Global regulators to step up scrutiny of risks outside banking system

Jan 5, 2023

First Read

Hits & Takes
John Lothian & JLN Staff

JLN friend, author and consultant Robert Khoury is the latest to give to the JLN MarketsWiki Education GoFundMe campaign. Khoury is the CEO at Agile Rainmakers and the author of How to Intern Successfully.

We interviewed Khoury back in the fall of 2021 about his writing on how to successfully intern. He has a second book on the subject on the way, I am told. Khoury was also a speaker at the MarketsWiki Education World of Opportunity series back in 2018, speaking about the same subject.

Eurex is out with its full year and December 2022 data figures, which show that Eurex total volumes were up 15 percent for the full year of 2022, OTC clearing volumes at Eurex continued their upward trend and volumes of Eurex Repo’s GC Pooling market grew 153 percent in December year on year.

WHO says China is undercounting the number of deaths from Covid, which is just shocking to me. WHO is asking for more reliable data, The Wall Street Journal reported. China replied, WHO, What?

The owner of the Chicago Bears, their matriarch Virginia McCaskey, has turned 100 years old, the Chicago SunTimes reported. McCaskey is the daughter of George Halas, one of the founders of the NFL and the founder, coach and player for the Chicago Bears.

The Sam Bankman-Fried and FTX scandal is working its way into the Chicago mayoral election, Axios reports. Mayor Lori Lightfoot is going after challenger “Rep. Jesus “Chuy” Garcia’s ties to and financial support from Bankman-Fried,” the story said.

Music entrepreneur David Umeh shared on LInkedIn that the Clouty MUSIQ Index is now live on the Bloomberg Terminal (ticker: MUSQ500)!

James F. Sullivan Jr. has left the start-up Stable and joined the team at Ever.Ag – Financial Services. He is a former CME Group ag specialist who will fit right in at the firm that specializes in all things agriculture.

Christine Murphy is starting a new position as University Talent Acquisition Lead at DRW.

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

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The inaugural IFRS Sustainability Symposium takes place February 16 – 17, 2023, at the Palais des congres de Montreal, Montreal, Canada. The symposium is a hybrid event that convenes business leaders, investors and policymakers from around the world with varied perspectives on sustainability disclosure for the capital markets. The main focus of discussion will be progress toward the IFRS Sustainability Disclosure Standards, a global baseline to inform investment decisions. You can learn more about the IFRS Foundation symposium and register to attend here.~SAED

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Tallarium CEO Ermilov’s plans to banish Excel from the OTC energy markets
JohnLothianNews.com

Stanislav Ermilov, founder and CEO of Tallarium, believes the over-the-counter energy markets are broken and the cause is the common Excel spreadsheet that has been the front end for deal making. John Lothian News talked with Ermilov about how his company, Tallarium, fixes that problem.

In his message to attendees at the FIA’s Innovators Pavilion in November, Ermilov said the off exchange energy markets are crucial but lag behind where they should be technologically. His company, Tallarium, fixes that and is also a tool to bring fairness, transparency and price discovery to these markets, he said.

Watch the video »

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Just 1% of applicants make it into Lazard’s summer internship program. The boutique bank’s head of campus recruiting shares 5 tips for aspiring financiers looking to ace the interview.
Emmalyse Brownstein – Insider
It’s that time of year again – mating season for investment banks and college sophomores. As the spring semester begins at universities across the country, so does the annual, months-long courtship to determine which star students will land summer internships on Wall Street. It’s an arduous process that taps recruits nearly two years before the industry’s program actually starts in summer 2024. But landing the spot is a key juncture in the career paths of aspiring bankers, since investment banks use these internships as a direct pipeline to fill their full-time analyst ranks.
/jlne.ws/3GH78wQ

***** Interning is an exclusive opportunity, which is why making sure you are successful in it is important. Reading Rober Khoury’s book is an essential part of a successful internship. Firms should make it a practice to send each of their interns a copy of the book before they start. Just saying.~JJL

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Chicago’s Cboe profits from year of stock market volatility; Exchange has been one of the biggest beneficiaries of the pandemic shift towards options trading
Nicholas Megaw – Financial News
The people in Cboe Global Markets’ options pits in downtown Chicago are not used to seeing new faces. Open-outcry transactions have been declining for decades as deals are executed electronically. Many of the roughly 300 people remaining have been there for more than 20 years.
/jlne.ws/3vDjvDV

***** Luck is where preparation meets opportunity. Cboe has done excellent preparation in a number of different venues and asset classes.~JJL

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Hong Kong to Lift Ban on Hamster Imports as Covid Policies Dismantled; City imposed ban on importing small mammals in January 2022; Importation of all mammals other than hamsters resumed in May
Shirley Zhao – Bloomberg
Hong Kong will lift a ban on importing hamsters for sale around the middle of this month, a year after the city ordered a culling of the furry mammals and shut down all pet shops selling them to eliminate the Covid-19 virus. Imported hamsters will still need to test negative for Covid before they are made available for sale, because studies found that they are susceptible to the virus and could easily spread to humans, a spokesman for the city’s Agriculture, Fisheries and Conservation Department said in an emailed statement.
/jlne.ws/3GfhUc9

****** Is this good news or bad news for hamsters?~JJL

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Japan: Tokyo is so crowded the government is paying families to leave
Emiko Jozuka and Jessie Yeung – CNN Business
Japan is offering to pay families to move out of its overcrowded capital, in an effort to revitalize countryside towns and boost the falling birth rate. Starting in April, families in the Tokyo metropolitan area, including those headed by single parents, will be eligible to receive 1 million yen ($7,700) per child if they move to less-populated areas across the country, according to a spokesperson from the central government.
/jlne.ws/3Glbvft

****** Buy a ticket to the U.S. We have lots of room and love immigrants. Or we used to.~JJL

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U.S. looks at ways to further target Iranian drone production, White House says
Reuters
The United States is looking at ways to target Iranian drone production through sanctions and export controls, and is talking to private companies whose parts have been used in production, the White House said on Wednesday.
/jlne.ws/3CrQbUx

***** Stupid is as stupid does!~JJL

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Chinese researchers claim to find way to break encryption using quantum computers; Experts assess whether method outlined in scientific paper could be a sooner-than-expected turning point in the technology
Richard Waters – Financial Times
Computer security experts were struggling this week to assess a startling claim by Chinese researchers that they have found a way to break the most common form of online encryption using the current generation of quantum computers, years before the technology was expected to pose a threat.
/jlne.ws/3ieDzt4

****** There are no secrets anymore. Time to institute the “Cone of Silence.”~JJL

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Wednesday’s Top Three
Our top story Wednesday was Want to Succeed on Wall Street? Learn Poker, Not Economics, a Bloomberg opinion piece. Second was This Iconic South Florida Resort Just Got a Massive Transformation – With 5 New Hotel Concepts and a $65 Million Pool Club, about the new (and improved?) Boca Raton, from Travel and Leisure. Third was the Financial Times’ Happy birthday to a ‘giant Ponzi scheme’, from bitcoin’s accidental co-creator, about the 14th anniversary of the launch of bitcoin.

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MarketsWiki Stats
27,120 pages; 242,205 edits
MarketsWiki Statistics

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Lead Stories

Global regulators to step up scrutiny of risks outside banking system; Watchdogs home in on clearing houses, hedge funds and pension schemes
Laura Noonan – Financial Times
Global regulators are set to sharpen their scrutiny of hedge funds, clearing houses and pension assets this year after a run of crises has shifted watchdogs’ focus towards risks outside the banking system. The disparate group, loosely defined as “non-bank financial institutions” by regulators, has been thrust into the spotlight after a series of market ructions over the past two years.
/jlne.ws/3CsWLua

Celsius Network Wins Ownership Rights to Customer Crypto Deposits; A bankruptcy judge rules firm can use $4.2 billion in cryptocurrency deposited with high-interest accounts as it sees fit
Soma Biswas – The Wall Street Journal
A bankruptcy judge ruled that digital coins deposited in Celsius Network LLC’s interest-bearing accounts belong to the firm, ruling against thousands of customers and deciding a key legal issue in crypto-related insolvencies. Judge Martin Glenn said Wednesday that $4.2 billion in cryptocurrency deposits are the property of Celsius, clearing the way for the company to use its digital assets as it sees fit, while also dealing a blow to the hopes of thousands of customers by declaring them unsecured creditors.
/jlne.ws/3jXLA60

