SGX Looks To Expand A50, Grow China-Centric Risk Management Business
Switch from MSCI to FTSE Russell Offers Powerful Network Lessons
John Lothian – John Lothian News
SGX learned much from the experience a year ago when their equity index products switched from MSCI to FTSE Russell. Those lessons are being utilized as they contemplate growing their equity index offerings by increasing the number of stocks in the A50.
The growing importance of China in global investors’ portfolios is driving this potential change, Michael Syn of SGX said in an interview with JLN over Webex. Syn is the head of equities at Singapore Exchange and serves as CEO of the stock market (SGX-ST), depository (CDP) and futures market (SGX-DT/DC).
SGX signed a strategic agreement with FTSE Russell in August of 2020 to develop multi-asset solutions in everything from equities to foreign exchange, commodities, fixed income and ESG. Its previous deal with MSCI, which expired in February of this year, focused just on equities. SGX retained its license with MSCI for the MSCI Singapore equity index futures and options.
To read the rest of this commentary, go HERE.
Analysis: What Can We Learn From the DOJ’s Latest Spoofing Conviction?
Renato Mariotti and Holly Campbell – John Lothian News
“I know how to game this stuff.” “One can definitely manipulate if you’re aggressive.” “If you spoof this it really moves.” These excerpts from online chats among traders and hedge fund managers more than a decade ago played a key role in the Justice Department’s successful prosecution of two Wall Street traders in the latest trial to take on “spoofing,” a form of market manipulation that was criminalized in the 2010 Dodd-Frank Act.
On August 5, 2021, a federal jury in the Northern District of Illinois convicted Edward Bases and John Pacilio of 18 counts of conspiracy, wire fraud, and commodities fraud for pushing market prices of precious metals futures contracts by routinely placing large “spoof orders” that they did not intend to fill. Interestingly enough, spoofing was one of the two counts where the defendants were found not guilty.
What happened in this case, and what can we learn from the result?
To read the rest of this commentary, go HERE.
Hits & Takes
John Lothian & JLN Staff
Let’s talk about climate risk and how to solve it.
Also, the Financial Markets Group at the Chicago Federal Reserve has published their latest podcast and it is titled “Can Global Financial Markets Manage Climate Risk?” — Chicago Federal Reserve
The latest video from Tradier’s OptionsBrewTV channel on YouTube is titled “Managing Portfolio Tail Risk with OTM Call and Put Options.” We can all use a little better tail risk management. — YouTube
Volatility is a thing in September as MIAX reported their SPIKES futures contracts set a volume record and daily volume record during the month. — MIAX
The New York Post has a story that a record 4.3 million people quit their jobs in September. I guess quitting your job is getting to be a thing. The good news is that many people are finding better jobs for their lifestyles and making more money, which is good for the economy. — NY Post
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: Cboe Options Institute hosts a free 75-minute webinar on “Portfolio Risk Reduction and VIX Futures” today at 12 p.m. ET. Benn Eifert, managing director of the CAIA Association, and Keith Black, CIO of QVR Advisors, are slated to join Cboe’s Matt Moran for the session. Registration information is here. ~SC
CME Group International Average Daily Volume Reached 5 Million Contracts in Q3 2021, Up 13% from Q3 2020
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that its international average daily volume (ADV) reached 5 million contracts in Q3 2021, up 13% year on year. Reflecting all trading done outside the United States, volume increases were driven by global growth in Interest Rate and Energy products, up 54% and 31% respectively.
****Volume is up and there are lots of smiling faces behind those masks.~JJL
Women in finance are turning to online poker to boost their career
In the long line of services promising to help women improve their lot at work, an entrant from a billionaire investor is attracting thousands of female financial professionals from around the world. Poker Power is a dozen-course program created by longtime trader Jenny Just that uses the card game to teach risk-taking and negotiation techniques. Lessons, taught by seasoned players, start with skills such as how to read opponents and when to fold.
***** A good poker game always starts with an ant(i)e.~JJL
Can Global Financial Markets Manage Climate Risk?
Federal Reserve Bank of Chicago
New episode: Our #LaSalleStreetPodcast explores the emerging challenges of climate change risk with the co-directors of the Volatility and Risk Institute at NYU Stern School of Business, Robert Engle, recipient of the 2003 Nobel Prize in Economics, and Richard Berner, who served as the first director of the Office of Financial Research. Our own Alessandro Cocco hosts the episode—listen here:
****** Where there is a risk, we can only try to manage it. Market-based solutions for managing that risk is the best way most of the time.~JJL
Tuesday’s Top Three
Our top story Tuesday was What the Future May Hold for the Coronavirus and Us, from the New York Times. Second was Everything you need to know about DeFi, from Quartz. Third was another coronavirus story from the New York Times, Past Pandemics Remind Us Covid Will Be an Era, Not a Crisis That Fades, illustrated with “The Triumph of Death,” by Pieter Bruegel the Elder.
