Hits & Takes
John Lothian & JLN Staff
Congratulations to Trading Technologies and 7Ridge on the completion of their deal yesterday. The press release came out late just as we were struggling to get out the newsletter so we were able to add the news at the last minute. Welcome Keith Todd to his new role. TT has now had three CEOs in less than one year, and none of them were named Harris Brumfield.
Former CFTC Chairman and CFTC YouTube channel video star Heath Tarbert is out with a commentary in the Financial Times about the Treasury market and the need to reform it. Mr. Tarbert is now the chief legal officer for Citadel Securities. The commentary is titled “US Treasury market needs to enter modern age; Series of reforms needed to improve trading in the world’s most important asset class.”
Robert McCauley, a non-resident senior fellow at Boston University’s Global Development Policy Center and associate member of the Faculty of History at the University of Oxford, has written a commentary for the Financial Times that compares bitcoin to Ponzi schemes and explains why bitcoin is worse.
MarketWatch has a story that says the best practice is that before holiday gatherings you should take an at home Covid-19 test to detect omicron. The problem is that there is a shortage of them for just that reason. According to some reports, local pharmacies, Walgreens and CVS stores are out of the tests. I had seen some as late as last week.
On December 20, SEBI, the Indian market regulator, issued directions for stock exchanges in the commodity derivatives segment to suspend new contract launches and new position taking (only position squaring allowed) in wheat, Channa, The Paddy (non-basmati), Mustard seed and its derivatives, Soybean and its derivatives, Crude palm oil and Moong. The directions took effect immediately and will run for a period of one year.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
For podcast aficionados: The IMF just published its editor’s pick of 10 podcasts from 2021 that cover issues they promise to continue to follow in 2022. You can view the selections here. Among the choices was one from University of Colorado professor Miles Kimball on “Measuring National Well-Being,” in which he posits that GDP falls short as the sole measure of the well-being of a country’s residents. He also wrote a recent article about the topic in the IMF’s Finance & Development magazine. A link to the story is here.~SC
ICE sent out an email with its “Year-end wrap… and trends we’re watching,” which includes: U.S. equity markets hit new highs despite ongoing uncertainty with COVID-19, with the NYSE data insights team offering in-depth analysis along the way; Uncertainty about interest rates saw a key bond volatility indicator, the ICE BofA MOVE index, spike in November, hitting levels not seen since early 2020 market dislocation; and Reaching net zero carbon emissions was a huge topic at COP26. Markets can help companies and economies accelerate the transition to a more sustainable future, as Gordon Bennett discusses.~SR
Why bitcoin is worse than a Madoff-style Ponzi scheme; A Ponzi scheme is a zero-sum enterprise. But bitcoin is a negative-sum phenomenon that you can’t even pursue a claim against, argues Robert McCauley.
Robert McCauley – FT
Bitcoin is off its all-time high of $69,000 set on November 9, 2021. It suffered a wrenching $12,000 flash crash over the first weekend in December, amid accounts of leveraged positions being closed out. And yet, even at the current price of $49,000, guests on financial TV news continue to tout it as the best-performing asset of the last N years, where N can be just about any number from one to ten. They also increasingly judge it as a credible investment in its own right.
***** Interesting story. The gist is that with Ponzi schemes there is a chance to claw back the money when the run happens and it all collapses. In bitcoin, it is a zero-sum scenario with nowhere to claw back from. ~JJL
The Wall Street That I Once Knew No Longer Exists; I don’t lament the loss of the macho trading culture. But I do lament the loss of risk-taking. That’s what made it thrilling and fun.
Jared Dillian – Bloomberg
I graduated from the Coast Guard Academy in 1996. It was a tough time to attend one of the U.S. Service Academies, and I suffered all manner of indignities. I was once shaved with a bayonet by an upperclassman. I was made to do 2,000 push-ups in a day. And with 101 days to go until graduation, the barracks were turned into a war zone known as “101st Night,” with round-the-clock hazing and physical discipline that bordered on abuse. My class’s experience with 101st Night was so extreme that it was immediately banned from then on.
***** The LaSalle Street I Once Knew No Longer Exists. I don’t lament the loss of the macho trading culture. But I do lament the loss of risk-taking and Billy Assimos as the manager of Ceres.~JJL
McDonald’s Forced to Ration Customers’ Fries as Supply Shortage Hits Japan
Lily Nonomiya – Bloomberg
McDonald’s Holdings Co. Japan will only offer french fries in small sizes from Friday after flooding at a Vancouver port and the coronavirus pandemic have cut off supplies of one of its key offerings.
