How to Fix a $2.2 Trillion FX Risk After 50 Years of Trying

Nov 27, 2023

First Read

Hits & Takes
John Lothian & JLN Staff

This newsletter is about non-price-oriented risks. Back when it started, the largest risk to the financial markets, including futures, options and securities trading, was the advent of electronic trading. Electronic trading was the runaway train that was going to run over everything and everyone in its way. It was a risk to everyone’s job, especially the people standing on trading floors conducting commerce the same way it had been for over 100 years.

Open outcry trading is largely gone. Remnants exist in niche sectors, but most everything trades electronically these days, proving my original thesis for this newsletter correct. But there were other risks that went along with the move away from open outcry trading, risks involving new regulations, new technologies, new products, new competition, globalization of trade, algorithmic trading, high-frequency trading, co-location and more non-price-oriented risks.

In recent years the rise of bitcoin and cryptocurrency trading presented new risks to the markets and to established players and all the people employed by them. JLN has covered that story from the beginning as Bitcoin attracted attention on Wall Street to today’s regulatory crackdown on major crypto players. We launched as a separate wiki when crypto was too toxic for established players to touch, then combined that content into MarketsWiki and decommissioned as crypto went mainstream. Crypto and tokenization remain large non-price-oriented risks to the larger markets and financial markets industry.

The ultimate destructive risk to the markets is war, which is why JLN follows the Ukraine-Russia war and the Israeli-Hamas conflict so prominently. Nothing can corrupt markets or the reallocation of resources like a war.

But there is a new risk that I believe tops crypto as a risk and that is artificial intelligence, or AI as it is called. I believe AI has the same potential risk to change everything in the financial markets and the financial markets industry as did electronic trading. AI is a powerpack that can be loaded into many different aspects of trading, clearing and settlement.

I believe AI will influence nearly every job in the industry in some way, it is just a question of how and when.

The coverage in JLN of the big kerfuffle in Silicon Valley over Sam Altman being fired by the board of OpenAI and then returning and the board being replaced was not just because it was interesting. It was also important. Discussions about the future of AI are taking place and it is important who has a seat at the table. We should all be informed about the debate and the issues and that is why JLN is covering this important topic.

The goal of JLN is to make the world a better place by supporting market-based solutions and providing clarity for participants and stakeholders about non-price-oriented market risks. AI has become a non-price-oriented risk that JLN will continue to follow, as it impacts us all.

FIA Asia 2023 opens tomorrow in Singapore and JLN’s Robby Lothian is there to represent the company and conduct video interviews at the conference and in Singapore. Besides conference coverage, Robby will be journeying across Singapore to video some Open Outcry Traders History Project videos and a career story of a senior SGX executive. This is Robby’s first solo trip and his first trip to Asia. I know he is in good hands with our friends at SGX and the FIA. He has a lot of work to do to keep him busy during a short week and quick turnaround.

SGX and Rama Pillai, who accepted the Kilt Challenge at IDX earlier this year, have posted a video to LinkedIn about the Futures For Kids and the Kilt Challenge and what it means. John Lothian News applauds Rama for accepting the Kilt Challenge and encourages you to participate in this noble effort. To support this cause and contribute to Rama’s Kilt Challenge fundraising for Futures For Kids, go HERE.

Thomas Chippas has been appointed both the chief executive officer and a director of Argo Blockchain plc. Chippas was formerly the CEO of ErisX.

The latest new member FIA has welcomed is Miller Strategic Partners LLP. Miller Strategic Partners, founded in 2023 by Ryne Miller and William Schroeder, is a law firm that advises traditional and emerging financial markets companies and trading firms.

We have enough problems with billionaires and crypto bros. See the story below. Benzinga now tells us that we could have had our first trillionaire had he held onto all the shares of his company he originally held. The story is titled “Bill Gates Could Be A Trillionaire Today If He Had ‘Diamond-Handed’ His Original Microsoft Shares.”

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


Our most read stories from our previous edition JLN Options were:
Nvidia Options Hand Rare Gains to Traders Betting on Calmness from Bloomberg via Yahoo Finance.
Hedge fund short sellers suffer $43bn of losses in market rally from the Financial Times.
Crypto Traders Load Up on Bitcoin Topside Option Plays After Binance’s Guilty Plea from CoinDesk. ~JB

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


Short sellers are misunderstood; Bans on the stock investment strategy are often misguided and harmful
The editorial board – Financial Times
Short selling has always had an image problem. The investment strategy – which involves selling a borrowed asset expecting its price to fall, then buying and returning it – is often associated with callous bankers gaining from others’ misfortune. The 2015 Hollywood film, The Big Short, which documents the billions some traders amassed by betting against the US housing market in the run-up to the global financial crisis, brought the practice to wider consciousness. Alongside the moral qualms, critics claim “shorting” stokes panic, crashes stock prices and punishes the public. The authorities have frequently responded by clamping down on the practice – the latest attempt comes from South Korea.

****** Short sellers and speculators as a whole will never fully be understood. ~JJL


Crypto Kings dethroned as crackdown sweeps away old guard; Criminal and civil charges end boom era’s ‘cult of personality’
Scott Chipolina and Nikou Asgari – Financial Times
The US’s successful prosecution of Binance’s Changpeng Zhao this week removed the top executive at the world’s largest cryptocurrency exchange, a key target in its efforts to clean up a market with a Wild West reputation. Zhao, also known as CZ, agreed to plead guilty to a criminal charge of failure to protect against money laundering, pay $50mn in penalties and step down as chief executive as part of the deal he struck with US authorities. He is due to be sentenced in February.

