Crisis memory, geopolitics and the risks of financial contagion

Jun 21, 2024

First Read

Hits & Takes
John Lothian & JLN Staff

When Jack A. Wing died in 2011, I realized the industry was losing some of the pioneers of the financial futures era. Wing founded the masters program in financial engineering at the Illinois Institute of Technology, where he would later teach. This was a key element giving financial futures some local academic heft to support the markets. In response to Wing’s death, John Lothian News started The History of Financial Futures video project.

Our original vision was to create a series of videos telling the global financial futures story in the hopes of getting it published on public television in the U.S. We were ambitious and naive, probably more of the latter.

We embarked on telling the story of financial futures in the U.S. based on a time line starting with Bretton Woods and moving forward from Nixon’s dropping of the U.S. dollar peg to gold.

At the same time, we hired John Parry, who had then just retired from Rostron Parry and was the first editor of FOW, to interview the heads of exchanges that became LIFFE, Eurex, and the Swiss Exchange

This project was put aside when we were hired to do paid video projects. When I picked it up again in 2019, that is when we conceived and launched The Open Outcry Traders History Project, which begot The Path to Electronic Trading video series.

Despite all the videos we have shot for these series, there is one story that has escaped us to date: the rich and deep history of trading in Amsterdam. The modern era of trading in Amsterdam started just a year after the launch of the 30-year bonds at the CBOT and four years before the start of trading in the S&P 500 futures at the CME.

Because of this history, and our missing it, I am headed to Amsterdam to talk to people about supporting an effort from John Lothian Productions to create a video series about The History of the Modern Era of Trading in Amsterdam (1978-Present). So far on my trip, as I have learned more about Amsterdam, with each layer of the onion, or even better, tulip bulb, that I have peeled back, I have learned more that convinces me this is the right thing to do.

Henry Schwartz of Cboe Global Markets shared on LinkedIn that a single stock hit double-digit millions for volume for the first time yesterday, with 10.6 million contracts traded. What stock was it? Nvidia, of course. It owns five of the top 20 volume days of single stock volume for stocks.

Thank you to Joe Guinan and his team at Advantage Futures, as well as CQG, for their hospitality in London yesterday. I appreciate being invited to watch the UK play Denmark in a Euros match.

I have a slightly embarrassing story to tell about attending the gala. I show up, I am wearing tux pants, tux shirt, bow tie, cummerbund and a Black Watch dinner jacket reflecting my past participation in the Kilt Challenge. I see the most interesting man in the world, Pat Kenny, who two years earlier had been the Kilt Challenge participant, and he is wearing the same outfit, though his Black Watch jacket was more subdued. Now, this was not the embarrassing part, as most of the men at the event were all wearing the same outfit. What was embarrassing was when I walked up to Pat and he was talking to a former Patsystems colleague who saw that I was wearing my IDX name tag and said, “The one guy who everyone at the party knows wears a name tag.” I put my name tag in my pocket.

What am I reading right now? I am reading “Daddy’s Girl” by Scott Lothian. Scott is my older brother, father of Patrick, our head of videography, and this is his third book. He has me engrossed in this story.

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

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Our most read stories from our previous edition of JLN Options were:
Wall Street’s $5.5 Trillion Triple-Witching to Test Market Calm from Bloomberg.
Vanishing short-sellers have helped push stocks to record highs. But beware a sharp negative reversal, JPMorgan says from Markets Insider.
Options Contracts Needed in Crypto Markets from MarketsMedia. ~JB

Subscribe to the JLN Options Newsletter HERE (it’s free).

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In China, AI transformed Ukrainian YouTuber into a Russian
Alessandro Diviggiano – Reuters
Olga Loiek, a University of Pennsylvania student was looking for an audience on the internet – just not like this. Shortly after launching a YouTube channel in November last year, Loiek, a 21-year-old from Ukraine, found her image had been taken and spun through artificial intelligence to create alter egos on Chinese social media platforms. Her digital doppelgangers – like “Natasha” – claimed to be Russian women fluent in Chinese who wanted to thank China for its support of Russia and make a little money on the side selling products such as Russian candies.
/jlne.ws/3z5S36A

****** The deepfake advertisements selling hemorrhoid cream in Bumpass, Virginia are the most invasive ones.

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The Purpose of Journalism Is to Get the Story; People love and need real reporting, but reporters have decided their job is something else entirely.
Peggy Noonan – The Wall Street Journal (opinion)
We are talking about journalism this week, about newspapers and warring newsrooms and lost readership and what to do. At bottom, though this gets lost, all the arguments are really about what journalism is. Here is what it is. It is a dark night on a vast plain. There are wild sounds-the hiss of prehistoric cicadas, the scream of a hyena. A tribe of cavemen sit grunting around a fire. An antelope turns on a spit. Suddenly another caveman runs in, breathlessly, from the bush. “Something happened,” he says. They all turn. “The tribe two hills over was killed by a pack of dire wolves. Everyone torn to pieces.”
/jlne.ws/3xhy1Wt

******Looks like journalism has evolved from “Something happened” to “Something happened, and here’s why that’s problematic for your intersectional identity group.” I guess those prehistoric cicadas were onto something with all that hissing – they were just practicing their hot takes for Twitter. ~JJL

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Trading Technologies wins Best Algo Trading Solution for TT platform at WatersTechnology Asia Awards 2024
Trading Technologies International, Inc.
Trading Technologies International, Inc. (TT), a global capital markets technology platform provider, announced that its TT platform won the award for Best Algo Trading Solution in the WatersTechnology Asia Awards 2024. The winners were announced yesterday at an awards ceremony and reception in Hong Kong. This marks the firm’s third award this year for excellence in its TT platform, which handled 2.2 billion transactions in 2023. TT won the award for Best Listed Derivatives Trading Solution both this month at the TradingTech Insight USA Awards 2024 and in March at the TradingTech Insight Europe Awards. Last year, Trading Technologies won the Waters Rankings Award for Best Algorithmic Trading Provider, and the TT platform was named Derivatives Trading System of the Year at both the FOW Asia Capital Markets Awards and the FOW International Awards.
/jlne.ws/4caDtJM

******* One wonders what TT does with all this lucite. ~JJL

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Thursday’s Top Three
Our top story Thursday was Hedge Fund Talent Schools Are Looking for the Perfect Trader, from Bloomberg. Second was the video of Rama Pillai’s Comments at FIA IDX 2024 FFK Gala that John Lothian took at IDX in London. Third was The TRADE’s Q2 Magazine: Now available online!, the latest edition of The TRADE Magazine.

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Lead Stories

Crisis memory, geopolitics and the risks of financial contagion; The question of how well we can deal with shocks in our future is not at all clear
Gillian Tett – Financial Times
If another financial shock erupts in the next decade, how well would we curb contagion? If you pitched that question to western regulators right now, their answer would probably be “pretty well”. After all, in the 15 years since the 2008 great financial crisis, western governments have poured huge resources into learning the right lessons, crafting new regulations, monitoring compliance and fostering culture change. And last year’s collapse of Silicon Valley Bank suggests that this has partly worked. Yes, regulators and SVB executives made terrible mistakes before the collapse, by failing to see the scale of interest rate risk. But contagion was contained without sparking a wider crash. Hooray.
/jlne.ws/4erjmst

SEC Chair Gensler Says UK, Other Markets Should Move to Faster Currency Settlement
Lydia Beyoud – Bloomberg
The head of the Securities and Exchange Commission is encouraging the UK and others to shorten the settlement time for currency trading to better align their markets with those in Asia and North America. The UK is debating a transition to next-day settlement, known as T+1, for securities transactions, with its Treasury calling for the shift by the end of 2027. But SEC Chair Gary Gensler is nudging the UK to go bigger by adding more asset classes for shorter settlement.
/jlne.ws/45BWa6G

