Calvin F. Williams Jr is Using His Business to Close the Wealth Gap
Alex Perry – John Lothian News
From creating investment management strategies to expanding financial education, Calvin F. Williams Jr. runs his business with one clear goal in mind: to close the racial wealth gap. Since age 12 when he first started his own lawn care service, he understood the value of building wealth, yet he also understood that many people lack the financial resources to do that.
Williams is the owner of FreemanCapital, the first Black-owned automated wealth management platform for retail customers that’s registered with the U.S. Securities and Exchange Commission (SEC). In 2021, Williams was named part of Investment News’ 40 Under 40, where he noted that after college, he couldn’t find a financial adviser because he “didn’t have a million bucks.” His fintech helps people of color achieve financial wellness – people who are often overlooked.
Read the rest of this article HERE.
Hits & Takes
John Lothian & JLN Staff
The CME Group announced multiple equity index futures and options volume records from trading on January 24, with the equity index futures and options complex reaching a new single-day trading volume record of 15,846,802 contracts. The previous record was 15,623,428 contracts set on February 28, 2020. Micro E-mini Equity Index futures reached a record 6,571,375 contracts traded on January 24, across all four indices – S&P 500, Nasdaq-100, Dow Jones Industrial Average and Russell 2000. This new high surpassed the previous record of 5,135,546 contracts set on January 21, 2022.
The NYSE’s Head of Research Kevin Tyrrell has an article titled “NYSE DMMs: Meeting the Volatility Challenge.”
FTX US was valued at $8 Billion (capital B) after it raised money from outside investors for the first time, taking $400 million from SoftBank, Paradigm and others. For perspective, $8 Billion or thereabouts was what the CME paid for the CBOT. Thank goodness the price of exchanges is not a component in the Consumer Price Index.
SEC Chairman Gary Gensler delivered a speech yesterday for the Northwestern Pritzker School of Law’s Annual Securities Regulation Institute on “Cybersecurity and Securities Laws.” He talked about the first securities hack, which occurred in France. He even shot one of his popular YouTube videos posted to Twitter to promote this speech. He said:
“In 1834, exactly a century before the SEC was established, the Blanc brothers in Bordeaux, France, committed the world’s first hack. The two bankers bribed telegraph operators to tip them off as to the direction the market was headed. Therefore, they gained an information advantage over investors who waited for the information to arrive by mail coach from Paris.”
And there was the first ever occurrence of the type of hack that later would be used in the “Inside Wall Street” BusinessWeek column insider trading scandal in 1990, among others.
The FIA Boca tennis tournament is sponsored by Trading Technologies and will benefit the Greenwood Project. Prizes will be awarded to the top three final scorers. The tournament is on Tuesday, March 15 at 8:45 to 11 AM. You can learn more HERE.
Hong Kong Exchanges and Clearing Limited (HKEX) wishes everyone a prosperous Year of the Tiger!
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
Reminder: The Cboe Options Institute is holding a 60-minute webinar today at 12pm EST (11:00 Central) exploring the topic of “Accelerating Growth in Funds’ Use of Options.” The speakers will be Keith Black, PH.D., CAIA, CFA, FDP managing director and program director, FDP Institute; Joseph Cusick, vice president, portfolio specialist, Calamos Investments; Blair Hull, founder and chairman, Hull Tactical; and Matt Moran, head of index insights, Cboe Global Markets. You can go HERE to register. ~SR
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CFTC Chairman Rostin Behnam Appoints Initial CFTC Leadership
Commodity Futures Trading Commission Chairman Rostin Behnam today announced the following leadership appointments as he begins his chairmanship. The personnel announced today will lead divisions, offices and other teams within the CFTC to execute the responsibilities in the CFTC governing statute and other issues facing the agency. Today’s announcement follows Chairman Behnam announcing his executive office staff and naming Tanisha Cole Edmonds as the CFTC’s first Chief Diversity Officer. Chairman Behnam plans to make additional staff and policy announcements very soon.
***** Amanda Olear has been appointed the Director of the Market Participants Division. Rob Schwartz has been named General Counsel and Clark Hutchison will continue his role as the Director of the Division of Clearing and Risk (DCR), which he has led since July 2019. Dr. Tamara Roust will continue as the Director of the Division of Data and Chief Data Officer, a role she has had since October 2020 and Suyash G. Paliwal will continue as Director of the Office of International Affairs (OIA).
Citadel Securities: how the Wall Street outsider became ‘the Amazon of financial markets’; Involved in more than 25 percent of all US stock trades, and tipped to float, the company is the focus of SEC scrutiny
Joe Rennison and Madison Darbyshire, Philip Stafford and Stefania Palma – FT
It was in the late 1980s that Ken Griffin set his sights on what Citadel Securities would eventually become. An early trade with Susquehanna Investment Group paid out less than the young Griffin was expecting. One version of the story has him sitting on the telephone in his Harvard dorm room, complaining to the Susquehanna trader and vowing to start a competing business to change the entire market, according to former employees and acquaintances.
***** Amazon of the financial markets? When I see Citadel trucks on my street every day then I will believe that.~JJL
Market Selloff Is Ultimate Test of What’s Real and What’s Not; Ultra-speculative assets are leading the way down, but robust corporate balance sheets could put a floor under prices.
