Hits & Takes
John Lothian & JLN Staff
This morning Comcast’s internet service went down across the Midwest, causing this newsletter to be delayed. I have Comcast at my home and others on the team do too. Apologies for the lateness of the newsletter. Even our backups of backups were impacted by the Comcast issues.
Wedbush’s Bob Fitzsimmons is raising money for Covenant House, a place where “Young people are welcomed with unconditional love and provided warm meals, education opportunities, job training, medical care, mental health and substance use counseling, and legal aid — essential services designed to help them build independent futures.” This is part of Sleep Out Saturday. You can find out more and support Covenant House by clicking HERE.
There were no new donations to the JLN MarketsWiki Education GoFundMe campaign yesterday.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
Investment company staff required to get special approval to hire white men
James Titcomb – Bloomberg
A multinational investment firm is forcing staff to seek approval before hiring white men in one of the most stringent diversity policies in the financial sector to date. State Street said it would require managers to demonstrate they had interviewed female and ethnic minority candidates before the company would sign off the hiring of a white man to a senior role.
***** Someday we will look back and laugh at this. Maybe not today.~JJL
Alan Greenspan Has a Word or Two of Advice for Markets; And that’s it. Too much central bank communication can become a liability.
Daniel Moss – Bloomberg
Alan Greenspan realized that when it came to taming markets and managing perceptions of how the world’s dominant economy should be steered, a few carefully chosen words could be invaluable. It’s a lesson today’s central bankers from Sydney to London would do well to reflect upon, after investors were whipsawed by monetary policy decisions in recent days.
***** To quote Alan Greenspan: “I guess I should warn you, if I turn out to be particularly clear, you’ve probably misunderstood what I’ve said.” ~JJL
Monday’s Top Three
Our top story Monday was JLN’s FIA Expo Panel Explores The Future of Crypto Market Structure, by Sarah Rudolph. Second was Investors take aim at private equity’s use of private jets, from The Financial Times. Third was The Wall Street Journal’s Wall Street Pushes Back as SEC Targets Business Practice That Generates Billions, about payment for order flow.
26,644 pages; 236,191 edits
EU Set to Ban Trading Practice Helping Power Meme-Stock Mania
Aoife White and Jorge Valero – Bloomberg
Parallels potential U.S. move to stem payment for order flow; MiFID review also looking to facilitate consolidated tape
The European Commission is planning to ban payment for order flow, paralleling potential U.S. moves to stem a practice that hit the headlines during the meme-stock mania. A forthcoming review of the Markets in Financial Instruments Directive will include a ban amid other measures to increase transparency, such as a consolidated tape of information about transactions, people familiar with the matter said.
Euronext breaks LSE deal to move clearing functions to Italy; Exchanges group activates break clause 6 years early as it tilts operations away from London
Philip Stafford – FT
Euronext is breaking a deal with a subsidiary of the London Stock Exchange Group to shift clearing functions to Italy, in a move that further reduces the role of UK-based institutions in pivotal areas of Europe’s financial markets.
Robinhood Hack Exposes Millions of Customer Names, Email Addresses; Trading app says the incident took place last week and that the breach has since been contained
Peter Rudegeair and Robert McMillan – WSJ
Robinhood Markets Inc. HOOD -3.21% said Monday that an intruder gained access to its systems last week and made off with the personal information of millions of its users. The trading app said in a blog post that the incident took place on Wednesday evening and that the breach has since been contained.
U.S. Regulators Inch Closer to Treasuries-Market Reforms
Christopher Condon and Liz Capo McCormick – Bloomberg
U.S. regulators moved closer to proposing fresh reforms to the market for Treasury securities as they continue to study the disruptions of March 2020 that were triggered by the onset of the Covid-19 pandemic. A progress report released Monday by a panel of staff from the Treasury Department, Federal Reserve and other top regulators identified five areas of study. It showed continued interest in expanding central clearing, improving transparency around dealing activity and enhancing trading-venue oversight, among other themes. The report was prepared by the Inter-Agency Working Group for Treasury Market Surveillance, which gave no timeline for any eventual recommendations.
One Billion People to Face Deadly Heat Stress If World Warms 2C; Climate crisis is cooking up a lethal mix of heat and humidity, according to a study released at COP26.
Damian Shepherd – Bloomberg
One billion people will be at risk of extreme heat stress if global warming causes the world’s temperature to rise by 2C, new modeling shows. A study by the Met Office, the U.K.’s national meteorological service, warned that a 2C rise could lead to a 15-fold increase of a potentially fatal cocktail of heat and humidity across the planet. A 4°C rise would mean that nearly half of the world’s population could be living in affected areas, according to the research, released at the COP26 climate conference in Glasgow.
