Coinbase Threat Shows There’s a New Crypto Sheriff in Town

Sep 9, 2021

First Read

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Hits & Takes
John Lothian & JLN Staff

The World Federation of Exchanges announced that Cboe Chairman, President and CEO Ed Tilly will serve as its next chairman for a two-year term. Tilly previously served as vice chairman from 2018 to 2021. Congratulations to Mr. Tilly on his election. — Cboe Global Markets

Former CFTC Chairman J. Christopher Giancarlo, now chairman emeritus of the CFTC (I missed the memo on this), announced that his new book, “Crypto Dad: The Fight for the Future of Money,” is to be released in early October by John Wiley & Sons. It is available for preorder on and The foreword is by Cameron and Tyler Winklevoss, the twin brothers who hired Mark Zuckerberg to create what became Facebook and later launched Gemini, the cryptocurrency exchange.

Giancarlo is not the only former CFTC commissioner getting in on the crypto world. Newly former CFTC Commissioner Brian Quintenz announced he is joining the Silicon Valley venture capital firm Andreessen Horowitz, known as @a16z, as an advisory partner on the cryptocurrency team. Andreessen Horowitz invests in seed to late-stage technology companies across the consumer, enterprise, bio/healthcare, crypto and fintech sectors. Their crypto funds have $3.1 billion under management.

Coinbase has a post on their blog by their Chief Legal Officer Paul Grewal titled, “The SEC has told us it wants to sue us over Lend. We don’t know why.” I am sure Coinbase will figure it out when they get the lawsuit or they can read this MarketWatch commentary by Mark DeCambre.Coinbase

FTX is on a rampage to make their brand a household name. Their latest sports sponsorship deal is with the American football star Tom Brady and his wife, the model Gisele Bündchen, who will be featured in a $20 million campaign for the cryptocurrency exchange. They also did a deal with Major League Baseball to have their logo on MLB umpires’ uniforms among a long list of sports-related sponsorship deals.

John Detrixhe of Quartz has a story titled, “How to tell the crypto hype from the crypto reality.” If it was only that easy. His next piece should be titled, “How to tell when women are not really into you.”

Our friends at FEAS, the Federation of Euro-Asian Stock Exchanges, will hold a Jordanian and Palestinian Capital Markets webinar on September 15 st 14:00 Yerevan time (GMT+4), or 5:00 a.m. CDT. The event features representatives of the stock exchanges and depository who will introduce their capital market and information about the country and about how to invest. The presentation will be followed by a Q&A session. You can register HERE.

The “Team of the Week” for the Wall Street Rides Far event is IEX Group. Here is what WSRF had to say about IEX:

Team of the Week: Team IEX Group
Thinking Big and Doing Good for Causes That Matter
For the team at IEX Group (IEX)—a financial technology company and national stock exchange operator—giving back is a key priority. The firm is keen to make a positive impact both in the markets and in society by contributing its passions and resources to causes that matter – including the Autism Science Foundation, which supports critical research to help people with autism spectrum disorder (ASD) to live healthy, full and successful lives. To sponsor the IEX Group ride, click HERE.

MEMX shared on Twitter that they traded an all-time high 4% of the U.S. equity market share yesterday.

There were no new donations to the JLN MarketsWiki Education GoFundMe campaign yesterday.

Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL


Cboe Global Markets’ Ed Tilly to Serve as Chairman of the World Federation of Exchanges
Cboe Chairman, President and CEO Ed Tilly will serve two-year term as Chairman of the WFE, the global industry group for exchanges and clearinghouses; Tilly will guide WFE’s board and 250 member organizations to advance WFE’s mission to support and promote the development of fair, transparent, stable and efficient markets around the world; Previously served as Vice Chairman of the WFE from 2018 to 2021
Cboe Global Markets
Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today announced that its Chairman, President and CEO Ed Tilly has been appointed Chairman of the World of Federation of Exchanges (WFE), the global industry group for exchanges and clearinghouses (CCPs) around the world. Mr. Tilly was previously Vice Chairman of the WFE from 2018 to 2021 and began serving a two-year term as Chairman of the WFE on September 9.

***** Tilly follows in the footsteps of his mentor, Bill Brodsky, who also served as the chairman of the WFE. ~JJL


EEX partnership fosters hedging of renewable energy risk; Pact with Swiss start-up Pexapark focuses on power futures
Bennett Voyles – FIA
The global shift to renewable power is spurring the creation of new infrastructure – and not just wind farms, solar plants, battery storage and transmission lines. Financial tools are also playing a role by helping buyers and sellers of renewable energy manage their price risk. One example is a recently announced alliance between the European Energy Exchange, Europe’s leading wholesale power market, and Pexapark, a software and advisory company based in Zurich that specializes in working with the renewables industry.

****Look out for the Swiss and Germans working together. All they ever do is change the world.~JJL


Marex pledges to help more clients move to sustainable commodities; Broker leverages its position in commodities sector to promote global environmental change
Kirsten Hyde – FIA MarketVoice
Marex, a global broker that puts on trades and derivatives hedges for commodity producers and consumers, has pledged to help its clients move to more sustainable commodities. The UK-based firm also aims to make its own operations carbon neutral by 2022. In its first-ever environmental, social and governance report, published this summer, Marex said it was building on policies set in place during 2020 to focus on ESG issues and support a green transition across its core traded commodities.

*****The goal of promoting global environmental change is not a small one. But you have to have a big goal to change the world.~JJL


Brian Quintenz
Katie Haun – Andreessen Horowitz
Crypto is at a crossroads. With innovation in the space accelerating so quickly and incredible new projects being launched every day, more and more leaders across business, finance, and government are starting to acknowledge our view that the future of the internet will be driven by crypto technology. It’s no wonder, then, that crypto regulation has come to the forefront of the national debate. As we witnessed with the Infrastructure Bill, it has never been more important for the crypto community to engage in productive dialogue with regulators and policymakers.

