How Rage, Boredom and WallStreetBets Created a New Generation of Young American Traders; European Union Approves New Financial Crime Agency

May 31, 2024

First Read

Hits & Takes
John Lothian & JLN Staff

Houda Harb, senior product manager at ASX, the Australian Securities Exchange, shared on LinkedIn the sad news that Maurice Farhart has passed away. Maurice was head of international sales at ASX and had been with the exchange since 2012. He also had a previous 10-year stint at the exchange from 1999 to 2009. He joined ASX in 1999 as its treasurer and “was then responsible for introduction of new interest rate futures products and customer management.”

The judge in the Langer vs. CME Group lawsuit issued an agreed order on May 29, 2024 in the Circuit Court of Cook County, Illinois, Chancery Division, in the case of Sheldon Langer, Ronald M. Yermack, and Lance R. Goldberg versus CME Group, Inc. and The Board of Trade of the City of Chicago, Inc. The court acknowledged the receipt of the parties’ briefs on the defendants’ motions for summary judgment, class decertification, and the exclusion of the plaintiffs’ expert testimony. The court will soon provide potential dates for a hearing on these motions. The parties have scheduled a mediation for July 11, 2024, and will submit a status report within one week of the mediation, either in writing or by scheduling a status hearing. Amid this order being issued, membership and lease prices at the CME Group have ticked up. One of the buyers of multiple memberships was longtime CBOT member George Hanley, who emailed me this statement about the lawsuit:

“I think a fair settlement could be a win/win for the exchange and the members to clean this up and put this behind us.”

Several major investors and proxy advisory firms, including Institutional Shareholder Services (ISS), Glass, Lewis & Co., the California State Teachers’ Retirement System (CalSTRS), and the Council of Institutional Investors (CII), are urging Tesla shareholders to vote against the compensation package for Elon Musk. This package could result in Musk earning up to $55.8 billion over the next decade without any performance conditions tied to the company’s financial performance.

The opposition to this package is based on concerns that it is excessive and lacks clear performance metrics to ensure that Musk’s interests are aligned with those of other shareholders. This vote can be seen as a test of how many Tesla shareholders are unwaveringly loyal to Musk, often referred to as “Musk fanatics.” The outcome will indicate whether these shareholders prioritize the company’s governance and financial performance over their admiration for Musk’s vision and leadership.

The vote is significant because it highlights the tension between the interests of Musk and those of other shareholders. If the package is approved, it may signal that a substantial number of shareholders are willing to overlook concerns about corporate governance and compensation practices as long as Musk remains at the helm. On the other hand, if the package is rejected, it could indicate that shareholders are becoming more critical of Musk’s compensation and are demanding greater accountability and alignment with the company’s overall performance.

Ultimately, the outcome of this vote will provide valuable insights into the dynamics between Tesla’s leadership, its shareholders, and the broader market. It will also serve as a benchmark for future compensation packages and corporate governance practices in the industry.

The International Swaps and Derivatives Association (ISDA) is hosting the Treasury Forum in New York on June 5, 2024, at etc.venues by Convene, 360 Madison Ave, 5th Floor. The event will feature keynote addresses by Gary Gensler, chair of the US Securities and Exchange Commission (SEC), and Michelle Neal, head of markets at the Federal Reserve Bank of New York. Other notable speakers include Jason Granet, chief investment officer at BNY Mellon, and Chris McAlister, managing director and global head of derivatives trading at Prudential Financial. The forum will cover sessions on SEC rules, the outlook for US Treasury markets, and the impact of Basel III. Full details and the agenda are available on ISDA’s website.

In May, CME E-Micro equity futures celebrated five years since they launched. They have achieved significant success, with over 2.6 billion cumulative contracts traded, including more than 1 billion contracts each for the Micro E-mini S&P 500 and Nasdaq-100. In 2024, the average daily volume (ADV) exceeded 2.4 million contracts. Remarkably, trading volume in the fifth year (May 2023-April 2024) surpassed 590 million contracts, more than double the first year’s volume of 214 million. Additionally, 24% of trading occurs outside U.S. hours, with participation from over 600 firms and 785,000 unique accounts in the past year, according to Paul Woolman, CME Group’s global head of equity index products, in a LinkedIn article from earlier this month.

The U.S. Department of Justice issued a press release reporting that two Estonian nationals, Sergei Potapenko and Ivan Turogin, were extradited to the United States to face charges in a $575 million cryptocurrency fraud and money laundering scheme. They were arrested in November 2022 and are accused of running a Ponzi scheme through their company, HashFlare, by selling fraudulent cryptocurrency mining contracts between 2015 and 2019. Customers from around the world invested over $550 million, but HashFlare allegedly lacked the mining equipment and conducted minimal mining activities. Potapenko and Turogin are also accused of raising $25 million for a virtual currency bank, Polybius, which never materialized. They allegedly used shell companies to launder proceeds, buying real estate and luxury cars. Both face multiple charges, each carrying a maximum penalty of 20 years in prison.

In another DOJ case, a disbarred California attorney, David Kagel, 85, pleaded guilty to operating a $9.5 million cryptocurrency Ponzi scheme. Kagel and his co-conspirators fraudulently induced victims to invest in programs promising high returns through AI trading bots. They falsely claimed Kagel held $11 million in Bitcoin as escrow to guarantee investments. Kagel admitted using victims’ funds for personal benefit and providing fraudulent letters to gain trust. Charged with conspiracy to commit commodity fraud, Kagel faces up to five years in prison, with sentencing scheduled for September 10. Co-conspirators David Gilbert Saffron and Vincent Anthony Mazzotta Jr. await trial in August for their roles in the scheme.

Today we have part two of our interview with former CQG President Joe Schroeter for The Path to Electronic Trading video series. Look for part three to be published on the www.johnlothiannews.com website later today. We also have an interview from our FIA Boca coverage with EPTA General Secretary Piebe Teeboom

Over the last eleven days, these are some of the new pages that have been added to MarketsWiki by Sarah Rudolph, Laura Oatney and myself: Piebe TeeboomâEURŽâEURŽ, Paul Woolman, Edward WishikâEURŽâEURŽ, John WillockâEURŽâEURŽ, Matthew Horisk, European Systemic Risk BoardâEURŽâEURŽ , Jean-Paul ServaisâEURŽâEURŽ, Romance scamsâEURŽ, Money MulesâEURŽâEURŽ, T+1âEURŽâEURŽ, Christopher Larkin, Marta PoleszczukâEURŽâEURŽ, Samantha DeZur, Bitcoin Pizza DayâEURŽâEURŽ, Tracy Rucker-WilsonâEURŽâEURŽ, Eric ChernâEURŽâEURŽ, Alex Albert, Isaac C. Hunt, Jr.âEURŽâEURŽ, London’s “Big Bang” of 1986âEURŽâEURŽ, Fixed commission system

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

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Our most read stories from our previous edition of JLN Options were:
Wall Street’s faster trade settlement sees some temporary bumps from Reuters.
Derivatives Trading in 2024: Opportunities and Data Scalability from FOW.
NYSE to Launch Cash-settled Index Options Tracking XBX from Finance Feeds.~JB

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

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Josef Schroeter Reflects on the CQG’s Transformation and the Evolution of Electronic Trading in Derivatives Markets
JohnLothianNews.com

Part Two of The Path to Electronic Trading Interview with Former CQG President
Elmhurst, IL (JLN) – Josef Schroeter, the former president of CQG, shares his insights on the company’s journey and the evolution of electronic trading in the derivatives markets.

Watch the video »

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European Principal Traders Gain Strategic Edge with New Advisors and Leadership, Aims to Enhance Market Transparency and Competitiveness
JohnLothianNews.com

Boca Raton, FL (JLN) – The FIA European Principal Traders Association has more punching power now, said its secretary general, Piebe Teeboom, after the traders group added two advisors to its team. Teeboom was interviewed by John Lothian news at the FIA International Futures Conference in Boca Raton, FL in March for the JLN Industry Leader video series sponsored by Wedbush.

