Futures exchange CME plans to launch bitcoin trading

May 16, 2024

First Read

Hits & Takes
John Lothian & JLN Staff

The recent case of two MIT students allegedly stealing $25 million by exploiting a bug in the Ethereum blockchain, reported by ARS Technica, is a stark reminder of the vulnerabilities inherent in even the most advanced technologies. This novel crime, executed in just 12 seconds, poses a significant threat to the integrity of blockchain technology and challenges the very principles upon which it is built.

The alleged scheme, as detailed by the Department of Justice, reveals a sophisticated level of planning and execution. The students, leveraging their expertise in computer science and mathematics, manipulated the Ethereum blockchain by tampering with pending transactions before they were added to the blockchain. This manipulation, facilitated by setting up validators through shell companies and exploiting transaction vulnerabilities, underscores the potential for highly educated individuals to misuse their skills for nefarious purposes.

What makes this crime particularly alarming is its implications for the broader blockchain ecosystem. The Ethereum blockchain, like others, is designed to be a decentralized and secure ledger, providing a transparent and immutable record of transactions. However, the ability of these individuals to alter transactions and effectively rewrite parts of the blockchain calls into question the security of such systems. If the foundational technology of blockchain can be compromised, it undermines trust in the entire cryptocurrency market, which relies on these systems for security and transparency.

Furthermore, the case highlights a significant challenge for regulators and law enforcement. The rapid advancement of technology often outpaces the development of regulatory frameworks, creating a cat-and-mouse game between innovators and those who seek to exploit these innovations. The students’ extensive measures to cover their tracks, including using foreign exchanges with lax “know your customer” (KYC) procedures and researching legal loopholes, demonstrate the complexity of investigating and prosecuting such crimes.

The timing of this incident is particularly notable as it coincides with the Securities and Exchange Commission’s (SEC) deliberation on whether to approve an Ethereum exchange-traded fund (ETF). The SEC, led by crypto-skeptic Gary Gensler, is cautious about the potential risks to investors. This case could bolster the argument for stringent regulations and robust security measures before any new cryptocurrency products are approved.

This unprecedented theft by exploiting the Ethereum blockchain is a wake-up call for the blockchain and cryptocurrency communities. It highlights the need for continuous innovation in security measures, more rigorous regulatory oversight, and a greater emphasis on ethical standards within the tech community. As blockchain technology continues to evolve, ensuring its integrity and security must be a top priority to maintain trust and protect investors.

According to the April 24 FT Special Report with updated stories from yesterday titled “Europe’s Climate Leaders,” Europe, the fastest-warming continent, faces political challenges in implementing climate regulation as highlighted in an annual FT-Statista survey showcasing companies that have significantly reduced carbon emissions intensity. The EU Green Deal is under scrutiny, with business groups expressing concerns over competitiveness, making climate rules a contentious political issue. Industry leaders recently signed a declaration in Antwerp, signaling rising tensions. Meanwhile, the satellite data sector is booming, with companies like Terrabotics monitoring emissions and industry activities. Despite regulatory crackdowns, companies continue sophisticated greenwashing practices, risking trust and investor confidence. Europe’s renewable energy sector, exemplified by the Baltic Eagle wind farm, faces challenges like “Dunkelflaute,” periods with minimal wind and sun. The Green Deal’s numerous regulations have increased compliance costs for businesses, requiring audits of supply chains and ensuring product reparability and deforestation-free commodities. The aviation industry sees sustainable aviation fuel as crucial for net-zero goals, but financing for production plants remains a hurdle. AI startups are also developing specialized applications to combat climate change, offering substantial benefits despite technological limitations.

First it was the environmental concerns because of the electricity demand from blockchain technology and things like bitcoin trading. Now, according to the Financial Times, Microsoft’s emissions have increased 30% since 2020 because of demand for AI and the datacenters that power it.

ESMA announced that Vojtech Belling has been reappointed as vice chair of the European Securities and Markets Authority (ESMA) for another two-and-a-half-year term. Belling, the executive director of the Financial Market Regulation and International Cooperation Department at the Czech National Bank, initially took on the role in November 2022.

ICE has posted a slideshow on LinkedIn about its relationship with FTSE Russell, celebrating 40 years of the FTSE 100 Index Futures, and looking back on some of the most significant milestones in the two company’s shared history.

EEX has 150 employees from EEX Group in Washington, Sydney, Leipzig, Vilnius, Helsinki, Paris and Singapore run “for the Wings for Life World Run early morning or late in the evening, in rain or sunshine, raising awareness and funds for the research for spinal cord injuries,” EEX posted to LinkedIn. Good work, EEX.

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 top US companies, net-zero commitments are still the exception, not the rule, according to an analysis by the S&P Global Sustainable Net-Zero Commitments Tracker dataset. Less than half (45%) of the leading listed companies in the US have a net-zero target, the tracker found. The ambition targets for reducing greenhouse gas (GHG) emissions at these companies, regardless of their net-zero plans, was also examined. For Scope 1, companies in the analysis were found to be aiming to cut 51% of emissions on average. Scope 3 ambitions were found to be much lower, even in sectors where Scope 3 makes up the bulk of emissions. The average Scope 3 reduction target for the financial sector, for example, is just 10%. View the complete findings HERE.~SAED

“Chris, as always, terrifying to talk to you,” sums up Sabrina Tavernise at the end of her conversation with NYT climate change reporter Christopher Flavelle on The New York Times “Daily” podcast. The interview talks through the findings of the recent New York Times Special investigation of the home insurance industry in a podcast titled, “The Possible Collapse of the US Home Insurance System. A Times investigation found climate change may now be a concern for every homeowner in the country.” Tavernise interviews Flavelle about his special report, which found that across the United States, more frequent extreme weather is starting to cause the home insurance market to buckle, even for those who have paid their premiums dutifully year after year. Give a listen HERE. ~SAED

Our most read stories from our previous edition of JLN Options were:
Cboe’s Adam Inzirillo talks about Cboe’s data offerings and growth at FIA Boca from John Lothian News.
GameStop Options Bets Seek 300% Rally in Days Despite Share Dip from Bloomberg.
Bill Gross Sells GameStop, AMC Options to Cash In on Meme Mania from Bloomberg.~JB

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


Veteran Trader George Hanley Shares Family’s Legacy in Trading at CBOT in Open Outcry Traders History Project Interview

May 16, 2024 – In an interview for the Open Outcry Traders History Project, veteran trader George Hanley recounted the rich history of his family’s involvement with the Chicago Board of Trade (CBOT). The interview, part one of three parts conducted by John Lothian News for the MarketsWiki Education video series, explored the Hanley family’s deep-rooted connections to the trading world, dating back to the early 20th century.