***** Brian Quintenz is turning his experience leading the CFTC’s TAC committee into Tic-Tac-Dough.~JJL


Market Making and the NYSE DMM Difference
Steven W. Poser, Director, Product Development, NYSE
Market makers1 play a key function in markets, committing capital to bridge timing differences between buyers and sellers. With the industry debating underlying market structure tenets such as tick sizes there has been renewed focus on different types of market making activity. NYSE Research has produced a white paper examining market making in US cash equities and highlighting the value of the NYSE Designated Market Maker (DMM) model compared to other U.S. equity market making models.

*****Disclosure: Steve Poser is a friend and former brokerage client of mine. And a very smart guy!~JJL


Wednesday’s Top Three
Our most-read story on Wednesday by far was the Wall Street Journal’s On 9/11, Split-Second Decisions by Employees at ICAP Affected the Rest of Their Lives. It is heartbreaking. Second was Interactive Brokers Issues Statement on Patent Trial Verdict, from Valdosta Daily Times. Third was Bloomberg’s Coinbase Gets Wells Notice From the SEC on Lend Product.


MarketsWiki Stats
26,617 pages; 235,799 edits
MarketsWiki Statistics


Lead Stories

Coinbase Threat Shows There’s a New Crypto Sheriff in Town
Ben Bain and Matt Robinson – Bloomberg
U.S. Securities and Exchange Commission Chair Gary Gensler just put the cryptocurrency industry on notice of how far the regulator will to go to tame a market he’s labeled the wild west of finance. In threatening to sue Coinbase Global Inc. if the exchange lets customers earn interest on their digital tokens, the SEC sent a warning to other firms already offering similar products or contemplating doing so. The move is the clearest sign yet that, under Gensler, the regulator will aggressively use its powers to thwart products it’s uncomfortable with — even before they launch.

Coinbase says the S.E.C. has threatened to sue it over a plan to pay interest.
Matthew Goldstein and Ephrat Livni – NY Times
Coinbase, the largest cryptocurrency exchange in the United States, said on Wednesday that federal securities regulators were threatening to sue it over a proposed financial product that would let customers earn interest on digital asset deposits.

How Joseph Lubin became Wall Street’s crypto whisperer; Gillian Tett meets ethereum’s co-founder, an increasingly powerful influence over the future of digital money
Gillian Tett – FT
In the summer of 2016, a group of central bankers from the American Federal Reserve left their Wall Street branch office, crossed the East River and headed to Bushwick. Their destination was a graffiti-covered warehouse on Bogart Street, home to a small company called ConsenSys.

Germany’s stock market needs deeper change; Adding 10 companies does not go far enough to overhaul the Dax 30
The editorial board – FT
That there has been little argument over expanding Germany’s Dax 30 index of blue-chip stocks to a Dax 40 reflects a fundamental problem with the reform. Including 10 more companies makes the index more diverse for investors and provides a showcase for more of the country’s companies. Yet the lack of controversy reflects a lack of ambition: deeper change is ultimately needed to create an equity market fit for Europe’s largest economy.

NFT mania is sign of a land grab for the online ‘metaverse’; Supporters hope tokens will be a crossover product which will attract millions of ordinary people to the crypto world
Malcolm Moore – FT
It has been another big week for NFTs, the digital collectibles that have captured the imagination of crypto enthusiasts and are now rapidly going mainstream. Dolce & Gabbana unveiled a collection of dresses, suits, jackets, tiaras and crowns that can be worn by digital avatars and said it would sell them as NFTs, or “non-fungible tokens”, later this month.

How to tell the crypto hype from the crypto reality
John Detrixhe – Quartz
With thousands of tokens floating around the internet, it’s not always easy to figure out whether or how to invest in cryptocurrency. Fortunately Quartz has spent years culling a firehose of crypto pitches, so we’ve learned a thing or two. And as back up, we also called crypto founder Hunter Horsley, CEO of index fund manager Bitwise Asset Management.

Kevin Sneader to Join Goldman Sachs as Co-President of Asia Pacific Ex-Japan
Goldman Sachs
The Goldman Sachs Group, Inc. (NYSE: GS) today announced that Kevin Sneader will join the firm as the co-president of Asia Pacific Ex-Japan alongside Todd Leland.

Goldman hires ousted McKinsey boss Kevin Sneader for top Asia role; Appointment comes months after executive failed to win re-election at consulting firm
Joshua Franklin and Andrew Edgecliffe-Johnson – FT
Goldman Sachs has hired ex-McKinsey executive Kevin Sneader to serve as the bank’s co-president in Asia-Pacific, months after he was ousted from the top job at the global consulting firm.

Bitcoin Could Eventually Collapse, Swedish Central Banker Warns
Ott Ummelas – Bloomberg
The governor of Sweden’s central bank compared buying and selling Bitcoins to trading stamps, questioning the staying power of currencies without government backing. “Private money usually collapses sooner or later,” Riksbank Governor Stefan Ingves said at a banking conference in Stockholm. “And sure, you can get rich by trading in bitcoin, but it’s comparable to trading in stamps.

London Rivals Closing the Gap in Race for Europe’s Top IPO Spot
Swetha Gopinath – Bloomberg
Frankfurt and Amsterdam are tied for second spot amid IPO boom; U.K. listing rule reform is a boon, but higher taxes to weigh
For years, London’s position as Europe’s hottest listing venue has seemed unshakable, but rivals Frankfurt and Amsterdam are quickly closing in with a flurry of initial public offerings this fall.

Australian banks reject pressure to deal with cryptocurrency firms
Paulina Duran – Reuters
Two of Australia’s largest lenders, National Australia Bank (NAB) and Westpac, on Thursday rejected criticism that they are stymieing competition by refusing to do business with cryptocurrency providers.

Ex-CFTC Official Brian Quintenz to Advise Andreessen on Crypto
Ben Bain – Bloomberg
Silicon Valley venture capital giant Andreessen Horowitz is hiring Brian Quintenz, a former top official at the U.S. Commodity Futures Trading Commission, to advise on crypto policy issues.