Watch the video »

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Donald Trump Becomes First Former US President Guilty of Crimes; NY jury convicts Trump of all 34 counts of falsifying records; Sentencing set for July 11, four days before GOP convention
David Voreacos, Patricia Hurtado, and Erik Larson – Bloomberg
Donald Trump was found guilty in the first criminal trial of a former US president in the nation’s history, a verdict that could reshape the political landscape five months before Election Day. After two days of deliberation, a jury of 12 New Yorkers found Trump guilty of all 34 counts of falsifying business records to conceal a hush-money payment to a porn star, a conspiracy that prosecutors said deprived voters of vital information before the 2016 election.
/jlne.ws/453w6kG

***** You have to say one thing for Donald Trump, he continues to make history.~JJL

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How Trump’s Team Blew It
Renato Mariotti – The New York Times
The criminal trial of Donald Trump didn’t have to end this way. The prosecution’s case had flaws that couldn’t be wallpapered over even with weeks of testimony, over 200 exhibits and a polished and persuasive presentation by Alvin Bragg, the Manhattan district attorney, and his team. If Mr. Trump’s lawyers had played their cards right, they most likely would have ended up with a hung jury or a misdemeanor conviction. The defense lost a winnable case by adopting an ill-advised strategy that was right out of Mr. Trump’s playbook. For years, he denied everything and attacked anyone who dared to take him on. It worked – until this case.
/jlne.ws/3Vkg0zI

***** I think I would have hired Renato.~JJL

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Amazon Is Expanding US Drone Service After Regulator’s Nod
Lynn Doan – Bloomberg
Amazon.com Inc.’s Prime Air drone program has been cleared by US regulators to fly devices beyond the visual line of sight of pilots, increasing range and giving more customers access to the service. The approval, which means pilots won’t need to be able to see the drones with their own eyes, will allow Prime Air to scale deliveries in the US, Amazon said on its website Thursday. The company will expand the area it services with unmanned aerial vehicles in College Station, Texas, and will start integrating such shipments into its same-day delivery network this year.
/jlne.ws/3V5Ig7X

****** Interestingly, the new Amazon drones are small and shaped like cicadas.~JJL

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Thursday’s Top Three
Our top story Thursday was Joe Schroeter on Transforming CQG for the Digital Age: From Humble Beginnings to Market Leader, part one of a John Lothian News video interview with Schroeter for JLN’s Path to Electronic Trading series. Second was JJ Kinahan of IG North America Discusses Options Trading and Regulatory Changes, a JLN video interview from OIC 2024. And third was Cryptocurrency and Regulatory Landscape: Insights from Katten Attorneys, a JLN video interview from FIA Boca 2024.

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Lead Stories

How Rage, Boredom and WallStreetBets Created a New Generation of Young American Traders; An excerpt from Nathaniel Popper’s forthcoming The Trolls of Wall Street.
Nathaniel Popper – Bloomberg
By the end of 2011, Jaime Rogozinski, 29, had fallen into a rut. He spent his days in front of a computer screen in a windowless office at the Inter-American Development Bank in Washington, DC, where he had an unexciting job helping to maintain the endless databases of economic statistics that the executives used. After work, he took the train home to his bland condo in the suburbs that he hadn’t bothered to decorate. When he came in at night, he generally made a beeline for his bedroom, where he spent more hours in front of a different computer screen, scrolling through the dribs and drabs of other people’s lives on social media.
/jlne.ws/3wYvgsM

European Union Approves New Financial Crime Agency; The creation of a new Frankfurt-based watchdog comes as part of a major package of anti-money-laundering measures
Richard Vanderford – The Wall Street Journal
The European Union has approved the creation of a new anti-money-laundering watchdog, a move aimed at closing loopholes for illicit cash flows in the 27-member union. The Council of the European Union, a legislative body, said Thursday that it had adopted a package of anti-money-laundering measures, including one creating a Frankfurt-based authority to oversee the most high-risk financial entities. The agency, to be called the Authority for Anti-Money Laundering and Countering the Financing of Terrorism, or AMLA, will start its work in mid-2025, and will have direct supervisory powers over some finance companies, the Council said. The new agency will also be empowered to levy fines.
/jlne.ws/3R3TyIQ

The world needs a new financial architecture; A system established in the middle of the last century must be reinvented to deal with the risks of this one
Michael Krake – Financial Times
What sets humans apart from animals is that we tell stories to drive collective action. The international financial architecture is one of the central narratives that have shaped our economic thinking for the past eight decades. Its institutions, rules and central actors affect the way economies, governments, firms and individuals interact financially. This architecture can catapult economies on to the path of progress, just as it can leave entire regions stuck and marginalised. It is crucial, therefore, that we ask ourselves what the ultimate purpose of the IFA is, who its beneficiaries are and who is actually telling the story.
/jlne.ws/3R9inCX

London stock market bucks IPO drought with rush of follow-on deals; UK exchange the most active in Europe as investors offload stakes in secondary transactions
Ivan Levingston – Financial Times
Record highs for the FTSE 100 have spurred a flurry of share sales on UK stock markets, even as the number of new listings in London remains subdued. The volume of follow-on transactions, in which investors in listed companies offload significant chunks of their stock, has already reached $11.5bn this year, according to data from the London Stock Exchange Group. That is the fastest start to the year to late May since the boom year of 2021, and includes 110 such follow-on issuances.
/jlne.ws/3Kr7dpm

Nvidia now worth more than entire FTSE 100
James Warrington – The Telegraph
Nvidia is now worth more than the entire FTSE 100 as the US tech giant cashes in on the artificial intelligence (AI) boom. Shares in Nvidia have risen more than 13pc over the last five days after bosses this week revealed sales trebled over the last year amid bumper trading. The jump has taken Nvidia’s market valuation to more than $2.8 trillion (£2.2 trillion). That’s more than the £2.15 trillion valuation placed on all FTSE 100 companies combined.
/jlne.ws/3WYF3K1

Affirmation rates reach nearly 95% on double-settlement day at DTCC; Increase in affirmation rates despite double-settlement day which included T+2 trades from prior to 28 May.
Jonathan Watkins – The Trade
Affirmation rates came in at 94.55% on the second day of T+1 in the US, which also happened to be the double settlement day, whereby trades from prior to the switch were also settling on T+2. The rate increased from 92.76% on the first day of T+1. In addition, settlement fails appear not to have spiked yet, with the percentage still under 2% over the first two days of the new setup.
/jlne.ws/3wZGL3c

There is currency stress on the horizon; But this may not be obvious to investors who cut their teeth in the past decade
Gillian Tett – Financial Times
This summer, the yen is stoking market jitters. For as the US dollar has rallied amid expectations that the country’s rates will remain higher for longer, the Japanese currency has slid to Â¥160 a dollar – sparking furtive intervention. Thankfully, it has now stabilised around Â¥157. But as investors warily wait to see what the Tokyo government does next, they should also look west, towards Beijing.
/jlne.ws/455l7qQ

The New ChatGPT Offers a Lesson in A.I. Hype; OpenAI released GPT-4o, its latest chatbot technology, in a partly finished state. It has much to prove.
Brian X. Chen – The New York Times
When OpenAI unveiled the latest version of its immensely popular ChatGPT chatbot this month, it had a new voice possessing humanlike inflections and emotions. The online demonstration also featured the bot tutoring a child on solving a geometry problem. To my chagrin, the demo turned out to be essentially a bait and switch. The new ChatGPT was released without most of its new features, including the improved voice (which the company told me it postponed to make fixes). The ability to use a phone’s video camera to get real-time analysis of something like a math problem isn’t available yet, either.
/jlne.ws/3yGZYHz

OPEC to Meet Amid Signs of Waning Influence on Oil Prices; Major producers, including Saudi Arabia and Russia, are set to gather virtually on Sunday. They are expected to maintain production cuts amid signs of a softening market.
Stanley Reed – The New York Times
When officials from many of the world’s biggest oil-producing countries meet on Sunday, their menu of options for managing the market may be limited. Over the past two years, the group known as OPEC Plus has agreed to a succession of cuts to oil output. The oil producers’ assumption has been that these trims would be temporary, but they have begun to take on an air of permanence as prices have been relatively subdued. Any relaxation of cuts would risk sinking prices in what looks like a soft market, analysts say.
/jlne.ws/3yDXgm6

Market maker Citadel Securities lures Goldman Sachs veteran Jim Esposito to its ranks; Investment banker left Wall Street lender in January and will become president of high-frequency trading firm
Joshua Franklin and Harriet Agnew – Financial Times
Billionaire Ken Griffin’s Citadel Securities has hired former Goldman Sachs executive Jim Esposito as president of the high-frequency market-making firm, underscoring the ambitions of upstart trading businesses to rival traditional Wall Street banks. Esposito, known to colleagues as “Espo”, was one of Goldman’s most senior bankers until his surprising departure in January. The role of president is a new one at Citadel Securities, and a person familiar with the hire said Esposito’s primary role would be helping to grow the firm’s ranks of clients and partnerships.
/jlne.ws/3wZAQLw

Europe must act over vicious circle in gas supply; Strategy for transmission networks needs a rethink to avoid rising costs
Natasha Fielding – Financial Times
The European gas market has proved far more resilient to the immense political and security challenges it has faced since the full-scale invasion of Ukraine in 2022 than many would have guessed. It was only two years ago that giving up the Russian pipeline habit seemed nigh-on impossible. But the EU is not yet out of the woods: Maintaining Europe’s single gas market is likely to cost a lot more in the future. The EU system has already had to reconfigure itself around the loss of its largest source of supply. And as the transition from gas to greener alternatives gains pace, a shrinking pool of remaining customers will have to shoulder the cost of maintaining oversized gas grids.
/jlne.ws/4c0Xhi9