***** Don’t worry, they will give you extra kale to make up for the missing fries.~JJL
Robinhood’s Top Lawyer Takes On an Old Frenemy at the SEC
Annie Massa – Bloomberg
Dan Gallagher and Gary Gensler used to catch the same commuter train to Washington — Gallagher bound for one federal agency, Gensler for another. A Republican, Gallagher has spun through Washington’s revolving door into a $30 million position as chief legal officer at Robinhood Markets Inc., whose free trading app has drawn millions of novice investors to meme stocks, cryptocurrencies and more, sometimes with devastating results.
***** Great friendships are made on the train. (Hello Rob!) I wonder how this will play out.~JJL
We spoke to crypto mega-billionaire Sam Bankman-Fried about his board-game-playing beginnings, the future of FTX, and his political ambitions. Here are the 5 biggest takeaways.
Matthew Fox – Business Insider
Sam Bankman-Fried is well known in the cryptocurrency industry for building a crypto empire worth about $30 billion in relatively short order. Bankman-Fried’s FTX crypto exchange, founded just over two years ago, is now seeking a $32 billion valuation in a $1.5 billion funding round. But Bankman-Fried’s early beginnings centered around playing board games while multi-tasking and always remaining occupied with something in Silicon Valley.
***** SBF is one of the most interesting people to come on the world stage in the last couple of years. He has an amazing work ethic and goals and has achieved incredible success and wealth at a young age. He has the potential to be a force for years to come.~JJL
Tuesday’s Top Three
Our No. 1 story Tuesday was once again Don’t Be Surprised When You Get Omicron, from The Atlantic. Second was Acquisition of Trading Technologies by 7RIDGE now complete, the big announcement from Trading Technologies. Third was More Than 130 Groups Call on CFTC to Shut Down ‘Dystopian’ Water Futures Market (that’s the Chicago Mercantile Exchange’s water futures market), from Common Dreams.
26,680 pages; 236,620 edits
From Trading Desk to Noodle Stall: A Singapore Success Story; When his dad was diagnosed with cancer, equities broker Watson Lim took over the family business—and hasn’t looked back.
Dan Murtaugh, Livia Yap – Bloomberg
A decade ago, Watson Lim thought he was on a glide path to a career in finance. Just a few years out of college, he was brokering equities at Singapore’s second-largest bank, poring over earnings statements and prospectuses to pitch trades and investments to clients. It was the sort of generational advancement his father had envisioned, a big step up from the grueling hours he’d spent cooking prawn noodles at one of the city-state’s storied hawker stalls.
Lax rules are allowing corporate fat cats to dump stock; US financial regulator should crack down to prevent selling just before share prices fall
Brooke Masters – FT
Company founders and executives are hearing the jingle of cold hard cash this holiday season. Profiting from a historic run up in share prices, US corporate insiders sold a record $69bn in shares this year, up 30 per cent from 2020, and 79 per cent more than the 10-year average. Almost 50 of these corporate bigwigs have pocketed more than $200m each.
NatWest pleads guilty to US charges over spoofing Treasury markets; UK-based bank to pay $35m penalty over fraud schemes conducted in London, US and Singapore
Stefania Palma and Siddharth Venkataramakrishnan – FT
NatWest has agreed to pay US authorities about $35m after pleading guilty to conducting fraud schemes in the US Treasury bond and futures markets. The UK bank on Tuesday pleaded guilty to one count of wire fraud and one count of securities fraud in a US federal district court in Connecticut. As part of its criminal conviction, NatWest agreed to work with an independent compliance monitor and to a three-year probation period.
Europe Faces Full Blown Energy Crisis As Gas Prices Smash All Records
Europe’s energy crisis got even worse on Tuesday as a shortage of natural gas, nuclear outages, declining wind power output, and cold weather boosted prices. The gas price at the Dutch TTF hub, the benchmark gas price for Europe, soared 10% to a new record high of 165 euros per megawatt-hour after gas entering Germany at the Mallnow compressor station plunged to zero. Flows were diverted eastward to Poland.
Brussels seeks EUR12bn annual revenues from EU carbon trading scheme; Commission makes pitch for fresh revenue streams from member states to repay pandemic recovery fund debts
Sam Fleming and Mehreen Khan and Emma Agyemang – FT
Brussels wants to take a EUR12bn annual slice of the EU’s emissions trading scheme (ETS) and use it to repay recovery fund debts and support vulnerable households, as the European Commission makes a pitch for fresh revenue streams from member states.