SEC’s AI Crackdown Signals Trickle of Cases Will Turn to Flood
Will Kubzansky – Bloomberg
A spate of recent US enforcement actions is likely just the beginning of a crackdown on companies overhyping artificial intelligence to investors. Since March, the Securities and Exchange Commission has accused three companies of so-called AI washing, or misrepresenting how they use machine learning and other tools. The moves follow multiple warnings from Gary Gensler, the agency’s chair, and the regulator’s top enforcement attorney over misstatements around the technology.
/jlne.ws/3zdZRDx

The Hedge Fund Veterans Delivering Capital Relief to Banks, With an ESG Twist
Natasha White and Frances Schwartzkopff – Bloomberg
As banks increasingly seek to transfer their credit risk to less regulated investors, buyers on the other side of those deals are starting to request an additional feature: sustainability. Newmarket Capital, a Philadelphia-based alternative asset manager founded by hedge fund veteran Andrew Hohns, has seen a substantial increase in the number of investors in synthetic risk transfers who now want their SRTs to have some form of environmental or social impact.
/jlne.ws/4cuUC0n

FCM-style client clearing comes to Europe; Eurex and LCH among CCPs ready to adopt new agency model aimed at easing bank capital
Luke Clancy – Risk.net
A new client clearing model for the European Union and UK aimed at easing the capital burden for the region’s clearing banks is being readied for launch. The European agent trustee model (EATM), sponsored by the Futures Industry Association (FIA), was unveiled at the trade association’s International Derivatives Expo event in London on June 19. The model brings European client clearing a step closer to the US futures commission merchant (FCM) model and is seen as critical for bolstering capacity
/jlne.ws/45HhKH2

Exxon’s Belgium Traders Decline UK Transfer, Risking Jobs
Jack Wittels – Bloomberg
More than two dozen of Exxon Mobil Corp.’s trading staff declined the oil giant’s offer to transfer to London from Belgium, putting their jobs at risk, according to a union official. A majority of the traders – 25 out of 36 – declined to relocate, according to Fransy Van de Gucht of the ACLVB union. “Those 25 will be gradually dismissed once they have handed over their job to – mostly newly hired – counterparts in London,” he said.
/jlne.ws/4euPziv

PBOC’s New Tools May Spur Big Shift in How It Manages Money
Bloomberg
China’s central bank chief hinted at a blueprint for a new toolkit that could open the door to its biggest policy overhaul in years, as officials try to bolster growth in the world’s No.2 economy. Pan Gongsheng, governor of the People’s Bank of China, gave the clearest signal yet that the authority may start trading government bonds in the secondary market, during a speech in Shanghai on Wednesday. That shift has the potential to rewire how the central bank injects money into the economy and regulate liquidity.
/jlne.ws/3KTvPYb

Nvidia’s Success Is the Stock Market’s Problem; The market is overly reliant on the chip company, which on its own accounted for a third of this month’s gain in the S&P 500
James Mackintosh – The Wall Street Journal
It was the best of times, it was not the worst, but some pretty bad times. In the tale of two stock markets facing U.S. investors, the S&P 500 is soaring to new records driven by a single company, Nvidia, while less-important companies fall and remain far below their highs. The Russell 2000 index of smaller companies is down 17% from its November 2021 peak and has made no progress at all this year.
/jlne.ws/3znx7be

Japan’s Century-Old Bank Sends Warning to World on Higher-for-Longer Rates
Taiga Uranaka, Mia Glass and Takashi Nakamichi – Bloomberg
For years, it was best known as Japan’s CLO whale – a $357 billion investing giant with seemingly insatiable appetite for yield in an era of rock-bottom interest rates. Now Norinchukin Bank has become one of the biggest casualties of an entirely different financial world – where higher-for-longer borrowing costs are exacting a painful toll on the market’s weakest hands.
/jlne.ws/3xqcw5K

Markets ignore the internal politics of central banks at their peril; There are significant institutional constraints on the Fed and the ECB’s room for manoeuvre
Robert Zoellick – Financial Times
This year macroeconomists and market mavens alike have been making mistaken guesses about the interest rate calls of major central banks. The masters of finance need to add another element to their forecasts: institutional politics. Neither the US Federal Reserve’s Jay Powell nor the European Central Bank’s Christine Lagarde is a certified member of the central bankers’ club. Lacking the economics training and record, they must operate as deft chairs of technocratic boards. Their predecessors – notably Paul Volcker, Alan Greenspan, Ben Bernanke and Mario Draghi – earned the respect of the monetary priesthood; they could debate with the experts and steer policies based on their own backgrounds. Powell and Lagarde cannot.
/jlne.ws/3KVzGEi

US regulators rebuff Citigroup’s ‘living will’ resolution plan; FDIC concludes hypothetical strategy in event of bank’s failure is deficient on data controls
Stephen Gandel – Financial Times
US banking regulators rejected Citigroup’s so-called living will – a detailed plan to wind itself down in the event of catastrophic failure – in the latest rebuke for a bank under orders to improve risk controls for nearly four years. In a closed-door meeting, the majority of the Federal Deposit Insurance Corporation’s five-member board voted on Thursday to reject Citi’s resolution plan. The nation’s largest banks, as part of reforms passed in the wake of the financial crisis, are required to have such plans to insulate taxpayers and the financial system from the impact of their failure. They are recertified every other year by the FDIC and the Federal Reserve. The FDIC called Citi’s data controls “deficient”. That was a downgrade from two years ago, in which the FDIC and the Fed passed Citi’s living will but called its data controls a “shortcoming”.
/jlne.ws/3RDi5Vh

Fireside Friday with… RBC’s James Hilton; The TRADE sits down with European head of multi-asset agency solutions at RBC Capital Markets, James Hilton, to explore shifting buy-side demand for algo solutions, multi-asset, and artificial intelligence.
Annabel Smith – The Trade
How are you seeing buy-side demand for algorithmic solutions change?
Algo trading is very well established and we’ve had this catalyst of Mifid II, which effectively means that more and more flow is now directed based on performance, particularly via performance weighted algo wheels. The biggest ask that we get when we’re pitching with clients is to present a differentiated approach. The idea of selecting a pool of homogeneous algorithms just isn’t going to result in performance improvements over time.
/jlne.ws/3zggNta

California Judge Breaks With New York Counterpart, Sends Ripple Securities Lawsuit to Trial; U.S. District Court Judge Phyllis Hamilton dismissed all four of the class action claims against Ripple but will allow one state law claim to proceed to trial.
Cheyenne Ligon – CoinDesk
A California judge has ruled that a civil securities lawsuit against Ripple will proceed to trial, denying in part the crypto firm’s motion for summary judgment in a suit alleging that Ripple’s CEO violated state securities laws in 2017. A jury will hear arguments on whether Ripple CEO Brad Garlinghouse made “misleading statements” in connection with the sale of securities in a 2017 televised interview. The other four claims in the class action securities lawsuit – the so-called “failure to register claims” – were tossed out on Thursday by Judge Phyllis Hamilton of the U.S. District Court for the Northern District of California.
/jlne.ws/4evt50N

U.S. Lawmakers Visit Detained Binance Exec in Nigeria, Call for Release; The two House members said Tigran Gambaryan is being wrongfully detained and should be freed.
Camomile Shumba – CoinDesk
U.S. lawmakers Rep. French Hill (R-Ark.) and Rep. Chrissy Houlahan (D-Penn.) visited Tigran Gambaryan in a Nigerian prison on Wednesday as the Binance executive remains incarcerated facing money-laundering charges due to his involvement with the crypto exchange. Visiting the country to discuss anti-terrorism efforts,”we also had the opportunity to advocate for an American that’s been wrongfully detained by the Nigerian government in the horrible prison that we got to go see, that’s called Kuje prison,” Hill said in a video posted to his X account on Thursday.
/jlne.ws/3KQeGyG

