The Innovator’s Dilemma Meets Fertik’s Law
John Lothian – JLN
NEW START-UP EXCHANGES SHOULD HELP, NOT HURT CME GROUP
The late author and Harvard professor Clayton Christensen coined the phrase “the innovator’s dilemma” in his popular book by the same name. In the book he describes why some well-run companies lose their dominant market position through the entrance of a competitor with a disruptive technology.
He uses as an example the personal computer and its smaller, slower disc drives, which disrupted “big iron” mainframe computers by offering a cheaper solution that was good enough.
The CME Group‘s dominant market position in the U.S. futures market, which some classify as a monopoly, has spawned two separate challengers built on the model of the innovator’s dilemma. The Small Exchange and the Fair Exchange are seeking to disrupt the CME’s dominant position, or at least carve out a place of their own in the U.S. futures market landscape.
It is the latter that is really the truth. The CME Group will most likely benefit from these new exchanges while not sacrificing their higher margins.
For the rest of the commentary, click HERE.
Hits & Takes
John Lothian & JLN Staff
Back when single stock futures were preparing to launch, I used to joke that Nasdaq-Liffe’s Bob Fitzsimmons was the most focused executive and would turn any question into an answer in support of the disruptive product. Asked about the weather, Fitzsimmons would say something like, “No matter what the weather, you can trade single stock futures.” That was a dig at floor-traded stocks at the NYSE. However, today in Hong Kong was proof that weather can still matter in an electronic trading environment. HKEX shut down this morning because of a “black rainstorm warning.” You can learn about all the severe weather arrangements for the HKEX |HERE.
For the record, the MGEX does not shut down for Purple Rain.
Speaking of the weather, there is an ICE storm going on in commodities. ICE/Intercontinental Exchange reported record open interest in its global commodities futures markets of 35.2 million contracts. That is a 10% year-over-year growth in total open interest. — ICE
Meanwhile at Nasdaq, there was a flood of IPOs during the first half of 2021, which raised a record amount of capital. Nasdaq welcomed 395 IPOs and had 14 exchange transfers in the first half of 2021. The IPO flood raised “a total of $103 billion, extending its leadership to 30 consecutive quarters,” Nasdaq reported. — Nasdaq
Nasdaq also set a record for the number of shares traded during the 2021 Russell U.S. Indexes reconstitution. A record 2.37 billion shares representing $80,898,531,612 were executed in the Closing Cross in 1.97 seconds across Nasdaq-listed securities. — Nasdaq
CME Group is learning that Satoshis can really add up. Its Micro Bitcoin futures traded over 1 million contracts as of Friday despite having launched just seven weeks ago. — CME Group
The Chicago Tribune was a world class newspaper when I was a youth and its columnists were among the world’s best, including Mike Royko. He was part of my inspiration to become a journalist. The Tribune is just a shell of its former self, and that was before its new owner, Alden Capital, offered buyouts to some of its biggest name columnists, including John Kass, Phil Rosenthal, Mary Schmich, Dahleen Glanton, Shannon Ryan, Heidi Stevens and Eric Zorn. It is a shame what has happened to the paper, which has suffered through some pretty bad owners of late. We shall see what Alden Capital does to revive the paper, but losing talent such as these writers is not a good indication. — ABC News
We had no new donations to the JLN MarketsWiki Education GoFundMe campaign over the weekend.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
The Spread – June 25, 2021
No summer doldrums this year; Volatility and volume surge; More (single stock) options to choose from; John Lothian weighs in with his take; and Jermal Chandler explains extrinsic value in this week’s options “Term of the Week.”
Whistleblower Thought He Would Get a Big Payout. Instead He Got Nothing and Went Broke; Securities and Exchange Commission says it can’t reward watchdogs if recouped funds come through bankruptcy process
Mark Maremont – WSJ
John McPherson was almost certain he’d get rich from the Securities and Exchange Commission’s whistleblower program. Instead, he ended up bankrupt and embittered. Despite what the SEC called his “extraordinary and continuing” assistance in helping the agency shut down an alleged $1.4 billion investment scam, Mr. McPherson was notified last year that his whistleblower award would likely be close to zero.
*****This is an interesting story. The whistleblower gets nothing because the firm declares bankruptcy, which means some of the worst offences might not get reported because there is nothing in it for the whistleblowers.~JJL
UBS to let most staff mix working from home and office permanently; Swiss bank expects embracing hybrid approach will make it a more attractive employer
Owen Walker – FT
UBS plans to allow up to two-thirds of its staff to mix working from home and the office on a permanent basis, betting the approach will give the Swiss lender an edge over Wall Street banks in recruiting.
*****Where can I go short blue British banker suits?~JJL
Hong Kong Stocks Edge Down After Storm Wipes Out Morning Trading
Jeanny Yu and Hau Tung Olivia Tam – Bloomberg
HKEX cancels morning trading of securities and derivatives; Hang Seng Index slips 0.06% after earlier halted on storm
Hong Kong stocks slipped on Monday after they resumed trading following a rainstorm that earlier cancelled the morning session. The benchmark Hang Seng Index slipped 0.06% as of 1:46 p.m. local time, in line with the muted moves in the MSCI Asia Pacific Index. The city earlier lifted all rainstorm warnings, meaning that stock trading would begin in according with Hong Kong Exchanges and Clearing Ltd.’s rules.
****** A flood of liquidity wipes out trading.~JJL
Trading Technologies connects customers to CurveGlobal
CurveGlobal is delighted to announce that it has signed an agreement to provide customers of Trading Technologies International, Inc’s (TT’s) TT® platform with free access to Curve. TT’s customers who are not currently connected to Curve will be able to trade short term interest rate futures with no Market Access Provider (MAP) fees, enabling them to benefit from growing volumes and open interest on CurveGlobal, particularly in SONIA-linked instruments. CurveGlobal futures also clear at LCH enabling customers to further benefit from portfolio margining opportunities.