Michael P. Regan – Bloomberg
It’s been an ugly start to the year in the stock market, and many on Wall Street are bracing for it to get even uglier. On Jan. 25 the S&P 500 index was almost 10% below its last high, which was reached on the first trading day of 2022. The Nasdaq-100 index was off nearly 15% from its peak in November, while the Russell 2000 Index of smaller companies was down almost 18% from its latest high.
*****There is not enough beer in the world to figure out what is real and what is not.~JJL
Picasso Heirs Launch NFTs of Unseen Work to Ride Crypto Wave
Jamey Keaten – AP
Pablo, meet Crypto. Heirs of Pablo Picasso, the famed 20th-century Spanish artist, are vaulting into 21st-century commerce by selling 1,010 digital art pieces of one of his ceramic works that has never before been seen publicly — riding a fad for “crypto” assets that have taken the art and financial worlds by storm.
***** No time like the present to cash in on your ancestor’s genius.~JJL
Tuesday’s Top Three
Our most read story Tuesday was CNBC’s Here’s how much money you have to earn to be in the top 1% in every US state. Second was Bloomberg’s FOMO Turns to OMG for Crypto Traders Who Bought at Peak Prices, with the great subheading “”It’s like they’re saying it’s the future and then it crashes. I was like, ‘this is not cool,'” says one investor who recently bought into the hype.” Third was the LinkedIn page for ABN AMRO Clearing Chicago’s Global Graduate Talent Program, which is looking for applicants.
26,697 pages; 237,154 edits
DeFi Increasingly Popular Tool for Laundering Money, Study Finds; The study by Chainalysis comes as the total annual value of laundered cryptocurrency jumped 30% in 2021
Mengqi Sun – WSJ
Decentralized finance protocols are playing an increasing role in money laundering, with the total value of cryptocurrency laundered rising year over year by 30% in 2021, according to blockchain data platform Chainalysis Inc. Cybercriminals laundered about $8.6 billion in cryptocurrency in 2021, Chainalysis said in a partial release of its 2022 cryptocurrency crime report, the full version of which will be published in February. Chainalysis determined the figure by tracking cryptocurrency sent from illicit addresses to addresses hosted by cryptocurrency services such as centralized exchanges and peer-to-peer exchanges.
Switzerland’s crypto valley looks past cold market winds; Zug finds itself on the front line of global finance dealing with digital assets
Sam Jones – FT
Tiny Zug was once an innocent sort of place, known for its baking nuns, half-timbered houses and a kirsch-soaked torte favoured by Audrey Hepburn. Then it became a low-tax paradise and a magnet for corporate letterboxes: home to Glencore and other, even less cuddly behemoths. And now, in the unassuming business parks and low-rise office blocks that gently sprawl from the small old town centre, it has become Europe’s cryptocurrency kingdom.
Analysis-Will the games stop? SEC mulls crackdown on trading apps
Katanga Johnson – Reuters
A year after the “meme stock” rally humbled hedge funds and roiled Wall Street, U.S. regulators are studying ways to crack down on psychological prompts used by Robinhood Inc and other commission-free brokers to promote frequent stock trading on smartphone apps. The Securities and Exchange Commission (SEC) started scrutinizing commission-free brokers like Robinhood, Webull Financial LLC and SoFi Inc last year after retail investors drove GameStop and other “meme stocks” sky high in Jan. 2021.
Nervy stock markets spark records in derivatives trading; Demand for put options exceeds early weeks of pandemic as investors braced for rate shift
Eric Platt – FT
Investors are racing to protect their portfolios from damage as volatility sweeps across Wall Street, sending stocks flying higher and lower as traders brace for tighter policy from the Federal Reserve. Put options contracts, which can shield against losses from declines in share prices, were in heavy demand at the start of the week, when the S&P 500 benchmark index of US stocks registered a 10 per cent drop from recent highs.
DeFi Shakeout Seen as Liquidations Lead to Crypto User Exodus
Olga Kharif – Bloomberg
80% of the decentralized apps could go away, DappRadar says; Nearly $300 million liquidated in last week: Dune Analytics
The recent meltdown in the digital-asset world has been especially hard on DeFi or decentralized finance, the embryonic sector that had surged in value since being touted as the future of finance less than two years ago.
Mark Zuckerberg’s Stablecoin Ambitions Unravel With Diem Sale Talks
Liana Baker, Jesse Hamilton and Olga Kharif – Bloomberg
The controversial cryptocurrency project that Mark Zuckerberg once defended in front of Congress is unraveling after regulatory pressure. The Diem Association, a cryptocurrency initiative once known as Libra backed by Meta Platforms Inc., is weighing a sale of its assets as a way to return capital to its investor members, according to people familiar with the matter. Diem is in discussions with investment bankers about how best to sell its intellectual property and find a new home for the engineers who developed the technology, cashing out whatever value remains in its once-ambitious Diem coin venture, said the people, asking not to be identified because the discussions aren’t public.
ETF Trading Surges to Record as Bulls and Bears Play Tug-of-War
Emily Graffeo – Bloomberg
The stock market’s dramatic turns are fueling record trading in ETFs, the highly liquid investment vehicles that traders are using to keep pace with surging volatility. As the Nasdaq Composite Index tumbled as much as 4.9% Monday then rallied back to a late day gain, four of the five largest exchange-traded ETFs — which go by the tickers IVV, VTI, VOO and QQQ — saw a record value of shares traded. The largest ETF by market value — the SPDR S&P 500 ETF Trust (SPY) — saw its second highest.