Jamie Dimon said no bank branch closed without his permission after rival boasted of stealing JPMorgan’s leases and customers
Eleanor Pringle – Fortune
When Jamie Dimon was backstage at a conference and heard a competitor crowing about taking on old JPMorgan branch leases and stealing the customers, he vowed it would never happen again. That’s why the CEO of America’s biggest bank, at one point, decided to personally rubber-stamp or veto every branch closure to ensure the institution didn’t lose any more customers to rivals. During a conversation at AllianceBernstein’s Strategic Decisions conference this week, Dimon said that at a previous Bernstein conference, Vernon Hill, who founded Commerce Bank in the 1970s, bragged about taking on the branch leases JPMorgan had vacated.
/jlne.ws/4e0qBat

Banks Funnel Billions More Into Private Credit as Frenzy Spreads
Carmen Arroyo, Hannah Levitt and Laura Noonan – Bloomberg
Banking giants that once had the most ground to lose to the burgeoning world of private credit keep finding more ways – and much more money – to pump into the sector. For years, the threat was that direct lenders would unseat incumbents by luring away clients and siphoning off corporate-loan business. Now, it seems the biggest US lenders have decided if they can’t avoid that competition, they will throw themselves into it. Banks including Goldman Sachs Group Inc., Citigroup Inc. and Wells Fargo & Co. have announced plans to cobble together more than $50 billion to plow into private credit in recent months, according to an analysis by Bloomberg. Some are offering investing clients more ways to wriggle into the action, with JPMorgan Chase & Co.’s asset management arm looking to scoop up a private credit firm, Bloomberg has reported.
/jlne.ws/3R8KMJg

New US rules aim to crack down on toxic air pollution by steelmakers; Rules target contaminants such as mercury, benzene and lead released by coke ovens used by facilities to burn coal
Tom Perkins – The Guardian
New Environmental Protection Agency rules aim to crack down on toxic air pollution from US steelmakers by limiting pollutants such as mercury, benzene and lead that have long poisoned the air in neighborhoods surrounding the plants. The rules target contaminants released by steel facilities’ coke ovens. Gas from the ovens creates an individual cancer risk in the air around steel plants of 50 in 1,000,000, which public health advocates say is dangerous for children and people with underlying health problems.
/jlne.ws/3R7ArO0

Fireside Friday with… ION’s Tommaso Di Grazia; The TRADE sits down with Tommaso Di Grazia, head of fixed income product development at ION, to discuss the rise of credit portfolio trading, how innovation is aiding adoption, and key trends shaping the future of credit portfolio trading.
Wesley Bray – The Trade
What are the key factors contributing to the rise of credit portfolio trading? Portfolio trading has seen a dramatic rise these past few years. It involves trading a basket of bonds of variable credit quality and risk as a single, all-or-none transaction, whereby the trade instruction specifies that the entire order must be filled. It’s not very different from list trading which has existed for a long time where dealers were requested to price a backet of instruments. However, in this scenario, traders don’t have the option of choosing the bonds included in a portfolio. Despite this, portfolio trading has become increasingly attractive.
/jlne.ws/4bSyrRO

Ukraine Invasion

NATO chief dismisses Russian warnings after lifting of arms restrictions
Sabine Siebold, Jan Lopatka and Jason Hovet – Reuters
NATO chief Jens Stoltenberg on Friday dismissed warnings by Russian President Vladimir Putin that allowing Kyiv to use Western weapons for strikes inside Russian territory might lead to an escalation. Speaking on the sidelines of a NATO foreign ministers’ meeting in Prague, Stoltenberg said the alliance had heard such warnings many times before.
/jlne.ws/3R8NtL5

Putin’s Shadow War Against Europe Is Intensifying; A string of sabotage attacks linked to Moscow shows that Putin doesn’t need to invade a NATO country to put pressure on the West.
Hal Brands – Bloomberg
Russian nationals have been arrested in Germany on charges of planning to attack military facilities. English prosecutors claim that Russian agents set fire to a warehouse containing aid for Ukraine. Sweden is investigating alleged Russian-sponsored acts of sabotage. The Czech government accuses Moscow of sabotaging its railways, as well. Estonia, meanwhile, has reportedly uncovered a host of Russian plots on its soil. Russian ships are suspected of targeting communications cables and wind farms in the North Sea. Now, Moscow may be involved in suspicious fires – including one that engulfed a shopping center – in Poland. The roster of allegations goes on and on.
/jlne.ws/4aHzEu2

U.S. Allows Ukraine to Carry Out Limited Strikes Inside Russia With American Weapons
Gordon Lubold and Michael R. Gordon – The Wall Street Journal
In a significant policy reversal, the Biden administration on Thursday said for the first time that it would allow Ukrainian forces to do limited targeting with American-supplied weapons inside Russia. The new policy will allow Ukrainian forces to use artillery and fire short-range rockets from Himars launchers against command posts, arms depots and other assets on Russian territory that are being used by Russian forces to carry out its attack on Kharkiv in northeastern Ukraine. But the policy doesn’t give Ukraine permission to use longer-range ATACMS surface-to-surface missiles inside Russia.
/jlne.ws/3VnfqkL

Russia, Ukraine Swap Prisoners for First Time Since February
Aliaksandr Kudrytski – Bloomberg
Russia and Ukraine conducted the first exchange of prisoners in almost four months, swapping 75 people from each side. The United Arab Emirates acted as mediator in the process, the Russian Defense Ministry said Friday on Telegram. Ukrainian President Volodymyr Zelenskiy said four civilians were among those returned to his country.
/jlne.ws/4bVW9we

Israel/Palestine Conflict

Biden Sticks to ‘Tightrope’ Israel Policy While Rafah Deaths Mount; Approach called ‘hard to execute and harder to communicate’; Officials say they’ve shaped Israeli actions behind the scenes
Iain Marlow – Bloomberg
President Joe Biden’s advisers have insisted for months to allies at home and abroad that his embrace of Israel has resulted in the least bad outcome in the Gaza war by reining in Prime Minister Benjamin Netanyahu’s impulses and preventing even worse bloodshed. That stance is coming under more scrutiny as harrowing scenes emerge from Gaza again and again. Last weekend, an Israeli airstrike at a refugee camp in Rafah killed 45 people, prompted fresh calls for Biden to cut off additional arms shipments and drew condemnation from US allies France and Germany. Samantha Power, Biden’s chief for humanitarian aid, said on Wednesday that Israel’s actions were having “catastrophic consequences.”
/jlne.ws/3Kq6ZyO

Yemen’s Houthi rebels claim 16 killed in US-UK strikes; Western allies step up strikes aimed at deterring Iranian-backed militants from attacks on shipping
Andrew England and John Paul Rathbone – Financial Times
Houthi rebels in Yemen have accused the US and UK of killing at least 16 people in their latest strikes aimed at deterring the Iran-backed militants from attacking shipping in the Red Sea. The Houthis made the claim on a rebel-controlled television channel after the western allies launched multiple strikes on Yemen, targeting 13 sites. The attacks destroyed eight Houthi drones in Yemen and over the Red Sea which “presented a threat to US and coalition forces, and merchant vessels in the region”, the US military’s Central Command said on Friday.
/jlne.ws/3Racgyh

Exchanges, OTC and Clearing

Wall Street Lands on India, Looking for Profits It Can’t Find in China; Stock markets in Mumbai have surged as big global investors hope India can become a source of growth. It won’t be so easy.
Alex Travelli – The New York Times
Mumbai, India’s financial capital, has seen a lot of new faces over the past year. The heads of global banks have been trooping through, visiting its stock exchanges, buying property and hiring new staff. A postpandemic boom has pushed the value of India’s stock market to about $5 trillion, putting it neck and neck with Hong Kong’s. India’s economy is among the fastest growing in the world. Wall Street can’t ignore India anymore.
/jlne.ws/4aKEpmG

Performance Bond Requirements: Agriculture, Energy, FX and Metals – Effective May 31, 2024
CME Group
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below. The rates will be effective after the close of business on May 31, 2024.
/jlne.ws/3yHySzR

ICI, SIFMA and DTCC Comment on U.S. Move to T+1
DTCC
Today, the Investment Company Institute (ICI), the Securities Industry and Financial Markets Association (SIFMA), and DTCC issued the following statement on the move to T+1: “With the U.S. T+1 settlement cycle for corporate bonds, municipal bonds, and equities transactions now in place, ICI, SIFMA, and DTCC thank all the stakeholders for their collaboration and support in successfully implementing this historic change to U.S. markets. There was a tremendous amount of partnership and hard work to make T+1 a reality. “Early indications following T+1 implementation are positive, and we look forward to working closely with firms and key stakeholders in the coming weeks to monitor and address any issues that may arise.
/jlne.ws/4bDcDtC