***** TT’s network of exchange, broker and asset manager connectivity is a big asset. Who wants to buy it?~JJL
Friday’s Top Three
Our top story Friday was Phantom Goldman Banker Is Bait in Swiss Trader’s Kidnapping, from Bloomberg. Second was Prop Trader Hudson River Reaps $1 Billion in Frenzied Quarter, from Yahoo Finance. And third was Chicago Board of Options Exchange Headquarters Named Architizer A+ Finalist, from Cannon Design. The Chicago Board Options Exchange’s new headquarters in the Chicago Old Post Office is one of five finalists in the Architecture + Ceilings category. Congrats to Cboe!
26,430 pages; 233,990 edits
CME Joins Battle for Retail Bond Traders With Smaller Product
Elizabeth Stanton – Bloomberg
Contracts will rise when yields rise, fall when rates drop; The Small Exchange rolled out identical product in December
CME Group Inc., whose Treasury futures already dominate among pros, is now trying to lure small traders by offering simpler-to-understand contracts that focus on the numbers the masses care most about anyway: yields. The contracts, when they begin trading on Aug. 16, will rise when Treasury yields increase and fall when they decline — whereas the existing futures move in the same direction as bond prices, a byzantine turnoff for many investors. The Micro Treasury Yield futures, which will compete with a similar set of products introduced last year by The Small Exchange, will come in 2-, 5-, 10- and 30-year versions. Their $10-per-basis-point price increment is much smaller than CME’s professionally targeted contracts and more digestible for retail traders.
U.K. Financial Regulator Bars Crypto Exchange Binance Markets
Priscila Azevedo Rocha and Joanna Ossinger – Bloomberg
Regulator has restricted firm from business in the country; Binance Markets Ltd. is a separate legal entity from Binance
The U.K.’s financial watchdog just took one of the most significant regulatory moves to date against a cryptocurrency exchange as global scrutiny of the industry hardens. Binance Markets Ltd., an affiliate of top global crypto bourse Binance, was told by the Financial Conduct Authority it has until the evening of June 30 to confirm it has removed all advertising and financial promotions, according to the authority’s register. The exchange must also make clear on its website, social media channels and all other communications that it’s no longer permitted to operate in the U.K. Binance Markets won’t be able to resume U.K. operations without prior written consent.
HKEX market open delayed following rainstorm warning; Severe rainstorm warning forced HKEX to delay its market open on Monday morning before trading resumed at 1.30pm local time.
Annabel Smith – The Trade
The morning trading session for derivatives and securities at exchange operator Hong Kong Exchanges and Clearing (HKEX) was delayed on Monday following severe rainstorm warnings in Hong Kong. HKEX confirmed via a statement at the beginning of the trading day that the market open, including Stock Connect trading, had been delayed due to the weather conditions, before cancelling the session at 9.00am local time.
Hong Kong’s first black rainstorm warning of 2021 leads to schools, Covid-19 jabs suspension, while Lantau landslide causes delays for hundreds; Islands District Council chairman Randy Yu estimates the storm affected about 300 to 400 residents on Lantau; Seven other landslides were reported in various areas across city while floods were also seen on Lantau and Cheung Chau
Zoe Low – South China Morning Post
Hong Kong suspended school classes and Covid-19 vaccinations on Monday morning as the first “black” rainstorm of the year lashed the city, while a landslide on Lantau Island resulted in delays for hundreds of residents on their daily commute. The black rainstorm warning – the highest in a three-tier system – was downgraded to a red-level alert at 11.05am after being in effect for almost three hours, then lowered again to amber status just 40 minutes later, prompting health authorities to say inoculation centres would gradually resume services. The stock exchange separately announced that trading would resume at 1.30pm after a morning halt.
Delta Variant Threatens to Destroy Another European Summer; The vaccination race is competing against a contagious virus strain
Henrique Almeida and Joao Lima – Bloomberg
A month ago, hotel manager Hugo Goncalves was gearing up for a bustling summer with almost all rooms at the Tivoli Marina de Vilamoura Resort in the Algarve fully booked. Goncalves hired new staff and stocked up the bar and kitchen to be ready for an influx of visitors, particularly British travelers, after a disastrous 2020. That was before Portugal was abruptly taken off the U.K.’s green list of countries, meaning those returning would need to quarantine, and the country started to look like a hotspot for the highly contagious delta strain of the coronavirus.
Credit Suisse could seek UBS merger after Greensill and Archegos scandals
Damian Shepherd – City AM
Credit Suisse’s top management are under pressure to overhaul the scandal-hit Swiss bank and a merger with rival UBS may be on the cards. Reuters today reported that three people familiar with the bank’s thinking are concerned that it could be challenged by investors demanding its break-up. This has led the sources to believe that a new strategic direction could include seeking a merger with Swiss bank UBS.
ICE’s Global Commodities Futures Markets Reach Record Open Interest of 35.2 Million Contracts
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today announced record open interest across its global commodities futures markets of 35.2 million contracts on June 24, 2021, contributing to 10% year-over-year (“y/y”) growth in total open interest on ICE and surpassing the previous record set on June 25, 2020.
CME targets year-end rollout of new margin model; Clearing house testing new Span 2 framework with members, more work needed with vendors
Costas Mourselas – Risk.net
CME Group hopes to begin rolling out its new value-at-risk-based margin framework in the fourth quarter of this year, after the coronavirus pandemic and a logjam at key vendors delayed its long-planned launch. Span 2 was initially slated to launch in the first quarter of 2020, with the bourse’s suite of energy products set to be the first asset class margined according to the new methodology. In late 2019, this date was pushed back to the third quarter of 2020, with the pandemic then causing a
Dubai Lures Wall Street Jet-Setters as Business Revives
Ben Bartenstein, Zainab Fattah, and Verity Ratcliffe – Bloomberg
Events draw hedge funds, oil executives and cricket stars; Dubai has so far won business from Asia and Africa conferences
The jet-setting days of Wall Street bankers and executives flocking to Davos in January might be on pause, but in the financial capital of the Middle East it’s business as usual once more. Dubai is moving full-speed ahead with in-person events on the back of fewer travel restrictions and one of the world’s most-connected airports. The United Arab Emirates also has among the fastest vaccination programs, with 15 million doses administered in a population of 10 million.