Ukraine Invasion

Putin’s Defense Pact With Kim Jong Un Alarms US Allies; North Korea and Russia reached a mutual defense deal; South Korea is now considering sending arms to Ukraine
Jon Herskovitz and Soo-Hyang Choi – Bloomberg
Russian President Vladimir Putin’s trip to Asia won him support to maintain his grinding war on Ukraine while alarming US allies such as South Korea, which is now considering supplying Kyiv with weapons that could change the battlefield. Putin returned to Russia after visits to North Korea and Vietnam that resulted in a military pact with Pyongyang that bound the two US adversaries even closer and raised the risks of military action on the Korean Peninsula.
/jlne.ws/3VynZIr

U.S. Redirects Air-Defense Missile Deliveries to Ukraine; Other American allies and partners with contracts for interceptor missiles will face delays
Nancy A. Youssef and Gordon Lubold – The Wall Street Journal
The Biden administration will rush the delivery of air-defense interceptors to Ukraine by halting delivery to allied nations, the White House said. President Biden hinted at the move last week during the Group of Seven meeting in Italy, saying, “We let it be known to those countries that are expecting from us air-defense systems in the future that they’re going to have to wait.”
/jlne.ws/45Hm0Gn

Israel/Palestine Conflict

Israel and Hizbollah’s dangerous slide towards all-out war; A week of belligerent rhetoric underscores the threat of escalation
The editorial board – Financial Times
After months of cross-border clashes between Hizbollah and Israel, the rhetoric between the two foes has escalated to worrying new levels. Israel says it has approved “operational plans for an offensive in Lebanon”; Hizbollah, the Iran-backed Lebanese militant group, says it would fight “without rules” and “without limits”. The threats may be bluster, but they raise the risk of a miscalculation that could lead to all-out war. The reckless baiting should stop.
/jlne.ws/3xoxLox

Exchanges, OTC and Clearing

Investors discover agribusiness: the number of individual investors almost doubles in the sector’s products at B3 in 2022; Invested volume reached BRL 411 billion, 79% more than at the end of 2021. The figure represents 19.5% of all investment in fixed income and equities
B3
Diversification has proven to be an important growth vector for the Brazilian capital market. A sectoral overview of individual investment data at B3 in 2022 shows a steep increase in agribusiness linked products in terms of number of investors and volume invested. These figures grew 95% and 79%, respectively, reaching 1.6 million investors and BRL 411 billion in resources, distributed among Agribusiness Credit Bills (LCAs), Agribusiness Receivables Certificates (CRAs) and Agribusiness Investment Funds (FIAGRO).
/jlne.ws/3JTizD8

ICE Benchmark Administration to Launch USD SOFR ICE Swap Rate Swap Spreads and EUR STR ICE Swap Rates as Benchmarks
Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of technology and data, today announced that ICE Benchmark Administration Limited (IBA) intends to launch USD SOFR ICE Swap Rate Swap Spreads and EUR STR ICE Swap Rates for use as benchmarks in financial contracts and financial instruments by licensees on July 1, 2024. The launch follows the successful publication by IBA of indicative, ‘Beta’ versions of the USD SOFR ICE Swap Rate Swap Spreads and EUR STR ICE Swap Rates settings for an initial testing period since May 3, 2024. “Following successful testing, we are pleased to announce a further expansion of IBA’s suite of ICE Swap Rate benchmarks to include SOFR swap spreads and EUR STR swap rates,” said Clive de Ruig, President of IBA. “IBA continues to innovate and develop its regulated benchmark offering to ensure that we can provide reliable and relevant benchmark data to our customers.”
/jlne.ws/3VPUIdG

ICE First Look: Mortgage Performance Remains Strong as Delinquencies, Foreclosures Continue to Improve in May
Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of technology and data, reports the following “first look” at May 2024 month-end mortgage performance statistics derived from its loan-level database representing the majority of the national mortgage market.
/jlne.ws/45EsjKL

Bloemfontein High School takes first prize in JSE Investment Challenge’s May edition; Set clear goals, understand the rules, and diversify your portfolio.
Johannesburg Stock Exchange
That is the sage advice from a group of four Headstart High School learners from Bloemfontein who emerged victorious, taking top spot in the JSE Investment Challenge’s Spectacular Portfolio category for the month of May. Amogelang Mabilo, Aabakwe Malope, Samekelo Sam, and Oomogetswe Brian – or rather, the NL-Pandas – are the group of Grade 10 and 11 learners who have proved it’s never too early to get investment savvy. “We developed a trade strategy and we stayed on it,” Malope explained, adding, “We decided to take emotions out of our investment decisions and spread our investments across different asset classes and sectors.”
/jlne.ws/4bgrpoS

Regular Change in KRX Minimum Volatility Index
KRX
There will be regular constituent changes in KRX Minimum Volatility Index, effective from June 28th, 2024
/jlne.ws/3xihQYV

On the fulfillment of obligations to trading participants and their clients
MOEX
The Moscow Exchange is aimed at properly fulfilling its obligations to all trading participants and their clients, despite the introduction of restrictive measures by the United States against the Moscow Exchange Group. In this regard, NCC decided to fulfill its obligations to trading participants and their clients to return US dollars and euros available after the partial blocking of foreign exchange collateral by converting this currency into Russian rubles. Conversion of US dollars and euros into rubles and fulfillment of obligations will be carried out before June 28, 2024 at the central rate established on June 13, 2024 based on the results of exchange trading on June 11, 2024.
/jlne.ws/3KSv2qj

The Moscow Exchange begins trading in futures for shares of PJSC Raspadskaya
MOEX
On June 25, 2024, trading in deliverable futures for ordinary shares of PJSC Raspadskaya begins on the Moscow Exchange derivatives market. Equity futures contracts will expand clients’ trading strategies and provide additional options for hedging equity portfolios. A series of futures with execution in September and December 2024 will be allowed for trading.
/jlne.ws/3xDdwU1

The Moscow Exchange is introducing automatic transfer of orders to the evening session on the stock market
MOEX
From June 24, 2024, the Moscow Exchange is introducing a mechanism for automatically transferring active orders for the purchase and sale of shares and investment fund units from the day trading session to the evening trading session. At the end of the main trading session, unexecuted limit orders indicating price and volume, as well as iceberg orders, will automatically move step by step into the closing auction of the main session, the opening auction and the trading period in the evening session. At each stage, the application can be executed if there is a counter-offer. The innovation applies only to instruments available during the evening trading session.
/jlne.ws/3VzCyvh

Fintech

Investing App Acorns Eyes IPO in Next Couple of Years, CEO Says
Teresa Xie and Sonali Basak – Bloomberg
Acorns, an investing and checking accounts app, will likely hold an initial public offering at some point in the next couple of years, according to Chief Executive Officer Noah Kerner. “Figuring out how to have a liquidity event is always on my radar,” Kerner said during an interview with Bloomberg Television on Thursday. “That is something we will likely do in the future,” he said, adding that the company does not have a date planned yet but it’s conceivable that an IPO will occur in the next couple of years.
/jlne.ws/4b9wYW9

Revolut Is Looking to Sell $500 Million Worth of Existing Shares
Emily Nicolle and Jennifer Surane – Bloomberg
Revolut Ltd., one of Europe’s most-valuable startups, has hired bankers to help it sell about $500 million worth of existing equity, joining a raft of private companies that have looked to alternative forms of liquidity for its shareholders as the market for initial public offerings remains in the doldrums. The challenger bank is working with Morgan Stanley on the sale, which will help it free up cash for legions of existing staffers and early investors, according to people familiar with the matter. The transaction, which was reported earlier by the Financial Times, may value Revolut at more than $40 billion, up from the $33 billion valuation it last garnered in a 2021 fundraising round.
/jlne.ws/4bctClp