****** Who are the crypto princes? ~JJL


Academic tortured in UAE calls for delay to sale of The Telegraph; Matthew Hedges welcomes potential government intervention following Abu Dhabi-backed bid
Patrick Sawer – Telegraph
A British academic jailed and tortured in the United Arab Emirates after being falsely accused of spying has criticised the bid by an Abu Dhabi-led investment fund to buy The Telegraph. Matthew Hedges, who was sentenced to life in jail in November 2018 after being arrested at Dubai airport, before being eventually released later that month, called for the UK Government to delay the proposed deal.

****** The UK government should take a long look at this. ~JJL


‘We will coup whoever we want!’: the unbearable hubris of Musk and the billionaire tech bros; Challenging each other to cage fights, building apocalypse bunkers – the behaviour of today’s mega-moguls is becoming increasingly outlandish and imperial
Douglas Rushkoff – The Guardian
Even their downfalls are spectacular. Like a latter-day Icarus flying too close to the sun, disgraced crypto-god Sam Bankman-Fried crashed and burned this month, recasting Michael Lewis’s exuberant biography of the convicted fraudster – Going Infinite – into the story of a supervillain. Even his potential sentence of up to 115 years in prison seems more suitable for a larger-than-life comic book character – the Joker being carted off to Arkham Asylum – than a nerdy, crooked currency trader.

******* Hubris is wonderful, isn’t it? ~JJL


Friday’s Top Three
Our top story Friday was Reuters’ Exclusive-OpenAI researchers warned board of AI breakthrough ahead of CEO ouster, sources say. Second was The Trade’s HKEX reveals plans to launch China treasury bond futures. And third was our MarketsWiki page for Hong Kong Exchanges and Clearing (HKEX).



Lead Stories

How to Fix a $2.2 Trillion FX Risk After 50 Years of Trying; Technology may finally offer a solution to the threat of settlement failures that faces financial institutions every day.
Andy Mukherjee – Bloomberg
It’s finally time to move on from a $2.2 trillion problem by burying Bankhaus Herstatt – a half-century after its collapse. On June 26, 1974, before the opening of the New York money market, liquidators swooped in and closed down the Cologne-based midsized lender before it could release the dollars for all the currency trades in which it had already received deutsche marks. The ensuing chaos on both sides of the Atlantic led to the creation of the Basel Committee on Banking Supervision. But the so-called Herstatt risk, in which one party is left holding a claim after it has discharged its obligations, has lived on.

Nasdaq bets on boom in ‘zero day’ options with new contracts; US exchange lists new options tracking gold, oil and Treasury ETFs
Nicholas Megaw – Financial Times
Trading in a controversial type of derivative known as “zero-day” options is spreading to Treasury and commodity markets, as Nasdaq and other exchange groups try to replicate a boom that has transformed trading in US stock indices. Nasdaq this week listed a series of new options contracts tracking some of the most popular exchange traded funds investing in gold, silver, natural gas, oil and long-term Treasuries.

The 5 trillion pound ‘pyramid scheme’ threatening to wreck your retirement
Ben Marlow – The Telegraph
The collapse of Southland Royalty, a private equity-backed oil-and-gas explorer that owned fields in Wyoming’s Green River basin and New Mexico’s San Juan Basin, in early 2020, was unremarkable in many ways. On the one hand, it was merely the latest shale driller to fall victim to a double-whammy of a near-halving of oil prices from highs of nearly $100 (80 pounds) a barrel in the middle of 2014, together with a four-year low in gas prices.

Binance and the End of Crypto’s Dream to Escape From Government; The platform’s settlement with federal authorities transforms it from a scofflaw into a watcher and enforcer on behalf of the U.S. Treasury
Henry Farrell and Abraham Newman – The Wall Street Journal
On Nov. 21, Binance, the world’s largest cryptocurrency exchange, pleaded guilty to breaking U.S. anti-money-laundering laws. Its CEO has stepped down, and the company will pay $4.3 billion in penalties. While the eye-watering fine is getting the headlines, it’s the details of the agreement that really redefine the relationship between government and crypto.

UK asset managers given go-ahead to launch ‘tokenised’ funds; Treasury backs blueprint for blockchain-based technology which industry says will cut costs for end investors
Sally Hickey – Financial Times
UK asset managers will be able to develop tokenised versions of their funds, after winning government backing for their push to experiment with blockchain technology. An industry working group, led by trade group the Investment Association, on Friday published a blueprint for regulated funds in the UK to put their assets on digital ledgers, with support from the UK Treasury and the Financial Conduct Authority.

China Scrambles to Contain a Looming Shadow-Bank Meltdown; Investors have protested against Zhongzhi, which has missed payments on some of its products
Rebecca Feng and Weilun Soon – The Wall Street Journal
Chinese authorities are taking more forceful action to contain the growing financial troubles of one of the country’s biggest shadow lenders. Police in Beijing said over the weekend that they had taken “criminal coercive measures”-a euphemism for arrests-against multiple employees of Zhongzhi Enterprise. The privately held conglomerate operates several businesses that sold investment products to many wealthy individuals and companies in China, and has struggled for months to make promised payments to investors.

The World’s Largest Buyer of U.S. Debt Isn’t Going Away; The end of zero-rate policy in Japan seems like a risk to American bonds. In fact, they may already have passed the test.
Jon Sindreu – The Wall Street Journal
Could the largest foreign buyer of American debt suddenly stop buying? Here is a comforting thought: This problem is probably already behind us. At a time when government issuance is massively expanding and firms face a 2025 refinancing cliff, overseas investors have gone from holding 43% of U.S. debt a decade ago to holding just 30%. Adding to the worries, the Bank of Japan 8301 0.35%increase; green up pointing triangle might start raising interest rates next year, giving some Japanese owners a reason to repatriate their money.

Ex-Binance CEO asks judge to allow him to leave US ahead of sentencing
Lauren Irwin – The Hill
Changpeng Zhao, the founder and former CEO of cryptocurrency exchange Binance, has asked the judge to allow him to leave the United States. Zhao’s lawyers are urging U.S. District Judge Richard Jones in Seattle to reject the Justice Department’s (DOJ) request to bar him from returning home to the United Arab Emirates until he is sentenced.

