Hedge Funds at War for Top Traders Dangle $120 Million Payouts

Jun 2, 2023

First Read

Hits & Takes
John Lothian & JLN Staff

Today we posted our interview with Cboe’s Henry Schwartz which we shot at the Options Industry Conference in Nashville. In the interview, he gave us a state of the industry update and talked about zero day to expiration options, the banking crisis, and how he uses artificial intelligence.

Schwartz gave a brief update on LinkedIn today about the state of the markets, saying, “A few quick option stats 5 months into 2023: 43.3M contract ADV is 7% above 2022 and implies 11.1B contract record year. Single stock ADV rebounded in May to 21.6M, ETF near 17M and Index 3.6M. Compared to pre-covid levels, nonindex option volume is up 124%, while spot volume is up 52%. Index volume is up 89%.”

I want to give a shout out to JLN Contributor Sally Duros for the Corrine Boone interview that we published yesterday. This was Sally’s first JLN video interview and it is full of her dedication to ESG, the subject she covers for JLN.

The U.S. Senate passed the bill to end the debt ceiling standoff, the Financial Times reported. This comes just four days before the deadline of when the U.S. Treasury said it would run out of money. The bill heads to President Joe Biden for his signature.

Speaking of President Biden, he crash landed during a graduation ceremony at the U.S. Air Force Academy, tripping over a sandbag on the stage, The Wall Street Journal reported. As I recall, Saturday Night Live comedian Chevy Chase did a great impersonation of Gerald Ford tripping various times during his brief presidency. Who will be the new Chevy Chase?

Abaxx Technologies Inc. has issued a press release about a conditional approval regarding where its shares would be listed. Now, the thing about the press release is that it is not for distribution in the United States, which is kind of a difficult thing to do when you put something on the internet for everyone to read. But I am including a link for this press release and trusting you that you are not in the United States, physically, emotionally or otherwise, if you decide to click on it.

We are expanding our Term of the Week video program that has been part of The Spread video series. Instead of just options-related terms, we are expanding to include futures terms as well as compliance and legal terms. We are looking for contributors for this program, people or firms willing to shoot short videos on a particular subject that we will publish as part of the series. Exchange Analytics has agreed to provide some compliance and legal related terms. We welcome law firms, brokerages, exchange firms, clearinghouses, technology firms and others to consider contributing to the series. It is great exposure and you can use the videos on your own website as well.

We will also soon be making an official announcement about a new video program called “Futures Discovery” that will mirror Options Discovery in form and function. We have a student already selected from Roosevelt University’s honors program for quantitative finance that is supported by donations from the Chicago Board of Trade Clearing Corporation Foundation. We are just finalizing the initial sponsors for the series. If you are interested in sponsoring, or learning more, contact me at johnlothian@johnlothian.com.

Good news on Jason Billups; he is starting to wake up, according to Stacey Billups in an update on the GoFundMe page to support the Billups family.

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


The top three stories in JLN Options yesterday were: AI Tech Rally Masks ‘Violent Rotations,’ RBC’s Silverman Says from Bloomberg. Goldman Sachs: Cash in on the $7 trillion AI explosion by making these 15 trades now from Business insider and Inside My Trade: The Trader Who Looks Forward to the Stock Market’s ‘Power Hour’ from The Wall Street Journal. Have a great weekend! ~JB


Cboe’s Henry Schwartz Details State of Options Markets for JLN at OIC and More

John Lothian News interviewed Henry Schwartz, senior director and head of product intelligence at Cboe Global Markets, at the 2023 Options Industry Conference in Nashville, TN, about the popularity of ODTE, Cboe’s 50th anniversary, the new trading floor, and the possible impact of AI on the options market.

Watch the video »


ChatGPT to Fuel $1.3 Trillion AI Market by 2032, New Report Says; Bloomberg Intelligence expects generative AI market to soar; Amazon, Microsoft, Google and Nvidia seen as biggest winners
Jake Rudnitsky – Bloomberg
The release of consumer-focused artificial intelligence tools such as ChatGPT and Google’s Bard is set to fuel a decade-long boom that grows the market for generative AI to an estimated $1.3 trillion in revenue by 2032 from $40 billion last year. The sector could expand at a rate of 42% over ten years – driven first by the demand for infrastructure necessary to train AI systems and then the ensuing devices that use AI models, advertising and other services, according to a new report by Bloomberg Intelligence analysts led by Mandeep Singh.

***** There is hype, and then there is $1.3 trillion worth of hype. Given the number of people paying attention to this, including Don Wilson spending time in California (did you catch that from the video interview we published earlier this week?), maybe there is a T in the number.


CoinDesk Turns 10: 2022 – How Crypto Gods Turn Into Monsters
Anna Baydakova – CoinDesk
2022 for crypto was an unprecedented hellscape of disasters – and the collapse of FTX was its culmination. It was also unprecedented for CoinDesk. Unlike any previous moment of failure in crypto history, this time we found ourselves at the epicenter, as our reporting triggered the events that unfolded. This resulted in a weird mix of bad and good news for CoinDesk itself. On one hand, Ian Allison and Tracy Wang’s coverage of FTX – including its egregious balance sheet and chaotic corporate governance – brought CoinDesk its first prestigious journalistic prize, the George Polk Award. CoinDesk received more mainstream recognition than at any time during the company’s 10 years of existence.

