Hits & Takes
John Lothian & JLN Staff
JPX has set Tuesday, September 21, 2021 as the Go-Live date for their new J-Gate3.0 trading system. The system, JPX says, will expand market liquidity and future improve the reliability and convenience to investors, trading participants and other market users. — JPX
FINRA would like to remind you to beware of broker imposter scams. The UK’s FCA regularly offers updates on different scammers pretending to be legitimate brokers. FINRA warns you of the same thing, fraudsters creating fake websites using names and professional details of actual industry professionals who have no connection to the imposter sites. Recently the FBI and SEC also issued warnings about this problem. — FINRA
Also, FINRA is preparing to change the fingerprint process for broker-dealer firms and funding portals. The new process is expected to become effective in late September, although it is subject to the appropriate approvals. FINRA has selected Sterling, whom they describe as “an experienced and technically advanced fingerprint services vendor” to process and submit fingerprints to the Department of Justice. This will not only be more efficient, FINRA says, but also more cost-effective. — FINRA
Alas, there were no new benefactors to the JLN MarketsWiki Education GoFundMe campaign yesterday.
I try not to hate. I try to love instead. I want to say I hate liars, but that is not true. I hate lies. I find people who tell them to be evil. I am not talking about the white lies we tell people to avoid difficult situations. I am talking about people who make up bald-faced lies and share them with a straight face, or share them without blinking. This type of lying creates a lack of trust in our fellow citizens, especially around vaccines. If 50% of the people are not vaccinated, who can you trust? And who can you trust to tell the truth? This lack of trust is a drain on our economy, costing jobs, careers and more. We were given some great advice in the Judeo-Christian world, “Thou Shall Not Bear False Witness…” I wish more people would take this advice and follow it, not in the name of any religion, but rather in the name of being a responsible citizen and part of this world.
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 FIA on Tuesday released new data for the first half of 2021 that shows global futures and options trading reached 28.9 billion contracts in the first half of the year, up 32.1% compared to the first half of 2020.
FIA’s data also show that in the second quarter, 14.08 billion futures and options were traded on derivatives exchanges worldwide, down 5% from the record-breaking 14.83 billion contracts traded in Q1 2021, but up 34.4% from the second quarter of 2020.
FIA will hold a webinar TODAY at 10 a.m. Eastern Time to discuss the volume and open interest data in more detail. You can go here to register.~SR
Yra Harris – Open Outcry Traders History Project – Part 2
In the early days of the Chicago Mercantile Exchange, economic opportunity was phenomenal, said CME currency trader Yra Harris. “I used to say it was like Jed Clampett [the character in the old TV series “The Beverly Hillbillies” who struck it rich] shooting at the ground and hitting oil.” It was a booming business.
Harris said he recently read CME Chairman Emeritus Leo Melamed’s latest book, “The Man of the Futures,” and was glad Melamed took the high road in the book. “It really rises above whatever animosities you might have,” Harris said. “Even back in the ’70s, I would say to him, you are making more millionaires than Steinbrenner [the principal owner of the New York Yankees from 1973 through 2010]. The exchange was growing by leaps and bounds.”
Go-Live Date of J-GATE3.0
Osaka Exchange, Inc. and Tokyo Commodity Exchange, Inc. have been preparing for the launch of next-generation derivatives trading system (J-GATE3.0) to expand market liquidity and further improve reliability and convenience for investors, trading participants, and other market users. Based on the progress of our preparations, we hereby announce that J-GATE3.0 will go-live on Tuesday, September 21, 2021, which has been set as schedule.
***** Have you marked September 21 on your calendar yet?~JJL
Everything You Need to Know to Master Working From Anywhere; Juggling multiple workplaces is an essential skill. You need the right gear, setup, and beverages.
Areianne Cohen – Bloomberg
“My rule of thumb is to create environments that support the body in five or six different positions,” says body-conscious design expert Galen Cranz, professor emerita at the University of California at Berkeley and principal at Cranz Consulting. Start with two body positions at each office (four total): At home you can’t go wrong with “perching,” which is seating your rear on the edge of a bar-height stool with your weight on your legs. If your in-office setup is a typical desk and chair, add a standing option.
*****This morning I am working from the Granville Inn in Granville, Ohio. We stopped here to have dinner with a couple of old Purdue friends of mine who live here.
Deutsche Börse starts new online seminars for private investors in September
Deutsche Börse AG
Evening seminars “Your way to the stock market” take place from September to December; Seminars especially for women in October and November; Crypto seminars and “Sustainable investing” are new to the program
In autumn, Deutsche Börse will organize new online seminars for private investors through its Capital Markets Academy. The evening seminars from September will be followed by seminars especially for women from October. Lectures on crypto investments and sustainable investing are new to the program.
***** School is in starting in September at Deutsche Börse, but in the meantime continue to enjoy your summer.~JJL
Tuesday’s Top Three
Our top story Tuesday was the SEC’s “Opinion of the Commission” in the case between ABN AMRO Chicago LLC and Chicago Board Options Exchange, Inc. and C2 Options Exchange, Inc. Second was, for the third time in the top three, Bloomberg’s Wild Superyacht Secrets I Learned When I Became a Deckhand. And third was the New York Times’ Return to Office Hits a Snag: Young Resisters.