Caution for Investors
Multi Commodity Exchange of India
It has been brought to the notice of the Exchange that a website “https://livemcxdata.online/” is providing illegal dabba trading platform and misusing the Multi Commodity Exchange of India Ltd. (MCX) brand name. It may be noted that MCX is in no way connected to such illegal dabba trading platform. A police complaint is filed in this regard. It may be further noted that “https://livemcxdata.online/” is not authorized to avail data feed services from the Exchange.
/jlne.ws/3yFQBrn

NSE Indices launches Nifty500 Equal Weight Index
National Stock Exchange of India
NSE’s index services subsidiary, NSE Indices Limited today launched a new strategy index – Nifty500 Equal Weight. The Nifty500 Equal Weight index represents an alternative weighting strategy to its parent index, the Nifty 500. It includes the same companies as the Nifty 500, however, weighed equally. The base date for the index is April 01, 2005, and the base value is 1000. The index is reconstituted on a semi-annual basis and weights are rebalanced on a quarterly basis. The index is expected to act as a benchmark for asset managers and a reference index tracked by passive funds in the form of Exchange Traded Funds (ETFs), index funds and structured products.
/jlne.ws/3Kli18J

Decisions of the annual meeting of shareholders of the Moscow Exchange
MOEX
On May 31, 2024, a repeat annual General Meeting of Shareholders (AGM) of the Moscow Exchange took place in the form of absentee voting. Shareholders approved the annual report based on the results of 2023, as well as the distribution of profits, including the payment of dividends based on the results of the 2023 financial year. In accordance with the recommendations of the Supervisory Board, shareholders decided to allocate 39.5 billion rubles, or 17.35 rubles per share, to pay dividends based on the results of 2023.
/jlne.ws/3R8SYJw

Fintech

Why fintech upstarts have failed to unseat UK banks; Companies such as Monzo, Starling and Revolut have transformed digital banking but traditional lenders still dominate the market
Akila Quinio – Financial Times
In a 2018 letter to new staff members, digital bank Monzo outlined a lofty series of ambitions. The company said it aimed “to do for personal finance what Facebook has done for keeping up with your friends, or Google for finding information”. The company, barely three years old at the time, also set a “long-term goal” of reaching a billion customers worldwide. Alongside a new cohort of challengers that also included Starling and Revolut, it was on a mission to usurp “legacy” banks, particularly the Big Four of HSBC, Barclays, Lloyds and NatWest that dominate the UK market.
/jlne.ws/4514tZz

US expansion pushes up credit losses at Klarna; Net losses at buy now, pay later specialist have more than halved
Akila Quinio – Financial Times
Credit losses at buy now, pay later group Klarna rose in the first quarter as it pursues its aggressive US expansion plans and consumers continue to struggle with high prices. Consumer credit losses at the Swedish fintech increased 59 per cent to SKr1.2bn ($110mn) in the first quarter. A person close to the company said the main factor was its expansion in the US, which it entered in 2019.
/jlne.ws/3X5pctg

Klarna Marketing Chief Says AI Is Helping It Become ‘Brutally Efficient’; David Sandstrom explains how artificial intelligence is helping the Sweden-based financial technology company do more in less time
Megan Graham – The Wall Street Journal
Swedish buy-now-pay-later company Klarna says artificial intelligence is helping to lower its marketing and sales costs by making tasks such as creating images and translating copy more efficient. The company announced Tuesday that it had cut sales and marketing spending by 11% in the first quarter of 2024 while increasing the number of campaigns and updating its collateral marketing materials more frequently. It attributed 37% of that reduction to AI, the equivalent of $10 million in annual savings.
/jlne.ws/4c1A0wI

Tech giants form an industry group to help develop next-gen AI chip components
Kyle Wiggers – TechCrunch
Intel, Google, Microsoft, Meta and other tech heavyweights are establishing a new industry group, the Ultra Accelerator Link (UALink) Promoter Group, to guide the development of the components that link together AI accelerator chips in data centers. Announced Thursday, the UALink Promoter Group – which also counts AMD (but not Arm just yet), Hewlett Packard Enterprise, Broadcom and Cisco among its members – is proposing a new industry standard to connect the AI accelerator chips found within a growing number of servers. Broadly defined, AI accelerators are chips ranging from GPUs to custom-designed solutions to speed up the training, fine-tuning and running of AI models.
/jlne.ws/4aGNqNC

US Is Slowing AI Chip Exports to Middle East by Nvidia, AMD
Mackenzie Hawkins and Ian King – Bloomberg
US officials have slowed the issuing of licenses to chipmakers such as Nvidia Corp. and Advanced Micro Devices Inc. for large-scale AI accelerator shipments to the Middle East, according to people familiar with the matter, while officials conduct a national security review of AI development in the region.
/jlne.ws/4e0MPJo

Lost Your Job at OpenAI? Become a Tech Regulator; AI experts might make less money in the world of government, but would do more good.
Lionel Laurent – Bloomberg
You rarely see any budding entrepreneur on Shark Tank or The Apprentice say their ambition is to be a government regulator. Yet that’s pretty much what the European Union’s freshly unveiled AI Office is counting on, as it hires 140 staff – including technology specialists – to enforce the 27-country bloc’s landmark AI regulations, the world’s most extensive. The regulator’s to-do list is a long one: Impose guardrails on a relatively nascent technology, test and evaluate general-purpose AI models, issue fines as needed and also promote “trustworthy” AI to unlock the productivity benefits companies are hungry for.
/jlne.ws/4bXzAHA

AI should not be a black box; Spats at OpenAI highlight the need for companies to become more transparent
The editorial board – Financial Times
Proponents and detractors of AI tend to agree that the technology will change the world. The likes of OpenAI’s Sam Altman see a future where humanity will flourish; critics prophesy societal disruption and excessive corporate power. Which prediction comes true depends in part on foundations laid today. Yet the recent disputes at OpenAI – including the departure of its co-founder and chief scientist – suggest key AI players have become too opaque for society to set the right course.
/jlne.ws/3wX9yFw

Saudi fund invests in China effort to create rival to OpenAI; Aramco’s Prosperity7 takes part in investment round for start-up Zhipu AI
Eleanor Olcott – Financial Times
A Saudi Arabian fund has backed China’s most prominent generative artificial intelligence start-up, becoming the only foreign investor in the country’s efforts to create a homegrown rival to OpenAI. Prosperity7, part of the state-owned oil group Aramco’s venture capital arm, has participated in a roughly $400mn investment round in AI start-up Zhipu AI, said two people familiar with the matter. The deal values the Chinese group at about $3bn.
/jlne.ws/3Kqh7HY

Salesforce Darkens the Skies for Cloud Software as AI Threat Looms; Growth slows as big deals are taking longer to close and artificial-intelligence hype isn’t yet paying off
Dan Gallagher – The Wall Street Journal
Turns out, a more profitable Salesforce isn’t that exciting when growth is grinding to a halt. Especially when investors have a culprit like artificial intelligence to blame. The cloud software company isn’t yet in no-growth territory. But its fiscal first quarter results and forecast late Wednesday put it a bit closer. Revenue for the quarter ending in April rose by a record-low 10.7% year over year to $9.1 billion, and the company projected just 7% growth for the current period. Both were below Wall Street’s forecasts.
/jlne.ws/4aL3P3B

Cybersecurity

How the DOJ is using a Civil War-era law to enforce corporate cybersecurity
Eric Geller – The Record
Amid an onslaught of high-profile cyberattacks showing how companies often neglect basic security measures, the Department of Justice is trying to use a law passed during the Civil War to put businesses on notice that these failures are unacceptable. Under the umbrella of DOJ’s Civil Cyber-Fraud Initiative, U.S. government attorneys have since early 2022 deployed the pointedly named False Claims Act to punish contractors that mislead the government about their cybersecurity defenses, hoping to send a shot across the bow of other vendors that aren’t complying with rules intended to fend off hackers. It’s an approach that reflects the goals in President Joe Biden’s National Cybersecurity Strategy, which emphasizes holding companies to a higher standard of cybersecurity and shifting the burden of combating hackers from customers to vendors.
/jlne.ws/4bFNRJ4

Cryptocurrencies

Large Mt. Gox Creditors Are Unperturbed by Looming Bitcoin Distribution; Speculators have been buying claims since 2014 bankruptcy; Tokyo-based Mt. Gox was once the largest Bitcoin exchange
Olga Kharif – Bloomberg
As the defunct exchange Mt. Gox inches closer to returning roughly $9 billion in Bitcoin a decade after filing for bankruptcy, crypto investors are increasingly fretting that will dampen prices. Perhaps they shouldn’t be. The price of the largest cryptocurrency slumped earlier this week after Mt. Gox’s Japanese trustee began moving tokens around in digital wallets. In a May 28 note, trustee Nobuaki Kobayashi said it plans to start distributing Bitcoin and Bitcoin Cash to creditors in “a while.” A majority of the claimants are expected to receive tokens before the end of October.
/jlne.ws/4dWvamd