Coinbase vulnerable to drug trafficking, money laundering and fraud, regulators say
Kristopher J. Brooks – CBS News
Coinbase is vulnerable to money laundering, drug trafficking and fraud, financial regulators in New York said Wednesday in a settlement that requires the cryptocurrency exchange to strengthen its security. New York’s Department of Financial Services (NYDFS) found that Coinbase has done a poor job at vetting new customers and examining transactions on the exchange to ensure they comply with state banking, cybersecurity and other rules. Under the settlement, the company will pay a $50 million penalty and agreed to spend another $50 million over the next two years to address shortcomings identified by the agency.
/jlne.ws/3vGSEqu

SEC intervenes on Binance US bid to buy assets of bankrupt crypto lender; Regulator’s move regarding assets of Voyager Digital highlights its increasing scrutiny of crypto exchange
Scott Chipolina and Joshua Oliver – Financial Times
The Securities and Exchange Commission has intervened in a deal that would see Binance US buy the assets of a bankrupt crypto lender, in a sign of how US authorities are stepping up their scrutiny of the digital asset exchange.
/jlne.ws/3WUKVBi

TradFi Fights for Tougher Crypto Rulebook in Wake of FTX Collapse; Traditional finance players want new international rules to stop FTX-style conflicts of interest, but the crypto industry warns of crimping blockchain benefits
Jack Schickler – CoinDesk
International plans to break up major crypto conglomerates appear to have been given a boost by the collapse of FTX, with allegations of misuse of funds revealing regulators’ worst fears to be true. Now major traditional finance (TradFi) players are egging on international standard setters to be yet bolder in tackling perceived excesses by the crypto sector – despite warnings from Binance and Coinbase that they could end up limiting the benefits of blockchain technology, documents published Wednesday reveal.
/jlne.ws/3Cmwhu8

SEC Pursues $45M Scam Based in Fake Blockchain Technology
Jesse Hamilton – CoinDesk
The U.S. Securities and Exchange Commission (SEC) accused alleged fraudster Neil Chandran and several others for orchestrating a scheme to get cash from tens of thousands of investors globally on the false promise that they were securing a lucrative deal to sell blockchain technology.
/jlne.ws/3WRxe66

Silvergate Raced to Cover $8.1 Billion in Withdrawals During Crypto Meltdown; Bank sold assets at a loss to cover withdrawals and cut 40% of its staff but remains committed to crypto
David Benoit – The Wall Street Journal
The collapse of crypto exchange FTX sparked a run on Silvergate Capital Corp., SI -39.82%decrease; red down pointing triangle forcing the bank to sell assets at a steep loss to cover some $8.1 billion in withdrawals. Crypto-related deposits plunged 68% in the fourth quarter, the bank said in an early release of some quarterly results. To satisfy the withdrawals, Silvergate liquidated debt it was holding on its balance sheet. The $718 million it lost selling the debt far exceeds the bank’s total profits since at least 2013.
/jlne.ws/3IuMxgv

Silvergate Tumbles After FTX Implosion Prompts $8.1 Billion Bank Run
Steve Dickson – Bloomberg
Silvergate Capital Corp. slumped in early trading after the bank said the crypto industry’s meltdown triggered a run on deposits, prompting the company to sell assets at a steep loss and fire 40% of its staff.
/jlne.ws/3WPGSG7

Institutional Crypto Investments Dropped 95% to $433 Million in 2022
Stacy Elliott – Decrypt
Crypto fund investments in 2022 were the lowest they’ve been since 2018, according to a new CoinShares report. “Digital assets saw inflows-investors putting money into crypto products-totaling $433 million for the whole of 2022, the lowest since 2018 when there were inflows of only $233 million,” James Butterfill, CoinShares head of research, wrote in the report. That’s a 95% decrease compared to 2021, when inflows totaled $9.1 billion, and a 93% drop from 2020, when inflows totaled $6.6 billion.
/jlne.ws/3Zb4SoJ

SEC’s Stock Proposals Fix What Ain’t Really Broken; Gary Gensler wants to level the playing field for regular folks navigating a fragmented marketplace.
Marc Rubinstein – Bloomberg
The festive period trading lull bypassed stock market pros: Just 10 days before Christmas, the Securities and Exchange Commission dropped a raft of proposed new rules on them. Running to 1,656 pages, the draft left market participants with plenty to absorb. For wholesalers such as Virtu Financial Inc. and Citadel Securities, the reading wouldn’t have provided much joy as a key theme emerged: minimizing their role in the stock trading value chain.
/jlne.ws/3ZhtrRc

Coinbase Stock Price Jumps 12% Following $100M NYDSF Settlement
Mathew Di Salvo – Decrypt
Coinbase’s stock jumped Wednesday following news that the cryptocurrency exchange had reached a $100 million settlement with the New York Department of Financial Services. Nasdaq Composite-listed COIN was up over 12% after the announcement, trading for $37.34 per share. America’s largest digital asset exchange today agreed to pay a $50 million fine and invest $50 million into bolstering its compliance programs after the New York regulator said it found “significant failures” in Coinbase’s compliance.
/jlne.ws/3ClT7lO

Tradeweb Reports December 2022 Total Trading Volume of $21.2 Trillion and Average Daily Volume of $1.02 Trillion
Tradeweb Markets
December 2022 ADV up 11.6% YoY; Fourth Quarter 2022 ADV down 4.1% YoY; Full Year 2022 ADV up 9.9% YoY
Tradeweb Markets Inc. (Nasdaq: TW), a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, today reported total trading volume for December 2022 of $21.2 trillion (tn). Average daily volume (ADV) for the month was $1.02tn, an increase of 11.6 percent (%) year-over-year (YoY). For the fourth quarter of 2022, total trading volume was $65.8tn and ADV was $1.07tn, a decrease of 4.1% YoY, with preliminary average variable fees per million dollars of volume traded of $3.00.[1]
/jlne.ws/3vCBdHE

Court Rules Digital Asset DAOs Can Be Sued by the CFTC; Federal court ruling in Ooki DAO case also opens the door for SEC action against decentralized autonomous organizations trading in digital assets.
William E. Walsh, Elizabeth Lan Davis, Maggie Sklar, and Harris L. Kay – Davis Wright Tremaine LLP
In September 2022, the Commodity Futures Trading Commission (CFTC) filed a complaint in federal district court in San Francisco against Ooki DAO, a decentralized autonomous organization (DAO), alleging violations of the Commodity Exchange Act (CEA) and CFTC Regulations. The CFTC alleged that bZeroX LLC transferred a blockchain-based software protocol to bZx DAO which renamed itself Ooki DAO. The CFTC alleged that Ooki DAO never registered with the CFTC and unlawfully engaged in off-exchange leveraged and margined retail commodity transactions in digital assets.
/jlne.ws/3WNKkBf

FTX-Linked Robinhood Stake Worth $460 Million Is Seized by US
Steven Church – Bloomberg
The US government has seized – or is in the process of seizing – hundreds of millions of dollars worth of Robinhood Markets Inc. shares as part of the fraud case against Sam Bankman-Fried, founder of the failed crypto firm FTX, lawyers said in court Wednesday. The government also is taking control of assets in bank accounts that were part of a bankruptcy case involving one unit of the FTX empire in the Bahamas, said James Bromley, a lawyer leading the main FTX insolvency proceeding in the US.
/jlne.ws/3GhePsb

CoinDeal Scammers Nailed By SEC in $45 Million Fraud Case
Jason Nelson – Decrypt
U.S. Regulators are starting 2023 off with a new round of cases targeting cryptocurrency scams. Six individuals and two companies tied to an investment scheme called CoinDeal were charged on Wednesday by the U.S. Securities and Exchange Commission in the U.S. District Court for the Eastern District of Michigan.
/jlne.ws/3QgOVt4

New York Landlords Try Carbon-Sucking Towers to Comply With Climate Law; Owners are embracing unorthodox solutions to decarbonize buildings in advance of the city’s new greenhouse gas law.
Patrick Sisson – Bloomberg
The Grand Tier, a 30-story high-rise at Broadway and 64th Street in Manhattan, features trappings typical of posh digs on the Upper West Side, including Central Park views and a lobby ornamented in French tapestry, silver travertine and Italian ironwork. The 20-year-old tower also boasts a singular feature: In the basement, an array of pipes and compressors the size of six parking spaces scrubs exhaust from the building’s two natural gas boilers, separating carbon dioxide from nitrogen and oxygen, liquefying it and storing it in metal tanks.
/jlne.ws/3Zda7UX