Watch the video »


Sam Bankman-Fried Traded In His $35 Million Mansion In The Bahamas For A Prison Cell With 35 Inmates But Claims “He Did Not Do Anything Wrong”
Caleb Naysmith – Benzinga
Formerly disgraced FTX CEO and Co-Founder Sam Bankman-Fried was convicted in November of wire fraud, money laundering and conspiracy, and sentenced to 25 years in prison. His high-profile trial marked a significant chapter in the unraveling of FTX, which collapsed under suspicious financial practices, leading to intense scrutiny and legal action.

****** Cognitive dissonance is a powerful drug.~JJL


Wall Street banker dead at 35 wanted new job over grueling 100-hour work weeks: report
Ariel Zilber – NY Post
The 35-year-old Bank of America investment banker who died of a blood clot earlier this month was looking for a new job at a different company due to the stress of working more than 100 hours a week, according to a report. Leo Lukenas III, a former enlisted soldier turned junior banker who worked out of Bank of America’s offices in Midtown Manhattan, contacted an executive recruiter about a new job before he died on May 2 of what the medical examiners called an acute coronary artery thrombus, Reuters reported on Wednesday.

***** Unfortunately, he now has two new jobs, martyr and angel.~JJL


FDIC Chair Martin Gruenberg apologizes for toxic workplace culture amid calls to resign
Reuters via NY Post
Federal Deposit Insurance Corp. chair Martin Gruenberg vowed to skeptical lawmakers Wednesday he would fix deep-seated cultural issues at his agency, as well as his own conduct. But lawmakers expressed doubt that the bank regulator – who spent nearly two decades in leadership roles at the agency and was also the subject of some employee complaints about his temper – was fit for the job. Testifying before Congress for several hours, Gruenberg was contrite for failing to see widespread sexual harassment and other issues detailed in an independent report, as well as accounts of him losing his temper with subordinates. But he was resolute that he planned to stay at the agency and see changes implemented.

****** When I think about some of the toxic work conditions I experienced early in my career and how much I enjoy working from home, I feel very lucky today.~JJL


Wednesday’s Top Three
Our top clicked item Wednesday was Euronext’s LinkedIn post containing a video/slideshow about its first quarter performance. Second was How Did Jim Simons’s Firm Make $100 Billion? He Told His Secrets to Our Reporter, from The Wall Street Journal. Third was ICE’s LinkedIn post thanking FOW for reporting that ICE’s ESTR (euro-short term rate) futures reached 100,000 lots of open interest for the first time on Monday, becoming the first exchange to do so.



Lead Stories

Futures exchange CME plans to launch bitcoin trading; US group has held discussions with market participants over Switzerland-based market
Philip Stafford – Financial Times
CME Group, the world’s largest futures exchange, is planning to launch bitcoin trading, aiming to capitalise on surging demand this year among Wall Street money managers to gain exposure to the cryptocurrency sector. The Chicago-based group has been holding discussions with traders who want to buy and sell the cryptocurrency on a regulated marketplace, according to three people with direct knowledge of the talks. The plan, which has not yet been finalised, would mark a further encroachment by major Wall Street institutions into the digital assets sector following the US Securities and Exchange Commission’s approval in January of stock market funds that invest directly in bitcoin.

Microsoft’s emissions jump almost 30% as it races to meet AI demand; Increase from 2020 to 2023 highlights challenges of meeting climate goals while investing in infrastructure
Camilla Hodgson – Financial Times
Microsoft’s emissions have risen by almost a third since 2020, as the push to build out the infrastructure behind artificial intelligence threatens its climate goals. The nearly 30 per cent increase in emissions was in large part due to the construction of the data centres that AI and cloud computing systems run on, Microsoft said in its annual sustainability report on Wednesday.

The GameStop Mania Is Back. Is Wall Street Ready This Time? Financial-plumbing problems were costly for investors in 2021, and a planned upgrade still isn’t complete
Alexander Osipovich – The Wall Street Journal
Meme stocks are back. Is Wall Street ready? The sudden revival of GameStop mania this week comes just as the U.S. financial industry is racing to fix a big problem with the market’s plumbing that roiled investors during the original meme-stock craze in 2021. On May 28, the industry is set to begin settling stock trades in one business day, rather than two, the current standard-an overhaul that would fill a key demand from regulators. Settlement is the behind-the-scenes process in which shares are delivered to buyers, and cash to sellers.

Microsoft Imposes New Energy Requirement on Suppliers in Effort to Reduce Its Climate Impact; Tech giant reports 30% rise in emissions and says biggest challenge in meeting its own environmental goals comes from building AI infrastructure and reducing carbon footprint of supply chain
Perry Cleveland-Peck – The Wall Street Journal
Microsoft will ask its main suppliers to use 100% renewable energy by the end of the decade, as it reported a 30% rise in emissions and acknowledged that the biggest challenge in meeting its climate goals comes from building new AI infrastructure and tackling the emissions from its supply chain. Chief Sustainability Officer Melanie Nakagawa said the company will require “select scale, high-volume suppliers to use 100% carbon-free electricity by 2030” for goods and services delivered to Microsoft. The tech heavyweight said the requirements will be rolled out at the start of the 2025 fiscal year as part of an overall update to the company’s Supplier Code of Conduct.

Europe’s Banks Find Breaking Up With Russia Is Hard to Do; The ECB is stepping up pressure on lenders to speed their exit from the country.
Steven Arons and Nicholas Comfort – Bloomberg
Two years after Russia’s full-scale invasion of Ukraine, big European lenders continue to operate hefty, increasingly profitable units in the country despite public pledges to wind them down. The combined head count of the five European Union banks with the largest Russia operations has fallen by just 3% since the invasion, and earnings have roughly tripled, thanks to the fat interest rates they’re getting on their piles of cash stuck in the country.