US stock exchanges seek new listings as Chinese companies retreat; NYSE and Nasdaq explore IPO pipelines in India and south-east Asia to replace lost business
Nicholas Megaw – FT
US stock exchanges are pursuing listings from companies in south-east Asia and India to counteract a sudden slowdown in business from China. Asian companies based outside China have been largely absent from the US stock market. But they are getting a closer look as Sino-US tensions cause new Chinese listings to dry up and threaten revenue for the New York Stock Exchange and Nasdaq stock market.
Crypto’s Wild 2021 Will Go Down as One for the Ages; Elon Musk, Shiba Inu, El Salvador and a $69.3 million NFT all played a part in a singular year for the industry. Here are 11 key moments.
Joanna Ossinger – Bloomberg
Cryptocurrencies had a blockbuster year in 2021 by almost any measure. Bitcoin, Ether and other coins jumped, reaching new highs far beyond their previous peaks. More institutions began offering research and services for the sector, and big-name investors piled in. Along the way, nonfungible tokens (NFTs) and decentralized finance (DeFi) joined the popular lexicon.
Wall Street Ends Crazy Year With Existential Angst and Big Bonuses; The biggest U.S. banks are making more money than ever, but finance veterans are ‘unsettled and ill at ease.’
Max Abelson – Bloomberg
As Goldman Sachs Group Inc. boss David Solomon chatted at a November dinner for retired partners, he mentioned that the firm will be among the country’s most profitable big public companies this year. But the veteran mergers banker Geoff Boisi was struck by how muted the excitement has been.
Europe’s Power Crunch Shuts Down Factories as Prices Hit Record
Todd Gillespie, Isis Almeida, and Jesper Starn – Bloomberg
French nuclear outages send European power prices to record; Energy cost spurs Europe’s top aluminum smelter to curb output
European power climbed to a fresh record as France faces a winter crunch, spurring the region’s top aluminum smelter to curb output. Electricity for delivery next year surged as much as 6.4% to an all-time high in Germany, Europe’s biggest power market. France, which usually exports power, will need to suck up supplies from neighboring countries to keep the lights on as severe nuclear outages curb generation in the coldest months of the year.
The impending Y2K you probably never heard of: a new interest rate used to price everything from mortgages to car loans
Jillian Berman – MarketWatch
This month may mark the end of 2021, but it has many policymakers, lenders and consumer advocates feeling like it’s 1999. “I’ve kind of been comparing it to Y2K,” Andrew Pizor, a staff attorney at the National Consumer Law Center, said of the transition away from the London Interbank Offered Rate or Libor. “It’s something that everybody says could be the end of the world but if we do everything right no one will notice.”
Implications of futures contracts ban on select commodities
Suresh P Iyengar – Hindu Business Line
Here is the BL Explainer on futures trading ban on select commodities, its benefits, controlling prices, and experts take on it.
Explained | Why SEBI suspended futures trading in agri products
Lalatendu Mishra – The Hindu
Objective is to rein in prices of essential commodities
The story so far: Securities & Exchange Board of India (SEBI) on Monday issued directions to stock exchanges in the commodity derivatives segment for immediately suspending trading in derivative contracts in key farm commodities, namely paddy (non-basmati), wheat, chana, mustard seeds and its derivatives, soya bean and its derivatives, crude palm oil and moong for a year.
Chicago to Require Vaccine Proof for Patrons of Indoor Venues
Elizabeth Campbell – Bloomberg
Chicago will require patrons of indoor venues like restaurants and gyms to show proof of Covid-19 vaccination, and employees who haven’t been inoculated must show a negative test starting in 2022, Mayor Lori Lightfoot announced.
The policy will take effect Jan. 3, Lightfoot said during a virus briefing on Tuesday with Allison Arwady, head of the city’s public health department. The mandate comes as cases of Covid-19 in the city and across the country are surging. On Monday, Chicago reported 1,776 daily cases, up 79% from a week earlier, according to health department data. The city’s positivity rate is 7.3%, up from 4.1% last week.
Omicron Has 80% Lower Risk of Hospitalization, New Study Shows
Janice Kew – Bloomberg
Once admitted, risk of severe disease is the same: NICD data; Compared to delta, odds of severe omicron disease is 70% lower
South Africans contracting Covid-19 in the current fourth wave of infections are 80% less likely to be hospitalized if they catch the omicron variant, compared with other strains, according to a study released by the National Institute for Communicable Diseases.