WHO Says China Is Undercounting Covid Deaths, Asks for More Reliable Data; Agency’s chief says testing requirements adopted by some countries for travelers from China are understandable
Joyu Wang and Liyan Oi – The Wall Street Journal
The World Health Organization in a briefing Wednesday urged Beijing to be more transparent about its Omicron outbreak, with some officials questioning the accuracy of the country’s Covid-19 data. WHO Director-General Tedros Adhanom Ghebreyesus said the agency is concerned about the surge in Covid-19 infections in China and again urged the Chinese government to deliver rapid and reliable data on hospitalizations and deaths.
/jlne.ws/3vIWj7f

Silvergate Shares Plunge 41% as Firm Cuts 200 Jobs, Writes Off Diem Asset Acquisition
Parikshit Mishra and Oliver Knight – CoinDesk
Silvergate Capital (SI), the crypto-focussed bank, has cut 40% of its total staff or about 200 employees, the firm said on Thursday. Shares of Silvergate tanked 41% at $12.89 in pre-market trading following the announcement. The bank has also halted its plans to launch a digital currency and has written off the $196 million related to its acquisition of the technology and assets of Diem Association from Meta (FB).
/jlne.ws/3Gkn72m

U.S. DOJ to seize $465 million of Robinhood shares tied to Bankman-Fried
Tom Hals and Dietrich Knauth – Reuters
U.S. prosecutors are in the process of seizing shares of Robinhood Markets Inc (HOOD.O) tied to Sam Bankman-Fried, who has been charged with fraud in the collapse of the FTX cryptocurrency exchange, a U.S. attorney told a judge on Wednesday. The Department of Justice did not believe the 56 million shares of Robinhood, worth about $465 million, were property of a bankruptcy estate, U.S. attorney Seth Shapiro told U.S. Bankruptcy Judge John Dorsey, who is overseeing the FTX bankruptcy.
/jlne.ws/3X13Utk

Market misery dealt sovereign wealth funds historic setback in 2022, study shows
Marc Jones – Reuters
Heavy falls in stock and bond markets over the last year have cut the combined value of the world’s sovereign wealth and public pension funds for the first time ever – and to the tune of $2.2 trillion, an annual study of the sector has estimated. The report on state-owned investment vehicles by industry specialist Global SWF found that the value of assets managed by sovereign wealth funds fell to $10.6 trillion from $11.5 trillion, while those of public pension funds dropped to $20.8 trillion from $22.1 trillion.
/jlne.ws/3ZdYKfC

Vinson & Elkins Brings Back Former Partner in Expansion Plan
Bloomberg Law
Vinson & Elkins, in a move to fulfill its growth plan, has brought back a former partner in New York, the firm announced Tuesday. Corporate finance partner Todd Triller, who left in 2017 to be managing director and co-head of energy credit for Carlyle Group Inc., is rejoining the firm. The hires come after a successful year of growth for the Texas-founded firm as it continues to bet on what it calls the “real” economy-sectors such as infrastructure and energy-in 2023.
/jlne.ws/3Zhy39Y

Ukraine Invasion

Russia now says 89 killed in Ukraine attack, blames mobile phones
Al Jazeera
Russia’s defence ministry has raised to 89 the number of its military personnel killed in a recent Ukrainian rocket raid on a school housing soldiers in Makiivka, in the Russian-occupied Donetsk region, and blamed the attack on unauthorised use of mobile phones by its forces. While Ukraine has claimed that about 400 Russian soldiers were killed in the missile attack in the first minutes of New Year’s Day on Sunday, Moscow had until Wednesday maintained that 63 Russian soldiers were killed.
/jlne.ws/3VLjmsK

CNN Exclusive: A single Iranian attack drone found to contain parts from more than a dozen US companies
Natasha Bertrand – CNN
Parts made by more than a dozen US and Western companies were found inside a single Iranian drone downed in Ukraine last fall, according to a Ukrainian intelligence assessment obtained exclusively by CNN. The assessment, which was shared with US government officials late last year, illustrates the extent of the problem facing the Biden administration, which has vowed to shut down Iran’s production of drones that Russia is launching by the hundreds into Ukraine. CNN reported last month that the White House has created an administration-wide task force to investigate how US and Western-made technology – ranging from smaller equipment like semiconductors and GPS modules to larger parts like engines – has ended up in Iranian drones.
/jlne.ws/3ifWyna

Drone Advances in Ukraine Could Bring Dawn of Killer Robots
Frank Bajak and Hanna Arhirova – Bloomberg
Drone advances in Ukraine have accelerated a long-anticipated technology trend that could soon bring the world’s first fully autonomous fighting robots to the battlefield, inaugurating a new age of warfare. The longer the war lasts, the more likely it becomes that drones will be used to identify, select and attack targets without help from humans, according to military analysts, combatants and artificial intelligence researchers.
/jlne.ws/3GIxIWA

U.S. edges closer to sending armored weaponry to Ukraine; President Biden acknowledges that Bradley fighting vehicles are under consideration for delivery to Kyiv, as France pledges light tanks
Karen DeYoung and Dan Lamothe – The Washington Post
After months of resisting Kyiv’s pleas for tanks to face increasingly dug-in Russian forces along the lengthy southern and eastern fronts, the United States and its allies are now poised to deliver a variety of armored fighting vehicles to Ukraine. Asked Wednesday if U.S.-produced Bradley Fighting Vehicles were under consideration for transfer to Ukraine, President Biden replied in the affirmative. A senior administration official said that Bradleys could be included in a package of weapons to be announced as soon as this week.
/jlne.ws/3Ghg3nh

Ukraine to get more armoured vehicles but presses for tanks to fight Russia
Pavel Polityuk – Reuters
Western allies moved toward supplying armoured battle vehicles to Ukraine but not the heavier tanks it has requested to fight Russia, while Washington predicted intense combat would continue for months on the eastern frontline. French President Emmanuel Macron told Ukrainian President Volodymyr Zelenskiy his government would send light AMX-10 RC armoured combat vehicles to help its war effort, a French official said on Wednesday after a phone call between them.
/jlne.ws/3ZaPE39

****The Financial Times and The Hill also had stories on this subject.

Russia is bombarding Ukraine with drones guided by U.S.-made technology, and the chips are still flowing
Chris Livesay and Erin Lyall – CBS News
They menace Ukraine’s skies, killing hundreds, and scarring millions. But while Moscow’s drones are Russian and Iranian, key technology inside is European and American. On an icy Kyiv morning, inside an unnamed location with sandbags shielding the windows, Ukrainian drone specialist Pavlo Kaschuk holds up a 30-pound drone that Ukrainian forces captured from Russia. “So, this is the Orlan 10,” he says. “It is a basic Russian UAV (unmanned aerial vehicle).” He opens it up and removes a module. The chip inside bears a logo that reads U-Blox, a Swiss company.
/jlne.ws/3Zf0p4k

Exchanges, OTC and Clearing

Intercontinental Exchange Reports December, Fourth Quarter and Full Year 2022 Statistics
Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology and market infrastructure, today reported December, Fourth Quarter and Full Year trading volume and related revenue statistics, which can be viewed on the company’s investor relations website at https://ir.theice.com/ir-resources/supplemental-information in the Monthly Statistics Tracking spreadsheet. “A radically different picture for natural gas was formed last year, with the U.S. now a leading supplier of much needed LNG to Europe, while interest rate derivative markets proved critical in 2022 to investors needing to manage inflation and reactions from Central Banks in a way not seen for a generation,” said Ben Jackson, President at ICE.
/jlne.ws/3Ghd7Hq

CME Group and CF Benchmarks to Launch Three New Metaverse Reference Rates and Real-Time Indices on January 30
CME Group
CME Group, the world’s leading derivatives marketplace, and CF Benchmarks, the leading provider of cryptocurrency benchmark indices, today announced plans to launch three new Metaverse reference rates and real-time indices, which will be calculated and published daily by CF Benchmarks, beginning January 30.
/jlne.ws/3iaLA2l

Full year and December 2022 figures at Eurex; Eurex total volumes up 15 percent for the full year 2022; OTC clearing volumes at Eurex continued their overall upward trend; Volumes in Eurex Repo’s GC Pooling market grew 153 percent in December yoy
Eurex
Eurex, the leading European derivatives exchange, ended the year with an 8 percent increase in traded contracts in December compared to December 2021, led by interest rate derivatives with plus 24 percent. Overall, volumes in 2022 grew by 15 percent to 1,955.7 million contracts. Over the complete year 2022, index derivatives and interest rate derivatives grew similarly, by 21 percent and 20 percent respectively.
/jlne.ws/3vFoGTC

