In Brutal Year for Bonds, Trading Has Become Exciting Again

Sep 20, 2022

First Read

Hits & Takes
John Lothian & JLN Staff

According to a post on a Cboe Alumni page on Facebook, Lee Tenzer has passed away. He was surrounded by his wife Marilyn and daughters Katie, Becca and Missy at a hospital in Madison, Wisconsin. Lee was the founder of the trading firm LETCO. JLN interviewed Lee for our Open Outcry Traders History Project video series.

Lee’s first clerk was Jon Najarian and later he hired Don Wilson. He formed LETCO so he and Najarian could both trade, as an entity was required to do that. At its peak, LETCO had 75 traders and 150 employees.

I asked Don Wilson for a comment on Lee’s passing and he shared this with me:

“The Chicago trading community owes a great debt to Lee Tenzer, and I’ll put myself at the head of that list. Lee hired me as a 20-year-old graduate of the University of Chicago to join LETCO. After nine months he said, “I think you are going to do well – you tell me what you want to trade”, and shortly thereafter I found myself on a seat in the Eurodollar option pit. What I’ll most remember about Lee was the way he operated — he was a man of great integrity who always treated people fairly.”

The NFA published its August Board Meeting Update video, produced by John Lothian Productions.

Hidden Road Partners CIV US LLC has been approved as a CME Clearing Member Firm, effective September 16, 2022.

Hidden Road Partners CIV US LLC has been approved as a CBOT Clearing Member Firm, effective September 16, 2022.

Hidden Road Partners CIV US LLC has been approved as a NYMEX and COMEX Clearing Member Firm, effective September 16, 2022.

The WIMAR SG meeting “Carbon Markets and the Net-Zero Future!” scheduled for September 27 in Singapore is fully booked and there are 100 people on the waitlist, sources say.

My son Tim is a teacher at a Montessori school in Columbia, Missouri. The husband of the director of the school is conducting a GoFundMe campaign fundraiser to help lower the cost of tuition of students of the school. He is riding across the state of Missouri on the Katy Trail for the fundraiser. If you are interested in helping Tim’s school, Columbia Montessori Society Inc, you can donate HERE. BTW, the Katy Trail is a beautiful ride. I have ridden parts of it.

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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SIFMA is holding its annual meeting, titled “The Intersection of Public Policy and Finance” on Oct. 24 at the InterContinental New York Barclay in New York City. Featured speakers include CFTC Chairman Rostin Behnam and SEC Chairman Gary Gensler. You can go here to join the waitlist. ~SR

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MWE SHORT: Julie Lerner – Disruptive Tech and Entrepreneurship
JohnLothianNews.com

In this video from MarketsWiki Education’s World of Opportunity event in Chicago, Julie Lerner, CEO of PanXchange, discusses the convergence of global markets and being a successful entrepreneur. Lerner maintains that not only do you need passion, you need a specific niche. She realized she found hers when she learned how to embed options into cash contracts while working for Cargill trading Latin American sugar. Lerner’s passion is commodities, but her niche is business development. Any entrepreneur trying to develop a business must have the network and reputation to give the endeavor legs. A great idea is useless in a vacuum.

Watch the video »

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Phoenix Won’t Limit Water Use Because California Would Take Saved Gallons
Anna Skinner – Newsweek
One Arizona water official said Phoenix won’t require residents to conserve water yet, fearing that the action wouldn’t actually benefit the Colorado River and instead would be diverted to other states struggling with drought.
/jlne.ws/3f4sI32

***** Tragedy of the commons on full display. ~JB

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Broker’s Model Sees Argentina Beating England in World Cup Final; Messi’s Argentina set for victory in Qatar, Liberum forecasts; Strategist Klement warns model includes ‘element of chance’
Joe Easton – Bloomberg
A London-based stockbroker has forecast victory for Argentina and yet more years of hurt for England football fans, according to its model predicting the winner of the upcoming FIFA World Cup. After toppling Spain in the semi-finals, Lionel Messi’s Argentina will beat old rivals England in the Dec. 18 final in Qatar to lift their first World Cup in 36 years, Liberum Capital Ltd. strategist Joachim Klement said in a note Tuesday.
/jlne.ws/3LsaBQx

***** My crystal ball has the opposite result.~JJL

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German Job Market Is So Hot That Candidates Are Ghosting Employers; 56% of recruiters say ghosting by applicants rose in last year; Indeed survey highlights challenges posed by labor shortage
Carolynn Look – Bloomberg
Good workers are in such high demand in Germany that they’re increasingly ghosting prospective employers. While companies sometimes ignore undesired applicants, candidates in Europe’s biggest economy have begun disappearing during the hiring process, according to a poll of 400 recruiters conducted Aug. 1 by job website Indeed.
/jlne.ws/3Ur9y7u

***** They should just accept both jobs and work them both.~JJL

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Monday’s Top Three
Our most-clicked story Monday was Late Merc leader Jack Sandner’s Lake Bluff estate sells, from Crain’s Chicago Business. Second was a tie between FACT SHEET: White House Releases First-Ever Comprehensive Framework for Responsible Development of Digital Assets, from the White House, and Cboe to Further Expand S&P 500 Index Options Suite with New and Additional Daily Expirations, from Cboe Global Markets. Third was also a tie, between Bloomberg’s The $24 Trillion Treasury Market Needs More Than Just Clearing and the LinkedIn post congratulating J. Christopher Giancarlo on being named among the “Most Popular Cryptocurrency Lawyers of 2022” by CoinsCapture.

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MarketsWiki Stats
27,011 pages; 240,789 edits
MarketsWiki Statistics

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Lead Stories

In Brutal Year for Bonds, Trading Has Become Exciting Again; Central Banks’ inflation fight has woken up a sleepy market; It’s ‘fun now to trade bonds again,’ LongTail’s Bhansali says
Michael Mackenzie and Liz McCormick – Bloomberg
Amid the wreckage of the great bond-market bust of 2022, there is a silver lining for some: Traders in the trenches of the $24 trillion Treasury market say it’s finally exciting again. This turn of events follows years of markets being lulled to sleep by central bankers doing whatever it took to suppress interest rates, in part to — get this — keep inflation from falling too low. While the excitement may not rival the likes of crypto or meme stocks, it’s enough to make trading government debt a lot more interesting. This year, with the Federal Reserve and global policy makers aggressively lifting rates to rein in consumer prices, many fixed-income professionals have been confronted with the wildest volatility of their careers.
/jlne.ws/3QXkQh0

Nasdaq Makes First Big Crypto Push to Lure Institutional Clients
Katherine Doherty and Yueqi Yang – Bloomberg
Nasdaq Inc. is making its first major push into crypto, as the second-largest stock exchange prepares to capitalize on increasing appetite for digital currencies among big-money investors. A new group dedicated to digital assets will initially offer custody services for Bitcoin and Ether to institutional investors, according to Tal Cohen, the company’s executive vice president and head of North American markets. Nasdaq hired Ira Auerbach, who ran prime broker services at crypto exchange Gemini, to head up the new Nasdaq Digital Assets unit.
/jlne.ws/3UqGdKs

SEC Suit Hints at Case for US Jurisdiction Over Ethereum Network
Suvashree Ghosh – Bloomberg
The saga over cryptocurrency regulation took another twist courtesy of a comment buried in a Securities and Exchange Commission lawsuit that hints at a case for US jurisdiction over the Ethereum blockchain. The suit lodged Monday is against the founder of a crypto investment research firm over allegedly undisclosed incentives linked to an initial coin offering. It also detailed the movement of Ether tokens in relation to the case.
/jlne.ws/3dwz76v

SEC Claims All of Ethereum Falls Under US Jurisdiction; In a civil complaint against a crypto influencer, the SEC suggested that it believes the U.S. government has jurisdiction over all Ethereum transactions.
Sander Lutz – decrypt.co
When the SEC filed a federal lawsuit Monday against crypto influencer Ian Balina for his failure to register a cryptocurrency as a security before launching a 2018 initial coin offering (ICO), everything at first appeared run-of-the-mill: the SEC has, for years, filed civil suits against individuals and organizations for rolling out unregistered ICOs. Eagle-eyed observers then read a little further into the fine print. In a bold and potentially unprecedented move buried in the lawsuit’s 69th paragraph, the SEC today claimed it had the right to sue Balina not only because his case concerns transactions made in the United States, but also because, essentially, the entire Ethereum network falls under the US government’s purview.
/jlne.ws/3BUnyj2