Revolut seeks valuation of more than $40bn in employee share sale; SoftBank-backed fintech is confident its value has increased over 20% since 2021 fundraising
Ivan Levingston and Akila Quinio – Financial Times
UK fintech Revolut is targeting a valuation exceeding $40bn in a share sale that would cement its status as Europe’s most valuable start-up, according to three people with knowledge of the plans. The SoftBank-backed company is working with Morgan Stanley to sell about $500mn worth of existing shares, including those held by employees, the people said.
/jlne.ws/3VS6K6g

Meta Delays AI Chatbot Launch in Europe After Regulator Pushback
Kurt Wagner – Bloomberg
Facebook parent company Meta Platforms Inc. will delay its launch of the Meta AI chatbot in Europe after regulators on the continent requested the company pause its plan to train its large language models with posts from users there. On Monday, Meta announced its intention to start training its LLM, called Llama, using public posts generated by European users. On Friday, it updated that statement to say those plans have been delayed indefinitely after the Irish Data Protection Commission pushed back on the decision.
/jlne.ws/4bg5XR8

SoftBank’s Masayoshi Son says past investments ‘just a warm-up’ for AI bet; Tech founder tells shareholders he was ‘born to’ make artificial superintelligence a reality
David Keohane – Financial Times
SoftBank founder Masayoshi Son told shareholders on Friday that investments the technology group had made in the past were “just a warm-up” for his grand ambition to create an era of artificial intelligence. An energised Son told SoftBank shareholders at the group’s annual meeting that his mission was to bring about so-called artificial superintelligence, technology that he says could be significantly smarter than humans.
/jlne.ws/3VSCGY8

****Here is that story from Bloomberg.

Bloomberg to offer access to CSRD data ahead of reporting deadline; New data offering will help inform the sustainability strategy of financial firms, alongside the sustainability reporting of their financing activities.
Wesley Bray – The Trade
/jlne.ws/3zdUDaV

Nvidia tide is lifting the tech sector; Chipmaker is the main winner but other companies are seeing big gains from the AI boom
Richard Waters – Financial Times
/jlne.ws/4evwgWd

Higher earners face greater AI exposure, study finds; Research estimates how much the fast-evolving technology hits various jobs, from software engineers to mechanics
Michael Peel – Financial Times
/jlne.ws/4eyW3N7

Generative AI set to take off in Asia this year as more companies roll out pilot projects; More than half of business executives say they are optimistic about AI’s potential to transform their businesses, a survey shows
Biman Mukherji – South China Morning Post
/jlne.ws/4ctDisB

Cybersecurity

Sellafield pleads guilty to criminal charges over cybersecurity failings
Anna Isaac and Alex Lawson – The Guardian
The UK’s most hazardous nuclear site, Sellafield, has pleaded guilty to criminal charges related to cybersecurity failings brought by the industry regulator. Lawyers acting for Sellafield told Westminster magistrates’ court on Thursday that cybersecurity requirements were “not sufficiently adhered to for a period” at the vast nuclear waste dump in Cumbria.
/jlne.ws/4cwaVu8

How the Dash to Ditch Paper Money Created a Playground for Criminals; Sweden has led the way in Europe in going cashless, but fast and easy digital commerce have left consumers and the state vulnerable to fraud.
Niclas Rolander and Jonas Ekblom – Bloomberg
Ellen Bagley was delighted when she made her first sale on a popular second-hand clothing app, but just a few minutes later, the thrill turned to shock as the 20-year-old from Linkoping in Sweden discovered she’d been robbed. Everything seemed normal when Bagley received a direct message on the platform, which asked her to verify personal details to complete the deal. She clicked the link, which fired up BankID – the ubiquitous digital authorization system used by nearly all Swedish adults.
/jlne.ws/4catpAi

Hackers ‘jailbreak’ powerful AI models in global effort to highlight flaws; Experts join forces in search for vulnerabilities in large language models made by OpenAI, Google and Elon Musk’s xAI
Hannah Murphy – Financial Times
Pliny the Prompter says it typically takes him about 30 minutes to break the world’s most powerful artificial intelligence models. The pseudonymous hacker has manipulated Meta’s Llama 3 into sharing instructions for making napalm. He made Elon Musk’s Grok gush about Adolf Hitler. His own hacked version of OpenAI’s latest GPT-4o model, dubbed “Godmode GPT”, was banned by the start-up after it started advising on illegal activities.
/jlne.ws/45z4MuI

Cryptocurrencies

Crypto ‘Secondaries’ Prices Jump as Expectations of IPOs Climb
Olga Kharif – Bloomberg
Crypto funds and private investors have been snapping up shares of private digital-asset companies in anticipation that some of them could be going public in the coming months. Equity in companies such as stablecoin issuer Circle Internet Financial, crypto exchange Kraken and blockchain forensics provider Chainalysis has been trading more actively recently, and many of the deep discounts of a year ago have declined, according to multiple trading venues. Crypto buy-side demand in the first half of 2024 is 28% higher than it was in the second half of last year, and 126% higher than in the first half of 2023, according to Forge Global, a secondary market platform.
/jlne.ws/45BKukv

StanChart setting up spot crypto trading desk for Bitcoin, Ether
Emily Nicolle – Bloomberg
Standard Chartered Plc (STAN.L) is setting up a trading desk for Bitcoin and Ether, people familiar with the matter said, making it one of the first global banks to enter spot cryptocurrency trading. The new crypto desk is close to starting operations and will be part of the bank’s FX trading unit, two of the people said, asking not to be named discussing private information. It will be run from London, according to one person.
/jlne.ws/4czvINr

MicroStrategy Buys $786 Million More in Bitcoin With Note Proceeds
Benjamin Taubman – Bloomberg
MicroStrategy Inc. bought approximately $786 million in Bitcoin with the proceeds raised from the sale of convertible notes. The company acquired 11,931 Bitcoin between April 27 and June 19, according to a filing Thursday with the US Securities and Exchange Commission. This is MicroStrategy’s third largest acquisition of Bitcoin following its $821 million purchase of 12,000 tokens on March 11.
/jlne.ws/4bbSOZd

Ether Restaking May Morph Into ‘Internet Bond’ Market, S&P Says; Restaking is similar to securities lending in fixed income; EigenLayer protocol has about $19 billion in restaked Ether
María Paula Mijares Torres – Bloomberg
The emergence of restaking services on the Ethereum blockchain, where investors can earn additional yield on their cryptocurrency, could lead to an “internet bond” market, according to S&P Global Ratings. Holders of Ether earn a yield by pledging, or staking, their tokens to be used to help verify transactions on the network, similar to in the bond world, where investors earn a baseline rate by lending their funds to a borrower. In restaking, rewards are compounded by reinvesting them into other protocols, akin to lending out securities in the fixed-income markets.
/jlne.ws/4ero8Gl

Meme Coin Liquidity Hits Record High Even as Bid-Ask Spread Spotlights Risk
Generally, increased liquidity leads to a tighter bid-ask spread, but that’s not the case with meme coins.
Omkar Godbole – CoinDesk
Executing trades in prominent meme coins is easier than ever now that liquidity, as measured by 1% market depth, has surged to record highs, according to data tracked by Paris-based Kaiko. The combined figure for DOGE, SHIB, PEPE, WIF, BONK, GROK, BABYDOGE, FLOKI, MEME, HarryPotterObamaSonic10Inu and HarryPotterObamaSonic, recently rose to $128 million, the data shows. The figure describes the total value of buy and sell orders within a 1% range of the current market price. The deeper the liquidity – that is, the higher the figure – the easier it is to execute large orders at stable prices.
/jlne.ws/4bcajZp

Politics

The danger of deepfakes is not what you think; Instead of wreaking political damage, AI-generated content can be useful for election campaigns
John Thornhill – Financial Times
One of our shoutiest moral panics these days is the fear that artificial intelligence-enabled deepfakes will degrade democracy. Half of the world’s population are voting in 70 countries this year. Some 1,500 experts polled by the World Economic Forum in late 2023 reckoned that misinformation and disinformation were the most severe global risk over the next two years. Even extreme weather risks and interstate armed conflict were seen as less threatening. But, type it gently, their concerns appear overblown. Not for the first time, the Davos consensus might be wrong.
/jlne.ws/3VvvgsB