LME Board changes; Gay Huey Evans, CBE, to step down as LME Chair; Will not seek Board re-election in 2023; remains in post to oversee transition LME to appoint two new independent non-executive directors
LME
The London Metal Exchange (LME) today announces that the LME Chair, Gay Huey Evans CBE, will not seek re-election and will step down once a new Chair has been appointed. She will continue to support the Board and the Executive during the transition, after which she will become a senior advisor to the HKEX commodities business. The LME Board has begun a global search for a new Chair and will update the market in due course. The committee is made up of the LME Board Directors Nicolas Aguzin, Laura M Cha, Antony Stuart and John Williamson.
/jlne.ws/3VMlxMn

Ferrous metals
LME
With the physical market at the centre of what we do, we have a long-standing and close relationship with the steel and steel raw material industries. The LME offers seven cash-settled ferrous futures contracts which have been designed in close consultation with the steel community to meet their risk management needs. All our ferrous contracts are tradable on LMEselect and via the inter-office market out to 15 months.
/jlne.ws/3jHYlBE

Bolsa Electronica de Chile Upgrades to Nasdaq Marketplace Services Platform; BEC to Move Operations to the Cloud in 2024
Nasdaq
Nasdaq, Inc. (Nasdaq: NDAQ) and Bolsa Electronica de Chile (BEC) today announced an agreement through which BEC will upgrade its current on-premise Nasdaq trading technology to Nasdaq’s SaaS-based Marketplace Services Platform, with the aim to move its operations to the cloud by the end of 2024. As an early adopter of a full cloud migration strategy in Latin America, BEC will be able to meet the evolving requirements of its growing business and client base.
/jlne.ws/3GhpEKY

Notice on Investigation and Penalties for Violations of Relevant Rules and Regulations in December 2022
SFE
Shanghai Futures Exchange (hereinafter referred to as “The Exchange”) has been on continuous efforts in investigating and penalizing violations of relevant rules and regulations, so as to strengthen the risk management of the futures market, regulate the futures trading activities and protect the legitimate rights and interests of futures market participants. The enforcement against such violations in December 2022 are listed as follows.
/jlne.ws/3GIgHf5

Moscow Exchange summed up the results of trading in 2022
MOEX
The total trading volume on the markets of the Moscow Exchange grew by 4.6% in 2022 and amounted to RUB 1.1 quadrillion. This is the highest figure in the history of exchange trading.
/jlne.ws/3QwPqQ9

Fintech

The Cloud Is Still a Multibillion-Dollar Opportunity. Here’s Why
Glenn Solomon – Forbes
As IT budgets inevitably tighten during a downturn, many startups will need to prove their relevance-and value-as must-haves. But despite the macro concerns we’ve all been living through, one promising sign is that overall growth in cloud spending is still robust. With more than two decades of investing experience in infrastructure software (including developer tools, data infrastructure, and cybersecurity), my top prediction for 2023 is that the public cloud ecosystem will continue to catapult forward. Here’s why:
/jlne.ws/3GHN4dy

Next year will see trading technology take poll position in the race to differentiate; When it comes to trading technology, those who dare, win, writes Matt Barrett, CEO of Adaptive Financial Consulting.
The Trade
Last year was a year of extremes. No asset class was left untouched as volatility ripped through markets, driven by rising rates and high inflation. Once-in-a generation market events quickly became the norm. For institutional trading firms, at times, it has been a bruising year. From the end of the equities bull market to the up-ending of the UK’s gilt market, and the collapse of FTX – we are living in an era distinct from the previous decade.
/jlne.ws/3QjKPjX

The TRADE launches the Algorithmic Trading Survey for 2023; Buy-side respondents have until 24 February to rate algo providers, with top performers due to be recognised as part of Leaders in Trading 2023.
Karen Delahoy – The Trade
Institutional investors, asset managers and hedge funds are invited to rate the service, features and capabilities of their algo providers in The TRADE’s 2023 Algorithmic Trading Survey. Now in its 16th year, The TRADE’s 2023 Algorithmic Trading Survey is live for buy-side participation until 24 February, with ‘long-only’ and ‘hedge fund’ results due to be included in the Q1 and Q2 editions of The TRADE magazine, respectively. We encourage algorithmic trading providers to support client participation.
/jlne.ws/3vHGzRK

Cybersecurity

Twitter Whistleblower ‘Mudge’ Joins Cybersecurity Firm Rapid7; Peiter Zatko complained about Twitter’s security to regulators; New part-time role will advise Rapid7’s executives, customers
Jack Gillum – Bloomberg
Peiter Zatko, the prominent computer security expert who blew the whistle last year on alleged security problems at Twitter Inc., is joining the cybersecurity firm Rapid7 Inc., the company said Wednesday. Zatko, known more commonly by his hacker-era name “Mudge,” will advise Rapid7’s executive team and customers in a part-time role, a spokesperson said. He will report directly to Boston-based Rapid7’s chief executive officer, Corey Thomas, who called Zatko’s extensive experience “invaluable.”
/jlne.ws/3Z5T2fL

JPMorgan Must Face Suit by Ray-Ban Maker Unit Over Cyber Theft; Judge dismisses breach of contract, negligence claims; Essilor can proceed with contract law provision claim
Chris Dolmetsch and Bob Van Voris – Bloomberg
JPMorgan Chase Bank NA will have to face a lawsuit by a unit of the French maker of Ray-Ban glasses that claims the bank ignored suspicious transactions as cybercriminals drained $272 million from its New York bank account. Essilor Manufacturing (Thailand) Co., which operates a plant in Thailand for EssilorLuxottica SA, sued the bank in April in federal court in New York, claiming JPMorgan was aware of a pattern of fraudulent transactions that led to the theft and failed to notify the company, despite red flags including a jump in monthly dollar volume and the movement of money to shell companies at regional banks, often in high-risk jurisdictions.
/jlne.ws/3ZdGLpG

A $68 Million Scam That Relies on Telecom Insiders; Recent court cases and an FBI warning point to new urgency
William Turton – Bloomberg
In May 2021, about 100 employees of an unnamed phone company received an unsolicited text message, according to court records. The sender, who isn’t named, had an offer: In exchange for cash, would the staffers leverage their access to the phone company’s internal systems to help them hijack customer phone numbers? Some of employees informed higher-ups about the texts, and eventually the FBI’s Newark field office became aware. But one employee who received the messages, Corrine Little, allegedly didn’t tell her bosses.
/jlne.ws/3vFhvek

Cybersecurity budgets under pressure at small businesses, new research shows; Password hacking and phishing seen among leading threats
Ciara O’Brien – Irish Times
Companies are set to cut their cybersecurity budgets by up to half in 2023, despite the risk of cyber attacks, a new survey has found. The research, which was carried out on behalf of managed IT and cyber security services company Typetec, found the average IT security budgets for small- and medium-sized businesses (SMBs) in 2023 were just under EUR58,000, almost 50 per cent lower than in 2022, when budgets were around EUR117,000. That decline comes despite 79 per cent of SMBs saying they had experienced a cyber attack in the past year, with password hacking, phishing, malware and insider attacks and employee negligence among the most common risks.
/jlne.ws/3vJuPhy

Cops Hacked Thousands of Phones. Was It Legal?; When police infiltrated the EncroChat phone system in 2020, they hit an intelligence gold mine. But subsequent legal challenges have spread across Europe.
Wired
For a week in October 2020, Christian Lodden’s potential clients wanted to talk about only one thing. Every person whom the German criminal defense lawyer spoke to had been using the encrypted phone network EncroChat and was worried their devices had been hacked, potentially exposing crimes they may have committed. “I had 20 meetings like this,” Lodden says. “Then I realized-oh my gosh-the flood is coming.”
/jlne.ws/3X5aKOz

Data From 200 Million Twitter Users Offered For Free On Hacker Forum
Peter Suciu – Forbes
Just weeks ago, a dataset allegedly containing the email addresses and phone numbers of more than 400 million Twitter users had been put up for sale on the hacker Breached Forums. The dataset, which was posted by a hacker using the screen name “Ryushi,” was first uploaded on December 23, 2022.
/jlne.ws/3vIU1Fb

Second cabinet minister says Twitter account hacked; Northern Ireland secretary, Chris Heaton-Harris, apologises after account posts ‘deeply unpleasant stuff’
Aubrey Allegretti – The Guardian
A second cabinet minister has said they fell victim to hackers and was forced to apologise after their Twitter account posted a series of offensive tweets about race, sexuality and gender identity. Chris Heaton-Harris, the Northern Ireland secretary, said others temporarily gained access to his account and posted some “deeply unpleasant stuff”.
/jlne.ws/3Cpndoi