Salesforce Launches Marketplace for Carbon Emission Offsets; CRM giant will aggregate offset sellers and rating agencies; Marketplace launching in October for US, 2023 internationally
Brody Ford – Bloomberg
Salesforce Inc. is launching a marketplace for carbon credits that will aggregate offset providers and rating agencies, aiming to reduce confusion about which offerings are legitimate. Carbon credits, marketed as a way for companies to atone for their emissions by investing in climate-friendly actions like tree planting, are difficult to measure and verify. If companies have access to transparent pricing and multiple third-party ratings for each project, it will encourage them to make more effective investments in offsets, said Patrick Flynn, Salesforce’s global head of sustainability. “Because of the controversy, many organizations are cautious about taking action.”
/jlne.ws/3S8tudA

Turkey Rules Out Urgent Intervention in Stock Market Rout; Regulators, brokerages held extraordinary meeting Monday night;Turkey sees no systemic risk from last week’s market rout
Kerim Karakaya and Tugce Ozsoy – Bloomberg
Turkey has no plans to immediately intervene in its plunging stock market, a senior government official said after an extraordinary meeting between regulators and brokerages late on Monday. Last week’s rout has barely made a dent in one of the world’s biggest equity market rallies of 2022, but the selloff was disproportionately high in the banking index, which plunged as much as 35% through Monday, posting the worst weekly drop on record.
/jlne.ws/3S0MFWU

Hong Kong Calls on Finance Firms to Return Workers From Abroad; SFC is rethinking flexibility granted for working overseas; Hong Kong sees exodus of talent as Covid curbs drag on
Kiuyan Wong – Bloomberg
Hong Kong’s top market regulator is talking to finance firms to bring back their licensed staff that have been working abroad amid efforts by the city to revive its status as a vibrant business hub. There’s growing concern at the Securities and Futures Commission over prolonged absences of licensed managers at the investment firms and brokerages it oversees, people familiar with the matter said, asking not to be identified discussing private deliberations. It’s in communications with some firms to urge them to have key personnel return to the city, emphasizing that the flexibility allowed during the pandemic is temporary, the people said.
/jlne.ws/3SfNNWC

Germany Earmarks Billions for LNG to Sever Russian Gas Reliance; Ministry sets aside additional 2.5 billion Euros to buy LNG; Floating LNG storage plan doesn’t cover short-term needs
Petra Sorge – Bloomberg
The German government has set aside billions of euros for natural gas purchases in an effort to stave off an energy crisis since Russia cut off its supplies. Initially, 1.5 billion euros had been set aside for gas buying, but with that funding nearly exhausted, the government has added another 2.5 billion euros, according to a document seen by Bloomberg. Altogether, credit lines of as much as 15 billion euros — to be distributed in tranches — were set aside to fund the purchases. So far, the government has spent 1.47 billion euros to lock in supplies, sourcing from five companies between March 10 and June 1, the Economy Ministry lead by Robert Habeck wrote in response to questions from the conservative opposition group CDU/CSU.
/jlne.ws/3qOJV31

Southwest Mexico Struck by 7.5 Magnitude Earthquake, Buildings Sway in Capital; Earthquake occurred after a commemoration of 1985, 2017 quakes; One person died in department store collapse in Colima state
Carolina Gonzalez – Bloomberg
A magnitude 7.5 earthquake struck southwestern Mexico on Monday, killing one person and prompting evacuations and causing buildings to sway in the capital. It occurred the same day as large tremors registered in 1985 and 2017. The earthquake was near La Placita de Morelos, in Michoacan state along the Pacific Coast, about 475 kilometers (295 miles) west of Mexico City, according to the U.S. Geological Survey. Hazardous tsunami waves were possible for coasts located within 300 kilometers of the epicenter, the Pacific Tsunami Warning Center said, asking people located in the threatened coastal areas to remain alert.
/jlne.ws/3f43UIv

Mark Zuckerberg’s $71 Billion Wealth Wipeout Puts Focus on Meta’s Woes; Even in a rough year for tech billionaires everywhere, the Meta CEO’s losses stand out.
Nur Dayana Mustak – Bloomberg
Mark Zuckerberg’s pivot into the metaverse has cost him dearly in the real world. Even in a rough year for just about every US tech titan, the wealth erased from the chief executive officer of Meta Platforms Inc. stands out. His fortune has been cut in half and then some, dropping by $71 billion so far this year, the most among the ultra-rich tracked by the Bloomberg Billionaires Index. At $55.9 billion, his net worth ranks 20th among global billionaires, his lowest spot since 2014 and behind three Waltons and two members of the Koch family.
/jlne.ws/3BSE56X

Private Equity Giants Are Having Cash Flow Problems; There’s a whiff of desperation at SoftBank and Fosun, which have had to unload crown jewels to keep their balance sheets looking tidy.
Shuli Ren – Bloomberg
Private equity firms are supposedly masters of the business universe, spotting the hottest trends and giving survival tips to their portfolio companies during economic downturns. But do they know how to manage their own cash flows? Investors are taking a hard look at some of the industry’s biggest names. Take SoftBank Group Corp., which recently raced to unload some of its crown jewels. In August the tech unicorn investor said it had sold $22 billion worth of Alibaba Group Holding Ltd. shares, cutting exposure to its most valuable asset by almost half, when the shares were roughly 70% below peak.
/jlne.ws/3UkCSwy

Bankers Should Get Years in Jail for Maple’s Role in Tax Scheme, Court Told; Frankfurt prosecutors deliver closing arguments in Maple case; American banker should get highest term: 5 years and 9 months
Karin Matussek – Bloomberg
Four former bankers at bankrupt Maple Bank GmbH should get as much as almost six years in prison for their role in a Cum-Ex case that allegedly cost German taxpayers 388.6 million euros ($388.1 million), prosecutors asked a German court. One of the accused, a 58 year-old American, should get the highest term and serve five years and nine months, Frankfurt prosecutors said in closing arguments on Monday, according to a spokesman for the court. Ex-Chief Executive Officer Wolfgang Schuck, 68, should get five years and three months, while a 51 year-old trader should get three years and nine months. Another 62 year-old banker who cooperated with prosecutors should be handed a suspended sentences, according to the prosecutors.
/jlne.ws/3Sk2Myu

Institutions Are Still ‘Wait-And-See’ With Ethereum
Lawrence Lewitinn – CoinDesk
The Merge has finally happened, and while bitcoin remains the preferred cryptocurrency of institutions (and one nation-state, El Salvador), Ethereum’s new consensus mechanism – and the scalability that is supposed to go with it – may attract some interest away from its bigger, older brother as the biting cold of the crypto winter continues.
/jlne.ws/3SkDb8C

How to Survive the Next Market Crash; Fund manager Mark Spitznagel, who earned a fortune when stocks cratered in 2008 and 2020, has some surprising advice for investors
Spencer Jakab – The Wall Street Journal
Jerome Powell and the Federal Reserve might be in the process of driving the stock market over a cliff by tightening into a recession. That is one potential scenario envisioned by fund manager Mark Spitznagel, who actually thinks the Fed will blink soon on rate increases. He isn’t explicitly betting on either outcome, but would likely find himself in the headlines again if the more dire one comes true: The last time there was a contraction in the U.S. economy his firm, Universa Investments, earned an astounding 4,000% return in a matter of weeks. The time before that, during the financial crisis, he more than doubled clients’ money even as the value of stocks was cut in half. In between those two downturns, Universa made $1 billion in a single day during the “flash crash.”
/jlne.ws/3RZ1gSH