IMF urges El Salvador to ditch bitcoin as legal tender; Criticism comes as President Nayib Bukele doubles down on crypto bet despite recent volatility
Christine Murray – FT
The IMF has urged El Salvador to stop recognising bitcoin as a legal tender in the country and expressed concern over its plan to issue bonds linked to the cryptocurrency, as prices for digital coins hit a rough patch.
Singapore clamps down on ads for ‘highly risky’ crypto trading; Move signals further caution despite platforms’ eagerness to tap financial hub
Dylan Loh – FT
Singapore’s financial regulator is clamping down on the marketing of cryptocurrency services in the city-state in a further setback for digital asset service providers looking to establish themselves in the Asian financial hub.
Emerging markets must ‘make haste slowly’ on CBDCs; Fear and opportunity combined make a strong case for central bank digital currencies, but there are some ticklish challenges
Duvvuri Subbarao – FT
The Fed is ambivalent about digitising the dollar, or so it seems from the discussion paper it released last week. Australia remains sceptical about the benefits of a retail central bank digital currency. Although a first mover in the CBDC field, Sweden’s Riksbank is still in the exploration phase. By current indications, a “Britcoin” by the UK is unlikely before 2025.
Glencore backed Viterra to acquire US grain trader Gavilon for $1.1bn; Deal comes as metals trader and miner considers options for its near 50 per cent stake
Emiko Terazono and Neil Hume – FT
Viterra, the crop trading business spun out of Glencore, has swooped to acquire a US rival in a deal that could pave the way for an initial public offering of the business as the industry records bumper profits.
Fidelity, Once Stodgy and Adrift, Bets on the Reddit Crowd; Abby Johnson, a CEO some doubted, has lifted the firm’s profits while reshaping it for the generation of young investors spurred by the pandemic
Justin Baer – WSJ
Fidelity Investments Chief Executive Abigail Johnson, granddaughter of the financial behemoth’s founder, checks the pulse of the investing world from an unlikely place these days: Reddit’s stock-picking forums. Not long ago, Fidelity appeared to some adrift and old-fashioned. Profits were down. Its mutual funds’ star stock pickers were losing clients. A firm that once stood as the world’s biggest money manager had slipped behind BlackRock Inc. and Vanguard Group. Some inside the family-controlled firm worried Ms. Johnson wasn’t bold enough to lead it.
Denmark Prepares to End Curbs as Hospitals Can Control Omicron
Morten Buttler and Christian Wienberg – Bloomberg
Government plans to end restrictions by the end of the month; Danish hospitalizations fall while number of infections surges
Denmark wants to end virus restrictions and reclassify Covid-19 as a disease that no longer poses a threat to society, according to government documents seen by Bloomberg News. The change is coming as the Nordic country registers record numbers of daily virus infections while hospitalizations are declining, indicating that omicron is less dangerous than earlier variants of the virus.
Scientists Identify Factors That Appear Linked to Long Covid
Marthe Fourcade – Bloomberg
Scientists seeking to find out which patients are most at risk of developing long Covid offered partial answers in a study. People who have circulating fragments of the coronavirus, specific antibodies directed against their own tissues or organs — known as auto-antibodies — and a resurgence of the Epstein-Barr virus appear more at risk, researchers said in an article in the scientific journal Cell.
BioNTech to Boost Staff by 50% at Biggest German Vaccine Factory
Naomi Kresge and Angela Cullen – Bloomberg
Covid vaccine maker plans to add about 250 jobs in Marburg; Factory could start making vaccines for other diseases too
BioNTech SE plans a 50% boost in staff at its biggest German factory this year as the omicron wave drives demand for boosters of its Covid-19 vaccine.
Where Is the Operation Warp Speed for Covid Testing? An all-out effort paid off in developing vaccines, but America continues to lurch from one wave of the virus to another without a meaningful plan for ongoing surveillance.
Cynthia Koons and Emma Court – Bloomberg
The U.S. is awash in vaccine doses, but the availability of tests has been a problem throughout the most intense surges of the Covid-19 crisis. That’s because while there was an Operation Warp Speed to create vaccines, there hasn’t been a comparable initiative for tests.
Hong Kong Covid Isolation Could Last to 2024, Euro Chamber Says
Michelle Fay Cortez and Iain Marlow – Bloomberg
Reopening unlikely until China has mRNA vaccines: draft report; Businesses should expect exodus of foreign staff, chamber says
Hong Kong’s zero-tolerance approach to Covid-19 could keep the Asian financial hub cut off from most of the world until 2024 and fuel a large-scale exodus of international workers and executives, according to a draft report by the European Chamber of Commerce in the city.
Austria to End Lockdown for Unvaccinated Monday, Nehammer Says
Marton Eder – Bloomberg
Austria will end a lockdown for unvaccinated people from Jan. 31 after the rate of infected people requiring hospitalization remained low during the latest wave of the coronavirus pandemic.
Exchanges, OTC and Clearing
CME Group Announces Multiple Equity Index Futures and Options Records
Record 15.8 million Equity Index futures and options contracts traded; Record 6.6 million Micro E-mini Equity Index futures contracts traded
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that its Equity Index futures and options complex reached a new, single-day trading volume record of 15,846,802 contracts on January 24, surpassing the prior record of 15,623,428 contracts set on February 28, 2020. Additionally, Micro E-mini Equity Index futures reached a record 6,571,375 contracts traded on January 24, across all four indices – S&P 500, Nasdaq-100, Dow Jones Industrial Average and Russell 2000. This new high surpassed the prior record of 5,135,546 contracts on January 21, 2022.