26,635 pages; 236,016 edits
Entry into S&P 500 could be influenced by ratings sales, research suggests; Benchmark index says academic paper alleging links between the list and credit ratings is ‘flawed’
Nicholas Megaw – FT
Entry into the S&P 500, the benchmark index of large US stocks, could be influenced by whether companies buy other services from the index’s parent company S&P Global, according to an academic study.
S&P 500: pay to play? A new working paper attempts to figure out why some companies make it into the blue-chip stock market index.
Jamie Powell – FT
In global markets, there’s not a more important stock market index than the S&P 500. Depending on who you ask, the blue-chip index of the US’s largest companies acts as an economic indicator, a benchmark for executive compensation or a primary source of social welfare, thanks to the trillions in dollars of household savings that track its every move.
Russia Shows Its Growing Sway Over Global Energy Markets; Moscow’s huge oil and gas reserves have given it more influence over Western and Chinese economies grappling with rising prices
Georgi Kantchev and Benoit Faucon – WSJ
The natural gas shortage that drove prices to records in Europe has exposed Russia’s rising leverage over global energy markets, with Moscow now playing a key role in everything from OPEC negotiations to coal exports to China.
Putin Sees European Gas Crisis as Russia’s Golden Chance
Irina Reznik and Henry Meyer – Bloomberg
Fresh from crowing over Europe’s gas crisis, Russian President Vladimir Putin now sees a chance to capitalize on it. Putin wants to press the European Union to rewrite some of the rules of its gas market after years of ignoring Moscow’s concerns, to tilt them away from spot-pricing toward long-term contracts favored by Russia’s state run Gazprom, according to two people with knowledge of the matter. Russia’s also seeking rapid certification of the controversial Nord Stream 2 pipeline to Germany to boost gas deliveries, they said.
CME Says It May Introduce 20-Year Treasury Futures Contracts
Elizabeth Stanton – Bloomberg
CME Group Inc., the dominant provider of futures tied to U.S. Treasuries, took a step toward introducing contracts tied to the 20-year bonds that were brought back in 2020 by the federal government.
Coinbase poised to launch NFT marketplace; US crypto exchange plans to allow users to create, buy and sell digital collectibles by end of year
Hannah Murphy – FT
Coinbase plans to launch a marketplace for non-fungible tokens (NFTs) as the largest US exchange for trading crypto assets joins the boom in digital collectibles. The exchange, which listed in New York earlier this year and has recently faced heightened scrutiny from regulators, announced that Coinbase NFT would let users create, buy or sell the increasingly popular digital tokens, that represent artworks or other collectibles.
Quarles to End Role as Chief Watchdog of Wall Street Banks
Jesse Hamilton – Bloomberg
Fed clarifies post before vice chair term expires Wednesday; Statement says Quarles to share duties on supervisory panel
Federal Reserve Vice Chairman for Supervision Randal Quarles will be removed from his role as the main watchdog of Wall Street lenders after his title officially expires this week. The industry widely expected Quarles to effectively remain head of the central bank’s supervisory committee, even without the vice chairman title. But the board has instead decided not to have a single governor take that position, according to a statement.
China becomes next big prize for quant funds; Big-name groups attracted by improved access and ‘exploitable inefficiencies’
Hudson Lockett and Tabby Kinder and Laurence Fletcher – FT
Quantitative trading pioneer DE Shaw applied for direct access to China’s financial markets last month with little fanfare. But when Chinese media spotted mention of the move on a regulator’s website, word quickly spread. “Another quant titan invests in China” ran the headline in China Fund, a financial newspaper.
Kitchen-Table Traders Should be Scrutinized for Naughtiness; The finance industry can’t complain about regulators seeing work-from-home as increasing the risk of dodgy dealing.
Marcus Ashworth and Mark Gilbert – Bloomberg
The Financial Conduct Authority of the U.K. has warned work-from-home traders that their domestic trading desks don’t provide sanctuary from its regulatory reach. The history of money suggests the overseer is right to suspect that conduct may have become more unbecoming outside of the office.
The U.S. Replaces China as World’s Biggest Bitcoin Miner
Will Mathis – Bloomberg
New limitations in China have sent mining to U.S., Kazakhstan; Cambridge study shows wipeout in activity in the Asian nation
The U.S. has become the world’s epicenter for Bitcoin mining after a crackdown in China effectively eliminated the practice in the former cradle of the industry. At the end of August, America accounted for 35.4% of the global hash rate, a measure of computing power used to extract the digital currency, according to a Cambridge Centre for Alternative Finance study published on Wednesday. That’s more than double the activity seen in April.
Jane Fraser Has a Plan to Remake Citigroup While Tormenting Rivals; The first woman to lead a top U.S. bank is betting on the wealth business, cutting back global branches, and going slow on the return to offices.
Jennifer Surane – Bloomberg
One of Citigroup Inc.’s more serendipitous real estate investments turned out to be the roof deck it built into its newly renovated downtown New York headquarters. With sweeping views of the Hudson River, it’s a thoroughly ventilated space that investment bankers and traders can slip away to for some socializing or after-hours cocktails. Not a bad perk for those back in the office in the midst of the lingering pandemic.
