Hong Kong Exchange’s New CEO Is Put on Cleanup Duty; China Targets ‘Speculators and Hoarders’ to Stop Commodity Boom

May 24, 2021

First Read

$42,076/$300,000 (14.0%)

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Hits & Takes
John Lothian & JLN Staff

On Friday we published Part One of our interview with Bradley Rotter, a pioneer in financial futures, hedge fund investing and cryptocurrency investing. I interviewed him over Zoom for the Open Outcry Traders History Project after he commented on a video from the series that I posted to a CBOT-related Facebook group. On Tuesday we will publish Part Two of his interview.

Today is the first day of work for Hong Kong Exchanges and Clearing Ltd‘s new CEO, Nicolas Alejandro Aguzin. Welcome to one of the best jobs you could ever imagine. — LinkedIn

On Friday I did an interview with Owain Johnson of the CME Group, where he is the global head of research and product development. Look for that story later this week. Owain started as a journalist, became an analyst, and landed the CME job after trying to sell them an index. And he is quite the world traveler.

Bloomberg reported that the Eiffel Tower will reopen in mid-July after suffering heavy losses. I love Paris. — Bloomberg

Bloomberg also reported that former U.S. Treasury Secretary Lawrence Summers said cryptocurrencies could stay as a feature of global markets as something akin to “digital gold.” So my question is, how many central banks are holding bitcoin like they do gold? And when was the last time gold was used in a cybersecurity hack crime to pay off the hackers? While there are some similarities to the way bitcoin and gold are used, I think Larry is wrong. — Bloomberg

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STA put out a new Trading Views podcast on Friday, this one featuring an interview with Bryan Harkins, president of BIDS Trading, and Mehmet Kinak, global head of systematic trading and market structure at T. Rowe Price. Their discussion touched on a range of topics, including the state of the exchange, Cboe’s acquisition of BIDS and the current ETF landscape. To listen, click here. ~SC

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Register for the virtual Asset Management Derivatives Forum
FIA.org

FIA and SIFMA AMG are bringing you a virtual take on the Asset Management Derivatives Forum in 2021. Join us for virtual programming on June 8 and 9, during which market participants from all sides of a trade and leading regulators will examine the latest developments impacting the use of derivatives by asset managers. This year’s keynote speakers are Dan Berkovitz, commissioner at the Commodity Futures Trade Commission, Catherine McGuinness, chair of the policy and resources committee for the City of London, and Allison Herren Lee, commissioner at the U.S. Securities and Exchange Commission. Learn more and register!

Sign Up Here »

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How Humanity Gave Itself an Extra Life; Between 1920 and 2020, the average human life span doubled. How did we do it? Science mattered — but so did activism.
Steven Johnson – NY Times
In September 1918, a flu virus began spreading through Camp Devens, an overcrowded military base just outside Boston. By the end of the second week of the outbreak, one in five soldiers at the base had come down with the illness. But the speed with which it spread through the camp was not nearly as shocking as the lethality. “It is only a matter of a few hours then until death comes,” a camp physician wrote. “It is horrible. One can stand it to see one, two or 20 men die, but to see these poor devils dropping like flies sort of gets on your nerves. We have been averaging about 100 deaths per day.”
/nyti.ms/2SjJlwc

*****This is a fascinating story about how life span doubled. It was not just scientific breakthroughs, but the strident activism of some to make those findings part of everyday life. There is an interesting parallel to our markets. It was not just the breakthrough economic writings of Milton Friedman or Friedrich Hayek that helped our markets develop, it was the strident and unending activism of people like Leo Melamed to make financial futures and electronic trading a reality.~JJL

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Executive Order on Climate-Related Financial Risk: One Small Step for Climate, One Giant Leap for Federal Climate Policy
Vinson & Elkins
On May 20, 2021, President Biden signed a long-anticipated Executive Order on Climate-Related Financial Risk (the “Executive Order”). The Executive Order establishes a policy “to advance consistent, clear, intelligible, comparable, and accurate disclosure of climate-related financial risk,” addressing such broadly varying actions as potential regulation of climate risk in the U.S. financial system and addressing the Department of Labor’s (“DOL”) Trump-era ESG investing rules. Notably, the Executive Order proposes to use federal procurement and lending programs as a test bed for a variety of climate-related initiatives, from contractor disclosure requirements to agency use of climate data in making award decisions.
/bit.ly/3yCMnw7

*****I am just mooning over this headline.~JJL

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Bitcoin is ‘a con,’ declares media luminary Barry Diller
Mark DeCambre – MarketWatch
It is pretty clear where IAC chairman Barry Diller stands on bitcoin: he hates it and views it as a potential danger to would-be investors. On Friday, asked to offer his thoughts on the crypto phenomenon that has swept across the world, billionaire Diller had this to say. “I think it’s a con.” “Yeah, absolutely,” he added. “I’ve watched some of the people that you’ve had on [CNBC] to talk about it: $40,000, $12,000, whatever, and I think this is nutso talk,” he said.
/on.mktw.net/3oDl00i

*****Barry Diller knows a con when he sees one.~JJL

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Bradley Rotter – Open Outcry Traders History Project, Part One
JohnLothianNews.com

Bradley Rotter has been a pioneer in financial futures, hedge fund investing and cryptocurrencies. He was on the trading floor of the Chicago Board of Trade when financial futures were just getting started. He convinced Merrill Lynch they needed a financial futures expert and was hired, then later moved to New York to work for EF Hutton before returning to Chicago to become the floor manager for AG Becker & Co. when bonds were first traded in the old South Room of the CBOT.

Watch the video »

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Goldman Sachs Analysts’ Theory About the VIX; Regulators Eye Index Providers – The Spread
JohnLothianNews.com

This week on The Spread, a Virginia resident is ordered to pay $5 million for defrauding investors, the SEC considers index regulation, bitcoin options drive bitcoin’s price down, and more.

Watch the video »

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Friday’s Top Three
Our top-clicked story Friday was Vela and Exegy merge to expand market data and execution platform offering, from The Trade News. Second was Kenilworth mansion with ties to World’s Fair takes 9 years to sell, from Crain’s Chicago Business, which also was our top-clicked story on Thursday. Third was World-Dominating Superstar Firms Get Bigger, Techier, and More Chinese, from Bloomberg.

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Lead Stories

Hong Kong Exchange’s New CEO Is Put on Cleanup Duty
Kiuyan Wong – Bloomberg
JPMorgan veteran Nicolas Aguzin steps in as CEO on May 24; New CEO will need to deepen trading links to China further
The veteran JPMorgan Chase & Co. banker who’s taking the helm at Hong Kong’s exchange has been put on cleanup duty. Chairman Laura Cha has handed Nicolas Aguzin, who takes charge Monday, the task of reviewing the exchange’s practices after a bribery scandal and censure from the regulator, according to people familiar with the matter. The 52-year-old former head of JPMorgan’s international private bank is seen by Cha as having the experience to force a cultural shake-up given his background at a heavily regulated bank, said the people, asking to remain anonymous discussing sensitive issues.
/bloom.bg/2Tiq7Yx

China Targets ‘Speculators and Hoarders’ to Stop Commodity Boom
Bloomberg News
‘Do not collude with each other,’ top metals producers told; Iron ore, steel lead losses in Chinese commodity markets
China stepped up its fight against soaring commodities prices, summoning top executives to a meeting that threatened severe punishment for violations ranging from excessive speculation to spreading fake news. The government will show “zero tolerance” for monopoly behavior and hoarding, the National Development and Reform Commission said after leaders of top metals producers were called to a meeting in Beijing with multiple government departments on Sunday.
/bloom.bg/3fEg1sp

‘Volmageddon’ fine may hint to era of stricter index regulation; SEC action on S&P hints at ‘deeper, unspoken concern’ about objectivity of benchmarks
Robin Wigglesworth – FT
It is easy to dismiss as a nothingburger the $9m fine recently slapped on S&P Dow Jones Indices for a seemingly minor glitch with a small, esoteric financial gauge. The case is convoluted and three years old. Who cares?
/on.ft.com/3ueywsz