MIT students stole $25M in seconds by exploiting ETH blockchain bug, DOJ says; Brothers charged in novel crypto scheme potentially face decades in prison; MIT students stole $25M in seconds by exploiting ETH blockchain bug, DOJ says
Ashley Belanger – Ars Technica
Within approximately 12 seconds, two highly educated brothers allegedly stole $25 million by tampering with the ethereum blockchain in a never-before-seen cryptocurrency scheme, according to an indictment that the US Department of Justice unsealed Wednesday. In a DOJ press release, US Attorney Damian Williams said the scheme was so sophisticated that it “calls the very integrity of the blockchain into question.”

LME Warehouse Queue Returns After Jump in Aluminum Orders; Canceled warrants have risen by over 280,000 tons in two days; Requests come after large deliveries from Trafigura last week
Jack Farchy – Bloomberg
Two huge requests to withdraw aluminum from London Metal Exchange stockpiles have confronted the exchange with the return of an old enemy: the warehouse queue. Orders to deliver out aluminum at LME warehouses jumped by 183,975 tons on Thursday, after a 100,325 ton increase the previous day. Almost all of that was in Port Klang, Malaysia, where 352,875 tons is now waiting to be delivered out.

Charles Schwab CFO to Retire in Executive Shakeup
Hannah Miao – The Wall Street Journal
Charles Schwab Chief Financial Officer Peter Crawford plans to retire and former Citigroup Treasurer Mike Verdeschi is expected to succeed him, the company said Thursday. Crawford became CFO in 2017 and has worked at Schwab for more than two decades. Chief Operating Officer Joe Martinetto will become executive chairman of the Schwab Banks. Schwab said it isn’t replacing Martinetto’s role at this time.

UK’s FCA charges social media stars with promoting unauthorised trading scheme
Financial Times
UK regulators have charged social media influencers for promoting an unauthorised financial trading scheme. The Financial Conduct Authority on Thursday said it had brought charges against nine people involved in promoting a foreign exchange scheme linked to high-risk derivatives on Instagram between 2018 and 2021.

Vladimir Putin and Xi Jinping vow to co-operate against ‘destructive and hostile’ US; Russia and China agree to tighten military ties and deepen economic partnership after talks in Beijing
Joe Leahy and Max Seddon – Financial Times
Vladimir Putin and Xi Jinping vowed on Thursday to work together against what they said was “destructive and hostile” US pressure and to deepen the ties that have sustained Russia’s invasion of Ukraine. The Chinese president welcomed his Russian counterpart, who arrived in Beijing before dawn, at the Great Hall of the People ahead of two days of meetings aimed at underscoring the leaders’ close relationship and bolstering China’s support for Russia’s wartime economy.

UBS chief Sergio Ermotti criticises Swiss regulators over Credit Suisse; Comments come after watchdog said he supported new rules that could increase capital requirements
Owen Walker – Financial Times
UBS chief executive Sergio Ermotti has lambasted Swiss authorities for allowing Credit Suisse to fail, as his bank fights back against growing calls within the country to increase UBS’s capital requirements. Ermotti, who was brought back to UBS just days after its state-orchestrated rescue of Credit Suisse last March, criticised the oversight of the fallen bank in a speech on Wednesday.

US Treasury threatens Austria’s Raiffeisen Bank over Russia unit; Bank ditched asset-swap plan connected to oligarch Oleg Deripaska after letter warning of potential secondary sanctions
Chris Cook and Max Seddon – Financial Times
Washington has warned Raiffeisen Bank International the lender is at risk of having its access to the US financial system curtailed because of its operations in Russia, said a person with direct knowledge of the correspondence. Washington could invoke national security grounds against the Austrian bank, according to a letter from deputy US Treasury secretary Wally Adeyemo dated May 6. The warning mentioned an executive order issued by the White House in December 2023, authorising secondary sanctions on foreign financial institutions conducting transactions involving Russia’s military industrial base.

Bridgewater founder Ray Dalio warns of danger of US debt to Treasury market; Billionaire investor has concerns about rising financial burden, global conflict and growing possibility of ‘civil war’
Kate Duguid – Financial Times
Ray Dalio, the billionaire founder of hedge fund giant Bridgewater Associates, has warned that the US government’s rising debt levels could hit Treasury bonds, arguing that investors should move some of their money to foreign markets. In an interview with the Financial Times, Dalio described his wide-ranging concerns about the US, including its debt load, the risk of what he calls a “civil war” and the potential for the country to become involved in another international conflict, which he warned could deter foreign investors from buying US bonds.

FIA backs international effort to promote “effective practices” for variation margin
FIA has responded to a discussion paper released by international standard setters that sets out eight “effective practices” for streamlining variation margin in centrally cleared markets. The discussion paper addresses the need for greater transparency and understanding of margin practices at central counterparties, particularly in light of recent episodes of market volatility triggered by the COVID crisis and Russia’s invasion of Ukraine.

Paxos Appoints Former CFTC Chairman J. Christopher Giancarlo to Board
Damian Chmiel – Finance Magnates
Paxos, a regulated blockchain and tokenization infrastructure platform, announced today the appointment of J. Christopher Giancarlo, former Chairman of the US Commodity Futures Trading Commission (CFTC), to its board of directors. Paxos Scores Regulatory Heavyweight from CFTC Giancarlo, a respected figure in the financial services industry and a passionate advocate for blockchain technology, brings decades of expertise to Paxos as the company continues to innovate in the digital asset space. During his tenure at the CFTC from 2014 to 2019, Giancarlo oversaw the introduction of the first Bitcoin futures products and applied a “Do No Harm” regulatory approach to blockchain technology.

Conscious usage of TCA: Making trade analytics more actionable; With data becoming unavoidably vital to the trading desk, Wesley Bray explores how traders are delving past traditional TCA and collaborating with data scientists on the desk to help gain a deeper understanding of market dynamics, in order to make better informed trading decisions.
Wesley Bray – The Trade
In the constantly evolving financial markets landscape, where volatility and complexity are continually featured, the ability to discern the true costs of trading has become paramount for investors and institutions alike. If used correctly, transaction cost analysis (TCA) can provide valuable insights in this environment, providing a comprehensive framework to dissect and understand the intricacies of trade execution.