Morningstar joins race to provide direct indexing services; Acquisition of Moorgate Benchmarks follows similar deals by BlackRock, Vanguard and Morgan Stanley
Steve Johnson – FT
Morningstar will become the latest big name to enter the field of “direct indexing”, following in the footsteps of a handful of industry giants including BlackRock, Vanguard and Morgan Stanley. The Chicago-based group, with operations spanning credit ratings, investment research and asset management, is acquiring indexing specialist Moorgate Benchmarks, which develops the customised and personalised indices that lie at the heart of direct indexing.

Chicago isn’t a power player when it comes to AI; Much of the research activity is in Urbana-Champaign, a Brookings study notes. The city’s best hope rests in its big-company assets.
John Pletz – Crain’s Chicago Business
Chicago is on the outside looking in when it comes to artificial intelligence, according to a study by the Brookings Institution. AI is one of the hottest areas of emerging technology, as machine learning and other techniques are applied to financial service and other industries. While it’s more hype than reality at this point, “AI has the power to boost the productivity of sector after sector of the economy,” Brookings Institution says.

Abaxx Announces Completion of Base Carbon Financing
Abaxx Technologies Inc., (NEO:ABXX) (OTCQX:ABXXF) (“Abaxx” or the “Company”), a financial technology company, majority shareholder of Abaxx Singapore Pte. Ltd., the Abaxx Commodity Exchange, and producer of the SmarterMarkets™ Podcast, has completed a non- brokered private financing of a new affiliated company, Base Carbon Corp. (“Base”). This represents the completion of a key milestone in facilitating the seed financing of Base Carbon and assisting the company as it pursues a public markets listing.

Coinbase Accuses SEC of ‘Sketchy Behavior’ After Threat to Sue
Olga Kharif and Joanna Ossinger – Bloomberg
Coinbase Global Inc.’s chief executive officer blasted the Securities and Exchange Commission for “really sketchy behavior” after the company received a warning that regulators plan to sue. In a Twitter thread, CEO Brian Armstrong said the SEC would be creating an unfair market if it tries to shut down its new lending product, which would allow consumers to earn interest on their crypto holdings.

L Squared Completes Acquisition Of Sterling Trading Tech; Sterling Trading Tech Is A Leading Provider Of Professional Trading Technology Solutions For The Global Equities, Options, And Futures Markets
Sterling Trading Tech
L Squared Capital Partners (“L Squared”) is pleased to announce the acquisition of Chicago, IL based Sterling Trading Tech (“STT” or the “Company”) from LLR Partners and other investors, a leading SaaS provider of financial technology for the global capital markets. The investment represents L Squared’s fourth platform investment in Fund III, a $505 million private equity fund that closed in September 2020. STT’s management also participated in the acquisition.

Rival Systems Releases Real-Time Customer Portfolio Margin and Risk Based Haircuts
Rival Systems
Rival Systems (Rival), an award-winning provider of trading and risk management software, today announced the addition of real-time Customer Portfolio Margin (CPM) and Risk Based Haircuts (RBH) to its enterprise risk platform. Rival’s fully hosted and managed solution is integrated with the OCC’s parameters and option valuations to accurately calculate margin based on start of day and current positions. Users can view real-time margin across all their accounts and set alerts to trigger when open, current or percent change in margin hit user defined thresholds.

Big banks are eating the little guys’ lunch right now; Nearly $9 of every $10 in local deposits was stashed at one of the area’s top 13 banks at the end of June, according to new data.
Steve Daniels – Crain’s Chicago Business
Big Chicago banks are swimming in cash while community lenders are no longer sharing equally in what continues to be historically high deposit growth. Cash stashed in local banks climbed 10% in the year that ended June 30, according to Federal Deposit Insurance Corp. data released Sept. 3. The increase was a slight surprise following the extraordinary 25% surge in deposits the year before, caused mainly by unprecedented federal relief to households and businesses.


The European Disease That’s Mutated Through the Black Death and Covid; As the biological virus attacks bodies, the mental one of anti-Semitism infects hearts and cultures where hatred has never ceased to be endemic.
Andreas Kluth – Bloomberg
As the coronavirus spread through Europe last year, cartoons and posts began going up on French social media that might as well have come straight from the 14th century. In one series, Agnes Buzyn, who is Jewish and was France’s health minister until February 2020, was depicted with grotesquely distorted features dropping poison into wells.

These Are the U.S. Companies Requiring Covid Vaccines for Employees
Matthew Boyle – Bloomberg
To mandate, or not to mandate? That is the question facing corporations right now as they weigh the pros and cons of requiring a Covid-19 vaccine for employees. The answers, so far, are all over the place.

Shell weighs vaccine mandate and firing staff who resist; Oil supermajor should not be a ‘pioneer’ on a ‘controversial issue,’ internal memo says
Derek Brower and Tom Wilson – FT
Royal Dutch Shell is weighing whether to mandate vaccines for employees and fire those who refuse to comply, according to an internal memo sent to the oil supermajor’s executive committee.

Covax cuts vaccine delivery forecasts to developing world by 25%; WHO-backed programme knocked off track by manufacturing problems and delays in approvals
Hannah Kuchler – FT
Covax has slashed its forecasts for Covid-19 vaccine deliveries to the developing world by about 25 per cent this year after India’s export ban, manufacturing problems and delays in approvals of new shots knocked the programme off track.

Covid Zero Is No Longer Working for Australia
Edward Cliff and Brian Fernandes – NY Times
Australia was, until recently, heralded for its effective suppression of Covid-19; through strict border closures, prolonged lockdowns and its fortune as a remote island continent, the country was able to avoid a large-scale outbreak. The Delta variant has, however, turned that success upside down.

Exchanges, OTC and Clearing

Nasdaq Launches Nasdaq Data Link to Simplify Data Discovery and Expand Cloud Delivery; Over 250 Proprietary, Third-Party, Free and Premium Datasets Immediately Available On a Single Platform
Nasdaq today announced the launch of Nasdaq Data Link, a cloud-based technology platform that empowers all segments of the investing public with a comprehensive suite of core financial, fund and alternative data. The platform connects the global financial community to the information needed to generate alpha, manage risk and gain transparency into public and private markets.