Deutsche Bank sets implicit quota of 50% women for senior hires; Meeting strict 2025 target is ‘a business necessity’, says lender’s human resources head
Olaf Storbeck – FT
Deutsche Bank will have to appoint women to about 50 percent of vacant senior management positions to meet its new 2025 gender target, a Financial Times calculation shows. Germany’s largest lender last week promised to raise the share of women among its roughly 600 most senior executives to at least 30 per cent by 2025, up from 24 per cent now.
/on.ft.com/3fBLLOK

CME Group to launch Bloomberg interest rate futures to support Libor transition; The interest rate futures by CME Group will be based on the Bloomberg short-term bank yield index.
Annabel Smith – The Trade
US derivatives exchange CME Group has set out plans to launch a new set of interest rate futures based on Bloomberg’s short-term bank yield index (BSBY) in the third quarter. The launch comes as the market continues to transition away from the Libor benchmark to other alternative reference rates including SONIA and SOFR.
/bit.ly/2SknHrQ

The SPAC Party Gets Going in Europe, This Time With Better Terms; Learning lessons from the U.S., sponsors proceed cautiously to avoid the wrath of regulators.
Alex Webb – Bloomberg
Now we all know just how U.S. investors went crazy for SPACs at the turn of the year, pumping $90 billion into the special purpose acquisition companies from December through February alone. Blank-check companies raise money from investors in an initial public offering and then merge with a company that’s itself looking to go public. The targets get a wad of cash while avoiding the rigmarole of their own IPO. The method allowed a slew of companies to soar to multibillion-dollar valuations even though they had no revenue, from Richard Branson’s space tourism company Virgin Galactic Holdings Inc. to electric truck maker Nikola Corp.
/bloom.bg/3hTq67p

Wall Street Aims to Make Sense of Confounding Bitcoin Swings
Joanna Ossinger – Bloomberg
Bitcoin had a volatile weekend after last week’s crypto crash; JPMorgan team says too early to call end to Bitcoin decline
Wall Street strategists face an almost impossible task in trying to analyze the outlook for Bitcoin and other tokens after a volatile rout. Even so, they are still trying, and some see the risk of more trouble ahead.
/bloom.bg/3yzCQ9e

Collapsed Singapore Oil Trader Founder Appeals $20 Million Order
Chanyaporn Chanjaroen and Alfred Cang – Bloomberg
Appeal was made after the Lims returned money to shipping firm; Lims transferred $19 million from Ocean Tankers in April 2020
Lim Oon Kuin, the founder of collapsed Singapore oil trader Hin Leong Trading (Pte.) Ltd, is appealing a court order to return funds the family took out of a unit just before it filed for protection last year. The appeal was made this month after the Lims paid the sum to Ocean Tankers Pte. Ltd. according to letters to the firm’s creditors seen by Bloomberg News. The amount covers $19 million transferred from the shipping company on two separate occasions last year to the Lims’ bank accounts, as well as interest and costs, totaling $20.1 million.
/bloom.bg/3fFlO0D

Why Changes to Hong Kong’s Stock Index Are a Big Deal
Sofia Horta e Costa – Bloomberg
The Hang Seng Index is undergoing a dramatic overhaul aimed at giving investors who track it greater exposure to China’s growing technological might. The heavy weighting of financial firms and state-owned enterprises will be reduced, which should go some way to rectifying the Hong Kong benchmark’s serial under-performance, and the near-doubling of the membership will add diversity. The changes aim to better reflect the city’s position as the preferred venue for mainland firms to sell shares, while keeping enough local companies on board to ensure it’s still a “Hong Kong” benchmark. Some $38 billion is invested in funds that follow the Hang Seng group of indexes.
/bloom.bg/3fDrfgQ

The boss is back but the workers are staying at home; Many chief executives who have returned to the office are struggling to convince staff to join them
Joshua Chaffin – FT
Such is Chesley Maddox-Dorsey’s devotion to her job as chief executive of American Urban Radio Networks that she has been working each day from the company’s Manhattan office for the past nine months — long before she received her Covid-19 vaccination.
/on.ft.com/3fJnoP1

Bank of America’s Merrill Lynch to Ban Trainee Brokers From Making Cold Calls; Brokerage will direct recruits to use Bank of America referrals and LinkedIn messages to prospect for new clients
Rachel Louise Ensign – WSJ
Bank of America Corp.’s BAC 1.27% Merrill Lynch Wealth Management unit is banning trainee brokers from making cold calls, a vestige of an era when the industry pushed hot stocks on anyone who would pick up the phone.
/on.wsj.com/3visN6v

Intelligence on Sick Staff at Wuhan Lab Fuels Debate on Covid-19 Origin; Report says researchers went to hospital in November 2019, shortly before confirmed outbreak; adds to calls for probe of whether virus escaped lab
Michael R. Gordon, Warren P. Strobel and Drew Hinshaw – WSJ
Three researchers from China’s Wuhan Institute of Virology became sick enough in November 2019 that they sought hospital care, according to a previously undisclosed U.S. intelligence report that could add weight to growing calls for a fuller probe of whether the Covid-19 virus may have escaped from the laboratory.
/on.wsj.com/3ubacHX

No One Was More Shocked by Lumber Mania Than Sawmill Operators
Breanna T Bradham – Bloomberg
Stunned by crowds at Lowe’s, mill operators boosted production; ‘We can use every bit of the tree except for the smell’
Deep in the flatlands of South Carolina, along a dusty road rung by pine trees, the wood-saws at the Charles Ingram Lumber Company whir day and night, cranking out the two-by-fours that have become the essential, and suddenly hard-to-find, ingredient of the great pandemic housing boom. Furman Brodie, who oversees operations at the 90-year-old company, says he only idles the machines long enough to give them the necessary maintenance — a few hours at most. And with prices on all cuts of wood soaring, he’s directed his crews to cut boards out of almost every inch of every tree that comes in. “If I could have 28 hours in a day instead of 24,” he says dryly, “I might run a little bit more.”
/bloom.bg/3wuBrip

Yes, Bitcoin Is Useless. Many Will Say: So What? Cryptocurrencies may ultimately have no intrinsic value, but humanity’s love for useless things means they aren’t necessarily worth nothing
Jon Sindreu – WSJ
The chances that bitcoin will ever become real money or make a productive contribution to society seem close to nil. Then again, the same is true for so many things in life. On Monday, the price of bitcoin found some footing after a turbulent weekend, rising to almost $37,000—still a painful 37% drop from the start of the month. Investors are engaged in the rational but onerous task of figuring out whether virtual currencies are immensely valuable because they can threaten governments’ fiat money, or just worthless digital tokens.
/on.wsj.com/3bROmmJ

Chinese trade associations sound crypto investment warning
Investing.com
The China Internet Finance Association has signed a joint statement with the China Banking Association and China Payment and Clearing Association, warning the public about the risks of investing in cryptocurrencies.
/bit.ly/3hWjXqW

Cryptocurrency holders take on central banks at their peril; The Fed, ECB and Bank of England are scathing about the speculative risks of modish digital tokens
Katie Martin – FT
Take it from someone frequently on the receiving end of their tweets and emails: cryptocurrency fanatics are often of a passionate and paranoid persuasion. Some people have jumped into this asset class, or currency, or whatever you want to call it, just for fun. For others, it is a moonshot to make some money, often successfully. It is a hobby, a side-hustle. But for the true believers, crypto is a way of life.
/on.ft.com/3hPcOJe

Convicted Libor trader Tom Hayes to join private spook firm; Former UBS and Citigroup employee hired as corporate spy six months after leaving prison
Kate Beioley – FT
Tom Hayes, the former UBS and Citigroup trader convicted of a conspiracy to rig the Libor benchmark, has joined a corporate intelligence agency run by former Black Cube operative Seth Freedman.
/on.ft.com/3fJiNwf

