Gensler says SEC to review payment for order flow

Jun 10, 2021

First Read

$42,376/$300,000 (14.1%)


Hits & Takes
John Lothian & JLN Staff

The new CME Group micro Treasury futures contracts are not the basis point futures I have suggested, but they are very close and maybe better. Certainly the micro name will enhance their popularity. More importantly, they will give traders and hedgers a more precise way of managing their interest rate risk. That is a key element of the micro contracts. One reason micros work so well is because commission rates have crashed to near zero in the last 40 years. This type of hedging would have been difficult during the years when commissions were fixed. When I started in the business in the early 1980s, some commissions were as high as $125 per round turn. That would negate much of the value of the micros. However, exchange fees are now the big issue where the battle is being fought with the recent disruptive fee schedule from newly announced Fair Exchange, or FairX

The other Eris, the CME Group Eris, saw its swap futures trade over 100K contracts in a day, trading 105,925 on June 8. That is $10 billion in notional value and sets a new volume record. Also, front-month open interest has more than tripled since early September 2020.

The LME will reopen the Ring on September 6, 2021. This date has been chosen to provide certainty and allow forward planning, on the basis that the London Metal Exchange’s existing vaccine criteria is expected to have been met, with adequate time allowed to ensure vaccine efficacy.

Cryptocurrency mining may not be green, but some is brown. Farmers are now using manure to power crypto mining operations, according to a MarketWatch report. — MarketWatch

BIS also thinks bitcoin assets are the equivalent of manure. A proposal put forward on Thursday by the Basel Committee on Banking Supervision would require banks to hold regulatory capital at a rate of 1,250% of the norm, or 100% of the value of the bitcoin held on their books. — MarketWatch

My LinkedIn news feed has shown several interns at industry firms and institutions give a shout out to starting their internship. It is nice to see these young people so excited to come into the industry, even if just for an internship.

The Hoff wants you to get vaccinated. David Hasselhoff, the popular Baywatch actor, has been recruited by health authorities to encourage citizens to get vaccinated. —|MarketWatch]]

There were no new donations to the JLN MarketsWiki Education GoFundMe campaign. Yesterday I interviewed Doug Harris for The History of Financial Futures and The Path to Electronic Trading series. Harris, who was recently inducted into the FIA Futures Hall of Fame, was the general counsel for JP Morgan Futures when it was first set up. He later worked for the OCC, the Office of the Comptroller of the Currency, and helped advance the cause of exchange traded derivatives there on behalf of banks. And he was the general counsel for BrokerTec Futures Exchange, a defunct organization that Harris says accomplished its goals of lowering fees, engendering cross margining and moving markets to an electronic trading format.

Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL


ISDA plans to hold the second of its virtual Derivatives Trading Forum series on Tuesday, June 29. The session will focus on changes to the derivatives market structure, regulation and trading practices, including responses to recent market events like Brexit and the pandemic. CFTC Commissioner Dawn D. Stump will be among the speakers. Information on registration is here. ~SC


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Bitcoin Put in Highest Risk Category in Bank Capital Proposal
Silla Brush – Bloomberg
Global regulators consulting on 1,250% risk weight for crypto; Financial firms are starting to build crypto trading business
Banks will face the toughest capital requirements for holdings in Bitcoin and other cryptoassets under global regulators’ plans to ward off threats to financial stability from the volatile market. The Basel Committee on Banking Supervision said on Thursday that the banking industry faces increased risks from cryptoassets because of the potential for money laundering, reputational challenges and wild swings in prices that could lead to defaults. The panel proposed that a 1,250% risk weight be applied to a bank’s exposure to Bitcoin and certain other cryptocurrencies. In practice, that means a bank may need to hold a dollar in capital for each dollar worth of Bitcoin, based on an 8% minimum capital requirement.

****** If this is what banks are going to have to do, what should clearinghouses have to do?~JJL


Marex cancels London listing; Broker’s move sparks concern investors may be increasingly cautious over companies coming to market
Philip Stafford – FT
Broker Marex has pulled its planned listing, raising concerns that investors may be growing more cautious on new companies coming to the stock market. The London-based broker, controlled by two former Lehman Brothers investment bankers following a private equity buyout in 2010, disclosed its decision late on Tuesday evening.

***** The suspense is killing me.~JJL


France is sending a second Statue of Liberty to the US
Xiaofei Xu and Lorraine Poupon – CNN
New Yorkers have a surprise gift to look forward to for this Independence Day: a second Statue of Liberty sent by France. This new bronze statue, nicknamed the “little sister,” is one-sixteenth the size of the world-famous one that stands on Liberty Island. On Monday, during a special ceremony, the smaller sibling was lifted and loaded into a special container at the National Museum of Arts and Crafts (CNAM) in central Paris, where it has been installed since 2011 in the museum’s garden. It will be erected on Ellis Island, just across the water from the original, from July 1 to July 5. The statue, over 450 kilograms (992 pounds) in weight and just shy of 10 feet tall, was first made in 2009. It is an exact replica of the original 1878 plaster model preserved by CNAM.

*****You can buy as many Statues of Liberties as you want in shops near Times Square in New York.~JJL


If COVID-19 trends continue, it could be years before virus is controlled: PAHO
Julia Symmes Cobb – Reuters
If the spread of COVID-19 continues at current rates it will be years before the virus is controlled in the Americas, the Pan American Health Organization (PAHO) said on Wednesday, as it called for countries to share excess vaccine doses.

*****Guess what? The Covid-19 pandemic is as bad as it has been in some countries in Pan-America. And guess what else? If we don’t stop it everywhere, it won’t go away. ~JJL


Wednesday’s Top Three
Our most clicked story on Wednesday was Bloomberg’s The Fed Is Paying 0.00%. Such a Deal! Depositors Are Flocking. Second was, for the fourth or fifth time in the top three, A former head of macro strategy at legendary investment firm Citadel lays out the 5 key qualities he believes makes a great trader — and provides a rare outlook on the future of hedge funds, from Business Insider. Third was Chuck Mackie’s Crypto Connection 2021 – Day One: Three takeaways from Tabb Forum’s crypto conference, at Medium.