Spring Comes in the Fall; Eight Takeaways from The Trading Show Chicago 2021
Chuck Mackie via Medium
As certain as daffodils and tulips, The Trading Show Chicago (TTSC) from Terrapinn has been held at Navy Pier each Spring for a number of years. That is until the advent of Covid 19, which drove the 2020 version of the event online and pushed the 2021 gathering from the Spring to the Fall. No matter because everyone — and I mean everyone — seemed ecstatic to be back to meeting in person and the ideas and energy on exhibit were as new and exhilarating as fresh blades of green grass emerging after a winter slumber.
Helping Teens Navigate the “New Normal”
The Morgan Stanley Alliance for Children’s Mental Health Reemergence Program set out to identify how teens are coping with life since the start of the pandemic and improve access to resources supporting them through this difficult time.
Why Impact of ‘Long Covid’ Could Outlast the Pandemic
Jason Gale – Bloomberg
Millions of people who have gotten Covid-19 and survived are finding that a full recovery can be frustratingly elusive. Weeks or even months after seemingly recovering from even a mild case, many patients still confront a wide range of health problems. As researchers try to measure the duration and depth of what’s being called “long Covid,” specialized, post – acute Covid clinics are opening to handle the patients. The scale of the pandemic and persistence of some of Covid’s disabling effects mean the economic pain and drain on health resources could continue well after the contagion ends.
Covid success of mRNA vaccines opens way to a new generation of drugs; Personalised cancer treatments are among those being developed using a technology once distrusted by big pharma
Nikou Asgari – FT
In 2017, Vinod Balachandran published a paper in the science journal Nature explaining an interesting phenomenon that he had discovered in a tiny number of pancreatic cancer survivors. T-cells circulating in their blood had developed the ability to identify, remember and fight back against proteins in the deadly tumours.
Philip Morris-backed group to launch world’s first plant-based Covid vaccine; Japanese pharma company says Medicago’s product will be cheaper to make and easier to transport
Kana Inagaki – FT
A unit of a Japanese company backed by Philip Morris International is planning to launch the world’s first plant-based Covid-19 vaccine that is potentially cheaper and easier to transport and store than conventional jabs.
Vaccinating poorer countries is vital to the recovery; IMF warns uneven pace of immunisation raises risks of economic scarring
The editorial board – FT
It would be hard to find an example of a government intervention that has done more good than vaccination efforts against coronavirus. As well as the obvious health benefits, immunising as many people as possible — starting with the most vulnerable — has allowed economies to unlock, workers to return to offices and emergency support measures to wind down. That has helped to produce an economic bounceback in the rich world that has more than paid off the amount invested in vaccinations.
Covid-19 demonstrated ‘power’ of government spending, says IMF; Pandemic highlighted great divide between countries over access to cheap finance
Chris Giles – FT
The coronavirus crisis caused a much larger rise in public and private debt than the global financial crisis, the IMF said on Wednesday, as it highlighted a “great finance divide” between countries with access to finance and those without.
Exchanges, OTC and Clearing
MIAX Reports Record SPIKES Futures Trading on MGEX in September 2021 and New Daily Record Volume of 14,890 Contracts
MIAX®, creator and operator of high-performance securities exchanges, products and services, today announced average daily volume (ADV) for SPIKES® Futures in September 2021 reached 7,502 contracts, a new monthly record and representing a 92.2% increase over the 3,904 ADV in August 2021. In addition, SPIKES Futures volume on September 9, 2021 totaled a new daily record of 14,890 contracts.
LME WEEK 2021: LME announces first sustainability disclosures on LMEpassport
The London Metal Exchange has registered the first sustainability disclosures on its new digital credentials register, LMEpassport, it announced on Tuesday, October 12.
LMEpassport is a platform register that enables a voluntary market-wide sustainable metals labelling program.
Metals producers Anglo American Platinum, Antofagasta plc, Boliden, Companhia Brasileira de Alumnio (CBA), Freeport-McMoran, Rusal, Teck Resources, Thailand Smelting & Refining and Zhejiang Huayou Cobalt all listed sustainability disclosures.
First sustainability disclosures listed on LMEpassport
LME press release via Mondovisione
The London Metal Exchange (LME) is pleased to announce the first sustainability disclosures registered on its newly launched digital credentials register, LMEpassport.
As of today, 12 October, nine producers have listed disclosures under the LME’s sustainability taxonomy, which covers environmental, social and governance spheres designed to ensure that all aspects of the sustainability world – and crucially, the ways in which LME-listed brands have moved to address them – can be reflected.
Market outages are one area where UK and EU could collaborate amid divergence, says Cboe; According to Cboe Europe’s head of equities, ESMA and the UK are aligned in their approach to how venues should communicate outages to ensure market resiliency.
Annabel Smith – The Trade
Cboe Europe’s head of equities, Natan Tiefenbrun, has said that guidelines around market outages could be one area where the UK and the EU collaborate amid swathes of ongoing Brexit-induced divergence. Both the UK and the EU have stressed the importance of communication in their approaches to how trading venues should manage outages and trading disruptions.