Asian Americans at Wall Street’s biggest banks say silence is no longer an option
Hugh Son – CNBC
A year after the pandemic began in New York City, something snapped in Alex Chi. The 48-year-old Goldman Sachs banker had been inundated with articles and video clips of horrifying seemingly random attacks on Asian Americans in his home town. Then, in late March, eight people were gunned down in the Atlanta area — most of them immigrants from Korea and China — and Chi could stand it no longer.
/yhoo.it/3bLMlbp

Half of traditional hedge funds considering crypto investments, report finds; Report by AIMA, PWC and Elwood AM found that 47% of traditional hedge funds were investing or considering investing in cryptocurrencies.
Annabel Smith – The Trade
Just under half of traditional hedge fund managers are investing or considering investing in cryptocurrencies, a report by the Alternative Investment Management Association (AIMA) has found. The research, conducted in partnership with PWC and Elwood Asset Management, surveyed 39 hedge funds in the first quarter this year with a total of $180 billion in assets under management.
/bit.ly/3ukHQLn

Wellness Exchange

Pfizer, Moderna Pledge More Covid Vaccines for Poorer Countries
Fergal O’Brien – Bloomberg
Italy’s Draghi says governments must cooperate on healthcare; Pledges come as G-20 tries to boost healthcare cooperation
Pfizer Inc. and other drugmakers pledged to get more Covid 19 vaccines to poorer countries over the next 18 months, ramping up efforts to battle the coronavirus pandemic. The pledges from Pfizer, Moderna Inc. and Johnson & Johnson were made at a summit of Group of 20 nations on Friday. At the event, leaders will pledge to prioritize multilateralism to tackle the virus and prevent future outbreaks, a bid to turn the page on damaging tensions in the response to the pandemic.
/bloom.bg/2T7Xk8S

Long Slide Looms for World Population, With Sweeping Ramifications; Fewer babies’ cries. More abandoned homes. Toward the middle of this century, as deaths start to exceed births, changes will come that are hard to fathom.
Damien Cave, Emma Bubola and Choe Sang-Hun – NY Times
All over the world, countries are confronting population stagnation and a fertility bust, a dizzying reversal unmatched in recorded history that will make first-birthday parties a rarer sight than funerals, and empty homes a common eyesore.
/nyti.ms/2Ta30ix

India’s back office business faces a reckoning from Covid-19; Brutal second wave forces companies to provide care for staff as healthcare system teeters
Benjamin Parkin and Richard Waters – FT
India’s catastrophic second Covid-19 wave has become the ultimate real-life stress test for the global services industry, as companies work to keep back-office operations running amid widespread infections and an overwhelmed healthcare system.
/on.ft.com/2TfSLJG

England’s lockdown lifting likely to go ahead on June 21, say ministers; Level of vaccination viewed as crucial to keeping coronavirus strains in check
Sebastian Payne – FT
Senior UK ministers say they are increasingly confident that the June 21 easing of all lockdown restrictions in England will go ahead as planned after research suggested Covid-19 vaccines were effective against new strains.
/on.ft.com/3bPinDL

Vaccines work well against variant found in India, data show; Two jabs of BioNTech/Pfizer or Oxford/AstraZeneca offer good protection against B.1.617.2 strain, research suggests
John Burn-Murdoch and Sarah Neville – FT
Two doses of either the BioNTech/Pfizer or Oxford/AstraZeneca Covid-19 vaccines offer good protection against symptomatic infection from the coronavirus variant first identified in India, according to new UK data, indicating minimal reduction in efficacy compared to the so-called Kent variant.
/on.ft.com/3bKxH4r

G-20 Leaders Pledge Money, Vaccines to Counter Covid Tension
Alessandro Speciale and John Follain – Bloomberg
Italy’s Draghi says international cooperation is vital; U.S., China and the EU offer assistance for poorer countries
Group of 20 leaders including China and the U.S. called for greater global cooperation to defeat the coronavirus pandemic and prevent future outbreaks, seeking to turn the page on damaging tensions over how to tackle the disease.
/bloom.bg/3yz3ZJg

Vietnam Looks to Make Sputnik V Vaccine This Year: VnExpress
John Boudreau – Bloomberg
A Vietnam health ministry research center is negotiating with the developer of the Sputnik V vaccine to obtain its technology for production in the Southeast Asian country this year, VnExpress reported.
/bloom.bg/2RG1NPH

How the Covid Variant From India Exposed U.K.’s Weaknesses; Boris Johnson’s team may have delayed closing the border to travelers from India because of political and logistical concerns.
Kitty Donaldson, Emily Ashton, and Tim Ross – Bloomberg
Prime Minister Boris Johnson was slow to ban travel to India, even as cases of a dangerous Covid-19 variant in the world’s second most populous country surged. Scientists and advisers now fear the U.K. has exposed its vulnerability, and the question is if the government machine can move fast enough when the next strain arrives.
/bloom.bg/3fK0U0i

Malaysia Stocks Rise as Full Lockdown Avoided to Allow Recovery
Anisah Shukry and Tien Hin Chan – Bloomberg
Up to 7 million workers will work from home under new curbs; Trade Ministry to detail further guidelines for the economy
Malaysia’s stocks climbed from a three-month low after the government resisted imposing a full lockdown to avoid derailing a nascent recovery in the economy.
/bloom.bg/3yAVcXd

Germany Imposes U.K. Travel Curbs Due to Variant From India
Arne Delfs – Bloomberg
Travelers from Britain will be forced into two-week quarantine; Decision could also affect German attendance at G-7 summit
Germany will impose fresh restrictions on travelers from the U.K. starting on Sunday due to the rapid spread in Britain of the coronavirus strain first identified in India. Travelers from the U.K. will have to spend two weeks in quarantine upon arrival in Germany even if they test negative for the virus, according to the foreign ministry. In addition, transport companies will only be allowed to bring German citizens back into the country.
/bloom.bg/3fFVovP

Singapore Approves Covid Breath Test With One-Minute Result
Derek Wallbank – WSJ
A breath test designed to detect Covid-19 and give accurate results within one minute has been approved for use in Singapore, the National University of Singapore said in a statement.
/bloom.bg/3wzZwo9

Vaccines versus variants: will the world ever reach herd immunity? New strains and persistent hesitancy to take jabs are complicating government plans to reopen economies
Hannah Kuchler and Clive Cookson – FT
In Ohio, anyone getting a Covid vaccine could win one of five lottery prizes of $1m. New Jersey residents getting the jab are being offered free beers. One site in New York boasted an even more unlikely incentive: a courtesy marijuana joint.
/on.ft.com/3hOSMhL

The short shelf life of pandemic national success stories; Quick-sketch caricatures have never been useful tools for forecasting the rise and fall of nations
Ruchir Sharma – FT
The oft-asked question — which nations are winning the fight against the pandemic — now has only one coherent answer. It depends on the month. The virus has repeatedly made losers of winners, and vice versa.
/on.ft.com/3oJ2UKx

Exchanges, OTC and Clearing

Former ICE CFO Looks Back on Dozens of Deals Made During His Tenure; Scott Hill retired last week after more than 14 years as finance chief of the marketplace operator
Nina Trentmann – WSJ
Scott Hill helped lead dozens of acquisitions during his more than 14 years as finance chief of Intercontinental Exchange Inc. as the marketplace operator spent over $30 billion on expanding its portfolio. Companies acquired by ICE during under his tenure include the New York Stock Exchange in 2012, market-data firm Interactive Data Corp. in 2015 and mortgage-processing firm Ellie Mae Inc. last year.
/on.wsj.com/3wtSXU1