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Lead Stories

Gensler says SEC to review payment for order flow; Shares in market maker Virtu fall after regulator says he will consider potential new rules
Philip Stafford – FT
The top US stock market regulator is looking to change the rules around share trading, including fees paid by large Wall Street groups to handle customers’ orders, after January’s explosion in “meme stocks” highlighted what he called “inefficiencies” in the market.

Banks will have to set aside capital equal to bitcoin assets under BIS proposal
Steve Goldstein – MarketWatch
Banks will need to set aside capital for their exposure to cryptocurrencies under a proposal put forward on Thursday by the Basel Committee on Banking Supervision. “While banks’ exposures to cryptoassets are currently limited, the continued growth and innovation in cryptoassets and related services, coupled with the heightened interest of some banks, could increase global financial stability concerns and risks to the banking system in the absence of a specified prudential treatment. The BIS said “group 1” cryptoassets, like stablecoins, would be assigned a smaller risk weighting that’s in line with assets like stocks than “group 2” cryptoassets like bitcoin BTCUSD, +4.22%, which would be assigned a risk weight of 1,250%. A $100 exposure to these group 2 cryptoassets would require a minimum capital of $100, under the BIS proposal.

Crypto’s Outlook in Washington Is Darkened by Ransomware Attacks
Benjamin Bain and Robert Schmidt – Bloomberg
Bitcoin ETF among products at risk of being sidelined; Elizabeth Warren calls tokens a ‘haven for criminals’
Just a few months ago, crypto enthusiasts were hopeful that Washington was warming to digital assets. But cyberattacks demanding Bitcoin ransoms, wild trading and rebukes from regulators have eroded their optimism.

SEC to Review Market Structure as Meme Stocks Stir Frenzy; Chairman Gary Gensler says focus is on pricing incentives that exchanges and high-speed traders use to attract orders
Dave Michaels and Alexander Osipovich – WSJ
The Securities and Exchange Commission is considering changes to some of the stock market’s most fundamental rules in light of the surge in trading over the past year by individual investors in meme stocks such as AMC Entertainment Holdings Inc. and GameStop Corp.

Global banking regulator urges toughest capital rules for crypto; Basel committee report comes as authorities step up plans to regulate the fast-emerging sector
Philip Stafford – FT
Global regulators are calling for cryptocurrencies to carry the toughest bank capital rules of any asset, arguing that requirements for holding bitcoin and similar tokens should be far higher than those for conventional stocks and bonds.

U.S. SEC chair Gensler to staff: recommend rules to ensure fair competition between exchanges, brokers
Katanga Johnson – Reuters
Gary Gensler, who chairs the nation’s top markets watchdog, said on Wednesday that he has asked staff to recommend rules aimed at ensuring fair competition between exchanges and brokers.

Interactive Brokers to Offer Crypto Trading in Coming Months
Katherine Chiglinsky and Matthew Leising – Bloomberg
Interactive Brokers Group Inc. is stepping deeper into cryptocurrencies with a plan to offer trading services. “Customers certainly are asking for it, and we expect to be ready to offer it to them by the end of the summer,” Chairman Thomas Peterffy said Wednesday at Piper Sandler Cos.’s global exchange and fintech conference.

Coinbase Teams Up With 401(k) Provider to Offer Crypto; Workers at participating companies could invest up to 5% of their account balances in cryptocurrency
Anne Tergesen – WSJ
A small group of workers will find something new in their 401(k) plan starting in July: the option to invest in cryptocurrency. ForUsAll Inc., a 401(k) provider, announced earlier this month a deal with the institutional arm of Coinbase Global Inc., COIN 1.66% a leading cryptocurrency exchange, that will allow workers in plans it administers to invest up to 5% of their 401(k) contributions in bitcoin, ether, litecoin, and others.

Robinhood and Didi to Kick Off a Hot IPO Summer; Bankers estimate that IPOs could raise some $40 billion in the coming months, the most ever during a summer stretch
Corrie Driebusch – WSJ
Public filings are looming for Chinese ride-sharing company Didi Chuxing Technology Co. and Robinhood Markets Inc., two of the most hotly anticipated initial public offerings of 2021, people familiar with the matter said. Their stocks are likely to begin trading in July. Fund managers, venture capitalists, bankers and lawyers said they are busier than they have been in decades at this time of year, which is usually quieter. Some claim business is even crazier than during the dot-com boom of the late 1990s.

French and Swiss Launch Cross-Border Digital Currency Trial
Catherine Bosley – Bloomberg
The central banks of Switzerland and France have joined forces with commercial banks to experiment on a wholesale cross-border digital currency, according to a statement. UBS Group AG, Credit Suisse Group AG, Accenture Plc and Natixis SA are among the private-sector players involved. The effort was launched under the auspices of the innovation hub at the Bank for International Settlements.

China Arrests 1,100 for Money Laundering in Crypto Crackdown
Bloomberg News
China arrested over 1,100 people in a sweeping crackdown on the use of cryptocurrencies for money laundering, adding to signs it’s further reining in crypto-linked activities. Police busted more than 170 criminal groups that used cryptocurrencies to launder money in telecom scams to avoid being tracked down, the Ministry of Public Security said in a statement. The campaign spanned 23 provinces and cities, it added. Arrest figures were as of Wednesday afternoon.

One step closer: How exchanges are seeking tighter relationships with clients; Increasingly, exchanges are trying to get closer to their customers, in a bid to better understand how they use market data. This move may come at the expense of data vendors that are being gradually squeezed out of the exchange-client relationship.
Wei-Shen Wong, Joanna Wright – Waters Technology
If you’re a subscriber to the Australian Securities Exchange’s ASX and ASX 24 datafeeds, you’ve probably recently signed a new contract with the exchange. In October 2020, the ASX announced it was expanding the use of its Data Reporting Module (DRM) to firms currently reporting so-called non-display use of equities and derivatives datafeeds indirectly via their data vendors.