Financial watchdog bans crypto exchange Binance from UK; FCA also issues consumer alert against sprawling cryptocurrency group
Adam Samson and Philip Stafford – FT
The UK’s financial watchdog has ordered Binance to stop all regulated activities in Britain and imposed stringent requirements in a stinging rebuke of one of the world’s biggest cryptocurrency exchanges.
How a Buzzy Cryptocurrency Fizzled; The ICP crypto token was worth billions. Until it wasn’t.
Andrew Ross Sorkin, Jason Karaian, Sarah Kessler, Stephen Gandel, Michael J. de la Merced, Lauren Hirsch and Ephrat Livni – NY Times
A crypto superstar crashes hard
The “Internet Computer” is an ambitious crypto project by the Dfinity Foundation, a Swiss nonprofit organization with big Silicon Valley backers like Andreessen Horowitz. Last month, it was the darling of the crypto world when it held a bonanza of an initial coin offering, valuing its token, known as ICP, at tens of billions of dollars in market cap. It’s a different story now, after ICP has lost more than 90 percent of its value.
When bitcoin bros* mourn the dead;”Think of it as a donation to everyone.”
Jemima Kelly – FT
Unconfirmed reports emerged over the weekend that Mircea Popescu, a notorious bitcoiner who founded the now-defunct and similarly notorious MPEx exchange, has drowned off the coast of Costa Rica. He was 41, according to the reports. FT Alphaville has not been able to confirm the news, but if correct, we offer our condolences to his friends and family.
IOSCO Elaborates On Its Vision And Expectations For The IFRS Foundation’s Work Towards A Global Baseline Of Investor-Focussed Sustainability Standards To Improve The Global Consistency, Comparability And Reliability Of Sustainability Reporting
The Board of the International Organization of Securities Commissions (IOSCO) has today published a report on issuers’ sustainability-related disclosures. The report, developed by IOSCO’s Sustainable Finance Taskforce (STF), reiterates the urgent need to improve the consistency, comparability and reliability of sustainability reporting for investors. Over the year since the STF was established, global momentum has been building in both public and private sector initiatives on sustainability-related disclosures. IOSCO´s work aims to support investors’ evolving informational needs and the ability of markets to price sustainability-related risks and opportunities and support capital allocation.
Cboe Europe chief Howson on how London may just keep its finance hub crown; The City is trying to reinvent itself amid the loss of a clear post-Brexit determination
Penny Sukhraj – Financial News
Brexit is putting pressures on the City but there may be opportunities ahead for the capital, says Cboe’s president for Europe, David Howson. “As an international hub, I don’t think it’s lost its place,” Howson told Financial News in an interview.
Get Ready to Live With Covid’s Hassles Forever; Just as with airline security after 9/11, many “temporary” pandemic regulations are with us to stay.
Niall Ferguson – Bloomberg
“I just want my life back,” said the singer Britney Spears on Wednesday. In 2008, Ms. Spears’s father was granted a conservatorship over her because of concerns about her mental health. According to her testimony last week, the arrangement has been used to force her to go on tour, to undergo psychiatric evaluations and to take medication.
Indonesia to Start Vaccinating Teens to Curb Covid-19 Resurgence
Arys Aditya – Bloomberg
Indonesia will start offering Covid-19 vaccination to those aged 12 to 17 years old, after last week extending the inoculation to all adults in order to curb a worsening virus resurgence. “The food and drug regulator has issued an emergency use of authorization for Sinovac vaccine to be applied on teens,” President Joko Widodo said in a press briefing on Monday.
The hunt for a coronavirus super shot; A so-called multivalent vaccine might protect against all Covid-19 mutations and any future pathogen from the betacoronavirus family
Sarah Neville – FT
As global vaccination campaigns race to stay ahead of new Covid-19 variants, pioneering scientists have set out to ease fears of another pandemic by developing a single shot to protect against coronaviruses past, present and future.
Russia on the back foot as third Covid wave surges; Moscow brings in tough new restrictions as Delta variant takes hold in vaccine-sceptical country
Max Seddon – FT
Russia has introduced tough new restrictions including regional lockdowns and compulsory vaccinations in a belated response to a third coronavirus wave sweeping the country.
Americans Seek Urgent Mental-Health Support as Covid-19 Crisis Ebbs; Hospital ERs across the country say they are overwhelmed by patients who didn’t receive psychiatric treatment through the pandemic
Robbie Whelan – Wall Street Journal
Before the coronavirus pandemic took hold, psychiatrist Garrett Sparks usually treated about a dozen patients on his overnight shift in the emergency department at Western Psychiatric Hospital, this city’s biggest mental-health hospital. On a recent Thursday evening, he saw 21 cases.
mRNA Vaccines May Offer Lasting Protection, Study Finds
The Pfizer and Moderna shots’ effects could last for years, a detailed look at immune responses suggests. Some lawmakers are urging Biden to commute prison sentences for people released early because of the virus.
Exchanges, OTC and Clearing
Trading Technologies connects to CurveGlobal for short term interest rate futures trading; TT customers will be able to trade short term interest rate futures at LSEG’s CurveGlobal with no market access provider fees.
Annabel Smith – The Trade
Chicago-based Trading Technologies (TT) has connected with the London Stock Exchange Groups’ (LSEG) interest rate derivatives platform and listed futures exchange CurveGlobal. Through the connection, LSEG said TT’s clients will be able to trade short term interest rate futures with no market access provider fees and benefit from open interest on CurveGlobal, particularly in SONIA instruments amid the Libor transition.
T7 Release 9.1 – already great, and now even better
Right from the start, the T7 trading architecture, developed by Deutsche Börse Group, has revolutionized the way traders and investors access market opportunities worldwide. Equipped with cutting-edge technology, the trading platform delivers ultra-low latency, robustness and safe handling even for very high throughput. To keep our trading system at these high standards, regular improvements and further extensions of functionality are key.