It’s time to reset EU-UK relations; The geopolitical landscape means member states now have an interest in rethinking how to work with London
Daniela Schwarzer- Financial Times
With elections on both side of the channel within the span of a few weeks, one could be forgiven for assuming that change is in the air with respect to the troubled state of EU-UK relations. In truth, of course, the subject hardly featured in the European parliament elections earlier this month. In the UK, too, both Labour and the Conservatives have said less than might be expected on all things Brussels – albeit, one presumes, for different reasons.
/jlne.ws/3xiCTKX

US banking heir gave Trump campaign fund $50mn after ex-president’s conviction; Tim Mellon has donated combined $100mn to committees for Republican candidate and Robert Kennedy Jr
Alex Rogers – Financial Times
Tim Mellon, a reclusive scion of the billionaire American banking dynasty, gave $50mn to a fundraising group supporting Donald Trump a day after the former US president was convicted of falsifying business records in a New York hush money trial. The donation, disclosed on Thursday, means Mellon has now given $75mn to the group, known as Make America Great Again Inc, over the past year, according to federal filings.
/jlne.ws/3VC7c78

***** Here is The New York Times version of this story.~JJL

Billionaires Pony Up Huge Donations for Trump, Biden; May contributions include record $50 million donation from Tim Mellon to pro-Trump super PAC, nearly $20 million from Mike Bloomberg to boost Biden
Anthony DeBarros and Jack Gillum – The Wall Street Journal
With weeks to go until their respective party conventions, Donald Trump and Joe Biden are getting significant financial support from just a handful of donors. On Thursday, the pro-Trump super PAC Make America Great Again Inc. reported a $50 million donation-the largest this cycle-from businessman Tim Mellon, an heir to the Mellon fortune. He contributed the sum the day after Trump was convicted in Manhattan on 34 felony charges.
/jlne.ws/3xAE887

The Swiss Go Full Matterhorn – But the UK Can’t; Election turmoil in Europe is strengthening the franc and enabling Switzerland to make its second rate cut this year.
John Authers – Bloomberg
Europe’s Mountains Beyond Mountains
From the Urals through the Balkans and the Dolomites to the Alps and the Pyrenees, Europe is punctuated by mountain ranges. Its central banking seems to be the same. We’re all now accustomed to think of rates in terms of mountain shapes, and particularly the choice between a Matterhorn – a triangular peak in which rates rise quickly, and then swiftly come down equally fast – and Table Mountain, where they stay at a drawn-out plateau. Maybe it’s appropriate that Switzerland has honored its most famous peak by tracing the Matterhorn, making its second cut Thursday after the first in March. And nobody is following along. These are the mountains sketched out so far by Europe’s main central banks and the US:
/jlne.ws/3VrhyXC

Brace for the most distorted election result in British history; The demolition of parties to the right will raise fresh doubts about first past the post
John Burn-Murdoch – Financial Times
There is a distinct possibility that the UK general election on July 4 produces the following outcome. Sir Keir Starmer’s Labour party wins a record 450 seats and a huge majority on a lower share of the vote than Jeremy Corbyn’s Labour achieved in 2017. Meanwhile, the Liberal Democrats win the second-largest number seats, becoming the official opposition, despite finishing fourth on vote share behind both the Conservatives and Nigel Farage’s Reform UK.
/jlne.ws/3xi5wYF

The law behind the Tory party election-betting scandal; Four people have been embroiled so far: 2 candidates, the party’s campaign director and a police officer
Robert Wright – Financial Times
/jlne.ws/3VCC3AL

Paris’ Rise as Finance Hub at Risk After Macron’s Election Call
Alexandre Rajbhandari – Bloomberg
/jlne.ws/3VS2xzu

Why the Far Right Is No Longer an Existential Threat to Europe; The far right’s acceptance of the euro means that possible victory in France’s election is unlikely to lead to financial crisis
Greg Ip – The Wall Street Journal
/jlne.ws/3xoHWcL

Regulation

Japan Regulator Poised to Penalize MUFG Units for Client Breach
Taro Fuse, Takashi Nakamichi and Taiga Uranaka – Bloomberg
Japan’s regulator plans to penalize a Mitsubishi UFJ Financial Group Inc. unit and two joint ventures as early as Monday for breaching client confidentiality rules, according to people with knowledge of the matter. The Financial Services Agency is expected to issue business improvement orders on MUFG Bank Ltd., Morgan Stanley MUFG Securities Co. and Mitsubishi UFJ Morgan Stanley Securities Co., the people said, asking not to be identified as the information isn’t public. The action follows a recommendation by Japan’s securities watchdog earlier this month.
/jlne.ws/45BYWsC

Lawyers who worked for Post Office amid Horizon scandal are under investigation
The Telegraph
More than 20 investigations are ongoing into solicitors and law firms that worked for the Post Office in cases linked to the Horizon IT scandal, the Solicitors Regulation Authority (SRA) has said. The SRA is investigating the strategy and conduct used by Post Office or Royal Mail Group solicitors during the period that saw hundreds of subpostmasters wrongly prosecuted. More than 700 subpostmasters were handed criminal convictions between 1999 and 2015 when errors in the Post Office’s Horizon IT system meant money appeared to be missing from many branch accounts when, in fact, it was not.
/jlne.ws/4cdgnCg

Swiss financial regulations not yet tough enough post-Credit Suisse, SNB says
Reuters
Switzerland’s financial regulations need further strengthening following the takeover of Credit Suisse by UBS, the Swiss National Bank said on Thursday, pressing for more to be done on capital and liquidity requirements. Credit Suisse roiled financial markets last year when it collapsed following a string of financial problems, and was absorbed by its old rival UBS in a state-engineered rescue. That fed concerns that the enlarged UBS posed risks for the Swiss economy and prompted the government to propose tougher regulations for banks deemed “too big to fail” in April. At the heart of the plan were proposals to have UBS hold more capital, but they still face a long political process.
/jlne.ws/4cuXUAL

Taiwan’s Finance Regulator Vows to Ease Rules to Stoke Growth; Regulator wants to expand use of financial products in Taiwan; Regulator plans to issue new rules on fintech, virtual assets
Chien-Hua Wan – Bloomberg
Taiwan plans to ease rules to allow the finance industry to become a bigger part of the island’s economic output amid a tech-led boom in investments, according to the new head of its market watchdog. “Taiwan financial industry output only makes up 6% of our GDP,” said Peng Jin-lung, the chairman of Taiwan’s Financial Supervisory Commission at a media presentation on Friday. “There’s more room to expand the market by easing rules and providing more products.”
/jlne.ws/3za3DOa

Low pay for UK financial crime prosecutors hits efforts to hire top talent; Lawyers at SFO and FCA earn increasingly less than peers at private firms
Suzi Ring – Financial Times
Lawyers at the UK’s main financial crime prosecutors earn increasingly less than their peers in private practice, according to an analysis of pay by the Financial Times, hitting efforts to recruit talent and tackle rising economic crime. The average partner at top criminal London law firm Kingsley Napley earned about £450,000 last year, according to people with knowledge of the firm’s remuneration, more than five times the maximum £79,315 salary for a case controller at the Serious Fraud Office. Partners at larger firms such as UK “magic circle” outfit Linklaters, which also has a business crime practice, took home an average of £1.79mn in 2023.
/jlne.ws/3XwSJfq

