Hits & Takes
John Lothian & JLN Staff
Who do you think would be a good candidate for this year’s class for the FIA Hall of Fame? The FIA Hall of Fame committee for 2024 has been formed, the applications are online and FIA is seeking your input for who would be a good candidate. The FIA Hall of Fame celebrates individuals in the listed and cleared derivatives industry who have made key contributions to our markets during their careers. Make a nomination HERE.
The Financial Times has an FT Guides report titled “Digital financial services: an explainer” with the subheadline “Online trading platforms and blockchain ledger technology are transforming the way people save and invest. Here, FT journalists explain the applications of these new developments in the retail and institutional financial services industry.”
The stories include:
How is blockchain changing financial services? The technology has yet to make significant inroads into the traditional banking sector
What are digital bonds and how are they issued? The European Investment Bank is one of the institutions leading the way with four such offerings so far
How can blockchain be used to trade bonds? Banks are making use of the technology underlying crypto – but how does it work with highly regulated assets?
What is robo-advice and how can it provide low-cost financial planning? Competitive pricing and easy-to-use investment tools are the main attractions for beginner investors
Robo-advisers: a clickable guide; An interactive graphic explaining how robo-advisers operate
What do digital wealth management platforms offer? The latest services use advanced algorithms and technology to offer clients fully managed portfolios
Why is technology best for checking bank customer identities? Machines aren’t just faster than humans at recognising faces, they’re also more accurate
How can data-screening help investors meet ESG standards? As demand for exclusionary investments rises, AI especially is evolving to process information on companies’ activities
The Cboe’s 2024 Risk Management Conference will be in Snowbird, Utah.
FIA published a photo gallery of EXPO highlights from its October 2-3 event in Chicago featuring exchange leaders, industry experts and key regulators.
FIA also published a MarketVoice podcast of the interview of CME Group’s Terry Duffy conducted by FIA’s Walt Lukken at FIA EXPO discussing Duffy’s outlook for the global economy and commodity markets and CME’s future plans.
FIA also published a MarketVoice podcast of the interview Lukken did with ICE’s Jeff Sprecher at EXPO where he discusses data, technology, innovation and the role of ICE in exchange traded derivatives markets.
The World Alliance of International Financial Centers (WAIFC) announced at its AGM in New York the addition of three new members to its board of directors: Obi Ibekwe, EnterpriseNGR (Lagos, Africa), Joe Moynihan, Jersey Finance (Jersey, Europe) and MyongHo Rhee, Busan Finance Center (Busan, Asia).
HKEX received the 2023 “Partner of Charity Giving Award” from The Community Chest of Hong Kong in recognition of HKEX’s philanthropic efforts and dedication to community engagement.
Susquehanna International Group, LLP (SIG) is a new player on Euronext Trader, Euronext’s web-based trading interface.
Abaxx announced some news about $27 million in financing to “complete RMO and ACH license requirements, termination of ATM program.” This news is not for release in the U.S. so if you are a U.S. based subscriber, please don’t read this.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
Our most read stories last Friday on JLN Options were:
Bitcoin ETF Rumor Had a Silver Lining and It’s Apparent in the Crypto Options Market from CoinDesk.
Powell Signals Fed to Stay on Hold and Keep Future Hike on Table from Bloomberg.
Japan to counter FX volatility with intervention, says official from Nikkei Ausia. ~JB
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How is blockchain changing financial services? The technology has yet to make significant inroads into the traditional banking sector
Stephen Gandel – Financial Times
When Blythe Masters, a former top JPMorgan Chase executive and one of the most prominent financiers on Wall Street, was appointed chief executive of blockchain company Digital Asset Holdings in 2015, many saw it as a sign that the technology – for building secure transaction networks – would upend financial services. At the time, Masters told Bloomberg News: “You should be taking this technology as seriously as you should have been taking the development of the internet in the early 1990s.”
***** When the group from the World Alliance of International Financial Centers was in town last week, I told them while I believe blockchain may ultimately prove valuable, there has not been a notable win yet that has gained the public’s attention. There have been notable losses, which is to be expected for any new technology trying to find a use.~JJL
Another Black Monday May Be Around the Corner; The Federal Reserve’s policies threaten the American economy and financial markets.
John Greenwood and Steve H. Hanke – Bloomberg
The Federal Reserve’s policies are threatening U.S. financial markets and the economy. They are in danger of a steep recession and the risk of a repeat of 1987’s Black Monday. Early in the pandemic, the volume of U.S. dollars in circulation soared. For two years starting in March 2020, the M2 money supply-a measure of the cash and checkable deposits in circulation plus savings deposits and other easily convertible assets-grew at an unprecedented annual rate of 16.5%. That is more than three times the appropriate rate for hitting the Fed’s 2% inflation target.
****** There are two reasons I hate October. One is all the scary movies on during the month, the other is all the scary trading days during the month.~JJL
Who You Calling Dumb Money? Everyday Investors Do Just Fine; The average stock portfolio of individual investors has beat the S&P 500 since 2014
Hannah Miao – The Wall Street Journal
Jeff Beckman knew he wouldn’t get rich working at a nonprofit, so he invested in the stock market. For nearly four decades, Beckman has steadily contributed to an employer-sponsored retirement plan allocated almost entirely to stock funds. He also bought shares of Apple, Berkshire Hathaway and Meta Platforms through a brokerage account. Now, the 63-year-old’s portfolio is worth roughly $1 million-and he has no plans to sell his stocks or rotate toward safer assets, such as bonds, anytime soon.