3 High-Frequency Trading Techniques to Run Your Business Like a Hedge Fund; I left the financial world long ago, but these principles have always stuck with me.
Nicholas Sonnenberg – Inc.com
Becuase I have spent the past decade of my life as an entrepreneur, people are often surprised to learn that I have a master’s degree in financial engineering and worked as a high-frequency trader for eight years at BNP Paribas. It wasn’t until I saw my entrepreneurial friend working from a laptop on the beach while drinking a piña colada that I realized my job wasn’t as cool as I thought. I made the switch and never looked back, but the high-frequency trader mindset has never really left me. Over the years, I’ve found myself incorporating financial principles into my business with great success. I could probably write an entire book on this (and I very well might) but for the sake of brevity, here are three that every entrepreneur should know.
/jlne.ws/3duUzcb

Bitcoin Looks Like a Faded Fad as Fed Goes All In on Rate Hikes
Jake Lloyd-Smith – Bloomberg
What is Bitcoin for, exactly? While that’s been a tricky question to answer in years past, it’s safe to say that right now, it’s definitely not for preservation of wealth. The shiny new thing is down 60% YTD against the grimy old thing (aka the USD). More losses may follow as the Fed hikes, with the bank’s next installment due midweek.
/jlne.ws/3qOULpI

Another Culture War Front: Are Companies Too ‘Woke’ When It Comes to Climate?; Conservatives in the U.S. have targeted firms for their environmental policies, but many companies are standing their ground.
David Gelles – The New York Times
On a muggy day in Tampa this summer, Gov. Ron DeSantis of Florida took the podium and unleashed an attack on what he claimed was one of the principal threats to the livelihoods and freedoms of upstanding American citizens. “This is something in many respects that is crushing the little guy,” he said. “So we want to make sure that we’re standing on the side of average people.” Mr. DeSantis was not talking about aggression from overseas, high gas prices, inflation, pandemic lockdowns or even the Democratic Party.
/jlne.ws/3eWrZkd

Sensitive Morgan Stanley devices were auctioned off online, finds SEC; Regulator fines lender’s wealth management business $35mn for failing to protect customer data
Stefania Palma and Joshua Franklin – Financial Times
US regulators have fined Morgan Stanley $35mn for an “astonishing” failure to protect customer data, which resulted in some computer hardware containing sensitive client data being auctioned off online. The US Securities and Exchange Commission said on Tuesday that the Wall Street bank’s wealth management business failed to protect information identifying around 15mn customers over a five-year period.
/jlne.ws/3qPuR5l

Spac booster Chamath Palihapitiya throws in the towel; Blank cheque vehicles to return $1.5bn to investors after failing to find targets
Ortenca Aliaj – Financial Times
Chamath Palihapitiya, one of the big boosters of special purpose acquisition companies, has thrown in the towel, returning $1.5bn to investors after failing to find targets. The former Facebook executive, who once labelled himself the Warren Buffett of his era, said two of his vehicles would liquidate, blaming valuations and volatility for his inability to find deals.
/jlne.ws/3f5rDYA

End of sub-zero: Europe ditches negative rates as inflation surges; Critics insist policy damaged bloc’s lenders while some central bankers say it boosted loan growth
Martin Arnold and Kana Inagaki – Financial Times
The era of negative interest rates in Europe is set to end this week when Switzerland’s central bankers leave Japan as the sole proponent of one of the most controversial economic experiments of recent times. Surging inflation has led monetary policymakers to raise rates above zero and ditch a policy that — by paying borrowers and penalising savers — turned the principles of finance on their head.
/jlne.ws/3f6zzZS

CME Group senior director joins United Fintech as senior relationship manager; New appointment joins after seven years at CME Group, having previously served at FXall, Barclays Capital, Lehman Brothers and Bloomberg LP.
Wesley Bray – The Trade
Start-up United Fintech has appointed a senior director from CME Group as its new senior relationship manager. Chris Codo takes on the role, after spending the last seven years at CME Group as senior director, with a focus on selling to hedge funds.
/jlne.ws/3Lw5XkQ

SEC proposes enhancements in risk management for US Treasury market; The regulator’s proposed rule changes look to lower risk through improved central clearing within the US Treasury market.
Wesley Bray – The Trade
The Securities and Exchange Commission (SEC) proposed rule changes on 14 September, which will enhance risk management practices for central counterparties in the US Treasury market alongside facilitating additional clearing of US Treasury securities transactions.
/jlne.ws/3xBOoKf

Ukraine Invasion

Kremlin says Ukrainian war crimes claims are a lie
Reuters
The Kremlin on Monday rejected allegations that Russian forces had committed war crimes in Ukraine’s Kharkiv province as a “lie”. Around 450 bodies – most of which Ukraine says are civilians – have been found in mass graves near Izium after Russian troops were this month forced out of the Kharkiv region, much of which they had controlled since the first weeks of their military campaign in Ukraine. Ukrainian President Volodymyr Zelenskiy said investigators at the site had found evidence of torture, including bodies with hands tied, and accused Russian troops of committing war crimes.
/jlne.ws/3DBwvPu

Ukraine’s Foreign Minister Urges the West to Send More Weapons; Ukraine counteroffensive sent ‘message to everyone’: Kuleba; He predicts Putin will try to block grain export deal renewal
Annmarie Hordern and Courtney McBride – Bloomberg
Ukrainian Foreign Minister Dmytro Kuleba urged western nations to supply more weapons so his government can press ahead with its counteroffensive against Russian forces. Kuleba said in an interview Monday with Bloomberg Television that Ukraine wants to add to its recent territorial gains and deny Russian President Vladimir Putin any strategic advantage gained since his army invaded on Feb. 24.
/jlne.ws/3BvNuQt

Crop-Trading Giant Bunge Exits Russia With Sunflower Plant Sale; Bunge joins other companies in leaving Russia post-invasion; Plant in Voronezh region and vegetable-oil brands are sold
Michael Hirtzer – Bloomberg
Bunge Ltd. sold its sunflower-crushing plant in Russia, marking the biggest oilseed processor’s exit from the country in response to the invasion of Ukraine. In addition to the plant in the Voronezh region, Bunge sold the regional rights to vegetable-oil brands including Oleina and Ideal, the company said Monday. With the sale, Bunge — the ‘B’ in the quartet of global crop-trading giants known as the ABCDs — joins other food companies in quitting Russia. While McDonald’s and Starbucks closed restaurants following the late-February invasion, some agricultural companies continued to make food and livestock feed.
/jlne.ws/3BVyAVq

Russia Hurries to Annex Occupied Ukraine Amid Kyiv’s Gains; Officials in occupied Donetsk, Luhansk set Sept. 23-27 votes; Sham votes in other areas could be held soon, officials say
Bloomberg News
The Kremlin is moving hastily to stage sham votes on annexing the regions of Ukraine its forces still control, after Kyiv’s military drove Russian troops from large areas of territory taken in their seven-month-old invasion.
/jlne.ws/3xBMg5d

Exchanges, OTC and Clearing

Nasdaq Establishes New Digital Assets Business; Underpins Nasdaq’s Focus on Advancing the Transformation of Markets and Driving Broader Institutional Adoption of Digital Assets; Subject to Regulatory Approval, Nasdaq Digital Assets Will Provide a Proprietary Custody Solution with Liquidity and Execution Services for Financial Institutions; Appoints Ira Auerbach, Former Global Head of Gemini Prime, to Lead New Business; Expands Anti-Financial Crime Technology Capabilities for Digital Assets.
Nasdaq
Nasdaq (Nasdaq: NDAQ) today announced the launch of “Nasdaq Digital Assets,” a new business that will power the digital asset ecosystem. The launch underpins Nasdaq’s ambition to advance and help facilitate broader institutional participation in digital assets by providing trusted and institutional-grade solutions, focused on enhanced custody, liquidity and integrity.
/jlne.ws/3DDk1H2

Santiago Exchange Added To FTSE Mondo Visione Exchanges Index
Mondo Visione
The Santiago Exchange (Bolsa de Comercio de Santiago) was added to the FTSE Mondo Visione Exchanges Index effective from the open on Monday 19 September. The FTSE Mondo Visione Exchanges Index, a joint venture between FTSE Group and Mondo Visione, was established in 2000. It is the first index to focus on listed exchanges and other trading venues. The FTSE Mondo Visione Exchanges Index compares the performance of individual exchanges and trading platforms and provides a reliable barometer of the health and performance of the exchange sector.
/jlne.ws/3qQzFY5