What can HKEx’s Synapse learn from watching ASX’s game of Chess? HKEx is looking to leverage smart contracts for its Synapse platform. Sell-side participants are generally positive as to the reasoning behind the build, but observers warn the ambitious project still has challenges to overcome.
Wei-Shen Wong – Waters Technology
The Australian Securities Exchange (ASX) has recently made a name for itself for its ambitious plan to replace its Chess equities clearing and settlement system with a distributed ledger technology (DLT) platform developed by Digital Asset. But since that decision, the exchange has needed to delay its original go-live implementation timeline multiple times. After conducting a re-planning, re-sizing, and review of the project, ASX now aims to have Chess go-live in April 2023. The new timeline
/bit.ly/3u3qEKx

Salary of Hong Kong Bourse’s New Chief Tops His Predecessor’s
Annie Lee – Bloomberg
Basic salary of Nicolas Aguzin to be $1.3 million a year; New CEO will also be awarded 211,756 of shares in HKEX
Nicolas Aguzin – Bloomberg
Hong Kong’s new stock exchange boss will earn a higher basic salary than his predecessor when he takes over on Monday. Nicolas Aguzin, incoming chief executive of Hong Kong Exchanges & Clearing Ltd., will receive a basic salary of HK$10 million ($1.3 million) a year, according to a statement Friday. That is 7.4% higher than his predecessor, Charles Li, who was paid HK$9.315 million.
/bloom.bg/3wtrOQX

LCH appoints former RBS FX global trading head to lead ForexClear; New head of ForexClear has previously worked in FX trading at major institutions including RBS where he was global head of FX trading until 2016.
Annabel Smith – The Trade
London-based clearing house LCH has appointed a former global head of foreign exchange trading at RBS to head up its ForexClear business, effective from June 1. James Pearson joins LCH as head of ForexClear in London where he will be responsible for the trading risk, daily management and strategic direction of its FX business, reporting to CEO of LCH, Isabelle Girolami.
/bit.ly/3ukHNzb

Morgan Stanley joins ICE Futures Abu Dhabi as clearing member; ICE Futures Abu Dhabi now has 29 exchange members and 22 clearing members following the addition of Morgan Stanley.
Annabel Smith – The Trade
US investment bank Morgan Stanley has become the latest institution to join the ICE Futures Abu Dhabi (IFAD) exchange as both an exchange and clearing member. With the addition of the investment bank, IFAD now has 29 exchange members and 22 clearing members including Citigroup Global Markets, Banco Santander, BNP Paribas, Goldman Sachs, HSBC, JP Morgan Securities, Societe Generale, RJ O’Brien, ABN Amaro, and Mizuho Securities.
/bit.ly/349Idhx

LCH appoints James Pearson as Head of ForexClear
LCH
Responsible for LCH’s FX derivatives clearing service;James to oversee continued growth at ForexClear
LCH, a leading global clearing house, today announced that it has appointed James Pearson as Head of ForexClear, effective 1 June 2021. Based in London, James will be responsible for LCH’s FX derivatives clearing service, reporting to Isabelle Girolami, CEO, LCH Ltd.
/bit.ly/3ud6bmp

Notice of Summary Action
CME Group
MEMBER: GOLDMAN SACHS & CO. LLC
RULE VIOLATION: 536. RECORDKEEPING REQUIREMENTS FOR PIT, GLOBEX AND NEGOTIATED TRADES
F. CTR Enforcement Program and Sanction Schedule
The Market Regulation Department will conduct audits of clearing members in order to verify the accurate recording and submitting of required audit trail information.
PENALTY: Pursuant to the Rule 536.F sanction schedule, Goldman Sachs & Co. LLC was issued a $2,500 fine on May 19, 2021 for its first violation of Rule 536.F. within 24 months.
/bit.ly/2SqgxSA

Product Modification Summary: Various Amendments to the S&P 500 Stock Price Index Futures, E-mini S&P 500 Stock Price Index Futures and Related Options Contracts – Effective June 07, 2021
CME Group
Various Amendments to the S&P 500 Stock Price Index Futures, E-mini S&P 500 Stock Price Index Futures and Related Options Contracts and Addition of Block Trade Eligibility to Options on E-mini S&P 500 Stock Price Index Futures.
/bit.ly/2SgLI2R

Product Modification Summary: Amendments to the Strike Price Increments for Five (5) WTI Crude Oil Weekly Options and Five (5) Brent Last Day Financial Weekly Options
CME Group
Amendments to the Strike Price Increments for Five (5) WTI Crude Oil Weekly Options and Five (5) Brent Last Day Financial Weekly Options
/bit.ly/3ffmECt

Exchange for Related Positions
CME Group
Effective on trade date Monday, June 7, 2021, and pending all relevant CFTC regulatory review periods, this Market Regulation Advisory Notice will supersede CME Group Market Regulation Advisory Notice RA2016-5 from October 26, 2020. It is being issued to advise the marketplace that effective on June 7, 2021, CME full-sized Standard & Poor’s 500 Stock Price Index Options will no longer be eligible as part of an Exchange of Option for Option (“EOO”) transaction. CME E-mini Standard & Poor’s 500 Stock Price Index Options will remain eligible as the Exchange options component of an EOO.
/bit.ly/2SaGRjI

Amendments to Rule 60006.A. (“FX Product Submission Methods”) to Disable CME ClearPort GUI for Over-the-Counter (“OTC”) Foreign Exchange (“FX”) Contracts
CME Group
/bit.ly/2QMbawR

REVISED – June 2021 Delivery Date Memo
CME Group
Revised Important dates and events through the month relevant to delivery and clearing procedures.
/bit.ly/3oCJczV

CME Group to Launch Bloomberg Short-Term Bank Yield Index (BSBY) Futures in Q3
PR Newswire
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it will launch interest rate futures based on the Bloomberg Short-Term Bank Yield Index (BSBY). These new contracts will be available for trading in Q3, with OTC clearing of BSBY swaps introduced in Q4, pending regulatory review. “In response to client demand for credit sensitive instruments, we are pleased to introduce BSBY futures to offer both price discovery and risk hedging for the BSBY Index,” said Sean Tully, Global Head of Financial and OTC Products at CME Group.
/prn.to/3hPHl9U

Fintech

World’s Supply of Chips Is in Danger Unless Taiwan Gets Vaccines; A Covid-19 outbreak is leaving Taiwan squeezed between the U.S. and China, and on the back foot on several fronts.
Alan Crawford, Debby Wu and Iain Marlow – Bloomberg
Back in February, as the world was beating a path to Taiwan’s door for help to tackle a shortage of semiconductors, the health minister got into a scrap with China over Covid-19 vaccines.mBeijing, he suggested, had used political pressure to derail Taiwan’s plan to purchase five million doses directly from Germany’s BioNTech SE, rather than via a Chinese company which held the rights to develop and market the BioNTech-Pfizer Inc. vaccine across China, Hong Kong, Macau and Taiwan. Foreign Ministry spokeswoman Hua Chunying retorted that Taipei “should stop hyping up political issues under the pretext of vaccine issues.”
/bloom.bg/3yBZZrq

Australian Fintech Firm mx51 Raises $25 Million
Bilal Jafar – Finance Magnates
Australia’s fintech startup, mx51 announced that the company has secured $25 million in the Series A funding round to accelerate its expansion. According to an official announcement, the recent funding round was led by Acorn Capital, Artesian, Commencer Capital and Mastercard. In addition, the company is planning to introduce new features to compete with other payment platforms in the country.
/bit.ly/3fIw3RU

epay announces new partnership with Revolut; The UK global payments processor epay, will provide the challenger bank with prepaid products and help it expand its customer offerings
Joanna England – Fintech Magazine
epay, the UK-based business segment of the North American group Euronet Worldwide Inc, has signed up to be the global partner for the challenger bank, Revolut. The full service payment provider, which was founded in 1999, will offer its unique range of products via Revolut’s platform in 36 countries, through an API integration into the challenger bank’s three apps, Junior, Consumer and Business. Currently, epay provides a range of tailored electronic payment, cash collection solutions including POS systems integration, a full settlement and reporting service and full marketing and distribution service support.
/bit.ly/2SmNZcO