Don’t Discount Bond Vigilantes, Says Economist Who Named Them; Edward Yardeni predicts bond investors will react negatively to higher inflation.
Peter Coy – Bloomberg
The once-feared bond vigilantes have been quiet lately. In Wall Street lore, they’re the investors who take matters into their own hands when the government isn’t protecting the currency. If inflation rises, deficits grow, or a country’s creditworthiness is at risk, the bond vigilantes sell bonds en masse, pushing up interest rates sharply and forcing the government to get serious.

The FOMO Economy: Is Everyone Making Money But You? Whether you’re into meme stocks, crypto, or real estate, buying seems driven as much by anxiety as by hope. Even professional investors who know better can’t resist getting in on the action.
Lionel Laurent – Bloomberg
Billionaire trader and investor Stanley Druckenmiller bought Bitcoin after watching its price go up and feeling the fear of missing out, aka FOMO. “I felt like a moron,” he said in an interview with the online news site the Hustle in May. He cashed out part of his $20 million bet after prices soared—”my heart’s never been in it”—but described the stampede of money managers into the cryptocurrency as an elephant trying to fit through a keyhole.

Opinion: Central banks endanger the economy by getting too cozy with reckless financial firms
Mohamed A. El-Erian – MarketWatch
After the 2008 global financial crisis, governments and central banks in advanced economies vowed that they would never again let the banking system hold policy hostage, let alone threaten economic and social well-being. Thirteen years later, they have only partly fulfilled this pledge. Another part of finance now risks spoiling what could be—in fact, must be—a durable, inclusive, and sustainable recovery from the horrid COVID-19 shock.

State Street sets up digital unit to capitalise on crypto craze; US custody bank declares ‘tipping point’ for market as clients increase exposure
Gary Silverman – FT
State Street, a US custody bank that oversees more than $40tn in assets, is setting up a new digital division, reflecting the pressure on financial services companies to help clients trade cryptocurrencies even as regulators work out rules for the sector.

She Exposed the Truth About ‘Dirty Money’: It’s Everywhere
Mark Schoofs – NY Times
Last Thursday, President Biden vowed to make global financial systems more transparent so that individuals and organizations engaged in corruption would find it harder to “shield their activities.” On the same day, a federal judge imposed prison time on Natalie Mayflower Sours Edwards, a former Treasury Department official who, by providing secret government documents to an investigative reporter, did more to bring transparency to the global financial system than almost anyone else in recent memory.

The Rising Tide of Broker Costs, and the Shrinking Pool of Competitors
John Ramsay – IEX
Competition is a linchpin of successful free market economies. It drives innovation, promotes efficient use of resources, and increases choice for consumers. It is no less critical to the success of our equity capital markets. But trends of the past decade have seen a sharp increase in costs to trade on exchanges, a sharp decrease in the number of exchange broker members, and a steady erosion in the ability of smaller or new firms to compete for business.

Pioneering Blockchain Investor, Rumi Morales, Appointed Adviser for SkyGrid; Former CME and Goldman executive played key role in developing crypto ecosystem with Ripple investment and CME Crypto Futures
SkyGrid, a Boeing, SparkCognition company that brings artificial intelligence, blockchain, and a over a century of aviation experience to the drone space, announced today that Rumi Morales, Partner and Board Member at Outlier Ventures and former head of CME Ventures, has been added to its Advisory Board. In her role at SkyGrid, Morales will help cultivate the ecosystem relationships and technology strategy that will define SkyGrid’s next generation products.

How ‘Creative destruction’ drives innovation and prosperity; This defence of capitalism by Philippe Aghion and collaborators also stresses the need for regulation and a social safety net
Martin Wolf – FT
Someone born in 1600 would find the world of 1800 quite familiar. But someone born in 1800 would find today’s world beyond comprehension. What explains this transformation? The answer is: market capitalism.

Asset Managers in Europe Look for Deals to Bulk Up; Firms have announced deals worth more than $5 billion this year, while DWS and BNP are possible bidders for NN Group’s asset-management arm
Julie Steinberg – WSJ
More European asset-management mergers and acquisitions have been announced so far this year than in the corresponding period in the three years prior, according to data provider Dealogic. Some 32 deals worth $5.2 billion have been announced so far this year.

Top House Republican Probes SEC’s Firing of U.S. Audit Regulator
Robert Schmidt – Bloomberg
The senior Republican on the House Financial Services Committee said he’s opening an investigation into the firing of the leader of the U.S.’s audit watchdog.


China Returns to Its Strict Covid Limits to Fight a New Outbreak; Foreign businesses worry that tough quarantines and restrictions could persist into next year as Beijing struggles with variants and questions about its vaccines.
Keith Bradsher – NY Times
Neighborhoods under strict lockdown. Thousands quarantined. Millions tested in mere days. Overseas arrivals locked up for weeks and sometimes months.

Vaccinated and need a vacation? CDC relaxes guidance for Americans traveling to more than 100 countries.
Callum Keown – MarketWatch
The U.S. Centers for Disease Control and Prevention has issued updated travel advice, easing restrictions on more than 100 countries and opening up more destinations to COVID-19 vaccinated Americans.

A king’s vaccine: Thailand’s struggle to deliver jabs to its people; The company producing the AstraZeneca vaccine in the country is owned by the monarch and there are signs of delays in the politically-sensitive rollout
John Reed, Michael Peel and Hannah Kuchler – FT
The soaring glass and steel Bang Sue Grand Station in Bangkok, is set to become south-east Asia’s largest railway terminal when it opens later this year. But this week it occupied a different role: as the launch pad for Thailand’s Covid-19 national vaccination rollout.