London Metal Floor Trade Volume Plunged 85% on Reopening Day
Mark Burton – Bloomberg News
Volumes on the London Metal Exchange’s open-outcry floor dropped 85% from pre-pandemic levels on traders’ first day back in “the Ring,” pointing to an even sharper contraction than some had predicted and reinforcing concerns that it may not stay open for long.

tZERO Announces Trading of American Films Common Stock on tZERO ATS Scheduled for September 27, 2021
tZERO, a leader in blockchain innovation and liquidity for digital assets, announced today that trading of the American Films, Inc. (OTC: AMFL) common stock will commence on September 27, 2021, on the regulated alternative trading system, operated by tZERO’s wholly owned, FINRA member broker-dealer subsidiary, tZERO ATS. American Films is an intellectual property anti-piracy innovator and developer of films and other creative projects. American Films will be the first over-the-counter traded company to move to trade on the tZERO ATS.

US fund filings show CME taking bite out of LCH swaps share; Counterparty Radar: Rivals neck-and-neck after big LCH user cuts rate swaps book and non-G10 trades surge
Duncan Wood –
There’s an eye-catching story about interest rate swap clearing buried in US mutual fund filings, which only becomes apparent when the data is scraped, aggregated and plotted over time: between the start of last year and the start of this, CME Group edged ahead of LCH as the sector’s clearing house of choice, reversing the huge advantage LCH had enjoyed. In the first quarter of 2020, more than 70% of the $915.8 billion in swaps held by the top 25 fund managers were cleared at LCH, with CME

Euronext says to launch durum wheat futures in Q4
Reuters Staff
Euronext will launch in the fourth quarter of this year its planned durum wheat cash-settled futures contract, the market operator said on Wednesday.
The timeframe for the launch, which is subject to regulatory clearance, is in line with Euronext’s previous expectation of a launch in the second half of 2021.

Euronext announces September 2021 review results of the OBX® Family
Euronext today announced the results of the September review for the OBX® family including the OBX®, OSEBX® and OSEFX®. The changes due to the review will be effective from Monday 20 September 2021.

Euronext announces September 2021 quarterly review results of the BEL® Family
Euronext today announced the results of the quarterly review for the BEL 20®, BEL Mid® and BEL Small® indices, which will take place after markets close on Friday 17 September 2021 and be effective from Monday 20 September 2021.

Euronext announces September 2021 quarterly review results of the PSI 20®
Euronext today announced the results of the quarterly review for the PSI 20®, which will take place after markets close on Friday 17 September 2021 and be effective from Monday 20 September 2021.

SGX Cares rolls out new Mini Challenge as fundraising gathers pace
New 5km event to serve as warmup to 18th annual Charity Run; SGX Cares is home to CSR pillars of Bull Charge, Outreach and Financial Literacy
Singapore Exchange (SGX) is introducing a new Mini Challenge running event for individuals and teams from its international network of corporate partners, as fundraising for SGX Cares Bull Charge beneficiaries gathers pace ahead of the annual Charity Run grand finale.

SGX welcomes Korea Investment & Securities Co as Derivatives Trading Member
Singapore Exchange (SGX) today welcomed Korea Investment & Securities Co., Ltd. (KISCL) as a Trading Member of its derivatives market. Based in Seoul, KISCL was incorporated in 1974 as the first investment trust company in South Korea. KISCL provides financial services including securities dealing and brokerage services, corporate finance, asset management and investment trust.

Gavin Prentice Appointed As LME User Committee Chairman
The London Metal Exchange (LME) is pleased to announce the appointment of Gavin Prentice as chairman of the User Committee and member of the Special Committee. Gavin has more than 30 years’ experience in commodities trading, most recently as Managing Director at Marex. Gavin is a long-standing member of the LME community, having served as an LME Board member from 2009-2012 and having chaired the LME’s Aluminium and Nickel Committees for more than a decade.

— EBS Market Integration onto CME Globex — CME
— CME Globex Notices: September 6, 2021 — CME
— CME STP Notices: September 9, 2021 — CME


Eventus Gets Funds From DRW, Jump Amid Crypto Trading Expansion
Nick Baker – Bloomberg
Its trade-surveillance software helps traders stamp out fraud; Clients see manipulation in every asset class, CEO Schwab says
Eventus Systems Inc., which helps brokers and traders prevent market manipulation, got a $30 million investment from a group led by Centana Growth Partners and including venture-capital affiliates of several Chicago-based trading giants.

Appital’s bookbuilding platform integrates with FlexTrade; The integration meets demands from asset management firms to offer a more efficient and transparent way for the buy-side community to execute large orders.
Wesley Bray – The Trade
Appital has announced that FlexTrade Systems is the first EMS provider to integrate with its bookbuilding platform. Through partnerships with firms such as FlexTrade, Appital said it is developing the necessary technological infrastructure to integrate its platform into existing market structures.

Broadridge’s LTX hires two fixed income veterans for new leadership positions; Incoming heads bring decades of experience to LTX and will help accelerate the digitisation of corporate bond trading.
Wesley Bray – The Trade
Broadridge Financial Solutions has appointed two new leadership positions at LTX, its AI-driven digital trading platform for corporate bonds. Ted Bragg and Jim Kwiatkowski will take on the new positions in the LTX leadership team and will work with Jim Toffey, CEO of LTX, to accelerate the digitisation of corporate bond trading.

TradeTech FX 2021: Technology lacks interoperability, says Fidelity FX tech head; Fidelity Investments’ head of FX technology has said getting applications to interact and collaborate with one another remains a key pain point for the buy-side.
Annabel Smith – The Trade
Effective interoperability between applications is lacking in the FX markets, according to Fidelity Investments’ head of FX technology, David Shack.

BlackRock goes live on Axoni blockchain network for equity swaps; The asset management giant will access the software through an integration with its flagship Aladdin platform.
Annabel Smith – The Trade
BlackRock has become the latest major institution to join the blockchain distributed ledger network by Axoni, Veris, for equity swaps trading. The asset manager will leverage the software through an integration of its flagship Aladdin platform, with further integration plans expected later.