– Omicron at Least Doubles Risk of Getting Infected on a Plane – Bloomberg
– The Best and Worst Places to Be as Omicron Upends Christmas – Bloomberg
– Japan reports first case of community spread of Omicron – Reuters
– South African medical experts say drop in new COVID-19 cases may mean omicron surge has passed – MarketWatch
– The first American to die of the Omicron variant was an unvaccinated Texas man who had previously caught COVID-19 – Business Insider
– Omicron Spread Prompts More Interest in Booster Shots Than New Vaccinations – WSJ
– To detect omicron, take an at-home COVID-19 test right before a holiday gathering, experts say – MarketWatch
– Omicron Is Just Beginning and Americans Are Already Tired
Exchanges, OTC and Clearing
CME Group Inc. Announces Fourth-Quarter and Year-End 2021 Earnings Release, Conference Call
CME Group Inc. will announce earnings for the fourth quarter and full year of 2021 before the markets open on Wednesday, February 9, 2022. Written highlights for the quarter will be posted on the company’s website at 6:00 a.m. Central Time, the same time it provides its earnings press release. The company will also hold an investor conference call that day at 7:30 a.m. Central Time, at which time company executives will take analysts’ questions.
Euronext New Listings
Integrated System Credit Consulting Fintech lists on Euronext Growth Milan
Directa SIM S.p.A. lists on Euronext Growth Milan
Himalaya Shipping lists on Euronext Growth Oslo
ICE Benchmark Administration to Launch GBP SONIA Spread-Adjusted ICE Swap Rate® as a Benchmark on January 4, 2022
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today announced that ICE Benchmark Administration Limited (IBA) plans to launch GBP SONIA Spread-Adjusted ICE Swap Rate® for use as a benchmark in financial contracts and financial instruments by licensees on January 4, 2022.
— Performance Bond Requirements – Agriculture, Energy, Metal Margin – Effective December 22, 2021 — CME
— Notice of Summary Action; MEMBER FIRM: VIRTU FINANCIAL GLOBAL MARKETS LLC, RULE VIOLATION: Rule 576. IDENTIFICATION OF GLOBEX TERMINAL OPERATORS — CME
Surveyor, Trillium Labs’ Industry-Disrupting Trade Surveillance Platform, Has Won ‘Most Innovative RegTech Solutions Provider’ in the Global Brands Magazine Awards
The Global Brand Awards is an annual event held by Global Brands Magazine (GBM), an international publication headquartered in the UK. The award aims to recognize global brands achieving excellence in performance across a broad range of sectors while keeping its readers updated on the branding world’s key trends. Trillium Labs was evaluated based on customer service, satisfaction, digital innovation, strategic relationships and new business development.
Fintech Influencers Are Making More Than Wall Street Bros
The social media influencer marketing craze that has revolutionized the retail, and music industries is now making its way to finance. Now, some influencers are pulling in as much as the Wall Streeters they cover, regularly making six figures by trading in their social media reach for marketing dollars. Bloomberg profiled a 25-year-old TikTok star with nearly 500,000 followers who has been driving traffic for finance startups like robo advisor Betterment.
A Growing Army of Hackers Helps Keep Kim Jong Un in Power; North Korea relies on cybercrime to fund its nuclear arms program and prop up the ailing economy.
Jon Herskovitz, Jeong-Ho Lee – Bloomberg
Kim Jong Un marked a decade as supreme leader of North Korea in December. Whether he can hold on to power for another 10 years may depend on state hackers, whose cybercrimes finance his nuclear arms program and prop up the economy. According to the U.S. Cybersecurity & Infrastructure Security Agency, North Korea’s state-backed “malicious cyberactivities” target banks around the world, steal defense secrets, extort money through ransomware, hijack digitally mined currency, and launder ill-gotten gains through cryptocurrency exchanges. Kim’s regime has already taken in as much as $2.3 billion through cybercrimes and is geared to rake in even more, U.S. and United Nations investigators have said.
New Log4J Flaw Caps Year of Relentless Cybersecurity Crises
David Uberti and Dustin Volz – WSJ
Last December, cybersecurity professionals began to unravel an extraordinary cyberattack on a little-known company based in Texas called SolarWinds . By hijacking the firm’s software-update mechanism, the hackers had gained the means for covert entry into their choice of thousands of unsuspecting customers.