Largest and fastest growing ESG derivatives segment – OI over 4.9 billion EUR
Strong volume growth with four new records in our ESG derivatives: Daily traded contracts over 179K, Monthly traded contracts over 583K, Quarterly traded contracts 562K, Month end capital volume OI at 4.9 billion EUR
Eurex Exchange Readiness Newsflash | Next Generation ETD Contracts: Publication of second Focus call content
With this newsflash, we would like to draw your attention to the publication of the NextGen ETD Contracts – second Focus call content: screencast, presentation, and Q&As.
— Amendments to the Daily Settlement Procedure Documents for Bitcoin Futures, Micro Bitcoin Futures, and Ether Futures Contracts — CME
— Performance Bond Requirements: Energy, Agriculture, Metals – Effective October 13, 2021 — CME
— Review of Collateral Haircuts — CME
ProMEX selects Exberry as core matching engine for its digital marketplace for physical commodities; Exberry provides scalable infrastructure at the heart of ProMEX’ groundbreaking trading platform
Exberry, the exchange technology pioneer, is providing its “Marketplace as a Service” technology at the heart of ProMEX, the digital marketplace for physical commodities. The new technology partnership will enable ProMEX to create new products and markets at speed, and securely offer trading in a wide variety of commodities in new ways.
HSBC launches open architecture post-trade platform to offer third-party services; The approach will allow clients to choose and connect to their preferred service providers, with the ability to select products and services best suited to their needs.
Jonathan Watkins – The Trade
HSBC has launched a platform in a bid to create a digital ecosystem that enables clients to access post-trade services and solutions from the bank and other third-party service providers. Named HSBC MarketSpace, the new setup will allow clients to choose and connect to their preferred service providers, with the ability to select products and services best suited to their needs.
Trumid secures additional $208 million in funding round; The funding round was led by Point Break Capital Management alongside existing investors including funds and accounts managed by BlackRock and T. Rowe Price.
Annabel Smith – The Trade
Fixed income platform provider, Trumid, has secured an additional $208 million in a funding round led by private investment firm, Point Break Capital Management.
Broadway Technology Appoints Fintech Industry Professionals as Part of Business Expansion Efforts
Omar Faridi – Crowdfund Insider
Broadway Technology, a provider of high-performance front-office solutions, reveals that it has hired two Fintech industry professionals as part of its efforts to expand its international business development team.Broadway Technology noted that they continue to make investments in top industry talent in order to support their global growth plans while increasing their focus on improving customer service.
Algorithms vs. Regulators Battle Royale Kicks Off in China; China is regulating algorithms. How that experiment goes could help Western regulators understand what to embrace—and what to avoid
Jacky Wong – WSJ
China is taking a first step toward regulating algorithms. How that experiment goes could help Western regulators understand what to embrace—and what to avoid—as they ponder tougher controls on Western social-media giants too.
Russia left out of White House’s 30-country ransomware summit this week
Zachary Basu – Axios
Russia is not one of the 30 countries invited to this week’s virtual counter-ransomware summit hosted by the White House, where the U.S. and its partners will discuss ways to crack down on global cybercriminal networks, according to a senior Biden administration official.
US talks global cybersecurity without a key player: Russia
Ben Fox – AP News
Amid an epidemic of ransomware attacks, the U.S. is discussing cybersecurity strategy this week with 30 countries while leaving out one key player: Russia.
The country that, unwittingly or not, hosts many of the criminal syndicates behind ransomware attacks was not invited to a two-day meeting starting Wednesday to develop new strategies to counter the threat.
Biden signs school cybersecurity act into law
Jonathan Greig – ZDNet
Cybersecurity experts hailed the K-12 Cybersecurity Act this week after US President Joe Biden signed it into law on October 8, officially kicking off efforts by CISA to examine the cybersecurity risks associated with K-12 educational institutions.
The law, which became one of the rare bills to pass in both the House and Senate, instructs CISA to examine the threats facing the nation’s schools and then provide recommendations as well as toolkits to educators on cybersecurity hygiene.
Boston cybersecurity ratings startup Black Kite raises VC round
Aaron Pressman – Boston Globe
Black Kite, a tech startup based in Boston, said Wednesday it had raised $22 million to expand its cybersecurity ratings service.
The investment in the five-year-old company was led by Volition Capital and also included Moore Strategic Ventures, Glasswing Ventures, and Data Point Capital. Black Kite said it had raised a total of more than $33 million since it was founded in 2016.
Crypto Exchange Coinbase Jumps on the NFT Bandwagon
Gerelyn Terzo – FX Empire
Coinbase is diversifying its revenue stream. The leading U.S. cryptocurrency exchange is building a new non-fungible token platform called Coinbase NFT. The marketplace will give users the opportunity to “create, buy, sell and share NFTs,” according to the announcement.
Coinbase Has Received the Third-Most Complaints Among Digital Wallet Firms
James Rubin – Coindesk
Coinbase’s digital wallet has received the third-most complaints among companies operating such wallets over the past four years. Coinbase received 755 complaints from 2017 through April 2021, according to the Massachusetts Student Public Interest Research Group (MASSPIRG), the consumer research and consumer advocacy group that reviewed complaints filed with the Consumer Financial Protection Bureau (CFPB). The CFPB first began receiving complaints about digital wallets in 2017.