26,494 pages; 234,803 edits
Credit Suisse’s Archegos Inquiry Rips Bank’s Due Diligence
Marion Halftermeyer and Heather Perlberg – Bloomberg
Lender is set to release results of internal inquiry Thursday; Review finds bank faced huge exposure for very little revenue
Credit Suisse Group AG failed to properly monitor tens of billions of dollars of exposure that piled up while handling trades for Archegos Capital Management that generated relatively little revenue, according to people briefed on the findings of the bank’s internal inquiry.
How new CDC guidance could impede Wall Street’s return to the office
Lydia Moynihan – NY Times
Wall Street titans beating the “back-to-your-desks” drumbeat have just been dealt a potential setback by the Centers for Disease Control. On Tuesday, the national public health agency reversed its previous guidance on mask-wearing for vaccinated people — saying it now recommends face coverings in all public settings for anyone in a COVID hot spot.
Glencore Probe Yields Charges Against Another Former Trader; Anthony Stimler pleaded guilty to conspiring to pay millions of dollars in bribes to officials in Nigeria and elsewhere, court records show
Dylan Tokar – WSJ
A former Glencore PLC trader pleaded guilty Monday to what prosecutors described as a conspiracy to pay millions of dollars in bribes to officials in Nigeria and elsewhere in exchange for favorable contracts with a state-owned oil company. Anthony Stimler, a U.K. citizen who worked for a Glencore subsidiary on the commodity trading company’s West Africa desk, pleaded guilty to conspiring to violate the U.S. Foreign Corrupt Practices Act and conspiring to commit money laundering, court filings show. The guilty plea was reported earlier by Bloomberg News.
Eurex and Capitalab first in Europe to execute compression in equity index derivatives; Successful production run was completed on 20 July
Eurex is the first European exchange to support compression services in its listed equity index business, addressing the industry-wide challenge of high cost of underlying capital for trading derivatives. Capitalab is an established compression services provider which now offers compression of exchange-traded European equity index derivatives, starting with EURO STOXX 50 Index Options listed at Eurex.
Robinhood’s IPO to Test Loyalty of Retail Trading Legion it Helped Create; Despite having access to buy in to one of the buzziest trading events of the year, some individual investors are saying: No thanks
Caitlin McCabe – WSJ
Robinhood Markets Inc. has spent the better part of a decade trying to entice nonprofessional investors to fall in love with markets. This week, the company will face its first public test of whether those same traders love Robinhood back.
BGC employee accused of fraud admits he owes money to broker; Michael Viney says he owes company £14.7m but denies breaching contract or misleading authorities
Kadhim Shubber and Philip Stafford – FT
A BGC Partners employee in London has admitted he owes the company £14.7m after the US broker-dealer sued, alleging a years-long fraud. Michael Viney, a tax adviser who the company has suspended, said in a court filing that he was liable to repay BGC the cash but did not address whether he improperly received the funds.
DeFi could revolutionize finance. Can regulators do anything about it?
Chris Matthews – MarketWatch
More than a decade after its creation, bitcoin BTCUSD, +6.12% and other cryptocurrencies have failed to achieve the dream of a new, widely-used global currency free from the manipulations of central banks. Yet the burgeoning movement of decentralized finance, or DeFi, has the potential to shake the very foundations of central banking and financial regulation that has defined the U.S. financial system for more than a century.
Why Centralized Cryptocurrency Exchanges Are Seeing A Mass Exodus
Luis Aureliano – Benzinga
Centralized cryptocurrency exchanges are witnessing a considerable drop-off in user counts, as traders begin to seek more fertile ground. Overall the last few months, Binance has seen its user base gradually fall in response to a series of regulatory setbacks.
Binance Seeks New CEO, Headquarters Amidst Regulatory Probes
Olga Kharif and Joanna Ossinger – Bloomberg
The world’s biggest crypto exchange, Binance, is looking for a new chief executive officer as it’s retooling to address concerns of regulators from around the world, current CEO Changpeng “CZ” Zhao said in a news conference call Tuesday.
Why ‘Delisting’ Is a Worry in China-U.S. Market Mess
Julia Fanzeres – Bloomberg
The value of Chinese stocks listed on American exchanges has fallen sharply in recent days, as Beijing clamped down on its booming private-education industry shortly after reining in many of its biggest technology companies. Both moves came against a backdrop of rising tensions between China and the U.S. and discussions over whether one government or the other could force so-called delistings. The sudden drop in stock prices opened up another possibility: that some Chinese stocks could be delisted the old-fashioned way, by no longer being worth enough. But there are other pathways that could lead to a departure of some firms from U.S. exchanges. Here is a look at the possibilities and their potential impact.
Beijing’s threat to VIEs triggers Wall Street angst over China stocks; Investors worry crackdown on structure used by education companies could spread to other sectors
Tabby Kinder and Hudson Lockett, Ryan McMorrow, Michael Mackenzie and Harriet Agnew – FT
The value of Chinese shares on Wall Street has soared from just a few billion dollars to $2tn over the past two decades as investors turned a blind eye to the precarious legal structure underpinning many of the country’s biggest US listings.
