched a fourth annual advance in 2022
Bloomberg News
Commodities are having a volatile start to the year as China’s virus tsunami and policy shifts leave investors scrambling to calibrate expectations for 2023. Crude and copper rose Friday on reports that President Xi Jinping might ease strict real-estate controls. That follows heavy losses triggered by the nation’s demand-destroying wave of Covid-19 infections. China’s uncertain path to recovery will steer commodities this year after prices posted a fourth annual gain in 2022.
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Increased Chinese Crude Buying Spooks European Oil Traders; Chinese traders snapping up Kazakhstan’s CPC Blend crude; Europe has just all but halted oil imports from Russia
Ali Asad Zulfiqar and Sherry Su – Bloomberg
China is snapping up cargoes of crude that would normally head to Europe, spooking the continent’s physical oil traders who’ve just seen imports from Russia all but halt at a time when local demand is rising. The world’s largest oil importer already bought 5 million barrels of mostly-Kazakh crude for collection from a port in the Black Sea next month, according to traders of the grade. In daily flow terms, it’s the most since at least the start of 2021.
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Standard Chartered Faces Fresh Questions After Report of Middle East Bank’s Takeover Bid; FAB says ‘no longer’ evaluating bid after Bloomberg report; StanChart’s emerging market focus makes it appealing: analysts
Harry Wilson – Bloomberg
Standard Chartered Plc’s Bill Winters wanted to mark the start of 2023 “with a little kindness,” he said on LinkedIn, but instead finds himself in the middle of a fresh debate about the emerging market lender’s future.
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Bigger Investors Pounced on Turkey’s Soaring Stocks Last Year; Demand jumped as stocks offered hedge against inflation; Turkish investors have begun 2023 in profit-taking mode
Tugce Ozsoy – Bloomberg
The number of larger investors buying Turkish stocks soared last year as the nation’s equity market saw a world-beating rally. With the market offering domestic investors a hedge against runaway inflation, accounts with budgets of more than 1 million liras ($53,200) climbed by more than 250% in 2022, according to Turkey’s Central Securities Depository data. That outpaced growth in all other portfolio size segments, in a shift from the previous year when smaller retail investors deploying between 100 to 1,000 liras rose the most.
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Adani Among Potential Suitors Eyeing Stake in India-Backed Power Trader; Other conglomerates may join the race for the trading unit; Bids for the minority stake are due as soon as January
Baiju Kalesh and P R Sanjai – Bloomberg
A stake for sale in state-backed electricity trader PTC India Ltd. is attracting initial interest from potential suitors including Asia’s richest man Gautam Adani, according to people familiar with the development. Adani is among possible bidders reviewing preliminary information on the business, the people said, asking not to be identified as the information is private. Other Indian conglomerates are also evaluating whether to bid, one of the people said.
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Miscellaneous

AI Is Cool But Can It Tailor a $50,000 Suit? The death of celebrated Neapolitan clothier Cesare Attolini reminds us that fine craftsmanship never goes out of style.
Rachel Sanderson – Bloomberg
In the winding streets off the Bay of Naples, lived and worked Cesare Attolini, the great master tailor of the soft-shouldered suit. The maestro, who died in November at 91, numbered among his clients A-listers from movies past and present: Clark Gable, Al Pacino, Marcello Mastroianni and Denzel Washington. At his funeral a month ago, actor Toni Servillo wore the canary yellow blazer that adorned him in the Oscar-winning movie “The Great Beauty.”
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Music financing boom reverberates to markets

Music financing boom reverberates to markets

First Read Hits & Takes John Lothian & JLN Staff Yesterday morning I checked the status of my investment accounts after the market opening as I often do and I was like, "WOW!" But then I saw there were problems with some of the opening auctions at the NYSE and...

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