****** What is the survivor bias of this statistic?~JJL
America’s Downtowns Are Empty. Fixing Them Will Be Expensive; Lonely sidewalks and closed storefronts inspire proposals to recast office districts into neighborhoods where people live, work and raise families
Konrad Putzier – The Wall Street Journal
Downtown streets were so crowded in the 1960s that developers conjured up a maze of elevated walkways between buildings, providing winter-proof avenues for office workers who filled the central city Monday through Friday. Stores, fast-food spots, bakeries and barber shops lined the covered, temperature-controlled walkways, which linked new glass skyscrapers sprouting one after the next. Workers racing to cubicles in the morning kept to the right to avoid crashing into each other, recalled convenience store clerk Monica Bray.
****** America’s cities’ downtowns are starting to look like America’s small-town downtowns – empty stores and for rent signs. I am just waiting for the first antique store to open on LaSalle Street or Jackson Blvd. in downtown. ~JJL
Friday’s Top Three
Our top clicked item on Friday was the petition to the SEC from the Healthy Markets Association weighing in on the SPIKES situation. Second was the job application for director of risk, derivatives at Robinhood. Third was a tie between the MarketsWiki Page for MGEX and How to Keep the Treasuries Market Functioning, an opinion piece from the Bloomberg editorial board.
CME in ‘strongest position’ for deals, CEO says, despite rising competition
Laura Matthews – Reuters
CME Group (CME.O) is in strong position to make acquisitions, armed with low debt and robust earnings, Chief Executive Officer Terry Duffy told Reuters, even as the world’s largest derivatives exchange operator faces rising competition. Exchanges have been consolidating over the years and some have expanded beyond market-sensitive businesses like trading to pursue more predictable revenue.
The return of the rice crisis; Export restrictions and extreme weather are threatening the global supply of a staple commodity relied on by millions
Susannah Savage, Jyotsna Singh, Benjamin Parkin and Aanu Adeoye – Financial Times
Fried rice is normally a popular choice among diners in Lagos, the economic capital of Nigeria. Yet lately many people have stopped ordering it, says restaurant manager Toni Aladekomo. With the price of the dish shooting up to N4,000 ($5.20) from N1,500 a year ago, it has “stopped being affordable for most”, says Aladekomo, general manager of Grey Matter Social Space, a restaurant in the upmarket business district of Victoria Island.
A Shrinking $1.3 Trillion Securities Market Is Bad News for the Economy
Lisa Lee, Carmen Arroyo and Neil Callanan – Bloomberg
For a fleeting moment this month, investment bankers in leveraged finance – the lucrative lending that oils the wheels of M&A and feeds the $1.3 trillion market for collateralized loan obligations – had rare cause for cheer. Company valuations were enticingly low for dealmakers, the US Fed looked closer to reversing punishing rate hikes, loans were getting done.
China crackdown on cyber scams in Southeast Asia nets thousands but leaves networks intact
Huizhong Wu – Associated Press
Zhang Hongliang, a former restaurant manager in central China, took various gigs in and outside China to support his family after losing his job during the COVID-19 pandemic. In March, a job offer to teach Chinese cooking at a restaurant led him into a cyber scam compound in Myanmar, where he was instead ordered to lure Chinese into giving up their savings for fake investment schemes via social media platforms.
Sam Bankman-Fried Took Risks at FTX. Will He Bet on His Own Testimony? Crypto-exchange founder faces choice on whether to take the stand after former members of his inner circle testified that there was sweeping fraud
Corinne Ramey and James Fanelli – The Wall Street Journal
FTX founder Sam Bankman-Fried, known for his appetite for risky bets, is mulling perhaps his biggest gamble yet: testifying in his own defense. The onetime crypto star, on trial in New York on allegations of fraud, money laundering and other offenses, has spent nearly three weeks watching some of his former close friends and colleagues take the stand and offer what appeared to be damning testimony. Bankman-Fried, they told jurors, knowingly directed and committed an array of criminal acts that led to the collapse of the FTX crypto exchange and the loss of billions of dollars in customer funds.
The humbling of the maths snobs; The likes of Sam Bankman-Fried and Liz Truss crave certainties in the mess of adult life
Janan Ganesh – Financial TImes
We must leave it to the criminal courts to decide the future of Sam Bankman-Fried. He denies the various charges against him. For now, I am less concerned with his specific doings than with his worldview, which is a sort of mathematical chauvinism.
Sam Bankman-Fried’s lawyers avoid challenges to ‘cartoon’ villain image
Luc Cohen – Reuters
Sam Bankman-Fried’s lawyers have complained that prosecutors at his fraud trial are portraying the FTX cryptocurrency exchange founder as a “cartoon of a villain,” but have done little to counter unflattering depictions of him offered to the jury by his former colleagues. In cross-examining former members of his inner circle who have pleaded guilty and testified for the prosecution, defense lawyers generally has avoided challenging their accounts of Bankman-Fried angrily snapping at colleagues who questioned key company decisions. They also did not challenge testimony by one of the witnesses that his quirky persona was mostly an act.
Chevron to Buy Hess for $53 Billion in Latest Oil Megadeal
James Herron and Laura Hurst – Bloomberg
Chevron Corp. agreed to buy Hess Corp. for $53 billion, a deal aimed at boosting production growth as the US oil industry bets on an enduring future for fossil fuels. In an all-stock transaction, Chevron will pay $171 per share for Hess, a premium of about 10% to the 20-day average price, according to a statement from the companies on Monday. Hess shareholders will receive 1.025 shares of Chevron for each Hess share, giving the company a total enterprise value of $60 billion, including debt.
Chevron’s Mike Wirth: ‘We are not selling a product that is evil’; Oil and gas executive says he will defy critics to make a ‘real world’ case for fossil fuels
Andrew Edgecliffe-Johnson and Jamie Smyth – Financial Times
To Chevron’s critics, who range from Just Stop Oil protesters to the governor of its home state and the president of the United States, the $300bn US oil and gas major exemplifies an industry recklessly promoting products it knows are warming the globe while greedily pushing up petrol prices.