The Fed should stop treating all money the same; As a cash pile mounts in the financial system, the central bank’s interest rate policy is working less well than it used to
Brendan Greeley – FT
Every afternoon at 12.45pm, the Federal Reserve does something that seems a little odd but has a perfectly rational purpose. It takes some of the $5.2tn in Treasuries it holds on its balance sheet, transfers ownership of some of them to money market funds and commercial banks, then credits itself with cash, in the same amount. The next day, the Fed reverses the transaction: it buys the Treasuries back. But this time the Fed loses a little money. It buys high, then sells low. On purpose.
Hot Housing Market Lets Banks Sell Mortgage Risk; Banks are now bundling and selling default risk on mortgage loans to yield-hungry investors
Julia-Ambra Verlaine – WSJ
A red-hot housing market is enabling banks to sell a new kind of bond that shares the risk of mortgage and loan defaults with institutional investors. Texas Capital Bank recently sold $275 million of securities to investors looking to cash in on the pandemic-fueled boom in home prices. The bonds are backed by short-term loans the bank makes to mortgage lenders. When those lenders’ borrowers default, the investors in the bonds effectively cover the loss.
US portfolio trading demand continues to rise, report finds; Research has found that portfolio trading volumes in the US fixed income markets increased 159% in the last two years.
Annabel Smith – The Trade
Portfolio trading has continued to gain significant traction in the US fixed income markets in the last two years, a Coalition Greenwich report has found. According to the report, portfolio trading volumes have risen 159% in the last two years as traders sought better efficiency and price improvement, with 72% of portfolio trades executed last year achieving price improvement over the prevailing mid-price.
As Infections Rise, C.D.C. Urges Some Vaccinated Americans to Wear Masks Again; In communities with growing caseloads, vaccinated and unvaccinated people should return to wearing masks indoors in public areas, health officials said.
Apoorva Mandavilli – NY Times
Revising a decision made just two months ago, the Centers for Disease Control and Prevention said on Tuesday that people vaccinated against the coronavirus should resume wearing masks in public indoor spaces in parts of the country where the virus is surging.
AstraZeneca Shot Brings No Increased Blood-Clot Risk After Two Doses
Deirdre Hipwell and Suzi Ring – Bloomberg
Rate of disorder after second shot was same as in unvaccinated; U.K. regulator reported 411 cases of clots including 71 deaths
AstraZeneca Plc’s Covid-19 vaccine doesn’t raise the risk of a rare blood clotting disorder after a second dose, suggesting people shouldn’t hesitate to get another one if they didn’t have trouble after the first.
Vaccine scandals lay bare Brazil’s enduring graft problem; Bolsonaro’s popularity is falling as corruption allegations threaten to swamp his administration
Bryan Harris – FT
Speaking to a local radio station this month, Brazilian president Jair Bolsonaro declared his government’s greatest achievement to date was “two and half years without corruption”.
US health officials perform U-turn on masks for vaccinated people; President Joe Biden considers vaccine mandate for federal employees because of the spread of Delta variant
Kiran Stacey and Peter Wells – FT
US public health officials have recommended that vaccinated people in areas with “substantial” levels of Covid-19 start wearing masks again in indoor public places, reversing guidance issued two months ago amid the rapid spread of the contagious Delta variant.
White Evangelicals Resist Covid-19 Vaccine Most Among Religious Groups; Nearly one-quarter don’t want shot, new study finds, and church leaders face hurdles persuading them
Ian Lovett – WSJ
More than six months into the country’s Covid-19 vaccination campaign, evangelical Christians are more resistant to getting the vaccine than other major religious groups, according to newly released data.
Workers’ Anxiety Grows as Covid Variant Casts a Shadow; Some see an undue rush by employers to get workplaces back to normal, whether by dropping precautions or imposing new rules.
Noam Scheiber – NY Times
When Kelly Harris, a personal grocery shopper in Steubenville, Ohio, was vaccinated in March against Covid-19, it was a huge relief. “I felt the weight of the world off my shoulders,” she said. Her sense of relief has turned to dread. After most supermarkets eased masking requirements in May, mask wearing plummeted in her area. She worried about bringing the virus home to her school-age children.
Covid Is Now a Crisis for the Unvaccinated
Aaron E. Carroll – NY Times
Case counts are rising, some hospitals are filling up, and the Centers for Disease Control and Prevention is again recommending universal masking in areas where cases are surging. But to suggest that Covid-19 is an escalating emergency in the United States is not quite right. The truth is that the vaccinated and the unvaccinated are experiencing two very different pandemics right now. If we don’t confront that, the nation can’t address either appropriately.
Exchanges, OTC and Clearing
ASX goes live with CME’s TriOptima compression service; The service allows banks to reduce their exposure and the size of their OTC derivatives portfolios by eliminating trades with mismatched cash flow dates.
Annabel Smith – The Trade
CME Group’s TriOptima has expanded the global reach of its compression service with the addition of the Australia Securities Exchange (ASX) to its network of trading venues. ASX will utilise its triReduce solution, allowing clearing banks to remove bilateral trades from mismatched cash flow dates, as well as, offset trade populations to reduce their exposure and the size of their over the counter (OTC) cleared derivatives portfolios.
TriOptima Goes Live with The Australian Securities Exchange (ASX) For triReduce Compression Services
TriOptima, a leading infrastructure service that helps to lower costs and to mitigate risk in OTC derivatives markets, announced today that the Australian Securities Exchange (ASX) has gone live with the triReduce compression service.