From The TRADE’s Research Desk: A tale of two algo strategies; While algo usage continues its rise across the buy-side, Claudia Preece delves into the latest results from The TRADE’s Algorithmic Trading Survey which found that while almost half of traders elect five or more providers, almost a third use just one, demonstrating a notable difference in key schools of thought – is the answer loyalty or diversification?
Claudia Preece – The Trade
Over the last year, the buy-side has seen a notable uptick in algo usage and looking into The TRADE’s most recent survey findings, this looks set to continue. The buy-side has long voiced simplification and automation as key focus areas within this environment, and taking the top spots this year in terms of what the buy-side most desires when it comes to algorithms were ease of use (5.97) and customer support (6.03).

Ukraine Invasion

Putin could now defeat Ukraine within months
Hamish de Bretton-Gordon – The Telegraph
The Prime Minister, in his “state of the nation” speech this week, accurately stated that the world is a very dangerous place, and we must ensure that our defence capabilities are up to the task. He is right on the threat but has yet to grasp that one way to meet it is by investing heavily in our physical and psychological military conventional deterrence. The signs coming out of Moscow are far from encouraging, with Putin sacking his combat generals to replace them with “bean counters”. Presumably to ensure the economy is on a total war footing and capable of taking on Nato and outlasting it on the battlefields and in the parliaments of Europe. If Trump comes to power, he may only need to hold tight until January 2025; not long.

Putin says advance of Russian forces in Ukraine is going to plan
Guy Faulconbridge – Reuters
President Vladimir Putin said on Wednesday that Russian forces were improving their positions every day along the front in Ukraine in all directions and that the advance was going to plan. Russia has been pushing Ukrainian forces back at various points in recent months despite hundreds of billions of dollars worth of aid from the United States and its allies.

Putin is plotting ‘physical attacks’ on the West, says GCHQ chief; British intelligence ‘increasingly concerned’ over growing links between Russia and cyber hacks
Matthew Field – The Telegraph
Vladimir Putin’s Russia is preparing “physical attacks” against the West, the head of GCHQ has warned, as British and American intelligence officials laid bare the dual threat posed by Moscow and Beijing. Anne Keast-Butler, who was appointed to lead Britain’s signals intelligence operations last May, used her first major speech to highlight the immediate threat posed by the Kremlin and the “epoch-defining” risk posed by China to the UK and its allies.

Israel/Palestine Conflict

Israel has no plan for Gaza after Hamas rule, the Israeli defense chief says
Daniel Estrin – NPR
Amid growing frustration in Israel over where the war is headed eight months in, Israeli Defense Minister Yoav Gallant on Wednesday accused Israel’s leadership of ignoring his requests to discuss a replacement to Hamas rule in Gaza. “Since October, I have been raising this issue consistently in the Cabinet, and have received no response,” Gallant said.

U.N. Lowers Count of Women and Children Killed, Citing Incomplete Information
The New York Times
The United Nations has begun citing a much lower death toll for women and children in Gaza, acknowledging that it has incomplete information about many of the people killed during Israel’s military offensive in the territory. As recently as May 6, the U.N’s Office for the Coordination of Humanitarian Affairs said in its regularly updated online report that at least 9,500 women and 14,500 children were among the dead, out of an overall death toll of 34,735.

The Unpunished: How Extremists Took Over Israel; After 50 years of failure to stop violence and terrorism against Palestinians by Jewish ultranationalists, lawlessness has become the law.
Ronen Bergman and Mark Mazzetti – The New York Times
This story is told in three parts. The first documents the unequal system of justice that grew around Jewish settlements in Gaza and the West Bank. The second shows how extremists targeted not only Palestinians but also Israeli officials trying to make peace. The third explores how this movement gained control of the state itself. Taken together, they tell the story of how a radical ideology moved from the fringes to the heart of Israeli political power.

Exchanges, OTC and Clearing

Intercontinental Exchange Chair & CEO Jeffrey C. Sprecher to Present at the Bernstein 40th Annual Strategic Decisions Conference on May 29
Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of technology and data, announced today that Jeffrey C. Sprecher, Chair and CEO, will present at the Bernstein 40th Annual Strategic Decisions Conference. The presentation will take place on Wednesday, May 29 at 2:30 p.m. ET. The presentation will be available live and in replay via webcast and can be accessed in the investor relations and media section of ICE’s website at http://ir.theice.com/.

New Exchange Council at EEX
Trading participants of the European Energy Exchange (EEX) have elected the new members of the Exchange Council, to serve for three years. The Exchange Council supervises the Exchange’s Management Board, provides guidance concerning the future development of the organisation, as well as approves and, if necessary, amends exchange rules and regulations. The Chairman and Deputy Chairman will be appointed in the constituent meeting on 12 June 2024.

Re: CPMI-IOSCO Report on Streamlining variation margin in centrally cleared markets – examples of effective practices
Global Association of Central Counterparties
The Global Association of Central Counterparties (“CCP Global”) is the international association for central counterparties (“CCPs”), representing 42 members who operate over 60 individual CCPs across the Americas, EMEA, and the Asia-Pacific region. CCP Global appreciates the opportunity to respond to the Report on Streamlining variation margin in centrally cleared markets – examples of effective practices 2 (“the Report”) prepared by the Committee on Payments and Market Infrastructures (“CPMI”) and the Board of the International Organization of Securities Commissions (“IOSCO”).


Two unlikely states are leading the charge on regulating AI; Connecticut’s ambitious legislation regulating the emerging industry got derailed. Now, the tech industry is trying to kill Colorado’s bill.
Mallory Culhane – Politico
Colorado and Connecticut this year launched the country’s most ambitious plays to become national models for regulating artificial intelligence. The groundbreaking bills took aim at the companies that develop and use AI systems, and would have prohibited them from causing discrimination in crucial services like health care, employment and housing. But by May, Connecticut’s effort had crumpled after a veto threat from Democratic Gov. Ned Lamont, who raised concerns that it would stifle the fledgling industry.