Green Cryptocurrency Mining Could Be the Way of the Future
Emily Cervone – Benzinga
Crypto mining is arguably the modern-day gold rush. However, instead of physically digging to find buried treasure, thousands of computers use their generated power, solving complex mathematical equations in order to mine new cryptocurrency coins. With cryptocurrency like Bitcoin (BTC-USD) currently having a market value of over $1071.21 billion, mining is not only very profitable — it is vital. However, concerns surrounding the amount of energy it takes to produce these coins are on the rise because mining operations can use more electricity than entire countries. And usually with energy consumption comes negative environmental impact depending upon how that energy is generated.
Bitcoin Miners Fleeing China Could Overload Siberia’s Power Grid
Aine Quinn – Bloomberg
Crypto miners move to Russian Far East after Chinese crackdown; Irkutsk governor warns soaring power demand risks accidents
A Siberian region known for its cheap electricity warned that a flood of Bitcoin miners from nearby China could overload its power grid after Beijing cracked down on cryptocurrency production. Retail energy consumption in the Irkutsk region this year is up 159% from 2020 levels due to an “avalanche” of underground crypto-mining, Governor Igor Kobzev said in a letter to Russian Deputy Prime Minister Alexander Novak, in which he called for higher electricity rates for miners. The problem has been exacerbated by China’s ban on mining that led to computing equipment being moved over the border, he said. The letter, reported in the local press, was confirmed by a spokeswoman for Kobzev.
Binance Will Shut Yuan Trading After Beijing’s Crypto Ban
Zheping Huang – Bloomberg
Binance Holdings Ltd. is shutting down peer-to-peer trading of the yuan, closing one of the last workarounds for Chinese users after Beijing’s blanket ban on cryptocurrency transactions.
Miami Mayor Says Plan Advancing to Pay City Employees in Bitcoin
Jonathan Levin – Bloomberg
Miami Mayor Francis Suarez said it’s “a major priority” for the city to be able to pay government employees in Bitcoin. “I want us to differentiate ourselves as a crypto capital of the United States or of the world,” Suarez said Tuesday in an interview with Bloomberg Technology’s Emily Chang.
Republicans, the Anti-Business Party
Paul Krugman – NY Times
Big business is overwhelmingly in favor of requiring that workers get vaccinated against Covid-19. A recent CNBC survey of chief financial officers found that 80 percent of them say they “totally support” the Biden administration’s plan to impose a vaccine-or-test mandate on companies with more than 100 workers, and many companies have already announced vaccination requirements for their employees.
Coronavirus Speeds GOP’s Populist Shift Away From Pro-Business
Mark Niquette – Bloomberg
State business groups fight GOP over mask, vaccine policies; Employers oppose Republican, Biden stances on their operations
The conflicts between businesses and Republican leaders like Texas Governor Greg Abbott over vaccine mandates highlights the GOP’s shift from a pro-business, anti-regulatory party to one that answers to a populist base.
Southwest and American Airlines Tell Texas Governor Who’s Boss; Federal requirements for vaccine mandates supersede state orders against mandates. Besides, the airlines care about health and safety.
Timothy L. O’Brien – Bloomberg
Texas Governor Greg Abbott wouldn’t want you to mistake his push to forbid private companies and others from issuing vaccine mandates as just another attempt to court conservative voters or tee up a White House bid. His executive order seeking to ban mandates in his state plainly says it’s part of a larger plan “aimed at protecting the health and safety of Texans.”
EU to Offer Brexit Concessions Ahead of New Round of U.K. Talks
John Follain and Kevin Whitelaw – Bloomberg
The bloc to unveil proposals on the Northern Ireland protocol; High-level EU delegation to head to London, EU official says
The European Union will offer a new package of concessions to the U.K. that would ease trade barriers in Northern Ireland, as the two sides prepare for a new round of contentious Brexit negotiations.
How to Save Democracy; By many measures, U.S. political institutions are in trouble. Here are three ways to help.
Jonathan Bernstein – Bloomberg
Political scientist Jennifer Victor has three suggestions to strengthen democracy: She asks everyone to vote, to build community and to read. Great suggestions, and an excellent topic. But I’m not sure I agree with her that the ways to build democracy are either very large — she talks about system-level reforms such as changing the way that members of the House are apportioned — or very small. Healthy democracy in the U.S., when it works, is participatory; while American citizens don’t have a particularly strong record of voting, they do tend to actively engage in politics more than people in most other large democracies do. So I think I’ll recommend slightly more involved, and more explicitly political, actions for folks who want to support democracy but don’t quite know where to start.
EU readies measures to help post-Brexit trading in Northern Ireland; Package from Brussels expected to ease bureaucracy but not address role of European Court of Justice
Peter Foster and George Parker, Andy Bounds – FT
The EU will on Wednesday unveil a package of measures intended to reduce bureaucracy associated with the controversial post-Brexit trading arrangements for Northern Ireland.