****** They were never gods, it is just some people could not see through their masks.~JJL


When Markets Melt Down, These Traders Cash In; Mark Spitznagel and Nassim Nicholas Taleb devised ways to reap huge profits from global chaos-and they expect a lot of chaos in the years ahead
Scott Patterson – The Wall Street Journal
As investors fretted about the possibility that the White House and Republican lawmakers would fail to raise the debt ceiling, one $20 billion firm wasn’t concerned about the potential stock-market mayhem. That’s because Miami-based Universa Investments reaps huge rewards in market crashes. It made billions in 2008 when the market collapsed during the global financial crisis, as well as in the 2020 crash sparked by the Covid-19 pandemic.

****** They are just “Odd Swans.”~JJL


A Leg To Stand On Commemorates 20 Years of Impact with Sponsor ADM Investor Services; Celebrating Partnerships Forged that Create Lasting Impact for Individuals with Disabilities
A Leg To Stand On
A Leg To Stand On (ALTSO) is commemorating two decades of providing children living with limb disabilities free, transformative mobility care, offering them the physical capabilities needed to meet their basic needs, attend school, support their families, and engage with their communities. ALTSO kicked off their anniversary celebrations with a video release featuring one of their first patients, Bhupendra. Bhupendra received his first prosthetic limb in 2006 at the age of eight and, after over a decade in ALTSO’s program, is now a proud college graduate. While as few as 10% of children with disabilities in developing countries attend school, in 2022 71% of ALTSO’s school-aged patients were attending or had already graduated from school.

****** Twenty years of great work and incredible support from the financial services and capital markets industries.~JJL


Thursday’s Top Three
Our top story Thursday was Bloomberg’s How the Fed Will Make Bank Transfers Truly Instant. Second was Wall Street Banks Are Using AI to Rewire the World of Finance, also from Bloomberg. Third was ‘Ultimate decider’ on Jeffrey Epstein was JPMorgan’s ex-top lawyer, says Jamie Dimon, from the Financial Times.


MarketsWiki Stats
27,344 pages; 245,075 edits
MarketsWiki Statistics


Lead Stories

Hedge Funds at War for Top Traders Dangle $120 Million Payouts; Paid sabbaticals, huge signing bonuses are among tools being used, as clients foot the bill in chase for steady returns.
Nishant Kumar – Bloomberg
When portfolio manager David Lipner said he was quitting billionaire Izzy Englander’s Millennium Management to join a rival, the hedge fund countered with an unusual proposal: A one-year paid sabbatical and an incentive upon return if Lipner stayed. And stay he did. For Millennium, the $58 billion industry giant known for ruthlessly cutting underperformers, the generous offer was seen as totally worth it.

U.S. Commodities Agency May Change Risk Rules to Consider Crypto
Jesse Hamilton – CoinDesk
The U.S. Commodity Futures Trading Commission (CFTC) has proposed an overhaul of its rules for risk management, and Commissioner Christy Goldsmith Romero said the changes should insist firms prepare themselves for crypto volatility and the risks from holding customers’ digital assets. The CFTC issued a proposal Thursday to invite comments on possible changes to the agency’s risk management program, and Romero said in a statement that “technologies like digital assets, artificial intelligence, and cloud services, also have emerged as areas that can carry significant risk.”

OCC Clears 949.1M Contracts in May 2023, Third Highest Month on Record
OCC, the world’s largest equity derivatives clearing organization, announced today that year-to-date average daily volume through May 2023 was 44.5 million contracts, up 6.6 percent compared to year-to-date average daily volume through May 2022. Total volume was 949.1 million contracts, up 9.5 percent compared to May 2022 and the third highest month in OCC’s history.

AI will create ‘more losers than winners’ even as Nvidia soars; Big investor says chipmaker will be among handful of tech groups to drive stocks higher
Harriet Agnew – Financial Times
Nvidia is one of a handful of companies that will sustain this year’s rebound in US stocks even as the rapid advances in artificial intelligence “creates more losers than winners”, according to one of the biggest recent buyers of shares in the US chipmaker.

Binance loses market share after regulatory clampdown; World’s biggest crypto exchange hit after moves by New York regulators and CFTC
Scott Chipolina – Financial Times
Binance, the world’s largest cryptocurrency exchange, has lost a quarter of its market share in the past three months as a US watchdog pursues it for alleged violation of federal laws. The group, which says it has no headquarters, controlled 57.5 per cent of the average monthly volume on the world’s crypto exchanges at its peak in February. But that has now dropped to 43 per cent, according to research provider CCData.

Backlash Against Weaponized Dollar Is Growing Across the World
Michelle Jamrisko and Ruth Carson – Bloomberg
All around the world, a backlash is brewing against the hegemony of the US dollar. Brazil and China recently struck a deal to settle trade in their local currencies, seeking to bypass the greenback in the process. India and Malaysia in April signed an accord to ramp up usage of the rupee in cross-border business. Even perennial US ally France is starting to complete transactions in yuan.