Cryptocurrencies

The ‘godfather of crypto’ wants to create a privacy-focused CBDC: Here’s how; David Chaum explained his game plan to create a CBDC that would also be appreciated by the crypto ecosystem in an exclusive interview.
Erahan Kahraman – Cointelegraph
When it comes to the “crypto” part of cryptocurrencies, David Chaum’s work predates the crypto ecosystem. His efforts as a renowned cryptographer date back to 1989, long before Bitcoin was a thing. Chaum developed the protocols that act as the basis of DigiCash – the world’s first digital currency secured by cryptography. As the CEO of privacy-focused network developer Elixxir, David Chaum is working with the Swiss central bank to develop a central bank digital currency (CBDC) that could also attract the crypto ecosystem due to its privacy features.
/jlne.ws/3GI4rv5

U.S. Moves to Seize Robinhood Shares, Silvergate Accounts Tied to FTX
Alexander Saeedy, Becky Yerak and Peter Rudegeair – The Wall Street Journal
Federal authorities are moving to seize hundreds of millions of dollars in assets in the U.S. tied to the bankrupt cryptocurrency exchange FTX, a sign that the battle over control of the company’s remaining funds is escalating. Seth Shapiro, a Justice Department official, said at an FTX bankruptcy court hearing Wednesday that the federal government has seized or is in the process of seizing Robinhood shares whose ownership is disputed by FTX and BlockFi, a cryptocurrency lender that collapsed in late November. The Wall Street Journal previously reported that the dispute involves 56 million shares.
/jlne.ws/3GGmxgV

Key bitcoin developer calls on FBI to recover $3.6M in digital coin
Dan Goodin – Ars Technica
One of the prominent developers behind the bitcoin blockchain said he has asked the FBI to assist him in recovering $3.6 million worth of the digital coin that was stolen from his storage wallets on New Year’s Eve. Luke Dashjr is a developer of the Bitcoin Core, an app that runs 97 percent of the nodes making up the bitcoin blockchain. Bitcoin Core derives from the software developed by the anonymous bitcoin inventor who uses the pseudonym Satoshi Nakamoto. That software was called simply Bitcoin but was later changed to Bitcoin Core to distinguish it from the coin. Dashjr has been contributing to the Bitcoin Core since 2011 and has long championed the concept of decentralization that the cryptocurrency was founded on.
/jlne.ws/3ihN5vq

Will Crypto Ever Be a Safe Investment?; Large institutions’ involvement as custodians of digital assets is good news, but some of the regulatory gaps can only be filled by new laws.
Andy Mukherjee – Bloomberg
In the annals of cryptocurrencies, 2022 will go down as the year when the industry nearly died. But then December saw the birth of a pair of exchange-traded funds in Hong Kong, offering new hope to both retail and professional investors. Asia’s first futures ETFs for Bitcoin and Ether join a growing list of initiatives that will go some way toward ameliorating the current crisis of legitimacy facing virtual assets.
/jlne.ws/3Gi1nV5

Viewpoint – Lessons from the year of crypto; In aftermath of FTX, markets must recognize value of intermediation but not abandon innovation
Walt Lukken – FIA
Is there anything more that can be said about the collapse of FTX, and its disgraced founder Sam Bankman-Fried? The public’s obsession with this catastrophic event seems unquenchable. Billions of dollars have vanished, and multiple investigations are now underway into what looks like a massive misuse of customer funds. The characters of this Shakespearian play are equally intriguing, from the disheveled shorts-wearing founder himself to his protective law professor parents to the nerdy business partner/girlfriend. Truth is indeed stranger than fiction, and we cannot get enough of it.
/jlne.ws/3CrbDJg

U.S. judge says Celsius Network owns most customer crypto deposits
Dietrich Knauth – Reuters
A U.S. bankruptcy judge ruled on Wednesday that Celsius Network owns most of the cryptocurrency that customers deposited into its online platform, meaning most Celsius customers will be last in line for repayment in the crypto lender’s bankruptcy. The ruling by U.S. Bankruptcy Judge Martin Glenn in New York affects approximately 600,000 accounts that held assets valued at $4.2 billion when Celsius filed for bankruptcy in July. The company does not have enough funds to fully repay those deposits, Glenn wrote.
/jlne.ws/3VNg4F9

Exclusive: FTX’s former top lawyer aided U.S. authorities in Bankman-Fried case
Angus Berwick – Reuters
FTX’s former top lawyer Daniel Friedberg has cooperated with U.S. prosecutors as they investigate the crypto firm’s collapse, a source familiar with the matter said, adding pressure on founder Sam Bankman-Fried who was arrested on criminal fraud charges last month. Friedberg gave details about FTX in a Nov. 22 meeting with two dozen investigators, the person said. The meeting, held at the U.S. Attorney for the Southern District of New York’s office included officials from the Justice Department, Federal Bureau of Investigation, and the U.S. Securities and Exchange Commission, the source said. Emails between attendees scheduling the meeting with those agencies were seen by Reuters.
/jlne.ws/3IpC3Pr

Superintendent Adrienne A. Harris Announces $100 Million Settlement with Coinbase, Inc. after DFS Investigation Finds Significant Failings in the Company’s Compliance Program
Department of Financial Services – New York State
Superintendent of Financial Services Adrienne A. Harris announced today that Coinbase, Inc. (“Coinbase”) will pay a $50 million penalty to New York State for significant failures in its compliance program that violated the New York Banking Law and the New York State Department of Financial Services’ (DFS) virtual currency, money transmitter, transaction monitoring, and cybersecurity regulations.
/jlne.ws/3GFnDcD

Cryptocurrency giant Coinbase strikes a $100 million deal with New York regulators
Giulia Heyward – NPR
Coinbase, a publicly traded cryptocurrency exchange, will pay $100 million in fees because of “significant failures in its compliance program” that violated New York state laws. Wednesday’s announcement of the settlement between Coinbase and the New York State Department on Financial Services comes on the heels of other actions by other regulatory agencies to monitor cryptocurrency companies. Those efforts have gained urgency after the November collapse of FTX, one of the largest cryptocurrency exchanges in the world. Its former founder, Sam Bankman-Fried now faces multiple criminal charges.
/jlne.ws/3Io0ehe

Crypto took such a beating in 2022 that U.S. regulators have teamed up for the first time to sound the alarm to banks tied to the industry
Chloe Taylor – Fortune
Last year was a difficult time for crypto investors, with billions being wiped out of the cryptocurrency market and the collapse of major exchange FTX dampening sentiment toward digital assets. The fallout saw people losing their life savings overnight, with more than a million people and businesses reportedly owed money by FTX. In light of the events of 2022, major financial regulators in the U.S. have come together for the first time to warn banks about the risks involved with being tied to the unpredictable crypto industry.
/jlne.ws/3VQmzae

One of the world’s largest bitcoin miners will shut off thousands of mining rigs tied to bankrupt Celsius as part of the firms’ bankruptcy proceedings
Morgan Chittum – Business Insider
One of the world’s largest bitcoin miners will shut off thousands of mining rigs tied to Celsius Network as a part of the firms’ bankruptcy proceedings. Core Scientific will stop hosting over 37,000 rigs that it says Celsius hasn’t been fully paying for, according to a court filing on Tuesday. Celsius claims that Core Scientific increased its power rate, which wasn’t stipulated in the two embattled companies’ initial agreement.
/jlne.ws/3Cn5Kgs

Genesis CEO Asks for More Time as Winklevoss Pressures Parent Company DCG
Mathew Di Salvo – Decrypt
The CEO of crypto broker Genesis has asked for time to sort out its troubled lending unit as its parent company Digital Currency Group (DCG) faces increasing pressure. Genesis halted withdrawals in November following the crash of crypto exchange FTX. And the platform owes high-yield savings product Gemini Earn $900 million.
/jlne.ws/3WPzhY9

Crypto’s Alpha Male Culture, Explained (Podcast); Is crypto’s future tied to its alpha male past?
Sharon Beriro – Bloomberg
Listen to Bloomberg Crypto on the iHeartRadio App, Apple Podcasts or Spotify. In the days leading up to the staggering collapse of FTX, a series of tweets from a top crypto executive signaled that the exchange was likely in deep financial trouble. Former FTX CEO Sam Bankman-Fried and Binance CEO Changpeng Zhao – or “CZ” as he’s commonly called – are known rivals. But when CZ tweeted that he was pulling his investments out of FTX, it sparked a run on the exchange that ultimately led to its insolvency.
/jlne.ws/3jVvgTH

Hong Kong Crypto Mogul Aims to Raise $1 Billion for Web3 Fund; Firm targeted as much as $2 billion as recently as November; Fundraising to invest in blockchain and metaverse startups
Suvashree Ghosh and Zheping Huang – Bloomberg
Animoca Brands Corp. is looking to raise about $1 billion this quarter for its new Web3 and metaverse investment fund, sharply scaling back its ambitions during the current crypto industry meltdown.
/jlne.ws/3WPS5q8