BornTec’s CrossCheck Selected by FCT Europe Limited as Premier Regulatory Solution; Using CrossCheck will enable FCT to meet trade surveillance and compliance needs
BornTec, the premier provider of real-time trade surveillance, data analytics, and compliance solutions for the capital markets industry, today announced that FCT Europe Limited has selected CrossCheck to meet its compliance mandates for trade surveillance. FCT, a regulated proprietary trading firm with traders located across Europe, Asia, and North America, is presently growing operations both organically and strategically with its unique approach to trading.

Automation of Bond Workflow Increases
Shanny Basar – MarketsMedia
Fintech Nivaura has appointed Scott Eaton as its new chief executive to increase the deployment of its technology to digitize bond issuance while Liquidnet is aiming to electronify the entire life cycle of a bond.

CloudMargin Expands Network to Include Nearly 60 Custodians, Helping Firms Meet Challenges of UMR Final Phases
Successfully Facilitated UMR Readiness for Phase 5 Firms
CloudMargin press release via Yahoo Finance
CloudMargin, creator of the world’s first and only collateral and margin management solution native to the cloud, today announced enhancements to facilitate clients’ preparedness for the Uncleared Margin Rules (UMR) for those firms that have just fallen under the scope of Phase 5 or will fall under the scope of Phase 6 as of next September. The firm is now connected to nearly 60 custodians globally for cash, securities and third-party SWIFT settlement, in addition to its long-established SWIFT connectivity to the four major triparty agents.


CISA to Host Fourth Annual National Cybersecurity Summit
Homeland Security Today
The Cybersecurity and Infrastructure Security Agency (CISA) announced today that it will host its fourth annual National Cybersecurity Summit this October. Coinciding with Cybersecurity Awareness Month, the 2021 summit will be held virtually as a series of webinars each Wednesday in October, beginning October 6 and ending October 27. Registration is required but there is no cost to attend. Last year’s event, which was also hosted virtually, had more than 15,000 attendees from around the world join the event.

United Nations’ Computers Breached by Hackers Earlier This Year
William Turton and Kartikay Mehrotra – Bloomberg
Hackers breached the United Nations’ computer networks earlier this year and made off with a trove of data that could be used to target agencies within the intergovernmental organization. The hackers’ method for gaining access to the UN network appears to be unsophisticated: They likely got in using the stolen username and password of a UN employee purchased off the dark web.

New Cybersecurity Report from HP Reveals 91% of IT Teams Feel Pressure to Compromise Security
Global News Wire
HP Inc. (NYSE: HPQ) today released its HP Wolf Security Rebellions & Rejections report, a comprehensive global study highlighting the tension between IT teams and employees working from home (WFH) that security leaders must resolve in order to secure the future of work. The findings show that IT teams have been forced into compromising security for business continuity at a time of rising threats. Making matters worse, their attempts to increase or update security measures for remote workers have often been rejected. This is particularly true for the future workforce of 18-24-year-olds – digital natives who feel increasingly frustrated with security getting in the way of deadlines, leading many to circumvent controls.

Hackers Leak VPN Account Passwords From 87,000 Fortinet FortiGate Devices
Ravie Lakshmanan – The Hacker News
Network security solutions provider Fortinet confirmed that a malicious actor had unauthorizedly disclosed VPN login names and passwords associated with 87,000 FortiGate SSL-VPN devices. “These credentials were obtained from systems that remained unpatched against CVE-2018-13379 at the time of the actor’s scan. While they may have since been patched, if the passwords were not reset, they remain vulnerable,” the company said in a statement on Wednesday.


State of Crypto: The SEC Takes on DeFi; The SEC’s investigation into DeFi platforms is unsurprising. The question is whether the U.S. regulator will bring charges.
Nikhilesh De – Coindesk
The SEC is reportedly investigating decentralized finance (DeFi) platforms and the parties behind them. While not unexpected, this is a new phase in the crypto-regulatory landscape. We may be able to predict how these investigations will proceed by looking at prominent historical examples.
DeFi investigation – The narrative
News broke Friday that the Securities and Exchange Commission (SEC) is conducting a probe into Uniswap Labs and other DeFi platforms. It’s unclear whether these investigations are still primarily for information-gathering purposes or whether there will be enforcement actions coming. Regardless, this is a pivotal, if expected, development in the regulator’s oversight of the crypto market.

Tom Brady and Gisele Bündchen to Star in $20 Million Campaign for Crypto Exchange; FTX is leaning on large-scale branding and advertising projects as it tries to break through to U.S. consumers
Megan Graham – WSJ
Cryptocurrency exchange platform FTX is trying to level up in the U.S. with more established competitors through a new ad campaign featuring the married couple of football great Tom Brady and model and businesswoman Gisele Bündchen.

Security Considerations to Dictate India’s Cryptocurrency Policy
Vrishti Beniwal – Bloomberg
India’s federal ministerial panel will consider a proposed legislation on cryptocurrencies with national security in mind, a lawmaker of the ruling Bharatiya Janata Party said. “We have to be very watchful about what happens to these crypto assets and cryptocurrencies,” Jayant Sinha, chairman of the Parliamentary Standing Committee on Finance, said Wednesday. “Use of these kind of crypto instruments in terror financing and for domestic security threats is something we have to be mindful of.”

Mark Cuban Urges ‘Aggressive’ Coinbase Response to SEC Warning
Nathan Crooks – Bloomberg
Billionaire entrepreneur and crypto investor Mark Cuban urged Coinbase to be “aggressive” dealing with the U.S. Securities and Exchange Commission over the warning it received from the regulator.

MicroStrategy Executives Sold Stock After Bitcoin’s Swoon
Julia Fanzeres – Bloomberg
Perhaps some MicroStrategy Inc. insiders aren’t quite as sure about tying the company’s long-term fortunes to Bitcoin as their Chief Executive Michael Saylor.