Amended SFTP upload functionality for short codes und algoIDs – migration of upload processes to the Common Upload Engine (CUE)
Eurex Deutschland will implement the Common Upload Engine (CUE) as central point of data uploads for Eurex Trading Participants. The CUE is an SFTP server and the respective account management will be performed in the Member Section of Deutsche Börse Group, analogous to the Common Report Engine (CRE). The changes communicated in this circular intend to streamline and simplify upload functionalities of various regulatory reporting requirements.
HKEX Welcomes Pilot Participants to HKEX Synapse, a Settlement Acceleration Platform for Stock Connect
Hong Kong Exchanges and Clearing Limited (HKEX) is, this week, pleased to welcome the first group of participants to join its pilot programme for HKEX Synapse (Synapse), HKEX’s new Stock Connect settlement acceleration platform. As part of the pilot programme, market participants, including asset managers, brokers, custodians, and clearing participants, will take part in workshops and testing of Synapse, to familiarise themselves with the platform and understand how their own settlement operations infrastructure can efficiently integrate within the Synapse environment.
Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and Montréal Exchange Closed for Canada Day
Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and Montréal Exchange will be closed on Thursday, July 1, 2021, for the Canada Day holiday.
Nasdaq Welcomed 395 IPOs and 14 Exchange Transfers in the First Half of 2021
7 of the 10 largest IPOs by proceeds raised listed on Nasdaq; 61% of all proceeds raised through IPOs listed on Nasdaq; $187 billion in market value switched to Nasdaq
Nasdaq (Nasdaq: NDAQ) announced today that in the first half of 2021 it welcomed 395 initial public offerings (IPOs), raising a total of $103 billion, extending its leadership to 30 consecutive quarters. A total of 160 operating companies listed during the first six months of 2021, representing a 78% win rate in the U.S. market. In addition to the IPOs, 14 companies transferred their corporate listing to Nasdaq, including Honeywell. Furthermore, history was made as Nasdaq welcomed Coinbase, the largest direct listing among all exchanges with $65 billion in market cap.
18th Consecutive Nasdaq Closing Cross Sets Record for Number of Shares Traded During 2021 Russell US Indexes Reconstitution
Nasdaq (Symbol: NDAQ) today announced the Nasdaq Closing Cross had a record day as it was used for the 18th consecutive year to rebalance Nasdaq-listed securities in the entire family of Russell U.S. Indexes, part of leading global index provider FTSE Russell, during their annual reconstitution.
Micro Bitcoin Futures Surpass 1 Million Contracts Traded
CME Group, the world’s leading and most diverse derivatives marketplace, announced that Micro Bitcoin futures volume surpassed 1 million contracts on Friday, June 25.
Expansion of Basis Trade at Cash Open (“TACO”) Eligibility for the E-mini Nasdaq-100 Futures and E-mini Russell 2000 Futures Contracts
Effective Sunday, July 18, 2021, for trade date Monday, July 19, 2021, and pending all relevant CFTC regulatory review periods, Chicago Mercantile Exchange Inc. (“CME” or “Exchange”) will expand the Basis Trade at Cash Open (“TACO”) eligibility for the E-mini Nasdaq-100 Futures (CME Globex Code NQQ, CME Rulebook 359) and E-mini Russell 2000 Futures (CME Globex Code RTQ, CME Rulebook 393) (the “Contracts”) to include five (5) quarterly contracts for trading on the CME Globex electronic trading platform (“CME Globex”) and for submission of clearing via CME ClearPort, as more specifically described in the table below.
Reduction of Block Trade Minimum Quantity Threshold for the Freight Route Liquefied Petroleum Gas (BLPG3) (Baltic) Futures Contract
Effective Sunday, July 11, 2021, for trade date Monday, July 12, 2021, and pending all relevant CFTC regulatory review periods, New York Mercantile Exchange, Inc. (“NYMEX” or “Exchange”) will reduce the block trade minimum quantity threshold for the Freight Route Liquefied Petroleum Gas (BLPG3) (Baltic) Futures contract (the “Contract”) as noted in the table below.
Trading Value via the RFQ Platform “CONNECTOR” in the ETF Market Surpasses 10 Billion Yen in the First Five Months of Service
Tokyo Stock Exchange, Inc. (hereinafter referred to as “TSE”) launched its RFQ (Request For Quote) platform, CONNEQTOR, in February of this year with the aim of improving liquidity in the ETF market. We are pleased to announce that the trading value via CONNEQTOR has surpassed 10 billion yen since the service was launched.
We will continue to update and improve this platform as we exchange opinions with investors, so please feel free to contact us with any requests or questions.
Publication of JPX Working Paper, Special Report “Expansion of the Heterogeneous Autoregressive Model with Tokyo Stock Exchange Co-Location Dataset”
Japan Exchange Group, Inc. (JPX) today published JPX Working Paper, Special Report “Expansion of the Heterogeneous Autoregressive Model with Tokyo Stock Exchange Co-Location Dataset”. JPX Working Papers highlight research and studies on changes in the market and regulatory environment with the aim of raising competitiveness. Conducted by officers and employees of JPX, its subsidiaries, and affiliates, as well as outside researchers, JPX Working Papers are intended to draw comments widely from academia, research institutions, and other market participants and observers.
CCP12 Annual General Meeting 2021
MondoVisione CCP12 – The Global Association of Central Counterparties – held its Virtual 2021 Annual General Meeting (AGM). In the 2021 virtual Meeting of the General Assembly, CCP12 Members approved the 2020 audit report and the updates CCP12 Bylaws, acknowledged the progress report and the work plan for the upcoming years and approved the budget plan for 2022. The four Working Committees of CCP12 presented their work, and recent publications, including the CCP12 Policy Perspective on the implementation timeline for the Basel III Standards, the updated PQD FAQ Guide, and joint work with EACH, FIA, and ISDA on CCPs’ default management auctions on category 1 topics.