Zeta becomes a unicorn with $250 million SoftBank-led funding
Manish Singh – TechCrunch
Zeta, a startup that helps banks and fintech firms launch products, is the newest to attain the coveted unicorn status after closing a new financing round. The banking tech firm, co-founded by veteran Indian entrepreneur Bhavin Turakhia, said on Monday it has raised $250 million in its Series D round led by SoftBank Vision Fund 2, confirming a TechCrunch report from mid-April. Existing investor Sodexo also participated in the round. The new round valued the startup, which has offices in Bangalore and Dubai, at $1.45 billion. That’s up from the $300 million valuation that Zeta reported in the second half of 2019.
/tcrn.ch/3ffWIGU

Nigeria’s Mono raises millions to power the internet economy in Africa
Tage Kene-Okafor – TechCrunch
In February, Nigerian fintech startup Mono announced its acceptance into Y Combinator and, at the time, it wanted to build the Plaid for Africa. Three months later, the startup has a different mission: to power the internet economy in Africa and has closed $2 million in seed investment towards that goal. The investment comes nine months after the company raised $500,000 in pre-seed last September and two months after receiving $125,000 from YC. Mono’s total investment moves up to $2.625 million, and investors in this new round include Entrée Capital (one of the investors in Kuda’s seed round), Kuda co-founder and CEO Babs Ogundeyi; Gbenga Oyebode, partner at TCVP; and Eric Idiahi, co-founder and partner at Verod Capital. New York but Africa-based VC Lateral Capital also invested after taking part in Mono’s pre-seed.
/tcrn.ch/3ffnsat

Improving Your Communications With Customers: Insights From Broadridge, The Fintech Industry’s ‘Back Office’
Micah Solomon – Forbes
Have you scratched your head from time to time at how some communications sent en masse to consumers (from credit card companies, utilities, fintech, wealth management, health insurance, and on and on) come off as redundant and waterlogged while others can appear streamlined, even sensible? Why some corporate customer communications are immediately in-one-ear-and-out-the-other, while others get right to what you really want to know (for example: in the case of a statement from your retirement plan, how your investments are performing in relation to your goals?
/bit.ly/3fhQeY6

Cybersecurity

Ireland Says ‘Real Risk’ Hackers May Release Stolen Data
Dara Doyle – Bloomberg
Ireland’s government warned of a “real risk” that hackers will release sensitive medical information, as it vowed again not to pay a ransom. Hackers have threatened to release private health records on Monday after infiltrating the system last week, in the latest cyberattack by an international crime gang. “There’s no great evidence yet of any mass dumping of data,” as yet, Irish PM Micheal Martin told RTE Radio on Monday. The decryption key the hackers provided is “helping” the health service recover its IT systems, he added.
/bloom.bg/2T9aEtr

Cybersecurity is Now Essential to Corporate Strategy. Here’s How to Bring the Two Together.
Joseph Melika – Entrepreneur
When Covid-19 forced the rapid transition to a remote workforce, it permanently shifted the role that the security teams have in an organization. Whereas previously security teams were more a back office function, today security is the foundation of the business and brand. This is true regardless of the business size or industry sector. There are several reasons for this shift. The first is the move to an almost entirely remote life. Traditionally, security teams were more focused on protecting their walled garden. Now they are dealing with a much larger and unpredictable attack surface. Users are working from home, possibly using their own devices. This is true regardless of the business size or industry sector.
/bit.ly/3fbjuQ1

3 Ways Cybersecurity is Uniquely Positioned to Provide a Pathway Into the Tech Industry
Joseph Melika – Entrepreneur
Breaking into the tech sector remains phenomenally difficult for most of the world. While talent is equally distributed, the pathways to opportunities are most certainly not, evidenced by the lack of cultural, geographic, socioeconomic, gender and racial diversity in the industry. At a time when the opportunity and income inequality gap continues to widen, cybersecurity is an area of the tech economy that is growing rapidly, pays well and offers an underappreciated pathway into highly skilled and paid work that is relatively accessible for anyone.
/bit.ly/3wvc144

Despite industry best practices, there will always be security breaches
Ira Winkler – The Hill
The recent article by Allen Gwinn demonstrates a gross lack of understanding of the fundamentals of cybersecurity. The title specifically refers to “industry best practices” which Gwinn defines with a link not to a cybersecurity company but to an article on a random computer services provider’s website not written by an expert. If Gwinn has the 40 years of expertise that he claims in all things cyber, he would be aware of the most commonly accepted cybersecurity industry best practices, which include minimally the Center for Internet Security Controls (CIS) and the National Institute of Standards and Technology Cybersecurity Framework (CSF). These, and many others created around the world by respected bodies, are peer reviewed and well accepted.
/bit.ly/3vgbN0t

The Colonial pipeline ransomware hackers had a secret weapon: self-promoting cybersecurity firms
Renee Dudley, Daniel Golden – Technology Review
On January 11, antivirus company Bitdefender said it was “happy to announce” a startling breakthrough. It had found a flaw in the ransomware that a gang known as DarkSide was using to freeze computer networks of dozens of businesses in the US and Europe. Companies facing demands from DarkSide could download a free tool from Bitdefender and avoid paying millions of dollars in ransom to the hackers. But Bitdefender wasn’t the first to identify this flaw. Two other researchers, Fabian Wosar and Michael Gillespie, had noticed it the month before and had begun discreetly looking for victims to help. By publicizing its tool, Bitdefender alerted DarkSide to the lapse, which involved reusing the same digital keys to lock and unlock multiple victims. The next day, DarkSide declared that it had repaired the problem, and that “new companies have nothing to hope for.”
/bit.ly/3yxjt0p

Why Live Patching Is A Critical Part Of Vulnerability Management
Igor Seletskiy – Forbes
There is no single, easy route to comprehensively mitigate against cyber threats. No such mechanism exists. Instead, successful threat mitigation relies on several important cybersecurity building blocks and an army of tools. Here at TuxCare, we rely on a mix of tools to harden, protect and respond. One of our most important cybersecurity building blocks is vulnerability management. It includes important tools such as penetration testing, vulnerability management platforms and the patching that eradicates vulnerabilities. But there is a key tool in vulnerability management that sometimes gets ignored.
/bit.ly/3ffkano

Cryptocurrencies

Bitcoin bros mock Paul Krugman for comparing the crypto craze to ‘a natural Ponzi scheme’
Nicole Lyn Pesce – MarketWatch
“Twelve years on, cryptocurrencies play almost no role in normal economic activity.”
That was Nobel Prize-winning economist and New York Times columnist Paul Krugman questioning crypto’s tangible value in a recent op-ed piece. The self-described “crypto skeptic” writes that while he often uses Venmo to split checks and buy groceries, and the PayPal-owned PYPL peer-to-peer payment service launched when bitcoin BTCUSD did in 2009, he still hasn’t seen bitcoin, Dogecoin DOGEUSD or other digital tokens become as readily adopted for daily transactions by the masses. And this makes him wonder what the digital assets are really worth.
/on.mktw.net/343C326

As bitcoin lurches, Wall Street plots its way into cryptoland; To work out the fate of crypto-investing, watch what the banks do next
The Economist
Crypto buffs have had a punishing week. On May 13th Tether, which issues a “stablecoin” widely used to facilitate bitcoin trading, said that just 2.9% of its $58bn-worth of coins is backed by cash reserves, feeding doubts about its dollar peg. Elon Musk, Tesla’s boss, tweeted that the electric-car maker would not after all accept payments in bitcoin. Then on May 18th China warned financial firms against servicing cryptocurrencies. The price of bitcoin tumbled to $30,000, less than half its record high in April, before stabilising at around $39,000.
/econ.st/3oC1Bgp