Almost All London Bankers May Be Back in the Office
Thomas Buckley and Jeremy Scott Diamond – Bloomberg
November 8, 2021The lunch hour is almost back to pre-Covid normality in the City of London and Canary Wharf, at least if sales of Pret A Manger Ltd. cappuccinos and five berry bowls are the measure. Bloomberg’s Pret Index shows that last week’s transaction volume in the two financial districts rose to 86% of pre-pandemic levels, the highest since the start of the crisis. Demand in the cluster for Pret’s coffee and fare may continue to rise through the rest of the year if Covid cases in the U.K. don’t increase, Pret Chief Executive Officer Pano Christou said in an interview.
Why 310 of Robinhood’s 7 Million Cyber-Attack Victims Should Be Really Quite Worried
Vlad Savov – Bloomberg
Robinhood Markets Inc. announced on Monday an embarrassing security breach that exposed the personal information of millions of its users, which will be of particular concern to the 300 or so customers who suffered the worst privacy compromise. Most of the 7 million affected accounts had only one piece of personal information exposed: either the user’s name or their email address. But in about 310 cases, more sensitive data such as date of birth and zip code was uncovered, as well as the user’s full name. About 10 of those people had “more extensive account details revealed,” Robinhood said, adding that the company is in the process of “making appropriate disclosures” to those users.
Big Tech Seeks Its Next Fortune in the Metaverse
Meghan Bobrowsky – WSJ
The bets that Facebook parent Meta Platforms Inc., Microsoft Corp. and others are placing on the metaverse reflect a growing belief that the emerging virtual realm will unlock serious real-world dollars.
The metaverse remains more aspirational than real, and its biggest supporters don’t expect it to be built quickly. Proponents though see a range of possibilities, from selling the hardware and software needed to access the metaverse to hawking virtual goods, services and advertisements within the digital world.
Morgan Stanley Gives Rich Customers What They Want: Hot Startups
Liz Hoffman – WSJ
Rich people are clamoring to buy stakes in hot private companies. Morgan Stanley, the largest U.S. manager of household wealth, is on the case.
The firm is building an a-la-carte menu of private-share offerings for its wealthiest clients, executives said. The program is expected to go live next year and will be overseen by a new hire, Mike Gaviser, who previously held senior fundraising jobs at KKR & Co. and AllianceBernstein. The price of admission: at least $20 million in assets.
Ford Motor Offers $2.5 Billion Green Bond to Investors
Nina Trentmann – WSJ
Ford Motor Co. on Monday offered a $2.5 billion unsecured green bond to investors, a first for the car maker that comes days after it launched its sustainable-financing framework and said it would buy back higher-priced debt.
Dearborn, Mich.-based Ford said it would allocate the proceeds from the bond offering, which has a 3.25% coupon and comes due in 2032, to fund investment in its growing battery electric vehicle portfolio, including the Mach-E, F-150 Lightning and E-Transit models. The company marketed the bond to existing as well as new investors.
Fed board member Randal Quarles to resign, giving Biden more scope to reshape central bank
Jeffry Bartash – MarketWatch
Federal Reserve Governor Randal Quarles said he will resign at the end of the December, leaving another vacant spot for the White House to fill and giving President Biden a chance to reshape the leadership of the U.S. central bank.
Wall Street Banks Must Disclose Climate Threats by Next Year, OCC Says
Jesse Hamilton – Bloomberg
Regulator sets climate response as a banking priority;l Agency expects U.S. firms to understand their exposures
Wall Street banks should be ready to answer key questions about their exposure to climate change by next year, said Michael Hsu, the acting chief of the Office of the Comptroller of the Currency.
SOFR First Slowly, Then All at Once: Measuring the Market Transition from LIBOR
Jonathan Rick – Tradeweb
The dealer-to-dealer market’s switch towards the Secured Overnight Financing Rate (SOFR) this summer galvanized broader acceptance of the new risk-free benchmark in swaps and was a watershed moment for building liquidity. Where regulators had struggled before to build momentum in the transition away from LIBOR, the July 26 “SOFR First” initiative accelerated SOFR linear swap trading. In the ensuing months dealers have gained a whole new level of comfort trading SOFR-related instruments with their clients. With today’s switch in the dealer-to-dealer market to SOFR for non-linear derivatives, we wanted to better quantify the market’s progress in SOFR adoption.
ETF’s big splash in MSCI’s new China index puts pressure on FTSE China A50
Just two months after MSCI introduced its China mega-cap index, the first exchange-traded funds (ETFs) tracking the new index began trading in China on Monday, armed with $4 billion, matching the money tracking the long-established FTSE China A50.
Post-Brexit Trade Deals Could Blunt U.K. Financial Regulators
Philip Aldrick – Bloomberg
Britain’s financial regulators could have their supervisory powers blunted by trade agreements with other countries, such as the U.S., under guidelines proposed for a post-Brexit regulatory framework. Among the proposed changes published by the Treasury on Tuesday is a call for the Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority to “assess whether the exercise of their powers to set rules and approaches on supervision is in compliance with the U.K.’s obligations under our trade agreements.”