MEFF launches new underlying for derivatives on Acciona Energía, Applus, Unicaja, Vidrala and Rovi
BME-X
MEFF, the BME Spanish derivatives exchange, has launched futures and options contracts on Acciona Energía, Applus, Unicaja, Vidrala and ROVI shares. With their incorporation, BME’s derivatives market extend the list of contracts available for both institutional and retail investors. Following these additions, the total number of Spanish underlyings that derivatives contracts can be traded on MEFF is 51. MEFF’s suite of Financial Derivatives products is complemented by Futures and Options on IBEX 35©, and futures on the IBEX Impacto Dividendo index and on Stock Dividends from the companies with the largest trading volumes.
/jlne.ws/3dzELoq

Updated naming convention for Event Contract Masterfiles – Effective September 19, 2022
CME
At firm requests, the naming convention for Event Contract Masterfiles is being changed today, September 19, 2022, so that the date in the filename reflects the current date rather than the next trade date. For example, the production filename for the master file generated this afternoon, Monday, September 19, 2022, will be CME.EventContracts.20220919.csv. The file contains data for contracts generated on September 19, for eligibility on trade date Tuesday September 20.
/jlne.ws/3DEZJNt

2022 Regular Constituent Change in the KTOP 30 Index
KRX
KRX will change the constituents in the KTOP 30 after its 2022 regular review.
/jlne.ws/3DDiMYo

More than 900 thousand deals were made during the first week of evening trading on the stock market
MOEX
On September 12, 2022, the evening trading session resumed on the Moscow Exchange stock market. The total trading time on the stock market is now almost 14 hours a day. During evening trading, you can make transactions with 46 shares, including those from the Moscow Exchange Index , and from September 19 – with mutual investment funds. During the first week – from 12 to 16 September – during the evening session, 905 thousand transactions were made, 106 thousand clients of 61 banks and brokerage companies took part in the auction. The total trading volume for the week amounted to 9.8 billion rubles. The largest volume of transactions was recorded in the shares of Sberbank, Gazprom, Lukoil, Yandex and Rosneft.
/jlne.ws/3S3r7ZR

Fintech

Blockchain Association Sets Up New Crypto Industry PAC
CoinDesk
The Blockchain Association is adding its own political action committee, called BA PAC, to the crypto industry’s growing array of campaign finance efforts seeking to steer the U.S. government’s debate over digital assets. The BA PAC will contribute to the campaigns of “pro-crypto candidates” from both parties, according to Kristin Smith, the Washington, D.C.-based association’s executive director.
/jlne.ws/3LtiG7x

KKR Rides the Blockchain to Expand Access to Private Equity
Tom Taulli – Barron’s
Last week Securitize, a digital asset securities firm, announced the launch of a tokenized fund to allow access to the KKR Health Care Strategic Growth Fund (HCSG) II. This is the first time private equity investing—with a major sponsor—has become available to qualified purchasers in the U.S. using blockchain technology. This fund is available for individuals or family businesses with portfolios of $5 million or more. Use of blockchain technology in the feeder fund should help with onerous record-keeping requirements.
Dreamstime
/jlne.ws/3dqpJBp

Beware the rise of the black box algorithm; Artificial intelligence doesn’t have to kill you to make your life worse or lead to bad policy outcomes
Stephen Bush – Financial Times
One of the ways my partner and I are well-suited is that we both like board games, and I am not very good at them. This helps, because my partner is a gracious winner but an appalling loser. Once, in her early teens, during a game of draughts with her sister, she responded to an unwinnable position by turning over the table.
/jlne.ws/3xCcvbL

Blockchain gaming groups try to lose ‘dodgy’ tag in Japan; First Tokyo Game Show in three years reveals concerns over players earning money from crypto-linked titles
Eri Sugiura – Financial Times
In a sign of the fast-changing times since the Tokyo Game Show was last physically staged in 2019, one of the biggest stands at this week’s convention is occupied by a loan provider — for players of blockchain games. The Philippines-based company Yield Guild Games (YGG) is Asia’s biggest provider of start-up loans for people hoping to earn a living from the new genre. It chose the show to launch a global marketing drive to convince the industry, governments and the public that crypto-linked games are not “dodgy”.
/jlne.ws/3dnz11i

Liquidnet names new DACH head of equity distribution; Incoming distribution head has previously served in equities focused roles across Credit Suisse, Deka Investments, Oddo BHF and Stifel.
Annabel Smith – The Trade
Liquidnet has appointed a new head of equity distribution for German speaking countries, The TRADE can reveal. Miriam Köstel joins Liquidnet as DACH head of equity distribution, responsible for leading the development of the firm’s block and broader execution businesses.
/jlne.ws/3SgK3E1

Cybersecurity

Major crypto trader Wintermute hit by $160 million hack, CEO says
Tom Wilson – Reuters
Hackers have stolen digital assets worth around $160 million from crypto trading firm Wintermute, its CEO tweeted on Tuesday, the latest heist to hit a sector long plagued by cybercrime. The theft targeted London-based Wintermute’s decentralised finance operations, Evgeny Gaevoy said in a tweet. The firm, which provides liquidity across major crypto exchanges and trading platforms, remains solvent after the hack, he added.
/jlne.ws/3BW4CAE

Crypto Market Maker Wintermute Hacked for $160M, OTC Services Unaffected
Oliver Knight – CoinDesk
Cryptocurrency market maker Wintermute has lost $160 million in a hack relating to its decentralized finance (DeFi) operation, according to a tweet from the company’s founder and CEO Evgeny Gaevoy.
/jlne.ws/3Un8yBq

Space Force shifting resources to intelligence and cybersecurity
Sandra Erwin – SpaceNews
The U.S. Space Operations Command is assigning cybersecurity and intelligence specialists to work side-by-side with satellite operators so they’re better prepared to protect U.S. systems from electronic and physical threats, said Maj. Gen. Douglas Schiess. “We are preparing and posturing for the fight,” Schiess said Sept. 19 at the Air, Space & Cyber conference. Schiess is vice commander of the Space Force’s Space Operations Command and also oversees U.S. Space Command’s combined forces component at Vandenberg Space Force Base, California.
/jlne.ws/3LqQJxp

CISA Plans to Measure the Effect of Coming Standards on Industry’s Cybersecurity
Mariam Baksh – Nextgov
The Cybersecurity and Infrastructure Security Agency will spend the next three years measuring the success of the government’s effort to protect both publicly and privately controlled critical infrastructure from cyberattacks. According to a national plan the agency just released to take it through 2025, CISA’s strategy will involve performance goals that were due at the end of July under a national security memorandum addressing cybersecurity for industrial control systems used in critical infrastructure. The agency is planning to issue them sometime in October—cybersecurity awareness month—CISA Executive Assistant Director for Cybersecurity Eric Goldstein said Thursday before lawmakers on the House Homeland Security Committee.
/jlne.ws/3qTchcA

Cryptocurrencies

Cryptoverse: After Merge, ether heads for a $20 billion Shanghai splurge
Medha Singh and Lisa Pauline Mattackal – Reuters
The Merge came, saw and conquered. Not that you’d guess from crypto prices. The Ethereum blockchain’s mega-upgrade finally went live on Sept. 15, moving it to a less energy-intensive “proof of stake” (PoS) system with hardly a hiccup. Even though anticipation of the event had seen ether rise about 85% from its June doldrums, it has since sunk 19%, hit along with bitcoin and other risky assets by investor angst over inflation and central-bank policy.
/jlne.ws/3UmpAzI

The Merge Was a Success. Crypto Still Has Problems
Hannah Miller – Bloomberg
All anyone can talk about in crypto is the success of an Ethereum upgrade known as the Merge. The Merge could have been a disaster of epic proportions last week. A failed or buggy overhaul of the Ethereum blockchain would’ve likely crashed digital asset prices, disrupted trading and worsened an already icy crypto winter. Instead, everything seems to have gone just fine—rivaling an iPhone update in seamlessness. This major win represents a bright spot for the industry at a time when the prices of Bitcoin and Ether remain far below their previous highs, crypto venture capital investing is in decline and regulators are putting digital assets in their crosshairs.
/jlne.ws/3RZnZ11