CNA Financial paid $40 million in ransom after March cyberattack;
Kartikay Mehrotra and William Turton – Bloomberg
Payment bigger than previously disclosed ransoms, experts say; Malware tied to Russian cybergang sanctioned by U.S. in 2019
CNA Financial Corp., among the largest insurance companies in the U.S., paid $40 million in late March to regain control of its network after a ransomware attack, according to people with knowledge of the attack.
/bloom.bg/3f7Zuhl

Huobi Stops Crypto Miner Hosting in China, Coindesk Says
Sebastian Tong – Bloomberg
Cryptocurrency exchange Huobi has stopped its miner hosting services on mainland China and is scaling back services and products in some markets following warnings from the Chinese government that it would crack down on cryptocurrency mining, Coindesk reported, citing a company statement.
/bloom.bg/2TgAcoH

Bitcoiners Waving Eco-Friendly Bona Fides Bet on Green Premium
Olga Kharif and Josh Saul – Bloomberg
A slew of crypto companies suddenly emphasize renewable use; Green push began before Musk’s tweet roiled token prices
Bitcoin’s environmental dark side has been glossed over for years. Elon Musk changed that with a tweet. And with it, the Tesla Inc. chief executive officer threw open what some see as a new market opportunity for crypto “miners” brandishing their eco-friendly credentials. Some are working to sell what they are calling green Bitcoin — coins whose transactions are verified on the blockchain by computers powered only by renewable energy. The bet is that they will be able to command a premium of up to 10%.
/bloom.bg/2Ta4Tf7

Ethereum Closes In on Long-Sought Fix to Cut Energy Use Over 99%; Shift could boost Ether as Bitcoin’s environmental rap worsens; ETH’s 45,000 gigawatt usage may fall to 1/10,000th of that.
Matthew Leising – Bloomberg
Users and developers of the world’s most-used blockchain have been wrangling with its carbon-footprint problem for as long as it’s been around. Now, they say, several recent breakthroughs will finally enable them to drastically cut energy use in a year or less.
/bloom.bg/3yyrAK5

Two Ways This Crypto Crash Looks Just Like the Last Peak
Joe Weisenthal – Bloomberg
Bitcoin, Ethereum, and other cryptocurrencies have obviously had a horrible week. And while it’s foolish to try predicting where things go next, there are two big similarities between this move and the one we saw at the end of 2017, the last time Bitcoin made its peak.
/bloom.bg/3bPgbfe

Musk Tweets He Supports Crypto in Battle Against Fiat Currencies
Tiago Ramos Alfaro – Bloomberg
Tesla chief’s comments boost price of Bitcoin past $38,000; Musk has previously made similar remarks about fiat on Twitter
Elon Musk is again tweeting about technology and cryptocurrencies, and this time he’s clear on where his support is at. In a thread started by Musk himself comparing magic to technology where someone asked what he thought about people “who are angry at you because of crypto,” the Tesla Inc. CEO tweeted that the “true battle is between fiat & crypto. On balance, I support the latter.”
/bloom.bg/3wqmopZ

A New Report From JPMorgan Shows Just How Big Tether Has Become
Joe Weisenthal – Bloomberg
There’s probably no coin in the crypto world that’s more scrutinized than Tether. It’s a so-called stablecoin, which trades on a public blockchain and has maintained a 1-to-1 peg against the dollar, based on assets that the company holds in reserves. You can think of it as a little bit like a money-market fund meets bearer asset. Earlier this week it published a chart of the composition of its holdings, showing the majority of its assets to be in cash and cash equivalents, the bulk of which is commercial paper.
/yhoo.it/3bNds5W

Chinese bitcoin miners brace for impact amid regulatory uncertainty
Wolfie Zhao – The Block
A comment made in China’s State Council meeting about cracking down on bitcoin trading and mining activities has sent shockwaves to local bitcoin miners over the weekend. While the regulatory hammer has yet to drop officially, the suspension is already driving some bitcoin miners into panic mode. While some have started selling their coins, others are turning to overseas mining facilities. “In the past 48 hours, Chinese miners already started to accelerate migrating process to other countries,” tweeted Mustafa Yilham, who leads the overseas business at Bixin, a long-time bitcoin mining firm in China. “There will also be large quantities of Bitcoin mining machines available for sales.”
/bit.ly/3oKDVq3

CoinShares Announces Record-Setting 2021 First Quarter Financial Results; Company delivers strong top- and bottom-line results; Q1 results exceed Full Year 2020 results as demand continues to grow for its suite of digital asset products and services
Coinshares
CoinShares International Limited (Nasdaq First North Growth Market: CS) (“CoinShares”, the “Group” or the “Company”) today announced preliminary financial results for its first quarter ended 31 March 2021. The full report, which is linked in this press release, can also be found on the CoinShares Investor Relations site.
/bit.ly/3wA7AFr

Politics

Biden Tax Enforcement Plan Includes Crypto Reporting Crackdown
Sarah Hansen – Forbes
TOPLINE The Treasury Department on Thursday outlined its plan to raise $700 billion over the next decade to help fund President Biden’s ambitious American Families Plan through new tax enforcement measures that include cracking down on reporting in the red-hot crypto market.
/bit.ly/3uaTjNw

The US Treasury wants every crypto transfer larger than $10,000 to be reported to the IRS
Matthew Fox – Insider
The Treasury Department detailed plans to have any cryptocurrency transfers of at least $10,000 to be reported to the Internal Revenue Service in a report on Thursday. Bitcoin pared its gains and fell by as much as 6% in afternoon trading following the release of the report, adding to the cryptocurrency’s volatile week of trading in which it fell more than 30% in a day.
/bit.ly/3bKLI22

A good chance to reform global corporate taxation; The world must engage with Joe Biden’s proposal of a minimum tax
The editorial board – FT
The Biden administration has proved to be imaginative and bold in many ways. Yet, from the point of view of its leading partners, few proposals are more significant than that for a global minimum rate of effective corporation tax. This should open the way to a resolution of a number of issues that are as important as they are technically complex. Its partners should urgently seize this opportunity to agree to reform.
/on.ft.com/3hLS7h5

Entrepreneurs can help the cause of economic justice; Empowering women and people of colour to build companies will strengthen minority communities
Damien Dwin – FT
The murder of George Floyd, and the ensuing protests, gave new urgency to the US debate about racial injustice. We have made some progress — racial equity is now a goal in capitols and boardrooms, and we’ve seen some examples of police reform.
/on.ft.com/3bP3FMU

US proposes global corporate tax rate of at least 15% in international talks; Biden administration backs down from original target of 21% as it seeks support for plan
Aime Williams, James Politi and Mehreen Khan – FT
The Biden administration has signalled it will accept a 15 per cent global minimum tax on large multinational companies, in international talks aimed at increasing revenues from corporations that operate across borders.
/on.ft.com/3fGSDdF

Member countries push back against IEA’s net zero road map; Japan and Australia will continue fossil fuel investment — against watchdog’s emissions advice
FT reporters
Japan and Australia have disputed the findings of the International Energy Agency’s report on reaching net zero emissions by 2050, indicating they will continue fossil fuel investment despite the watchdog’s advice.
/on.ft.com/3wvdpE4

Congressman: ‘Most of my colleagues don’t have a deep understanding of cryptocurrencies’
Ben Werschkul – Yahoo Finance
With the incredible volatility in cryptocurrency markets in recent weeks, lawmakers might be watching the price moves like everyone else, but aren’t likely to act anytime soon, predicts one Representative.
/yhoo.it/3hOgxGN

Ex-Trump Official at Binance.US Faces Uproar Over Firm’s Sibling
Joe Light – Bloomberg
CEO says crypto firm is separate from embattled sister company; Binance Holdings faces scrutiny from several U.S. agencies
The first challenge for the new chief executive officer of Binance.US: combat the perception that his company is simply a stand-in for a sister crypto firm that’s under investigation by U.S. authorities.
/bloom.bg/2TeteR7