U.K. to Empower Regulators to Repeal and Replace EU Rules
Alex Morales – Bloomberg
Regulators to be given power to tailor rules to U.K. market; Treasury report among reviews designed to boost City of London
British regulators will be granted greater flexibility to update laws inherited from the European Union, as part of the U.K. government’s push to overhaul the financial industry after Brexit.
India to buy 10 million doses of Zydus Cadila’s COVID-19 shot at about $4 each
India has placed an order for 10 million doses of Zydus Cadila’s DNA COVID-19 vaccine at a price of 265 rupees ($3.57) per dose, the drugmaker said on Monday.
Denmark Will Bring Back Some Restrictions as Covid-19 Cases Soar
Morten Buttler – Bloomberg
Denmark, which has one of Europe’s highest vaccination rates, plans to re-introduce some restrictions to halt a recent spike in Covid-19 contamination cases. Danes will have to again present so-called corona passports to attend public events, Prime Minister Mette Frederiksen said at a press conference late on Monday. The move follows a recommendation from health authorities that the country reclassifies the virus as a disease that poses a critical threat to society.
AstraZeneca commits to vaccines business with new division; Move comes despite Anglo-Swedish group’s non-profit Covid-19 jab suffering setbacks earlier this year
Donato Paolo Mancini and Hannah Kuchler – FT
AstraZeneca is creating a new division for vaccines and antibody therapies as the drugmaker commits to the business despite the shaky start for its Covid-19 shot.
BioNTech lifts revenue forecast as Covid vaccine orders climb; German biotech expects to hit EUR17bn in sales and produce 3bn jabs this year
Erika Solomon – FT
BioNTech has lifted its revenue forecast for its blockbuster coronavirus vaccine to EUR17bn this year as demand for the jab continues to grow.
Exchanges, OTC and Clearing
Robinhood (HOOD) Hack Exposes Millions of Customers’ Personal Data
Robinhood Markets Inc. said personal information of about 7 million people — or roughly a third of its customers — was compromised in a data breach last week and that the culprit demanded payment.
The intruder obtained email addresses of about 5 million people as well as full names for a separate group of about 2 million, Robinhood said Monday in a statement. For some customers, even more personal data was exposed, including names, birth dates and ZIP codes of about 310 people, and more extensive information belonging to a group of about 10.
SGX welcomes China International Capital Corporation Hong Kong Futures Limited as Derivatives Trading Member
Singapore Exchange (SGX) today welcomed China International Capital Corporation Hong Kong Futures Limited (CICC HKF) as a Trading Member of its derivatives market.
CICC HKF is a wholly owned group member of China International Capital Corporation Limited (CICC) which provides investment banking, equities, fixed income, commodities and currencies, asset and wealth management, research, and private equity services to clients worldwide.
TMX Group Limited Declares Dividend of $0.77 per Common Share
The Board of Directors of TMX Group Limited today declared a dividend of $0.77 on each common share outstanding, payable on December 10, 2021 to shareholders of record at the close of business on November 26, 2021.
TMX Group hereby advises that this dividend is designated as an “eligible dividend” for Canadian income tax purposes.
TMX Group Limited Reports Results for Third Quarter of 2021
TMX Group Limited [TSX:X] (“TMX Group”) today announced results for the third quarter ended September 30, 2021.
[J-Quants] Proof of Concept Project to Provide a Learning Environment for Trading Utilizing IT and Data Analysis – Announcement of Data Analysis Educational Content –
Japan Exchange Group
Japan Exchange Group, Inc. (JPX) launched “J-Quants”, a Proof of Concept (PoC) Project* in January 2021 to provide a learning platform for trading using IT and data analysis, and is now releasing an educational tool for the Stock Analysis Tutorial (*1), which is provided as part of the PoC, to SIGNATE Quest (*2).
HKEX Publishes Consultation Paper On Operational Model For Derivatives Holiday Trading
HKEX to introduce non-HKD denominated futures and options trading and clearing on Hong Kong public holidays (except New Year’s Day)
Proposal supports Hong Kong’s competitive standing as Asia’s premier derivatives trading market
Hong Kong Exchanges and Clearing Limited (HKEX) today (Tuesday) published a Consultation Paper on the proposed operational model for non-Hong Kong Dollar (HKD) denominated futures and options trading and clearing services on Hong Kong public holidays (Derivatives Holiday Trading).
DTCC to Launch Platform to Digitalize and Modernize Private Markets
Using Cloud, API and DLT technology, the Digital Securities Management platform will provide the foundational infrastructure to transform the private market ecosystem and enable tokenization of securities; service expected to launch in early 2022 pending regulatory approval.
The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, today announced a new platform to streamline the issuance, transfer and servicing of private market securities.
Euronext to cut ties with LCH and move clearing to Italian CCP following merger; Earliest date for derivatives clearing deal to end is 2024 under the 10-year deal signed in 2017, as LCH shrugs off impact of the break-up on its business.