Google turns to AI to protect users from mobile phone thefts; Feature that automatically locks screen when device is snatched comes amid reports of rise in the crime
Stephanie Stacey – Financial Times
Google said it would use artificial intelligence to detect when Android smartphones have been snatched and quickly lock the screen, as technology groups move to protect sensitive data amid reports of rising mobile phone theft. The Silicon Valley giant announced on Wednesday its new “theft prevention lock”, powered by Google AI, which will be activated if the device detects “a common motion associated with theft” – such as if a thief takes a phone from an owner’s hand and attempts to run, cycle, or drive away with it.

Britain’s got AI talent but that’s not enough; The ambitions may be homegrown yet the funds still come from abroad
John Thornhill – Financial Times
It’s the kind of crazily ambitious investment that seemingly only happens in Silicon Valley near the top of a hype cycle: a pre-product, lossmaking artificial intelligence start-up raises $1.05bn from SoftBank, Microsoft and Nvidia to fund a dizzying ambition for global domination. In fact, this deal was sealed in London last week when Wayve, which develops software for autonomous vehicles, announced Europe’s largest AI start-up fundraising.

Gen AI looks easy. That’s what makes it so hard
Rodney Zemmel, McKinsey & Company – Fortune
This commentary is from McKinsey & Company, a Fortune Global Forum Knowledge Partner. Rodney Zemmel is a senior partner in McKinsey & Company’s New York office and global leader of McKinsey Digital. He is a coauthor of Rewired: The McKinsey Guide to Outcompeting in the Age of Digital and AI. The natural-language capabilities of generative AI are so user-friendly that even CEOs, who typically are not early adopters, experiment with it. Less than a year after gen-AI-based tools burst onto the scene in late 2022, one quarter of C-suite executives were already using it. The widespread interest in gen AI has created a massive wave of use cases and experiments-and there’s the rub. Such efforts are relatively easy to launch but can chew up resources without creating much value.


Thoma Bravo’s LogRhythm merges with Exabeam in more cybersecurity consolidation
Paul Sawers – TechCrunch
Private equity giant Thoma Bravo has announced that its security information and event management (SIEM) company LogRhythm will be merging with Exabeam, a rival cybersecurity company backed by the likes of Cisco and Lightspeed Venture Partners. SIEM is the business of using real-time data gleaned from servers, network devices, and applications to flag abnormal activity and thwart potential security threats before they escalate. Consolidation in the space is rife. The LogRhythm and Exabeam merger news arrived on the same day as Palo Alto Networks confirmed it was acquiring the assets of IBM’s SIEM business, QRadar, which IBM itself had acquired in 2011. It also follows Cisco’s $28 billion megadeal to procure SIEM giant Splunk, a deal that closed in March.

The Cybersecurity Implications Of Gen Z’s Tech-Savvy Lifestyle
David Balaban – Forbes
The evolving lifestyle of Generation Z has significant implications from a cybersecurity perspective. As digital natives born into an era of rapid technological advancement, their habits, preferences, and interactions with technology shape not only market trends but also the landscape of cybersecurity. Let’s explore how Generation Z’s habits intersect with cybersecurity and what the challenges and solutions are in this area.

Nigeria Halts Cybersecurity Tax After Public Outrage; In the midst of an economy struggling with soaring inflation, the Nigerian government paused plans to place a levy on domestic transactions that was aimed at enhancing cybersecurity.
Robert Lemos – DarkReading
The Nigerian government halted its effort to fund national cybersecurity improvements through a 0.5% levy on domestic electronic transactions after the current administration faced widespread public criticism for increasing taxes during an economic crisis.


Hong Kong cryptocurrency customer scammed in alleged HK$1 million ‘hell money’ scheme; Suspects allegedly showed man stacks of hell banknotes and persuaded him to transfer about HK$1 million worth of USDT to cryptocurrency wallet provided by them
Oscar Liu – South China Morning Post
Hong Kong police have arrested three workers at a currency exchange shop after a customer was allegedly shown stacks of “hell money” before transferring about HK$1 million (US$128,010) worth of cryptocurrency. The force’s technology crime division on Wednesday arrested three men, aged between 31 and 34, on suspicion of obtaining property by deception and confiscated 3,000 hell banknotes, a safe and a note counting machine at a shop in Tsim Sha Tsui.


High debt levels put Europe at risk of ‘adverse shocks’, ECB warns; ‘Fiscal slippage’ leaves countries vulnerable to geopolitical tensions and higher interest rates, says central bank
Martin Arnold – Financial Times
European countries are “vulnerable to adverse shocks” from geopolitical tensions and persistently high interest rates because of their failure to keep reducing their public debt, the European Central Bank has warned. In its twice-yearly financial stability review, the ECB said many European governments had not fully reversed the support measures introduced to shield consumers and businesses from the impact of Covid-19 and the war in Ukraine.

A Trump Win Puts $1 Trillion in US Energy Investments at Risk; Wood Mackenzie report sees boost for fossil fuels with GOP win; Biden policies have turned US into global green-energy leader
Mark Chediak – Bloomberg
A victory by Republican Donald Trump in the US presidential election threatens $1 trillion in energy investments and future support for low-carbon energy sources, according to a Wood Mackenzie report. A Trump administration likely will put forward policies that reduce help for electric vehicles, renewable energy and carbon capture technologies while promoting fossil fuel production, the report said. Trump has already vowed to issue an executive order targeting offshore wind development if he wins. Wood Mackenzie said lower investments in US energy would delay the country’s push to zero out greenhouse gas emissions.

Joe Biden to raise solar import tariffs in bid to protect US industry
Move follows sweeping levies on Chinese goods in latest protectionist trade action ahead of November election
Aime Williams and Amanda Chu – Financial Times
Joe Biden is set to impose tariffs on double-sided solar panel imports, as the president moves to protect US clean energy manufacturers and boost jobs ahead of November’s election. US officials said the move would immediately end an exemption from Trump-era tariffs on imports of a type of panel unit often used in large solar projects, one of the fastest-growing forms of clean energy in the country. They will now attract a tariff rate of 14.25 per cent.