Bermuda cracks down on connected-party investments after 777 saga; Watchdog probes conflicts and ‘undue influence’ in insurers’ interests in associated assets
Ian Smith – Financial Times
The financial watchdog in Bermuda, at the heart of the world’s reinsurance industry, is cracking down on life insurers’ investments in connected parties following problems at 777 Partners and its reinsurer based in the British overseas territory. The Bermuda Monetary Authority is probing firms’ exposure to affiliated assets, including looking for conflicts of interests, the regulator confirmed to the Financial Times. Insurers will now have to seek its prior approval for new investments of this type and will have to demonstrate that they are an appropriate match for their liabilities.
/jlne.ws/4cq4Q2N

Selective Disclosure of Information Regarding Cybersecurity Incidents
Erik Gerding – SEC
[*]Last year, the Commission adopted rules requiring public companies to disclose material cybersecurity incidents under Item 1.05 of Form 8-K.[1] Since then, staff in the Division of Corporation Finance have heard assertions that those rules may preclude a company from sharing additional information about a material cybersecurity incident with others, including their commercial counterparties. Apparently, some companies are under the impression that if they experience a material cybersecurity incident, the Commission’s new rules prohibit them from discussing that incident beyond what was included in the Item 1.05 Form 8-K disclosing the incident. That is not the case.
/jlne.ws/3XRjf3B

“Shortening the Settlement Cycle: Benefitting Everyday Investors” Prepared Remarks before the Accelerated Settlement in the U.K. Conference
Chair Gary Gensler – SEC
Last month, the U.S. smoothly shortened the settlement cycle for equities, corporate bonds, and municipal securities to one day after the transaction date (T+1). This step better unifies the U.S. market structure, where Treasuries, options, and mutual funds already largely settle in one day. For everyday investors, this means you now can sell your stock on a Monday and get your cash on a Tuesday. This makes a real difference-you don’t have to wait until Wednesday. With 58 percent of American households holding stocks,[1] this is significant. This step also helped better unify the U.S. market structure, where Treasuries, options, and mutual funds already largely settle in one day.
/jlne.ws/3Xytnhj

SEC Obtains Final Judgment Against Former State Street Executive
SEC
On June 17, 2024, the U.S. District Court for the District of Massachusetts entered a final judgment against Ross McLellan, a former executive of Massachusetts-based State Street Corporation, for engaging in a scheme to defraud certain customers of State Street’s transition management business.
/jlne.ws/3KTVK1S

NFA orders London, United Kingdom introducing broker Clarksons Platou Futures Limited to pay a $250,000 fine
NFA
NFA has ordered Clarksons Platou Futures Limited (Clarksons) to pay a $250,000 fine. Clarksons is an introducing broker Member of NFA located in London, United Kingdom.
/jlne.ws/3XyufCB

Court finds iSignthis breached disclosure laws and Nickolas Karantzis breached his directors’ duties
ASIC
The Federal Court has found iSignthis Ltd, now known as Southern Cross Payments Ltd, engaged in a number of contraventions of the law between 2018 and 2020. Nickolas John Karantzis, its former managing director and chief executive officer, was also found to have breached the law, by failing to ensure information given to the ASX was not false or misleading as well as breaching his directors’ duties.
/jlne.ws/3KRLJ5c

The third meeting of the Working Group on Disclosure and Assurance of Sustainability-related Financial Information (of the Financial System Council)
FSA
The Working Group on Disclosure and Assurance of Sustainability-related Financial Information (of the Financial System Council) will hold its third meeting on June 28, 2024 as follows.
/jlne.ws/4bgpkt4

Public-private initiatives to support new entrants of emerging asset managers (Japanese EMP)
Overview
FSA
The Government of Japan has published “Policy Plan for Promoting Japan as a Leading Asset Management Center” on December 13th, 2023. As a part of the plan for reforming Japan’s asset management sector, the government has developed the program to support new entrants (Japanese EMP) for facilitating entrustment to emerging asset managers through joint public-private initiatives.
/jlne.ws/4cwbaVI

Investing and Trading

Wall Street’s $5.5 Trillion Triple-Witching to Test Market Calm
Carly Wanna – Bloomberg
Friday’s US options expiration may provide volatility-starved traders with some short-term market swings. The so-called ‘triple-witching’ will see some $5.5 trillion worth of options tied to indexes, stocks, and exchange-traded funds fall off the board, according to an estimate from options platform SpotGamma. As the contracts disappear, investors will adjust their positions, adding a burst of volume capable of swinging individual holdings.
/jlne.ws/4bgoJYx

Forget Profits, IPO Investors Are Paying Up for Revenue Growth
Bailey Lipschultz – Bloomberg
Investors are so hungry for initial public offerings to rebound that they are once again willing to sacrifice profit for revenue growth – and have set aside money for the privilege of participating. Those were some of the key takeaways from a recent survey by Blueshirt Group, which advises companies on going public. Although most of the money managers Blueshirt polled said they want IPO candidates to show they can generate profits by 2026, they ranked growth as the top priority.
/jlne.ws/3xuvs3g

How ‘selfish and entitled’ millennials are capitalising on a £71 trillion goldmine
Charlotte Lytton – The Telegraph
Millennials are about to inherit the biggest fortune ever to be reaped by a generation as their baby boomer parents die and they bank decades of house price growth. However, these inheritors can expect not only lump sums and family homes, but lawsuits and relationship-ending fallouts. Record numbers of wills are being contested, with some 10,000 people now disputing their inheritance every year. More than double the number of probate disputes were brought before the High Court in the first nine months of 2023 than the equivalent period of 2016. This is thought to be a fraction of the real figure, as most are settled out of court.
/jlne.ws/3VxMfdM

Rating agencies give high marks to bonds financing defaulted properties; Securities backing single commercial buildings are popular with investors but several have failed to live up to top ratings
Stephen Gandel – Financial Times
Credit agencies have mis-rated more than $100bn of commercial real estate debt in an increasingly popular segment of the market, say mortgage veterans, including at least a dozen deals that maintain top investment-grade ratings even though the borrowers are in default. The questionable ratings are cropping up in a portion of the mortgage bond market that has evolved in the past decade or so, in which deals are backed by one loan or mortgage on a single major office building rather than on a bundle of multiple properties.
/jlne.ws/3KRpnkz

Elon Musk Foils the Proxy Firms; Like Exxon Mobil, Tesla went directly to investors and over the heads of the left-leaning advisers.
Michael Toth – The Wall Street Journal
Votes by Tesla shareholders to reinstate Elon Musk’s pay package and approve the company’s reincorporation in Texas aren’t only a victory for Mr. Musk over the Delaware judge who invalidated the CEO’s compensation deal in January. They are also a stinging rebuke to the proxy advisory firm Glass Lewis and the left-wing agenda it pushes on public companies.
/jlne.ws/4c8XxMp

Environmental, Social and Corporate Governance

Ex-BlackRock Executive Seeks Unity to Fight Climate Change
Saijel Kishan – Bloomberg
Paul Bodnar, BlackRock Inc.’s former chief of sustainable investing, said climate activists need to stop “demonizing” the fossil-fuel industry for advances to be made on the environmental front. “There’s too much demonizing between industry and the environmental community right now,” said Bodnar, who now serves as director of sustainable finance at the Bezos Earth Fund. “It’s like a fight to the death. It needs to be a little bit more of a cooperative posture.”
/jlne.ws/3z9Q4OT

Hawaii agrees to ‘groundbreaking’ settlement of youth climate change case
Nate Raymond – Reuters
Hawaii on Thursday agreed to take action to decarbonize its transportation system by 2045 to settle a lawsuit by 13 young people alleging the U.S. state was violating their rights under its constitution with infrastructure that contributes to greenhouse gas emissions and climate change. Democratic Governor Josh Green announced the “groundbreaking” settlement at a news conference attended by some of the activists and lawyers involved in the lawsuit, which they called the first-ever youth-led climate case seeking zero emissions in transportation.
/jlne.ws/45R0HT3