Japanese Crypto Exchange DMM Bitcoin Suffers $305M Hack; Measures have been taken to prevent further unauthorized outflows, the exchange said.
Oliver Knight – CoinDesk
DMM Bitcoin, a Japanese cryptocurrency exchange, said it lost 48 billion yen ($305 million) of bitcoin (BTC) following a hack. In a blog post on its website, DMM Bitcoin said 4,502.9 BTC “leaked” out of the exchange. Measures have been taken to avoid further unauthorized outflows. “Please be assured that we will procure the equivalent amount of BTC equivalent to the outflow with the support of the group companies and guarantee the full amount,” DMM Bitcoin said.
/jlne.ws/3yKBe0X

Politics

DealBook: Why Megadonors Are Unfazed by Donald Trump’s Guilty Verdict; Money flowed into the former president’s re-election campaign from Wall Street and Silicon Valley following Thursday’s historic conviction.
Andrew Ross Sorkin, Ravi Mattu, Bernhard Warner, Sarah Kessler, Michael J. de la Merced, Lauren Hirsch and Ephrat Livni – The New York Times
Guilty on all counts. Donald Trump is the first sitting or former president to be convicted of a felony in U.S. history, after a jury ruled that he falsified business records to cover up a sex scandal with a porn star that could have sunk his 2016 campaign. In normal times, that might mean the end of his political ambitions. Instead, Wall Street and Silicon Valley money is flowing into his re-election campaign following the ruling.
/jlne.ws/3KqIVMu

Wall Street Billionaires Are Rushing to Back Trump, Verdict Be Damned; A growing number of financial elites are throwing their weight behind Trump, who was found guilty in the first criminal trial of a former US president.
Amanda L Gordon and Sridhar Natarajan – Bloomberg
Before 12 New Yorkers branded Donald Trump a felon, a very different kind of jury – one assembled at the sumptuous Pierre hotel on Fifth Avenue – had reached a verdict of its own. Even if the courtroom jury found him guilty as charged, the wealthy Wall Streeters at the Pierre concluded, he’d still be their choice for the White House. That meeting, 16 days prior to Thursday’s historic verdict, laid bare the cool calculus now at play in American finance.
/jlne.ws/4bRb4b8

Hedge fund billionaire Bill Ackman likely to back Donald Trump; Financier’s anticipated announcement comes as Wall Street warms to former US president
Antoine Gara and James Fontanella-Khan and Alex Rogers – Financial Times
Hedge fund billionaire Bill Ackman is leaning towards backing Donald Trump in the US election, according to a person briefed on his thinking, as some of Wall Street’s leading figures throw their weight behind the former president. Ackman, who backed Trump’s Republican rivals, including Nikki Haley, in the party’s primary contest this year, is likely to make his endorsement on X, the Elon Musk-controlled social media platform in which he is a minority investor.
/jlne.ws/3KmVGr4

Greens aim to win voters ‘utterly uninspired’ by Starmer; Campaign launch emphasises policies that pitch party to the left of Labour
Lucy Fisher – Financial Times
Sir Keir Starmer offers only “incremental change” from the ruling Conservatives, the Green party said as it launched an election campaign that pitched the party to the left of Labour. Promising “real hope and real change” across issues including the NHS and housing, Green co-leader Adrian Ramsay suggested Starmer will deliver merely a “few tweaks” if he wins power in five weeks’ time.
/jlne.ws/457kk8H

Starmer Says Energy Transition ‘Is Coming’ in Pitch to Scotland
Ellen Milligan – Bloomberg
Labour leader Keir Starmer vowed to not revoke oil and gas licenses as he unveiled his plan to launch a public clean energy company in Scotland, designed to create tens of thousands of jobs for the energy transition. “We’re not turning off the taps. Oil and gas will be part of the mix for many years, we’re not revoking any licenses. But a transition is coming,” he said in a speech in Glasgow on Friday. “The worst thing we could do now is do what Rishi Sunak is doing and put our head in the sand and pretend it’s not happening.”
/jlne.ws/3VngF3p

Networks linked to Russia and China use OpenAI tools to spread disinformation; Covert influence perpetrators from Iran and Israel also creating misleading content, says Microsoft-backed group
Hannah Murphy – Financial Times
OpenAI has revealed operations linked to Russia, China, Iran and Israel have been using its artificial intelligence tools to create and spread disinformation, as technology becomes a powerful weapon in information warfare in an election-heavy year. The San Francisco-based maker of the ChatGPT chatbot said in a report on Thursday that five covert influence operations had used its AI models to generate text and images at a high volume, with fewer language errors than previously, as well as to generate comments or replies to their own posts. OpenAI’s policies prohibit the use of its models to deceive or mislead others.
/jlne.ws/4bGeJsH

Mexico’s Sheinbaum: from activist to climate scientist to presidential frontrunner
Diego Ore – Reuters
When Claudia Sheinbaum – the frontrunner to become Mexico’s next president – was just six years old, her parents were active participants in protests during one of the darkest periods of the country’s modern history. It was 1968, the Institutional Revolutionary Party had governed Mexico with an iron fist for decades and the country was swept by large demonstrations pressing for democratic change. In one horrific incident, as many as 400 students at a protest were killed by soldiers and paramilitary forces.
/jlne.ws/4bGdSZ1

S. African President’s Allies Want Democratic Alliance Deal; ANC set to lose national majority for first time in 30 years; ANC leaders to meet in coming days to chart course of action
S’thembile Cele and Colleen Goko-Petzer – Bloomberg
South African President Cyril Ramaphosa is under pressure from his closest party allies to form a coalition with the opposition Democratic Alliance after this week’s crushing election blow, according to people familiar with the matter. The difficulty he’s facing is that there’s also a push by his detractors within the African National Congress to form an alliance with former President Jacob Zuma’s new party and the populist Economic Freedom Fighters, the people said, asking not to be identified because they’re not authorized to comment. It would be untenable for Ramaphosa to remain in office in such a scenario, they said.
/jlne.ws/4bHhTfA

Nigerian Lawmakers Seek to Strip Central Bank of Crucial Powers; Senators want to create coordinating team for rates decisions; Challenge comes as Nigeria battles worst inflation in 28 years
Nduka Orjinmo – Bloomberg
Nigerian lawmakers want to strip the central bank of the final decision in setting interest rates, instead proposing a new team to be headed by the minister of finance. A trio of legislative proposals are making their way through the Senate but must be debated before they can advance to the desk of President Bola Tinubu for his assent or veto.
/jlne.ws/3R5Q3RS

Regulation

Two 39-year-old Estonian men are the alleged kingpins behind a massive half billion fraud targeting thousands of U.S. investors
Amanda Gerut – Fortune
The Department of Justice is advancing a case alleging that two men in Estonia cheated investors in a byzantine cryptocurrency mining operation that generated $575 million, authorities said. Sergei Potapenko and Ivan Turõgin, both 39, were arrested in Tallinn, Estonia, and charged on an 18-count indictment filed in the Western District of Washington, DOJ said in a statement today. According to the indictment, the duo claimed to offer virtual currency mining rights to customers for a fee, but in reality they were relying on sham invoices, fabricated documents, and a crypto mining capacity of less than 1% of what they told customers. Potapenko and Turõgin, and others who were unnamed in the indictment, spent the money people paid them on real estate properties in Estonia, luxury cars, and lavish gifts, authorities said.
/jlne.ws/3KoLbnq

Two Estonian Nationals Extradited from Estonia to the United States for $575M Cryptocurrency Fraud and Money Laundering Scheme
Department of Justice
Two Estonian nationals will make their initial appearance in the U.S. District Court in Seattle at 5:00 p.m. EDT today following their extradition from Estonia to the United States to face criminal charges related to their roles in a massive multi-faceted cryptocurrency Ponzi scheme. Sergei Potapenko and Ivan Turogin, both 39, were arrested on Nov. 20, 2022, in Tallinn, Estonia, on an 18-count indictment filed in the Western District of Washington.
/jlne.ws/4e6ylrl

Former Investment Banker and Registered Broker Sentenced for Operating $1.5M Cryptocurrency Investment Fraud Scheme
Department of Justice
A former investment banker, who was formerly a registered broker with the Financial Industry Regulatory Authority, was sentenced today to three years and five months in prison for a fraud scheme that resulted in approximately $1.5 million in investor losses and for a separate access device fraud scheme. According to court documents, from November 2020 to August 2022, Rashawn Russell, 28, of Brooklyn, New York, engaged in a scheme to defraud multiple investors by inducing them to invest with him based on false promises that, among other things, he would use their funds for cryptocurrency investments and that the investors would earn large-and sometimes guaranteed-returns from those investments. Russell misappropriated much of the investors’ assets and used them to fund personal expenses, to gamble, and to repay other investors. Russell also repeatedly failed to repay investors’ principal investments and failed to provide investors with promised rates of return. After certain investors requested to be repaid their investments, Russell also falsely represented that he had wired the money to them.
/jlne.ws/452jRF1