Here’s why Coinbase is in hot water over crypto lending — and how the SEC is sending a shot across the bow for DeFi
Mark DeCambre – MarketWatch
Coinbase Global finds itself in a dust-up with its top regulator over lending practices that the Securities and Exchange Commission says run afoul of existing securities rules. Brian Armstrong, the outspoken chief executive of Coinbase COIN, -3.23%, late Tuesday disclosed that the crypto platform is being investigated over a lending program tha

Quant funds tackle chronic overfitting in crypto strategies; Firms adapt backtests and tread lightly to address “huge” overfitting risk, magnified by scarce data
Faye Kilburn –
Quantitative funds have long been haunted by the spectre of overfitting – a model performing well in backtests that use historical data, but not when applied to current market conditions. And if a fund trades crypto rather than traditional assets, the risk is even higher.


Opinion: How the rise of Politico shifted political journalism off course
Perry Bacon, Jr. – Washington Post
Politico’s sale last month to the German media company Axel Springer for a reported $1 billion was the culmination of a stunning rise of a publication founded in 2007 in what most people assumed was an overly-crowded market: coverage of Washington and U.S. politics. Politico is now read by insiders as much as bigger, long-standing outlets such as the New York Times and The Post, and that billion-dollar sale price is more than three times what Jeff Bezos paid for The Post in 2013.

The Quiet German on the Verge of a Shock Win
Flavia Krause-Jackson – Bloomberg
In some ways, Olaf Scholz, the front-runner to replace Angela Merkel as Germany’s chancellor, owes his political resurrection to the pandemic. Less than two years ago, the finance minister was contemplating getting out of politics all together. His Social Democrats had rejected him as party leader. He was seen as too moderate and too close to Merkel.

Global Economic Warfare Intensifies as Military Conflict Recedes; Biden, like Trump, embraces sanctions, though they may be losing effectiveness and increasing the risk of conflict
Greg Ip – WSJ
The last American soldier had barely left Afghanistan when President Biden pledged that pressure on the Taliban would continue through other means, in particular what he described as economic tools. He has since maintained sanctions on the Taliban, though the action imperils Afghanistan’s aid-dependent economy.

What Xi Means by ‘Disorderly Capital’ Is $1.5 Trillion Question
Bloomberg News
Slogan aimed at Big Tech slips into crackdowns in more sectors; New Xi-isms fueling concern about tilt away from markets
If nothing else, President Xi Jinping is known for his pursuit of order. So how far the Chinese president’s attack on the “disorderly expansion of capital” will go has emerged as a defining question for investors trying to navigate the country’s wave of regulatory crackdowns.

German Finance Ministry Raided Over Anti-Money Laundering
Karin Matussek – Bloomberg
German prosecutors probe officials at investigative unit FIU; Social Democrat chancellor candidate Scholz leads Fin Ministry
German prosecutors raided the federal finance and justice ministries in Berlin as part of a probe into whether officials at an anti-money laundering unit failed to handle cases correctly.

Biden’s Opportunity to Reshape the Federal Reserve; Multiple seats on the U.S. central bank’s board are in play.
Saleha Mohsin, Dave Merrill, Craig Torres – Bloomberg
President Joe Biden has an opportunity this fall to reshape the Federal Reserve, potentially ushering in an era in which the U.S. central bank’s governing board will have more women and people of color and those who would put more weight on reducing economic inequality.


SEC puts crypto industry on notice with Coinbase move; Warnings of enforcement highlight fraught legal debate at heart of regulatory approach towards the sector
Stefania Palma, Kiran Stacey, Joshua Oliver and Gary Silverman – FT
Last week, Gary Gensler, the chair of the Securities and Exchange Commission, said cryptocurrency trading platforms could not last long outside the US regulatory framework. This week, it became clear that the SEC meant business.

EU Bank Watchdogs Warn on Industry Plans to Soften Regulations
Nicholas Comfort and Frances Schwartzkopff – Bloomberg
European bank regulators issued a joint warning against watering down tough new capital requirements, after the industry seized on the pandemic to lobby for less onerous rules. Twenty-five central banks and watchdogs from across the region sent a letter to the European Commission on Tuesday calling for a “full, timely and consistent implementation” of global standards known as Basel III. The package is about to enter a decisive phase in Europe with the Commission’s proposal for how to translate it into law due before the end of the year.

Advancis Ltd enters administration
On 7 September 2021, Advancis Ltd (trading as Buddy Loans) was placed into administration. Shane Crooks, Tony Nygate and Kiri Holland of BDO LLP were appointed as Joint Administrators.

Richard Faithfull sentenced to over 5 years imprisonment for money laundering
On Thursday 9 September 2021 Richard Faithfull was sentenced to 5 years and 10 months imprisonment for laundering money, contrary to s.327 Proceeds of Crime Act 2002. He was also disqualified from being a company director for a period of 10 years.

FCA to move faster to remove unused firm permissions
The FCA has published draft guidance on a new power that allows it to move faster to remove regulatory permissions that are no longer being used by financial services firms.

ASIC extends relief for employee redundancy funds
ASIC has extended the relief for employee redundancy funds from the managed investment and associated provisions of the Corporations Act 2001 until 1 October 2024.

ASIC enforcement update January to June 2021
ASIC has today released its Enforcement Update for January to June 2021. During this period, ASIC continued to pursue its enforcement priorities for a fair, strong and efficient financial system for all Australians.

Investing and Trading

Fixed Income markets seek clues from housing data
Lynn Martin – ICE
Where to from here? That’s the question fixed income markets are asking, after the Federal Reserve’s highly anticipated Jackson Hole meeting held the status quo amid economic uncertainty with the Delta variant. Helping calm nerves, the Fed emphasized “a different and substantially more stringent test” for raising rates, distinguishing that action from the decision to scale back bond purchases.

Become a Day Trader Without Breaking the Bank
Sean Sechler – Benzinga
What if you had a job that allowed you to potentially make money from any location in the world, be your own boss and take advantage of opportunities to create earning potential? That may all be possible with day trading if you are willing to educate yourself and stick to a solid risk management strategy.

ECB to Count Risks in Setting Bond-Buying Pace: Decision Guide
Alexander Weber – Bloomberg
Officials may decide to slow down purchases in fourth quarter; Longer-term stimulus settings, economic outlook also in focus
The European Central Bank will have to decide on Thursday whether the recovery is strong enough to warrant an imminent slowdown in monetary stimulus.