We cannot afford to have a bad COP; Backsliding and inconsistency on national climate commitments is deeply troubling
Mary Robinson – Financial Times (opinion)
The writer is chair of The Elders and former president of Ireland. This year will go down in history as the one when global temperature records were not merely surpassed but shattered. There is also a risk that 2023 becomes the year that multilateral co-operation on climate fractures, if leaders do not respond at the scale and with the urgency the science demands. As COP28 starts in Dubai against a backdrop of divisive geopolitics, governments need to demonstrate that working together on our shared challenges is not only necessary but possible.

UAE planned to use COP28 summit for oil deals, documents show; Leak appears to outline talking points for discussions with foreign governments
James Politi, Kenza Bryan, Simeon Kerr and Raya Jalabi – Financial Times
The United Arab Emirates planned to use meetings about the COP28 climate summit it is hosting later this week to pitch oil and gas deals to foreign governments, according to leaked briefing documents obtained by the non-profit Centre for Climate Reporting alongside the BBC. Sultan al-Jaber, president-designate of this year’s UN climate summit, has called for a “phaseout” of fossil fuels globally. But his position as head of COP28 while also leading the UAE state oil company Adnoc has attracted criticism from politicians in the US and Europe because of the perceived conflict of interest.

Biden not scheduled to attend COP 28 climate summit
Rebecca Falconer and Ben Geman – Axios
President Biden is not expected to attend the opening of COP 28 this week, but will send top U.S. officials to the UN climate summit in Dubai this week, the White House confirmed. Why it matters: Biden attended the previous two COP summits, and has put tackling climate change at the center of his policymaking. Environmental policy forms a key part of his administration’s national security strategy. Senior White House aides suggested that Biden was busy dealing with matters like the Israel-Hamas war, per the New York Times, which first reported the news. The big picture: Over 70,000 delegates are expected to attend COP 28, which begins on Thursday. These include Pope Francis, who on Sunday confirmed his attendance despite having a lung inflammation.

Coffee and cocoa stored in EU warehouses at risk of destruction under new rules; Anti-deforestation law passed in June restricts non-compliant stocks from being sold in the bloc
Alice Hancock and Susannah Savage – Financial Times
Hundreds of thousands of tonnes of coffee and cocoa stored in EU warehouses risk being destroyed as an unforeseen consequence of the bloc’s deforestation law, which came into force in June this year. The law aims to ban products including coffee, cocoa, palm oil and rubber that have been grown in areas of deforestation from being sold within the bloc.

Ukraine Invasion

Russian Drones Knock Out Power as Kyiv Marks Historic Famine; Air defense shoots down 71 of 75 drones fired overnight; Ukraine commemorates millions killed in Soviet-era Holodomor
Daryna Krasnolutska – Bloomberg
Russia fired its biggest barrage of loitering munitions to date at Ukraine overnight as Kyiv prepares to commemorate victims of the 1930s famine orchestrated by Soviet leader Josef Stalin to force Ukrainian peasants onto collective farms. Ukraine’s air defense said it shot down 71 of 75 Shahed-131/136 drones aimed mainly toward the capital region and launched from two directions within Russia. It also shot down one Russian Kh-59 cruise missile in the Dnipropetrovsk region of Ukraine’s east.

Gazprom Says Gas Exports to China Reach New High as Demand Soars
Bloomberg News
Russia’s Gazprom PJSC said its natural gas deliveries to China have hit a new historic high amid rising demand. Chinese National Petroleum Corp. requested volumes via the Power of Siberia 1 route that once again exceeded Gazprom’s contractual obligations on Nov. 23, the Russian producer said in a statement cited by state news service Tass on Saturday.

Bloomberg: Some EU members seek to weaken Russia sanctions enforcement plan
Martin Fornusek – Kyiv Independent
Some EU countries seek to weaken the bloc’s plans aimed against Russia’s ability to acquire restricted dual-use goods via third-party countries, Bloomberg reported on Nov. 25, citing undisclosed sources. The European Commission has reportedly proposed banning importers from reselling dual-use products like semiconductors to Russia while requiring the buyers to deposit a certain sum in an escrow account.

Ukraine needs more air defences to protect grain exports, Zelenskiy says
Max Hunder – Reuters
Ukraine needs more air defences to protect its grain export routes as well as regions bordering Russia, President Volodymyr Zelenskiy said on Saturday, as he addressed an international summit on food security in Kyiv. “There is a deficit of air defence – that is no secret,” Zelenskiy told the Grain from Ukraine summit, which was attended by senior officials from European countries, including Swiss President Alain Berset and Lithuanian Prime Minister Ingrida Simonyte.

Russia Targets Ukrainian Cities With Waves of Explosive Drones; The attack, which was largely repelled, is likely the first of a fresh effort to knock out Ukraine’s power
James Marson – The Wall Street Journal
KYIV-Russia sent waves of explosive drones to strike cities across Ukraine in the largest attack since last winter that likely marks the start of a fresh campaign aimed at demoralizing and dislocating Ukrainians. Ukraine’s military said it intercepted all but one of 75 Shahed drones overnight, most of which were targeted at Kyiv. Authorities in the capital said five people were slightly injured, including an 11-year-old child, and several buildings damaged.

Israel/Palestine Conflict

How Israel is interfering with Hamas’s route to victory; The Jewish state is determined to defeat the enemy, whatever the price
Jake Wallis Simons – Telegraph
As the sun went down on Friday October 6, Israelis began preparing for shabbat. For some, their weekend plans were not particularly restful; this would be the fortieth consecutive Saturday on which thousands would take to the streets of Tel Aviv to protest the Netanyahu government. Others had gentler intentions. Two hours south of the buzzing metropolis, in the sleepy kibbutz of Kfar Aza near the Gaza border, Aviv and Livnat Kutz were hoping to spend the following afternoon with their three teenage children and other likeminded locals flying kites near the fence as a gesture of peace towards their Palestinian neighbours.