BioNTech prepares expansion into Africa alongside EU; German biotech plans to build mRNA facilities on the continent in next four years
Erika Solomon and Sam Fleming – FT
BioNTech is planning a push into Africa, aiming to establish mRNA vaccine production facilities on the continent as part of a long-term effort to tackle diseases beyond Covid-19.

US to donate 500m doses of Pfizer’s Covid vaccine; Joe Biden set to announce plan to boost global inoculation efforts ahead of G7 summit
Kiran Stacey – FT
The US will purchase 500m Covid-19 vaccines made by Pfizer to donate to other countries, Joe Biden will announce on Thursday, a significant expansion of the administration’s efforts to help increase inoculation rates around the world.

J&J CEO Says Covid-19 Vaccine Will Be Important Tool to Contain Pandemic; Alex Gorsky says one-shot vaccine has significant advantages globally despite its lower uptake in the U.S.
Peter Loftus – WSJ
Johnson & Johnson’s chief executive said the company’s Covid-19 vaccine could still play a role in containing the global coronavirus pandemic despite its setbacks with production problems and safety concerns.

Tokyo vaccination centre to offer shots to younger people as Olympics loom
The main coronavirus vaccination centre in the Japanese capital of Tokyo will begin booking shots for people under 65 from Saturday, media reported on Thursday, as it ramps up inoculation efforts before the 2020 Olympics open next month.

Indian state sharply raises COVID-19 death toll prompting call for wide review
Manas Mishra, Neha Arora – Reuters
An Indian state has raised its COVID-19 death toll sharply higher after the discovery of thousands of unreported cases, lending weight to suspicion that India’s overall death tally is significantly more than the official figure.

Exchanges, OTC and Clearing

Euronext announces June 2021 quarterly review results of the BEL® Family
Euronext today announced the results of the quarterly review for the BEL 20®, BEL Mid® and BEL Small® indices, which will take place after markets close on Friday 18 June 2021 and be effective from Monday 21 June 2021.

Believe lists on Euronext Paris
Euronext celebrates today the listing of Believe, one of the world’s leading digital music companies specialising in developing independent artists and labels, on Compartment A of its regulated market in Paris (ticker code: BLV).

Euronext announces June 2021 quarterly review results of the PSI 20®
Euronext today announced the results of the quarterly review for the PSI 20®, which will take place after markets close on Friday 18 June 2021 and be effective from Monday 21 June 2021.

CME Globex Notices: June 7, 2021
CME Group
Critical System Updates
Update – CME Globex Performance Enhancements – June 27 UPDATE
CME FX Link Enhancements: New Zealand Dollar/US Dollar Spot FX Impact – June 27
Product Launches
Micro USD/JPY, USD/CAD and USD/CHF Futures with OTC Quoting Convention – June 27
E-mini S&P 500 Quarterly PM European Style Options – June 27

SGX consults on proposed rules changes related to GIFT Connect
Singapore Exchange (SGX) is seeking market feedback on proposed amendments to the SGX-Derivatives Clearing Rules (SGX-DC Clearing Rules) and the SGX Derivatives Trading Futures Trading Rules (SGX-DT Futures Trading Rules) in relation to the operation of the NSE IFSC-SGX Connect (GIFT Connect).

SIX Exchange Regulation Initiates Investigation Against Relief Therapeutics Holding Ltd.
On 10 June 2021, SIX Exchange Regulation AG (SER) initiated an investigation against RELIEF THERAPEUTICS Holding Ltd. due to a potential violation of the rules on ad hoc publicity.

New Exchange Council Of EEX Elected
The Exchange Council as one of the four exchange bodies of the exchange is elected every three years. Therefore all exchange participants are categorized into four groups according to their core business and elect their representatives within these groups.


DASH Expands Product Suite with the Launch of Risk, Allocation Tools; With DASH360 Risk and DASH360 Allocations, industry-leading technology provider further supports trading firms throughout the full trade lifecycle
DASH Financial Technologies
DASH Financial Technologies (“DASH”), the leading U.S. options technology and execution provider, today announced the launch of DASH360 Risk and DASH360 Allocations. The highly customizable new products – which allow traders to dynamically manage their 15c3-5 market access requirements and post-trade option and equity trade allocations, respectively – are the latest additions to the award-winning DASH360 suite of analytics, reporting and risk tools.

How A Group Of Redditors Is Making Algotrading Accessible To All
Alexander Puutio – Forbes
Markets sure aren’t what they used to be. In fact, trading is less profitable than it has ever been before according to experts like Professor Aswath Damodaran, Professor of Finance at New York University Stern School of Business.

China Passes Law to Strengthen Control Over Tech Firms’ Data
Bloomberg News
Top legislative body approves measure; few details available; Move comes amid tech crackdown and trade battles with U.S.
China’s top legislative body has passed a data security law, strengthening Beijing’s control over digital information amid a crackdown on local technology giants and market access disputes with the U.S. The legislation was approved Thursday by the National People’s Congress Standing Committee, state broadcaster China Central Television said. The full text of the final legislation wasn’t immediately released.

Fintech Investors Are Hitting the Marqeta; The card-payments enabler behind big names like Square, DoorDash and others will be a major play for investors betting on digital commerce
Telis Demos – WSJ
Marqeta, one of the forces behind the rapid evolution of payments and commerce, is now a public company. Investors should get to know it. The company started trading on Wednesday following its initial public offering, and jumped 13% from its offering price. It provides what it calls “modern card issuing” to customers such as Square, DoorDash, Affirm Holdings and Goldman Sachs, facilitating the speedy issuance of a virtual or physical card to a client’s end users. For Square, that is used to help turn its Cash App into a neo-banking account with a debit card. For DoorDash, it enables deliverers to pay for the food being picked up from a restaurant.