NFT Sales in 2022 Nearly Matched the 2021 Boom, Despite Market Crash
Andrew Hayward – Decrypt
Despite months of declining sales and falling prices, overall NFT sales volume last year nearly matched the 2021 peak, according to data from DappRadar. A buzzy start to the NFT market in 2022 buoyed the year-end tally and helped make up for the several weaker months that followed, the data suggests.
/jlne.ws/3GbC5rm

Politics

Beware digital-dollar drive, Dems’ election-denying leader and other commentary
NY Post Editorial Board
Libertarian: Beware Digital-Dollar Drive
The collapse of FTX “could lead to onerous federal regulations and the establishment of a federal ‘digital dollar,’âEURŠ” warns Kristin Tate at The Hill. After all, “the Federal Reserve and many in Congress have been salivating for such changes for years. This could be a fig leaf to justify it.” It would likely “coincide with a gradual abolishment of physical cash,” giving the feds “the ability to instantly track, catalog and scrutinize every person’s transactions” – “a dystopian nightmare.” Yet “the vulture-like actions by those in power to take advantage of the [FTX] disaster are both predictable and intentional.”
/jlne.ws/3IIq9R9

It’s Time for Congress to Pass a Federal Virtual Currency Law
Bloomberg Law
Katten attorneys analyze how regulators determine whether a crypto asset is a security. They explain why it’s essential to know whether an asset is a security-to avoid negative outcomes for crypto traders and investors. Recent events regarding FTX and other failed crypto enterprises amplify the need for the 118th Congress to take action by passing legislation to provide holistic federal oversight of the virtual currency market. This includes regulating market participants that engage in a virtual currency business from the US or with US persons.
/jlne.ws/3CrBUr8

The ultrarich are getting cozy in America’s tax havens at everyone else’s expense
Whizy Kim – Vox
In 2020, a proposed constitutional amendment in Illinois attempted to turn the state’s flat personal income tax of 4.95 percent into a graduated rate that rises with income. Democratic Gov. J.B. Pritzker, a billionaire himself, posed the amendment as a fight for tax fairness that would ask the state’s wealthiest residents to pay a greater share, but he had a formidable foe: Billionaire hedge fund manager Ken Griffin, who poured $54 million into defeating the measure, framing the amendment as an extra burden on Illinois taxpayers that would enable irresponsible government spending.
/jlne.ws/3jTt4Mj

Rolling Back IRS Funds Would Make It Harder To File Tax Returns And Easier To Cheat
Howard Gleckman – Forbes
Once they finally pick a Speaker, the very first bill House Republicans will adopt likely would make it harder for the IRS to help taxpayers file their returns and easier for tax dodgers to cheat. It doesn’t seem like very smart branding, but what do I know? Of course, that’s not how the House GOP is framing its coming vote to reverse nearly all of the 2021 Inflation Reduction Act’s (IRA) $80 billion increase in the IRS budget over the next decade. The House GOP says it is trying to prevent 87,000 armed IRS agents from harassing innocent taxpayers. While this oft-repeated claim resonates among some on the political right, it has little connection to reality.
/jlne.ws/3WIEZLo

Regulation

SEC Pushes Back on Binance.US Deal to Buy Voyager Digital
Yueqi Yang – Bloomberg
The US Securities and Exchange Commission is pushing back on Binance.US’s plan to buy bankrupt crypto lender Voyager Digital in a deal valued at about $1 billion, according to a bankruptcy court filing. The purchase agreement underpinning the deal doesn’t include sufficient detail about Binance’s ability to close the transaction, the SEC said in a limited objection Wednesday. More disclosure is needed about what Binance’s US operations will look like following the deal, along with more information about how customer assets will be secured, lawyers for the SEC said.
/jlne.ws/3QfPi7b

SEC Files Limited Objection to Binance.US’s $1B Deal for Voyager Assets
Nelson Wang – CoinDesk
The U.S. Securities and Exchange Commission (SEC) has filed a limited objection to Binance.US’s proposed $1.02 billion purchase of the assets of bankrupt crypto lender Voyager. In its filing, the SEC questioned the adequacy of the information in Binance.US’s disclosure statement, specifically details on the ability of the crypto exchange to “consummate a transaction of this magnitude,” as well as how Binance.US intends to secure customer assets and details on how Binance.US would rebalance its cryptocurrency portfolio.
/jlne.ws/3VICBCZ

Statement on Fall 2022 Regulatory Flexibility Agenda
Chair Gary Gensler – SEC
Today, the Office of Information and Regulatory Affairs released the Fall 2022 Unified Agenda of Regulatory and Deregulatory Actions, which includes contributions related to the Securities and Exchange Commission and short- and long-term regulatory actions that administrative agencies plan to take.
/jlne.ws/3QgcNgm

SEC Charges Creator of CoinDeal Crypto Scheme and Seven Others in Connection with $45 Million Fraud
SEC
The Securities and Exchange Commission today charged Neil Chandran, Garry Davidson, Michael Glaspie, Amy Mossel, Linda Knott, AEO Publishing Inc, Banner Co-Op, Inc, and BannersGo, LLC for their involvement in a fraudulent investment scheme named CoinDeal that raised more than $45 million from sales of unregistered securities to tens of thousands of investors worldwide.
/jlne.ws/3QeoEf6

SEC Obtains Judgment Against Individual in Multi-Million Dollar Securities Offering Fraud
SEC
On December 23, 2022, the United States District Court for the District of Maine entered a final judgment against Paul Hess ordering him to pay approximately $2,977,000 in disgorgement, prejudgment interest, and penalties.
/jlne.ws/3jUYK41

SEC Charges Former SPAC CFO for Orchestrating $5 Million Fraud Scheme
SEC
The Securities and Exchange Commission announced on January 3, 2023, fraud charges against Cooper J. Morgenthau, the former CFO of African Gold Acquisition Corp., a SPAC or special purpose acquisition company, for orchestrating a scheme in which he stole more than $5 million from the company and from investors in two other SPACs that he incorporated.
/jlne.ws/3X2lc9m

SEC Obtains Partial Judgments Against Two CodeSmart Defendants
SEC
On December 22, 2022, the U.S. District Court for the Eastern District of New York entered a bifurcated judgments against Marc Wexler and Matthew Bell, enjoining them from violating certain provisions of the federal securities laws.
/jlne.ws/3IqEfWP

ASIC issues infringement notices to energy company for greenwashing
ASIC
ASIC has taken action for greenwashing against listed energy company Black Mountain Energy Limited (BME).
BME has paid $39,960 to comply with three infringement notices issued by ASIC in relation to concerns about alleged false or misleading sustainability-related statements made to the Australian Securities Exchange (ASX) between 23 December 2021 and 8 September 2022.
/jlne.ws/3IqCc5f

US regulators issue first ever warning to banks over crypto asset risk; The joint warning was issued on the same day the Feds launched a new FTX Task Force to recover lost investor assets from the collapsed exchange.
Laurie McAughtry – The Trade
The US Federal Reserve, alongside the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), on 3 January issued their first ever formal warning to the financial system regarding the risks inherent within the crypto asset industry.
/jlne.ws/3GGLyIM

Investing and Trading

Tradeweb succession as Hult becomes CEO and Pluta becomes president
Dan Barnes – The Desk
Tradeweb, the market operator for rates, credit, equities and money markets, has implemented leadership changes as part of its previously-announced succession plan. Effective 1 January, 2023, Billy Hult became chief executive officer of Tradeweb Markets and Thomas Pluta became the company’s president. Both Hult and Pluta will continue on the board of directors. Lee Olesky, formerly chairman and CEO, retired as Tradeweb CEO on December 31, 2022 and now serves as non-executive chairman of the board.
/jlne.ws/3ZeZqBa

ETF Market Expanded in 2022 Through Bear Market But Took Hits; Category made gains on mutual funds; energy ETFs were winners; Year’s losers included fixed-income, crypto and SPAC funds
Isabelle Lee and Vildana Hajric – Bloomberg
Optimists were still to be found in the world of US exchange-traded funds, where more than 400 new ETFs were launched despite a harsh bear market. Funds took in more than half a trillion dollars as more investors learned to embrace their easier-to-trade and tax-friendly structure. Still, the $6.5 trillion industry was shaken by market turmoil. Many funds saw sharp drawdowns as equities and fixed-income strategies slumped beneath the Federal Reserve’s rate hikes to battle inflation. Trendy new ETF themes burned bright and then faded. Commodity funds rode sharp price increases driven by the war in Ukraine and Russian sanctions.
/jlne.ws/3VNEn67