‘Woke capitalists’ provoke backlash from US conservatives; Some shareholder groups want chiefs to avoid issues such as racial justice and voting rights
Andrew Edgecliffe-Johnson – FT
Why, a shareholder asked at Goldman Sachs’ annual meeting last month, was the bank supporting Marxists against the capitalist policies that had made it such a powerhouse? Had its board been taken over by “the far-left woke mob”?
/on.ft.com/3fbhDL3

Upstart Peer-to-Peer Crypto Exchanges Take Aim at Coinbase; Decentralized markets such as Uniswap account for a growing share of cryptocurrency trading
Alexander Osipovich – WSJ
Coinbase Global Inc., COIN -3.88% which has made billions running cryptocurrency markets, is facing competition from a new breed of upstarts that look less like the New York Stock Exchange and more like Napster, the defunct music-sharing service.
/on.wsj.com/2QJBMhS

Regulation

Billionaire Mining Moguls Fight Fraud Cops in $99 Million Trial
Ellen Milligan – Bloomberg
ENRC accuses its former lawyer and the SFO of collusion; Suit stems from eight-year criminal probe into Kazakh firm
Billionaire mining tycoons said the U.K.’s fraud prosecutor colluded with their own “bullying” lawyer to leak confidential information and manufacture grounds for a criminal probe that’s dragged on for almost a decade. The 11-week London trial between Kazakh miner Eurasian Natural Resources Corp. and the Serious Fraud Office started Monday as the company seeks 70 million pounds ($99 million) from the prosecutor, and hundreds of millions more from its ex-lawyer Neil Gerrard for money it says it spent on legal fees for internal investigations and defense.
/bloom.bg/3yCDC5d

Leveraging Regulatory Cooperation to Protect America’s Investors
Commissioner Allison Lee – SEC
Remarks at the 2021 Section 19(d) Conference
Good afternoon. It’s a privilege to welcome you all to the annual Section 19(d) Conference. I want to start by commending NASAA and SEC staff for their work in putting this event together. And thanks to our colleagues from NASAA and FINRA for joining us and for being steadfast partners in our shared investor protection work. Our organizations work closely together throughout the year, but this conference represents an important opportunity for us to reflect on the policy and regulatory concerns that we share, and to deepen our cooperative partnership.
/bit.ly/2SoXdVP

Esma Closed For Public Holiday On Monday 24 May
ESMA
The European Securities and Markets Authority (ESMA) will be closed on Monday 24 May.
/bit.ly/2TfoYRp

Holiday Reminder Regarding FINRA Market Transparency Reporting Systems
MAY 24, 2021
In observance of Memorial Day, FINRA’s Market Transparency Reporting Systems will be closed on Monday, May 31, 2021. Affected applications include:
Alternative Display Facility (ADF)
OTC Bulletin Board (OTCBB)
Over-the-Counter Reporting Facility (ORF)
Trade Reporting and Compliance Engine (TRACE)
FINRA/Exchange Trade Reporting Facilities (TRFs)
/bit.ly/3wu6Wch

Investing and Trading

U.S. Home Prices Push to Record High, Slowing Pace of Purchases; Cost for existing properties up 19% in April from year earlier; supply of homes remains limited
Nicole Friedman – WSJ
America’s home-buying frenzy is cooling off for the first time since it heated up last year, as limited inventory and record high prices are excluding potential buyers.
/on.wsj.com/3woLZiQ

Inflation Forces Investors to Scramble for Solutions; Pickup in consumer-price momentum leaves tough choices in assets like gold, bitcoin
Sam Goldfarb – WSJ
Signs that inflation is picking up momentum are adding a new dimension to the post-lockdown market rally, forcing investors to make difficult decisions about how to protect their portfolios from the emerging threat.
/on.wsj.com/3fIrV4w

For Startup Leaders, SPACs Have Lost Their Allure; Entrepreneurs are increasingly wary about the money-raising tool after watching peers’ stocks slide and investors balk
Heather Somerville – WSJ
Startup chief executives are turning a cold shoulder to SPACs. Skeptical CEOs say they are turning down offers from special-purpose acquisition companies, deleting their solicitous emails and tapping the brakes on merger deals amid nosediving shares and disappointed investors.
/on.wsj.com/3hLlUGQ

Investor protests at US executive pay hit record high; Remuneration packages were rewritten during pandemic to make it easier for chief executives to earn millions
Patrick Temple-West and Andrew Edgecliffe-Johnson – FT
Investor protests over executive pay have hit an all-time high as ire deepens for packages that were rewritten during the pandemic to make it easier for chief executives to earn tens of millions of dollars.
/on.ft.com/3fG04ls

Soccer Fans Show Private Equity the Red Card; After the European Super League disaster, teams have hardened against corporate investors.
Alex Webb – Blomberg
The fallout from the ill-fated European Super League has been so comprehensive that even those who weren’t involved are suffering. The latest casualty is the private equity industry, which is now struggling to make headway on its grand plan of investing in sporting competitions.
/bloom.bg/2Tes9J3

Tesla Accused in Suit of Firing Worker to Cover Up Copper Theft
Dana Hull – Bloomberg
Millions of dollars worth of copper stolen, according to suit; Musk allegedly tried to keep information from shareholders
A former employee of Tesla Inc.’s massive battery plant outside of Reno, Nevada, claims in a lawsuit that he was fired from his $18,000-a-month job because the company, and Chief Executive Officer Elon Musk, wanted to cover up rampant theft of copper wire at the site.
/bloom.bg/3hOkaMZ

Iron ore prices drop after China warns of ‘excessive speculation’; Beijing increasingly concerned over record prices feeding through to rising inflation
Thomas Hale – FT
The price of steelmaking ingredient iron ore fell sharply after China signalled it would focus on efforts to cool soaring prices, warning of “excessive speculation” as concerns grow over rising inflation.
/on.ft.com/3wxBGcj

New index seeks to peer inside Lloyd’s of London insurance market; Gauge aims to place a value on marketplace as if it were a publicly listed entity
Ian Smith – FT
Two former Lloyd’s of London researchers have created a proxy stock index for the specialist insurance market, aiming to provide a rare glimpse into its performance for investors in the sector.
/on.ft.com/3oJRgPo

Issuance of Bundles of Risky Loans Jumps to 16-Year High; A recovering economy, demand from yield-starved investors boost collateralized loan obligations
Sebastian Pellejero – WSJ
Sales of securities backed by bundles of risky corporate loans are hitting records, lifted by a recovering economy and demand from yield-starved investors. Issuance of new collateralized loan obligations, which buy up loans to companies with junk credit ratings and package them into securities, totaled over $59 billion as of May 20, according to data from S&P Global Market Intelligence’s’ LCD. That is the highest ever figure for that period in data going back to 2005.
/on.wsj.com/3yzuU7X

Environmental, Social and Corporate Governance

Green Finance Goes Mainstream, Lining Up Trillions Behind Global Energy Transition; After years of intermittent excitement and fizzled expectations, environmental-oriented investing is no longer just a niche interest
Scott Patterson and Amrith Ramkumar – WSJ
Some of the world’s biggest companies and deepest-pocketed investors are lining up trillions of dollars to finance a shift away from fossil fuels. Assets in investment funds focused partly on the environment reached almost $2 trillion globally in the first quarter, more than tripling in three years. Investors are putting $3 billion a day into these funds. More than $5 billion worth of bonds and loans designed to fund green initiatives are now issued every day. The two biggest U.S. banks pledged $4 trillion in climate-oriented financing over the next decade.
/on.wsj.com/3wvc0gM