******This story from The Guardian.

Brazil Sells $2 Billion in Sustainable Global Bonds
Giovanna Bellotti Azevedo and Maria Elena Vizcaino – Bloomberg
Brazil returned to global capital markets for the second time this year with a $2 billion sustainability bond, joining a string of developing nations selling new debt. The nation sold seven-year notes at a yield of 6.375%, down from initial price talk in the 6.625% area, according to people familiar with the matter who asked not to be identified because they’re not authorized to speak about it. The notes will be used to repay public debt and to finance projects under its sustainability framework.
/jlne.ws/4eBlqhB

Fossil Fuel Firms Flared Most Gas Since 2019, Says World Bank; Gas flaring rose last year, reversing declining trend of 2022; Efforts to curb flaring haven’t been sustainable: World Bank
Tope Alake – Bloomberg
The burning of excess natural gas from global oil fields hit its highest level since 2019 last year, spewing enough pollutants into the atmosphere to equal those from an extra five million cars, according to a World Bank report. Gas flaring by oil and gas producers rose by about 7% last year to 148 billion cubic meters compared to 2022, the World Bank’s Global Gas Flaring Tracker Report said Thursday. The increase in flaring resulted in an additional 23 million tons of carbon dioxide equivalent emissions.
/jlne.ws/3VQ5TmB

How companies are starting to back away from green targets; In the past year, many have dropped or missed goals to cut emissions or to loosen ties with polluting sectors
Kenza Bryan and Attracta Mooney – Financial Times
At a recent address to investors, the former BP chief executive Lord John Browne urged them to consider Aesop’s fable of the rider who stops feeding his horse in peacetime, only to find it lame when war comes. The soldier in the analogy represented the companies who are pulling back on climate action, creating more long-term risk for all concerned as the ever-greater effects of the climate crisis loom. “The story is a good reminder that if we want something to serve us longer, we need to take care of it constantly,” he said. “The hard truth is that we’ve done a poor job of reconciling corporate actions with the interests of society and the planet in a balanced way. Yet the urgent need to do so is undiminished.”
/jlne.ws/3RDBcPb

Rescuing diversity from the DEI backlash; Diverse workforces are here to stay. Companies need to find new ways to manage them
Sarah Murray – Financial Times
/jlne.ws/3VGYDIC

Oil-Sands Group Scrubs Website Amid Canada Greenwashing Law
Brian Platt and Robert Tuttle – Bloomberg
/jlne.ws/3RByrh8

New carbon calculation framework launched for global advertising industry; A coalition of businesses including the world’s six largest advertising holding firms have supported the launch of a new industry-wide voluntary standard for measuring and disclosing greenhouse gas emissions.
Sarah George – edie
/jlne.ws/3KQ7xhT

US offers $850 million in grants to clean up oil sector methane emissions
Valerie Volcovici – Reuters
/jlne.ws/4ctoSZv

LNG Export Project at Center of Firestorm Set for Vote; Venture Global’s CP2 project is on FERC’s Thursday agenda; Delayed project prompted protests by environmentalists
Ari Natter and Ruth Liao – Bloomberg
/jlne.ws/4ccj2Mt

Well Beyond the U.S., Heat and Climate Extremes Are Hitting Billions; People all over the world are facing severe heat, floods and fire, aggravated by the use of fossil fuels. The year isn’t halfway done.
Somini Sengupta – The New York Times
/jlne.ws/4bm5j4I

California’s Bay Area is Heating Up. Its Infrastructure Isn’t Designed For It; The region has one of the lowest air-conditioning ownership rates in the nation, but residents are growing increasingly uncomfortable as summer temperatures rise.
Ruchi Shahagadkar – Inside Climate News
/jlne.ws/3Xyth9r

Institutions

Opinion; The big banks have just strengthened their grip on Britain
Ben Marlow – The Telegraph
The entry of supermarkets into the world of banking always felt like one of the more implausible business propositions of recent times. A quarter of a century later, Sainsbury’s has finally given up on the idea that it might be able to flog someone a mortgage while they were doing the weekly shop. As Sir Philip Hampton neatly put it earlier this year: “You wouldn’t buy your potatoes from HSBC.” So what possessed the industry’s finest minds to think the reverse would be true and families would one day be arriving back from Aldi with a week’s worth of baked beans, 12 lavatory rolls and some new home insurance?
/jlne.ws/3VTb6dw

Goldman Team Finds Alternative to Crowded TSMC Arbitrage Trade
Jeanny Yu – Bloomberg
It has become one of the most popular – and more recently, painful – trades among arbitrageurs on Wall Street: buying Taiwan Semiconductor Manufacturing Co.’s lower-valued Taipei shares and shorting the US stock on hopes prices will converge. Investors can use options to bet that the premium on TSMC’s American Depositary Receipts – currently hovering between 20% and 25% – will shrink while capping their potential for losses if markets move the wrong way, according to a note from the bank’s trading desk on Wednesday. It advises buying puts on the US ticker and selling those on the Taiwan shares.
/jlne.ws/45EKZu4

Top Bank of Cyprus Investors to Explore Sale of Stake
Pamela Barbaglia and Jan-Henrik Forster – Bloomberg
Two of the top investors at Bank of Cyprus Holdings Plc are exploring a sale of their stakes in the country’s biggest bank, according to people with knowledge of the matter. AB CarVal Investors and Caius Capital are working with an adviser to gauge interest in their combined 15% holding, said the people. They have approached potential buyers including Greece’s Alpha Bank SA, the people said, asking not to be identified because the information is private.
/jlne.ws/3RBy2v8

ABN Amro nears deal to buy HSBC’s German private bank, Boersenzeitung says
Reuters
Dutch bank ABN Amro is seeking to further expand in Germany as it is nearing a deal to acquire HSBC’s wealth management unit in the country, newspaper Boersenzeitung reported on Friday, without specifying its sources. The takeover of the business, formerly known as Trinkaus & Burkhardt, could be announced over the next two to three weeks, the paper said. A transaction would extend ABN Amro’s foray into Germany, Europe’s largest wealth management market, after it last month signed a deal to buy Fosun’s private bank Hauck Aufhaeuser Lampe for 672 million euros ($730 million).
/jlne.ws/3KPVtgy

Bidders line up for HSBC’s German fund administration and custody units, sources say
Amy-Jo Crowley and Emma-Victoria Farr – Reuters
State Street, BNP Paribas and Caceis are lining up as potential bidders for the sale of HSBC Germany’s fund administration unit INKA and custody business, three sources familiar with the matter told Reuters.
/jlne.ws/3zcJWFw

Morgan Stanley says ‘crown jewel’ of Citi is worth half the bank’s value
Michael del Castillo – Fortune
/jlne.ws/3xovqdf

US regulators reject Citi’s ‘living will’ resolution plan, FT reports
Reuters
/jlne.ws/3XulxFz

Segantii Returns a Third of Fund Assets and Cuts Dozens of Staff
Bei Hu, Cathy Chan, Lulu Yilun Chen and Nishant Kumar – Bloomberg
/jlne.ws/3XEbbmF

Work & Management

The Case for Hybrid Work: More Innovation and Greater Employee Engagement; The best-managed companies demand enough in-office time for employees to meet and brainstorm, but offer enough flexibility to attract workers
Rick Wartzman and Kelly Tang – The Wall Street Journal
Ever since the coronavirus began to come under control, companies have been grappling with an issue that has elicited strong feelings from those in the C-suite as well as those confined to a cubicle: Should they pull all of their employees back to the office? Or should they let them work from home? Our latest research suggests that the optimal answer is yes-and yes. A blended approach is often best.
/jlne.ws/3zd9nGU

In Praise of Bragging; Some tips for celebrating your achievements without seeming like a jerk.
David Robson – Bloomberg
Most etiquette mavens give self-celebration a bad rap. Debrett’s-the British bible on good manners-calls boasting “a childish character trait.” It counsels, instead, to “resort wherever possible to understatement.” The 17th-century mathematician and philosopher Blaise Pascal similarly observed in his “Pensées”: “If you want people to think well of you, do not speak well of yourself.” Parents everywhere seem inclined to agree. I was certainly told quite a few times that “no one likes a showoff.”
/jlne.ws/45Ess0L