HKEX Morning Trading Session Cancelled Due To Black Rainstorm Warning
Further to the announcement made at 8.45 am on Monday (28 June), Hong Kong Exchanges and Clearing Limited (HKEX) announced that the morning trading sessions of both the securities and derivatives markets (including Stock Connect trading) has been cancelled due to a Black Rainstorm Warning remaining in force.
Man Group migrates post-trade processing to new DTCC platform with corfinancial; Salerio from corfinancial provided connectivity to DTCC’s CTM trade confirmation platform as Man Group migrated its US equity post-trade workflows.
Hayley McDowell – The Trade
UK hedge fund Man Group is migrating its US securities trade processing flows to DTCC’s enhanced platform with the help of trading software provider corfinancial. Man Group has shifted its US equity trade confirmation workflow from the OASYS platform, which DTCC has confirmed will be decommissioned by 31 October this year, to its Institutional Trade Processing Central Trade Manager (CTM) system.
How Fintech Will Change Financial Services in 2021 and Beyond
Maxim Bederov – Finance Magnates
It seems a rather trite thing to say that the world has changed. But, it is true. In 2021, seismic shifts are everywhere from crypto assets to payments, lending to capital markets and banking, and financial services professionals have had to sprint just to keep up, let alone forge ahead with their own innovations.
But, as we inch ever closer to breaking out of the pandemic-panic cycle that has defined our world over the past 18 months, a number of grand themes are starting to emerge in the way that fintech interacts with financial services.
Walmart and Fintech Green Dot Reveal that Walmart MoneyCard Is Now Offered as Demand Deposit Account
Omar Faridi – Crowdfund Insider
Walmart (NYSE: WMT) and Green Dot (NYSE: GDOT) recently revealed that the Walmart MoneyCard that’s issued by Green Dot Bank is now being provided as a demand deposit account (DDA) – which may be better equipped to assist Walmart clients with saving more money and living better.
New and current Walmart MoneyCard account holders are now able to access Green Dot Bank’s extensive virtual banking platform (similar to a regular bank account). Customers may also take advantage of the ease and convenience of managing their money digitally or at Walmart’s 4,500+ store locations or Green Dot’s 90,000+ retail distribution locations across the US.
China’s cyber power at least a decade behind the US, new study finds
Helen Warrell – The Financial Times
The study, published on Monday by the International Institute for Strategic Studies, comes as a series of hacking campaigns have highlighted the growing threat of online espionage by hostile states.
Amazon buys encrypted message platform Wickr
Hannah Murphy – The Financial Times
Amazon’s cloud computing business has acquired a US encrypted communications platform popular among government and military agencies, citing demand for more secure messaging in the work-from-home era.
Microsoft Discloses New Customer Hack Linked to SolarWinds Cyberattackers
Robert McMillan – The Wall Street Journal
Microsoft Corp. said hackers, linked by U.S. authorities to Russia’s Foreign Intelligence Service, installed malicious information-stealing software on one of its systems and used information gleaned there to attack its customers. The hackers compromised a computer used by a Microsoft customer support employee that could have provided access to different types of information, including “metadata” of accounts and billing contact information for the organization, a Microsoft spokesman said.
Cybersecurity complements efforts to accelerate economic growth, says Muhyiddin
Kuala Lumpur – The Edge Markets
Cybersecurity should become the priority of every nation, especially on matters underlying economic and national security, said Tan Sri Muhyiddin Yassin. The prime minister said it as such, it has become one of the government’s main focus areas to complement efforts in accelerating the economic growth of the country.
Tanzania central bank says it is working on president’s cryptocurrency push
Nuzulack Dausen – Reuters
Tanzania’s central bank has said it is working on President Samia Suluhu Hassan’s directive to prepare for cryptocurrencies, pointing to a possible reversal of a ban it put in place in 2019.
Bitcoin Mining Hashrate Hits New 13-Month Low
Ryan James – Be[in]Crypto
The mining hashrate of bitcoin has hit a 13 months low following the increased decline in mining activity in China. The total hashrate on the bitcoin network currently sits at 101.9 TH/s. The last time the network saw a hashrate that low was at the beginning of June 2020.
China Crackdown Reshapes the Market: The Week in Bitcoin
Joanna Ossinger – Bloomberg
China’s crackdown on crypto is reshaping the industry. That’s been said for a while, but now the evidence is here. Top executives like Binance’s Changpeng “CZ” Zhao and FTX’s Sam Bankman-Fried say Bitcoin miners are pulling the plug on operations in China. That’s backed up by a look at the hashrate, a measure of the computing power used in mining and processing. A measure of the hashrate on BTC.com shows it down almost by half in two and a half weeks.
Even Gold-Obsessed Indians Are Pouring Billions Into Crypto
Suvashree Ghosh and Ronojoy Mazumdar – Bloomberg
Daily trading values are up nearly 900% in last 12 months; Investors pile in, regulators give conflicting signs on future
The cryptocurrency aficionados’ mantra that Bitcoin is equivalent to digital gold is winning converts among the world’s biggest holders of the precious metal. In India, where households own more than 25,000 tonnes of gold, investments in crypto grew from about $200 million to nearly $40 billion in the past year, according to Chainalysis. That’s despite outright hostility toward the asset class from the central bank and a proposed trading ban.
Mexican Billionaire Says His Bank Is ‘Working’ to Accept Bitcoin
Oscar Medina – Bloomberg
Ricardo Salinas said last year 10% of portfolio is in Bitcoin; Owner of Mexico’s Banco Azteca has wealth of $15.8 billion
Mexican billionaire Ricardo Salinas Pliego endorsed the use of Bitcoin and said his bank is on the way to accepting the cryptocurrency. “Sure, I recommend the use of Bitcoin, and me and my bank are working to be the first bank in Mexico to accept Bitcoin, if you need more details or information follow me on my Twitter account,” Mexico’s third-richest man and owner of Banco Azteca said in a tweet response to Michael Saylor, the billionaire founder of Microstrategy Inc.