CME Group Inc. Reports Second-Quarter 2021 Financial Results
CME Group Inc. (NASDAQ: CME) today reported financial results for the second quarter of 2021. The company reported revenue of $1.2 billion and operating income of $675 million for the second quarter of 2021. Net income was $510 million and diluted earnings per share were $1.42. On an adjusted basis, net income was $589 million and diluted earnings per share were $1.64. Financial results presented on an adjusted basis for the second quarter of 2021 and 2020 exclude certain items, which are detailed in the reconciliation of non-GAAP results.1
Micro Index Futures: Amendment to the “Product Specific Supplements”
The Executive Board of Eurex Frankfurt AG took the following decision with effect from 1 September 2021:
Amendment to the “Product Specific Supplements” 56 and 57 for Micro Futures on the DAX®, EURO STOXX 50® and SMI® indices
Deutsche Börse Group with good second quarter in line with annual expectations
Deutsche Börse Group
Deutsche Börse Group has published its half-yearly financial report for 2021. The link to the report and related links can be found at the bottom of the email.
ICE Enhances Mortgage Prepayment Model With Data From ICE Mortgage Technology; Leverages transaction-based residential mortgage rates from ICE Mortgage Technology
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of data, technology and market infrastructure, today announced it has enhanced its mortgage prepayment model with daily residential mortgage rates from ICE Mortgage Technology. This represents the first joint product that leverages anonymized transaction data from ICE Mortgage Technology and ICE’s expertise in identifying and creating new alternative data offerings.
NYSE Pillar Options Migration: Arca Options Pillar Cert, Proprietary Market Data Specifications, New Migration Resources
NYSE Arca Options’ Pillar Certification environment (“Pillar Cert”) is available for testing and includes most outright, complex and risk control functionality, in addition to the below recently added items listed below.
Nasdaq, Inc. Prices EUR615 Million Senior Notes Offering
Nasdaq, Inc. (the “Company”) (Nasdaq: NDAQ) today announced that it priced a public offering of EUR615 million aggregate principal amount of 0.900% senior notes due 2033 (the “Offering”). The Company expects to use the net proceeds from the Offering, together with available cash balances, to refinance its existing 1.75% Senior Notes due 2023. The Offering is expected to close on July 30, 2021, subject to customary closing conditions.
New Product Summary: Initial Listing of the Adjusted Interest Rate Russell 2000® Total Return Index Futures, Adjusted Interest Rate Russell 1000® Total Return Index Futures, Adjusted Interest Rate Nasdaq-100 Total Return Index® Futures, and Adjusted Interest Rate Dow Jones Industrial AverageTM Total Return Index Futures Contracts
Initial Listing of the Adjusted Interest Rate Russell 2000® Total Return Index Futures, Adjusted Interest Rate Russell 1000® Total Return Index Futures, Adjusted Interest Rate Nasdaq-100 Total Return Index® Futures, and Adjusted Interest Rate Dow Jones Industrial AverageTM Total Return Index Futures Contracts
Product Modification Summary: Reduction of Block Trade Minimum Threshold for the Iron Ore 62% Fe, CFR China (TSI) Futures and Average Price Option Contracts
To Clearing Member Firms; Back Office Managers
Reduction of Block Trade Minimum Threshold for the Iron Ore 62% Fe, CFR China (TSI) Futures and Average Price Option Contracts
Product Modification Summary: Expansion of the Listing Schedule of the North European Hot-Rolled Coil Steel (Argus) Futures Contract
Expansion of the Listing Schedule of the North European Hot-Rolled Coil Steel (Argus) Futures Contract
Reduction of Block Trade Minimum Threshold for the Iron Ore 62% Fe, CFR China (TSI) Futures and Average Price Option Contracts
Expansion of the Listing Schedule of the North European Hot-Rolled Coil Steel (Argus) Futures Contract
SGX Orb Awards to showcase Asia’s progress on sustainability
Special category to spotlight initiatives that support a more sustainable future; Fourth edition of awards part of SGX’s efforts to foster financial education, empower investors
Singapore Exchange (SGX) today launched the fourth edition of its annual SGX Orb Awards to recognise excellence in financial journalism and content. Extending the theme of “Connecting Perspectives and Inspiring Conversations,” this year’s special category will spotlight initiatives that support a more sustainable future.
Making Science registers its first fixed income programme on MARF
Making Science Group has registered its first fixed income securities issuance programme for a total amount of 30 million euros on BME’s fixed income market, MARF. With this new financing mechanism, Making Science will diversify its financial sources by issuing medium and long-term bonds in a flexible manner over the next 12 months, whose amortization and coupons, fixed or variable, will be determined at the time of the launch of each of the individual issues to be placed. The funds obtained through the bonds will be used mainly to finance new acquisitions of domestic and international companies that will serve to reinforce Making Science Group’s growth strategy, as well as to invest in R&D.
Bioarag debuts on the capital markets with a green bond programme on MARF
Biodiésel de Aragón (Bioarag) has registered its first fixed-income securities issuance programme for a total amount of 10 million euros on BME’s fixed income market, MARF. This new continuous issuance programme will allow Bioarag to access new funders by issuing medium- and long-term bonds over the next 12 months. Bioarag will structure the bonds to be issued under the Programme to qualify as “green instruments” in accordance with ICMA Green Bond Principles and following the second party opinion granted to the Programme on July 1st by Serfiex.