Regulation and fragmentation’s influence on the current liquidity landscape; The TRADE explores evolving liquidity dynamics, delving into the impacts of RTS amendments as well as the role that electronic liquidity providers (ELPs) are playing in this shifting landscape.
Wesley Bray – The Trade
The constantly shifting liquidity landscape is characterised by the availability and ease with which assets can be bought and sold without significant changes in price. Particularly in Europe, we are witnessing shifts in this dynamic, as well as increasingly fragmented liquidity within the region.
/jlne.ws/4bGgRkb

Commissioner Pham Announces Agenda for Global Markets Advisory Committee Meeting on June 4
CFTC
CFTC Commissioner Caroline D. Pham, sponsor of the Global Markets Advisory Committee (GMAC), announced the agenda for the upcoming GMAC public meeting on Tuesday, June 4, from 10:00 a.m. to 1:00 p.m. EDT at the CFTC’s New York Regional Office.
/jlne.ws/4aIQXuN

SEC Investor Advisory Committee to Examine the New Frontier for Investment Advice and Discuss AI Regulation at June 6 Meeting
SEC
The Securities and Exchange Commission’s Investor Advisory Committee will hold a virtual public meeting on June 6, 2024, at 10 a.m. ET. The meeting will be webcast on the SEC website. The committee will host two panels: Examining the New Frontier for Investment Advice; and AI Regulation: Embracing the Future. The committee will also discuss potential recommendations regarding the Protection of Self-Directed Investors when Trading Complex Products and Utilizing Complex Strategies and Financial Literacy and Investor Education.
/jlne.ws/3VldFom

Frank Lynold Mercado; Tiger Wolf Capital, LLC; SEC Charges North Carolina Man and His Advisory Firm With Running Ponzi Scheme Victimizing More Than 100 Clients
SEC
Securities and Exchange Commission v. Frank Lynold Mercado and Tiger Wolf Capital, LLC, Civil Action No. 3:24-cv-00514 (W.D. N.C. filed May 30, 2024)
The Securities and Exchange Commission has charged Charlotte, North Carolina resident Frank Lynold Mercado and the unregistered advisory firm that he controlled, Tiger Wolf Capital, LLC, with defrauding more than 100 investors through a Ponzi scheme.
/jlne.ws/4e4W7Eo

ESAs publish templates and tools for voluntary dry run exercise to support the DORA implementation
ESMA
The European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) today published templates, technical documents and tools for the dry run exercise on the reporting of registers of information in the context of Digital Operation Resilience Act (DORA) announced in April 2024.
/jlne.ws/455q1Eg

Final MiCA rules on conflict of interest of crypto assets providers published
ESMA
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, is publishing today the Final Report on the rules on conflicts of interests of crypto-asset service providers (CASP) under the Markets in Crypto Assets Regulation (MiCA). In the report ESMA sets out draft Regulatory Technical Standards on certain requirements in relation to conflicts of interest for crypto-asset service providers (CASPs) under MiCA, with a view to clarifying elements in relation to vertical integration of CASPs and to further align with the draft European Banking Authority (EBA) rules applicable to issuers of asset-referenced tokens (ARTs).
/jlne.ws/3VqKGzC

FMA cancels Stockfox Limited’s FAP licence
FMA – New Zealand
The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – has cancelled Stockfox Limited’s (Stockfox) Financial Advice Provider (FAP) licence with effect from 30 May 2024.
The FMA is satisfied that Stockfox no longer meets key requirements for a market services licence under the Financial Markets Conduct Act (FMC Act) because:
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Bilateral meeting between Minister Suzuki and Mr. Christian Noyer, Honorary Governor of the Bank of France
FSA Japan
On May 31, Mr. Suzuki Shunichi, Minister of State for Financial Services, held an in-person bilateral meeting with Mr. Christian Noyer, Honorary Governor of the Bank of France. They exchanged views on their own initiatives as an international financial center including the Government of Japan’s Policy Plan for Promoting Japan as a Leading Asset Management Center.
/jlne.ws/4e5R5Y0

FSA Weekly Review No.588 May 31, 2024 NEW
FSA Japan
This page contains the latest in events, developments, and updates to the FSA website.
/jlne.ws/4c4DZZv

Top executives of SFC and DFSA meet in Dubai to extend market ties
SFC – Hong Kong
The Securities and Futures Commission’s (SFC) Chief Executive Officer, Ms Julia Leung, and its Executive Director of Investment Products, Ms Christina Choi, held a high-level meeting today with top executives of the Dubai Financial Services Authority (DFSA) in Dubai, United Arab Emirates (UAE) as part of their official visit to the Middle East. Joining today’s meeting with Ms Leung and Ms Choi were the DFSA’s Chief Executive, Mr Ian Johnston, its Managing Director of Policy and Legal, Ms Charlotte Robins and Mr Brad Douglas, the Senior Director, Head of Markets, Strategy & Risk. During the meeting, both sides discussed how to further strengthen financial collaboration between the Hong Kong SAR and Dubai International Financial Centre (DIFC). They also exchanged views on issues of mutual interest, including the latest regulatory developments in both markets.
/jlne.ws/3x1bGw3

Investing and Trading

Wheat Jumps Most Since War in Ukraine Due to Weather
Áine Quinn, Olesia Safronova and Celia Bergin – Bloomberg
In April, Ukrainian farmer Yurii Sekh was looking forward to a good wheat harvest. One of the driest Mays in the region’s records dashed those hopes. It also sent prices for the staple grain soaring, reviving fears of rising food costs. Russia, which along with Ukraine accounts for almost a third of global wheat exports, has seen parched crops during a vital month for their development. Unseasonal frost also devastated acres of standing crops, and with harvests now only weeks away, the chances of a substantial recovery are dwindling.
/jlne.ws/3V4E9ZZ

S&P says issue affecting market data for S&P, Dow Jones indexes resolved
Reuters
A technical glitch affecting the dissemination of market data for the S&P and Dow Jones indexes for more than an hour on Thursday has been resolved, S&P Dow Jones Indices said. Trading continued normally with the benchmark S&P 500 index and the Dow Jones Industrial Average down 0.2% and 0.7%, respectively. S&P Dow Jones Indices said it was aware there was an issue impacting the transmission of its real-time index values from about 10:41 a.m. to 11:51 a.m. EST.
/jlne.ws/3X1z6vO

Japan’s $62bn support for yen provides little reprieve; Currency’s slide towards 34-year lows resumes as finance ministry reveals scale of market intervention
Kana Inagaki – Financial Times
Japan spent a record Â¥9.8tn ($62bn) from late April to May to boost the yen, but the currency has resumed its slide towards 34-year lows even as expectations build for interest rate rises, highlighting the struggle Tokyo faces to stabilise its exchange rate. With currency interventions having only a fleeting effect on the yen, analysts say the Bank of Japan faces a “huge dilemma” as it comes under pressure to raise rates at a faster pace when the economy remains weak due to sluggish consumption.
/jlne.ws/3X3T3SJ

Tesla investors should reject Elon Musk’s $56bn pay, says proxy adviser ISS; Adviser supports proposal to reincorporate electric-car maker in Texas
Stephen Morris – Financial Times
Proxy adviser ISS has counselled Tesla shareholders to vote against Elon Musk’s $56bn pay award but supported a proposal to reincorporate the electric-car maker in Texas, in a mixed result for the board ahead of its annual meeting next month. “Although the achievement of the grant’s performance hurdles and the substantial growth in the company’s size and profitability are fully recognised, the award value was considered outsized from the start,” ISS said in a report on Thursday.
/jlne.ws/3yI3JfE

How to analyse an M&A deal on the back of a napkin; Whether you own the aggressor or acquiree, here’s the playbook
Stuart Kirk – Financial Times
The 80/20 rule – also known as the Pareto principle after the Italian economist who wrote about it more than a hundred years ago – refers to a small number of causes having outsized outcomes. Vilfredo noticed a fifth of the pea plants in his garden bore most of the fruit and 80 per cent of land was owned by 20 per cent of the population. Anyone who has ever been employed knows the score. Just a few people do most of the work. It’s the same with financial analysis. Only a small number of inputs is required to have a firm hold on the output. Especially mergers and acquisitions. Basic maths and the back of a cigarette packet? You’re set.
/jlne.ws/3Vji6Qp