Ark finds silver lining in massive ETF losses: years of tax benefits; Cathie Wood pitches upside of disappointing returns of flagship investment fund
Will Schmitt – Financial Times
Cathie Wood’s Ark Investment Management has a new pitch to investors who might be concerned by the asset manager’s huge losses owing to rising interest rates – think of the tax write-offs. Wood’s flagship investment product – the $6.3bn ARK Innovation exchange traded fund, known as ARKK – is down more than 25 per cent over the past three months, according to Morningstar.
Sorry, European Banks. Investors Just Aren’t Into You; The lenders are priced for danger, but there could be some positive third-quarter surprises in store.
Paul J. Davies – Bloomberg
Investors just don’t fancy European banks. This distaste has left valuations languishing at levels low enough to imply imminent financial disaster. While this view is far too bleak, the industry’s third-quarter results in coming weeks aren’t likely to change anyone’s mind.
‘A lot of anger’: U.S. faces flak as it pushes for World Bank to run climate fund; Developing countries want rich, polluting nations to supply many billions of dollars to address climate damage. And they distrust Washington’s motives.
Zack Colman – Politico
The Biden administration’s proposal to put the World Bank in charge of a fund that would pay poorer countries suffering irreversible climate damage is threatening to rattle U.N. climate talks that begin next month in Dubai. The negotiating team led by climate envoy John Kerry reluctantly endorsed the idea of establishing a fund for “loss and damage” suffered by developing nations at U.N. climate talks last year, but countries left the details of how it would work – and where its many billions of dollars would come from – for later.
Chevron buys Hess for $60B as Big Oil deals reshape industry
Ben Geman – Axios
U.S. oil industry consolidation is suddenly happening at breakneck speed. Driving the news: This morning Chevron announced an all-stock deal to buy Hess Corp. for $53 billion, with a total deal value of $60B including debt. It comes on the heels of Exxon’s blockbuster Oct. 11 deal to buy Pioneer Natural Resources in an even larger transaction. Why it matters: The deals (if regulators bless them) are reshaping the American industry as the two largest U.S. companies, flush with cash after a long stretch of high prices, snag giant independents.
Financiers stick to ‘Davos in the Desert’ plans despite Middle East war; Larry Fink, Jamie Dimon and Jane Fraser among those expected at Saudi investment conference
Brooke Masters and Simeon Kerr – Financial Times
Scores of senior bankers and financiers plan to descend on Riyadh next week for Saudi Arabia’s high-profile investment conference despite rising instability in the region because of the Israel-Hamas conflict. JPMorgan Chase’s Jamie Dimon, BlackRock’s Larry Fink, Citigroup’s Jane Fraser, Goldman Sachs’ David Solomon, Blackstone’s Stephen Schwarzman and Carlyle’s Harvey Schwartz are among the best-known American chief executives expected to attend or speak next week at the seventh annual Future Investment Initiative. The scheduled UK attendees include HSBC’s Noel Quinn and Standard Chartered’s Bill Winters.
Federal Reserve warns of growing geopolitical risks to global financial system; US central bank says Middle East conflict and war in Ukraine threaten ‘spillovers’ to markets
Colby Smith and Joshua Franklin – Financial Times
Escalating geopolitical tensions pose a threat to the global financial system amid heightened risks of higher inflation and slower growth, the Federal Reserve warned on Friday. In its latest twice yearly Financial Stability Report, the US central bank flagged the potential for “broad adverse spillovers to global markets” in the event that the Middle East conflict and the war in Ukraine intensify or stresses emerge elsewhere.
A price cap on Russian oil aims to starve Putin of cash. But it’s largely been untested. Until now
David McHugh – Associated Press
For months after Ukraine’s Western allies limited sales of Russian oil to $60 per barrel, the price cap was still largely symbolic. Most of Moscow’s crude – its main moneymaker – cost less than that. But the cap was there in case oil prices rose – and would keep the Kremlin from pocketing extra profits to fund its war in Ukraine. That time has now come, putting the price cap to its most serious test so far and underlining its weaknesses.
Kill and Be Killed: Ukraine’s Bloody Battlefield Equation; The dynamics of Europe’s deadliest war in generations remain exceedingly violent and increasingly complicated by factors far from the battlefield.
Marc Santora and Constant Meheut – The New York Times
As Russia mounted wave after wave of attacks over the summer, Sgt. Mykola Rogozovets and fellow members of his unit started drawing little plus signs in the dirt of their bunker while artillery shook the ground around them.
Israel and the lessons of 9/11; The country has less margin for error than a superpower like the US
Gideon Rachman – Financial Times
“While you feel that rage, don’t be consumed by it. After 9/11, we were enraged in the United States. And while we sought justice and got justice, we also made mistakes.” So said Joe Biden on his recent visit to Israel. But the US president did not elaborate in public on the mistakes that America made. So what were they? Broadly speaking, the US attempted to defeat “terrorism” through conventional military means. It launched wars in Afghanistan and Iraq that led to hundreds of thousands of deaths. But more than 20 years after starting its war on terror, America is probably less powerful and respected around the world than it was in 2001. And its own society has been gravely wounded.
‘There is no work’: war with Hamas hits Israel’s economy; Economists forecast sharp contraction and big government deficits as fears mount of extended conflict
James Shotter and Ivan Levingston – Financial Times
Before war broke out between Israel and Hamas, Jeremy Welfeld’s brewery in the Israeli town of Emek Hefer produced 50,000 litres of beer a month, while his 14 restaurants around the country drew in thousands of customers each day.
Hamas Mortally Threatens Israel’s Existence; If the state is unable to protect Jews, as it was on Oct. 7, it has lost its purpose.