Micro Ether Futures Surpass 500,000 Contracts Traded
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that Micro Ether futures volume surpassed 500,000 contracts on January 24. “The arrival of micro-sized contracts for both Bitcoin and Ether futures in 2021 has taken our cryptocurrency product offering to the next level,” said Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products. “We’re pleased with the early adoption and rapid growth of Micro Ether futures since their launch on December 6. These contracts are providing one more way for both financial institutions and sophisticated, active retail traders to gain exposure to digital assets through our liquid and trusted cryptocurrency derivatives markets.”
Deutsche Börse increases transparency for investors in the ESG sector with new offering
Deutsche Börse is expanding its sustainability data offering for investors. In addition to existing company data, investors and interested market participants can now access information on individual sustainability aspects on the Börse Frankfurt website. Among other things, issuers can deposit ESG ratings, key figures, and sustainability reports. With this new service, Deutsche Börse is helping to increase transparency and the depth of information on companies’ sustainability activities.
Clearstream launches primary market issuance interface for Eurobonds
Deutsche Börse Group
Consistent and automated processing of issuance processes prior to completion reduces latency and risk; Issuers and market participants can now retrieve ISINs and request acceptance of issued securities in real time; Initial interface features include code assignment and ICSD approval
Clearstream, Deutsche Börse Group’s post-trade service provider, has launched its Primary Market Issuance API (PMI API), further driving innovation in the Eurobonds market. Effective immediately, issuers and market participants can call up ISINs in real time and request acceptance of securities issued under a program. Other functions of the new PMI API include the assignment of the associated common code as well as the CFI and FISN identifiers of the securities.
Nasdaq Named to 2022 Bloomberg Gender-Equality Index
Nasdaq, Inc. today announced its inclusion in the 2022 Bloomberg Gender-Equality Index (GEI) for the second consecutive year. The GEI is a modified market capitalization-weighted index that tracks the performance of public companies committed to transparency in gender-data reporting. Nasdaq is one of 418 companies across 45 countries and regions to be named to the 2022 index.
Nasdaq Announces Quarterly Dividend of $0.54 Per Share
The Board of Directors of Nasdaq, Inc. (Nasdaq: NDAQ) has declared a regular quarterly dividend of $0.54 per share on the company’s outstanding common stock. The dividend is payable on March 25, 2022 to shareholders of record at the close of business on March 11, 2022. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by the Board of Directors.
Nasdaq Reports Fourth Quarter and Full Year 2021 Results; Delivers Strong Growth in Revenue and EPS
Nasdaq, Inc. (Nasdaq: NDAQ) today reported financial results for the fourth quarter of 2021 and full year 2021. 2021 net revenues1 were $3,420 million, an increase of 18% over 2020. Solutions segments2 revenues increased 21% while Market Services increased 13%. Net revenues increased 12% compared to the fourth quarter of 2020. Solutions segments revenues increased 19%, including 12% organic growth and 7% contribution from the acquisition of Verafin. Annualized Recurring Revenue (ARR)3 increased 19% compared to the fourth quarter of 2020, and excluding Verafin, increased 9%. Annualized SaaS revenues increased 43% and represented 34% of ARR.
NYSE DMMs: Meeting the Volatility Challenge
Kevin Tyrrell, Head of NYSE Research
The NYSE market model features a Designated Market Maker (DMM) for each listed security. The DMM has unique responsibilities to actively make markets (i.e., quote bids and offers) throughout the trading day, both at the inside market prices and throughout the order book. The DMM is also responsible for executing the NYSE Opening and Closing Auctions, and is obligated to ensure all marketable auction orders receive an execution. Other markets do not apply such obligations to any market makers.
Execution of the Compression Trades for Nikkei 225 Options
Osaka Exchange (OSE) announced that the compression trades for Nikkei 225 Options (powered by TriOptima AB) * was executed during the Night Session on January 25th (Trading date January 26th). In this cycle, total of 4,449 contracts (JPY 120 billion in notional amount) were traded.
How Listed Companies Have Addressed Japan’s Corporate Governance Code (as of December 31, 2021)
Tokyo Stock Exchange, Inc. has published “How Listed Companies Have Addressed Japan’s Corporate Governance Code (as of the end of December 2021)”, based on corporate governance reports submitted by listed companies by the end of December 2021.
— Amendments to Block Trade Reporting Window for Certain Equity Contracts such that ALL Block Eligible Equity Futures and Options Contracts for ALL Hours will be Fifteen (15) Minutes – CME
— Change in Regular Firm’s Clearing Agent – CME
What the hell is Web3, anyway? The next iteration of the internet is upon us, with the potential to deliver radical shifts to every industry, including banking. The movement, which is currently buoyed by the prospects of blockchain and virtual reality, has implications for computing, data protection, networking, collaborating, and the very definition of a bank as a trusted intermediary and institution.