Jonathan Watkins – The Trade
Euronext’s chief executive has outlined plans to break away from using LCH as its clearing house for cash equities and derivatives, the latter which will break a 10-year deal signed between the two parties in 2017. Stephane Boujnah presented the break-up during the pan-European exchange operator’s strategic plans to 2024 where he pointed out that Euronext is now the owner of a multi-asset clearing house – CC&G – following its acquisition of Borsa Italiana, which will now become its CCP of choice for its cash equity, listed derivatives and commodities markets.
Zillow’s Algorithm-Fueled Buying Spree Doomed Its Home-Flipping Experiment; How the real estate company’s innovation became a $569 million cautionary tale.
Patricia Clark – Bloomberg
In the beginning there were Zestimates, Zillow Group Inc.’s best guess at what the house next door was worth. Then there were Zprices, as company insiders nicknamed its attempt to use home valuation software to get into the home-flipping game. Finally there was the gasoline that Zillow poured on as it burned cash paying too much for houses, leading to a $569 million dumpster fire. On Nov. 2 the online property giant shuttered its technology-powered home-flipping business, Zillow Offers; said it was firing 2,000 workers; and began grappling with the damage it had done to one of the most valuable brands in real estate.
BestEx Research Appoints Algorithmic Trading Veteran Hector Robles to Expand Futures Business
BestEx Research Group, LLC
BestEx Research Group, LLC, a provider of high-performance algorithmic execution and measurement solutions for equities, futures, and foreign exchange trading, today announced the appointment of industry veteran Hector Robles as Managing Director of Business Development to expand the firm’s futures business. Robles will report to Founder and CEO Hitesh Mittal as BestEx Research aggressively expands its footprint in the futures market.
Chicago fintech raises $19 million, plans to hire up to 60; GeoWealth, which has built an enterprise software platform for independent wealth advisers, lands funding from Kayne Partners Fund and JPMorgan Chase.
Katherine Davis – Crain’s Chicago Business
GeoWealth, a Chicago-based software developer for the financial services industry, has raised $19 million in funding as it works to expand the business. GeoWealth has built a “turnkey” enterprise software platform for independent wealth advisers to manage their clients’ money. The software can show real-time performance of funds, portfolio analytics, generate proposals and seamlessly bill clients.
Big xyt Partners With ETFbook to Offer Transparency In European ETF/Ps
big xyt, the independent provider of smart data and analytics solutions to the global trading and investment community, is pleased to announce its partnership with ETFbook, a leading ETF information and analytics platform, to provide daily fund data for their Liquidity Cockpit for ETFs solution.
big xyt’s Liquidity Cockpit for ETFs solution provides a consolidated view of security metrics for global exchange traded funds (ETFs), derived from multiple sources, encapsulating national regulated trading venues, multilateral trading facilities (MTFs) including Request for Quote (RFQ) volume, and OTC/SI reported transactions, all disseminated through a single, standardised data feed.
Fenics Market Data Expands FX Options (“FXO”) Offering with AI and New Analytics
Fenics Software Limited
Fenics Market Data (“FMD”), a division within BGC Partners, Inc. (Nasdaq: BGCP) (“BGC Partners,” “BGC” or the “Company”), today announced the launch of its latest upgrade to its FXO volatility service, FMD FXO 2.0 (“FXO 2.0”). FXO 2.0 combines machine learning with improved analytics to deliver over 300 currency pairs and 27 precious metal pairs, improving the surfaces with more wing data points and long dated tenors. FMD market spreads now update more dynamically based on liquidity information from BGC Partners’ trading venues and its award-winning broking divisions.
Robinhood says email addresses of 5 million customers exposed in security breach
Robinhood Markets Inc said on Monday a third party had obtained access to the email addresses of about five million of its customers. The fee-free broker said the full names of a different group of about two million people were also exposed in the breach, while 310 people had more personal information, including names, birth, dates and zip codes, compromised.
U.S. charges two hackers in connection with major ransomware attacks
Two suspected criminal hackers have been charged in the United States in connection with a wave of ransomware attacks, including one that led to the temporary shutdown of the world’s largest meat processor and another that snarled businesses around the globe on the Fourth of July weekend, U.S. officials said Monday.
Robinhood Security Breach Exposes Data on Millions of Users
Annie Massa – Bloomberg
Brokerage says 5 million email addresses compromised in attack; Firm says it doesn’t believe clients incurred financial losses
Robinhood Markets Inc. said personal information of millions of customers was compromised in a data breach last week and that the culprit demanded a payment. An “unauthorized party” obtained email addresses of about 5 million people as well as the full names “for a different group of approximately 2 million people,” Robinhood said Monday in a statement.