Coinbase Hikes Some Crypto Trading Fees in Boon to Biggest Clients; Those trading $15 million to $250 million a month may see rise; The exchange also lowered fees for some customer tiers
Olga Kharif – Bloomberg
Coinbase Global Inc., the biggest U.S. crypto exchange, is changing its fee structure in a move that may increase costs for some users while lowering them for some of its highest-volume customers. Starting Tuesday, some Coinbase customers with $15 million to $250 million in monthly volume may end up paying fees that are as much as 2 basis points higher than under the current schedule, according to the new fee structure, which is based on trailing 30-day activity. Customers in other tiers – including large clients with volume of more than $250 million a month – may see slightly lower fees.
/jlne.ws/3QWPGGo

Crypto Researcher Didn’t Disclose ICO Incentives, SEC Says; Ian Balina promoted SPRK token on social media platforms; Defense lawyer has said allegations against Balina ‘unfounded’
Chris Dolmetsch – Bloomberg
The founder of a cryptocurrency investment research firm was accused by the SEC of promoting an initial coin offering without disclosing that he had been given incentives to do so. Ian Balina, 33, promoted the SPRK token on social media platforms including YouTube and Telegram without revealing that he had been compensated by the company that offered it, the Securities and Exchange Commission said in a suit filed Monday in federal court in Austin, Texas. While the SEC didn’t identify Balina’s firm, the description matches that of Token Metrics, an Austin-based firm that provides “AI-based cryptocurrency ratings and price predictions.” Balina’s bio on the site describes him as a “former IBM Watson Analytics evangelist” who has “built million-dollar businesses from the ground up.”
/jlne.ws/3QR9fA9

New Crypto Fund Takes US a Step Closer to Spot Bitcoin ETF; DEFI is filed under a 1933 act, not the typical 1940 law; It launches at a volatile time in the crypto universe
Katherine Greifeld – Bloomberg
Holdouts for a physically backed US Bitcoin exchange-traded fund saw a glimmer of hope on Thursday with the launch of a new futures-backed product. The Hashdex Bitcoin Futures ETF (ticker DEFI), developed with Teucrium, began trading on Thursday, according to a statement. Unlike existing derivatives-backed crypto ETFs, DEFI was filed under the Securities Act of 1933, rather than the Investment Company Act of 1940.
/jlne.ws/3qS34R

Crypto Intelligence Firm Coin Metrics Partners With Hedge Fund Two Sigma for Institutional Push
Ian Allison – CoinDesk
Hedge fund Two Sigma’s trading data system Venn is teaming up with Coin Metrics, a provider of intelligence to cryptocurrency investors, to help make crypto market infrastructure friendlier for institutions accustomed to traditional capital markets.
/jlne.ws/3f3vZjd

India’s WazirX to delist USDC, apply auto convert to Binance’s stablecoin
Pradipta Mukherjee – Forkast
WazirX, India’s largest cryptocurrency exchange by trade volume, said it has stopped deposits of stablecoins USDC, USDP and TUSD, and will automatically convert users’ existing balances to Binance’s USD-backed stablecoin BUSD at a 1:1 ratio.
/jlne.ws/3dtJwjA

Binance Secures License in Dubai to Offer More Crypto Services
Camomile Shumba – CoinDesk
Crypto exchange Binance has secured a license from Dubai’s Virtual Asset Regulatory Authority to offer a range of crypto-related services in the city, according to a Tuesday announcement.
/jlne.ws/3LpHlKp

Alameda Research to repay US$200 mln crypto loan to Voyager Digital
Pradipta Mukherjee – Forkast
Sam Bankman-Fried’s trading firm Alameda Research will repay around US$200 million in cryptocurrencies to bankrupt digital assets broker Voyager Digital by Sept. 30.
/jlne.ws/3SjsrHE

DeFi Trader Nets Over $500K by Using DEX GMX to Manipulate Avalanche Token
Shaurya Malwa – CoinDesk
A savvy crypto trader deployed millions of dollars to manipulate the prices of Avalanche’s AVAX tokens on the decentralized exchange GMX, taking up to $700,000 in profits by using a strategy that exploited a basic loophole.
/jlne.ws/3qRDFaJ

The Quest for Cheaper Bitcoin Mining Power Continues North; Miners from Sweden and Norway are heading north of the Arc ic Circle in their quest for less expensive energy sources.
Victoria Vergolina – Bloomberg
Sweden and Norway are home to some of the most abundant energy sources in the world — including geothermal, wind and hydro electricity. Which helps explain why these countries have been becoming so attractive to Bitcoin miners. Unfortunately for those miners, the combination of Russia’s invasion of Ukraine along with rising inflation and environmental factors like drought, are curbing the availability of cheap electricity in these Nordic regions. Miners in some of these areas could even be regulated out of the market. So miners are on the move again, forever chasing that combination of abundant electricity for relatively low prices. This time, they’re heading north of the Arctic Circle. Bloomberg Editor Lars Paulsson joins this episode to discuss what’s happening in the region.
/jlne.ws/3xBZBdV

MicroStrategy Says It Purchased $6 Million in Bitcoin
Dave Liedtka – Bloomberg
MicroStrategy Inc. says it purchased about $6 million in Bitcoin between Aug. 2 and Sept. 19. The approximately 301 Bitcoin was acquired for about $6 million, at an average price of about $19,851, the company said in a US Securities and Exchange Commission filing Tuesday. The purchases were made with excess cash.
/jlne.ws/3BtYZrU

DeFi Lender Maple Debuts Bitcoin Mining Fund Charging Up to 20%; Bitcoin miners struggle to raise money as market rout worsens; Major lender Maple has issued $1.8 billion of loans to date
David Pan – Bloomberg
Crypto lending platform Maple has set up a $300 million credit fund for Bitcoin miners, charging as much as 20% interest on their loans. The new fund launches just as more mining firms come under stress. Bitcoin’s low prices, soaring energy costs and network competition have compressed miners’ revenues to a two-year low. Fundraising opportunities from traditional capital market and other crypto-native financiers have also dried up.
/jlne.ws/3qRR7LR

U.S. Treasury Seeks Comment on Crypto’s Illicit Finance Risks; The request for comment is part of the agency’s mandate under President Biden’s March executive order to study the development of cryptocurrency
Mengqi Sun – The Wall Street Journal
The U.S. Treasury Department is seeking public comment on the possible illicit finance and national security risks posed by the use of digital assets, as part of the agency’s mandate under President Biden’s March executive order to study the development of cryptocurrency. The request for comment, issued Monday, also asks the public for suggestions to mitigate these risks by the deadline of Nov. 3.
/jlne.ws/3xz77WM

Crypto Exchange WazirX to Delist USDC in Boost for Binance’s Stablecoin
Michael Bellusci – CoinDesk
WazirX is delisting stablecoins USDC, USDP and TUSD on Sept. 26. The Indian crypto exchange has also stopped taking deposits, according to a blog post Monday. WazirX said withdrawals of those three stablecoins can occur until Sept. 23. The exchange will automatically convert those stablecoins in customer balances to Binance’s BUSD stablecoin at a 1:1 ratio.
/jlne.ws/3SgnQ9b

Chinese Crypto Tycoon-Backed Bitdeer Buys Asia’s ‘Fort Knox’; Le Freeport sold to Jihan Wu’s company for S$40 million; Wu is one of the most influential people in crypto market
Ranjeetha Pakiam, Chanyaporn Chanjaroen, and Zheping Huang – Bloomberg
Chinese crypto billionaire Jihan Wu is expanding into the physical asset space. Wu’s Bitdeer Technologies Holding Co. spent S$40 million ($28.4 million) buying Le Freeport, a maximum-security vault in Singapore, according to people with knowledge of the matter who asked not to be identified because the transaction was private. Dubbed Asia’s Fort Knox, Wu acquired the repository for fine art, precious gems, and gold and silver bars, from shareholders led by Swiss art dealer and founder Yves Bouvier, the people said.
/jlne.ws/3RZsHMq