JPX to Achieve Carbon Neutrality by 2024 through Self-Generated Energy
Japan Exchange Group, Inc. (JPX) today announces that, to combat climate change, it will switch 100% of electricity consumed by the Group to renewable energy by FY2024 and aim for carbon neutrality across Group companies on the same timeline. For details, please see the below press release.
Japan Exchange Group, Inc. and Consolidated Subsidiaries Consolidated financial results for the three months ended June 30, 2021 (Based on IFRS), unaudited
Overview of Earnings for Q1 FY2021
Japan Exchange Group, Inc.
Blockchain firm Fireblocks raises $310 million, valuation at $2 bln
Gertrude Chavez-Dreyfuss and Sohini Podder – Reuters
Fireblocks, a platform that allows banks and other financial institutions to store, move and issue cryptocurrencies, said on Tuesday it raised $310 million in fresh capital from investors, boosting its valuation to $2 billion.
Robinhood Shelled Out $30 Million to Hire This Ex-Lawmaker – Inside Crypto’s Regulatory ‘Revolving Door’
Ya?l Bizouati-Kennedy – Banking Rates
The crypto world is evolving at lightning speed and regulatory frameworks are trying to keep up the pace. Because of loopholes, ever-evolving laws and lack of international regulation, this has led to some confusion and legal troubles for a slew of new firms involved in cryptos. In turn, many are increasingly finding a way around it: Hiring former regulators to help them keep the law on their side as much as possible.
Robinhood Under Investigation for Finra Registration Violation
Danny Nelson – Coindesk
Robinhood Financial is facing an investigation over CEO Vlad Tenev’s failure to register with the Financial Industry Regulatory Authority , one of Wall Street’s top regulators, the online broker disclosed Tuesday in regulatory filings.
Broadridge expands data offering for asset managers with Snowflake; The partnership will enable asset management clients to better consolidate and analyse their trading and portfolio data.
Annabel Smith – The Trade
Broadridge Financial Solutions has expanded its data suite for asset management clients with a partnership with cloud solutions provider Snowflake. The integrated platform offered by Snowflake gives users access to data storage and processing and analytics solutions via the cloud.
Bloomberg rolls out daily credit risk indicator tool; Credit risk indicator at Bloomberg incorporates its evaluated pricing data to provide clients with early warnings on rating downgrades and defaults.
Hayley McDowell – The Trade
Bloomberg has rolled out a daily credit risk indicator tool aimed at providing firms with early warnings on rating downgrades and defaults ahead of traditional analysis. Known as Market-Implied Probability Default (MIPD), the indicator incorporates Bloomberg’s evaluated pricing (BVAL) to estimate fixed income market sentiment and reacts to changing market and issuer conditions.
Hackers Pose as Flirty Aerobics Instructor to Target Employees
Ryan Gallagher – Bloomberg
Iranian group said to be behind attacks on defense companies; ‘Marcella Flores’ sent messages, photos to try to dupe worker
A hacking group aligned with Iran’s government has waged a years-long campaign to steal data from American defense contractors, even posting as a flirtatious aerobics instructor from the U.K. in an attempt to dupe an employee, according to cybersecurity researchers.
Biden warns cyber attacks could lead to a ‘real shooting war’; US president’s remarks follow breaches that paralysed critical services
Katrina Manson – FT
Joe Biden has warned that cyber attacks could escalate into a full-blown war as tensions with Russia and China mounted over a series of hacking incidents targeting US government agencies, companies and infrastructure.
Many ransomware attacks go unreported. The FBI and Congress want to change that.
Gerrit De Vynck – The Washington Post
Congress, urged on by the nation’s top law enforcement agencies, is pushing to require companies to report ransomware attacks in an effort to help the government understand the scope of the threat.
Cyber Daily: U.S., Chinese Officials Spar Over Cybersecurity
The Wall Street Journal
Officials from the U.S. and China met on Monday to discuss ways to set terms for responsible management of the relationship between the two countries, but the meeting turned testy over cybersecurity and other issues, The Wall Street Journal reports.
Machine Identity Lies at the Core of Cybersecurity
Shoeb Ahmed – Security Boulevard
The biggest change we can witness in the digital world is that information has become a precious asset. In the physical world, it was never a problem because the communication used to happen directly between speaker and listener. But now it travels through digital means all across the globe and that makes it prone to breaches.
A Fed-issued digital dollar could print money — for the people
Sheila Bair – Yahoo Finance
More and more informed observers are asking why, after 13+ years of the Federal Reserve’s increasingly aggressive monetary interventions, the benefits remain so skewed toward Wall Street over Main Street. The answer is simple: follow the money. Using its traditional tools, the Fed pumps money into the financial system, hoping it will make its way into the broader economy. But the Fed can’t control where the money goes or who financial institutions decide to lend to, and clearly, the primary beneficiaries have been investors and the ultra-rich.
Mastercard to launch new crypto and blockchain program
Teuta Franjkovic – Coin Rivet
American card services corporation Mastercard Inc says it wants to enable its users to make buy, spend and hold cryptocurrencies in a more convenient way. Dubbed ‘Start Path’, this global start-up engagement program plans to work with digital assets, blockchain and cryptocurrency companies with the goal of growing digital asset technology.