Bloomberg enhances portfolio trading offering with basket building tool; The Portfolio Trading Basket Builder incorporates its Evaluating Pricing Services (BVAL) allowing participants to use data, analytics and communication tools to optimise baskets.
Annabel Smith – The Trade
Bloomberg has enhanced its portfolio trading offering with the launch of a basket builder tool allowing institutions to optimise their portfolio creation before executing electronically. The basket builder incorporates Bloomberg’s Evaluated Pricing Services (BVAL) as a pricing reference in addition to standard quote types allowing participants to source the optimal basket of bonds.

Principal Global Investors installs fixed income EMS from TS Imagine; The integration by Principal Global Investors follows TradingScreen and Imagine Software’s merger last month to create TS Imagine.
Annabel Smith – The Trade
US boutique asset manager Principal Global Investors has implemented the execution management system (EMS) from TS Imagine for its fixed income trading operations.

BNP Paribas rolls out algo for Brazilian real markets; The expansion of its NDF capabilities will see BNP Paribas provide on-shore liquidity on the Brazilian Mercantile and Futures Exchange.
Hayley McDowell – The Trade
BNP Paribas has confirmed the launch of a new algorithm for Brazilian real (BRL) markets as it continues to grow its local market presence in Brazil The French investment bank said the expansion of its non-deliverable forward (NDF) capabilities to include BRL follows increased demand from clients for BRL currency pairs.

Etrading Software’s Digital Token Identifier Foundation Establishes Task Force With Association Of National Numbering Agencies On Digital Asset Standards To Examine Synergies Between The DTI And ISIN Standards
Etrading Software (ETS), global provider of technology-led solutions designed for financial institutions and industry initiatives, acting as the selected Registration Authority for the new International Organization for Standardization’s (ISO) standard ISO 24165 for Digital Token Identifiers (DTIs), and the Association of National Numbering Agencies, (ANNA), a global member association seeking to foster standardisation within the financial industry and ISO Registration Authority for ISO 6166 International Securities Identification Numbers (ISINs), today announce a new joint task force to identify potential synergies between the DTI and ISIN.

Refinitiv Workspace for Wealth Advisors chosen for Nomura’s International Wealth Management business
Fast, light and built on an open platform, Refinitiv Workspace for Wealth Advisors is tailored to the specific needs of wealth advisors, delivering an efficient workflow and actionable insights at home or in the office.


JBS says it paid $11 million in bitcoin in ransomware attack
Jacob Bunge – WSJ
JBS USA Holdings Inc. paid an $11 million ransom to cybercriminals who last week temporarily knocked out plants that process roughly one-fifth of the nation’s meat supply, the company’s chief executive said. The ransom payment, in bitcoin, was made to shield JBS meat plants from further disruption and to limit the potential impact on restaurants, grocery stores and farmers that rely on JBS, said Andre Nogueira, chief executive of Brazilian meat company JBS SA’s U.S. division.

Meat processor JBS paid $11 million in ransom to hackers.
Rebecca Robbins – NY Times
The world’s largest meat processor said on Wednesday that it paid an $11 million ransom in Bitcoin to the hackers behind an attack that forced the shutdown last week of all the company’s U.S. beef plants and disrupted operations at poultry and pork plants.

The U.S. government is getting closer to having a national cyber czar
Joseph Marks – WP
Congress is getting closer to confirming the first-ever national cyber director as the government lurches from one cyber crisis to the next.
President Biden’s nominee for the post, Chris Inglis, is facing a confirmation hearing this morning before the Senate Homeland Security and Governmental Affairs Committee — the first step in what is likely to be an easy path to confirmation.

Manitowoc Identifies a Cybersecurity Incident on its Network
Business Wire
The Manitowoc Company, Inc. (NYSE: MTW) (the “Company” or “Manitowoc”), a leading global manufacturer of cranes and lifting solutions, today announced that the Company experienced a cybersecurity incident, resulting in a systems outage. Upon identifying the issue, the Company promptly engaged an industry-leading third-party information technology firm and forensics specialist and legal counsel to assist in the investigation. Federal law enforcement has been notified, and the Company is diligently working to restore its systems. This matter has caused and may continue to cause a delay or disruption to the Company’s business.


Kraken to No Longer Offer Margin Trading for US Investors Who Don’t Meet ‘Certain’ Requirements
Tanzeel Akhtar – Coindesk
Cryptocurrency exchange Kraken said it will no longer offer margin trading for U.S. clients who do not meet certain requirements.

Gemini Acquires Leading Crypto Custody Technology; Enhances Speed and Scale of Asset Listings, Transfers, and Usage
emini, a crypto platform, today announced the acquisition of Shard X, a leading developer of secure multi-party computation (MPC) cryptographic technology. Gemini will integrate Shard X’s MPC technology into its distributed, multi-site key management and signing infrastructure, markedly increasing the speed with which Gemini can transfer customer assets and provide support for new asset listings and usage on the Gemini platform.

A luxury $22.5 million Miami penthouse was sold in the largest crypto real estate purchase to date
Isabelle Lee – Insider
A luxury penthouse in Miami has just been bought for $22.5 million using cryptocurrency; It is considered to be the largest known cryptocurrency real estate purchase to date; The transaction was closed just weeks after the developer announced that it would accept digital assets as payment
A luxury penthouse in Miami was purchased for $22.5 million using cryptocurrency in what was considered to be the largest known cryptocurrency real estate purchase to date.

How did federal agents recover bitcoin and access a crypto wallet tied to the Colonial Pipeline cyberattack?
Mark DeCambre – MarketWatch
U.S. federal authorities are fairly tight-lipped on the method of recovering some $2.3 million in bitcoin paid to cyber-hackers of Colonial Pipeline Cos., last month. It is a rare, but not unprecedented, win for agents who are part of a newly formed Ransomware and Digital Extortion Task Force.

El Salvador’s Bitcoin Bombshell – What Does It Mean?
Michael D McDonald and Matthew Bristow – Bloomberg
Ever since Bitcoin was launched as the world’s first cryptocurrency, its proponents have made big claims about its power to upend financial systems and change the very nature of money. But a simpler question has remained maddeningly unresolved — can it work in the real world, for the mundane matters of buying and selling things and transferring money? El Salvador’s announcement that it will consider Bitcoin legal tender may give an answer.