Rebecca Natale – Waters Technology
It’s neither bird, nor plane, nor superhero. It’s not an app or a singular new piece of technology. To define Web3.0, this year’s latest buzzword notch in the Gartner hype cycle, it might be easier to say what it’s not, rather than what it is. From large US institutions—such as Goldman Sachs and Meta (formerly known as Facebook)—to the smallest start-ups, there’s a general consensus that Web3.0—or Web3, the latest iteration of the internet following Web1 and Web2—is something we need to brace
Walmart-Backed Fintech Startup Is Acquiring Two Firms and a New Name; The startup, to be called ONE, is helmed by former Goldman executives and aims to build a ‘financial services super app’
Sarah Nassauer – WSJ
The financial-technology startup backed by Walmart Inc. WMT -2.18% said it plans to purchase two small firms and launch under a new brand. The firm, helmed by two former Goldman Sachs Group Inc. executives, will buy Even Responsible Finance Inc., which is used by employers to offer workers their paychecks early and counts Walmart as a large customer. It will also buy ONE Finance Inc., a financial-services mobile app known as a neobank that allows users to manage money and apply for a debit card or other services that come with lower fees than traditional banks typically charge.
Barclays Investment Bank operations chief joins Baton Systems in same role; New executive is the first chief operating officer in Baton Systems’ history, bringing industry experience from Barclays, Deutsche Bank, and Bankers Trust.
Annabel Smith – The Trade
The former chief operating officer of Barclays Investment Bank has joined post-trade and blockchain technology provider, Baton Systems, in the same role. David Ornstein has been appointed as Baton’s first chief operating officer, joining from Barclays Investment Bank where he had previously spent 13 years, notably guiding the institution through the transformation of its business processes.
Avelacom scales up Asian operations with Bursa Malaysia deployment; The move will allow investment banks, hedge funds, and other market stakeholders to engage with one of Southeast Asia’s fastest-growing markets.
Laurie McAughtry – The Trade
Avelacom, one of the world’s biggest low latency connectivity, IT infrastructure and data solutions providers, has this week deployed its point-of-presence (PoP) at Malaysia’s stock exchange, The TRADE can exclusively reveal.
Fast-growing fintech Baton Systems strengthens management team appointing industry leader David Ornstein as first COO
Baton Systems (“Baton”), the fintech transforming post-trade processing using distributed ledger technology (DLT), has announced the appointment of David Ornstein as the company’s first Chief Operating Officer. Ornstein joins the rapidly-scaling business at a crucial time, as industry demand continues to soar for innovative solutions that enable banks to optimise funding and capital returns by addressing rising levels of settlement risk, unnecessary costs and inefficiencies in post-trade processing. With a unique mix of both front and back office experience across capital markets, Ornstein has been driving strategic change and operational excellence in both high-growth and established global financial services businesses for over 25 years.
What Happens When Russian Hackers Come for the Electrical Grid; Emergency training at a restricted facility off Long Island has aimed to minimize the potentially catastrophic effects of a cyberattack on U.S. power infrastructure.
Michael Riley – Bloomberg
Five times over three years, a desperate scenario has played out on Plum Island, an isolated spit of land just off the northeastern tip of New York’s Long Island. A large part of the power grid has gone down, leaving the population in the dark and critical facilities such as hospitals growing desperate. A team of utility operators and cybersecurity experts scrambles to get the grid back up, while hackers try to keep it down.
White House clamps down on federal cybersecurity after big hacks
Sean Lyngaas – CNN
The White House plans to release an ambitious strategy Wednesday to make federal agencies tighten their cybersecurity controls after a series of high-profile hacks against government and private infrastructure in the last two years, according to a copy shared with CNN.
It’s one of the biggest efforts yet by the Biden administration to secure the computer networks that the government relies on to do business.
Gensler discusses cybersecurity under the securities laws
Cooley LLP – JDSupra
In remarks yesterday before the Northwestern Pritzker School of Law’s Annual Securities Regulation Institute, SEC Chair Gary Gensler addressed cybersecurity under the securities laws. Gensler suggests that the economic cost of cyberattacks could possibly be in the trillions of dollars, taking many forms, including denials-of-service, malware and ransomware. It’s also a national security issue. He reminds us that “cybersecurity is a team sport,” and that the private sector is often on the front lines. Given the frequency of cybersecurity incidents, the SEC is “working to improve the overall cybersecurity posture and resiliency of the financial sector.” To Gensler, the SEC’s cybersecurity policy has three components: “cyber hygiene and preparedness; cyber incident reporting to the government; and in certain circumstances, disclosure to the public.” In his remarks, Gensler considered cybersecurity in a variety of contexts, including SEC registrants in the financial sector, such as broker-dealers, investment companies, registered investment advisers and other market intermediaries; service providers and the SEC itself, but his discussion of cybersecurity in the context of public companies is of most interest here.
Eight Cybersecurity Predictions To Brace For In 2022
Mike Wilson – Forbes
As we kick off the new year, one certainty is that cybersecurity issues are not going anywhere. In 2021 ransomware attacks plagued organizations across the globe and data breaches continued to grow. From the Colonial Pipeline to the JBS beef plants, attacks are happening with alarming regularity. It’s clear that no industry is immune from the threat and, as the speed of digital transformation continues to accelerate, cybersecurity woes will continue to escalate in 2022 and beyond.
Regulators Forecast Storm of Cybersecurity Activity
Carlton Fields – JDSupra
In September and October 2021 alone, the Federal Trade Commission, the New York State Department of Financial Services, and the Securities and Exchange Commission all signaled their plans for a cybersecurity squall.