That attack, which the U.S. government blamed on Russia, infiltrated scores of federal agencies and private companies and was widely described as one of the worst intelligence failures in history. Things, it seemed, couldn’t get much worse.
Deep Instinct Asks Leading Cybersecurity Influencers To Share Their 2025-2030 Predictions
The spate of significant cybersecurity attacks this year has firmly planted security and ransomware prevention on boardroom agendas in the U.S. and around the world. Today’s threats are increasingly sophisticated and impactful — and attackers are constantly probing to find easier ways to evade detection. Given how regularly these attacks occur, along with their potential to severely impact business continuity, it is apparent that a longer time horizon is needed to plan for the threats not only of tomorrow, but also for those that may impact organizations in the years to come.
China regulator suspends cyber security deal with Alibaba Cloud
Chinese regulators on Wednesday suspended an information-sharing partnership with Alibaba Cloud Computing, a subsidiary of e-commerce conglomerate Alibaba Group (9988.HK), over accusations it failed to promptly report and address a cybersecurity vulnerability, according to state-backed media reports.
BlackBerry revenue beats estimates as cybersecurity demand stays strong
BlackBerry Ltd (BB.TO), beat Wall Street estimates for third-quarter revenue on Tuesday, helped by sustained demand for its cybersecurity and Internet of Things products.
Bitcoin Miner TeraWulf Buys 15,000 Computers for Upstate N.Y. Facility
Josh Saul and Crystal Kim – Bloomberg
Bitcoin mining company TeraWulf Inc. will buy 15,000 computers from Bitmain Technologies Ltd. for about $169 million and install the machines at a facility it’s building in upstate New York.
Crypto Exchange Bitpanda Lists Bitcoin Exchange-Traded Note on Deutsche Boerse
Tanzeel Akhtar – Coindesk
Bitpanda, a cryptocurrency investment platform based in Vienna, has launched its first exchange-traded cryptocurrency note (ETC). The note will track the price of bitcoin and be traded in euros. Bitpanda, which has a valuation of $4.1 billion, said the Bitpanda Bitcoin ETC is listed on Deutsche Boerse’s Xetra market. It plans to add more crypto ETC products in 2022.
Secure America’s Financial Strength With Stablecoins, Not Central Banks
Jake Chervinsky – Coindesk
As they say, change is hard. In a dynamic digital world, it’s tempting to protect ourselves from the pressure of change by simply refusing to acknowledge it and clinging to the status quo. But while that approach may feel comfortable, it’s a poor way for policymakers to manage a national strategy. Thankfully, there’s another way: embrace change and use it to our advantage.
An employee embezzled $154 million from Sony then converted it to bitcoin — now the feds are trying to return it
Natasha Dailey – Business Insider
The US Justice Department is trying to return more than $150 million that was embezzled from a Sony subsidiary and converted into bitcoin. In May, a worker at Sony Life Insurance Company in Tokyo allegedly diverted $154 million to a personal account at a Southern California bank when the company was instead trying to transfer the funds between financial accounts, according to a Monday press release from the US Justice Department.
Jack Dorsey says crypto will replace the dollar, then slams Web3
Chris Morris – Fortune
Jack Dorsey is stirring the crypto pot once again. The cofounder and former CEO of Twitter
on Monday evening took to the social media platform to declare his belief that Bitcoin would replace the dollar. Responding to a question from singer Cardi B (no, really!), Dorsey once again showed enthusiasm for the cryptocurrency, setting off a firestorm of comments from critics in the replies.
Binance CEO Warns Against Isolating CBDCs From Broader Crypto Ecosystem
Jamie Crawley – Coindesk
Changpeng Zhao, the CEO of cryptocurrency exchange Binance, believes the contribution of central banks digital currencies (CBDC) will be broadly positive to the crypto world, but warns issuers against isolating them from the broader ecosystem.
China’s State Media Xinhua to Issue NFTs Amid Crypto Crackdown
China’s official Xinhua News Agency is planning to issue news collectibles based on technology used in non-fungible tokens even as policy makers in Beijing have largely banned all crypto-related transactions.