Nonprofit Seeks to Trap Carbon in the Financial Markets; Climate Vault buys up permits to pollute from the cap-and-trade market and then locks them away
Jenna Telesca – WSJ
Scientists have been trying to stash carbon emissions in rocks, soil and trees to slow the effects of climate change. Now an economics professor wants to trap carbon dioxide in the financial markets. Prof. Michael Greenstone’s plan takes advantage of the current cap-and-trade system around carbon emissions. It creates a secondary marketplace that allows organizations to offset their carbon emissions with pollution permits. The hope is that this would effectively reduce emissions and redirect capital to environmentally focused startups.
/on.wsj.com/2RxWnq1

G7 agrees to stop overseas funding of coal to limit global warming; Member states pledge to keep temperature rise to 1.5C relative to pre-industrial times
Leslie Hook and Camilla Hodgson – FT
G7 countries have vowed to stop all new financing for overseas coal projects by the end of this year, in a breakthrough in the global effort to fight climate change.
/on.ft.com/3wsFzPL

ExxonMobil faces ‘winds of change’ as climate battle reaches boardroom; Activist shareholders will try to green a titan of the oil industry in the most-watched proxy battle in years
Justin Jacobs and Derek Brower – FT
ExxonMobil, a titan of corporate America, faces a pivotal moment this week as restive shareholders have their say on what critics call an inadequate response to seismic shifts brought on by climate change.
/on.ft.com/3fewqEQ

China and US look to rekindle Paris bond to reach net zero; Negotiations resume after Trump hiatus but relations beyond climate issues remain rocky
Kiran Stacey – FT
Last month, two veteran diplomats met in Shanghai to renew a 20-year-old working relationship and hammer out the text of a sensitive joint communiqué.
/on.ft.com/3up4iU1

Young voices grow louder in company strategies and values; This age group is seen increasingly as driving sustainability — as decision makers and stakeholders
Amy Bell – FT
Matts Johansen spent much of his youth in Nor­way skateboarding: learning tricks and how to take risks. And they are skills he has brought to his role as chief executive of fishing and biotech company Aker BioMarine.
/on.ft.com/3vfKNyo

Clean energy stocks are as crowded as tech before dotcom crash, says MSCI; Flood of cash leaves renewable sector especially vulnerable to sharp market sell-off
Steve Johnson – FT
Ownership of renewable energy stocks is as crowded a trade as technology stocks were at the height of the 1999 dotcom boom, according to index provider MSCI.
/on.ft.com/3ugsKH5

Institutions

Soaring markets boost asset managers’ fortunes; Active funds receive welcome reprieve against industry challenges as stock indices head skyward
Michael Mackenzie – FT
A rising tide of earnings growth and robust investor inflows are a welcome change for many US asset managers, although it is seen as providing a temporary reprieve from strategic challenges.
/on.ft.com/2TbwTiA

Former Goldman Executive Sumit Rajpal Launches Buyout Firm; GrowthCurve Capital to focus on technology, healthcare, financial and information services
Miriam Gottfried – WSJ
Sumit Rajpal, former co-head of the merchant bank of Goldman Sachs Group Inc., GS 1.80% is launching a new private-equity firm targeting companies that are sitting on valuable troves of data that can be used more effectively to spur growth.
/on.wsj.com/3yxvaEv

High-profile hedge funds make bet on little-known oil company
Taconic Capital, CQS and Kite Lake Capital are among funds backing Noreco, with a market cap of £270m
Laurence Fletcher – FT
A cluster of high-profile hedge funds are hoping to turn round the fortunes of a beaten-down North Sea oil and gas firm in which they have built sizeable positions as energy prices soar.
/on.ft.com/3hN2z8f

Norway Wealth Fund to Oppose Electing Pouyanne as Total Director
Anton Wilen – Bloomberg
The Norwegian sovereign wealth fund will vote against the re-election of Total SE’s Patrick Pouyanne as director of the French energy company at this week’s annual general meeting.
/bloom.bg/3yBzouE

Bankers Return to the Office, Just Not on Mondays
Thomas Buckley and Jeremy Scott Diamond – Bloomberg
More than half of workers in London’s financial districts may now be traveling back into the office, the most since lockdown measures began easing in the U.K., according to rising sales of tuna baguettes and lattes. Just not on Mondays or Fridays.
/bloom.bg/3u2dddT

US hedge fund Schonfeld enters macro trading with ex-Citadel hire; Inflation fears help sustain investors’ interest in funds that make bets across currencies and bonds
Laurence Fletcher – FT
Hedge fund Schonfeld Strategic Advisors has hired the former head of macro strategies at Citadel and his team, after the pandemic transformed making bets on global bonds and currencies into one of the industry’s hottest areas.
/on.ft.com/2Ta9s9f

Regions

First Warning Sign in Global Commodity Boom Flashes in China
Bloomberg News
Economic expansion and credit impulse may have already peaked; Some prices still have to room to rise due to lagging effects
One pillar of this year’s blistering commodities rally — Chinese demand — may be teetering. Beijing aced its economic recovery from the pandemic largely via an expansion in credit and a state-aided construction boom that sucked in raw materials from across the planet. Already the world’s biggest consumer, China spent $150 billion on crude oil, iron ore and copper ore alone in the first four months of 2021. Resurgent demand and rising prices mean that’s $36 billion more than the same period last year.
/bloom.bg/3yxcdSh

Inside the Race to Avert Disaster at China’s Biggest ‘Bad Bank’; Huarong Asset Management poses a crucial test of China’s financial system.
Bloomberg News
It was past 9 p.m. on Financial Street in Beijing by the time the figure inside Huarong Tower there picked up an inkbrush and, with practiced strokes, began to set characters to paper. Another trying workday was ending for Wang Zhanfeng, corporate chairman, Chinese Communist Party functionary—and, less happily, replacement for a man who very recently had been executed.
/bloom.bg/3hPF0LO

Germany Suffers 300 Billion-Euro Hit From Covid Fallout, Research Group Says
Chris Reiter – Bloomberg
Damage represents about 9% of the country’s annual GDP; Losses and distortions will ‘take years’ to balance out
Germany has suffered a 300 billion-euro ($366 billion) blow from fallout linked to the coronavirus and the economic damage will take years to fix, according to research group IW Cologne.
/bloom.bg/3yzb4tt

‘Naive’ Credit-Market Fix in Sweden Dismays $130 Billion Manager
Rafaela Lindeberg – Bloomberg
Sweden’s latest proposal to reform its illiquid credit market is doomed to fail. That’s the verdict of the head of fixed-income at Alecta, one of the country’s biggest pension managers with $130 billion in assets. The Swedish corporate bond market came to a standstill during a pandemic-induced selloff early last year. More than 30 credit funds were forced to halt redemptions as they fought back the panic that ensued when investors realized just how illiquid their holdings really were.
/bloom.bg/3hPbTIA

China Braces for $1.3 Trillion Maturity Wall as Defaults Surge
Bloomberg News
Shift toward shorter-dated onshore issuance accelerates; ‘Everyone wants to limit their exposure,’ ING’s Pang Says
Even by the standards of a record-breaking global credit binge, China’s corporate bond tab stands out: $1.3 trillion of domestic debt payable in the next 12 months. That’s 30% more than what U.S. companies owe, 63% more than in all of Europe and enough money to buy Tesla Inc. twice over. What’s more, it’s all coming due at a time when Chinese borrowers are defaulting on onshore debt at an unprecedented pace.
/bloom.bg/2TfX4ok

Miscellaneous

Many Boy Scouts Victims Find Little Comfort as Bankruptcy Nears End; Chapter 11 odyssey has left some victims who stepped forward at the Boy Scouts’ request feeling angry and mistrustful of the process
Peg Brickley and Joseph De Avila – WSJ
When the Boy Scouts of America filed for bankruptcy last year and asked alleged victims of childhood sexual abuse to step forward, roughly 84,000 did, with many hoping the legal proceeding would help usher a financial settlement—and some closure to their ordeals.
/on.wsj.com/3vkJ5Me

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