Trail of Brothers Linked to Missing Bitcoin Stash Is Still Murky
Loni Prinsloo and Roxanne Henderson – Bloomberg
Cajee brothers ran crypto investment platform from S. Africa; Law firm aware of about 62 clients who invested in Africrypt
The Cajee brothers, who ran a cryptocurrency investment platform from South Africa that the local regulator suspects of being a Ponzi scheme, are confounding both their family and desperate investors alike.
CME Micro Bitcoin Futures Pass 1 Million Contracts Traded
CME Group, the world’s leading and most diverse derivatives marketplace, announced that Micro Bitcoin futures volume surpassed 1 million contracts on Friday, June 25.
“We continue to see strong customer demand and rapid uptake in our new Micro Bitcoin futures contract since their introduction a little more than a month ago,” said Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products.
Even Gold-Obsessed Indians Are Pouring Billions Into Crypto
Suvashree Ghosh and Ronojoy Mazumdar – Bloomberg
The cryptocurrency aficionados’ mantra that Bitcoin is equivalent to digital gold is winning converts among the world’s biggest holders of the precious metal.
In India, where households own more than 25,000 tonnes of gold, investments in crypto grew from about $200 million to nearly $40 billion in the past year, according to Chainalysis. That’s despite outright hostility toward the asset class from the central bank and a proposed trading ban.
Crypto Market Rebound Liquidates $200 Million Worth of Short Positions
Bilal Jafar – Finance Magnates
The crypto market saw a strong recovery in the last 24 hours as the overall market cap added nearly $90 billion. On Monday, the total market cap touched approximately $1.4 trillion.
According to the latest data published by crypto analytics firm, bybt.com, the latest surge in crypto assets has accelerated the liquidation of short trading positions across the crypto market. The data shows that nearly $218 million worth of short positions got liquidated within a single day.
UK financial regulator bans world’s largest crypto exchange; The UK has banned Binance Markets from any regulated business in the country, extending a global crackdown on crypto.
Britain’s financial regulator has said Binance, one of the world’s largest cryptocurrency exchanges, cannot conduct any regulated activity and issued a warning to consumers about the platform, which is coming under growing scrutiny globally.
Crypto Embracing Stock Market’s Lessons on Technological Inclusion
Reuben Jackson – Nasdaq
The financial services industry has long been a proponent of technology use. However, when it came to retail offerings, the best technology was often kept in the hands of institutional users. Eventually, slowly but surely, the internet changed everything.
Macron rolls out red carpet to JPMorgan, global CEOs in post-Brexit push
President Emmanuel Macron will declare that Paris is back on the map of global finance on Tuesday when he inaugurates JPMorgan’s new trading hub in the French capital which he hopes will attract more bankers leaving post-Brexit Britain.
CFTC Orders Three Credit Suisse Entities to Pay $1.5 Million for Swap Data Reporting Failure
The Commodity Futures Trading Commission today filed and settled charges against Credit Suisse International, Credit Suisse Securities Europe Limited, and Credit Suisse Capital LLC (Credit Suisse entities or respondents), provisionally registered swap dealers, for failing to comply with swap data reporting obligations as a swap dealer.
Credit Suisse to pay $1.5 million for swap data reporting failures; Registered swap dealers at Credit Suisse were found to have inaccurately reported swap transactions by the US derivatives regulator.
Annabel Smith – The Trade
Credit Suisse will pay a $1.5 million penalty after the US derivatives trading watchdog found three of its registered swap dealers reported inaccurate swap data over a period of five years.
Hong Kong Brokers Warned by Watchdog Over Inadequate Controls
Kiuyan Wong – Bloomberg
Funds withdrawn without oversight from managers in charge; City’s securities regulator steps up monitoring of brokers
Hong Kong’s securities watchdog warned the city’s brokers after finding examples of inadequate controls, as it escalates efforts to monitor unauthorized trading and cash movements. Regulated banks, brokers and financial advisers had insufficient oversight of their own accounts and those of clients, the Securities and Futures Commission said in a circular posted on its website Monday.
Warning: Telstra bonds investment opportunities are fake
ASIC is alerting investors about fake Telstra Corporation Limited (Telstra) corporate bonds; Scammers are promoting Telstra bonds offered on the ASX to legitimise the existence of the fake bonds; Do not buy bonds from Telstra (or any other company) that are offered via email or as a recommendation from a comparison website – these are a scam.
ASIC cancels AFS licence of BBY Ltd
ASIC has cancelled the Australian financial services (AFS) licence held by BBY Limited (BBY), effective 24 June 2021. The terms of the cancellation allow the BBY AFS licence to continue in effect until 31 March 2022 for the following purposes only:
Joint Readout of Principals Meeting of U.S. and UK Authorities Regarding Central Counterparty Resolution
Senior officials from the Securities and Exchange Commission, Federal Deposit Insurance Corporation, Commodity Futures Trading Commission, Federal Reserve Board, and the Bank of England convened a virtual meeting today to discuss certain issues relating to the concept of resolution of a central counterparty (CCP). This meeting was one of a regular series of senior-level meetings held since 2017 to share views on CCP resolution and review the progress of an ongoing program of joint work among the agencies.
***** Here is the CFTC version of this release. ~JJL
SEC Charges Amec Foster Wheeler Limited With FCPA Violations Related To Brazilian Bribery Scheme
The Securities and Exchange Commission today announced charges against Amec Foster Wheeler Limited (Foster Wheeler) for violations of the Foreign Corrupt Practices Act (FCPA) arising out of a bribery scheme that took place in Brazil. As part of coordinated resolutions with the SEC, the U.S. Department of Justice, the Brazil Controladoria-General da Uni?o (CGU)/Advocacia-Geral da Uni?o (AGU) and the Ministério Publico Federal (MPF), and the United Kingdom Serious Fraud Office (SFO), the company has agreed to pay more than $43 million related to this scheme, including more than $10.1 million to settle the SEC’s charges.
Financial Reports and Policies
As a not-for-profit, self-regulatory organization whose operations are funded by member firm fees—without the support of any taxpayer dollars—FINRA must prudently manage its finances to ensure it can appropriately fund its mission to protect investors and promote market integrity in a manner that facilitates vibrant capital markets.