CFTC Mulls Rules Change to Accommodate Crypto and AI Risk
Andrew Asmakov – Decrypt
The Commodity Futures Trading Commission (CFTC) has issued a new proposal to revise its rules pertaining to risk management, accounting for risks related to “evolving technologies” like cryptocurrencies and artificial intelligence.

Sam Bankman-Fried’s lawyers pin hopes on The Bahamas; Plus, a vanishing CEO and Wall Street builds its own crypto market
Scott Chipolina – Financial Times
Hello and welcome to the latest edition of the FT’s Cryptofinance newsletter. This week, we’re revisiting The Bahamas. Could The Bahamas be about to throw sand into the US machine that is prosecuting Sam Bankman-Fried? The intriguing question came to light this week in a court document filed in New York by the defence team of the former FTX chief.

Nvidia was born in the booth of a bullet-ridden Denny’s-now it’s worth $1 trillion
Chris Morris – Fortune
Nvidia broke into the trillion-dollar club on Wall Street this week, an impressive feat for any company, but perhaps even more so considering where it got its start. Long before they were launching GeForce graphics cards and powering A.I. engines, the founders of the graphic chip manufacturer were focused instead on things like Moons Over My Hammy and pancakes as they sat in a booth of a bullet-ridden Denny’s near San Jose, not far from CEO Jensen Huang’s home.

Counterfeiting Scandals Keep Slamming the Commodities Market; Bags of stones have been substituted for nickel and painted rocks for copper.
Tracy Alloway and Joe Weisenthal – Bloomberg
Earlier this year, it emerged that the London Metals Exchange had been holding a bunch of bags filled with stones instead of the nickel needed to back trades for major commodities players, including Trafigura. Before that, commodities trader Mercuria was given painted rocks instead of the copper it was supposed to take delivery of. In short, the commodities world is no stranger to fraud.

RenTech’s Jim Simons Donates a Record $500 Million to Stony Brook; It’s the largest unrestricted gift of its kind in US history; Jim and Marilyn Simons met each other at the New York school
Francesca Maglione – Bloomberg
Renaissance Technologies founder Jim Simons and his wife Marilyn are giving $500 million to Stony Brook University, the public college on Long Island where he taught before leaving to start his wildly profitable hedge fund. The gift, made by their Simons Foundation, will be the largest unrestricted donation to an institution of higher education in US history, according to a statement Thursday. The funds will go toward Stony Brook’s endowment.

UBS CEO warns of painful jobs decisions after Credit Suisse takeover
John Revill – Reuters
UBS Chief Executive Sergio Ermotti on Friday warned of painful decisions about job cuts following the takeover of Credit Suisse, which he said he hoped would be formalised in coming days.

Exclusive-Barclays CEO in bid to stem US talent flight
Milana Vinn, Abigail Summerville and David Carnevali – Reuters
Barclays Chief Executive C.S. Venkatakrishnan held a virtual town hall this week to address management changes that have led to about two dozen U.S. investment bankers fleeing in the last few weeks, people familiar with the matter said.

Candriam restructures trading globally to expand high touch capabilities; Move follows the merging of the asset manager’s legal entities in France, Belgium and London last year; Edouard Petitcollot will lead the organisation as global head of trading.
Annabel Smith – The Trade
Candriam has overhauled its global trading structure in a bid to refocus its attention on more complex and high touch trading strategies, The TRADE can reveal. The asset manager will now operate with two specialised trading groups, one dedicated to equities, consisting of a team of three traders and headed up by Fabien OreÌEURve, and one dedicated to fixed income, consisting of four traders and headed up by Amaury Van Ruymbeke.

Fireside Friday with… Coutts’ James Stringer; The TRADE speaks to James Stringer, associate director, dealing at Coutts – and one of The TRADE’s 2022 Rising Stars of Trading and Execution – about liquidity access in a fragmented market, shifting regulation and how technology and transaction cost analysis are evolving buy- and sell-side relationships.
Wesley Bray – The Trade
What are the key pain points associated with accessing liquidity and how do you navigate this?
Since the introduction of Mifid I and II and the subsequent rise of MTFs and other alternative trading venues, we’ve seen a huge drift towards market fragmentation. Do additional venues really mean we have more choice? Do end-clients benefit from the shifts we’ve seen in an attempt to realise a more competitive market structure? Or has it just spread liquidity more thinly over a more convoluted playing field? This is already a well-covered, but increasingly significant topic in this industry. There are many providers out there who are offering a vast array of interesting and innovative solutions to try and navigate this landscape, but for me, rather than build a patchwork of different systems, the key to steer through such a fragmented market is to try and keep things clean and simple.

Ukraine Invasion

‘Stream’ and ‘Torch’: the Gazprom-backed militias fighting in Ukraine; Russia’s state gas company has recruited, equipped and paid security guards to join the invasion
Polina Ivanova, Christopher Miller and Max Seddon – Financial Times
The late Erast Yakovenko, a barrel-chested veteran of the 1990s war in Chechnya, hailed from a long line of Russian military men. So it was no surprise to his family when he signed up to fight in Ukraine – even at 53.

Satellite Images Reveal Russian Defenses for Ukraine Counteroffensive
WSJ Video
As Ukraine prepares to launch a counteroffensive, satellite images and videos show how Russia is strengthening its defense lines with anti-tank ditches, Dragon’s teeth and trenches. WSJ examines what Ukrainian troops could face.