Binance founder willing to go, as pressure mounts
Krisztian Sandor and John O’Donnell – Reuters
Binance founder Changpeng Zhao said he was willing to step down whenever he finds a successor who can do a “better job”, as one of the world’s biggest cryptocurrency exchanges, under pressure from regulators around the world, sought to reinvent itself.
Rise of Digital Yuan Brings New Challenges for China Tech Giants; Tencent and Ant Group spent a decade digitizing money and payment networks. Now the government wants a larger role.
Zheping Huang – Bloomberg
For the past decade, private companies in China have led the way in the digitization of money, with Tencent Holdings Ltd. and Ant Group Co. setting up enormous private payment networks and cryptocurrency-mining operations providing the fuel for the global Bitcoin boom. Their emergence was a break from Chinese financial history, which has been marked by aggressive centralized control. Things may now be reverting to the norm.
Crypto firm Bullish starts pilot as bets on DeFi accelerate; Goldman Sachs applies to launch ETF for the decentralised finance market
Eva Szalay – FT
Bullish Global, the cryptocurrency project backed by several billionaires, has begun a private pilot of its much-anticipated trading network as Wall Street steps up its interest in decentralised finance.
Now is not the time for central bank digital currencies; Stephen Cecchetti and Kim Schoenholtz argue against the need for a “universal” CBDC.
In a recent column, the FT’s Martin Wolf called for central banks to introduce their own retail digital currencies now. While we share several of Martin’s concerns about the importance of faster and cheaper payments, financial inclusion, and limiting private digital currencies, we could not disagree more with his argument for central bank digital currencies (CBDC). In fact, we hope that central banks will not introduce digital currencies that are universally available, supplied without limit in exchange for bank deposits, and bear interest — what we call a “universal” CBDC.
Cryptocurrencies are ‘funny money,’ that ‘mirrors’ Wall Street abuses, says Senate Banking Chairman
Chris Matthews – MarketWatch
Senior Democrats in Congress again to telegraphed their skepticism of cryptocurrencies and digital-asset technology on Tuesday, when Chairman Sherrod Brown of Ohio said that the growing economy of digital assets are putting “Americans hard-earned money at risk,” during a Senate Banking Committee hearing Tuesday.
Warren urges Yellen to crack down on cryptocurrency
Kellie Mejdrich – Politico
Sen. Elizabeth Warren is pressing Treasury Secretary Janet Yellen to rally federal agencies to develop a “coordinated and cohesive regulatory strategy” on cryptocurrencies, which the Massachusetts Democrat says pose growing risks to the financial system.
Monsanto Fined For Illegally Keeping Tabs on Politicians, Media
Stephanie Bodoni – Bloomberg
Company fined $472,000 for tracking and ranking 200 people; List ranked journalists and politicians by influence
Bayer AG’s Monsanto was fined 400,000 euros ($473,000) for violating French data protection rules by keeping tabs on more than 200 people, including politicians and journalists it was looking for help to lobby in its favor in European debates on pesticides and genetically-modified organisms.
Dividend-Tax Trades Were Criminal Act and ‘Blatant’ Money Grab, Court Says
Josefine Fokuhl and Karin Matussek – Bloomberg
Verdict followed appeal in first court case in Bonn last year; Controversial dividend paybacks likely cost taxpayers billions
The Cum-Ex trading practice blamed for costing German taxpayers billions of euros was illegal and can be punished as crimes, the country’s top criminal court ruled. In the first case about the controversial tax strategy to reach the top tribunal, the Federal Court of Justice backed the conviction last year of two former London investment bankers, according to the verdict Wednesday in Karlsruhe. The judges also upheld the seizure of 176 million euros ($208 million) from M.M. Warburg Group, the profit that the private lender made from these transactions.
Court Documents Reveal Ex-Glencore Trader’s Political Bribes in Nigeria
William Clowes – Bloomberg
Anthony Stimler wired money for payments to secure oil deals; Prosecutors describe multiple transfers to persuade NNPC
A former Glencore Plc trader who said he was part of a bribery scheme to win oil contracts from Nigeria transferred $300,000 of company funds in 2014 to an intermediary who’d requested the cash to benefit a senior government official in the nation’s elections, U.S. court filings show.
HSBC accused of ‘blatant and indefensible’ forex fraud by ex-client; Court hears closing arguments in 7-week trial between bank and currency manager ECU
Eva Szalay and Jane Croft – FT
London-based currency traders at HSBC would routinely front run client orders in a bid to make extra profits as part of a “blatant and indefensible” fraud, lawyers for currency manager ECU Group claimed at London’s High Court.
ESMA publishes MiFID II/MiFIR Annual Review Report on RTS 2
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today published the MiFID II/MiFIR Annual Review Report under Commission Delegated Regulation (EU) 2017/583 (RTS 2). ESMA proposes to the European Commission to move to stage three of the phase-in for the transparency requirements, for both the average daily number of trades threshold used for the quarterly liquidity assessment of bonds, and for the pre-trade size specific to the instrument threshold for bonds.