FCA fines Crosfill & Archer Claims Limited £110,000
The FCA has fined claims management company, Crosfill & Archer Claims Limited, £110,000. This fine was for making unsolicited telemarketing calls to people who registered not to receive this type of sales call, where the firm had no evidence they had consented to receive the call or where the firm was unable to confirm what consent had been obtained on customer data purchased from third party data providers.
Investing and Trading
Sporttrade Inc. raises $36 Million to transform sports betting; Investors include Jump Capital, Nasdaq Ventures, Impression Ventures and more; Sporttrade enables users to trade sports bets like stocks to create a more fair, efficient, elevated, and engaging customer experience
Sporttrade, a Philadelphia-based fintech, sports betting company, today announced it has raised $36m in funding. The coalition of investors from both the financial and gaming industries include lead investor Jump Capital, Impression Ventures, Hudson River Trading, Tower Research Ventures, Jim Murren, former CEO of MGM Resorts International and Tom Wittman, former CEO of the Nasdaq Stock Exchange. In addition, Sporttrade issued convertible debt to Nasdaq Ventures in connection with the transaction. Funding will be put towards customer acquisition, expansion into additional states, and continued investment in a diverse, talented team.
DTCC Provides First Electronic Certificate of Deposit as Part of Ongoing Effort to Lead Industry to Full Dematerialization; New electronic Certificates of Deposit (CD) platform is the latest milestone in the firm’s work to lower risks and costs for market participants by reducing the need for physical certificates
The Depository Trust & Clearing Corporation (DTCC), the premier market infrastructure for the global financial services industry, today announced the launch of its new Underwriting Central (UWC) platform, an automated service for electronic Certificates of Deposit (CD) offered by DTCC’s subsidiary, The Depository Trust Company (DTC).
Record Stock Sales From Money-Losing Firms Ring the Alarm Bells
Lu Wang and Vildana Hajric – Bloomberg
AMC, GameStop lead troubled companies in flooding the market; Glut of shares provides latest evidence of elevated enthusiasm
If you think a rush by companies to sell their shares is a bad omen for the market, imagine a scenario where most of the sales come from firms that don’t make money. It’s happening now. Since the end of March, almost 100 unprofitable companies, including GameStop Corp. and AMC Entertainment Holdings Inc., have raised money through secondary offerings, twice as many as coming from profitable firms, according to data compiled by Bloomberg.
Meme stock hype can deter women from investing; Day trading coverage perpetuates myths about the ‘real job’ of investment management
Ellen Carr – FT
“What’s a day trader?” My godson calls to ask me this just after his 18th birthday, newly in possession of a Schwab brokerage account flush with high school graduation cash. When I define the term, he confesses to me that, yep, he has become a day trader with a $1,000 paper profit in his first week as a legal adult. I say “confesses” because he has done what I recommended against doing: perusing Reddit forums and gambling on stocks that dominate them such as retailer GameStop.
During Covid-19, Most Americans Got Richer—Especially the Rich; U.S. households gained $13.5 trillion in wealth in 2020. That isn’t how recessions usually work.
Orla McCaffrey and Shane Shifflett – WSJ
The coronavirus pandemic plunged Americans into recession. Instead of emerging poorer, many came out ahead. U.S. households added $13.5 trillion in wealth last year, according to the Federal Reserve, the biggest increase in records going back three decades. Many Americans of all stripes paid off credit-card debt, saved more and refinanced into cheaper mortgages. That challenged the conventions of previous economic downturns. In 2008, for example, U.S. households lost $8 trillion.
The Stock Market Hasn’t Been This Placid in Years; S&P 500 hasn’t had a 5% correction based on closing prices since October, but there is turmoil in the depths
James Mackintosh – WSJ
The U.S. stock market is as calm as can be on the surface, while churning underneath more than it has in decades. The S&P 500 is so quiet it is almost disconcerting. The index hasn’t had a 5% correction based on closing prices since the end of October; no wonder the new day traders who started buying shares in lockdown think the market only goes up. The last time the S&P was this serene for so long was in 2017, a period of calm that ended with the volatility crash early in 2018—although back then it was even quieter for much longer.
Far From Texas, Huge Gas Bills Stoke Anger After February Freeze; Natural-gas prices across the Midwest exploded during the extreme chill, leaving some to suggest more federal oversight is needed
Christopher M. Matthews – WSJ
An angry backlash is building across the middle of the U.S. as states step in to help their constituents pay billions of dollars in natural-gas bills racked up during February’s freeze.
Environmental, Social and Corporate Governance
World’s Biggest Carbon Market to Get Stronger in EU Green Shift
Ewa Krukowska – Bloomberg
EU plans to speed up emissions cuts, retain supply controls; Carbon border levy to replace free permits for steel, cement
The European Union’s carbon market, the world’s biggest, is set to expand and impose tougher limits on emitters as the region aligns its entire economy with a stricter climate target for the next decade.
China’s Carbon Market Set to Miss Target for Start of Trading
National market was supposed to begin trading by end of June; Exchange says it’s currently unclear when system will begin
China’s long-awaited national carbon market is set to miss the government’s target to have trading underway by the end of June. It’s unclear when the system will begin operating, a spokesperson with the Shanghai Environment and Energy Exchange, which will host trading, said Monday. Minister of Ecology and Environment Huang Runqiu had said in February that he wanted the first trades to commence by the end of June.
Swiss Private Equity Giant Makes $400 Million Bet on U.S. Solar
Josh Saul – Bloomberg
Dimension builds small community solar power projects; Partners sees that niche market growing 10-fold next 5 years
Swiss private equity firm Partners Group Holding AG agreed to buy a majority stake in U.S. community solar developer Dimension Renewable Energy, betting its niche market could grow tenfold in the coming years.
‘Mind-boggling’ heatwave breaks records in western US; Temperature in Seattle forecast to hit 41C as hot weather moves into the Pacific Northwest
Leslie Hook and Steven Bernard – FT
A record-breaking heatwave across the western US is set to intensify this weekend, as climate change and an atmospheric “heat dome” combine to bring about the hottest temperature the region has ever experienced.