Pimco Cuts Payouts as Much as 45% on Muni Closed-End Fund Shares; Asset manager cuts monthly payouts on 9 muni closed-end funds; Distribution cuts range from 20% to 45% as leverage costs soar
Martin Z Braun – Bloomberg
Pacific Investment Management Co. cut monthly payouts on nine municipal bond closed-end funds by as much as 45% after a sharp jump in short-term rates increased borrowing costs. The money manager cut the distributions on the $199 million Pimco California Municipal Income Fund to 3.6 cents per share from 6.5 cents per share, according to a statement Tuesday. Short term-borrowing costs on the fund surged as high as 8.25% in December. The fund trades at a 29% premium to its net asset value while the yield on the closed-end fund’s portfolio is about 4%, according to data compiled by Bloomberg.
/jlne.ws/3vCRyfh

Good News on Taxes Came Too Late for Many SPACs; Worries about a tax bill hitting this year caused a frenzy of SPAC liquidations
Amrith Ramkumar – The Wall Street Journal
A rare bit of good news came too late for battered SPACs that were liquidating at a record pace last month. With the market essentially frozen and the possibility of a new tax worsening their losses, creators of special-purpose acquisition companies closed roughly 85 SPACs in December, taking nearly $750 million in losses.
/jlne.ws/3Zb8KWN

Environmental, Social and Corporate Governance

California Wine Town to Fight Blackouts With Batteries, Hydrogen; Backup system in Calistoga will keep lights on for 2 days during emergency power shutoffs.
David R Baker – Bloomberg
A California wine country town plagued by wildfires and blackouts could soon get a backup power supply capable of running most of its homes and businesses for two days on batteries and green hydrogen. Utility giant PG&E Corp. and Energy Vault Holdings Inc. plan to create a microgrid covering most of Calistoga, a small town of restaurants, tasting rooms and shops at Napa Valley’s northern end. During disruptions on the region’s electrical grid, the microgrid would use a mix of lithium-ion batteries and fuel cells running on hydrogen to supply the town, with no greenhouse gas emissions.
/jlne.ws/3jMvj3P

What You Need to Know About Cultivated Meat; Advocates say cell-based meat could reduce emissions and improve biodiversity, while critics argue that for now it’s mostly hype.
Coco Liu – Bloomberg
Cultured meat. Cultivated meat. Lab-grown meat. Cell-based meat. Whatever you call it, the newest addition to alternative protein is having a bit of a moment. Over the past few months, Singapore’s government wined and dined VIP guests with cultivated meat at COP27, lab-grown chicken passed its first hurdle with the US Food and Drug Administration and a landmark global agreement to protect biodiversity applied new pressure to rethinking how beef, pork, chicken and seafood are produced.
/jlne.ws/3QpbJHd

Eelgrass: the endangered marine plant vital to keeping climate stable; Efforts under way to restore seagrass meadows capable of capturing more carbon than rainforests
Paul Brown – The Guardian
Arhizome with long green leaves attached left stranded on a beach after a winter storm shows that just offshore are undersea fields of common eelgrass, Zostera marina. Remarkably, eelgrass is a plant, not algae like seaweed. The plants grow in sunlit shallow water producing seeds like terrestrial grass and using photosynthesis to grow. Their rhizome root system spreads under the sand, as a second reproduction method, and in doing so stabilises the seabed, although their shallow habitat makes plants vulnerable to being uprooted by storms. Though the floating rhizome has the potential to begin a colony elsewhere.
/jlne.ws/3vKGhJO

Building With Sustainable Wood Is Key to Greener Cities; Amsterdam’s partnership with a tropical forest for everything from park benches to construction projects offers a new model for urban development.
Feargus O’Sullivan – Bloomberg
The city of Amsterdam uses a lot of wood-for public-housing construction, bridge repair, street furniture and more. But it’s tough to be sure the lumber doesn’t come from fragile ecosystems. Last summer, Amsterdam started working with the stewards of a sustainably managed forest in Suriname to buy traceable hardwoods for use in projects across the city. The alliance is the brainchild of Cities4Forests, a group that promotes sustainable building materials, aiming to make the construction industry greener and more equitable. We spoke with its founder, Canadian architect and lifelong wood obsessive Scott Francisco, about why tropical forests are vital to cities and why sustainability strategies frequently don’t work.
/jlne.ws/3XoyEVB

EU ban on deforestation-linked goods sets benchmark, say US lawmakers; Campaigners hail EU move, and congressman says it gives fresh impetus to similar US plans
Arthur Neslen – The Guardian
A groundbreaking EU deal to ban the import of goods linked to deforestation has set a global benchmark and will hasten the passage of a similar law in the US, American lawmakers have said. A football pitch-sized tract of forest is lost every second somewhere around the world, mostly to agricultural expansion. From 2024, the EU will require firms working in deforestation hotspots to certify that their goods have not harmed forests after a cutoff date of 31 December 2020.
/jlne.ws/3WLSvhf

Big investors ask Glencore to justify thermal coal development
Melanie Burton – Reuters
International investors with $2.2 trillion in assets will ask commodity giant Glencore Plc (GLEN.L) to show how its development of thermal coal mines meets the goals of the Paris climate accord to keep global warming to 1.5 degrees. Glencore is one of the world’s largest producers and traders of the fossil fuel used in power generation and record prices of the commodity helped add some $10 billion to its earnings in the six months to June.
/jlne.ws/3InKwCT

UK weather: 2022 was warmest year ever, Met Office confirms
BBC
Last year was the UK’s warmest year on record, the Met Office has confirmed. The average annual temperature in 2022 was more than 10C for the first time, the national weather service said. The mean temperature across the 12 months was 10.03C – topping the previous all-time high of 9.88C in 2014. It means 15 of the UK’s top 20 warmest years on record have all occurred this century – with the entire top 10 within the past two decades.
/jlne.ws/3InfTxm

‘Feels like summer’: Warm winter breaks temperature records in Europe
Matthias Williams and Kate Abnett – Reuters
Ski slopes deserted due to lack of snow; Activists call for faster action on climate change; Pollen warning issued as plants bloom early; Governments get short-term gas-price respite. Record-high winter temperatures swept across parts of Europe over the new year, bringing calls from activists for faster action against climate change while offering short-term respite to governments struggling with high gas prices.
/jlne.ws/3VLHpaP

Germany Breaks Record for Electricity Generation From Wind
relates to Germany Breaks Record for Electricity Generation Josefine Fokuhl – Bloomberg
Germany produced a record amount of electricity from wind on Wednesday, helping to reduce the need to burn fossil fuels as Europe battles an energy crisis. The nation’s wind farms generated 50,232 megawatts, according to data from the European Energy Exchange. Output is expected to decline in the coming days and increase again on Friday.
/jlne.ws/3VMbGpR

UAE Plans $15 Billion Push for Low-Carbon Energy by 2030; State oil producer Adnoc earmarks spending on carbon capture; Spending is part of strategy to invest $150 billion on energy.
Anthony Di Paola – Bloomberg
The United Arab Emirates is earmarking $15 billion for energy-transition projects over the rest of the decade as the Middle Eastern oil producer seeks to burnish its green credentials ahead of hosting a key global climate summit. Abu Dhabi National Oil Co. will make the investments, the government said in a statement on Thursday. The state-owned company will look at international partnerships and carbon capture as part of its expansion of a cleaner-energy unit established last year.
/jlne.ws/3jNFwx3

Welcome to 2023: ESG & employees still win even in economic uncertainty
Natalie Runyon – Thomson Reuters Institute
Can ESG issues improve the well-being of employees in the coming year as human-centered business becomes more a part of the mainstream? Environmental, social, and governance (ESG) issues and the power shift in favor of sought-after employees will emerge as business-as-usual topics in 2023, even amid the uncertain global economic environment. Indeed, both topics remained consistently in the top business news headlines in 2022 and in general, are a continuation of a larger trend of human-centered business. As a result, these topics will become part of the normal course of business discourse in 2023. More specifically, here are five ESG themes that will be on the horizon this coming year:
/jlne.ws/3vDKuPt

ESG will be a heavy focus for tech leaders in 2023
Bob Violino – CNBC
CIOs are becoming increasingly more critical for companies to meet their ESG goals. Rising environmental regulations, cost savings, and other financial benefits that come from operational efficiencies tied to sustainability are driving ESG forward. The biggest technological challenge for organizations working to embed ESG into their operations is a lack of quality data. Environmental, social and governance initiatives will keep many CIOs busy in 2023, as organizations look to enhance IT and operational efficiency and comply with regulations.
/jlne.ws/3VSrDei