Debt Markets’ Eerie Calm Echoes Eve of 2007 Credit Crisis; Junk bond spreads this tight are a reason for unease.
John Authers – Bloomberg
It’s Quiet — But Not Too Quiet
When markets get dull, it is an old standby for financial commentators to say that they’re too quiet. But sadly, even that might not be true this time. Or at least, it’s not true of the remarkably steady advance of the U.S. stock market.

Bitcoin and Meme Stock Traders Are Tired of ‘Buying the Dip’; Cryptocurrency, equity and SPAC fans use the phrase to rally support on social media when their investments sink. Does it actually work?
Claire Ballentine and Charlie Wells – Bloomberg
When Bitcoin plunged on Tuesday, El Salvador’s President Nayib Bukele tweeted a version of the three words that have become a mantra for meme stock traders: Buy the dip. This past year, those three words have ricocheted across social media any time a meme asset slumps. AMC shares in freefall? “Buy the dip,” Redditors insist. Crypto taking a slide? Cue a flock of “buy the dip” tweets. A celebrity SPAC is spiraling downward? Telegram groups alight with prods from hopeful buyers.

Investor Anger Emerges Over EQT’s $2.7 Billion Broken Promise
Rafaela Lindeberg – Bloomberg
A move by EQT AB’s partners to sell stock worth $2.7 billion a year earlier than stipulated in a lock-up agreement is sowing discontent among the private equity firm’s investor base.

Amazon aggregators are walking into the dragon’s cave; Investment funds snapping up many of the platform’s most popular merchants may find it a risky move
John Thornhill – FT
Any sober seller might think twice about doing business with a company whose founder was wedded to the idea that “your margin is my opportunity.” But many merchants, desperate to stay afloat as retail sales shifted online during the pandemic, have had little choice but to sell on Amazon’s vast marketplace. At last count, some 56 per cent of the units sold on Amazon’s platform were made by 1.9m third-party sellers.

Algo sniffers make a tough business tougher; FX spot is already a hard game for many LPs and the rise of skew sniping only makes things harder
Lukas Becker –
Passive algorithms have been one of the big success stories in spot foreign exchange in recent years. In the low-volatility environment, and even during the Covid-induced vol spike last year, market participants have been keen to use the algos to place bids and offers on electronic venues that are skewed, or discounted, to encourage other market participants to take you out of the risk.

‘Widowmaker’ Natural Gas Spread Doubles as Traders Eye Winter
Simon Casey – Bloomberg
A natural gas trade known as the widowmaker because of its volatility is once again in focus amid concerns about the level of U.S. inventories as the country get closer to winter.

Environmental, Social and Corporate Governance

Developing Standards for ESG
Investments and hedges linked to environmental, social and governance (ESG) factors are growing fast, seen by market participants as an effective and efficient way to meet climate and development objectives. With the COP26 climate change summit just weeks away, and with increasing numbers of countries aiming to achieve net-zero emissions in the coming decades, ESG-related transactions are likely to become even more prevalent.

As Climate Risk Goes Mainstream, When Will Mandatory Reporting Hit The US Market?
Felicia Jackson – Forbes
Extreme weather and its knock-on effect on the economy is an increasing concern for countries, companies and investors. The recent IPCC report warned that over 1.1 degrees of warning has already changed the climate and scientists warn that exceeding tipping points could triple the economic cost of climate change. The resulting economic instability makes climate risk a fundamental issue for central banks, regulators, investors and companies.

Janus Henderson Enters Crowded ESG Field With Five Active ETFs
Elaine Chen – Bloomberg
Asset manager launches three equity and two fixed-income funds; Investor allocations have jumped in past two years, firm says
Janus Henderson is joining the ESG rush in the $6.8 trillion exchange-traded fund market. The $428 billion asset manager is launching five actively managed ETFs that integrate sustainable investing criteria, according to a statement Thursday.

Zurich Insurance joins corporate squeeze on air travel to cut emissions; Europe’s second-largest insurer to expand use of video calls introduced during the pandemic
Ian Smith and Philip Georgiadis – FT
One of the world’s largest insurers Zurich has pledged to slash emissions from air travel, the latest big global employer to seize on working practices introduced during the pandemic to cut its carbon footprint.

World’s biggest ‘direct air capture’ plant starts pulling in CO2; Developer of Orca project in Iceland plans much larger facility in next few years
Leslie Hook – FT
The start-up behind the world’s biggest direct carbon capture plant said it would build a much larger facility in the next few years that would permanently remove millions of tonnes of carbon dioxide from the atmosphere.

Funds Go Green, but Sometimes in Name Only; Companies are turning their struggling funds green to capture the flood of cash into sustainable investments
Shane Shifflett – WSJ
Fund companies are rebranding their out-of-fashion investment offerings as green, hoping to grab a portion of the cash pouring into sustainable products. In some cases, the rebranding has been in name only.


Jane Street paid staff $1.3m as profits soared
Sarah Butcher –
If you’re a quant trader or a financial services technologist nowadays, you’ll probably have heard of Jane Street. You may also want to work there. Many try. Few succeed: the company says only a “small percentage” of applicants are accepted for interview. Jane Street’s interviews are notoriously demanding and the questions get harder with each round.

Ken Griffin’s $38 billion Citadel is outpacing rivals like Millennium and Point72 so far this year. Here’s how its funds are performing.
Bradley Saacks – Insider
Billionaire Ken Griffin’s $38 billion shop is up nearly 10% for the year through August in its flagship Wellington fund after returning 3.5% last month, people familiar with the fund tell Insider. The Chicago-based hedge fund is also up nearly 10% in its Tactical Trading multi-strategy fund, which pulls from equity and quant portfolio managers after being originally started as a high-frequency trading vehicle. The firm’s global fixed income business was flat for the month of August and is up 7.5% for the year.