$113 Million in Dirty Crypto Cleaned by Frankfurt Prosecutors
Karin Matussek – Bloomberg
Frankfurt bank hired to put the money back into circulation; Illicit crypto was sold within a week, says Bankhaus Scheich
Prosecutors in the German state of Hesse tapped a local bank to “clean” cryptocurrencies worth about 100 million euros ($113 million) they seized in a criminal case against three drug traders. The anti-cybercrime unit of the Frankfurt General Prosecutor turned to Bankhaus Scheich Wertpapierspezialist AG, a specialist in digital assets, to return the cryptocurrency to regular circulation, the agency said in a statement Wednesday. The pair said they will cooperate in future criminal cases to put confiscated cryptocurrencies back into the markets.
NFT of ‘Merry Christmas’ — first text ever sent — sells for $121K
Theo Wayt – NY Post
A NFT of the first text message ever sent — a holiday greeting that simply reads “Merry Christmas” — was auctioned off for $121,000 in Paris on Tuesday. The text, which was sent on Dec. 3, 1992, was sold by the British wireless company Vodafone. Proceeds from the sale went to the United Nations Refugee Agency.
US Treasury market needs to enter modern age; Series of reforms needed to improve trading in the world’s most important asset class
Heath Tarbert – FT
Since its establishment in 1790, the US Treasuries market has fuelled America’s emergence as an economic superpower. Given its size and centrality to the global financial system, one would expect the US Treasuries market to have a modern structure. Yet the reality is that it has failed to keep pace with other financial markets. Recent shocks to the Treasuries market, including the pandemic-driven volatility of March 2020, highlight the need for structural reform. A wholesale rewrite is not required but a series of targeted changes could bring it more into the modern age.
Mayfair 101 Group to pay $30 million penalty for misleading advertising
The Federal Court has ordered four companies in the Mayfair 101 Group to pay a combined penalty of $30 million for misleading advertising. In March 2021, the Court found Mayfair Wealth Partners Pty Ltd and Online Investments Pty Ltd (trading as Mayfair 101), M101 Nominees Pty Ltd and M101 Holdings Pty Ltd engaged in misleading or deceptive conduct and made false or misleading representations when promoting the M+ and M Core Fixed Income Notes (21-055MR).
Operation of the Financial Services and Credit Panel
The Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Act 2021 (Act) implements the Federal Government’s response to the Financial Services Royal Commission Final Report Recommendation 2.10: New financial adviser disciplinary
William Birdthistle Named Director of Division of Investment Management
The Securities and Exchange Commission today announced the appointment of William A. Birdthistle, currently a professor at Chicago-Kent College of Law, as Director of the Division of Investment Management. The Division oversees regulatory policy for investment advisers and investment companies, including mutual funds and other investment products and services relied upon by retail investors.
Nikola Corporation to Pay $125 Million to Resolve Fraud Charges;Company Also Agrees to Continue Cooperating with the SEC
The Securities and Exchange Commission today announced that Nikola Corporation, a publicly traded company created through a special purpose acquisition company transaction, has agreed to pay $125 million to settle charges that it defrauded investors by misleading them about its products, technical advancements, and commercial prospects. The settlement follows the SEC’s litigated action filed earlier this year against Trevor Milton, the company’s founder and former Chief Executive Officer and Executive Chairman.
CFTC Grants Seed SEF LLC Request to Vacate SEF Registration
The Commodity Futures Trading Commission announced today that it issued an order vacating the swap execution facility (SEF) registration of Seed SEF LLC (Seed). The order was issued at the request of Seed. The CFTC had granted Seed registration as a SEF on August 23, 2016.
Danish woman charged over laundering of $4.5 billion in Danske Bank scandal
A Danish woman has been charged by Danish police in a money laundering case involving more than 30 billion Danish crowns ($4.55 billion) which was channeled through Danske Bank’s Estonian branch, Denmark’s public prosecutor said on Wednesday.
City veteran Jan du Plessis nominated to lead UK accounting regulator; Former BT chair would take over Financial Reporting Council as it prepares to be transformed
Michael O’Dwyer – FT
City veteran Jan du Plessis has been nominated by the government as the new chair of the UK accounting watchdog, whose board has been without a permanent leader for more than 18 months.
Metro Bank fined £5m for capital reporting error; Regulator says bank failed to act with ‘due skill, care and diligence’
Oliver Ralph – FT
Metro Bank has been fined more than £5m by the UK financial regulator over failings in its financial reporting between 2016 and 2019. The Prudential Regulation Authority said on Wednesday that it had fined the bank for “failing to act with due skill, care and diligence” when reporting its capital position, and also for failings in its governance and controls.
Latest statistical report from ESMA provides a misleading picture of European securities markets, says industry; Omitting UK data from its report is highly concerning, say industry associations.