ESG & CEOs
Andrew Stuttaford – National Review
The obvious way to read a debate (not) is by reading its concluding section, but the other day, I noticed a piece by Samuel Gregg that was the final installment of a forum organized by Law & Liberty on ESG (an investment discipline in which companies are rated by how they measure up to various environmental, social, and governance criteria). I’m looking forward to reading the other articles included in the forum soon, but Gregg’s finale makes for a great start, not least for his comments on the role of the CEO. Gregg notes the growing critique of ESG “from within corporate America.” That may be optimistic, although it does seem that some in the C-suite are less willing to associate themselves with ESG’s broadly progressive agenda than in the past. There have been signs, too, of consumer pushback (Gregg cites the example of Disney), and of disillusion among those investors who were persuaded to buy ESG products by the most dishonest of all the lines that have been used to peddle them – which is that ESG is a way of doing well by doing good. That was, except during the ESG bubble, never credible.
/jlne.ws/3Gd60zA

Institutions

BMO Takes Top Spot for Canadian IPOs in Dismal Year for Market; Volume of initial public offerings falls 85% from 2021 record; Equity financing deals also drop as valuations decline
Kevin Orland – Bloomberg
Bank of Montreal’s capital-markets unit was the top arranger of initial public offerings in Canada in 2022, eking out two significant deals in a year when plunging equity prices all but froze the market for companies seeking to sell shares for the first time. Canadian companies undertook 112 IPOs with a total value of C$1.82 billion ($1.35 billion) last year. That’s down 85% from 2021’s record C$12 billion in deals. BMO Capital Markets, which handled two offerings with a total value of C$197.6 million last year, previously held the top spot on the Canadian IPO league tables in 2018.
/jlne.ws/3X3eJes

HK Brokers’ Reopening Euphoria Is Dealt Blow by China Clampdown; HK firms review China plans just days before border reopens; China cleansed 2,500 underground money routes to curb outflow
Bloomberg
China’s order that its biggest online brokerages stop taking on new onshore investors couldn’t have come at a worse time for Hong Kong’s struggling financial firms. As preparations are in full swing to reopen the border with mainland China as early as Jan. 8 after more than three years of Covid restrictions, hopes for a bonanza of fresh clients has been cast into doubt by the demand to a halt of “illegal” activities by Futu Holdings Ltd. and Up Fintech Holding Ltd.
/jlne.ws/3WK9b8U

How Denmark Put an End to Bank Robberies
Armanis Syed – Time
Last year, there was not a single bank robbery in Denmark, according to data released Tuesday by an industry group for lenders. The news comes on the back of declining cash services, fueled by a rise in online and mobile transactions, and beefed up security.
/jlne.ws/3jUtHVI

Hedge Funds Gave Startups Billions. What Are They Worth? A tech rout has frustrated investors trying to pinpoint the value
of private companies. A Bloomberg analysis offers clues.
By Hema Parmar, Linly Lin and Noah Buhayar Wealth – Bloomberg
The pain – and then the questions – kept coming last year as prominent hedge funds took turns marking down the value of their stakes in private companies. Every time they wrote down holdings by millions, or even billions, of dollars, investors questioned whether they had gone far enough. An exclusive Bloomberg News analysis offers a partial glimpse into one of the most opaque corners of the investing world, and the findings aren’t reassuring. In many cases, hedge funds and other money managers disagree over how to value private companies, including some of the hottest, such as ByteDance and Discord.
/jlne.ws/3idtfl2

Wellness Exchange

Airlines Slam ‘Knee-Jerk’ Covid Test Plan for Chinese Travelers
Christopher Jasper – Bloomberg
The airline industry’s global lobby group condemned national moves to introduce Covid tests and other measures for arrivals from China as travel from the Asia nation resumes despite a flareup in the virus. The measures represent a knee-jerk reinstatement of steps that have proven ineffective in stemming the pandemic over the past three years, the International Air Transport Association said in a statement Wednesday.
/jlne.ws/3Z4kgmO

New Zealand Won’t Seek Negative Covid Test for China Travelers
Tracy Withers – Bloomberg
New Zealand has no plans to require visitors from China to provide a negative Covid-19 test, saying there is minimal public health risk to the South Pacific nation. New Zealand officials have carried out a public health risk assessment including working through scenarios of potential case numbers among travelers from China, Covid-19 Response Minister Ayesha Verrall said Wednesday in Wellington. The work “confirmed these visitors won’t contribute significantly to our Covid case numbers meaning entry restrictions aren’t required or justified,” she said.
/jlne.ws/3GH81pa

Hong Kong residents rush to get vaccinated ahead of China border reopening
Reuters
Hong Kong residents have swamped clinics to get vaccinated against COVID-19 ahead of the expected reopening of the city’s border with mainland China, which some people fear will bring a surge of infections to the financial hub. City government centres providing shots produced by BioNTech have in recent days been mostly booked solid, some until February, in contrast with a few weeks ago when anyone seeking a vaccine could stroll into a nearly empty facility.
/jlne.ws/3vE8Tod

China COVID data shows no new variant but under-reports deaths, WHO says
Alessandro Diviggiano and Bernard Orr – Reuters
Data from China shows that no new coronavirus variant has been found there, but also that the country under-represents how many people have died in a rapidly spreading COVID-19 outbreak, World Health Organization (WHO) officials said on Wednesday. Global unease has grown about the accuracy of China’s reporting of an outbreak that has filled hospitals and overwhelmed some funeral homes since Beijing abruptly reversed its “zero COVID” policy.
/jlne.ws/3jTRQvT

Bodies burned in streets of China with funeral homes overwhelmed by COVID deaths
Isabel Keane – NY Post
Graphic images appear to show families in China burning the bodies of their loved ones in the streets – a horrifying consequence of the country’s current surge in COVID cases. Chinese funeral homes and hospitals say they’ve become overwhelmed after the country’s “zero-COVID” policies were reversed last month.
/jlne.ws/3IqzuN7

What We Know About the ‘Kraken’ Covid Variant XBB.1.5 and Why It’s Causing Concern
Low De Wei – Bloomberg
A new Covid variant that was first detected last year has quickly become the dominant strain in the US – and picked up a creepy moniker along the way.
/jlne.ws/3Gj7Pv1

Germany to require rapid COVID-19 test for travellers from China
Reuters
Germany is changing its entry rules for travellers from China and will in future require at least a rapid coronavirus test to enter the country, Health Minister Karl Lauterbach said on Thursday.
/jlne.ws/3WNFa8l

WHO warns of most transmissible subvariant, questions China’s covid data
Andrew Jeong – The Washington Post
World Health Organization officials expressed concern Wednesday about a new omicron subvariant of the coronavirus – its most transmissible yet – while also urging China to be more forthcoming with its data on infections and deaths amid a recent surge there.
/jlne.ws/3jUqwgJ

Regions

Why China’s Reopening Isn’t Boosting Global Oil Markets Yet; Futures in London, New York lost almost 10% in early sessions; Risks from China’s reopening, global slowdown closely watched
Alex Longley and Devika Krishna Kumar – Bloomberg
It’s been a painful start to the new year for oil bulls. While China’s emergence from Covid Zero spurred talk of a demand boom from some of the market’s biggest names, a significant resurgence in energy consumption remains weeks, if not months away.
/jlne.ws/3GIne9u

Record Winter Heatwave Forces Snowless Alpine Ski Resorts to Close Slopes
Hugo Miller, Allegra Catelli, and Eugene Reznik – Bloomberg
It’s January and a forlorn ribbon of artificial snow, flanked by verdant pastureland, is all that links the Swiss village of Gstaad, altitude 1,050 meters, with the ski resort’s uppermost reaches. Les Contamines, a French resort overlooking Mont-Blanc, just canceled this weekend’s World Cup telemark ski race because of a lack of snow. Only weeks into the season, some lower-altitude, lower-budget destinations are closed.
/jlne.ws/3vFh2ZC

Miscellaneous

Why Working Out During the Workday Is the Ultimate Power Move; In theory, you have time for midday exercise. In reality, you may need a lofty title and political clout to get away with it
Callum Borchers – The Wall Street Journal
Maybe your office building has a gym where you can squeeze in a few bicep curls on your lunch break. Or perhaps you’re still working from home and could go for a run between Zoom calls. Working out in the middle of the workday makes perfect sense…in theory. In reality, a certain type of person has a distinct advantage in pulling it off routinely.
/jlne.ws/3GioAGz

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