Listen: Negotiators Push to Extend Israel-Hamas Truce
The Wall Street Journal
Israel and Hamas are in the fourth and final day of a halt in fighting that has seen Hamas release dozens of hostages in exchange for Palestinian prisoners held in Israel. In this edition of the What’s News podcast, WSJ correspondent Stephen Kalin explains where the two sides and the U.S. stand on a possible extension of the ceasefire. Luke Vargas hosts.

Exchanges, OTC and Clearing

HKEX Commits To Carbon Neutrality By 2024 And Net Zero By 2040
Hong Kong Exchanges and Clearing
Hong Kong Exchanges and Clearing Limited (HKEX) is today (Monday) pleased to announce the company’s own commitments to achieving both carbon neutrality and net zero. Reflecting the Group’s long-standing convictions, and commitments to advancing the sustainable development of global markets and the broader communities in which the Group operates, HKEX is pleased to confirm its plans to achieve Group carbon neutrality by 2024, and net zero by 2040. To align with the Paris Agreement goal of limiting global warming to 1.5 degrees Celsius above pre-industrial levels, HKEX commits to the continual reduction of its scope 1, 2, and 31 greenhouse gas emissions, and to neutralise its residual emissions by 2040. HKEX intends to submit its science-based emission reduction targets to the Science Based Targets initiative (SBTi) for validation in 2024.

Intercontinental Exchange, Inc. Announces Amendments to Private Exchange Offer and Consent Solicitation for Black Knight InfoServ, LLC’s Outstanding 3.625% Senior Notes Due 2028
Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE: ICE) (“ICE”) announced today amendments to its previously announced private exchange offer (the “Exchange Offer”) and related consent solicitation (the “Consent Solicitation”) with respect to the outstanding 3.625% Senior Notes due 2028 (the “BK Notes”) issued by Black Knight InfoServ, LLC (“BK”), a wholly owned subsidiary of ICE. ICE will not make any further amendments to the terms and conditions of, or the consideration offered in, or any extensions of, the Exchange Offer and Consent Solicitation. If the Requisite Consent (as defined below) is not obtained by the earlier of (i) the Expiration Date (as defined below) and (ii) the termination of the Exchange Offer and Consent Solicitation, the terms of the BK Notes will remain unchanged and BK will continue to be bound by the reporting covenant and the other covenants in the indenture under which the BK Notes were issued (the “Original BK Indenture”).

ASX expands delivery uplift roadmap to include new recommendations from review
ASX has expanded the actions it will undertake to further improve delivery capability across the organisation following a review of its delivery frameworks. The review was conducted to inform a special report published today which assesses ASX’s Portfolio, Program and Project Management frameworks. The special report was delivered to ASIC on 29 September 2023 and was audited by EY. The special report included a maturity assessment by independent expert PM-Partners which benchmarked ASX against internationally recognised standards. While PM-Partners identified areas for improvement it also determined ASX has strong foundations, capable people and has applied dedicated resources over the last two years to uplift processes, frameworks, people and capabilities.

Western Cape Government & JSE collaborate to fund SME’s for growth
Johannesburg Stock Exchange
The Western Cape Government Department of Economic Development and Tourism (DEDAT) has collaborated with the Johannesburg Stock Exchange (JSE) to address the funding gap for Small and Medium Enterprises (SMEs) in the Western Cape. In a Capital Matching event held today in Cape Town, they are bringing together more than 80 SMEs in the Tourism & Manufacturing, Agriculture & Agri Processing, Green Economy, Real Estate, Service and Technology sectors. The high-growth, ready to scale SMEs have the opportunity to meet with some of South Africa’s leading funders in speed pitching sessions, offering an overview of their business growth prospects. An estimate by the International Finance Corporation reveals the significant impact of the local SME sector on South Africa’s economy, contributing approximately 34% to the annual GDP and employing between 50 and 60% of the total workforce. Despite their vital role, over 70% of small businesses face challenges that lead to failure within the first five years. These challenges include a lack of access to tools and technology, skills deficits, difficulties in market access, and a pervasive lack of funding.

Speech by Loh Boon Chye, CEO, SGX Group at the celebration of the DR Linkage between Singapore and Thailand
Mr Harry Goh, Charge d’Affaires, Embassy of the Republic of Singapore; Ms. Nataya Niyamanusorn, Assistant Secretary General, Securities and Exchange Commission of Thailand; Mr Kee Rui Xiong, Executive Director, Monetary Authority of Singapore; Dr. Pakorn Peetathawatchai, President, Stock Exchange of Thailand; Mr. Rawin Boonyanusasna, Head of Global Markets Group, Krungthai Bank PCL Mr. Charnsak Thanataecha, Director and Chief Product Officer, Yuanta Securities (Thailand); Distinguished guests, ladies and gentlemen, And to everyone in Thailand and Singapore watching this live on Facebook, Good morning. I am equally delighted to be here in Bangkok again – this time to celebrate with SET and our partners, the fruition of ASEAN’s first two-way exchange-level depository receipts (DR) linkage. This could only have been achieved with the support from everyone present today.


The Fight for the Soul of A.I.
David Brooks – The New York Times
One of the nice things about OpenAI is that it was built on distrust. It began as a nonprofit research lab because its founders didn’t think artificial intelligence should be pioneered by commercial firms, which are driven overwhelmingly by the profit motive. As it evolved, OpenAI turned into what you might call a fruitful contradiction: a for-profit company overseen by a nonprofit board with a corporate culture somewhere in between.

A Conversation With Sam Altman, Cast in a New Light; Two podcast hosts recorded an interview with the chief executive of OpenAI. Two days later, he was fired.
Terence McGinley – The New York Times
In early November, a few days before a meeting of developers at OpenAI, the journalist Casey Newton bumped into Sam Altman, the company’s chief executive, at a birthday party. Mr. Altman had an idea: They should discuss “the future.”