Why Brooklyn Nets Star Spencer Dinwiddie Co-Founded a Crypto Startup; How creator tokens are changing the relationship between stars and their fans
Tracy Alloway and Joe Weisenthal – Bloomberg
Joe Weisenthal and Tracy Alloway analyze the weird patterns, the complex issues and the newest market crazes. Join the conversation every Monday and Thursday for interviews with the most interesting minds in finance, economics and markets.

How farmers are using cow manure to power crypto mining operations; Farmers with renewable energy sources like anaerobic digestion can earn 10 times more running crypto mining machines than selling energy to providers
Rupert Steiner – MarketWatch
An entrepreneur who has set up a cryptocurrency mining business powered by cow manure has seen business boom since Tesla TSLA, -0.80% boss Elon Musk questioned bitcoin BTCUSD, +4.14% over its environmental credentials.

Tether’s commercial paper disclosure places it among global giants; JPMorgan estimates stablecoin operator would be one of the largest investors in the US market
Siddharth Venkataramakrishnan and Joe Rennison – FT
Disclosures from cryptocurrency provider Tether suggest it has become one of the world’s largest investors in the US commercial paper market, rubbing shoulders with the likes of fund managers Vanguard and BlackRock and dwarfing the investments of tech giants like Google and Apple, according to estimates from JPMorgan.

Bitcoin Junk Bonds Offer Imperfect But In-Demand Crypto Pathway
Paula Seligson and Crystal Kim – Bloomberg
MicroStrategy’s latest Bitcoin gambit: $500 million junk deal; ‘You might as well just buy the Bitcoin,’ one observer says
MicroStrategy Inc., already well on its way to transforming from a software company into a Bitcoin repository, just sold junk bonds that give investors a novel way to put money into the cryptocurrency.

For Financial Markets Infrastructure, Given At The Westminster eForum Policy Conference

Bitfinex Supports Bitcoin Ecosystem in Collaboration with Hodl Hodl
Hodl Hodl via Medium
Bitfinex, a state-of-the-art digital token trading platform, and Hodl Hodl have announced that Bitfinex will invest in the peer-to-peer (P2P) bitcoin trading and lending platform.


World’s Richest Face Tax Squeeze After 40% Run-Up in Fortunes
Ben Steverman, Laura Davison and William Horobin – Bloomberg
G-7 leaders expected to endorse tax accord this weekend; Biden is proposing to increase taxes on ultra-wealthy Inc. founder Jeff Bezos has the resources to launch himself into space. Elon Musk does, too. In many ways, though, the richest people left the vast majority of the world behind long ago. The world’s wealthiest 500 individuals are now worth $8.4 trillion, up more than 40% in the year and a half since the global pandemic began its devastation. Meanwhile, the economy’s biggest winners, the tech corporations that created many of these vast fortunes, pay lower tax rates than grocery clerks, and their mega-wealthy founders can exploit legal loopholes to pass huge windfalls onto heirs largely tax-free.

Crypto Is ‘Wild West’ Needing Consumer Protections, Warren Says
Joe Light and Joe Weisenthal – Bloomberg
The U.S. government needs to step up oversight of the digital currency market and find ways to protect consumers from scams stemming from the rapid rise of cryptocurrencies, Massachusetts Democratic Senator Elizabeth Warren said Wednesday. Warren, in a Bloomberg TV interview, called the market for cryptocurrencies the “wild West,” and said digital currency is “not a good way to buy and sell things and not a good investment and an environmental disaster.”

Keystone XL pipeline cancelled after Biden scraps US permit; Victory for environmentalists comes as groups step up campaigns against other oil projects
Myles McCormick – FT
Construction of the controversial Keystone XL pipeline was officially terminated on Wednesday, handing a big victory to environmentalists that fought the project for more than a decade as they intensified their battles against other fossil fuel development.

The US needs a little nudge theory to boost its jab campaign; ‘Biden’s administration wants not medical, management or data science, but social science instead’
Gillian Tett – FT
Joe Biden is engaged in a race against time. Earlier this year, the US president said he wanted 70 per cent of adults to have received at least one Covid-19 vaccine shot by July 4, so Americans could celebrate Independence Day together.

El Salvador becomes first country to adopt bitcoin as legal tender; Analysts sceptical of move hailed by crypto entrepreneurs and country’s authoritarian president
Jude Webber and Eva Szalay – FT
El Salvador has become the first country to make bitcoin legal tender, a move President Nayib Bukele hailed as a historic step towards financial inclusion and economic growth for the poor Central American nation.

Europe’s Carbon Border Tax Plan Looms Over Global Trade; Plan comes as G-7 leaders start to gather ahead of summit in southwestern England
Matthew Dalton – WSJ
PARIS—Europe is preparing legislation that would jolt the rules of international trade by taxing imported goods based on the greenhouse gases emitted to make them, a plan that has sent shudders through the world’s supply chains and unsettled big trading partners such as the U.S., Russia and China.

We Ran the Treasury Department. This Is How to Fix Tax Evasion.
Timothy F. Geithner, Jacob J. Lew, Henry M. Paulson Jr., Robert E. Rubin and Lawrence H. Summers – NY Times
Six hundred billion dollars per year, and growing: That is two-thirds of total nondefense discretionary spending by the federal government, about what is spent on defense operations, military personnel and procurement, and more than mandatory federal expenditures on Medicaid. It’s also approximately how much unpaid taxes cost the U.S. government. This must change, and it can.


A Standard for Risk Data
Reporting of risk data has never been the easiest of tasks, either for banks or regulators. Different firms capture the information in different ways, which then needs to be submitted to different regulators across numerous jurisdictions in a variety of formats, creating an operational headache and the potential for errors and inconsistencies. There’s now an opportunity to change this amid increased use of a common standard for risk data – a development that, as adoption grows further, will dramatically reduce the burden of compiling and interpreting risk data, increase the accuracy and consistency of the information reported, and pave the way for greater automation.