Beware of Broker Imposter Scams
While impersonation scams are certainly not new, there are surprising new variants every day. In a February 2021 report, FINRA observed an increase in cyber-related incidents, including fraudsters creating fake websites using the names and professional details of actual industry professionals (who have no connection to the imposter sites). And more recently, the FBI and Securities and Exchange Commission issued a warning to investors about this problem.
FINRA Fingerprint Process Change; VENDOR TO PROCESS FINGERPRINTS TO FBI FOR FINRA
FINRA is close to implementing a new fingerprint process for broker-dealer firms and funding portals that is expected to become effective late September, although it is subject to the appropriate approvals. FINRA has contracted with Sterling to be its designated fingerprint provider. Sterling, an experienced and technically advanced fingerprint services vendor, will process and submit fingerprints to the Department of Justice (FBI) for broker-dealer firms and funding portals. Benefits of this process change include state-of-the-art technology, processing efficiencies and reduced pricing for firms.
FCA publishes Decision Notice against Markos Markou for lack of oversight
The FCA has today published a Decision Notice in respect of Markos Markou, the Director and Chief Executive of a mortgage broker firm, Financial Solutions (Euro) Limited (FSE). Mr Markou has referred the Decision Notice to the Tribunal.
FCA consults on proposals to boost disclosure of diversity on listed company boards and executive committees
The FCA has launched a consultation on proposals to improve transparency for investors on the diversity of listed company boards and their executive management teams.
SEC Closely Scrutinizing Green Investments and Climate-Related Disclosures
Lisa Whitley Coleman – EHS Daily Advisor
Melissa Hodgman, acting director of the Securities and Exchange Commission’s (SEC) Enforcement Division, indicated that the SEC expects to look more closely at “green” investments in the future. Her comments were made at a Managed Funds Association webcast, according to Law 360.
Investing and Trading
Should Investors Have Multiple Brokerage Accounts?
Ellen Chang – U.S. News
While some investors appreciate the simplicity of keeping all of their investment funds under one account, there are many reasons to branch out to different brokerages.
Rio Tinto Pays $9.1 Billion Dividend as Profit Hits Record
Thomas Biesheuvel and James Thornhill – Bloomberg
Rio Tinto Group, the world’s biggest iron ore miner, reported its highest-ever interim profit and will pay $9.1 billion in dividends as the company and its global rivals cash in on this year’s commodities rally.
Robinhood IPO’s large retail allotment has Wall Street braced for volatility; Brokerage to set aside up to 35% of shares to app customers in break from the norm
Madison Darbyshire and Eric Platt – FT
The decision by retail brokerage app Robinhood to reserve an unusually large stake in its initial public offering this week for its own customers has money managers girding for a volatile trading debut.
Retail investors to drive $1.5tn push towards bespoke index funds; Vanguard, JPMorgan, BlackRock and Morgan Stanley have all done deals to bolster their direct indexing offerings
Michael Mackenzie and Billy Nauman and Chris Flood – FT
The biggest names in asset management are preparing for a major shift to an era when investors demand customised equity portfolios that have traditionally been the preserve of wealthier clients.
Top European investor says Chinese regulatory crackdown is ‘noise’; DWS chief says asset managers must take long-term view when doing business in China
Harriet Agnew – FT
The chief executive DWS, one of Europe’s largest investors, has dismissed the escalating regulatory crackdown in China as “noise”, arguing the asset management industry should take a long-term view in a country it is betting will deliver vast profits.
Will the Delta Variant Wreck the Recovery? Probably not. But there are potential challenges with both supply and demand that put the economy at risk.
Neil Irwin – NY Times
The good economic news, when it comes to the ascendant Delta variant of the coronavirus, is that it puts the economy at risk in only two ways. The bad news: They are supply and demand.
Environmental, Social and Corporate Governance
U.K. Targets 40% Women and More Racial Diversity in Boardrooms
Silla Brush – Bloomberg
Financial Conduct Authority plans ‘comply or explain’ goals; Watchdog hopes data-sharing will encourage firms to act
London-listed companies should have at least 40% women and one non-White director in their boardroom, under the most detailed plans yet from British financial regulators to increase diversity in corporate life.
Pension Funds Talk Green While Holding Billions in Polluter Stocks; The 10 largest U.S. public funds still have a lot of money invested in the biggest corporate contributors to global warming.
Tim Quinson – Bloomberg
The 10 largest U.S. public pension funds still have a lot of money invested in the biggest corporate polluters.
Spain Plans to Issue Debut Green Sovereign Bond in September
Jeannette Neumann – Bloomberg
Spanish Treasury is targeting a 20-year maturity for bond; Spain has identified EU13.6b worth of projects to finance
Spain will sell its inaugural green bond in September, joining a flurry of other governments making debuts to fund environmental projects this year. The Spanish Treasury’s first such bond will have a 20-year maturity, Economy Minister Nadia Calvino said on Wednesday. She didn’t specify how much it plans to raise, though the government has identified 13.6 billion euros ($16.1 billion) of projects to finance with green debt, such as sustainable transportation and waste water treatment.
Barclays Gets Boost From Dealmaking
Stefania Spezzati – Bloomberg
Biggest quarter for banking fees since Staley took charge; Dividends, buybacks as British lender sees economy improving
Barclays Plc’s investment bankers brought in a record haul as the booming deals market extended through the second quarter, offsetting more muted results in trading and helping the group to deliver improved profit and fresh shareholder payouts.