UK warns EU against ‘historic misjudgement’ on Brexit; London demands overhaul of Northern Ireland trading deal as Brussels prepares concessions
Peter Foster and Andy Bounds and Sam Fleming – FT
The EU will be making a “historic misjudgement” if it fails to agree to rewrite the Brexit deal that covers trading arrangements for Northern Ireland, the UK warned on Tuesday.
A record 4.3 million workers quit their jobs in August, led by food and retail industries
Jeff Cox – CNBC
Workers left their jobs at a record pace in August, with bar and restaurant employees as well as retail staff quitting in droves, the Labor Department reported Tuesday.
Quits hit a new series high going back to December 2000, as 4.3 million workers left their jobs. The quits rate rose to 2.9%, an increase of 242,000 from the previous month, which saw a rate of 2.7%, according to the department’s Job Openings and Labor Turnover Survey. The rate, which is measured against total employment, is the highest in a data series that goes back to December 2000.
The Global Markets Advisory Committee Will Meet on October 25
The Global Markets Advisory Committee (GMAC) will hold a public meeting on Monday, October 25, 2021. The meeting will begin at 8:45 a.m. (EDT) via teleconference in accordance with the Commodity Futures Trading Commission’s implementation of social distancing due to the coronavirus (COVID-19) pandemic. Commissioner Dawn Stump is the sponsor of the GMAC.
SEC’s ‘complex’ ETP probe could impact crypto ETFs; Investors are increasingly finding ways to access bitcoin outside the regulator’s remit, lawyers and analysts warn
Jackie Noblett – FT
The Securities and Exchange Commission’s indication that it is going to look more closely at how it regulates complex exchange traded products has implications for future bitcoin ETF rules, say attorneys and analysts.
Employee Engagement Crucial in Weeding Out Corporate Misdeeds; Experts from the corporate and government realms address cryptocurrency, cybersecurity and the importance of whistleblowers at the WSJ Risk & Compliance Forum
David Smagalla – WSJ
Issues around cryptocurrency, cybersecurity and efforts to encourage whistleblowers dominated the discussion at Tuesday’s WSJ Risk & Compliance Forum. Employee engagement is seen by compliance professionals as instrumental in uncovering potential crimes within companies, said Glenn Leon, senior vice president and chief ethics and compliance officer at Hewlett Packard Enterprise Co.
ASIC calls on Australian CEOs to review whistleblower policies
Whistleblowers are an essential part of an organisation’s ability to detect misconduct and identify, escalate and address issues. ASIC has written to CEOs of public companies, large proprietary companies and trustees of registrable superannuation entities (RSEs) urging them to review their whistleblower policies to ensure they comply with the law.
Federal Court Orders Suffolk New York Man and His Company to Pay $370,000 for Commodity Pool Fraud and Misappropriation
The Commodity Futures Trading Commission today announced that the U.S. District Court for the Eastern District of New York entered a consent order for permanent injunction, monetary sanctions, and equitable relief against defendants Craig L. Clavin and his company Lighthouse Futures, Ltd., both of New York.
FCA staff revolt over Rathi’s transformation programme
The Financial Conduct Authority is facing a workface revolt, with staff resorting to unionisation amid anger over proposed pay cuts and chief executive Nikhil Rathi’s transformation plans. Unite, the union for finance sector staff, has launched a staff petition to secure the right to be formally recognised to represent workers across the organisation – the first time this has happened in the watchdog’s history.
Investing and Trading
Don’t Blame Short Sellers for THG’s $2.6 Billion Problem; The British e-commerce company has to do a lot more to reassure investors about its SoftBank-tied Ingenuity business.
Andrea Felsted – Bloomberg
“Well, what a year,” said Matthew Moulding, chairman and chief executive officer of THG Group Plc, the seller of protein shakes, skincare and designer clothes, as he introduced an investor event on Tuesday. The British e-commerce company has had a rough ride since its 4.5 billion-pound ($6.1 billion) initial public offering in Sept. 2020. And it was about to get worse: Its shares slumped 35% after the meeting, wiping 1.9 billion pounds off of the group’s market capitalization.
How THG’s investor day went disastrously wrong; SoftBank-backed ecommerce group said it was under ‘short attack’ before share price crashed
Helen Thomas – FT
THG founder Matthew Moulding once took to Instagram to celebrate his gym-going for 500 consecutive days in locations across the globe. The question ahead of Tuesday’s investor presentation was whether the beauty boss could lift where it counts: namely, his share price.
Smart Sprayers Targeting Farm Weeds to Hit U.S. Market in 2022
Michael Hirtzer – Bloomberg
American farmers will soon be able to buy smart weed sprayers that promise to significantly reduce the use of farm chemicals. Israel-based Greeneye Technology is planning to sell the sprayers powered by artificial intelligence in the U.S. beginning in 2022. The equipment, which attaches to tractors, can identify some 200 different plants and apply chemicals only on the ones that need it. It could lower herbicide volumes by up to 90%, according to Nadav Bocher, chief executive officer of the startup.