Share sale set to test financial impact of OpenAI’s leadership turmoil; Key investors bullish of hitting $86bn valuation despite company’s chaotic power struggle
George Hammond and Michael Acton – Financial Times
An upcoming sale of shares in OpenAI is set to test how much the past week’s leadership chaos has cost the company and its backers, though big investors are bullish about securing a high valuation. The employee stock sale, which had been planned before the sacking last week of chief executive Sam Altman and expected to value the company at $86bn, will continue as planned, according to two investors with direct knowledge of the matter.

Argo Blockchain PLC Announces Appointment of CEO and PDMR Notification
Argo Blockchain PLC
Argo Blockchain plc (“Argo” or “the Company”), a global leader in cryptocurrency mining (LSE:ARB)(NASDAQ:ARBK), is pleased to announce that it has appointed Thomas Chippas as Chief Executive Officer and Director with immediate effect.


U.S, U.K. And 16 Other Nations Agree AI Security Guidelines
Emma Woollacott – Forbes
Eighteen countries have signed an agreement on AI safety, based on the principle that it should be secure by design. The Guidelines for Secure AI System Development, led by the U.K.’s National Cyber Security Centre (NCSC) and developed with the U.S.’s Cybersecurity and Infrastructure Security Agency (CISA), are claimed to be the first of their kind to be agreed globally.

India fights back against soaring digital fraud; Financial literacy education is key to protecting Indians from scams in era of superfast payments
Chloe Cornish – Financial Times
Maria was juggling the hundred little tasks that arise between waking up and commuting to work in Mumbai, when her phone started ringing and wouldn’t stop. The repeat caller said he was from her network provider Vodafone – and if she didn’t provide documentation to prove her identity right now, her Sim would be blocked.

Revealed: The terrifying rise of the ‘crypto-jackers; The cyber crimewave offering big returns while cheating its victims out of anything from a few hundred pounds to a million
Olivia Christie – Daily Mail
Rising numbers of Scots are falling prey to sophisticated cryptocurrency scams, according to Police Scotland’s cyber-crime unit. Lured by the prospect of a quick profit and stellar returns, many people are tempted to invest in digital currencies such as bitcoin. However, police have warned that the growth in legitimate investments has spawned a parallel crime boom – including fraudulent schemes and also a sophisticated form of theft called ‘crypto-jacking’.

Cyberattack on Kansas Courts Leaves Lawyers Filing ‘Everything by Fax’; The state’s court system has been offline for more than a month
Shannon Najmabadi – The Wall Street Journal
Kansas attorney Kayla Clark can typically file legal documents online. She can see when a judge signed them. But she has been locked out of this digital world for more than a month, one of numerous lawyers and litigants forced to go analog in the wake of an October cyberattack that has crippled Kansas’ court system and made it mostly impossible to pay fines, file for divorces or complete other legal tasks online.

Cybersecurity is everywhere, even in the watch on your wrist
Sintija Segleniece – Medium
Cybercrime is set to amass an 8 trillion dollars in damages in 2023, and the numbers are only going to grow. It means that now, more than ever, we need to prioritize education at all levels – from youth at schools to our parents at home – to avoid falling victim to cyberattacks. Our IT Monitoring Engineer Kristaps Kozlovskis, a cybersecurity enthusiast, is actively promoting the topic in his local community and is a frequent speaker at schools and tech events. Join us as we dive into Kristaps’ professional journey and learn about the hottest topics in cybersecurity.

Another major crypto exchange has been hacked, with $100 million stolen


DYdX to unlock $500 million of tokens, 30% of supply
Zack Abrams – The Block
In the weeks ahead, a number of crypto projects will unlock significant quantities of tokens. Here’s a breakdown of the most significant unlocks and airdrops for the month of December, according to TokenUnlocks data. Leading the pack is decentralized exchange dYdX, which will unlock 150 million tokens – or 30% of its tokens allocated to investors, founders, and past and future employees – on Dec. 1, midnight UTC. The tokens are worth $500 million at current prices, according to The Block’s price data.

Grayscale Bitcoin Trust Could See $2.7B of Outflows if ETF Conversion Is Approved: JPMorgan; The bitcoin price could come under pressure as some of the money is likely to completely exit the ecosystem, the report said.
Will Canny – CoinDesk
A significant number of Grayscale Bitcoin Trust (GBTC) shares have been bought in the secondary market this year at a deep discount to net asset value (NAV) in anticipation the trust’s conversion to an exchange-traded fund (ETF) will be approved by the U.S. Securities and Exchange Commission (SEC), JPMorgan (JPM) said in a research report Thursday.

Circle, Japan’s SBI Enter Pact to Spur Stablecoin USDC Usage; Memorandum seeks to circulate the USDC token in Japan; Nation is vying with Asian peers for stablecoin business
Natalie Choy – Bloomberg
Stablecoin issuer Circle Internet Financial Ltd. entered into a pact with SBI Holdings Inc. to circulate the USDC token in Japan, which is vying with the likes of Singapore and Hong Kong to develop a digital-asset hub. SBI Holdings, a venture capital group and financial services provider, will also work with Circle on establishing a banking relationship and promoting the use of Circle’s web3 services in Japan, according to a statement Monday. Web3 refers to a vision of the internet built around crypto and blockchain technology.

NFT Regulations In Europe: Challenging Traditional Tax Frameworks
Joseph Katala – Cryptopolitan
A non-fungible token (NFT) is a special digital record stored on a blockchain. It typically represents ownership rights in digital or real assets, such as digital art or reward items like alcohol or vacations. NFTs serve as a way to confirm who owns or has the rights to that asset. The proof of ownership is secure because information stored on blockchains is extremely difficult to alter or delete. NFTs stand out from other tokens like Bitcoin and Ether. Bitcoin and Ether tokens are very similar and can be exchanged directly, making them fungible, like serial-numbered banknotes. In contrast, NFTs have unique metadata that points to various digital or real-world assets, making them non-fungible. So, what about NFT regulations in Europe?