Clean Energy ETFs Take a Hit, but Money Keeps Flowing In; Exchange-traded funds that track renewable-energy indexes have posted double-digit declines this year
Michael Wursthorn – WSJ
Investors have lost a bundle this year betting on solar-panel and wind-turbine makers. Their response: to double down. A year ago, green stocks and the funds that track them rallied tremendously in the aftermath of the market’s recovery from a pandemic-induced swoon. Solar-panel and wind-turbine companies were among firms benefiting from a surge of investor- and consumer-driven demand for renewables, despite many being small unprofitable ventures.
UK lenders tumble down global rankings as China soars
Ben Woods – Telegraph
European banks have tumbled down the world rankings following a bruising encounter with the pandemic, as Chinese lenders continue to rise. HSBC is the only European lender to make the world’s top 10 banks, in a year when the Covid crisis hammered profits across the industry.
Credit Suisse Takeover Fears Can Be a Good Thing; A deal would impose much-needed cultural change on the Swiss bank. The challenge would be to find management to take on such a complex integration.
Chris Hughes – Bloomberg
Credit Suisse Group AG’s franchise has proved indestructible through one crisis after another for decades. Its latest mess looks particularly bad. The Swiss bank faces parallel calamities in investment banking and asset management with the same cause — poor risk control — at a time its rivals are performing well. The case for a takeover is strong in principle. The list of realistic buyers is short.
Brevan Howard Ups the Ante in Hedge Fund Recovery; The firm founded by Alan Howard is closing its main funds to new money. It’s a smart move that rivals should aspire to.
Mark Gilbert – Bloomberg
After several dismal years, hedge funds are back in favor with investors. Improved performance is luring cash back into the industry. So much so that one of the most storied firms in the industry is making a smart decision to limit the size of its assets to preserve its ability to generate alpha.
UBS to Let Two-Thirds of Employees Adopt Permanent Hybrid Work
Yueqi Yang, Andrew Davis, and Sebastian Tong -Bloomberg
Swiss lender seeks recruiting edge with flexible approach; Up to two-thirds of staff can mix working from home and office
UBS Group AG will permanently allow as many as two-thirds of its employees to adopt a hybrid model of working from home and the office, according to a person familiar with the plans, as it seeks a competitive recruitment edge over some U.S. banks taking a more hardline approach.
Inside the secretive private equity firm behind the £6.8bn Asda buyout; With the help of US hedge fund manager Paul Tudor Jones, two bankers built TDR into an ‘old world’ force
Kaye Wiggins and Robert Smith – FT
The Coach Makers Arms is owned by a daisy chain of corporate entities that leads to the secretive offshore tax haven of Jersey — and ends a stone’s throw from its own front door near London’s Oxford Street. The structure was arranged by the private equity firm TDR Capital, whose executives decided in 2017 to buy their local watering hole across the street.
Deutsche Bank compensates Spanish winemaker over forex scandal; German lender pays EUR10m to Don Simón owner JGC to settle claims of mis-selling exotic derivatives
Stephen Morris and Olaf Storbeck – FT
Deutsche Bank paid more than EUR10m to Europe’s largest wine exporter to settle a dispute over the alleged mis-selling of foreign exchange derivatives, as the lender nears the end of an internal probe that has already led to the departure of two senior executives.
How China Is Cracking a Window for Its Bond Investors
Livia Yap and Rongrong Huang – Bloomberg
China is taking another step to loosen its capital controls and in the process is giving onshore investors greater access to a previously hard-to-reach bond market. The so-called southbound link of the Bond Connect program will help draw capital from the mainland to bonds available in Hong Kong, which are currently a challenge to buy due to regulatory restrictions. The new channel could serve to check excess strength in China’s currency by balancing money flowing from overseas funds into Chinese assets. It also could help buttress Hong Kong’s status as a financial hub.
China’s cyber power at least a decade behind the US, new study finds; International Institute for Strategic Studies says Beijing’s online capabilities have been ‘exaggerated’
Helen Warrell – FT
China’s strengths as a cyber power are being undermined by poor security and weak intelligence analysis, according to new research that predicts Beijing will be unable to match US cyber capabilities for at least a decade.
Taiwan equities ETF inflows hit record high in May; Performance stands in contrast to mutual fund peers that saw combined assets shrink
Rebecca Feng – FT
Taiwan-listed exchange traded funds investing in domestic equities saw their highest-ever monthly net inflows in May, despite a surge in coronavirus cases and a domestic stock market slump in the middle of the month.
Pressure builds to resolve fate of Chinese bad debt manager Huarong; The state-owned group’s aggressive overseas expansion carries echoes of China’s private conglomerates
Thomas Hale in Hong Kong and Edward White – FT
Six months after its chair Lai Xiaomin was found guilty of corruption and executed, the fate of Huarong Asset Management, China’s biggest bad debt manager, is no clearer and the stakes for Beijing are rising.
‘Don’t come to Amsterdam.’ Dutch capital tells rowdy tourists to stay away
Isabelle Gerretsen – CNN
Amsterdam’s well-known tolerance of recreational drugs and sex has long attracted tourists in search of the seedier side to the city of canals and cycle paths.
But when border closures and lockdowns brought about by the Covid-19 pandemic emptied the Dutch capital of all visitors, many locals found the absence of the noisier, intoxicated ones to be a breath of fresh air.
The Apps and Websites You Need for International Travel During Covid and the Reopening; Tips for finding entry requirements, digitizing documents and expediting check-in now that travel abroad is becoming possible again
Nicole Nguyen – WSJ
Now that Covid-19 restrictions are easing for vaccinated tourists in Europe and elsewhere, you might have your sights set on some international summer travel. But it won’t be business as usual. Depending on where you’re going, expect wildly fluctuating prices, new testing and vaccination rules and even varying mask specs. (Sorry, Air France doesn’t want your pretty homemade face covering.)