A Stock Market Malaise With the Shadow of ’70s-Style Stagflation; After coasting higher over the summer, markets are jittery over rising prices, growth snarls and a number of other threats.
Matt Phillips – NY Times
Vaccine mandates seem to be working, younger children may be approved for shots by Halloween, and the coronavirus appears to be in retreat. But those hopeful signs herald a messy new phase for the country’s economic recovery — and that’s putting Wall Street more on edge than it’s been in months.
Environmental, Social and Corporate Governance
Steaks Could Soon Become Champagne-Like Luxury
Áine Quinn – Bloomberg
The boss of Europe’s top meat processor said beef will become a luxury like champagne because of the climate impact of producing it. “Beef is not going to be super climate friendly,” Danish Crown Chief Executive Officer Jais Valeur said in an interview with Danish newspaper Berlingske. “It will be a luxury product that we eat when we want to treat ourselves.”
What Comes After GE’s 129 Years of Greenhouse Gas; Can a company synonymous with the industrial past bring its polluting customers into the greener future?
Ryan Beene – Bloomberg
The lights stayed off for years after the 2013 closure of the Ormet Corp. aluminum plant near Hannibal, Ohio. Until someone finally noticed the valuable electrical infrastructure sitting alongside the mothballed smelting operation.
NatWest Plans $136 Billion Financing to Aid Climate Transition
Marion Dakers – Bloomberg
NatWest Group Plc said it will lend 100 billion pounds ($136 billion) to customers cutting carbon emissions by the end of 2025.
IEA warns spending on clean energy must triple to curb climate change; Fatih Birol says energy market volatility should not become a barrier to policy action
Tom Wilson – FT
Extreme volatility in energy markets will present a continued risk unless investment in clean power is tripled in the next decade, the head of the International Energy Agency warned, as he issued a call to arms for world leaders ahead of the upcoming UN climate summit.
UK ‘falling behind’ on onshore wind targets; Planning authorities approving less than half of the capacity needed, new report says
Nathalie Thomas and Jim Pickard – FT
Planning authorities in the UK are approving less than half of the onshore wind capacity that the country will need to install each year to achieve the country’s net zero targets, according to the renewables industry.
Investor Shift From Fossil Fuels Leaves Surging Market to Smaller Players; While those still in the oil-and-gas sector are moving to boost production, they aren’t expected to make a significant impact on output
Gregory Zuckerman – WSJ
This should be a great time for energy investors. Few of them are still around to enjoy it. Years of awful returns and pressure from clients to exit from the oil-and-gas business have left fewer and smaller firms able to take advantage of rising prices and help boost production. The unwillingness of some banks to make energy loans has compounded the challenges to boosting energy supplies.
Rich Countries Must Bear the Cost if We Can Ever Hope to Achieve a Net-Zero World
Larry Fink – WSJ
Mr. Fink is the chairman and chief executive of the investment company BlackRock. As the leaders of the World Bank and the International Monetary Fund meet this week, they have a chance to reimagine how the world can use finance to reduce the risks from climate change.
Nasdaq Europe Sees ESG Growth
In three to five years Nasdaq Europe aims to have global coverage of sustainable bonds, established green equities, significant usage of Puro.earth and continue to be the leading European growth platform for small and medium-sized enterprises.
Bjørn Sibbern, president of European markets at Nasdaq, told Markets Media: “There are many opportunities around ESG to grow and expand both organically, inorganically and through partnerships.”
JPMorgan Bankers Notch Record Quarter for M&A Advisory Business
Hannah Levitt – Bloomberg
Revenue from merger advice almost tripled in the third quarter; Dimon says bank weathered Delta, supply-chain disruptions well
JPMorgan Chase & Co.’s dealmakers posted their best quarter yet, riding what’s on track to be a record year for mergers and acquisitions. Fees from advising on deals almost tripled in the third quarter, crushing analysts’ estimates and helping to push the firm’s net income to $11.7 billion.
JPMorgan Profit Jumps on Reserve Release; The bank freed up $2.1 billion it had set aside for bad loans. Revenue was essentially flat.
David Benoit – WSJ
JPMorgan Chase & Co.’s JPM -0.77% third-quarter profit rose 24% thanks to a release of rainy-day funds socked away during the pandemic’s darkest days. The bank posted a profit of $11.69 billion, or $3.74 per share, up from $9.44 billion, or $2.92 per share, a year ago. That beat the $3 per share that analysts had expected, according to FactSet.
Man Group Gets $5.3 Billion to Lift Assets to Another Record
Nishant Kumar – Bloomberg
Most inflows were into the hedge fund’s alternative strategies; CEO Luke Ellis sees positive momentum into the fourth quarter
Man Group Plc pulled in $5.3 billion in new cash during the third quarter, the highest for any quarter in at least a decade, showing the rising interest in the hedge fund industry. Its shares rose.
Deutsche Bank Chief Sewing Says Inflation Probably Here to Stay
Steven Arons – Bloomberg
Deutsche Bank AG Chief Executive Officer Christian Sewing said the current bout of inflation will likely prove longer lasting, adding his voice to a widening group of leaders calling on central banks to react.