The wars shaping the new world order; Great-power rivalries have once again become central to international relations
Brahma Chellaney – The Japan Times
The crises, conflicts and wars that are currently raging highlight just how profoundly the geopolitical landscape has changed in recent years, as great-power rivalries have again become central to international relations With the wars in Gaza and Ukraine exacerbating global divisions, an even more profound geopolitical reconfiguration – including a shift to a new world order – may well be in the works. These two wars heighten the risk of a third, over Taiwan. No one – least of all Chinese President Xi Jinping – can watch the United States transfer huge amounts of American artillery munitions, smart bombs, missiles and other weaponry to Ukraine and Israel without recognizing that American stockpiles are being depleted. For Xi, who has called Taiwan’s incorporation into the People’s Republic a “historic mission,” the longer these wars continue, the better.

Calls for AI tax overhaul amid concerns machines ‘cheaper to use’ than humans; Jeremy Hunt’s ‘full expensing’ tax pledge strikes fear over jobs in creative industries
James Warrington – Telegraph
The creative industries have called for an overhaul of the UK’s tax regime for the artificial intelligence (AI) era amid concerns it will be cheaper to buy machines than hire humans.


Hong Kong police vow to make arrests after Hounax virtual asset trading platform allegedly scams 131 people out of nearly HK$120 million; Securities and Futures Commission listed Hounax as suspicious virtual asset trading platform early this month; Platform, which claimed to be run by Singaporean company, started operating early in 2023 and appeared to target Hong Kong investors, police say
Emily Hung – South China Morning Post
Hong Kong police launched an investigation on Saturday after more than 130 people claimed a virtual asset exchange platform called Hounax scammed them out of nearly HK$120 million (US$15.4 million), with the force vowing to make arrests soon. The Securities and Futures Commission (SFC) listed Hounax as a suspicious virtual asset trading platform early this month after it was found to have lied about its ties with a financial institution and a venture capital firm.

Beijing police launch investigation into troubled wealth manager Zhongzhi
Beijing police are investigating suspected crimes committed by Zhongzhi Enterprise Group, a leading Chinese wealth manager, according to a social media post published by the Chaoyang Public Security Bureau on Saturday. Zhongzhi earlier this week told investors it is heavily insolvent with up to $64 billion in liabilities, threatening to reignite concerns that China’s property debt crisis is spilling over into the broader financial sector.

South Korea Is Probing Sales of Exotic Notes Linked to Chinese Stocks
Shinhye Kang – Bloomberg
A South Korean regulator is investigating whether financial institutions that sold derivatives products linked to Chinese stocks adequately explained the risk of losses to retail investors. The Financial Supervisory Service is probing sales of equity-linked securities tied to the Hang Seng China Enterprises Index, the regulator said in a text message. Some 8.41 trillion won ($6.5 billion) of such products will mature in the first half of next year, the Korea Economic Daily reported earlier, citing unidentified people in the industry.

How the $1.8 Billion Real-Estate Commissions Lawsuit Came to Be; For years, lawyers prodded at the rule on how buyers’ and sellers’ agents share fees. But two lawsuits finally took aim at it head on.
Laura Kusisto – The Wall Street Journal
The litigation that could end up changing how millions of Americans buy and sell homes was hiding in plain sight for three decades. The current set of rules governing how agents are paid, which effectively mean sellers are the ones who set compensation for buyer agents, date to the 1990s. Those rules have come under significant scrutiny, particularly as commissions have remained around 5% to 6% of the sale price even as home values have skyrocketed and many buyers do more of the work finding a home themselves online.

FCA publishes final report on IFPR implementation observations
We have today published the final report on our multi-firm review into firms’ progress in implementing the internal capital adequacy and risk assessment (ICARA) process and reporting requirements under the Investment Firms Prudential Regime (IFPR).

ASIC acknowledge ASX’s release of the Portfolio, Program and Project Management Special Report and Audit Report

Investing and Trading

Who Needs a Record Label? VC-Like Investments Power New Music Artists; Online platforms pair musicians releasing TikTok, YouTube videos with investors
Anne Steele – The Wall Street Journal
Call it the music industry’s version of venture capital. A generation of independent music artists-from a ukulele-strumming college student to pop singers belting in front of smartphones-are getting their start outside of major labels with the help of online marketplaces that pair them with financial backers.

The Revenge of the Zero-Rate World Is Coming; Financial historian Edward Chancellor tells Merryn Talks Money how low rates resulted in capital being misallocated, and why that’s bad news for any soft landings.
John Stepek and Merryn Somerset Webb – Bloomberg
Over the past 12 months, interest rates across the world rose rapidly, in many cases from their lowest levels on record. Despite a few hiccups along the way-including a UK gilts market panic and a mini-banking crisis in the US-inflation is starting to ease and investors are hoping for a “soft landing.”

Black Friday Shoppers Set Online Spending Record, Adobe Says; US online revenue up 7.5% from last year: Adobe Analytics; Slow sales growth possible during broader holiday months
Alicia Diaz – Bloomberg
Black Friday shoppers spent a record $9.8 billion online in the US, Adobe Analytics reported, offering a positive sign for retailers facing lackluster sales forecasts for the holiday season. Demand for electronics, smartwatches, TVs and audio equipment helped boost the day’s online sales by 7.5% compared with last year. Consumers extended their budgets by leaning on buy-now, pay-later options, which climbed by 72% from the week before Thanksgiving.