Michael Oren – The Wall Street Journal
Israel has to destroy Hamas because the attack of Oct. 7 threatens the country’s existence. If the conflict ends in stalemate or cease-fire, the terrorists will have gotten away with mass atrocities on Israeli soil. We will never be secure from future onslaughts. Tourism and foreign investment will vanish, and many Israelis will raise their children elsewhere.
Why is the Israel-Gaza dispute so intractable? This is a conflict that has always flared beyond its own contested borders, making any solution infinitely harder
James Barr – Financial Times
“We will break Transjordan, bomb Amman and destroy its army; and then Syria falls; and if Egypt will still continue to fight, we will bombard Port Said, Alexandria and Cairo,” wrote Israel’s first prime minister, David Ben-Gurion when war broke out in 1948. “This will be in revenge for what they…did to our forefathers in Biblical times.”
Exchanges, OTC and Clearing
CME Group Eyes Acquisitions Following Three Years of Double-Digit Earnings Growth
Jared Kirui – Finance Magnates
CME Group’s CEO Terry Duffy has announced that the group is in its strongest position ever, even as it faces intensifying competition. CME’s focus on business segments like trading has paid off with three consecutive years of revenue growth, driven by the increasing demand for hedging amid market volatility
Leaders in Trading 2023: Meet the nominees for… Outstanding Dark Trading Venue; Learn more about the four firms shortlisted for The TRADE’s 2023 Editors’ Choice Award for Outstanding Dark Trading Venue: including Cboe BIDS Europe, Goldman Sachs’ Sigma X, Liquidnet and Virtu POSIT.
Editors – The Trade
Next up in our Leaders in Trading 2023 Editors’ Choice Awards write up series, we bring you the shortlisted candidates for Outstanding Dark Trading Venue, showcasing exceptional performance in the non-disclosed trading arena. Over the last year, these dark trading venues have helped innovative the marketplace with a range of expansions in their respective product suites and expansions into new markets, alongside boasting increased volumes – making for a very competitive award category.
LSE confirms system outage linked to RFQ for ETP functionality; Thursday’s outage affected all instruments aside from constituents of the FTSE 100, FTSE 250 and IOB securities.
Claudia Preece – The Trade
Following all instruments on Partition 3 (of 3) of the LSE Order Book entering into a Halt state yesterday at 3.11pm, the London Stock Exchange (LSE) has now confirmed that the cause was a matching engine logic issue on Partition 3. LSE specified that “the mirror process did not take over as would be expected in case of a hardware issue,” and that their investigations found the root case to be related to the Request For Quote (RFQ) functionality for Exchange Traded Products (ETPs).
Industry Veteran Kevin Wolf Joins American Financial Exchange as Chief Financial Officer
American Financial Exchange
The American Financial Exchange (AFX), a self-regulated exchange that provides banks and financial institutions a marketplace for overnight unsecured interbank lending and borrowing, today announced that Kevin Wolf, an industry veteran with over 20 years of capital markets experience, has joined the company as its new Chief Financial Officer (CFO). With his extensive background driving growth and profitability for various companies, Wolf brings a wealth of expertise to the AFX team.
The Moscow Exchange took part in the launch of the Exchange Champions program
On October 19, 2023, an acceleration program in the field of exchange-based financing instruments “Exchange Champions” was launched on the basis of the scientific cluster of Moscow State University (MSU) . The program was prepared by the National Champions Association with the support of the Moscow Exchange and the Innopraktika company.
NSE Academy Limited collaborates with RV University for Post Graduate Certification Program in Global Financial Markets and NSMART Finance Lab
I read Andreessen’s ‘techno-optimist manifesto’ so you don’t have to; Unrestrained technological ‘accelerationism’ is a bad idea
Jemima Kelly – Financial Times
It would be reasonable upon reading Marc Andreessen’s “techno-optimist manifesto”, to feel somewhat perplexed, and then to wonder: is the billionaire bitcoin-backing venture capitalist OK? After all, the 5,000-odd-word essay, published on his VC fund a16z’s website on Monday, does contain such phrases as: “Love doesn’t scale…Let’s stick with money”; “We believe in the romance of technology…the eros of the train, the car, the electric light”; and, perhaps most startlingly: “We believe any deceleration of AI will cost lives. Deaths that were preventable by the AI that was prevented from existing is a form of murder.”
Tokyo Stock Exchange and Broadridge unveil direct EMS connection for ETF trading; The linking of the two offerings is set to enable increased efficiency for asset management businesses in their processes.
Claudia Preece – The Trade
Tokyo Stock Exchange (TSE) and Broadridge Financial Solutions have launched a new direct connection, between TSE’s ETF trading platform, CONNEQTOR, and Broadridge’s EMS, Xilix.
Multi-asset trading: Reduced errors and enhanced high touch execution; The TRADE and James Barnett, trader at Manulife Investment Management, discuss the value of one multi-asset trader managing both execution and hedging and the importance of utilising available resources and partnerships to maintain a specialist service on a cross asset desk.
Annabel Smith – The Trade
What are the benefits of merging trading across asset classes?
The key benefits of merging the trading function to be multi-asset have to come down to efficiency and scale, both as it relates to the execution of trades but also on how the trader operates when observing markets, providing market colour and looking at data.
Paytm Founder Launches $4 Million Fund to Bet on AI, EVs
Sankalp Phartiyal – Bloomberg
Paytm founder Vijay Shekhar Sharma has launched a 300-million rupee ($3.6 million) fund, seeking to invest in India’s fast-growing artificial intelligence and electric vehicle sectors. The VSS Investments Fund is backed by VSS Investco Private Limited, an entity Sharma owns and controls, the billionaire fintech entrepreneur said in a statement Monday. The fund will be managed by a professional investment manager.