Anita Hawser – The Trade
ESMA’s decision to omit UK and other trading data from its 2021 Annual Statistics Report (ASR) has caused an outpouring of comments on social media and led industry associations to accuse it of misrepresenting EU securities markets, which could scupper efforts to deliver a consolidated tape for equities.
Effective date for amendment to NFA Financial Requirements Section 18
NFA Financial Requirements Section 18 requires each swap dealer (SD) Member that is also a broker-dealer or security-based SD (SBSD) to file financial reports with NFA using the SEC’s FOCUS report. NFA recently learned that certain SDs intend to comply with the CFTC’s capital, margin, segregation, recordkeeping and reporting requirements in lieu of the equivalent SEC regulations, pursuant to SEC Rule 18a-10, and will not file the FOCUS report with the SEC. Therefore, NFA amended Financial Requirements Section 18 to require SBSDs that do not file the FOCUS report with the SEC to use one of the other two forms developed by NFA: Form FR-CSE-NLA or FR-CSE-BHC.
FCA publishes Decision Notice against hedge fund for conflicts of interest failings
The Financial Conduct Authority has published a Decision Notice against BlueCrest Capital Management (UK) LLP (BCMUK) setting out its decision to impose a financial penalty of £40,806,700 on the firm.
FCA statement on British Steel Pension Scheme Redress
The FCA’s Board has asked for a consultation to be prepared on a redress scheme, under s404 of the Financial Services and Markets Act, for former members of the British Steel Pension Scheme (BSPS) who transferred their pension.
Extension of facility for conducting annual meeting and other meetings of unitholders of REITs and InvITs through Video Conferencing (VC) or through Other Audio-Visual means (OAVM)
Investing and Trading
Analysis-‘Hands off’: Why some U.S. investors are pulling meme stocks from brokerages
Svea Herbst-Bayliss and Krystal Hu – Reuters
Jose Castillo pulled his $60,000 worth of GameStop Corp shares from his brokerage last summer, even though he had no intention of selling them. The 26-year-old information technology worker, who lives in the greater Minneapolis area, is among a growing number of investors in “meme” stocks — shares such as GameStop popular with day traders — who are withdrawing them from brokerages out of concern the shares will be lent to hedge funds engaging in short-selling.
The Paranoid Style in American Investing; In 2021, financial prophets and online echo chambers warped stocks and crypto, inflated a bubble and opened the era of identity investing.
Chris Bryant – Bloomberg
The year 2021 will be remembered as one in which markets tumbled down a rabbit hole and entered financial wonderland: A once-elite undertaking became more populist, tribal, anarchic and often downright bizarre. Retail investors upstaged hedge funds, crypto squared up against fiat currencies and financial flows crushed fundamentals. Farewell stocks, hello “stonks”: Memes matter now.
The Big Bet for FX Traders Is How Best to Hide From Inflation
Payne Lubbers – Bloomberg
Higher yields in emerging markets look attractive, Amundi says; Goldman eyes Swiss franc and Swedish krona as prices tick up
Investors are redrafting their playbooks as they game out just how well different currencies can withstand — or harness — the rising tide of global consumer prices. For the likes of Amundi Pioneer Asset Management and Brandywine Global Investment Management, the answer may lie in higher-yielding emerging markets or big commodity producers that stand to gain from rising prices. Analysts at Goldman Sachs Group Inc. are more focused on mispriced opportunities around the policies of central banks, which may show more willingness to embrace FX appreciation and extend their rate-hiking cycles amid climbing inflation risks. And still others are of a mind to just hide out in the dollar — the world’s biggest reserve currency and a go-to haven.
The old lessons from gold’s new existential crisis; A combination of crypto and climate means the industry is left trying to justify its own existence
Helen Thomas – FT
In the world of sustainable investing, being dubbed socially useless is a rough result to take. But that was the challenge laid at the door of the gold sector by one of the world’s best known mining investors. BlackRock’s Evy Hambro suggested this month that the gold industry had to do a better job in justifying the environmental costs of digging the shiny stuff out of the ground, given its limited industrial and technological uses.
Environmental, Social and Corporate Governance
Morningstar ESG Chief Asks Herself: What Do Those Trillions Do?
Frances Schwartzkopff and Saijel Kishan – Bloomberg
Fund managers are about to close their books on another bumper year of ESG flows. What that means for the environment, social justice and good governance is unclear. Hortense Bioy, the global head of sustainability research at Morningstar Inc., says she’s struck by the persistent lack of clarity around investing strategies marketed as ways to protect the planet.