Democrats Batter Bank Regulator Over F.D.I.C.’s ‘Toxic’ Workplace Culture; The agency’s chair, Martin Gruenberg, has resisted Republicans’ calls to resign, but criticism by his own party raises questions about how long he can hang on.
Emily Flitter – The New York Times
Martin Gruenberg is still the leader of the Federal Deposit Insurance Corporation, an agency that supervises U.S. banks, but after a bipartisan grilling on Wednesday by members of a House committee overseeing bank regulators, he appeared to be hanging on by a thread. Democrats expressed dismay over his responses to the crisis at his agency, after a scathing report of a culture of widespread sexual harassment and discrimination. One congresswoman appeared to call for him to resign, as Republicans have been doing for months.

How Robert Fico turned Slovakia into one of Russia’s only allies
James Rothwell – The Telegraph
Robert Fico, the Slovakian prime minister who was shot on Wednesday, has presided over a shift from pro-Western values to growing sympathies with Russia since his election victory last September. The Left-wing populist has steered his Smer (Direction-Social Democracy) party strongly against military support for Ukraine, vowing in a pre-election interview with The Telegraph last year that he would cut arms supplies to Kyiv altogether.

Why growing China-Russia military ties worry the west; Closer co-operation forged through joint exercises is forcing Pentagon and allies to react
Kathrin Hille and Max Seddon – Financial Times


US charges two brothers with novel $25 million cryptocurrency heist
Nate Raymond – Reuters
Two brothers who studied at the Massachusetts Institute of Technology were arrested on Wednesday on U.S. charges that they carried out a cutting-edge scheme to exploit the Ethereum blockchain’s integrity and steal $25 million worth of cryptocurrency. Federal prosecutors in Manhattan called the scheme perpetrated by Anton Peraire-Bueno, 24, and James Peraire-Bueno, 28, “novel” and said the case marked the first time that such a fraud had ever been the subject of U.S. criminal charges.

SEC Staff Publishes New Investment Adviser Statistics Report
The staff of the Securities and Exchange Commission today published a new report of Investment Adviser Statistics, which is based on aggregated data filed by investment advisers on Form ADV. The new report, which will be updated on an annual basis, is designed to give the public a view into the investment advisory industry, with insights into areas such as business activities, client composition, and the types of funds advised. The report shows trends over time.

Fostering a Healthy “Tone at the Top” at Audit Firms
Paul Munter – SEC
Audit firms are private businesses with the same legitimate interest in making a profit that all private businesses have. But audit firms have also been entrusted to be essential gatekeepers in maintaining the integrity of our capital markets. The leaders of audit firms, and the tone that they set, play a central role in ensuring that professionals within audit firms do not sacrifice integrity and professionalism for profit and growth.

Nutra Pharma Corp. et al; SEC Obtains Final Judgments Against Florida Microcap CEO and Consultant for Fraud
Securities and Exchange Commission v. Nutra Pharma Corp. et al, No. 2:18-cv-5459 (E.D.N.Y filed Sept. 28, 2018)
On May 13, 2024, the U.S. District Court for the Eastern District of New York entered final consent judgments against Erik (“Rik”) Deitsch, the former CEO of microcap issuer Nutra Pharma Corporation (“Nutra Pharma”), and Sean McManus, a consultant for Nutra Pharma, enjoining them from violating certain provisions of the federal securities laws, ordering disgorgement and civil monetary penalties, imposing penny stock bars, and as to Deitsch, imposing an officer-and-director bar.

ASIC restricts three listed companies from issuing a reduced-content prospectus
ASIC has restricted XTC Lithium Limited (XTC), My Rewards International Limited (MRI) and Range International Limited (RAN) from issuing a reduced-content prospectus for 12 months after they failed to lodge financial and other reports in line with their obligations. ASIC’s determinations mean that XTC, MRI and RAN will not be able to rely on the reduced-disclosure rule under section 713 of the Corporations Act and instead must issue a full prospectus if they wish to raise funds from retail investors.

ASIC’s Financial Reporting and Audit Surveillance Program; Speech by ASIC Commissioner Kate O’Rourke at the CA ANZ Audit Conference 2024, 16 May 2024.
Good morning, everyone. Thank you for the invitation to speak here today. Before I begin, I’d like to acknowledge the Gadigal people of the Eora Nation, the Traditional Owners and Custodians of the land from which I am making this address today – Sydney.

ESMA publishes data on markets and securities in the EEA
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor is publishing today the Statistics on Securities and Markets (ESSM) Report, with the objective of increasing access to data of public interest. The report provides details about how securities markets in the European Economic Area (EEA30) were organised in 2022, including structural indicators on securities, markets, market participants and infrastructures.

Vojtech Belling reappointed Vice Chair of ESMA
The Board of Supervisors of the European Securities and Markets Authority (ESMA) has reappointed Vojtěch Belling as its Vice Chair. Mr Belling, who is the Executive Director of the Financial Market Regulation and International Cooperation Department of the Czech National Bank (CNB), will serve a further two-and-a-half-year term effective immediately. He was originally appointed to the role in November 2022.

‘Finfluencers’ charged for promoting unauthorised trading scheme
The FCA has brought charges against nine individuals in relation to an unauthorised foreign exchange trading scheme promoted on social media. Emmanuel Nwanze has been charged with running an unauthorised investment scheme and issuing unauthorised financial promotions. The FCA alleges that, between 19 May 2018 and 13 April 2021, Mr Nwanze and Holly Thompson used an Instagram account (@holly_fxtrends) to provide advice on buying and selling contracts for difference (CFDs) when they were not authorised to do so.

What’s New on the FSA Website; Week of May 2, 2024 – May 9, 2024
FSA Japan
This page contains the latest in events, developments, and updates to the FSA website.

SFC facilitates broadening of master-feeder ETFs offerings in Hong Kong
SFC – Hong Kong
The Securities and Futures Commission (SFC) today publishes a revised circular to allow SFC-authorised feeder ETFs under master-feeder structure to invest in overseas-listed master ETFs – including actively managed ETFs – from different markets under streamlined requirements provided certain conditions are met (Note 1).

Investing and Trading

Commodities Hit Highest in a Year, Posing New Inflation Threat
Devika Krishna Kumar – Bloomberg
A key gauge for raw materials prices rose to the highest level in more than a year, throwing a wrench in central banks’ efforts to tamp down inflation. The Bloomberg Commodity Spot Index – which tracks 24 energy, metal and agricultural contracts – inched up Wednesday to the highest reading since April 2023.