Wellness Exchange

IRS to Reject Billions of Dollars in Covid Employer Tax-Credit Claims; Amid widespread fraud, agency moratorium on processing new requests to remain in place
Richard Rubin and Ruth Simon – The Wall Street Journal
The Internal Revenue Service is planning to deny billions of dollars of what it says are improper claims for a popular pandemic-era tax credit, while starting to gradually pay out some claims that have been sitting at the tax agency for more than nine months. The IRS, following a long review of the employee retention tax credit, plans to maintain a moratorium on processing claims filed since mid-September 2023. The agency, which had said it hoped to resume significant processing of claims in late spring, announced its plans less than an hour before the summer solstice.
/jlne.ws/3ze6PIH

Banks Pressed to Screen for Money Flow From Fentanyl Precursors; An alert by the U.S.’s financial crimes watchdog asks banks to file suspicious activity reports in connection to procurement networks for chemicals that go into the production of illicit fentanyl
Dylan Tokar – The Wall Street Journal
Financial institutions are under pressure to guard against financial activity related to the production and sale of illicit fentanyl, amid a campaign by the Biden administration to respond to more overdose deaths. The U.S. Treasury Department’s financial crimes watchdog issued an alert on Thursday asking banks to screen for money flows related to the production of illicit fentanyl. Banks are required to screen transactions by their customers and report suspicious activity.
/jlne.ws/3VOTLSS

The Opaque Industry Secretly Inflating Prices for Prescription Drugs; Pharmacy benefit managers are driving up drug costs for millions of people, employers and the government.
Rebecca Robbins and Reed Abelson – The New York Times
Americans are paying too much for prescription drugs. It is a common, longstanding complaint. And the culprits seem obvious: Drug companies. Insurers. A dysfunctional federal government. But there is another collection of powerful forces that often escape attention, because they operate in the bowels of the health care system and cloak themselves in such opacity and complexity that many people don’t even realize they exist. They are called pharmacy benefit managers. And they are driving up drug costs for millions of people, employers and the government.
/jlne.ws/4cqxU9C

Regions

Taiwan’s Triple-Whammy Tightening Shrinks a Measure of Liquidity
Betty Hou – Bloomberg
A triple whammy of tightening factors in Taiwan is pushing banks to scale back purchases of central bank deposits at the fastest pace on record, a sign that market liquidity is shrinking. Monetary policy tightening, a seasonal impact from tax payments, and an investment boom that’s drawing cash into stocks are all coming at the same time. That has cut demand for negotiable certificates of deposits and certificates of deposits issued by the central bank – a key tool to manage liquidity as onshore banks use them to store excess cash.
/jlne.ws/3zbGhrD

China’s Pork Probe Is Yet Another Blow for Struggling EU Farmers
Celia Bergin, Hallie Gu and Sara Sjolin – Bloomberg
The threat of China slapping tariffs on the European Union’s pork is the last thing the continent’s beleaguered industry needs. China, the world’s biggest pork consumer, this week announced a probe on imports from the EU that could result in tariffs as part of a trade tit-for-tat. The bloc’s top exporters of the meat – like Spain and Denmark – warn that any levies will further hit overseas sales that have been falling for several years, hurting the entire supply chain from farmers to processors.
/jlne.ws/3VTNi8b

China Region Bond Plan Revised Amid Rule Change Speculation
Bloomberg
China’s Henan province said it was selling new bonds to fund government projects, revising an earlier statement the money would be used to repay debt that initially triggered market speculation of Beijing potentially loosening rules for local authorities. The province in central China earlier said it planned to sell 52 billion yuan ($7.2 billion) in special local bonds next week and use all the funds to repay existing debt, according to a ratings report published by China Lianhe Credit Rating Co. on Wednesday.
/jlne.ws/3XxAlmA

MSCI Keeps South Korea Listed as Emerging Market Amid Ban on Shorts
Youkyung Lee – Bloomberg
South Korea’s attempts to win a market upgrade from MSCI Inc. have been dealt a setback by the nation’s unexpected move last year to reimpose a full ban on the short-selling of stocks. In its annual classification review, the index provider decided to maintain South Korea’s status as an emerging market, as expected. While the nation’s efforts to reform capital markets and currency trading hours had spurred hope for an upgrade to developed status, its prohibition of a common trading strategy is still seen as a barrier.
/jlne.ws/3xos2Pz

Singapore Becomes Hot Spot for M&A Bankers Hunting Asia Deals
Elffie Chew – Bloomberg
Singapore has turned into a hive of activity for mergers and acquisitions this quarter as investor confidence returns, helped by relative economic and political stability. The flurry of action in just the past few days includes a KKR & Co.-Singapore Telecommunications Ltd. consortium agreeing to invest S$1.75 billion ($1.3 billion) in ST Telemedia Global Data Centres, beating other global investors. More are likely coming, including Europe’s biggest insurer Allianz SE discussing a possible tie-up with Income Insurance Ltd.
/jlne.ws/4eANLEO

Philippines Emerges as Southeast Asia Renewable Power Pacesetter; 99-GW pipeline of clean energy puts nation ahead of neighbors; Rollout, integration across archipelago will be challenging
Sing Yee Ong and Ditas B Lopez – Bloomberg
The Philippines has leapfrogged its Southeast Asian neighbors to become a regional leader in planned clean-power projects as fewer investment restrictions and green-minded policies attract domestic and foreign cash. Changes including allowing full foreign ownership of renewable energy projects have already helped secure a pipeline of 99 gigawatts of wind and solar developments. That’s more than enough power to supply all Philippine households, and is ahead of Vietnam at 86 gigawatts and about five times higher than in Indonesia.
/jlne.ws/4ev265x

China’s LNG Boom Threatened by Growing Menu of Alternative Fuels
Bloomberg
Cracks are appearing in the bullish picture for liquefied natural gas demand in China. Global majors like Shell Plc and TotalEnergies SE have invested billions of dollars in new seaborne gas supply, wagering that consumption in the world’s biggest importer will continue to expand rapidly. That long-held view hinges on China using ever more of the cleaner-burning fuel as a bridge between dirty coal and the renewable energy that will deliver net zero by 2060.
/jlne.ws/3za2oyu

Saudi Arabia Dethrones China as Top Emerging-Market Borrower
Selcuk Gokoluk – Bloomberg
Saudi Arabia has displaced China as the most prolific issuer of international debt among emerging markets, breaking Beijing’s 12-year run at the top. Data for new-bond sales by both governments and corporates this year reveal the kingdom is borrowing at a record pace as global debt investors begin to back Crown Prince’s Mohammed bin Salman’s Vision 2030 plan. Chinese borrowers, on the other hand, are witnessing a buying frenzy in local-currency bonds and have slowed international issuance to one of the slowest paces in recent years.
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Brazil Central Bank Is Set to Halt Interest Rate Cuts Due to Credibility Crisis
Maria Eloisa Capurro – Bloomberg
Brazil’s central bank will likely pause its nearly yearlong cycle of interest rates cuts as policymakers face a full-blown credibility crisis and struggle to tame inflation expectations that are rising further above target. All analysts surveyed by Bloomberg expect the bank led by Roberto Campos Neto to hold the Selic steady at 10.5% after markets close on Wednesday, except for two who forecast another quarter-point cut. Traders also see a halt now, and most are pricing in rate hikes later in the year.
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The Spread

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Observations & Insight Miami International Holdings, Inc. (MIH) announced that the SEC has approved MIAX Sapphire LLC's application to become a national securities exchange. MIAX Sapphire, MIH's fourth national securities exchange for U.S. multi-listed options,...

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