Credit Suisse Waives Fees for Clients Hit by Greensill Collapse
Lucca De Paoli – Bloomberg
Credit Suisse Group AG is planning to waive a number of fees for clients that invested in its Greensill-linked supply-chain finance funds, many of whom are still waiting to get their money back.
JPMorgan profits boosted by reserve releases and M&A boom; Jamie Dimon touts ‘strong results’ despite economic disruptions from Covid and supply chain woes
Joshua Franklin – FT
JPMorgan Chase kicked off Wall Street bank earnings with a big jump in profits driven by a dealmaking boom and the release of $2bn in reserves. The largest bank in the US on Wednesday reported a profit of $11.7bn, or $3.74 per share, up from $2.92 per share in the same period last year. Analysts had forecast profit to be flat at $9.4bn, according to consensus data compiled by Bloomberg.
Deutsche Bank faces EUR500m lawsuit in widening forex derivatives scandal; Spanish hotel group’s legal claim is tied to sale of exotic financial products
Olaf Storbeck, Stephen Morris and Daniel Dombey – FT
One of Spain’s biggest hotel groups is suing Deutsche Bank for EUR500m in damages over the alleged mis-selling of risky foreign exchange derivatives that it says left it with crippling losses.
BlackRock’s profits beat estimates but assets stall shy of $10tn; World’s largest money manager ended the third quarter with $9.5tn in assets under management
Michael Mackenzie – FT
BlackRock’s assets under management retreated slightly during the third quarter but remained near an industry peak of $9.5tn, while revenues rose strongly from client demand for actively managed and sustainable funds during a volatile quarter for financial markets.
BlackRock Profit Rose 23% in Third Quarter; Money-management firm beat analysts’ earnings expectations as revenue grew 16%
Dawn Lim – WSJ
BlackRock Inc.’s BLK -0.42% third-quarter profit rose 23% during a volatile stretch for markets. The money-management company posted a profit of $1.68 billion, or $10.89 a share, for the quarter ended September, up from $1.36 billion, or $8.87 a share, a year earlier. The company beat analysts’ profit expectations.
Kepler Cheuvreux to acquire Ellipsis Asset Management from Exane; The European agency broker said the acquisition of Ellipsis, which has EUR2.8 billion in assets under management, was a cornerstone in its development into asset management.
Annabel Smith – The Trade
European agency broker Kepler Cheuvreux has entered into a definitive agreement to acquire Ellipsis Asset Management from Exane SA. The deal is expected to close in the fourth quarter of this year and remains subject to approval from the French Financial Markets Authority. Financial terms were not disclosed.
China Not ‘Dumb’ Enough for Lehman Moment, StanChart CEO Says
Marion Dakers and Francine Lacqua – Bloomberg
The Chinese government won’t allow the turbulence surrounding stricken property developer China Evergrande Group to turn into a systemic crisis, the chief executive officer of Standard Chartered Plc said.
Housing Bubble Risks Are Accelerating Across Europe, Hong Kong
Olivia Konotey-Ahulu – Bloomberg
Frankfurt and Toronto top danger zone ranking in UBS report; Prices fueled by search for larger homes, low interest rates
The risk of housing bubbles across Europe has accelerated as the pandemic sparked a global spending spree on larger living spaces that was turbocharged by central banks’ aggressive stimulus.
China Developers Account for About Half of World’s Troubled Debt
Shannon D Harrington and Claire Boston – Bloomberg
The strained sector stands out in markets awash with liquidity; Evergrande, Kaisa top list of stressed Chinese developers
In a world where central bank stimulus has wiped out most of the distress from global bond markets, the troubles of China’s property companies are standing out. Of the $139 billion of U.S. dollar-denominated bonds trading at distressed prices, 46% were issued by companies in China’s real estate sector, according to data compiled by Bloomberg on Oct. 12, which captured bonds trading at yield premiums of at least 10 percentage points above their benchmark rates.
Chiefs of EU utilities warn against ‘short-sighted’ interventions; Governments and Brussels told that moves such as Spain’s windfall levy imperil green transition
Leslie Hook, Mehreen Khan and Daniel Dombey – FT
Chief executives of European utilities including Enel, Orsted, Vattenfall and EDP have written to EU governments urging them to avoid drastic market interventions such as Spain’s windfall tax, as countries resort to emergency measures to curb the energy crisis.
Litquidity Hires ‘FBoy Island’ Star and Former Banker to Cash In on Popularity; Centerview Partners alum and reality TV star Mark Moran is joining the New York startup founded by an anonymous former investment banker.
Gillian Tan – Bloomberg
Litquidity, run by an anonymous person who satirizes the financial industry via memes on social media, made its first public hire as it seeks to cash in on its growing influence and popularity. The New York-based startup, founded in 2017 by a former investment banker and private equity staffer who refers to himself as “Lit,” tapped Centerview Partners alum Mark Moran as head of growth and operations. Litquidity is making the hire as it starts discussions to raise funding ahead of a broader push into digital media.