US copper prices soar to record high as funds pile in; Short sellers cover negative bets as gap between US and UK prices hits largest on record
Harry Dempsey – Financial Times
US copper prices have blown out to a record premium over the global benchmark in London, as speculative funds pile in and traders are forced to cover short bets on the world’s most important industrial metal. Copper futures traded in New York surged to an all-time high, with the most active three-month contract to July rallying 11 per cent in the past week to a peak of more than $5 per pound on Wednesday.

AIG to Sell 20% Stake in Insurer Corebridge to Nippon Life; AIG spun off its life and retirement business in 2022; All cash deal is major step for Nippon Life to seek US growth
Taiga Uranaka and Nao Sano – Bloomberg
Nippon Life Insurance Co. has agreed to acquire a 20% stake in Corebridge Financial Inc. for about $3.8 billion in cash, marking its biggest-ever deal as it seeks a foothold in the US. American International Group Inc., which owns more than 50% of Corebridge, will sell approximately 120 million shares for $31.47 each to Nippon Life under the planned deal, the US insurer said in a statement Thursday. AIG said it agreed to maintain 9.9% of the business for two years after the closing, which is expected by the first quarter of 2025.

Odd Lots: Pierre Andurand on Shrinking Cocoa Supplies
Pierre Andurand made his name trading oil and other energy-related assets, but wild swings in the price of cocoa have recently lured the founder of Andurand Capital Management into a new market. He bet on cocoa earlier this year and saw the trade pay off as the price of the beans surged to a record $12,000 a ton. Prices have since fallen back to around $7,800, but Andurand sees scope for further upside as extreme deficits in the building blocks of chocolate loom. In this episode, we talk about how he entered the cocoa market, how he formed his investment thesis, and potential interest in other soft commodities, like coffee and orange juice. We also talk about copper, where a similar story of structural shortages is now playing out in prices.

Marc Lore Sees Sports Deals as Path to ‘Collective Happiness’; On the latest episode of The Deal, the investor reveals why making billions of dollars selling Diapers.com and Jet.com left him “depressed.”
Jason Kelly – Bloomberg
With all the money pouring into sports these days, big-time investor Marc Lore says he has an additional metric for success: happiness. “We just had this drive to say, man, ‘Let’s get in there and put our energy into this and help turn this thing around,'” he says of his sports team investments. “If we do that, we could add a lot of collective happiness-in the city, the fans and the players.”

The Rate-Hiking Era Has Been Good for the FTSE; Yet the UK market still trades at a significant discount to its global peers.
John Stepek – Bloomberg

Environmental, Social and Corporate Governance

The Retreat From ESG Proxy Voting; Major investment funds are losing their zeal to push politics in shareholder votes.
The Editorial Board – The Wall Street Journal
In the murky world of shareholder proxy voting, a little media scrutiny goes a long way. Asset managers hoped investors wouldn’t notice how their shares were being voted, but many have curbed their ESG enthusiasm now that word is getting out. Even BlackRock has turned a new leaf.

TUS bars imports from 26 cotton manufacturers over Uyghur forced labor
The United States blocked imports from 26 Chinese cotton traders or warehouse facilities on Thursday as part of its effort to eliminate goods made with the forced labor of Uyghur minorities from the U.S. supply chain. The companies are the latest additions to the Ugyhur Forced Labor Prevention Act Entity List that restricts the import of goods tied to what the U.S. government has characterized as an ongoing genocide of minorities in China’s Xinjiang region.

US green energy push expected to generate $47bn market in tax credits; Oil companies, banks, private equity and others partner with renewables developers to offset liabilities
Amanda Chu – Financial Times
Blackstone, Vitol and a film venture involving American football star Travis Kelce are among the investors to have joined a new market for green tax credits as it approaches $50bn in size. The Inflation Reduction Act, the landmark climate law signed by President Joe Biden in 2022, hinges on tax credits to drive new investment in clean energy and other technologies.

Fatal Heat Waves Are Testing India’s Ability to Protect 1.4 Billion People; Longer and more frequent periods of extreme temperatures are exposing the nation’s flawed attempts to respond to a changing climate.
Rajesh Kumar Singh – Bloomberg
In scorching heat on a busy Kolkata street last month, commuters sought refuge inside a glass-walled bus shelter where two air conditioners churned around stifling air. Those inside were visibly sweating, dabbing at their foreheads in sauna-like temperatures that were scarcely cooler than out in the open. Local authorities initially had plans to install as many as 300 of the cooled cabins under efforts to improve protections from a heat season that typically runs from April until the monsoon hits the subcontinent in June. There are currently only a handful in operation, and some have been stripped of their AC units, leaving any users sweltering.

Why It’s So Hard to Track the Fashion Industry’s Emissions; A growing number of fashion companies are talking about substantially cutting their greenhouse gas emissions. But evaluating those efforts is tricky.
Zahra Hirji and Sana Pashankar – Bloomberg
To understand fashion’s climate challenge, think of a shirt. Every shirt starts with raw materials. Cotton, for example, is grown on farms and then spun into yarn in factories largely found across the Global South. The fibers are sent to textile makers, who turn them into fabric used to make clothes. The clothes are shipped to apparel retailers, who sell them to consumers in stores and online. The exact number of steps in the process depends on the company and the product, but the overall gist is the same: Behind any piece of clothing you buy is a complex supply chain, almost every link of which involves emitting greenhouse gasses into the atmosphere. Behind that supply chain, though, is a carbon-accounting mess.

Oil Makes Headway on US Stockpile Decline and Wider Risk-On Mood
Yongchang Chin – Bloomberg

Green hydrogen group Thyssenkrupp Nucera hit by drop in orders; Frankfurt-listed company is latest to highlight difficulties facing the embryonic technology
Rachel Millard – Financial Times


Vanguard’s new chief plans to lure ‘millions and millions more’ clients; At BlackRock, Salim Ramji led the industry-beating iShares. Now he has big plans for Vanguard
Brooke Masters and Will Schmitt – Financial Times
Vanguard’s newly named chief executive Salim Ramji, the first outsider to lead the $9.3tn asset manager, has big plans to extend its reach well beyond the 50mn people it serves. The Pennsylvania-based group best known for retirement plans and low-cost funds is seeking to expand its advisory offerings. A dominant player in US mutual funds and exchange traded funds, it has struggled to grow internationally, lagging behind market leader BlackRock, which manages $10.5tn in assets, while its customers and counterparties routinely complain about its clunky technology.