Deutsche Bank Doubles Down on Traders as Cost Target Scrapped
Steven Arons – Bloomberg
Lender lifts outlook after weathering fixed-income slump; CEO Sewing is approaching final stretch of his turnaround plan
Deutsche Bank AG’s traders kept Chief Executive Officer Christian Sewing’s overhaul alive when negative interest rates eroded income from lending. Now the CEO is counting on them to carry him to the finish line.
Deutsche Bank Posts Surge in Profit but Faces Headwinds; Frankfurt-based lender reports drop in revenue as booming client activity during the pandemic slowed
Patricia Kowsmann – WSJ
Deutsche Bank AG’s results signaled that the bumper profits accruing to its investment bank may have peaked, exposing the deeper challenges the lender faces two years into a strategic makeover.
Santander Set to Beat Profitability Goal on Pandemic Rebound
Charles Penty – Bloomberg
U.S., U.K. businesses are boosting bank’s earnings recovery; Plunge in provisioning costs bolsters Spanish lender’s results
Banco Santander SA said it’s on track to beat a key profitability metric for the year with earnings from the U.S. and U.K. fueling the Spanish lender’s resurgence after historic losses linked to the pandemic.
Deutsche Bank ditches cost-cutting target after bumper quarterly performance; Germany’s biggest lender reports best run of profits in almost a decade
Olaf Storbeck – FT
Deutsche Bank has ditched a cost-cutting target central to chief executive Christian Sewing’s effort to revive the fortunes of Germany’s biggest lender, telling shareholders that the transformation was now “significantly advanced” after reporting its best run of profits in almost a decade.
Man Group posts tenfold gain in performance fees; Hedge fund’s ‘blowout’ results signal a change in fortune for wider sector
Laurence Fletcher – FT
Man Group, the world’s largest listed hedge fund manager, reported first-half performance fees 10 times higher than a year ago, in the latest sign of the industry’s robust rebound from the coronavirus pandemic.
BNY Mellon’s first active ETF to invest in international equities; The Concentrated International ETF will be fully transparent, disclosing its portfolio holdings each day
Jackie Noblett – FT
BNY Mellon Investment Management’s first active exchange traded fund will be an international equity product, the group has disclosed. The asset manager believes it can capitalise on strong demand and product gaps in global equities with one of its specialist managers, executives said.
Former Standard Life global equity trading head joins Tourmaline in the US; Latest senior hire at Tourmaline joins the firm from Liquidnet after previously working in senior trading roles at Standard Life Investments and Aberdeen Standard Investments.
Hayley McDowell – The Trade
A former global head of trading at Standard Life and 15-year buy-side trading veteran has joined Tourmaline to build out the outsourced trading provider’s Boston office in the US. Stephen Berte has been appointed managing director at the firm, tasked with deepening its connection with the buy- and sell-side community in Boston, Tourmaline confirmed.
Analysis – No gain without pain: Why China’s reform push must hurt investors
Tom Westbrook – Reuters
Carnage in China’s financial markets signals the beginning of a new era, investors say, as the government puts socialism before shareholders and regulatory changes rip apart the old playbook.
Japan’s Olympic Medal Haul Lifts a Group of Unusual Stocks
Gearoid Reidy and Shoko Oda – Bloomberg
Shares with links to medal winners outperforming in Tokyo; Japan has 11 gold medals so far including judo, table tennis
With Japan’s Olympic team outperforming all expectations at the Tokyo Games so far, some unlikely stocks in the host nation are seeing the benefits. In an Asian stock market pummeled by a Chinese regulatory crackdown this week, Japan’s haul of 11 gold medals is lifting everything from real estate stocks to the shares of seafood vendors with the most tenuous of links to the medalists. Park24 Co. — a car park and vehicle-sharing operator — is up over 6% this week after Japan’s judo team, many of them employees of the company, won every men’s gold medal so far as well as multiple women’s medals.
How China Is Trying to Fight Back Against Sanctions
China has created new legal tools to retaliate against sanctions imposed by the U.S. and some of its allies over issues ranging from human rights to national security. This arsenal could put global firms in the cross-hairs of a conflict between the world’s two largest economies. So far, however, China has shown a desire to avoid escalation.
CFA Pass Rate Plummets to Record Low of 25% for Level 1 Exam
Katherine Doherty – Bloomberg
The 58-year low dwarfs decade’s average pass rate of 42%; Some candidates may have suffered from pandemic disruptions
The pass rate for the Chartered Financial Analyst Level I exam administered in May was the lowest since testing began in 1963. Twenty-five percent of applicants passed the latest test, down from 44% for those who sat for the February examination, according to the CFA Institute’s website. The 10-year average pass rate is 42%.
The RV Vacation Meets Glamping as More Americans Embrace Outdoor Trips; A handful of glamping retreats around the U.S. now cater to Outdoorsy’s RV renters looking for a little coddling around the campfire
L. Wright – WSJ
IN THE GROWING field of outdoor hospitality, a new collaboration is giving the often folksy #vanlife crowd a luxe way to escape. Collective Retreats, a company that’s created glamping compounds in unexpected places such as Governors Island in New York Harbor, has teamed up with Outdoorsy, often referred to as the Airbnb of RV rentals.