China has stolen more personal and corporate information than every other country in the world combined, FBI director says
Kwan Wei Kevin Tan – Insider
FBI Director Christopher Wray says China is running the world’s most extensive hacking program. “You have the biggest hacking program in the world by far, bigger than ever other major nation combined. Stolen more of our personal and corporate data than every nation, big or small, combined,” Wray told 60 Minutes’ Scott Pelley in an interview that aired on Sunday.
How to ask the board and C-suite for security funding
Deb Radcliff – CSO Online
Recent guidance published by the National Association of Corporate Directors (NACD) and the Internet Security Alliance instructs board members to drive “a culture of corporate cyber responsibility” by empowering CISOs with the influence and resources they need to drive decisions where cybersecurity is effectively prioritized and not subordinated to cost, performance, and speed to market.
SEC’s New Requirements: Expert Insights into Their Impact on Cyber Risk Disclosures
Peter Suciu – Clearance Jobs
In July, the United States Securities and Exchange Commission (SEC) announced that it would require public companies to disclose their cybersecurity risk management strategies and governance practices annually, as well as any material cybersecurity incidents.
A new report released this month from cyber risk monitoring firm ISS Corporate Solutions (ICS), found that in advance of the rules taking effect, companies are making a concerted effort to signal to stakeholders that they have an effective approach to managing cybersecurity threats.
How the DOD Is Marching Toward Full Zero Trust Implementation
Ireland Degges – GovConWire
With technology advancing rapidly and new threats taking shape, zero trust, a security strategy based on continuous authentication, has become a major priority for the Department of Defense. In November 2022, the department solidified its zero trust push with the release of the Zero Trust Strategy and Implementation Roadmap.
Grayscale Bitcoin Discount Narrows With ETF Conversion Seen ‘Inevitable’; Grayscale Bitcoin Trust trades 14% below value of its tokens; That’s the narrowest discount going back to 2021, data show
Vildana Hajric – Bloomberg
The world’s largest Bitcoin fund is surging faster than the cryptocurrency itself as investors anticipate that an ETF centered on the token could soon launch. The Grayscale Bitcoin Trust (ticker GBTC) is trading about 14% intraday below the value of its underlying holdings, the narrowest such reading going back to 2021, according to data compiled by Bloomberg Intelligence. The discount stood near 50% earlier this year.
How Bankman-Fried Allegedly Spent Billions in Customer Funds Before FTX Collapse; Evidence presented in Sam Bankman-Fried’s trial showed how the FTX co-founder was rising in prominence just as his trading firm was running out of money.
Yueqi Yang – Bloomberg
A meeting with President Bill Clinton in midtown Manhattan, a dinner with the head of Saudi Arabia’s sovereign wealth fund, an invitation from Anthony Scaramucci to attend a Steelers game. These were some examples presented in court that showed how Sam Bankman-Fried was rising in prominence just as his trading firm Alameda Research was running out of money.
Is TradFi’s entry into DeFi a turning point or a sign of greater battles ahead?
Robert Quartly-Janeiro – Forkast
In November 2022, in the weeks following FTX’s collapse, Harvard University Professor Kenneth Rogoff argued that the end of crypto was in sight. “It is hard to see how crypto could compete with more efficient financial intermediation options,” he wrote at the time.
China’s central bank to ‘resolutely curb’ crypto speculation; Hong Kong updates regulations
Jenny Ortiz – Forkast
Pan Gongsheng, recently appointed head of the People’s Bank of China (PBOC), the country’s central bank, said the agency will severely crack down on illegal financial activities such as cryptocurrency transactions in the country, local media reported on Saturday. Meanwhile, Hong Kong regulators announced restrictions on retail access to certain “complex” digital asset products.
Cryptocurrencies under renewed focus after Hamas attacks; Politicians and regulators step up scrutiny of alleged links between digital currencies and terrorism
Scott Chipolina – Financial Times
The crypto industry’s long quest for legitimacy and mainstream adoption hit another big hurdle this month, as US politicians and authorities intensified their focus on alleged links to the financing of terrorism.
Tougher UK crypto regime sparks boom for compliance advisers; Start-ups receive boost from new marketing rules on digital assets
Nikou Asgari – Financial Times
Why Pro-Dollar Politician Javier Milei Is Roiling Argentina Markets
Jonathan Gilbert – Bloomberg
Javier Milei, a free-marketeer and political outsider, has been leading the race for Argentina’s Oct. 22 presidential election since pulling off a stunning victory in the August primary. Here’s what you need to know about Milei – and why the election matters for the rest of the world.
Billionaires Are Next Up in Crosshairs of Global Tax Architects; A 2% wealth levy could raise $250 billion a year, study shows; Economist Stiglitz says tax disparity undermines democracy
William Horobin – Bloomberg
Governments should create a global minimum tax on the super-rich similar to a system agreed for major multinationals to deliver a significant boost to revenues, the EU Tax Observatory said. Applying a 2% rate to the wealth of the world’s 2,750 billionaires could raise some $250 billion a year, according to research published by the independent network of academics based at the Paris School of Economics.
‘He’s like a mob boss’: legal experts alarmed by Trump’s attacks on judges
Peter Stone – The Guardian
As Donald Trump faces 91 criminal charges including 17 for his multifaceted drive to overturn his 2020 election loss, and a high-stakes civil trial, he has launched a spate of ad hominem attacks on two judges overseeing trials, posing physical risks for the judiciary and weakening the US judicial system, say former judges and legal experts. Rising concerns about Trump’s attacks on judges and prosecutors were underscored this month when a federal judge in Washington DC and a state judge in New York issued tailored gag orders to curb Trump’s public tirades.
Azerbaijan’s victory over Armenian enclave raises fears of another war; The oil-rich state is emboldened by takeover of Nagorno-Karabakh, with southern Armenia fearing it may be next
Polina Ivanova and Baku – Financial Times
Hundreds of Kalashnikov rifles were lined up neatly on the ground while a dog snoozed next to grenade launchers. Tanks, some bruised and battered, stood disarmed against a horizon of dark mountains. “Our trophies,” a major said with a smile. This was Azerbaijan’s victory lap.