Politics

Biden’s Team Saved Ukraine by Learning From Its Mistakes; The fight against Russia should be over keeping a rules-based international order, not a crusade against autocracy.
Robert D. Kaplan – Bloomberg
Much can still go wrong with the Ukraine war, but so far, President Joe Biden’s defense and national security teams have outperformed any administration since President George H.W. Bush, National Security Adviser Brent Scowcroft, Secretary of Defense Dick Cheney and Joint Chiefs Chairman Colin Powell responded to Iraq’s invasion of Kuwait in 1990. With one significant caveat. Team Biden hasn’t learned one of the most important lessons of that earlier administration: The primary role for the US in foreign affairs is to maintain international rules and norms, not to lead a fight for global democracy.
/jlne.ws/3dyQ7sR

Tensions rise amid frustration over mystery Manchin deal
Aris Folley And Rachel Frazin – The Hill
Lawmakers are frustrated about being kept in the dark as Democratic leaders strategize how to jimmy an energy deal struck with Sen. Joe Manchin (D-W.Va.) behind closed doors through Congress — while also averting a government shutdown. Democratic leadership is aiming to use a must-pass government-funding bill to advance an energy permitting proposal by Manchin by the end of the month. But with roughly two weeks standing between Congress and the critical funding deadline, tensions are simmering over the closely-kept negotiations.
/jlne.ws/3UqBfgY

Regulation

SEC proposes enhancements in risk management for US Treasury market; The regulator’s proposed rule changes look to lower risk through improved central clearing within the US Treasury market.
Wesley Bray – The Trade
The Securities and Exchange Commission (SEC) proposed rule changes on 14 September, which will enhance risk management practices for central counterparties in the US Treasury market alongside facilitating additional clearing of US Treasury securities transactions. The membership standards required of covered clearing agencies for the US Treasury market will be updated by the proposed rule changes, with respect to a member’s clearance and settlement of specified secondary market transactions.
/jlne.ws/3xBOoKf

South Korea requests Interpol’s help in Terraform Labs crypto probe
Associated Press
South Korean prosecutors have asked Interpol to issue a fugitive alert for the founder of Terraform Labs as they investigate a $40 billion crash of the firm’s cryptocurrency that devastated retail investors around the world. The Seoul Southern District Prosecutors’ Office asked Interpol on Monday to circulate the “red notice” for Do Kwon across the agency’s 195 member nations to find and apprehend him.
/jlne.ws/3SiZBaA

ICO Promoter Ian Balina Charged With Violating Federal Securities Laws
Cheyenne Ligon – CoinDesk
Crypto promoter Ian Balina has been charged with violating U.S. securities laws for his role in promoting – and later reselling – tokens connected to a 2018 initial coin offering (ICO). In a complaint filed Monday in the Western District of Texas’s Austin Division, the U.S. Securities and Exchange Commission (SEC) said Balina promoted an unregistered securities offering for SPRK tokens between April and July of 2018, and did not disclose that he was paid by the Cayman Islands-based issuer, Sparkster Ltd., to do so.
/jlne.ws/3Lwyy9p

SEC, Ripple Call for Immediate Ruling in Suit Over Whether XRP Sales Violated Securities Laws
CoinDesk
The U.S. Securities and Exchange Commission (SEC) and Ripple Labs each want a federal judge to rule either that the crypto company affiliated with the XRP cryptocurrency violated federal securities laws or otherwise dismiss the lawsuit without requiring a lengthy trial. CoinDesk Global Policy & Regulation Managing Editor Nikhilesh De breaks down the details.
/jlne.ws/3BwozfD

CFTC Staff Issues No-Action Letter to Taiwan Futures Exchange
CFTC
The Commodity Futures Trading Commission’s Division of Clearing and Risk today announced it has issued a time-limited no-action letter to Taiwan Futures Exchange (TAIFEX). The letter states DCR will not recommend the CFTC take enforcement action against TAIFEX if it clears swaps for the proprietary trades of TAIFEX clearing members that are U.S. persons or affiliates of U.S. persons without registering as a derivatives clearing organization (DCO) as required by the Commodity Exchange Act (CEA).
/jlne.ws/3DByyTA

Statement of Commissioner Christy Goldsmith Romero: Proposal for Heightened Enforcement Accountability and Transparency in Settlements
CFTC
The HEAT test is designed to identify cases in which admissions are necessary to promote the public interest goals of law enforcement—justice, accountability, and deterrence—to the fullest extent. While a successful trial meets all of those public interest goals, it is well-known that federal regulators, including the CFTC and the SEC, settle the overwhelming majority of civil enforcement cases. It is not well-known to the public, but is well-known to many regulated entities and the defense bar, that in the overwhelming majority of these settlements, the government does not require the defendant to admit their conduct or the illegality of that conduct.
/jlne.ws/3UqSvTl

Loop Capital settles with SEC over alleged violations; The enforcement action is the agency’s first against a broker-dealer for violations of the rule requiring registration when providing investment advice to municipalities.
Steve Daniels – Crain’s Chicago Business
Loop Capital has agreed to settle with the Securities & Exchange Commission over agency findings that the Chicago-based investment firm didn’t properly register as a municipal adviser before providing advice to an unnamed city on bond investments. Loop didn’t admit or deny the allegations and agreed to pay a $100,000 civil penalty and disgorge a little over $5,400, according to the SEC. “The action marks the first time the SEC has charged a broker-dealer for violating the municipal advisor registration rule,” the agency said in a release today.
/jlne.ws/3Bu2ApJ

Crypto Firm Fights SEC by Claiming Its Investors Lack Rights; XRP promoter says tokens can’t be securities without contracts; The case could help clarify SEC authority over crypto assets
Chris Dolmetsch – Bloomberg
Cryptocurrency firm Ripple Labs Inc. sought to defeat a Securities and Exchange Commission suit by claiming that its XRP token isn’t a security subject to the regulator’s authority. Ripple over the weekend filed a motion seeking dismissal of the suit before trial in federal court in Manhattan. The company argued that XRP can’t be considered a security because there was no “investment contract” granting investors rights or requiring the issuer to act in their interests.
/jlne.ws/3DDrWUH

Morgan Stanley Smith Barney to Pay $35 Million for Extensive Failures to Safeguard Personal Information of Millions of Customers
SEC
The Securities and Exchange Commission today announced charges against Morgan Stanley Smith Barney LLC (MSSB) stemming from the firm’s extensive failures, over a five-year period, to protect the personal identifying information, or PII, of approximately 15 million customers. MSSB has agreed to pay a $35 million penalty to settle the SEC charges.
/jlne.ws/3S8vYIW

Office of the Investor Advocate Releases Research Study on Fund Performance Benchmarks
SEC
Researchers from the SEC’s Office of the Investor Advocate (OIAD) released an independent research study examining the impact of mutual fund performance benchmarks on investor decision-making, and potential strategic behavior by firms in displaying benchmarks. This study examines market data and the results of a large behavioral experiment to understand how funds employ benchmarks and how investors respond to benchmark presentation.
/jlne.ws/3BUu61d

SEC Investor Advisory Committee to Discuss Human Capital Labor Valuation, Security-Based Swaps, Beneficial Ownership, and ESG Disclosure on Sept. 21
SEC
The Securities and Exchange Commission’s Investor Advisory Committee will hold a virtual public meeting on September 21 at 10 a.m. ET. The meeting will be webcast on the SEC website.
/jlne.ws/3SjTB1m

Sparkster to Pay $35 Million to Harmed Investor Fund for Unregistered Crypto Asset Offering
SEC
The Securities and Exchange Commission today issued a cease-and-desist order against Sparkster Ltd. and its CEO, Sajjad Daya, for the unregistered offer and sale of crypto asset securities from April 2018 through July 2018 and charged crypto influencer Ian Balina for failing to disclose compensation he received from Sparkster for publicly promoting its tokens and failing to file a registration statement with the SEC for Sparkster tokens that he resold. Sparkster and Daya agreed to settle and to collectively pay more than $35 million into a fund for distribution to harmed investors.
/jlne.ws/3dthYL6