BNY Mellon combines market offerings through Global Markets Trading integration; The integrated service will improve client experience, increase optionality, and execution choice as well as offering clients improved access to BNY Mellon’s global markets and execution enterprise, the firm said.
Wesley Bray – The Trade
BNY Mellon has today announced the integration of Global Markets Trading (GMT), which will combine the firm’s capabilities in foreign exchange, fixed income, equities and capital markets to provide full-service client provisions. GMT will improve client experience, increase optionality, and execution choice, as well as offering clients improved access to BNY Mellon’s global markets and execution enterprise.

Work & Management

Jump Trading may have best salaries for women in HFT… and the worst bonuses
Alex McMurray – Efinancialcareers.com
At the elite electronic trading firms, women are still very much the minority, and pay can sometimes pale in comparison to their male peers. Using median gender pay gap data from Gov.UK, Jump Trading stands out as a top destination for female traders in the sector… at first.

Exclusive-Bank of America banker who died had sought to leave, citing long hours, recruiter says
Milana Vinn – Reuters
The 35-year-old Bank of America investment banker who died from a blood clot earlier this month wanted to leave the U.S. bank because he was working more than 100 hours a week, according to an executive recruiter who spoke with him about seeking a new job. Junior banker Leo Lukenas III died of an acute coronary artery thrombus, a type of blood clot, the New York Office of the Chief Medical Examiner said last week.

Microsoft offers staff to relocate from China; Offer comes as tensions rise between Washington and Beijing over sensitive technology
Eleanor Olcott and Ryan McMorrow and Camilla Hodgson – Financial Times
Microsoft has extended an offer to some of its China-based staff to relocate outside of the country, as tensions rise between Beijing and Washington over sensitive technology including artificial intelligence. The software giant “shared an optional internal transfer opportunity with a subset of employees”, according to a company spokesperson on Thursday, adding that Microsoft will “continue to operate in [China] and other markets where we have a presence”.

‘Easier than pensions’: why electric cars are the hot company perk; Salary sacrifice schemes provide cheaper access to EVs
Peter Campbell and Emma Jacobs – Financial Times
In decades past, the company car was a symbol of professional status, prized by employees as a visible marker of seniority. It is now making a comeback in a different guise as a popular workplace perk – and has quietly become the biggest driver of electric vehicle sales across the UK.

Deadly US Oil Blast Exposes Risks of Pushing Profits Over Safety; Marathon Petroleum, the largest fuel producer in the US, delayed repairs at its Galveston Bay refinery amid high demand and record profits. A leaky pump then caused a deadly explosion.
Chunzi Xu and Robert Tuttle – Bloomberg
The explosion that rocked Marathon Petroleum Corp.’s Galveston Bay oil refinery one year ago trapped Rigoberto Guillen 75 feet in the air. Stranded on a metal platform, he and a colleague crouched low as black smoke engulfed them. “I couldn’t see my coworker,” Guillen said. “I couldn’t even see the sun.”

Big Companies Remain Dividend Holdouts Four Years After Pandemic Began; Boeing, Carnival and American Airlines are among dozens of companies working to strengthen their finances first. ‘Is this the equivalent of long-term Covid?’
Mark Maurer – The Wall Street Journal

Wellness Exchange

Surging Hospital Prices Are Helping Keep Inflation High; A 7.7% increase in prices at hospitals last month was the highest in 13 years
Melanie Evans – Bloomberg
One reason U.S. inflation is still high: Increases in prices for procedures to prop open clogged arteries, provide intensive care for newborns and biopsy breasts. Hospitals didn’t raise prices as early in the pandemic as supermarkets, retailers and restaurants. But they have been making up ground since then. Their increases have contributed to stubbornly high inflation readings from the consumer-price index, which in April increased 3.4% from a year ago.


The limits of yen intervention; Unilateral efforts to prop up Japan’s currency are expensive and potentially futile
The Editorial Board – Financial Times
Japan’s intervention in support of its currency has proved to be a little like the labours of Sisyphus. The Japanese Ministry of Finance is suspected by traders to have used $59bn to boost the yen from a historic intraday low of ¥160 to ¥153 to the dollar two weeks ago. But as of Wednesday, the Japanese yen is back to trading at around ¥156 per dollar, and it may slip further.

Japan’s economy shrank more than expected in the first quarter
Yuri Kageyama – AP
The Japanese economy shrank at an annual rate of 2% in the first quarter of this year, as consumption and exports declined, the government said Thursday. Although unemployment has stayed relatively low in the world’s fourth largest economy at about 2.6%, wage growth has been slow and prices have risen partly due to weakness of the yen against the U.S. dollar.

Tel Aviv Stock Exchange to align trading week with global bourses
Steven Scheer – Reuters
The Tel Aviv Stock Exchange (TASE) is planning to alter its schedule and add Friday to the trading week in a bid to strengthen the Israeli bourse’s global profile, it said on Thursday. The exchange hopes a decision to shift away from Israel’s Sunday to Thursday work week to one that overlaps more with Wall Street and European bourses will win inclusion in global index provider MSCI’s Europe category.

As Western Drought Recedes, the Great Salt Lake Is the Biggest It’s Been in Years; Reservoirs are rising across the region, boosting water businesses. But conservation efforts continue amid fears the rain won’t last.
Jim Carlton – The Wall Street Journal
Darin Christensen was working on his boat docked in the Great Salt Lake, preparing for something he hadn’t been able to do the past two years: take it out in the water. “You can sail 40 miles without hitting anything,” a grinning Christensen, 62, said in April as a ceaseless wind rocked his 25-footer, the Abraxas.

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The Spread

The Stock Market Has Rarely Been This Sleepy

Lead Stories The Stock Market Has Rarely Been This Sleepy Gunjan Banerji - The Wall Street Journal It's eerily calm out there in the stock market. The Cboe Volatility Index, or VIX, dropped below 12 last week, a nearly five-year low. The gauge, based on options prices...

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