Exchanges, OTC and Clearing

Euronext continues investment in clearing business with 50 new hires; The exchange group discusses with The TRADE how it has not ruled out an open access model in the future and has a target of 65% headcount growth of Euronext Clearing – formerly CC&G – between the end of 2021 and 2023.
Annabel Smith – The Trade
Euronext is approaching the end of a two-year hiring spree for its new clearing business as it continues to invest in the division as a core pillar of its future strategy. The exchange group set out plans at the end of 2021 to grow the Euronext Clearing’s headcount by 65% at the end of 2023, amounting to roughly 50 new hires across its risk, technology, sales and product development functions.

Aquis to expand dark offering with new ‘Dark to Lit Sweep’ functionality; Functionality is expected to go live on Monday 5 June and comes alongside enhancements to its Auction on Demand (AoD) service.
Annabel Smith – The Trade
Aquis Exchange is set to launch a new ‘Dark to Lit Sweep’ functionality to its Aquis UK and Aquis EU markets as it continues to expand its dark trading offering, The TRADE can reveal. The new functionality goes live on Monday 5 June, and allows members to sweep the Aquis Matching Pool (AMP) dark book before inputting an order in the lit book. The functionality will offer three order types; Dark to Lit (Immediate or Cancel Order), Dark to Lit (Day), and Dark to Lit (Post-only for non-client proprietary order flow).

Via Ameribor website: UK regulator makes ‘final call’ to switch off Libor
Huw Jones – Reuters
Markets participants have a month to stop using Libor, the tarnished interest rate banks were fined for trying to rig, Britain’s Financial Conduct Authority (FCA) said on Wednesday. The London Interbank Offered Rate (Libor) reflected the cost of lending between banks, using quotes from panels of banks in 35 variants across five currencies.

SIX publishes the monthly key figures for SIX Swiss Exchange and BME Exchange about the trading and listing activity in Switzerland and Spain

Cboe Launches New Global Listing Offering for Companies and ETFs of the Purpose-Driven Innovation Economy
Cboe leverages its existing network of stock exchanges in five markets around the world to facilitate access to capital and liquidity across the globe Cboe Global Listings focuses on growth companies and asset managers committed to innovation with a global impact

CME Group Reports May 2023 Monthly Market Statistics
CME Group
Highest-ever May ADV of 25M contracts; Double-digit volume increases in interest rates, energy, agricultural and metals, as well as many individual products. SOFR futures and options continue ADV growth. CME Group, the world’s leading derivatives marketplace, today reported its May 2023 market statistics, showing average daily volume (ADV) increased 3% to 25 million contracts during the month, the highest May ADV in company history.

Cash market sales statistics for May 2023
Deutsche Boerse
A trading volume of euro106.54 billion was achieved on Deutsche Boerse’s cash markets in May (previous year: euro141.06 billion / previous month: euro85.62 billion). Of this, euro103.79 billion was attributable to Xetra (previous year: euro138.08 billion / previous month: euro83.18 billion), which means that the average daily Xetra turnover was euro4.72 billion (previous year: 6.28 eurobn / previous month: eurp4.62bn). Turnover on the Frankfurt Stock Exchange was euro2.75 billion (previous year: euro2.99 billion / previous month: euro2.44 billion).

Forfeiture of Unclaimed Final Dividend for 2016
On 14 April 2023, Hong Kong Exchanges and Clearing Limited (“HKEX”) announced that, pursuant to HKEX’s Articles of Association, the final dividend for 2016 of HK$2.04 per share, payable on 2 June 2017 and remaining unclaimed on 2 June 2023, would be forfeited and would revert to HKEX. Accordingly, the unclaimed final dividend for 2016 amounting to HK$10,243,903.22 is forfeited and reverts to HKEX today.

Update – Amendment of Rules in relation to Northbound Trading of Stock Connect by China Securities Regulatory Commission (CSRC), Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE)PDF

Tick Sizes for Medium Liquidity Stocks (TOPIX Mid400) after June 5
Tokyo Stock Exchange, Inc.
Tokyo Stock Exchange, Inc. will apply tick sizes applied to TOPIX 100 constituents to medium liquidity stocks (TOPIX Mid400 constituents) after June 5, 2023.

JPX Monthly Headlines – May 2023
JPX group companies undertake various initiatives and disseminate information with the aim of providing the most attractive markets to all users. Every month, we showcase the highlights of these efforts in short and concise summaries just for you.


Fintech Brex’s Revenue Surges After Regional Bank Turmoil; Company on track for annual run rate of about $500 million; Brex saw growth of business accounts, spend management units
Katie Roof – Bloomberg
Brex, a credit-card startup, has seen a surge in usage of its products following this year’s regional banking turmoil. The company has surpassed $100 million in annual recurring revenue for Empower, its spend management business, according to a statement reviewed by Bloomberg News. It said Brex’s business accounts unit is also on pace for $100 million in revenue in the next 12 months.