You Bought Gold at Costco. What Are the Taxes When You Sell It? Learning the tax rules on gold could help avoid costly mistakes
Laura Saunders – The Wall Street Journal
Gold is glittering. Recently, the spot price was around $2,360 an ounce, up about 21% in the past 12 months. Some buyers are snapping up gold bars and coins offered by Costco, while others are investing in funds holding bullion. Many buyers don’t know or care about taxes on gold sales, because they see their hoard as a hedge against chaos instead of an asset like a stock. If they need to sell, goes the thinking, maybe there won’t even be an Internal Revenue Service.
/jlne.ws/4535CQ4

Own a 401(k)? You Could Soon Vote on Issues Like Elon Musk’s Pay; “Pass-through” voting is on the rise thanks to fintech and the politicization of business
Jon Sindreu – The Wall Street Journal
Do you think Elon Musk should be paid $47 billion to keep his attention focused on Tesla? Or that Disney has gone “woke?” Or that Shell isn’t moving away from oil fast enough? If, like many people, you own these companies through mutual or exchange-traded funds-say, as part of your 401(k)-you don’t get a say in these matters; only your fund manager does. But get your suffragist hat on, because this could soon change as big investment firms embrace “pass-through voting.” That is, giving their clients a voice during “proxy season”-the spring period when listed corporations hold their annual general meetings.
/jlne.ws/3UWA0Hm

IRS Starts Expansion of Government Alternative to Private Tax Software; Direct File system could reach more states and more taxpayers in 2025
Richard Rubin – The Wall Street Journal
Direct File, the IRS’s new electronic tax-filing system that is free for users, will become a permanent program and expand to more taxpayers starting next year, administration officials said Thursday. The Biden administration is inviting all 50 states and Washington, D.C., to participate, potentially creating a much bigger program than this year’s limited-scope 12-state pilot. Over the next several years, the Internal Revenue Service wants to make Direct File an option for all common tax situations, Treasury Secretary Janet Yellen said.
/jlne.ws/457iXqF

Environmental, Social and Corporate Governance

Future energy demand does not need new fossil fuels, study says; Existing oil, gas and coal projects are ‘sufficient’ as green energy expands, research finds
Aime Williams – Financial Times
Energy groups did not need to develop any new oil, gas and coal projects to meet future demand, an academic paper says, at a time when rhetoric over the role of fossil fuel companies in addressing climate change is escalating. Researchers from University College London and the International Institute for Sustainable Development studied projected future global demand for oil and gas production, and for coal- and gas-fired power generation, under a range of scenarios that limit warming to 1.5C above pre-industrial levels.
/jlne.ws/3wVHy5g

Rich countries met $100bn climate goal two years late, OECD says; Pledge to provide finance to help emerging countries cut emissions first made in 2009
Lee Harris – Financial Times
Rich countries finally met their target to deliver $100bn in climate finance to poorer nations in 2022, two years later than promised, the OECD said – a goal that proved to be a flash point in global negotiations. Wealthy nations first made the pledge to help developing nations cut emissions and adapt to climate change at the Copenhagen summit in 2009.
/jlne.ws/3wMXyXj

Big Carbon-Offsets Project to Be Withdrawn From Key Ledger; How Zimbabwe Helps Sell ‘Carbon Neutral’ Fossil Fuel That Doesn’t Exist
Natasha White and Ray Ndlovu – Bloomberg
One of the world’s biggest carbon-offset projects is being withdrawn from a key registry and standards body, in a move that once again adds confusion to the troubled market for CO2 credits. Carbon Green Investments, a company that owns and operates offset projects, says it’s removing the Kariba forestry project in Zimbabwe from Verra’s registry, effective immediately, according to an emailed statement.
/jlne.ws/3R6nOmh

Barclays Says Blacklists Set to Grow With EU’s New ESG Fund Rule
Greg Ritchie and Frances Schwartzkopff – Bloomberg
Analysts at Barclays Plc are warning that a growing number of stocks will be consigned to exclusion lists as new European Union rules for ESG funds are enforced. The EU’s fund naming rules, announced earlier this month, place limits on how freely asset managers can claim a fund lives up to environmental, social and governance goals. Newly created funds will need to comply immediately, while existing ESG funds will be subject to a nine-month window to either prove compliance or abandon the label.
/jlne.ws/4bD6PjO

Congress Pushes Forward With Bill Expanding the Rights of Mining Companies on Federal Land; The Mining Regulatory Clarity Act passed the House with bipartisan support and awaits approval in the Senate.
Esther Frances, Megija Medne and Phillip Powell – Inside Climate News
After the House of Representatives passed legislation that would allow mining companies more legal rights to federal lands by a bipartisan vote of 216-195 earlier this month, a bipartisan group of Senate sponsors are moving it through their chamber. “With the passage of the Mining Regulatory Clarity Act, we’re codifying existing precedent and unlocking our rich domestic mineral resources,” said Bruce Westerman (R-Ark.), the chairman of the House Natural Resources Committee, after the House passed the bill on May 8.
/jlne.ws/4c3dByP

What Can Artificial Intelligence Really Do to Fight Climate Change? “AI can be a really powerful support and accelerator for many different climate change-related applications,” says MIT professor Priya Donti on this week’s Zero.
Akshat Rathi and Mythili Rao – Bloomberg Zero (podcast)
Depending on who you ask, AI is either going to save the world or end it. The technology’s capacity for data-crunching and problem-saving can help predict weather events, making it easier to optimize power grids, prepare for natural disasters and maximize crop output. But artificial intelligence is also energy intensive – and easy to apply to ethically questionable ends.
/jlne.ws/3R6owzX

Glencore’s climate action plan wins more support from shareholders
Reuters
A majority of Glencore investors have indicated they were satisfied with the commodities giant’s plans to reduce carbon emissions, just as it gets closer to completing its acquisition of Teck Resources’ steelmaking coal business. Just 10% of investors rejected Glencore’s 2024-2026 Climate Action Transition Plan at the annual general meeting on Wednesday, compared with around 30% who had voted against an earlier plan in 2023.
/jlne.ws/3wY8T6G

Battles over CEO pay across the globe
Reuters
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Edinburgh council bans SUV and cruise ship ads in climate crackdown; Allowing adverts from fossil fuel industry is ‘inconsistent’ with net zero target, it says
Simeon Kerr – Financial Times
/jlne.ws/3R9kaIm

Helios Nordic Energy, Major deal in Nordic solar energy sector
Helios Nordic Energy
/jlne.ws/3x0m7zV

Saudi Arabia to sell $12bn worth of Saudi Aramco shares; Offering in world’s largest oil exporter to be set in range of SR26.7-SR29 as kingdom seeks fresh capital
Tom Wilson, Anjli Raval, Shotaro Tani and Malcolm Moore and Ahmed Al Omran – Financial Times
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Codelco to Enter Lithium Market After Signing Accord With SQM
Emma Sanchez and James Attwood – Bloomberg
/jlne.ws/4bFlmvg

Institutions

Citi Appointed as Depositary Bank for Super Hi International Holding Limited ADR Program
Business Wire
Citi Issuer Services, acting through Citibank, N.A., has been appointed as depositary bank by Super Hi International Holding Ltd. (“HDL”), a Hong Kong-listed leading Chinese cuisine restaurant brand operating the Haidilao hot pot restaurant chain in its international markets outside of Mainland China, Hong Kong, Macau, and Taiwan, for the initial public offering (the “IPO”) of HDL’s American Depositary Shares (“ADSs” or “ADRs”), representing its ordinary shares listed in Hong Kong.
/jlne.ws/4c3bWJB

Banks Warned of ‘Huge’ Fallout of UK’s New Greenwash Law; Lawyers note that new FCA rule is particularly far-reaching; UKSIF study points to likelihood of more litigation risks
Greg Ritchie and Frances Schwartzkopff – Bloomberg
Banks and asset managers in the UK woke up to a new reality on Friday, as the country enforces some of the most far-reaching anti-greenwashing rules ever seen. Due to its broad scope, the new requirement from the Financial Conduct Authority is “going to capture a huge range of communications” within the finance industry, said Clare Wiles, a managing associate in Linklaters’ financial regulation team.
/jlne.ws/4cj1s9t

UBS, Credit Suisse takeover is over the line; UBS confirmed its intention to take over Credit Suisse backâEUR¯in March 2023 with the deal subsequently reported to be worth more than $3.25 billion.
Claudia Preece – The Trade
The merger of UBS AG and Credit Suisse AG has officially completed – within the expected timeline. UBS praised the support from global regulators in facilitating a deal which has been the topic of much discussion across the market since its announcement last year.
/jlne.ws/4bRhRSa