Russia-Linked REvil Hackers Hit With Arrests by U.S., Allies
Jack Gillum, Ryan Gallagher, and Chris Strohm – Bloomberg
Arrests, indictment, reward follow vow to curb hacking scourge; Reward of $10 million offered for information on REvil leaders
After vowing for months to crack down on ransomware, the Biden administration and allied countries unleashed a string of actions Monday against one of the most prolific hacking groups and also issued sanctions against cryptocurrency entities that allegedly enable such attacks.
McAfee to be taken private by Advent-led group in $14 billion deal
McAfee Corp said on Monday a consortium led by U.S. private equity firm Advent International will take the cyber security company private in a $14 billion deal. The deal comes as a pandemic-driven shift to remote working and a rise in cyber attacks have spurred demand for antivirus and digital security software.
Hackers breached organizations in defense, energy, other sectors, cybersecurity firm says
Kelly Hayes – Fox 10 Phoenix
Suspected foreign hackers breached nine global organizations across the defense, education, energy, health care and technology sectors, including servers used by companies working with the U.S. Department of Defense, according to findings shared by a cybersecurity company.
A report posted Sunday from Palo Alto Networks, a company offering network security solutions, said hackers targeted at least 370 organizations running Zoho ManageEngine servers in the U.S. alone.
Commerce to Impose Long-Anticipated Export Controls on Cybersecurity Items
Goodwin – JDSupra
In an interim final rule issued October 21, 2021, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) announced new Export Administration Regulations (EAR) controls on “cybersecurity items,” including “intrusion software” products and technology. The interim final rule is effective January 19, 2022, and BIS is accepting comments on it until December 6, 2021. Those potentially impacted by the new controls include developers of cybersecurity software (e.g., penetration testing tools, antivirus and threat-detection software), cybersecurity service providers, cybersecurity research organizations, cybersecurity-related law enforcement agencies, IT system administrators, and cyber forensics professionals.
Smart Inu Aims To Boost Crypto Investing on BSC Network With Its Innovative Smart Contract Investment Solution
Smart Inu, the only verified and audited smart contract investment platform on the Binance Smart Chain (BSC) network, has introduced its innovative investment solution make it easier for users to start investing in crypto assets on BSC.
An $8,000 bet on shiba inu coin allowed a warehouse manager to retire after the meme coin’s stunning rally, report says
Isabelle Lee – Business Insider
A 35-year-old former supermarket warehouse manager who made an $8,000 bet on shiba inu at the start of the year is now enjoying his retirement thanks to the meme coin’s stunning rally. Rob, who is from northern England, told Fortune he dabbled in cryptocurrencies to supplement his $68,000 yearly salary so he could create a better life for his partner and their son.
France Sees Merits in a Wholesale Central Bank Digital Currency
William Horobin – Bloomberg
The Bank of France called for further research on a central bank digital currency for wholesale use in the financial sector after finding efficiency advantages for markets and payments.
Another Physical Bitcoin ETF Application Lands in Long-Shot Bid
Katie Greifeld – Bloomberg
BlockFi Inc. has joined the list of firms hoping that U.S. regulators might soon have a change of heart when it comes to physically-backed Bitcoin funds. The BlockFi NB Bitcoin ETF, a joint venture with an affiliate of Neuberger Berman Group LLC, would hold the world’s largest cryptocurrency in order to track its returns, according to a Monday filing with the Securities and Exchange Commission.
Kazakhstan senate approves monitoring of crypto platforms
Fasika Zelealem – Coin Rivet
Kazakhstan’s financial monitoring system will now target cryptocurrency businesses. New legislation passed by the Kazakhstan Senate means businesses that deal with digital assets as well as crypto trading services must adhere to anti-money laundering (AML) regulations.
Crypto Exchange That Fled Nigeria for Estonia Plans Fundraising
Ruth Olurounbi and Loni Prinsloo – Bloomberg
Bootstrapped Patricia planning to raise as much as $50 million; Nigeria’s clampdown forced Patricia to move offices to Estonia
Patricia Technologies Ltd., a cryptocurrency exchange, plans to tap investors for the first time as it recovers from a clampdown in Nigeria that decimated its business and forced it to move its headquarter to Estonia.
China to Make Digital Yuan and Payment Apps More Connected
China’s digital yuan will be further interlinked with mobile payment apps that have dominated the country’s retail transactions, according to China’s central bank governor.
SPAC Tied to Trump’s Media Venture Seeks Wall Street Backing
Gillian Tan – Bloomberg
Digital World Acquisition begins to schedule PIPE roadshow; Terms haven’t been finalized; stock soared on deal news
The blank-check company tied to Donald Trump’s new media venture has already won the support of retail traders who have sent the stock up almost 500%. Now, big Wall Street investors are getting another opportunity to pile in, even as some financial firms have distanced themselves from doing business with the former U.S. president.