Suspected State-Backed Hackers Hit Series of New Targets; Vietnam, Thailand and Brunei among the countries targeted; ‘Dark Pink is not a one-time campaign,’ researcher says
Sarah Zheng – Bloomberg
A hacking group suspected of ties to an Asian government has broadened its targets to government agencies in countries including Indonesia and Thailand, carrying out cyber-espionage as recently as April, cybersecurity firm Group-IB says. The perpetrators, dubbed Dark Pink by the Singapore-based company, infiltrated five new targets using sophisticated malware and phishing emails.

Cybersecurity and cloud computing have the largest tech skills gaps
Emer Roche – Finextra
In the future jobs market, it will pay to have skills that are in demand–so says The World Economic Forum’s (WEF) 2023 Future of Jobs report. Technology is moving faster than companies can design and scale up their training programmes, and as a result, companies and organisations are reshaping the way they look at nearly every aspect of the workplace.

What Is a Cybersecurity Risk Assessment?
A cybersecurity risk assessment is the process of identifying, categorizing, and prioritizing potential cybersecurity risks. Also frequently referred to as a cyber risk assessment, it involves a proactive approach to an organization’s security. Rather than simply reacting to threats as they surface, a cybersecurity risk assessment prepares security teams for threats in advance.


Coinbase Derivatives Exchange to Offer Institutional Bitcoin and Ether Futures
Shaurya Malwa – CoinDesk
Coinbase Derivatives Exchange, the regulated futures offering by crypto exchange Coinbase (COIN), will offer bitcoin (BTC) and ether (ETH) tracked futures for institutional clients starting June 5, it said in a Thursday release. Coinbase said it created these products to cater to increased institutional demand following the issuance of its nano Bitcoin (BIT) and nano Ether (ETI) contracts last year.

Liquidators Of Sam Bankman-Fried’s Alameda Research Have Scavenged $110 Million Of Bitcoin After Losing Billions
Bitcoin Magazine
Liquidators in charge of the recovery of assets for the now-disgraced Alameda Research hedge fund founded by Sam Bankman-Fried currently control over $110 million worth of bitcoin held in various wallets, according to a report supplied by blockchain analysis firm Arkham Intelligence. These wallets have been receiving BTC from exchanges and cold wallets as recently as March 2023, the report revealed.

Missing ‘Bitcoin Millionaire’ and ONFO coin co-creator found dead: Report
Martin Young – CoinTelegraph
The co-founder of referral-based crypto project ONFO coin has been found dead from an apparent gunshot wound about a week after he went missing, although police don’t currently suspect foul play. Dr. John Forsyth, a crypto advocate and emergency room doctor, was reported missing by relatives after not showing up to his shift at the Mercy Hospital in Cassville, Missouri, on May 21. His family launched an appeal on his whereabouts on social media soon after.

Binance is either 3 steps ahead or in big trouble-it’s hard to tell
Jeff John Roberts – Fortune
There has been a flurry of news about Binance in the last week, and whether that news is good or bad depends on how you want to read the tea leaves. The company’s many critics will look at the latest developments as proof that Binance is circling the drain ahead of a long overdue collapse-while its defenders can make a case that the company’s founder, Changpeng Zhao, is playing fourth-dimensional chess while everyone is else playing checkers.

Crypto exchange Gemini to soon operate in the UAE
Gemini will “soon” start the process of buying a crypto license to operate in the United Arab Emirates, and the team has met stakeholders throughout the region to learn more about local regulatory requirements, the crypto exchange said late on Wednesday. Gemini, founded by cryptocurrency pioneers and identical twins Cameron and Tyler Winklevoss, is aiming for the “adoption of crypto globally across 20 countries.”

Petrobras Captures Carbon to Ramp Up Gas Production, and Calls It Green; Oil major recycles its own oil-field carbon to pump more crude; Carbon capture is part of deepwater natural gas expansion
Peter Millard – Bloomberg

Crypto Rues Bitcoin’s Decoupling From AI-Fueled Tech Stock Gains; Bitcoin posted first monthly loss of 2023 while Nasdaq surged; During pandemic era tokens and stocks often moved in tandem
Vildana Hajric and Isabelle Lee – Bloomberg


U.S. Is Willing to Begin Nuclear Arms Dialogue With Russia; Washington seeks to sketch out future arms-control path after the New Start treaty expires in 2026
Michael R. Gordon – The Wall Street Journal
The Biden administration is prepared to begin talks without preconditions with Moscow on steps to limit nuclear arms after the New Start treaty expires in 2026, national security adviser Jake Sullivan plans to say in a speech Friday.

Brussels urges UK to join trade pact to ease risk of post-Brexit car tariffs; Trade experts warn British membership of Pan-Euro-Mediterranean convention is not ‘immediate fix’
Andy Bounds and Alice Hancockand Peter Foster and George Parker – Financial Times
The UK should join a pan-European agreement on goods trade to limit the damage to its car industry from looming post-Brexit tariffs instead of seeking a delay to their introduction, according to senior officials in Brussels.


EU’s Banking Regulator Highlights AML Risks in Privacy Coins, Self-Hosted Wallets
Jack Schickler – CoinDesk
Crypto companies should watch out for customers using privacy coins or self-hosted wallets as they try to spot potential money laundering activity, the European Banking Authority said in draft guidance published Wednesday. The plans, open for comment until August 31, follow a series of crackdowns on crypto tools which can enhance online privacy, but which lawmakers worry can be used to hide criminal or terrorist money.