SEC Obtains Final Judgment Against Municipal Advisor and Its Owner in Municipal Bond Offering Schemes
SEC
On August 2, 2022, the U.S. District Court for the Western District of Louisiana entered a final judgment against defendants Aaron B. Fletcher and Twin Spires Financial LLC for their involvement in two fraudulent municipal bond offerings and their failure to register as a municipal advisor.
/jlne.ws/3SA0L1F

Former financial adviser pleads guilty to making unauthorised client transactions
ASIC
On 16 September 2022, former financial adviser John Wertheimer, formerly of Canning Vale, Western Australia, pleaded guilty in the Perth Magistrates Court to one charge of providing a financial service on behalf of a person who carries on a financial services business while unauthorised to do so. Mr Wertheimer also pleaded guilty to one charge of engaging in dishonest conduct in relation to a financial service.
/jlne.ws/3f3Iuv9

AMP companies admit liability and fined $14.5 million for fees for no service
ASIC
Five companies that are or were part of the AMP Limited group (together ‘AMP’) have been ordered by the Federal Court to pay a total $14.5 million in penalties for charging fees for services that were not provided to 1,452 superannuation members.
These members had been paying fees in return for access to general financial advice as part of an agreement between their employer and AMP. On leaving their employer, the members continued to be automatically charged the advice fee, despite no longer having access to the advice services for which they were being charged.
/jlne.ws/3BsAewg

Investing and Trading

NinjaTrader Group Introduces First-of-its-Kind Mobile Trading Experience Custom-Built for New CME Group Event Contracts
NinjaTrader Group – PR Newswire
NinjaTrader Group, LLC, a global leader in futures brokerage for active traders through its subsidiaries NinjaTrader and Tradovate, announced that the firm has just introduced a first-of-its-kind mobile trading experience, custom-built for the new event contracts launched today by CME Group. The firm sees significant potential for the new products, which give U.S. investors the opportunity to predict the daily closing price of up to 10 of the world’s most popular financial and commodities markets.
/jlne.ws/3BtEzze

Market Making Is Hard for Houses; Also GMX crypto exploit, Musk vs. Twitter rhetoric and Do Kwon’s whereabouts.
Matt Levine – Bloomberg
In the stock market there are market makers. A market maker is in the business of buying stock from people who want to sell and selling stock to people who want to buy. Those people could just trade with each other directly, sure, but that would be inconvenient. You might want to sell now, and I might want to buy in 10 minutes. Rather than wait around, you sell to a market maker now, and she sells to me in 10 minutes. You and I get “immediacy.” In exchange, we pay the market maker a bit of money, in the form of a spread between the price she pays you now and the price I pay her in 10 minutes.
/jlne.ws/3xEaJXI

Wall Street’s Mysterious 2,200% IPOs Come From Tiny N.J. Broker; Network 1’s microcap listings stand out for outsized moves; US market transfixed by run of Hong Kong-style wild swings
Ishika Mookerjee, Kiuyan Wong, and Drew Singer – Bloomberg
Fifty miles south of midtown Manhattan, in a red-brick building bounded by a railway track, sits a little-known brokerage behind some of the world’s wildest initial public offerings. From its base in Red Bank, New Jersey, Network 1 Financial Securities Inc. has underwritten six US microcap IPOs this year that surged by an average 2,190% on their first day of trading. That’s more than 250 times the performance of offerings underwritten by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley, according to Bloomberg-compiled data.
/jlne.ws/3BSFevh

Calpers’ Investment Chief Highlights Lagging Returns, ‘Lost Decade’ for Private Equity; Nation’s biggest pension fund has trailed peers’ returns in almost every asset class
Heather Gillers – The Wall Street Journal
The nation’s largest pension fund got a scathing performance review Monday when its new investment chief highlighted the retirement system’s underperforming returns and estimated it missed out on $11 billion in gains during a “lost decade” for private equity. The unusually candid presentation to board members of the California Public Employees’ Retirement System, known as Calpers, showed returns lagging behind other large pensions in almost every asset class over the past 10 years, with private equity trailing the most, 1.3 percentage points. In each year between 2009 and 2018, the presentation showed, Calpers put $5 billion or less in new money into private equity, an asset class that public pension funds have relied on heavily in recent years to amp up returns.
/jlne.ws/3BTer1V

British Pound and Euro Are in a ‘Doom Loop,’ TD Strategist Says; ‘Policymakers can’t produce the needed energy supply,’ TD says; Sterling is trading near the lowest levels in 37 years
Naomi Tajitsu – Bloomberg
The Bank of England has limited power to stop the downward spiral in the UK pound, said strategists at TD Securities, who are predicting more losses in the coming months. The pound and euro are trapped in a “doom loop” caused by soaring energy prices that feed into weaker economic growth and lower currency values, wrote strategists including James Rossiter in a note on Friday. They expect the UK currency to fall to $1.11 by year-end, down about 3% from its current level.
/jlne.ws/3S0HaHK

World Will Get More Millionaires After 2022’s Wealth Loss; Credit Suisse sees number of millionaires growing 40% by 2026; China is among countries that will add the most millionaires
Yoojung Lee – Bloomberg
The number of millionaires globally will grow by 40% in the next five years, even as rising rates and Russia’s war in Ukraine are sinking asset classes and private fortunes this year. By 2026, there will be more than 87.5 million people with at least $1 million in wealth, up from 62.5 million in 2021, according to Credit Suisse Group AG’s Global Wealth Report 2022 released on Tuesday. The number will grow faster in emerging economies, with China almost doubling its millionaire population, the forecasts show.
/jlne.ws/3f4JcZ1

Billionaire Founder ‘Alert in War’ Is Doubling His Oil Fortune; Torbjorn Tornqvist’s wealth has almost doubled since 2021 as the firm’s profits soared with Putin’s invasion of Ukraine disrupting markets.
Benjamin Stupples – Bloomberg
Torbjorn Tornqvist moved quickly into crisis-management mode after Russia annexed Crimea. The co-founder and chief executive officer of energy trader Gunvor Group raced to buy out his business partner, Gennady Timchenko, closing the deal just one day before the US sanctioned the Russian billionaire in 2014. To help finalize the transaction, Tornqvist, a native of Sweden, had to take out a 10-figure dividend from the privately held firm.
/jlne.ws/3RYCAKh

Investors Love and Hate Lula a Decade After He Made Them Very Rich; Those eyeing his comeback are split into two camps: locals who loathe him and foreigners who welcome his return.
Felipe Marques and Vinicius Andrade – Bloomberg
Days after Luiz Inacio Lula da Silva exited the presidential palace in Brasilia, Mohamed El-Erian, then CEO of the powerhouse bond shop Pimco, published what was in essence a love letter to him. This was January 2011, the world was in the midst of a torrid commodities boom, Brazil’s economy was soaring, and Pimco, along with scores of other investors, had just made a fortune investing in the country’s bonds.
/jlne.ws/3qSUDWa

‘SPAC King’ Chamath Palihapitiya Closing Two SPACs After Failing to Find Deals; Venture capitalist says it is a ‘precarious moment’ in markets after looking at more than 100 companies to take public with two SPACs and not finding a deal
Amrith Ramkumar – The Wall Street Journal
One of the biggest promoters of SPACs is shutting down two deal-making efforts that together hold more than $1.6 billion after the market collapsed, wiping out tens of billions in startup market value and punishing individual investors. Chamath Palihapitiya will wind down and return cash from the two special-purpose acquisition companies to shareholders after failing to find companies to take public. Giving up is an admission by the brash venture capitalist dubbed the “SPAC king” that the market that helped make him a mainstay on business television has effectively shut down.
/jlne.ws/3xEGwYl

Environmental, Social and Corporate Governance

Farm and food investors face $150 billion loss on climate change, report says
Ross Kerber – Reuters
Top farming and food firms could lose up to a quarter of their value by 2030 if they do not adapt to new government policies and consumer behavior tied to climate change, United Nations-affiliated campaigners said in a new report. Research to be presented on Tuesday looked at how 40 big companies including agricultural producers and food retailers could fare under scenarios called key to reducing emissions, such as if governments impose carbon emssions prices or if consumers reduce their consumption of meat.
/jlne.ws/3BUlqrz