Hedge Funds Hit by ‘Onerous’ ESG Rule Turn to Lawyers for Help
John Ainger and Frances Schwartzkopff – Bloomberg
An obscure rule covering environmental, social and governance investing in Europe has prompted hedge-fund managers in the U.S. and U.K. to turn to their lawyers. At issue is whether they need to comply with one of the most complicated corners of Europe’s Sustainable Finance Disclosure Regulation. The sub-section in question — the so-called Principal Adverse Impact rule — requires investment firms to state whether their actions might in any way harm the environment. U.S. and U.K. hedge funds had thought the rule applied only to products marketed in Europe. But it now seems they must state PAI risks for their entire firm, even those parts that don’t target European clients.
Black Women Hold Record Share of S&P 500 Boardroom Seats
Jeff Green – Bloomberg
An unprecedented number of new Black female directors has helped women gain a record share of boardroom seats at S&P 500 companies this year. Etsy Inc., Caesars Entertainment Inc. and HP Inc. were among companies adding Black women to their boards in November, with women gaining a net 14 seats overall, data compiled by Bloomberg show. This year, 168 Black women hold 231 spots of the more than 5,500 seats at S&P 500 companies, according to ISS Corporate Solutions, the data and analytics provider that advises companies on corporate governance, executive pay and ESG matters.
Hedge Fund Veteran Brummer Looks to Hire New Traders After Record Loss
Love Liman – Bloomberg
Patrik Brummer, the 72-year-old founder of Sweden’s biggest and oldest hedge fund, is hoping to hire more equity traders to avoid a repeat of the unprecedented losses suffered this year. His $13.8 billion eponymous partnership wants to add new long-short equity vehicles to Brummer Multi-Strategy, the firm’s flagship fund that gives clients access to several independent, in-house strategies. The fund has lost 0.4% in 2021 while its benchmark index returned 7.4% over the same period.
Cantor Plans to Double Europe Equities Staff in Coming Years
Harry Wilson – Bloomberg
Wall Street firm has hired Shortland, De Mattia to lead unit; Expansion is part of U.S. brokerage’s wider hiring spree
Cantor Fitzgerald LP may almost double staff numbers at its European equities business over the next few years as the brokerage expands beyond Wall Street.
Calpers chief Marcie Frost says hedge fund fees remain ‘problematic’; US pension fund to lift private equity and debt allocations over concern public markets are ‘a little overheated’
Josephine Cumbo – FT
Calpers, the US’s biggest public pension plan, has reinforced its aversion to hedge funds, declaring that their fees remain “problematic” even as the fund ramps up its allocation of assets to private equity. Some investors are turning to hedge funds to help them benefit from — or at least weather — the likely shift in global monetary policy in the coming year. But Marcie Frost, chief executive of the $500bn California Public Employees’ Retirement System, told the Financial Times that Calpers was not inclined to shift.
Only a third of UK-based active equity funds outperform passives; 2021 research shows rate dropped to only 19% for funds focused on North American equities
Alf Wilkinson – FT
Only a third of active equity funds in the UK outperformed a passive alternative this year, according to research by investment platform AJ Bell. The UK platform’s Manager versus Machine report analysed the performance of about 800 open-ended retail funds across seven Investment Association equity sectors.
American Workers Are Burned Out, and Bosses Are Struggling to Respond; Workplace stress is rampant and resignations have risen; employers are trying four-day workweeks, mandatory vacation days and other new ways of working
Te-Ping Chen, Ray A. Smith – WSJ
In the first 10 months of this year, America’s workers handed in nearly 39 million resignations, the highest number since tracking began in 2000. Some want better jobs. Others, a better work-life balance. Still others want a complete break from the corporate grind. Almost two years into the pandemic that left millions doing their jobs from home, many Americans are rethinking their relationship with work.
U.S. cities try new way to help the poor: give them money
Andy Sullivan – Reuters
Spurred by the coronavirus pandemic, dozens of U.S. cities are deploying a new tool in their war on poverty: cash.
At least 16 cities and counties are handing out no-strings-attached payments to some low-income residents, a Reuters tally found. At least 31 other local governments plan to do so in the months ahead.
That’s a departure from most U.S. anti-poverty programs, which provide benefits for specific needs like groceries or rent and require recipients to hold a job or look for work.