SEC Charges Massachusetts-Based Firm and Its Co-Owners with Acting as Unregistered Securities Dealers
The Securities and Exchange Commission (the “SEC”) today announced charges against Auctus Fund Management, LLC (“Auctus Management”) and its co-owners Alfred Sollami of Brookline, Massachusetts and Louis Posner of Mansfield, Massachusetts, for failing to register as securities dealers with the SEC. Auctus Management, Sollami, and Posner allegedly bought and sold billions of newly-issued shares of microcap securities through their fund Auctus Fund, LLC (“Auctus Fund”), generating millions of dollars in profit, without registering as dealers or associating with a registered dealer, as required by the federal securities laws.

CFTC Seeks Public Comment on the Risk Management Program Requirements for Swap Dealers and Futures Commission Merchants
The Commodity Futures Trading Commission today published an advanced notice of proposed rulemaking (ANPRM) seeking public comment on potential amendments to the Risk Management Program (RMP) requirements in CFTC Regulations 23.600 and 1.11 (collectively, RMP Regulations) applicable to swap dealers and futures commission merchants.

Statement of Commissioner Christy Goldsmith Romero on Advance Notice of Proposed Rulemaking on Risk Management Program Regulations
Management of existing, evolving, and emerging risk is paramount to the financial stability of the United States and global markets. This is evidenced by the recent bank failures, followed by subsequent government action taken out of regulatory concern over possible contagion effect to other banks and broader economic spillover.[1] Federal Reserve Board Vice Chair Michael Barr recently testified before the Senate at a hearing on the bank failures, “the events of the last few weeks raise questions about evolving risks and what more can and should be done so that isolated banking problems do not undermine confidence in healthy banks and threaten the stability of the banking system as a whole.”[2]

ESAs put forward common understanding of greenwashing and warn on risks
Press release

Financial watchdog bans referral fees for debt packagers to help struggling consumers
The FCA is banning certain providers of debt advice from receiving referral fees from debt solution providers.

Investing and Trading

Rivian May Lose Nasdaq Spot After 90% Selloff, JPMorgan Says; Stock may be removed from Nasdaq 100 this month, says analyst; ON Semiconductor top among companies that may replace EV maker
Esha Dey – Bloomberg
Shares of Rivian Automotive Inc., the money-losing electric vehicle startup, may get pushed out of the Nasdaq 100 Index as early as this month after plunging more than 90% from their record high, according to JP Morgan Securities. The index typically removes the smallest members of the Nasdaq 100 if the company is weighted at less than 0.1% of the gauge for two consecutive months, JPMorgan analyst Min Moon writes in a note on Thursday.

Treasury May Delay Some T-Bill Sales If Debt Limit Not Resolved; Department ‘tentatively’ announces 3-, 6-month bill auctions; Wrangling over passage of debt-cap legislation is ongoing
Alex Harris – Bloomberg
The US Treasury Department is considering postponing its regular three- and six-month bill auctions “tentatively” scheduled for next Monday if constraints around the statutory debt limit remain. Ordinarily, the department would have announced on Thursday the size of the upcoming week’s three- and six-month benchmark bill sales and they would be sold the following Monday.

Active management is a sham – no wonder my returns are suspect; I’m a hypocrite for deriding stock pickers but choosing my own funds
Stuart Kirk – Financial Times
OK readers. We’ve been together for six months now and if any of you still have your money in an active fund – you know, where you actually let portfolio managers choose things all on their own – I haven’t done my job. There is no excuse for it. Actually, there’s one. If your manager says: “I am privy to inside information and am willing to go to jail to make you rich,” then of course you pretend not to hear and stay invested.

The creeping equitisation of credit trading; Smaller, faster, stronger, better?
Robin Wigglesworth – Financial Times
Dutch market-maker Flow Traders has just published a report that examines the evolution of European fixed income trading. It’s one of Alphaville’s fave subjects (yes, we’re a hoot at dinner parties), so we dug in. The overall direction is clear: Europe is also seeing a huge shift away from phone lines and Bloomberg messages and towards algorithmic trading on various electronic platforms.

How to be a contrarian investor; Following the herd is just one of our cognitive biases
James Henderson – Financial Times
Shares in oil and gas group Serica Energy are down 21 per cent so far this year due to a windfall tax, anti-oil sentiment and Labour’s pledges to halt new drilling licences in the North Sea. This makes the contrarian in me twitch with anticipation. Until we have built the necessary renewable energy infrastructure, we need gas. I would rather it came from the North Sea, where Serica is predominantly focused, and this has been a good share for us over the long term.