Is China really dumping Treasury bonds and sending yields higher? A former US official explains the mystery
Filip De Mott – Business Insider
China isn’t fueling the bond-market rout with a large sale of its Treasury holdings but is instead reshuffling its US debt assets, Brad Setser, a former Treasury official, wrote for the Council on Foreign Relations. After US Treasury yields surged to highs not seen in 16 years, economists have looked for explanations for what is now one of the worst market crashes in history.

What are zero-day options? Here’s how they’re taking over a key corner of the stock market and why they could pose a big risk.
Matthew Fox – Business insider
There’s a new options trading product that is taking over Wall Street, and it could ultimately pose a big risk for the stock market as it gains in scale. Zero-day options have quickly become a major force in the market, even as some observers have dismissed them as “just gambling” or the “fantasy football of option trading.”

Private Equity’s Bubble Vintage May Fizzle; It matters not just what you buy but when you buy it, and 2021 wasn’t a great moment to deploy capital.
Chris Bryant – Bloomberg

Billions Wiped Out as Stock-Safety Trade on Wall Street Misfires; Dividend ETF flows near record lows following last year’s boom; Safety trade has underperformed in 2023 as tech stocks rally
Emily Graffeo – Bloomberg

China Investors Face Tens of Billions in Losses Over Zhongzhi; China Vision’s Sun says assets typically sold at 70% discount; Authorities said criminal investigations opened into firm
Bloomberg News

Environmental, Social and Corporate Governance

World stands on frontline of disaster at Cop28, says UN climate chief; Exclusive: Simon Stiell says leaders must ‘stop dawdling’ and act before crucial summit in Dubai
Fiona Harvey – The Guardian
World leaders must “stop dawdling and start doing” on carbon emission cuts, as rapidly rising temperatures this year have put everyone on the frontline of disaster, the UN’s top climate official has warned. No country could think itself immune from catastrophe, said Simon Stiell, who will oversee the crucial Cop28 climate summit that begins next week. Scores of world leaders will arrive in Dubai for tense talks on how to tackle the crisis.

COP28: What key issues will be discussed at UN climate change conference?
Kate Abnett – Reuters
Following a year of record heat and drought, this year’s U.N. climate summit will feature a contentious set of issues for countries working to find common ground in tackling climate change, including whether to phase out fossil fuels and how to finance the energy transition in developing countries. Here are the key issues in the two-week COP28 negotiations starting Nov. 30 in Dubai. Taking stock of climate progress. The main task at COP28 is a first-time assessment of countries’ progress towards meeting the 2015 Paris Agreement’s goal of limiting the global temperature rise to “well below” 2 degrees Celsius, while aiming for 1.5C.

28 voices on COP28: What we want from the climate summit (part 1)
Sidhi Mittal – edie
Exclusive: In the initial segment of a two-part exclusive, edie converses with business leaders, sustainability professionals, climate experts, and green organisations aiming to seize the sustainable business prospects emerging from the crucial COP28 discussions in December. 28 voices on COP28: What we want from the climate summit (part 1) With the clock ticking down to less than a week before COP28 convenes in Dubai, the tangible urgency in addressing the climate crisis looms large, as illustrated by edie’s dedicated COP28 Action Trackers over the past month. COP28 will involve the first-ever global stocktake of climate pledges and actions made by governments since the Paris Agreement, revealing that the world has veered off track from the trajectories set out under the 2015 Paris Agreement.

There’s Never Been a Better Time to Buy an Electric Car; As US production volumes catch up with demand, a glut of electric vehicle inventory is leading to decent discounts. But lower prices won’t last long.
Kyle Stock – Bloomberg
The battery-powered BMW iX is a technological marvel. It travels up to 321 miles on a charge, its glass sunroof goes opaque at the touch of a button and you can turn up the stereo by twirling a finger near the dashboard. At the moment, one of these magical machines is on offer in Los Angeles for $80,195, a 17% discount on the sticker price. If that’s a bit rich, there’s an Ariya, Nissan’s all-new EV, listed for $36,690 in Kansas City – a discount of 18%. More affordable still is the $29,990 Hyundai Kona Electric available in Atlanta. That’s a 31% discount, making it almost as cheap as the gas-burning version.

Fewer Than 10% of CEOs in FTSE 350 Are Women; Women at top of firms are less likely to be in commercial roles.
Olivia Konotey-Ahulu – Bloomberg
Even as Britain’s largest companies are hiring women in executive leadership roles at the fastest pace in five years, there’s a big hurdle to cross: they are still unlikely to be in influential roles overseeing the commercial side of the business. That’s according to a report by gender consultancy The Pipeline, which found that while women made up almost every third executive committee member in the FTSE350 as of July 2023, they tend to be in so-called “functional roles.” This tends to mean they’re promoted to HR and marketing positions rather than roles with profit and loss responsibilities – which are more likely to lead to a CEO position. Male CEOs account for 91% in the index.

Companies Are Dropping Carbon Offsets, But Still Buying the Worst Ones; Purchases of carbon offsets fell for the first time in at least a decade last year, according to an analysis of 260,000 publicly available transactions.
Natasha White, Akshat Rathi, and Demetrios Pogkas – Bloomberg

China’s Remote Deserts Are Hiding an Energy Revolution; Nations will be urged at COP28 to triple renewable energy capacity this decade. The world’s top polluter is already on track, propelled by President Xi Jinping’s strategy to use remote regions to host vast green projects.
Bloomberg News Green

Revealed: Colonial rule nearly doubles UK’s historical contribution to climate change
Carbon Brief

As Groundwater Dwindles, Powerful Players Block Change; Here are some of the people fighting efforts to conserve a vital resource that’s disappearing across the United States.
Christopher Flavelle – The New York Times

Climate and Inequality Entwinement Imperils Us All; International inequality will be a focus of COP28, but politicians need to take a look at inequity within their own borders, too.
Lara Williams – Bloomberg