China Issues Revised Measures on Cybersecurity Review Over Network Operators
Goodwin – JDSupra
In response to recent data security concerns arising from overseas listings of Chinese internet companies operating in the People’s Republic of China (the “PRC”), the Cyberspace Administration of China (the “CAC”) has issued revised measures to expand the types of businesses and circumstances that would require cybersecurity review by the CAC. This has impacted and could potentially impact a broad range of data-rich tech companies.
Bitbuy – Canada’s first crypto trading platform to become regulated as a marketplace – relies on Eventus platform for trade surveillance; First Canadian client for Eventus as company continues global expansion
Eventus Systems, Inc.
Eventus Systems, Inc., a leading global provider of multi-asset class trade surveillance and market risk solutions, announced today that Bitbuy Technologies, Inc. (Bitbuy) – Canada’s first cryptocurrency trading platform to be regulated as a marketplace – is using the Eventus Validus platform to meet all of its trade surveillance needs. Bitbuy is the first Canadian client of Eventus, which has been steadily growing its reach globally.
Ditch Bitcoin: IMF Urges El Salvador to Rethink Crypto
Eric Martin – Bloomberg
The International Monetary Fund’s board urged El Salvador to strip Bitcoin of its status as legal currency due to its large risks, highlighting a major obstacle for the nation’s efforts to get a loan from the institution.
Binance to End Freeze on Deposits From Key EU Payments Network
Ben Bartenstein – Bloomberg
Binance Holdings Ltd. is poised to start accepting euro bank deposits from a major European payments network, putting an end to a months-long suspension, according to a person familiar with the matter.
FTX US Valued at $8 Billion With Backing From SoftBank, Paradigm
Katie Greifeld and Vildana Hajric – Bloomberg
FTX US raised money from outside investors for the first time, collecting $400 million from SoftBank, Paradigm and others in a deal valuing the cryptocurrency exchange at $8 billion.
Put On Your Crypto Winter Coats
Chris Nagi – Bloomberg
An evocative, and currently trending, phrase in the already teeming vernacular surrounding Bitcoin longs is “crypto winter,” the recurrent situation in which doldrums set in for months after a major price slump and everyone must sit there wondering if the market will ever move again. The idea, new by historical standards, is — like everything else subject to the Twitter metabolism — rapidly being depleted of meaning through viral overuse by worried crypto brethren after a brutal few days of sharp selling.
Crypto Tax Loophole Offers Escape Hatch for Battered Investors
Allyson Versprille – Bloomberg
Selling for loss could mean future tax savings, experts say; Digital assets currently not subject to ‘wash sale’ rules
There may be a silver lining for crypto investors selling at huge losses during the recent market turmoil: a quirk in the tax code that lets people minimize what they’ll owe the government down the road. Unlike stocks and bonds, cryptocurrencies aren’t subject to federal rules that bar people from claiming deductions if they sell an asset at a loss and then buy an identical or similar asset within 30 days before or after the sale. That provides a unique opportunity for people suffering steep losses to sell and reap future tax savings, then buy more virtual tokens at cheaper prices, according to crypto tax filing software firms.
Digital Asset adds former CFTC chairman to its board of directors; As an advocate for blockchain and digital assets, the incoming board member will help drive Digital Asset’s vision to build the global economic network.
Wesley Bray – The Trade
Former chairman of the United States Commodity Futures Trading Commission (CFTC), J. Christopher Giancarlo, has joined Digital Asset’s board of directors. As a member of the board, he will offer counsel on strategic matters to Digital Asset’s leadership, including asset tokenisation, distributed ledger technology (DLT) advancement and the regulatory and monetary developments impacting this space. From 2014 to 2019, Giancarlo acted as the 13th chairman of the CFTC under Presidents Barack Obama and Donald Trump.
U.S. House speaker Pelosi’s stock trades attract growing following online
Noel Randewich – Reuters
A year since a Reddit-driven retail trading frenzy rocked the markets and created the ‘meme stock https://www.reuters.com/business/why-did-sec-release-report-gamestop-2021-10-18’ phenomenon, leading U.S. lawmaker Nancy Pelosi’s investments have become a meme in their own right.
China Criticizes U.S. Diplomats Seeking Exit Over Covid Rules
American staff fear lockdowns as omicron spreads, CNN reports; Latest source of diplomatic strain ahead of Winter Games
China said a U.S. bid to let its diplomats exit China during the pandemic defied logic, after reports emerged American embassy officials were worried about the country’s tightening epidemic measures.
How the Biden administration failed the Omicron test; The new variant has exposed dysfunction in America’s public health institutions that has continued under a new president
Kiran Stacey – FT
One of the first things President Joe Biden did after being elected was to name a new advisory board of doctors and scientists to deal with the Covid-19 pandemic. The message was clear: no longer would the White House take its cues from Fox News hosts and conspiracy theorists, as he believed it had under Donald Trump. Biden would be guided by “science and by experts”, he said on November 9 2020.
Venture Capital Becomes a Tech Battleground Between China, U.S.; U.S.-trained VCs built China’s tech sector, but now the Communist Party calls its shots
Greg Ip – WSJ
Last year, China’s tech stocks cratered. This year, America’s are following suit. But their selloffs have very different drivers, and therein lies a potential inflection point in the emerging competition between the two countries. The Nasdaq correction is the natural consequence of speculative froth that allowed numerous unprofitable companies to go public and many established companies to achieve nosebleed valuations.