Europe Has a New Cop on the White-Collar Crime Beat; The European Public Prosecutor’s Office, launched last week, will investigate crimes involving EU funds, including Covid-19 relief programs
Dylan Tokar – WSJ
The European Union’s newest law-enforcement agency is facing a number of challenges out of the gate, including watching how billions in Covid-19 relief funds are spent and dealing with resistance to expanded EU powers from some member states.

ASIC highlights focus areas for 30 June 2021 financial reports under COVID-19 conditions
ASIC has highlighted key focus areas for financial reporting by companies for reporting periods ending 30 June 2021 under COVID-19 conditions.

ASIC commences civil proceedings against shipbuilder Austal Limited for continuous disclosure breach
ASIC has today commenced proceedings in the Federal Court against Austal Limited (ASX:ASB) (Austal) and its former CEO, David Singleton, for alleged breaches of the Corporations Act (the Act) and ASIC Act

SEC Updates List of Firms Using Inaccurate Information to Solicit Investors
The Securities and Exchange Commission today announced that it updated its list of unregistered entities that use misleading information to solicit primarily non-U.S. investors, adding 55 soliciting entities, four (4) impersonators of genuine firms, and five (5) bogus regulators.

Opening Statement of Commissioner Dawn D. Stump Before the Agricultural Advisory Committee Meeting
Thank you all who have joined today’s virtual Agricultural Advisory Committee meeting. I am very hopeful that 2021 will eventually allow us the opportunity to again meet together in person. But as the Committee has some pressing business I am pleased that we are taking the opportunity to have these important conversations today from our various remote locations.

Investing and Trading

GameStop’s Latest Amazon Hires Prove It’s More Than a Meme Stock; With its latest senior-management appointments, GameStop now has a fully revamped executive team, a solid plan and plenty of capital to transform its business.
Tae Kim – Bloomberg
GameStop Inc. has been best known lately for the excitement it has generated with the Reddit crowd, and as one of the first of the big meme-stock winners. But for those willing to take a deeper look, there is something more going on: Its promised transformation is taking shape and making significant progress.

Yes, Real Estate Prices Are Soaring, and No, It’s Not a Bubble; Stricter lending standards have reduced risk in the market.
Peter Coy – Bloomberg
The parallels are hard to ignore: the record prices, the bidding wars, the subdivisions that fill up as soon as they’re built, the resourceful buyer who clinched a deal by dropping off cupcakes that matched the home’s interior paint colors. Today’s real estate market feels a lot like the bubble market circa 2006. “The numbers don’t make sense. How do you make a rational offer on a house when you have irrational people in the game?” asks James Carmer, a software engineer who’s toured more than 100 houses in Austin.

Bailey’s Biggest Job Hire at BOE Showcases Priorities of New Era
David Goodman – Bloomberg
Choice of Haldane’s successor will make significant signal; Chief economist is only MPC member selected by BOE itself
Bank of England Governor Andrew Bailey will soon make possibly the most consequential hiring decision of his tenure as he picks a successor to outgoing Chief Economist Andy Haldane.

Gold under the new regime, A hedge, but not necessarily an inflation hedge
Robert Armstrong – FT
Welcome back. I own no gold, other than a pair of cufflinks my dad gave me. My wedding ring is platinum. But the topic is unavoidable, especially when the topic on everyone’s mind is inflation. So here goes.

Trafigura reports record half-year profits of $2.1bn; Commodity traders reap rewards from pandemic volatility and rising oil and metals prices
David Sheppard and Neil Hume – FT
Trafigura made record profits in the first half of its financial year as the commodity trader rode the wave of a recovery in demand and prices for oil and metals.

Bond Front-Runners Don’t Care About Inflation; Why are yields falling amid evidence of mounting price pressures? Investors know that, for the Fed, unemployment matters more.
John Authers – Bloomberg
Cold Feet
Super Thursday is with us. In the next few hours, we will find out how the European Central Bank intends to adjust monetary policy as Europe finally brings the pandemic under control, and we will also get to see whether the startling jump in April’s U.S. inflation numbers persisted or even accelerated in May. A lot hinges on this. And yet markets have behaved as though the outcome of these events were already known. There has been a sharp move away from bets on inflation. The fall in the benchmark 10-year yield since it peaked two months ago has now been equivalent to a rate cut by the Federal Reserve, and Wednesday saw it drop below 1.5% for the first time since March. With two-year yields staying almost unchanged, this means that the yield curve has flattened in the last three months.

Low-Cost Trading & Changing Attitudes Are Driving Retail Participation
TD America
Kirsten Wegner discusses this past year for the retail investor, with participation going as high as 20-25% of daily trading volume on some days. 80% of Americans say that Covid-19 has changed how they view what is financially important, with more than two-thirds of Americans wanting to save more.

Environmental, Social and Corporate Governance

Finance Risks Falling Behind In a Greening World; Britain’s incoming COP26 President argues that financial institutions risk living in the past if they don’t take rigorous steps to invest in fighting climate change.
Alok Sharma – Bloomberg
The effects of climate change are all around us. Last year was the hottest on record; the last decade, the hottest ever recorded. Almost a decade and a half after the global financial crisis, experts warn that the effects — from rising sea levels, flooding, droughts and wildfires — could make financial crises more than twice as likely to occur.

Investors With $41 Trillion Ask G-7 to Stop Subsidizing Fossil Fuels; They also want nations to phase out thermal coal-based electricity generation
Alastair Marsh – Bloomberg
A coalition of investors overseeing a combined $41 trillion of assets have called on world leaders to set more ambitious greenhouse gas emissions targets and end support for fossil fuels.

Energy Transition May Be Subprime Moment for European Banks; The big risk is investments linked to fossil fuels plummet in value.
Alastair Marsh – Bloomberg
transition would leave Europe’s biggest banks in financial peril comparable to the subprime crisis that U.S. lenders faced in 2008.