Parliamentary Joint Committee Opening Statement, 20 October 2023
Opening statement by ASIC Chair Joe Longo at the Parliamentary Joint Committee on Corporations and Financial Services, Oversight of ASIC, the Takeovers Panel and the Corporations Legislation, 20 October 2023
Consumer Price Developments in September 2023
Monetary Authority of Singapore
This September 2023 report contains an update of the latest consumer price developments in Singapore, prepared by MAS and the Ministry of Trade and Industry.
Market stability key as regulators battle to keep up with technological developments; The potential impact of AI on financial infrastructures identified as a “possible threat to resiliency, stability, and confidence in the financial system,” by Liquidnet report.
Claudia Preece – The Trade
Market stability remains a key focus for regulators who are battling to keep up as technology propels forwards, says latest Liquidnet report, ‘moving on from Mifid’. As the market experiences a technological surge – with no end in sight as development continues to accelerate – the ‘Q3 2023 liquidity landscape’ report made clear that though regulators remain focused on ensuring stability in markets, there are questions as to the ability to empirically ensure this.
Scammers exploit bitcoin ATMs. Will new California laws help crack down on fraud?
Queenie Wong – LA Times
Jim Meduri answered a terrifying phone call in January from a man pretending to be his son. The caller, who sounded on the verge of tears, said he’d been in a car accident. Meduri was convinced his son had been arrested for driving under the influence and injuring a pregnant woman and her daughter.
Hong Kong police arrest 51 suspects in crackdown on scams involving nearly HK$100 million; Suspects allegedly involved in investment schemes, job recruitment ruses, telephone fraud and online shopping scams; In one case, an 85-year-old mum lost HK$15,000 after receiving call from her ‘son’ who needed money to bail him out of jail
Danny Mok – SCMP
Hong Kong police have arrested 51 people in a crackdown on scams and money laundering involving almost HK$100 million (US$12.78 million). The suspects, arrested during a week-long operation carried out in various districts earlier this month, were allegedly tied to 39 fraud and money-laundering cases concerning HK$99 million, Chief Inspector Shun Po-chun of the Wan Chai district on Sunday said. The suspects were accused of obtaining property by deception and engaging in money laundering. They were allegedly involved in investment schemes, job recruitment ruses, telephone fraud and online shopping scams.
Investing and Trading
Wild Treasuries Swings Just Starting as Bond Traders ‘Buckle Up’; Mixed signals from Fed, geopolitical angst fuel bond tumult; Volatility in Treasuries only seen increasing in coming months
Liz Capo McCormick and Michael Mackenzie – Bloomberg
A surprisingly strong US economy and mixed signals from the Federal Reserve have fueled some of the wildest swings in Treasuries in recent memory. Add geopolitical angst and a surge in debt supply and you have a recipe for sustained volatility for months to come, market watchers say.
Money Managers With $100 Trillion Confront End of the Bull Market; Active asset managers have been bleeding cash, and strategies to stem the outflows haven’t had much effect. Many may not survive a bear market.
Silla Brush and Loukia Gyftopoulou – Bloomberg
T. Rowe Price Group Inc. is reeling from a $127 billion exodus over just two years. At Franklin Resources Inc., the latest member of a billionaire family to run the firm is trying to reverse a nearly uninterrupted 20-quarter losing streak. Across the Atlantic, the chief of Abrdn Plc has reached a blunt conclusion: merely managing mutual funds isn’t enough of a business any more.
When Japan Ends Negative Rate Policy, Treasuries Will Suffer; The BOJ is likely to tighten during the first half of 2024, a majority says in Bloomberg survey
Yumi Teso and Masaki Kondo – Bloomberg
Japan’s era of negative interest rates will end in coming months, and the implications for world markets will be enormous, with US Treasuries set to suffer the most, according to the latest Bloomberg Markets Live Pulse survey. The Bank of Japan is likely to unwind its unusual policy of sub-zero rates during the first half of 2024, the majority of 315 respondents said. The move would bring an end to a bold experiment it embarked on in 2016 – one that’s recently placed Japan at odds with other major central banks that have been tightening aggressively to combat inflation.
Investors snap up fixed income ETFs despite bond rout; Relentless rise of yields attracts new inflows – but leaves long-dated bondholders nursing losses
Mary McDougall – Financial Times
Investors have been flocking to fixed income exchange traded funds to scoop up higher yields this year, despite a broad sell-off in bonds, as markets brace for interest rates staying higher for longer.
Scottish ‘kilts’ could be a financial innovation too far; Edinburgh will pay a premium for issuing its own bonds
The editorial board – Financial Times
The Scots have form on daring financial innovation. Before the Scottish Enlightenment’s David Hume, Adam Ferguson and Adam Smith, there was John Law. An intellectual pioneer, he was the first to advocate monetary stimulus through paper money only partially backed by real assets.
Environmental, Social and Corporate Governance
Carbon freebies: How UK firms can close factories and make millions on the carbon market; Labour MP calls on government to ‘close loophole’ in policy described as the cornerstone of net zero
Joe Sandler Clarke – Unearthed
A little-known government scheme designed to encourage businesses to reduce emissions allowed one company to make 32m pounds on the carbon market after closing a factory and causing hundreds of job losses. A Labour MP has now called on the government to close the “loophole” in the UK emissions trading system (ETS) that allows firms that reduce emissions simply by closing factories the chance to make millions from the sale of carbon credits.
Q&A: The Pope’s New Document on Climate Change Is a ‘Throwdown’ Call for Action; A professor who has studied Francis’ writings on climate says he singles out the U.S. for overconsumption and takes “aim” at the U.S. Conference of Catholic Bishops’ denialism.