Billionaire investor Ackman is planning IPO of Pershing Square, WSJ reports
Reuters
Hedge fund billionaire Bill Ackman is planning an initial public offering for his investment firm Pershing Square Capital Management as soon as next year, the Wall Street Journal reported on Friday, citing people familiar with the matter. A booming stock market and economic resilience have spurred many companies to list their shares and take advantage of the recovering U.S. IPO market.
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Bill Ackman Eyes IPO of Pershing Square; Rare hedge-fund firm listing aims to capitalize on investor’s record and newfound celebrity
Juliet Chung and Peter Rudegeair – The Wall Street Journal
Bill Ackman is planning to take his investment firm public as soon as next year, the boldest move yet by the hedge-fund manager to capitalize on his social-media fame. As a precursor to a public listing, Ackman is selling a stake in the firm, Pershing Square, to investors in a funding round expected to value the firm at about $10.5 billion, people familiar with the matter said. That deal is expected to close in the coming days.
/jlne.ws/4531fEE

Has Hargreaves Lansdown seen the light? Platform group launches index tracker fund product – at long last
David Stevenson – Financial Times
While the more politically minded among you may disagree, I think the most exciting announcement of the past few weeks has come, not from Westminster, but Bristol, home of the UK’s biggest investment platform, Hargreaves Lansdown. And I’m not talking about the rejected £4.7bn takeover bid from a private equity consortium, which got people animated last week. I’m talking about the fact that HL, the great champion of active fund management, appears to have seen the light and launched a portfolio service providing a risk-rated fund of index-tracking funds.
/jlne.ws/4bZTvpd

Commercial Property Meltdown Clobbers Pension Funds; Government retirement funds are selling property at a loss as the slump spreads
Heather Gillers – The Wall Street Journal
Government pension plans are getting hit by the commercial real-estate meltdown and many fear the bleeding is far from over. Canada’s national pension plan said in May that it is selling stakes in Manhattan and San Francisco office towers for $225 million less than it paid for them. In April, California’s government worker pension fund said it had unloaded a Sacramento property it had been trying to develop for almost two decades. In March, consultants warned California’s teacher pension that office holdings would continue to drag down returns, even after a 9% real estate loss in 2023.
/jlne.ws/3Vnxuva

Cost of ESG is a growing challenge for some Asian fund managers; Trying to keep pace with European and US managers poses growing challenge for some smaller players in the region
Ernest Chan – Financial Times
Local Asian asset managers are finding it harder to meet the rising costs of building out environmental, social and governance teams and complying with increasingly onerous sustainable investing policies that are putting a further squeeze on profit margins. Asset owners in the region are increasingly requiring ESG capabilities as a “minimum requirement”, but trying to keep pace with large European and US fund firms is a growing challenge for smaller firms from the region.
/jlne.ws/3yLo8AI

Work & Management

Job Seekers Brave AI Bots, Interviewing Nightmares in Tougher Labor Market; From puzzling personality tests to group interviews that feel like a reality dating show, hiring rites have taken a surreal turn.
Jo Constantz – Bloomberg
Employers are turning to increasingly bizarre hiring tactics in a job market where the balance of power has shifted away from workers. When Marissa Marlowe got invited to a happy hour hosted by a New York tech startup she was interviewing with for a job, she was under the impression she’d meet future coworkers. Instead, when she got to the bar, it was packed with other applicants competing for the same exact role. After multiple rounds of interviews, it turned out this was yet another test.
/jlne.ws/3X9pW0x

Work Advice: Unpacking the reasons for ‘quiet vacationing’; It’s a poor compromise in the quest for work-life balance, but workers have legitimate reasons for trying to sneak in downtime.
Karla L. Miller – The Washington Post
“Quiet vacationing” has joined “quiet quitting” and “quiet firing” as the latest (and least poetic) scourge of the modern workplace. Also known as the hush trip, workcation, hush-cation, or bleisure travel – you get the idea – quiet vacationing refers to workers taking time off, even traveling, without notifying their employers. Taking advantage of work-from-anywhere technology, they are logging in from hotels, beaches and campgrounds, sometimes using virtual backgrounds and VPNs to cover their tracks.
/jlne.ws/3ySxSJ6

Wellness Exchange

Third person in US tests positive for bird flu in connection to outbreak in dairy cattle
Brenda Goodman – CNN
A third person in the US has tested positive for H5 bird flu in connection to an ongoing outbreak in dairy cattle, the Michigan Department of Health and Human Services said Thursday. This is the second human case reported in the state and the fourth ever in the US. This time, in addition to some of the eye symptoms seen with previous H5N1 cases, the farmworker reported a cough and other respiratory symptoms that are more typical of human influenza infections, the health department said.
/jlne.ws/3x027NP

4 ways to let go of grudges that can harm our health; Identify the meaning behind your grudge, exercise, practice forgiveness and look for ‘joy snacks.’
Juli Fraga – The Washington Post
Holding a grudge against someone is common for most of us. A neighbor insults us, our boss criticizes us or a friend betrays us, and we begin to resent them. While it’s human nature to get upset at being treated badly, holding on to ill will can hurt our mental health. In one small study of 20 grudge holders, researchers found that harboring resentment could reinforce upsetting thoughts, lower self-esteem and make negative feelings fester. Another study linked bearing a grudge with an increased risk of heart disease and chronic pain.
/jlne.ws/4aLuzAV

Regions

Japan spent record $62 billion to prop up yen in past month
Erica Yokoyama – Bloomberg
Japan spent a record Â¥9.8 trillion ($62.2 billion) in the past month to prop up the yen after it fell to a 34-year low against the dollar, surpassing the total amount it used in 2022 to defend the currency. The finance ministry disclosed figures Friday for the period between April 26 and May 29. The amount exceeded earlier estimates of Â¥9.4 trillion based on a comparison of the Bank of Japan’s accounts and money broker forecasts. Japan’s previous monthly intervention record of Â¥9.1 trillion was set in very different circumstances when authorities were trying to weaken the yen in autumn 2011.
/jlne.ws/453tnaW

China commercial banks’ profits squeezed, loan quality holds steady
Reuters
Chinese commercial banks saw their profitability further squeezed in the first quarter of the year amid a slowing economy, while their non-performing loan ratios remained steady, the country’s financial regulator said on Friday. Net interest margin – a key gauge of profitability – further narrowed to 1.54% in the quarter from 1.69% in the previous three months, the National Financial Regulatory Administration said in a statement on its website.
/jlne.ws/3R8Hvdj

EU Tariffs on EVs Would Cost China Almost $4 Billion in Trade; A 20% tariff would mean 125,000 fewer Chinese cars to the EU; Kiel Institute study doesn’t calculate retaliatory measures
John Ainger – Bloomberg
European Union tariffs on Chinese electric vehicles would likely cost Beijing nearly $4 billion in trade with the bloc, according to a new analysis. The number of Chinese EVs imported to the EU would drop by a quarter – some 125,000 vehicles – if Brussels were to impose a 20% import tariff, Germany’s Kiel Institute for the World Economy said Friday, citing its new study. Sales of locally produced vehicles would likely increase by almost the same amount.
/jlne.ws/3X3kOLi

Venezuela’s long and winding debt restructuring road; There’s some forward movement though
Elias Ferrer – Financial Times
Many people think Venezuelan debt is a lost cause, a game only to be played by rinky-dink hedge funds. After all, the bonds have been in default since 2017 – a longer period in limbo than even Argentina suffered after its 2001 default. The bonds were issued by the Venezuela government and two state-owned companies, national oil champion PDVSA and the utility Elecar. With accrued interest, we’re looking at $92bn. A few more years of past-due interest heaping up and Venezuela’s debt restructuring might even supplant Argentina’s in size as well as lengthiness.
/jlne.ws/4bSuAEk

Miscellaneous

This Summer’s Big Debate: How Long Should Your Shorts Be? Five-inch inseams have been popular for the past few summers. Some are passionate that it’s time for change.
Jacob Gallagher – The Wall Street Journal
Deep down, Gary Wells knows that he looks better in shorter shorts. But this summer, you won’t spot him in anything other than knee-hiding near-capris. “All of the shorts that I’m wearing now are baggy, longer shorts,” said Wells, 41, a costumer in Los Angeles. The 3-inch shorts in his closet are sharper and sportier. But the pendulous vintage bloomers he’s bought lately? They “make me feel like I am on top of the trend and I know what’s cool right now,” said Wells.
/jlne.ws/4e49WCJ

What AI thinks a beautiful woman looks like
Nitasha Tiku and Szu Yu Chen – The Washington Post
As AI-generated images spread across entertainment, marketing, social media and other industries that shape cultural norms, The Washington Post set out to understand how this technology defines one of society’s most indelible standards: female beauty. Every image in this story shows something that doesn’t exist in the physical world and was generated using one of three text-to-image artificial intelligence models: DALL-E, Midjourney or Stable Diffusion. Using dozens of prompts on three of the leading image tools – MidJourney, DALL-E and Stable Diffusion – The Post found that they steer users toward a startlingly narrow vision of attractiveness. Prompted to show a “beautiful woman,” all three tools generated thin women, without exception. Just 2 percent of the images showed visible signs of aging.
/jlne.ws/4aHC7V9

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The Stock Market Has Rarely Been This Sleepy

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

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