Germany Agrees Rules to Tackle ‘Pandemic of Unvaccinated’
Iain Rogers and Arne Delfs – Bloomberg
The three parties in talks to form the next German government agreed on a package of measures they could deploy to tackle a record surge in Covid-19 cases which seeks to avoid sweeping restrictions like school closures and curfews.
Putin Knows He Has a Climate Problem, Kerry Says: COP26 Update
U.S. climate envoy John Kerry speaks with Bloomberg Green at COP26 on Tuesday, and House Speaker Nancy Pelosi leads a congressional delegation to the climate talks, as the hard work at the summit gets fully under way.
Companies Lobby Against Democrats’ Interest-Deduction Limits; Executives say corporate debt, investment could shift offshore if proposal raises U.S. borrowing costs for multinational companies
Nina Trentmann and Theo Francis – WSJ
A tax provision under consideration in Congress that is designed to get multinational businesses to pay more U.S. taxes could lead companies to move borrowing and investment offshore, some corporate executives and tax professionals say.
How JPMorgan Is Helping Washington Make Sense of the Pandemic Economy; The JPMorgan Institute uses account data to parse consumer financial behavior. It also is trying to influence economic policy.
David Benoit – WSJ
The pandemic sent economists hunting for evidence of how people were coping financially. They found it tucked away in a tiny corner of JPMorgan Chase JPM -1.19% & Co. A few dozen employees at the JPMorgan Chase Institute, the bank’s in-house think tank, have unparalleled access to the saving, spending and borrowing habits of the bank’s customers, stripped of names and other identifying details.
If It Quacks Like a Duck… SEC Chairman Gary Gensler Invokes the “Spirit of the Law” as DeFi Takes Center Stage, Alex Kim
Alex Kim – Katten
SEC Chairman Gary Gensler vowed on November 4, 2021, that the SEC will look beyond the label of decentralized finance (DeFi) or peer-to-peer lending products and consider the “economic realities” of a given product or arrangement.
Chairman Gensler further warned that “[h]istory tells us that when a group of people try to mask the underlying economic realities of a certain product or instrument, investors can get hurt. Further, their pain can spread from the financial system to the real economy.
CFTC Orders United States Commodity Funds LLC to Pay $2.5 Million for Failure to Fully Disclose Information Relating to Trading Limitations to Commodity Pool Participants
The Commodity Futures Trading Commission today simultaneously filed and settled charges against United States Commodity Funds LLC (U.S. Commodity Funds), a registered commodity pool operator (CPO), for failing to fully disclose certain position limits that its futures commission merchant imposed on one of the commodity pools it managed, United States Oil Fund, LP (USO).
Former Quantum Resources director convicted of insider trading and market manipulation offences
Avrohom Mordechai Kimelman, of St Kilda East, Victoria, has been sentenced to 18-months imprisonment, to be released immediately upon entering into a $5000 recognizance and an undertaking to be of good behaviour for two years, after being convicted of insider trading and market manipulation offences in the County Court of Victoria.
SEC Names New Board Members to Audit Watchdog
Incoming chair Erica Y. Williams will be the PCAOB’s first Black leader
Paul Kiernan – WSJ
WASHINGTON—The Securities and Exchange Commission moved to complete its overhaul of the federal audit watchdog Monday, naming four new members to the Public Company Accounting Oversight Board.
The SEC appointed Erica Y. Williams, an attorney with Kirkland & Ellis LLP, to serve as the PCAOB’s chairwoman. It also tapped Christina Ho, Kara Stein and Anthony C. Thompson to serve as members of the board, which the SEC oversees. Duane DesParte, currently the acting chairman, will remain on the board.
SEC Appoints New Chairperson and Board Members to the Public Company Accounting Oversight Board
SEC Press Release
The Securities and Exchange Commission today announced the appointments of Erica Y. Williams as Chairperson and Christina Ho, Kara M. Stein, and Anthony (Tony) C. Thompson as Board members of the Public Company Accounting Oversight Board (PCAOB). Duane DesParte will continue his service as a Board member and will remain Acting Chairperson until Ms. Williams is sworn in.
Workhorse discloses DoJ, SEC probe related to USPS contract
Electric van-maker Workhorse Group said on Monday it was being investigated by the U.S. Department of Justice and the U.S. Securities and Exchange Commission related to trading in the company’s securities leading up to the award of a U.S. Postal Service (USPS) contract.
How Dodd-Frank Locks Out the Least Affluent Homebuyers; Rules intended to protect borrowers and rein in fees have drained the profit from small-dollar mortgage lending. Who suffers? People who are straining to start building wealth.
Virginia Postrel – Bloomberg
In Los Angeles, $80,000 is a 10% down payment on the county’s median priced home. In Winston-Salem, North Carolina, it buys a condominium or a fixer-upper in East Winston, the historically Black area east of Route 52. Inexpensive properties like the ones in East Winston could serve as starter homes for people on their way up the housing ladder. They could provide a way to build family wealth from modest incomes. But they don’t.