Paloma Beltran – Inside Climate Change\NPR
In June 2015, Pope Francis published a groundbreaking document that made a theological case for climate action called Laudato Si’: On Care for Our Common Home. That fall, in a rare moment of unity, nations established the landmark Paris Climate Agreement. Now, eight years later, the Pope is back with an even bolder update. In “Laudate Deum,” or “Praise God,” Pope Francis says the world is “nearing the breaking point,” condemns climate denial, and calls for urgent climate action. The Roman Catholic church he leads is the largest Christian denomination and has over a billion followers around the world.
BlackRock-backed US carbon pipeline scrapped in face of opposition; Navigator COâ‚‚ cites ‘challenging’ regulatory process for project meant to bury emissions
Jamie Smyth – Financial Times
A company backed by BlackRock has abandoned plans to build a 1,300-mile pipeline across the US Midwest to collect and store carbon emissions from the corn ethanol industry following opposition from landowners and some environmental campaigners.
A Shadowy Corner of International Law Is Threatening Climate Action, U.N. Expert Warns; An obscure but far-reaching system allowing corporations to sue governments is being “weaponized” by the fossil fuel and mining industries, according to a new U.N. report, jeopardizing progress in developing nations.
Nicholas Kusnetz and Katie Surma – Inside Climate News
Soon after Italy approved a ban on offshore oil drilling, in 2015, the country received some alarming news: A British oil company that had been planning to drill was suing the government, seeking hundreds of millions of dollars in compensation. The company, called Rockhopper, brought its claim not in Italian courts but through a system of international arbitration that allows foreign investors to sue governments. Last year, the company won the case along with an order that the Italian government pay Rockhopper about $200 million.
An Oil Giant Quietly Ditched the World’s Biggest Carbon Capture Plant; Occidental Petroleum is leading the global charge to vastly expand the use of technologies that suck up carbon dioxide. The failure of company’s biggest-ever bet shows the challenges ahead.
Natasha White, Akshat Rathi, and Kevin Crowley – Bloomberg
The world wants to master the process of corralling carbon, and Occidental Petroleum Corp. is building a futuristic machine on the dusty plains of Texas designed to do just that.
What Peak Oil Tells Us About Climate Goals; Catch up on the latest episodes of Bloomberg Green’s Zero podcast.
Oscar Boyd and Christine Driscoll – Bloomberg
Smoke, Screened: As U.S. wildfires pollute the skies, a loophole is obscuring the impact. Can it be fixed?
Molly Peterson, Dillon Bergin and Andrew Witherspoon – Muckrock
ESG is beyond redemption: may it RIP; The investing framework is now facing a mountain of troubles, almost all of them of its own making
Aswath Damodaran – Financial Times (opinion)
Why Measuring the Clean Energy Economy Is a Game of Catch-Up; Solar and wind are changing the US economy faster than methods can be devised to capture their impact.
Nathaniel Bullard – Bloomberg
Goldman Sachs Veteran to Become CEO of Asset-Management Firm; Luke Sarsfield, who helped run Goldman’s asset-management unit, to join P10
Cara Lombardo – The Wall Street Journal
Goldman Sachs veteran Luke Sarsfield, one of several executives to leave the bank recently, is set to become chief executive of asset manager P10 PX -3.93%decrease; red down pointing triangle. Dallas-based P10, which specializes in so-called alternative investments, plans to announce the move Monday, people familiar with the matter said.
Asset Managers Are Updating Bond Models to Capture a New Risk
Sheryl Tian Tong Lee – Bloomberg
A growing number of asset managers is reassessing bond values tied to real assets, as a spike in the frequency of flash floods, fires and storms hits conventional pricing models. Mitch Reznick, head of sustainable fixed income at Federated Hermes, says climate risk is a key reason why the investment manager is now underweight real estate credit. Jonathan Bailey, global head of ESG and impact investing at Neuberger Berman Group LLC, says he’s increasingly looking at whether issuers have enough capital to deal with the fallout of climate change. And analysts at Barclays Plc say nature-related risks are being mispriced across sovereign bond markets, and will ultimately trigger downgrades.
Ex-Paulson Partner Shuts Hedge Fund Berry Street on Rising Rates
Nishant Kumar and Liza Tetley – Reuters
Orkun Kilic is closing his hedge fund Berry Street Capital Management four years after its inception, citing high interest rates and a challenging regulatory environment. The London-based fund, which pursued an event-driven strategy and oversaw over $900 million at its peak, has struggled in 2023, seeing losses of 4.2% in the nine months through September. Assets under management at the time of its decision to shutter were $575 million.
European banks to reveal profit boost from higher rates; Third-quarter earnings will be bolstered by rising net interest income but tailwind will not last
Owen Walker – Financial Times
European banks will reveal a boost to profits from higher interest rates when they report results this week, but face pressure to find new engines of growth as central banks’ efforts to tighten monetary policy near an end.
Smaller Banks Look to Shrink Their Way Back to Health; Banks that are big but not huge, such as KeyCorp, Citizens and Truist, reported big profit declines
Gina Heeb – The Wall Street Journal
Regional banks have shelled out more and more to depositors to get them to stick around. For many, that still hasn’t been enough. After an ugly third quarter, banks rolled out plans last week to try to shrink themselves back to health. Profits dropped by double digits from a year earlier at a number of them, including 44% at KeyCorp , 32% at Citizens Financial and 28% at Truist Financial.