COP28 President Lobbied on Fossil Fuel at Climate Meetings, BBC Reports; Sultan Al Jaber allegedly planned to use meetings with foreign governments about the upcoming UN climate summit to push forward the oil and gas agenda, according to the BBC
Laura Millan and Maria Tadeo – Bloomberg

Uranium’s Epic Rally Says Lots About the World Right Now; Climate change will continue to spur demand for the metal while traders are betting on the growing risk of geopolitical disruptions to supply.
Liam Denning – Bloomberg


First Republic Crashed and Burned. This Bank Wants to Copy Its Business; Citizens Financial Group hopes a new unit geared toward rich people will help it crack a long-coveted market
Rachel Louise Ensign and Gina Heeb – The Wall Street Journal
Regional lender Citizens Financial Group opened a new private bank for wealthy customers last month. Its inspiration: First Republic Bank FRCB -20.00%decrease; red down pointing triangle, which collapsed earlier this year in the second-largest bank failure in history. Citizens, based in Providence, R.I., is spending tens of millions of dollars hiring former First Republic staffers. It hopes the strategy will help it crack a market it has long coveted. Executives say they plan to copy only the good parts of First Republic, such as its beloved customer service.

HSBC UK Gets Digital Services Back Up After Black Friday Outage
Harry Wilson – Bloomberg
HSBC Holdings Plc said its UK mobile and digital banking services were getting “back up and running” after a disruption during the Black Friday sales. HSBC UK customers earlier reported problems with accessing online banking, while the London-based firm said it was investigating the problems as a “matter of urgency” in a message posted to its account on X, formerly known as Twitter. It later added that the issue stemmed from its “internal systems.”

Work & Management

To Stop the Fiscal Apocalypse, Bet on the Young; The only viable way to support an aging population is to make working people richer and more plentiful.
Kathryn Anne Edwards – Bloomberg
Have you heard about America’s impending fiscal apocalypse? It’s that moment in the not-too-distant future when there will be too many elderly people for younger generations to support, rendering the federal government incapable of meeting its obligations. The apocalypse can be averted. Just make the young richer and more plentiful. Fantastic as that might seem, it’s entirely attainable.

Why Is Everyone So Unhappy at Work Right Now? U.S. employees are more dissatisfied than they were in the thick of the pandemic
Vanessa Fuhrmans and Lindsay Ellis – The Wall Street Journal
Americans, by many measures, are unhappier at work than they have been in years. Despite wage increases, more paid time off and greater control over where they work, the number of U.S. workers who say they are angry, stressed and disengaged is climbing, according to Gallup’s 2023 workplace report. Meanwhile, a BambooHR analysis of data from more than 57,000 workers shows job-satisfaction scores have fallen to their lowest point since early 2020, after a 10% drop this year alone. In interviews with workers around the country, it is clear the unhappiness is part of a rethinking of work life that began in 2020. The sources of workers’ discontent range from inflation, which is erasing much of recent pay gains, to the still-unsettled nature of the workday. People chafe against being micromanaged back to offices, yet they also find isolating aspects of hybrid and remote work. A cooling job market-especially in white-collar roles-is leaving many professionals feeling stuck.

Wellness Exchange

China Says Multiple Pathogens Are Behind Spike in Respiratory Illnesses; NHC says combination of pathogens have caused outbreaks; Doctors have warned for weeks about spike in pneumonia cases
Bloomberg News
China’s health commission said a combination of pathogens is causing a surge in acute respiratory infections across the country, reiterating previous comments aimed at easing concerns a novel virus may be the source.

UK Finds First Human Infection With Swine Flu Virus Variant
Marthe Fourcade – Bloomberg
UK health officials have reported a person with a flu strain typically found in pigs, marking the first time this variant has been detected in a human in the country. The UK Health Security Agency is working to determine any risks the pathogen might pose to human health, it said in a statement Monday. The person experienced only a mild illness and has fully recovered, according to the agency.


Australia to Introduce Legislation to Overhaul Central Bank; Changes follow independent review of Reserve Bank of Australia Legislation to cement the RBA’s dual price, employment mandate
Emily Cadman and Ben Westcott – Bloomberg
Australia’s government will introduce legislation this week to facilitate the largest overhaul of the central bank in a generation, including setting up a separate governance board and scrapping the treasurer’s power to reverse policy decisions. The bill is the result of an independent review of the Reserve Bank that made 51 recommendations, some of which require modifications to the RBA’s operating law. It follows criticism in recent years ranging from the bank’s pre-Covid reluctance to cut interest rates to a pledge that they wouldn’t rise before 2024 and a messy yield-target exit – that damaged the institution’s credibility.

Africa’s richest man under pressure as giant refinery nears production; Nigerian billionaire Aliko Dangote faces accusations of unfair practices and a struggle to secure crude supplies
Aanu Adeoye and David Pilling – Financial Times
If all goes to plan, Aliko Dangote, Nigeria’s most successful businessman and the richest person in Africa, is about to bring online a $20bn oil refinery outside Lagos that could transform the continent’s biggest economy. Starting operations at the vast facility would mark the culmination of a career in which Dangote, whose personal wealth is estimated by Forbes at $10.5bn, has built a fortune through salt, flour, sugar and, most significantly, cement.


A Walk in the Woods with My Brain on Fire: Autumn; A wildlife sanctuary holds up a mirror to the climate crisis, war and dispossession.
David Sassoon – Inside Climate News
One of our readers recently asked us if we might write something about war and climate. Many thoughts came to mind. The first: that the biggest wars are fought over the geopolitics of fossil energy, often in disguise. There’s also the Paris climate accord, which fails to require the reporting of military emissions in national greenhouse gas inventories: The rain of exploding bombs and missiles, the tanks and trucks that guzzle diesel, the fighter planes that burn jet fuel, the forward bases and supply lines that swallow gasoline by the tanker. As if they don’t count. It’s permission to continue waging war on the natural world, turning a blind eye to all the casualties of the future.

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