The European exchanges clarify the treatment of dividends in Derivatives Contracts
BME Bolsas y Mercados Españoles
The European Corporate Actions Committee (ECAC), of which MEFF, the Spanish derivatives exchange, is a member, has added further clarity to the existing guidelines for the treatment of corporate actions on derivative contracts when dividend payments are postponed or cancelled due to the Covid-19 pandemic. In addition to MEFF, ECAC members include Borsa Italiana, Eurex Deutschland, Euronext, ICE Futures Europe and Nasdaq Stockholm.
SEC Approves PCAOB Rule to Establish A Framework for Determinations Under the Holding Foreign Companies Accountable Act
The Securities and Exchange Commission today announced that it has approved the Public Company Accounting Oversight Board’s (PCAOB) Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act. Rule 6100 will establish a framework for the PCAOB’s determinations under the Holding Foreign Companies Accountable Act (HFCAA) that the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by an authority in that jurisdiction.
SEC Charges Exchange-Traded Product and Its General Partner With Disclosure Failures
The Securities and Exchange Commission today charged United States Oil Fund LP, an exchange-traded product (ETP), and its general partner United States Commodity Funds LLC for misleading statements about limitations imposed by its sole futures commission merchant and broker. USO and USCF have agreed to pay $2.5 million in penalties to settle parallel cases by the SEC and Commodity Futures Trading Commission.
Ahmed Abonamah Named Director of Office of Credit Ratings
The Securities and Exchange Commission today announced that Ahmed Abonamah has been named Director of the agency’s Office of Credit Ratings, where he has served as Acting Director since October 2020.
“Ahmed already has proven to be a qualified and thoughtful leader of the Office of Credit Ratings,” said SEC Chair Gary Gensler. “Credit rating organizations play central roles in our financial system, and oversight is critical to maintain fair, orderly, and efficient markets. I thank Ahmed for taking on this responsibility and look forward to our continued work together.”
ESMA publishes latest edition of its newsletter
Your one-stop-shop in the world of EU financial markets focuses this month on our new Chair, Verena Ross, and on the EU-wide campaign on investment recommendations on social media.
Investing and Trading
Options Craze Rewriting Rules of VIX, S&P 500 Relationship
Lu Wang – Bloomberg
The day-trader obsession with using bullish options to speculate on stocks is doing strange things to the age-old relationship between the U.S. equity market and its benchmark volatility index. Rather than move in the opposite direction, as the S&P 500 and Cboe Volatility Index have almost always done for three decades, they went up in unison for two weeks — a stretch of synchronized increases not seen in 14 months.
Fed Warns Risky-Asset Prices Are Rising, Adding to Crash Worries
Jesse Hamilton – Bloomberg
In report, Fed also flags concerns tied to Chinese real estate; Central bank says stablecoins are susceptible to ‘runs’
The Federal Reserve is warning that prices of risky assets keep rising, making them more susceptible to perilous crashes if the economy takes a turn for the worse. “Asset prices remain vulnerable to significant declines should investor risk sentiment deteriorate, progress on containing the virus disappoint, or the economic recovery stall,” the Fed said in its twice-yearly Financial Stability Report released Monday.
FANGs Are Getting Fatter on Falling Bond Yields;The increasing dominance of the technology giants owes more to their sensitivity to rates than the power of their businesses.
John Authers – Bloomberg
There are some remarkable goings-on in the markets. Most of them are linked to each other. So as a new week starts, this is an attempt to draw together the strands. Here we go.
Bubble Fears Are Rising as Financial Conditions Flash Boom Times
Cecile Gutscher and Libby Cherry – Bloomberg
Investors say market froth will grow without monetary redress; Dovish central bank surprises pour fuel on cross-asset rally
Bubble warnings are ringing louder after a week of dovish central bank bombshells fueled the easiest financial conditions in nearly four decades. BlackRock Inc.’s Rick Rieder and Allianz SE’s Mohamed El-Erian are among those warning that systemic risks will only multiply, unless monetary officials take more decisive measures to pare extraordinary pandemic stimulus. While policy makers are acutely aware of the dangers in the easy-money era, their accommodative stances are encouraging ever-increasing flows to the riskiest markets.
Researchers from Federal Reserve’s San Francisco regional bank throw support behind 50-year Treasury bond
Vivien Lou Chen – MarketWatch
Such longer-term debt instruments “could provide an attractive opportunity to finance the growing debt in a sustainable way,” according to an economic letter released by San Francisco Fed on Monday.
GE Will Split Into Three Units, Ending Conglomerate for Good
Ryan Beene – Bloomberg
Heath, energy businesses to be separated from aviation arm; GE’s conglomerate structure to end after years of speculation
General Electric Co. will split into three separate companies, breaking up the once-mighty conglomerate into standalone businesses focused on health care, power and aviation. The shares surged.
The Fed warns of social media ‘echo chambers’ that pump up meme stocks.