First ‘investment passport’ under the ARFP granted to NZ fund manager
The Financial Markets Authority (FMA) – Te Mana Tatai Hokohoko has approved Smartshares Limited as a passport fund under the Asia Region Funds Passport (ARFP). ARFP is a multilateral agreement between New Zealand, Australia, Japan, Thailand and The Republic of Korea that allows investors and managed funds from those countries to do business more easily. The initiative facilitates the offering of liquid and well-diversified managed funds among the signatory economies. Smartshares is the first fund manager to be approved under the ARFP.
China to Start Three-Year Crackdown on Money Laundering
China will start a nationwide crackdown on money laundering from 2022 to 2024, after stepping up regulatory efforts in recent years. Eleven government agencies will carry out the campaign, which is aimed to “stop the spreading trend of money laundry and other related crimes,” the People’s Bank of China said in a statement Wednesday.
Cybersecurity and Securities Laws
Chair Gary Gensler – SEC
Northwestern Pritzker School of Law’s Annual Securities Regulation Institute
Thank you. It’s good to be with the Annual Securities Regulation Institute. As is customary, I’d like to note that my remarks are my own, and I’m not speaking on behalf of the Commission or SEC staff. As some of you may know, I often like to talk about the founding of our nation’s securities laws in the 1930s. So again, today, I’d like to discuss the ’30s — but this time, I actually mean the 1830s.
in the Matter of Heidi Mao; Administrative Proceeding File No. 34-94057; SEC Obtains Final Judgment Against Promoter Charged with Fraudulent Conduct
Securities and Exchange Commission v. CKB168 Holdings Ltd., et al., No. 1:13-cv-5584 (E.D.N.Y. filed Oct. 9, 2013)
On December 28, 2021, the U.S. District Court for the Eastern District of New York entered a final judgment against defendant Heidi Mao in a previously filed civil action that charged Mao with promoting investments in a fraudulent pyramid scheme. The SEC’s complaint, filed on October 9, 2013, charged 16 defendants, including Mao, with perpetrating a worldwide pyramid scheme. According to the SEC’s complaint, through the efforts of three CKB executives who live overseas and top promoters living in the U.S., including Mao, the scheme ensnared investors in New York, California, and other areas with large Asian-American communities. The executives and promoters collectively raised tens of millions of dollars from investors in the United States, Canada, Taiwan, Hong Kong, and other countries in Asia.
ESMA requires to report net short positions between 0.1% and 0.2% during transition
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today published a statement to clarify how to report net short positions (NSPs) between 28 and 31 January 2022 when the reporting threshold changes from 0.2% to 0.1%.
ESMA appoints two new members to its Management Board
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has reappointed one current member and appointed two new members to its Management Board to replace outgoing members. The appointments took place at the Board of Supervisors meeting on 25 January.
PODCAST: Deep Learning: The Future of the Market Manipulation Surveillance Program
FINRA’s Market Regulation and Technology teams recently wrapped up an extensive project to migrate the majority of FINRA’s market manipulation surveillance program to using deep learning in what is perhaps the largest application of artificial intelligence in the RegTech space to date.
Investing and Trading
Millions of frustrated taxpayers still waiting on last year’s refund as tax season begins
Karen James Sloan – CNBC
Tax filing season began this week, but millions of taxpayers are still waiting for last year’s refunds. Alysha Holliday, 30, of North Olmstead, Ohio, is one of them. She filed an amended return in April, after Congress changed the rules to make thousands of dollars in unemployment benefits tax-free.
Retail Traders Flocked to Levered ETF Betting on More Tech Pain
Bailey Lipschultz – Bloomberg
Individual investors pushed cash into a levered exchange-traded fund betting against the tech-heavy Nasdaq 100 as they looked to profit from the market’s spiral. Retail traders bought $76.6 million of the ProShares UltraPro Short QQQ ETF (ticker SQQQ) — an ETF that delivers results that are three times the inverse performance of the gauge — amid Monday’s rout, according to data compiled by JPMorgan Chase & Co. strategist Peng Cheng. That reversal comes after months of betting that crowd favorites like the Invesco QQQ Trust Series 1 (ticker QQQ) and Nvidia Corp. would continue to rise.
Glencore Expands U.S. Grain Trading With $1.1 Billion Deal
Masumi Suga and Thomas Biesheuvel – Bloomberg
Glencore Plc’s Viterra unit agreed to buy the grains business of Gavilon Group, making good on a longstanding goal to grow in the U.S. as the commodity giant assesses the future of its agriculture operations.
Paul Allen’s Family Office Spins Out $8 Billion Manager
Benjamin Stupples – Bloomberg
Vulcan Capital is now Cercano and open to outside capital; Minimum client account will typically be $100 million
The family office of Microsoft Corp. co-founder Paul Allen has spun out its investment-management group into a standalone business catering to the world’s super-rich. Vulcan Capital is now Cercano Management and oversees investment assets for the estate and family foundation of Allen, who died in 2018, according to a representative of the family office, Vulcan Inc. It’s led by former Vulcan Capital Chief Investment Officer Chris Orndorff and allocates across public markets, private equity, private credit and real estate, according to a November registry filing.
Wall Street Zeroes In On Just How the Fed Might Drain Liquidity
Alex Harris and Sydney Maki – Bloomberg
Analysts are split on where the Fed unwind will appear first; A decline in bank reserves could curtail how long QT goes on
Wall Street analysts have been busy war-gaming just how quickly the Federal Reserve might start shrinking its balance sheet. Now attention is also turning to exactly which parts of the financial system it could suck the most liquidity from as it reverses its pandemic-era stimulus.