Can you cut costs to lift your returns? Competition leads to lower prices – but read the platforms’ small print
Emma Dunkley – Financial Times

The Best CD Rates for June 2023; CDs can help you log in today’s generous interest rates
Martha C. White – The Wall Street Journal

Nowhere for Investors to Hide From AI Hype; Even if you can look past the froth, there are few places to invest
James Mackintosh – The Wall Street Journal

Environmental, Social and Corporate Governance

Joe Rogan Is Fueling Climate Misinformation on TikTok, Watchdogs Warn; The actor-turned-podcaster recently touted the so-called “Adam and Eve” conspiracy theory to play down the climate crisis and criticize efforts to curb it. The clip has since gone viral.
Kristoffer Tigue – Inside Climate News
A clip of celebrity podcaster Joe Rogan touting a conspiracy theory that links global warming to Earth’s magnetic field has gone viral on TikTok, despite the platform’s new policy prohibiting climate misinformation, a new report warns. It’s the latest report to highlight how Big Tech companies continue to fuel false and misleading claims about climate change online, an issue that some experts say has become a top threat to the global effort to curb rising temperatures.

When Climate Gets Under Your Skin; Surprising Ways Climate Change Can Affect Your Health
Alan Buis – NASA Global Climate Change
From insect-borne diseases to seasonal allergies and “superbugs,” climate change is quite literally getting under our skin, affecting our health in often surprising ways. If Earth came with a warning label, like the one the Surgeon General puts on cigarette packages, it might say something like: “Warning: Climate change contributes to many well-known phenomena that negatively impact human health, including heat stress, extreme events, food insecurity, and poor air quality.”

Petrobras Captures Carbon to Ramp Up Gas Production, and Calls It Green; Oil major recycles its own oil-field carbon to pump more crude; Carbon capture is part of deepwater natural gas expansion
Peter Millard – Bloomberg
Brazil’s state-controlled oil giant Petrobras is capturing and storing a growing amount of carbon dioxide below the seabed in a strategy that helps it boost oil and natural gas production. It also calls it green. The company is pursuing the strategy at three giant offshore oil fields located 230 kilometers (143 miles) off the coast of Rio de Janeiro.

Special Report: Nations who pledged to fight climate change are sending money to strange places
Emma Rumney, Irene Casado Sánchez, Jaimi Dowdell, Misato Nakayama, Sakura Murakami and Kiyoshi Takenaka – Reuters
Italy helped a retailer open chocolate and gelato stores across Asia. The United States offered a loan for a coastal hotel expansion in Haiti. Belgium backed the film “La Tierra Roja,” a love story set in the Argentine rainforest. And Japan is financing a new coal plant in Bangladesh and an airport expansion in Egypt.

Cities and states suing Big Oil just got a boost from the Supreme Court; Complaints from Minnesota to Massachusetts, and from Honolulu to New York City, have a better shot at prevailing.
Patrick Parenteau and John Dernbach – GreenBiz
Honolulu has lost more than 5 miles of its famous beaches to sea level rise and storm surges. Sunny-day flooding during high tides makes many city roads impassable, and water mains for the public drinking water system are corroding from saltwater because of sea level rise. The damage has left the city and county spending millions of dollars on repairs and infrastructure to try to adapt to the rising risks.

EU regulators flag rising greenwashing practices by banks; European Banking Authority says there is a ‘clear increase’ in financial institutions overstating their climate credentials
Kenza Bryan and Alice Hancock – Financial Times

New Bloomberg Commodity Index Tilts Against Carbon
ESG Investor


Goldman, AQR Alumni Start Niche Hedge Fund With Backing From Cliff Asness; ClearAlpha’s fund will have 13 teams and 20 strategies; The fund expects to collect $1 billion within a year
Amanda L Gordon – Bloomberg
A new multistrategy hedge fund run by Wall Street veterans Brian Hurst and Elisha Wiesel began trading Thursday, focusing on offbeat strategies such as temperature arbitrage. Hurst, a 21-year veteran of AQR Capital Management, and Wiesel, who spent 25 years at Goldman Sachs Group Inc., are starting Niche Plus as ClearAlpha Technologies’ first fund.

Analysis-Banks break taboo for high-risk bonds
CarloGiovanni Boffa and Chiara Elisei – Reuters
Investors who earned easy money with high-risk bonds invented after the financial crisis are being forced to accept that the rules have changed: they may not get paid. Banks typically sold these perpetual bonds – known as AT1 bonds – with five years before an option to repay was triggered. In the past, investors got their money back, and banks replaced the bonds with new ones, but some are changing tack.

JPMorgan’s Dimon visits Taiwan to meet staff, clients -source
Selena Li and Kane Wu – Reuters
Jamie Dimon, the chief executive of U.S. bank JPMorgan Chase & Co, is visiting Taiwan on Friday, a source with direct knowledge of the matter said, his first trip to the island in a nearly a decade, after concluding a visit to China this week.

HSBC Explores Deals in Debt Market That Credit Suisse Built
Natasha White – Bloomberg
HSBC Holdings Plc has added its name to the list of banks looking to expand into a fast-growing corner of an ESG debt market that’s so far been dominated by Credit Suisse Group AG.

TD and Cowen’s prime brokerage and outsourced trading unit agree to part ways; The pair have communicated to clients that it would be in the best interest for the businesses to find a more ‘strategically and geographically aligned’ partner; TD acquired Cowen in March for $1.3 billion.
Annabel Smith – The Trade
TD Bank Group and TD Cowen’s prime brokerage and outsourced trading division are to diverge on mutually agreed terms months after their merger. According to sources familiar with the matter, the pair have communicated to clients that they have jointly concluded it would be in the best interests of clients if the prime brokerage and outsourced trading business were divested to a partner more “strategically and geographically aligned” to the platform.