State Street to offer Europe’s cheapest S&P 500 ETF after drastic fee cut; SPY5 is currently the fifth-largest S&P 500 ETF in Europe
Work & Management
DHS Issues Proposed Rule to Modernize the H-1B Specialty Occupation Worker Program; USCIS seeks to update regulations with proposed rulemaking to improve program efficiency and integrity
Department of Homeland Security
Today, the Department of Homeland Security (DHS), through U.S. Citizenship and Immigration Services (USCIS), published a Notice of Proposed Rulemaking (NPRM) that would modernize the H-1B specialty occupation worker program by streamlining eligibility requirements, improving program efficiency, providing greater benefits and flexibilities for employers and workers, and strengthening integrity measures. The H-1B program helps U.S. employers hire the employees they need to meet their business needs and remain competitive in the global marketplace, while adhering to all U.S. worker protections under the law.
Australia Gender Bias Costs Economy $80 Billion, Taskforce Says; Report argues Australians need 52 weeks paid parental leave; Firms will be forced to reveal their gender pay gaps from 2024
Amy Bainbridge and Ben Westcott – Bloomberg
Australia needs urgent legislative changes to end economic inequality between men and women, a government taskforce found, highlighting the problem costs the economy A$128 billion ($80 billion) a year.
Wall Street cues a lesson in Ivory Tower finance
Lauren Silva Laughlin – Reuters
Wall Streeters are trying to teach universities a lesson, but may provide them with a broader understanding of economics instead. Billionaire investors Marc Rowan and Bill Ackman are enraged over controversial positions on the Middle East at their respective alma maters, the University of Pennsylvania and Harvard. In doing so, they have drawn attention to the unsavory money-go-round in U.S. higher education and provided an opportunity for the system to become a freer market.
Goldman Sachs wants to train 1,000 employees in ‘mental health first aid’ by 2024 as Wall Street confronts mental health crisis
Paige McGlauflin, Joseph Abrams – Business Insider
Good morning! It’s not uncommon for employers to offer training in first aid through programs like the Red Cross, where workers are taught essential life-saving medical skills needed in emergencies. But what if companies also trained workers in mental health first aid? It’s an effort Goldman Sachs is pursuing. The investment banking giant rolled out its Mental Health First Aid program in Europe in 2019, expanding to Asia in 2021 and the U.S. in 2022. Since then, over 500 employees have become certified as “MHFAiders,” as the firm calls them. It now aims to double that number to 1,000 by the end of 2024.
Fixing America’s health insurance woes is ‘actually very simple,’ says leading economist
Annalisa Merelli – STAT
Fixing the U.S. health care system can seem like a herculean task. But the solution is “actually very simple,” according to Massachusetts Institute of Technology economist Amy Finkelstein. In their recent book “We’ve Got You Covered: Rebooting American Health Care,” Finkelstein and Stanford economist Liran Einav describe how years of research have led them to the conclusion that the best way forward is for the U.S. to offer universal basic health care coverage.
The opioid crisis has gotten much, much worse despite Congress’ efforts to stop it; Lawmakers missed the deadline to renew a law supporting treatment and recovery.
Carmen Paun – Politico
America’s drug overdose crisis is out of control. Washington, despite a bipartisan desire to combat it, is finding its addiction-fighting programs are failing. In 2018, Republicans, Democrats and then-President Donald Trump united around legislation that threw $20 billion into treatment, prevention and recovery. But five years later, the SUPPORT Act has lapsed and the number of Americans dying from overdoses has grown more than 60 percent, driven by illicit fentanyl. The battle has turned into a slog. Even though 105,000 Americans died last year, Congress is showing little urgency about reupping the law since it expired on Sept. 30. That’s not because of partisan division, but a realization that there are no quick fixes a new law could bring to bear.
China’s Nasdaq-Style Index Falls to Record Low on Growth Concern
China’s gauge of tech equities fell to the lowest since its inception more than three years ago, worn down by concerns over higher US rates’ impact on global liquidity and a weak export outlook.
Will India’s rise above China mean higher ETF returns? Analysts are asking how much of the country’s buoyancy is priced in to valuations
Steve Johnson – Financial Times
Just months after India overtook China as the world’s most populous nation, it also seized the Middle Kingdom’s mantle as the world’s fastest-growing large economy. China’s economy is tipped by the World Bank to expand by just 4.4 per cent next year – its weakest rate since 1990, excluding the Covid pandemic – amid a property crisis, weak export growth and geopolitical headwinds. By contrast, India’s economy shows no sign of a slowdown amid a consumer boom: growth of 6.3 per cent is expected this year.
Coal Failures Make Australia World’s Most Volatile Power Market; Nation experiencing biggest price swings, Rystad analysts say; More energy storage needed to limit fluctuations: researchers
Rob Verdonck – Bloomberg
Unplanned coal power plant outages, the impact of natural disasters on transmission lines and huge deployments of rooftop solar have made Australia the world’s most volatile power market, according to Rystad Energy. Price spreads on the National Electricity Market, which covers about 80% of Australia’s demand, were the highest among 39 markets studied globally, the industry consultant said Monday in a report.
British Rice Industry Fears India Pact Will Kill Off Local Mills
Lucy White – Bloomberg
A £1 billion ($1.2 billion) corner of the UK economy is fearing for its future as Britain and India close in on a long-awaited free-trade agreement. British rice millers such as Tilda Ltd. and Veetee Rice have thrived for decades by importing low-tariff unmilled brown rice from the likes of India and Pakistan and “polishing” the grains into the white product loved by UK consumers.
Why have ETFs not caught on in the UK? Their market share is a third of that in the US but, as platforms lower costs and technical hurdles, younger investors are showing interest
Dave Baxter – Financial Times
In the same way that US political and cultural trends often spread overseas, so, too, do America’s most popular investments. But, in the UK, investors have been much slower to embrace one of the most successful exports of all: the exchange traded fund.
Why Olive Oil Is So Expensive Right Now; Prices have more than doubled as extreme weather hit crops in Spain, Italy and elsewhere. The upcoming harvest isn’t looking much better, so that drizzle of oil on your salad may remain costly.
Santul Nerkar – The New York Times