Deutsche Bank Calls End of Honeymoon Phase With Remote Work
Jennifer Surane – Bloomberg
Deutsche Bank AG is calling the end of the honeymoon phase for employees’ relationship with remote work. A growing number of workers report feeling isolated from colleagues, Deutsche Bank said in a report to clients. Workers are increasingly likely to develop musculoskeletal problems due to inadequate remote-work setups. Nearly 40% of workers in the U.S. say they feel exhausted after a full week of virtual meetings.

Morgan Stanley Expands Its Search for Black Traders to London
Harry Wilson – Bloomberg
Wall Street bank launches program aimed at widening diversity; First hires will hit the trading floor in February 2022
Morgan Stanley is bringing its program to hire more Black and female traders and salespeople to London, hoping to replicate the success it’s had on Wall Street. The Morgan Stanley Experienced Professionals Program is aimed at recruiting Black or female candidates already working in other industries that might not have considered a career at a bank. The program has received more than 800 applications in the U.S. since opening last September and led the bank to hire about 70 staff across its business.

Goldman Sachs Ends Social Distancing, Free Food in London Office
Marion Dakers – Bloomberg
Wall Street bank will keep mask mandate and testing program; About half of staff already attending each day, memo says
Goldman Sachs Group Inc. is dropping social distancing rules in its London office and will return to full occupancy starting next week. With the “vast majority” of staff in the U.K. fully vaccinated, Goldman is already seeing about half of its London workers in the office each day, according to an internal memo seen by Bloomberg News.

Macquarie Plans Hybrid Work to Be Permanent for Its U.S. Staff
Nabila Ahmed – Bloomberg
Macquarie Group Ltd. told its staff in the U.S. that they can adopt a permanent flexible schedule, and asked unvaccinated employees to wear masks in the office, according to people with knowledge of the matter.

Hedge funds muscle in to Silicon Valley with private deals; Deal value smashes records while investment vehicles hunt for new ways to fire up drab returns
Joshua Franklin and Laurence Fletcher – FT
Hedge funds are elbowing their way into Silicon Valley at an unprecedented rate with a record-smashing $153bn worth of investments in private companies in the first six months of 2021.

Olivetree Financial rebuilds event driven team in London with hires from BTIG; Event desks are recruiting ahead of an anticipated uptick in UK M&A deals, with the UK seeing more than $300bn worth of deals to June 2021 on a rolling 12-month basis, according to Citi research.
Will Canny – The Trade
Olivetree Financial has added to its event driven team in London with two senior hires from BTIG. Both Greg Levett and David Abraham will be starting at the equities brokerage in September and their appointment follows the rehiring of Tim Caulton, who re-joined the firm in July.

RBC Capital Markets launches e-FX server and pricing engine in Singapore; The new platform will allow quicker execution, access to greater liquidity and increased price discovery across G10 currencies and emerging markets currencies.
Wesley Bray – The Trade
RBC Capital Markets is launching an electronic foreign exchange (e-FX) server and pricing engine based in Singapore to serve its clients across Asia-Pacific and the rest of the world.


China’s ‘quant’ traders fend off regulatory flak
Chinese hedge fund managers parried criticism of their trading techniques and market impact on Tuesday, a day after the country’s top securities regulator said the rapidly growing number of “quants” was a challenge to stock exchanges.

Nio’s Hong Kong Listing Faces Delay Into Next Year
Bloomberg News
Auto company faces HKEX scrutiny over user trust structure; Chinese EV maker planning sale of up to $2 billion U.S. shares
Chinese electric-car maker Nio Inc. may delay its planned Hong Kong listing to next year, according to people familiar with the matter. The U.S.-traded company filed for a second listing in Hong Kong in March, but isn’t likely to debut in the Asian financial hub before early 2022, the people said, asking not to be identified as the information is private. Nio has received queries from the Hong Kong stock exchange about aspects of its structure, including a user trust set up in 2019, the people said.

‘Reversing Gears’: China Increasingly Rejects English, and the World; A movement against Western influence threatens to close off a nation that succeeded in part by welcoming new ideas.
Li Yuan – NY Times
As a student at Peking University law school in 1978, Li Keqiang kept both pockets of his jacket stuffed with handwritten paper slips. An English word was written on one side, a former classmate recalled, and the matching Chinese version was written on the other.

Wealth Management Connect and southbound Bond Connect schemes to start in next few days, PBOC deputy governor says
An aggregate quota of 300 billion yuan (US$46.47 billion) in fund movement will be allowed under the Wealth Management Connect; Upcoming launch of southbound Bond Connect link will complement the northbound route launched in 2017
Enoch Yiu – South China Morning Post
Two long-awaited cross-border investment schemes – Wealth Management Connect and the southbound leg of the Bond Connect – will be launched in the next few days, Pan Gongsheng, deputy governor of People’s Bank of China, said on Thursday.


Apollo Co-Founder Leon Black Denies Ex-Model’s Epstein Allegations; Mr. Black says evidence will show that a purported 2008 private-jet trip from New York to Palm Beach, Fla., never took place
Miriam Gottfried and Mark Maremont – WSJ
Apollo Global Management Inc. APO -1.00% co-founder Leon Black in a new legal filing denies claims that he once flew an ex-girlfriend to Florida for a potential sexual encounter with the late sex offender Jeffrey Epstein, calling the allegation a “fantastical tale” dreamed up by the woman.

Why Art Struggled to Address the Horrors of 9/11; After the attacks, American culture became one of prohibitions. Then the Iraq War made it difficult to address Sept. 11 on its own terms.
Jason Farago – NY Times
Weeks after the towers fell, Jennifer Bartlett started painting. She had watched them collapse from her roof that September, and in her studio in the West Village she began depicting what almost no one wanted to depict, in her style of solid dots daubed into a grid of little squares. Toward the edges the dots are that distinctive cloudless blue, but most squares she overlaid with two dots, or three, the gray of the smoke superimposed on the red or saffron of the fireball. The dots became embers of exploded airplanes, or TV screen pixels (we had no smartphones then); they were papers raining down on the financial district and the Battery. Across two squares Bartlett placed a figure, stylized like in a cave painting, feet over head. A diver.

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