FTSE SET Index Series June 2023 semi-annual review
FTSE Russell
FTSE Russell announces that there will be two changes to the constituents of the FTSE SET Large-Cap Index, following the June 2023 semi-annual review. Siam Makro and TRUE Corporation have been added to the FTSE SET Large-Cap Index, and Bangkok Expressway and Metro and Digital Telecommunications Infrastructure Fund will be removed from the index. The index series is reviewed semi-annually in accordance with the index ground rules.

Changes in composition of the STOXX Europe 600 Index
Press Releases – Qontigo
Qontigo has announced the new composition of the STOXX Europe 600 Index. Effective as of the opening of European markets on June 19, 2023, the following stocks will be added to and deleted from the index and its respective size and sector indices:

Philips Pensioenfonds adopts STOXX Index to align its emerging markets equity portfolio with several United Nations Sustainable Development Goals
Press Releases – Qontigo
Philips Pensioenfonds, in collaboration with index and analytics provider Qontigo and asset manager BlackRock, has successfully aligned its EUR 370 million emerging markets equity portfolio with several Sustainable Development Goals (SDGs). The mandate, managed by BlackRock, tracks a custom equity benchmark, the iSTOXX® PPF Responsible SDG Emerging Markets Index.

Work & Management

AI vs. Columnist: Can You Spot the Difference?; I know AI will probably replace me some day, but – do I really have to train my replacement?
Jessica Karl – Bloomberg
Normally, I generously sprinkle dozens of links – scores, even – through the first paragraph of this newsletter, to delight and surprise your parched digital palates. But not today, reader. Today I want you to click on one link and one link only: to this 35-second video of Parmy Olson. Did you click it? Have you watched?? With the sound on?? If you did – and again, if you didn’t, go right now! – you know that the video doesn’t actually feature Parmy.

Crypto Data Firm Nansen to Lay Off 30% of Staff
Emily Nicolle – Bloomberg
Blockchain analytics platform Nansen said it is laying off 30% of its workforce, citing broader difficulties in the crypto market. The firm had tried to expand into business areas that were not core to the company’s strategy, Nansen CEO Alex Svanevik said in a statement posted on Twitter. Founded in 2019, the startup’s expansion coincided with a boom in demand for cryptoasset services and investment.

Wellness Exchange

Sick Workers Tied to 40% of Food Poisoning Outbreaks, C.D.C. Says; To combat outbreaks at restaurants and other dining establishments, policies that support sick workers, including paid leave, may be needed, the agency said in a report this week.
Amanda Holpuch – The New York Times
People who showed up to their restaurant jobs while sick were linked to 40 percent of food poisoning outbreaks with a known cause from 2017 to 2019, the Centers for Disease Control and Prevention said in a report released on Tuesday. Paid sick leave and other policies that support sick workers could improve food safety outcomes, according to the report, which was based on a review of 800 food poisoning outbreaks, using data provided by 25 state and local health departments.

This Nonprofit Health System Cuts Off Patients With Medical Debt; Doctors at the Allina Health System, a wealthy nonprofit in the Midwest, aren’t allowed to see poor patients or children with too many unpaid medical bills.
Sarah Kliff and Jessica Silver-Greenberg – The New York Times
Many hospitals in the United States use aggressive tactics to collect medical debt. They flood local courts with collections lawsuits. They garnish patients’ wages. They seize their tax refunds. But a wealthy nonprofit health system in the Midwest is among those taking things a step further: withholding care from patients who have unpaid medical bills. Allina Health System, which runs more than 100 hospitals and clinics in Minnesota and Wisconsin and brings in $4 billion a year in revenue, sometimes rejects patients who are deep in debt, according to internal documents and interviews with doctors, nurses and patients.


Kenya central bank says digital currency not a ‘compelling priority’
Kenya’s central bank does not consider the issuance of a digital currency a “compelling priority” but it will continue monitoring developments in the area to help future decisions on issuance, it said on Friday.

Miami Developer Plans $1 Billion Towers on Last Brickell Key Lot; Swire gets set to build condos and a new Mandarin Oriental hotel, wrapping up more than 40 years of construction on the South Florida island.
Natalie Wong – Bloomberg
Swire Properties Inc. is embarking on the final phase of its four-decade-long development of Miami’s Brickell Key. The company is spending more than $1 billion to build two towers on the southernmost point of the island. The project, dubbed One Island Drive, will include an 800-foot-tall (244-meter) Mandarin Oriental-branded condo skyscraper with 222 units, including duplex penthouses.


Bloomsbury: survival of publishers points to AI prophecy overkill; Printed books continue to dominate sales over digital formats
Financial Times
Absolutist predictions about the extinction – or dominance – of a product can persuade us to buy or sell a stock. But universally held views can also be wrong. This is worth remembering amid prophecies that generative artificial intelligence will take over the world.

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The Spread

OCC liquidity risk doubles to all-time high in Q2

Lead Stories OCC liquidity risk doubles to all-time high in Q2; Concentration of activity around June expiration responsible for record rise Joshua Walker - Risk.net The estimated largest payment obligation Options Clearing Corporation (OCC) could have faced had a...

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