Jeanna Smialek – The New York Times
Stocks that experience major volatility as a result of social media attention — often called meme stocks — have not threatened broader financial stability so far but could open the door to vulnerabilities, the Federal Reserve said in a report on Monday.
Environmental, Social and Corporate Governance
Singapore to Curb Greenwashing With Stress Tests, Technology
Chanyaporn Chanjaroen and Haslinda Amin – Bloomberg
Singapore’s financial watchdog is turning to regulation and technology to tackle so-called “greenwashing,” which it considers the weakest link in the push to expanding sustainable finance.
LME sustainability: one year on
Matthew Chamberlain – LinkedIn
As week two of COP26 gets underway in Glasgow, nearly a year after we laid out our sustainability action plan, now is a good opportunity to reflect on what we have achieved at the LME and in the broader metals market.
It’s been an extremely challenging year, with the effects of the pandemic being felt by all areas of the metals value chain. Port closures, supply chain bottlenecks, surging demand, record price highs in several LME metals and of course the recent tightness and low inventory levels in the copper market – it’s been a year like no other.
British Government Sells About £400 Million of NatWest Shares
Tom Metcalf – Bloomberg
The U.K. government has sold roughly 400 million pounds ($540 million) worth of shares in NatWest Group Plc in the past month and a half in a further reduction of its stake in the bank. The Treasury now owns a 52.96% stake in the lender formerly known as Royal Bank of Scotland, according to a filing Monday. That’s a percentage point less than its holding as at Sept. 20, according to the statement.
Morgan Stanley Gives Rich Customers What They Want: Hot Startups; The bank’s private-share platform is expected to go live next year. Price of admission: $20 million in assets.
Liz Hoffman – WSJ
Rich people are clamoring to buy stakes in hot private companies. Morgan Stanley, the largest U.S. manager of household wealth, is on the case. The firm is building an a-la-carte menu of private-share offerings for its wealthiest clients, executives said. The program is expected to go live next year and will be overseen by a new hire, Mike Gaviser, who previously held senior fundraising jobs at KKR & Co. and AllianceBernstein. The price of admission: at least $20 million in assets.
Buy-side are struggling to attract more diverse talent, TradeTech panel hears; Buy- and sell-side firms told if you’re not on the diversity, equity and inclusion journey already, you need to get on it to remain profitable and successful as a business.
Jon Watkins – The Trade
“As an industry we need to be braver and more vocal about the opportunities in our industry for people with different backgrounds and skillsets,” Kirstie MacGillivray, head of multi-asset dealing at Aegon Asset Management stated on the first day of TradeTech Europe in London.
China’s wealthy seek new ways to move money, avoid Xi Jinping’s redistribution policy
Peter Aitken – Fox News
China’s rich have changed their focus from making money to keeping it as President Xi Jinping introduces new measures to redistribute wealth among a swell of support.
Europe Considers Tapping “Cushion Gas” As Market Continues To Tighten
Europe could have a way out of a natural gas shortage if the winter is colder than usual. The very tight European gas market may find relief from the supply crunch if it taps part of the so-called cushion gas, which keeps supply pressure at storage facilities, energy consultancy Wood Mackenzie said this week.
China Bans Brokers From Hiring Influencers, Live Streaming
Push comes as Beijing pursues a more ‘benign’ online world; China’s brokerages face growing competition as markets open
Chinese regulators banned brokerages from hiring social media influencers to attract new customers, turning off the spigot on one of the most popular ways to gain clients in the intensely competitive sector.
Monetary Authority Of Singapore Enhances FinTech Regulatory Sandbox With Sandbox Plus
The Monetary Authority of Singapore (MAS) today announced three enhancements to its FinTech Regulatory Sandbox framework to further catalyse financial innovation and FinTech adoption.
2 MAS launched the FinTech Regulatory Sandbox in 2016 to encourage and enable experimentation of technology innovation to deliver financial products and services. The Regulatory Sandbox, which is fully bespoke, was enhanced with Sandbox Express in 2019 to provide firms with a faster option for market testing in pre-defined environments.
China Tightens Oversight of $3.7 Trillion Mutual Fund Market
Chinese regulators moved to tighten oversight of the nation’s 23.9 trillion yuan ($3.7 trillion) mutual fund market, banning product recommendations by unlicensed firms and individuals.
Covid retirees show work-from-home revolution has not benefited everyone; Older people were staying in the labour market for longer — until the pandemic hit
Sarah O’Connor – FT
Where have all the workers gone? Homeward-bound migrants aren’t the only ones who are leaving labour shortages in a number of countries in their wake. An army of older workers has headed for the exit too. These “Covid retirees” are bucking a trend. One of the most important employment stories of the past two decades has been the rise in the proportion of older people still participating in the labour market. Much will depend on whether the pandemic reverses, temporarily disrupts or in the long-run even accelerates that phenomenon.