When an activist investor attack is no bad thing; Outside critiques are already forcing change at Unilever and Peloton — and that’s no bad thing
Brooke Masters – FT
It’s a chief executive’s nightmare. First an activist investor takes a stake in the company. Next they start questioning the strategy and sowing divisions between management and the board and shareholders Unilever boss Alan Jope was jolted into this scenario over the weekend by the news that Nelson Peltz, the activist famous for shaking up consumer groups, has built a position in the FTSE 100 company.
Environmental, Social and Corporate Governance
U.S. Clears Second-Largest Ever Loan of Oil From Strategic Reserve
Ari Natter and Sheela Tobben – Bloomberg
The U.S. Department of Energy announced the loan of 13.4 million barrels of crude oil from its strategic reserve as part of a renewed effort by the Biden administration to contain oil prices that have surged to their highest level since 2014.
Vestas warns of further turbulence for wind turbine makers; Danish manufacturer blames supply chain problems and higher costs for gloomy 2022 outlook
Richard Milne – FT
Vestas has warned that supply chain and profitability woes in the wind turbine industry would continue for at least the rest of the year as the green energy industry faces challenging times.
Sustainable Investing Bubbles Can Change the World—and Sink Your Portfolio; A mania in clean-energy stocks holds lessons for ESG investors. This is the third in a series of Streetwise columns taking a critical look at sustainable investing.
James Mackintosh – WSJ
If you want a company to do more of what it does, one way to accelerate its expansion is to buy its stock; get all your friends to buy its stock; persuade fund managers, Reddit readers and pension funds to buy its stock; and watch the price soar. Eventually the board will take advantage of the bubble you create to raise what is for the company very cheap money and invest it in the business. Job done.
Wells Fargo Said to Eye Sale of $1 Billion Hong Kong Bank Stake
Matthew Monks – Bloomberg
Wells Fargo & Co. is considering a sale of its minority stake in a Hong Kong lender, as the U.S. bank continues to unload assets as part of a turnaround plan, people with knowledge of the matter said.
JPMorgan Plans to Hire 500 as It Takes Top Spot in Latin America
Cristiane Lucchesi and Hannah Levitt – Bloomberg
JPMorgan Chase & Co., which raked in more investment-banking fees in Latin America than any of its competitors last year, plans to hire more than 500 people in the region as it gains market share and builds on its success in acquisition finance.
Bank of America Employees to Share Stock Award of $1 Billion
Katherine Doherty – Bloomberg
Staff earning as much as $500,000 a year are eligible; Financial firms are competing to attract and retain employees
Bank of America Corp. is rewarding almost all of its employees with a pool of $1 billion in restricted stock, further boosting compensation as financial firms compete to attract and retain workers.
TD Plans to Hire 2,000 Tech Workers Amid Battle for Talent
Kevin Orland – Bloomberg
Goal is more than six times bank’s technology hires in 2021; Firm seeking to add workers throughout geographic footprint
Toronto-Dominion Bank plans to hire more than 2,000 technology workers this year, more than six times the number added last year, pitting the lender against fintech firms in the war for talent.
UK banks push back over fraud worries in Covid loans; Executives fear being scapegoated after Lord Agnew criticised government officials’ ‘schoolboy errors’ in the scheme
Daniel Thomas and Stephen Morris – FT
UK banks fear their reputation could be unfairly tarnished over accusations that they handed out billions to fraudsters in a state-backed coronavirus business loan scheme.
Brookfield expands hedge fund business into Europe; Canadian group’s move comes after funds employing a multi-strategy approach have thrived during the pandemic
Laurence Fletcher -FT
Brookfield Asset Management is expanding its hedge fund business into Europe, as the Canadian investment group bets on a trading strategy that has delivered stellar returns for some of the industry’s biggest names during the pandemic.
JPMorgan to start converting $9bn in mutual funds to ETFs in April; The four funds bled a combined $2bn during the 12 months ended November 30
David Isenberg – FT
JPMorgan will in April begin converting $9.1bn in mutual funds to ETFs, the company has disclosed.
Citi plans £100m revamp of Canary Wharf tower; Three-year project described as vote of confidence in the City of London and the future of the office
Stephen Morris and George Hammond – FT
Citigroup will undertake a three-year overhaul of its London skyscraper costing more than £100m, in what the bank has described as a vote of confidence in the City of London after Brexit and the future of the office post-pandemic.
Many Countries Fail to Counter Corruption Despite Promises, Antigraft Group Says; The U.S. has done little to improve its own reputation, according to Transparency International’s latest survey
Dylan Tokar – WSJ
Many countries around the world have stalled in their efforts to improve their image regarding the amount of corruption within their borders, Transparency International said Tuesday. The findings, part of an annual survey by the Berlin-based advocacy group, arrive amid a push by President Biden to make anticorruption a central pillar of his administration’s national security agenda.
Jes Staley pressed JPMorgan to keep Jeffrey Epstein as client; Retention efforts shed further light on relationship that later prompted Barclays chief to resign
Joshua Franklin – FT
Jes Staley pressed JPMorgan Chase to keep Jeffrey Epstein as a client — despite the fact that the disgraced financier had been convicted of prostitution offences — before the bank cut him off as a customer in 2013, according to two people involved in the discussions.