Nordea Caps Flows Into $10 Billion ESG Fund as Demand Soars
Frances Schwartzkopff – Bloomberg
Nordea Asset Management says it’s trying to slow the flow of cash into its global climate fund amid seemingly insatiable demand for clean assets. To “protect the interests of all shareholders and to ensure the continued efficient management of the fund,” Nordea plans to cap daily subscriptions and conversions at 1 million euros, effective June 25, it said on Thursday. The cap is per shareholder and applies to institutional share classes only. Nordea said it will take more measures to slow inflows if necessary.

China’s environmental goals fire up metals prices; Aim of carbon neutrality demands lighter metals production, potentially adding to rapid rise in commodity prices
Henry Sanderson and Neil Hume and Thomas Hale – FT
China’s pledge to reduce carbon emissions by the middle of the century will require large cuts in the production of metals, potentially adding further fuel to an already rapid rise in commodity prices as the world emerges from the coronavirus pandemic.


Hedge Funds Have a Favorite New Sunshine Bond; An 8.75% coupon on Piraeus’s new CoCo bond had investors queuing around the block. Risk is definitely back on in Europe’s debt markets.
Marcus Ashworth – Bloomberg
There’s a simple rule when trading European banks in a bull market: Buy the riskiest debt available to get the most bang for your buck. If you think cash is trash then why not look at a CoCo bond from a Greek Bank (the riskiest type of paper from the riskiest country in the euro area)?

Deutsche Bank Sees $365 Million Hit as Ruling Adds to Headwinds
Steven Arons – Bloomberg
German court ruling allows clients to challenge fee increases; Trading environment ‘normalized’ in second quarter, CFO says
Deutsche Bank AG warned of a 300 million-euro ($365 million) hit after a German court allowed some clients to challenge higher fees, adding to headwinds for Chief Executive Officer Christian Sewing as he enters the second half of his turnaround plan.

SocGen Says It Could Boost Dividend Once Basel Rules Clear
Alexandre Rajbhandari – Bloomberg
Bank could be more opportunistic with potential excess capital; ECB dividend cap lift is “more likely than not”: Finance Head
Societe Generale SA said it could have the potential to boost dividends when it has enough clarity on the regulatory framework and the outlook for the economy. The lender, which currently has a payout ratio of 50% of underlying net income including share buybacks, could offer more to shareholders once the implementation of the current round of Basel committee rules progresses, said William Kadouch-Chassaing, deputy general manager and head of finance in a conference on Thursday.

Record profits for CMC Markets after online trading surges; Chief executive and Tory donor Peter Cruddas takes home more than £55m
Daniel Thomas – FT
CMC Markets posted record profits after a surge in spread betting and online trading in stocks as many people were stuck at home during a year of market volatility.

CMC Markets to Start Retail Investment Platform for U.K. Clients
Tom Metcalf – Bloomberg
Broker says it’s investing in ‘non-leveraged’ trading platform; Annual results show CFD clients rose by 34% during pandemic
CMC Markets Plc is building a retail investment platform for U.K. clients as the online broker looks to diversify its business. The London-based firm is building a “a non-leveraged trading platform for U.K. clients,” it said in a statement that also unveiled annual results in line with analyst estimates.

Deutsche Bank Damps Expectations for Drop in Key Regulatory Cost
Nicholas Comfort and Steven Arons – Bloomberg
CFO Von Moltke sees no cut to single resolution fund payments; Bank has been lobbying to cap payments to resolution fund
Deutsche Bank AG damped expectations it can cut a key regulatory levy next year, dealing a blow to efforts to trim costs as part of a restructuring plan. The German lender is more pessimistic that its contributions to a fund for winding down failed lenders will decline in the near term, Chief Financial Officer James von Moltke said at an investor conference on Thursday.

Departure of Deutsche executives linked to alleged mis-selling probe; Wind-down unit head Louise Kitchen and senior forex banker Jonathan Tinker to step down
Olaf Storbeck – FT
The sudden departure of two veteran Deutsche Bank executives is linked to a continuing investigation into the alleged mis-selling of foreign exchange derivatives to corporate clients in Spain, people familiar with the matter told the Financial Times.


Demand Surges for Bonds With Rating-Cut Protection: India Credit
Divya Patil – Bloomberg
Investors in India’s local-currency notes are demanding more protection than ever as the world’s worst Covid-19 wave threatens the outlook for businesses.

China Tempers Climate Change Efforts After Economic Officials Limit Scope; Authorities have limited the scope of a carbon-trading scheme as driving growth takes priority
Sha Hua in Hong Kong and Keith Zhai – WSJ
China’s top economic planners have put the brakes on attempts by environmental officials to reduce carbon emissions as driving growth takes priority over meeting climate targets for now, according to people familiar with the matter.


TED Talks Won’t Treat Your Depression
Jesse Singal – NY Times
Maybe chicken soup can treat depression. That provocative claim was made not by a quack in a late-night infomercial but by John Bargh, a Yale social psychologist. He is an expert on “social primes,” the subtle cues that supposedly exert a major unconscious influence on our behavior. He has published research suggesting that, for example, exposure to words with geriatric associations like “wrinkles” primes people to walk slower.

The head of the Committee to Protect Journalists offers a warning as he prepares to step down.
Katie Robertson – NY Times
After 15 years as the executive director of the Committee to Protect Journalists, Joel Simon said on Wednesday that he would step down by the end of the year. Founded in 1981, the Committee to Protect Journalists is a nonprofit organization that defends the rights of journalists around the world. Mr. Simon, 56, joined in 1997 and has been in charge since 2006.

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First Read $46,041/$300,000 (15.3%) ++++ Hits & Takes John Lothian & JLN Staff We have a new and improved version of The Spread today. We have overhauled our approach to this video series and have the whole JLN team contributing to it. Suzanne Cosgrove has...

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