Nigeria battling floods ‘beyond control’ as warning given of dams overflowing
Floods have affected half a million people, including 100,000 displaced, Nigeria’s National Emergency Management Agency says
The Guardian
Nigeria is battling its worst floods in a decade with more than 300 people killed in 2022 including at least 20 this week, as authorities said the situation is “beyond our control.” The floods in 27 of Nigeria’s 36 states and capital city have affected half a million people, including 100,000 displaced and more than 500 injured, Nigeria’s National Emergency Management Agency said. The disaster has also destroyed thousands of hectares of farmland, worsening fears of a disruption of food supply in Africa’s most populous country.
/jlne.ws/3QYclSE

The Free Market Doesn’t Guarantee Freedom for Everyone; Racial discrimination was actually profitable before it was banned in 1964. This is relevant for civil-rights policy today.
Trevon Logan – Bloomberg
Does the free market ensure freedom? There’s a common perception that it does — that if, for example, a business discriminates against people of a certain race or sexual orientation, it will bring punishment upon itself in the form of higher expenses and fewer customers. Competitors will profit by meeting the unsatisfied demand. Unfortunately, the history of Black Americans demonstrates that the market doesn’t always deliver the freedom it promises — a conclusion that has implications for addressing discrimination today.
/jlne.ws/3SgoKT7

Oil Sands Carbon-Capture Goals May Strain Alberta Labor Force
Robert Tuttle – Bloomberg
The Canadian oil industry’s C$12 billion (US$9.1 billion) plan to store carbon emissions underground probably will strain Alberta’s labor force, according to the president of the group organizing the effort. The bulk of the construction work will happen between 2025 and 2030, Kendall Dilling, president of the Pathways Alliance, said during an interview Monday. With the effort expected to require tens of thousands of workers, oil-sands companies are looking to stagger projects to make the workforce challenge more manageable.
/jlne.ws/3LthSQn

A Hotter Planet Is Already Warping Asset Prices; A Q&A with economic researchers explores the extent to which costs from heat stress are reflected in the pricing of stocks, corporate debt and municipal bonds.
Jonathan Levin – Bloomberg
Climate change will have severe consequences on the global economy, including through rising seas and increased hurricane activity, droughts and wildfires. But the biggest economic cost may be the growing frequency of heat waves, which drive up energy costs for air conditioning and slash the productivity of many types of laborers, principally those whose jobs require them to work outdoors. New research led by New York University economist Viral Acharya attempts to measure the extent to which those costs are already reflected in the pricing of stocks, corporate debt and municipal bonds. The researchers found a significant impact from heat stress exposure on all three. I spoke with Acharya and one of his co-authors, Tuomas Tomunen, an assistant professor of finance at Boston College. A condensed and lightly edited transcript of the conversation follows. Their paper, which was co-written by Suresh Sundaresan of Columbia University and Timothy Johnson of the University of Illinois — can be found here.
/jlne.ws/3BRIKpY

Business Schools Are Beginning to Embrace Stakeholder Inclusion; As MBA programs play catch-up with CEOs and move beyond shareholder capitalism, they have yet to change the core curriculum.
Paul Keegan – Bloomberg
On the role of business in society, the trend lines are clear: Shareholder primacy is out and stakeholder inclusion is in. Chief Executive Officers Jamie Dimon of JPMorgan Chase & Co. and Larry Fink of BlackRock Inc. were among the scores of corporate luminaries who in 2019 publicly made “a fundamental commitment to all of our stakeholders,” including the environment, employees, suppliers, and communities, as members of the Business Roundtable. Similar pledges now pop up everywhere, from global gatherings of the business elite to advertisements for the Australian toilet paper company Who Gives a Crap Ltd., which uses recycled materials and spends half its profits on building toilets and improving sanitation in the developing world: “Wipe your bum, change the world.” Business schools have been slow to reflect this zeitgeist, but they’re rapidly making up for lost time.
/jlne.ws/3BwgLKR

We Need a War Effort on Wind Turbines; Red tape and local opposition to wind farms are massive roadblocks to keeping Europe warm and lit over the winter — and beyond
Chris Bryant – Bloomberg
Europe should build wind farms as if winning the war in Ukraine depended on it: After all, the winter is gusty, wind power doesn’t emit carbon and you don’t have to pay unfriendly governments to make it blow. To be sure, we need to mobilize every available energy resource to reduce power bills and keep the lights on. We must keep nuclear plants operating, tap new gas supplies and add more energy storage. Yet we’re still not building renewables fast enough, and that’s often due to byzantine administrative hurdles and local opposition. The solution is to cut red tape and turn “NIMBYs” into “YIMBYs” — people who say, “Yes, in my back yard.”
/jlne.ws/3SfYkkv

Institutions

Two Turkish banks suspend Russian Mir payments after U.S. sanctions
Ebru Tuncay and Jonathan Spicer – Reuters
Turkish lenders Isbank and Denizbank have suspended use of Russian payment system Mir, the banks said on Monday, following a U.S. crackdown on those accused of helping Moscow skirt sanctions over the war in Ukraine. The moves, announced separately, came after Washington expanded its sanctions last week to include the head of the entity running Mir, which is popular with the tens of thousands of Russian tourists who arrived in Turkey this year. The suspensions by two of the five Turkish banks that had been using Mir reflect their effort to avoid the financial cross-fire between the West and Russia, as the Turkish government takes a balanced diplomatic stance.
/jlne.ws/3qN5C3D

Calpers admits ignoring private equity boom cost up to $18bn of gains; Biggest US public pension plan missed out on almost a decade of returns by being too conservative
Josephine Cumbo – Financial Times
Calpers, the biggest public pension plan in the US, admitted a decision to put its private equity programme on hold for 10 years had cost it up to $18bn of returns as it announced an overhaul of its governance.
/jlne.ws/3LreWUj

Hedge funds take aim at UK fund management groups; Citadel and Point72 among firms betting against companies including Abrdn and Ashmore
Laurence Fletcher and Joshua Oliver – Financial Times
Hedge funds are betting that a tumble in shares of UK asset management companies including Abrdn and Ashmore will accelerate as a brutal bear market dents their investment performance and ability to attract new business. Ken Griffin’s Citadel, Steve Cohen’s Point72 and Marshall Wace are among those running bets on lower share prices for listed so-called long-only firms, whose bias towards rising asset prices puts them at more acute risk from the tumult so far in 2022 in equities and bond markets.
/jlne.ws/3BQGWxj

Central Banks And Supervisors Can Help Address Nature Loss, A Major Financial Stability Issue; Dr. Marta Ra is the cofounder of the international network Women in Sustainable Finance (WISF), a mental health and well-being ambassador.
Marta Ra, Councils Member – Forbes
The extensive coverage of the UN’s latest climate report makes one thing clear: We must act fast to avoid catastrophic damages to our planet and economy. The report confirms that we’re not on track to secure a climate-resilient, liveable future—and the costs could be huge. Under climate stress test scenarios, the U.S. bank Citigroup would have to raise over $73 billion to cover climate losses alone. But, climate change is only one side of the environmental crisis. Nature loss is the other one. Together, they represent a major twin crisis.
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Wellness Exchange

New York Times Opinion: Mental Health in America; America’s mental health crisis isn’t just about feelings. It’s about money, power and politics, too.
The New York Times
It’s Not Just You. America’s mental health crisis isn’t just about our unhappiness as individuals. It’s about the world we live in: our economy, our culture, our medical establishment. Americans have long treated mental health as a personal matter. But until we realize that society shapes our mental health and how we treat it, we won’t be able to feel better.
/jlne.ws/3S22VHi

Biden Says the Pandemic Is Over. But at Least 400 People Are Dying Daily; The president made the remark in an interview that aired on CBS’s “60 Minutes” on Sunday night. By Monday, the backlash was in full swing.
Sheryl Gay Stolberg – The New York Times
With 400 to 500 Americans still dying every day of Covid-19, President Biden has declared that “the pandemic is over.” But don’t tell that to people like Debra McCoskey-Reisert, whose mother died in early August. Or Ben HsuBorger, who has chronic fatigue syndrome, a condition often brought on by viruses, including the coronavirus. Or Peter W. Goodman, whose wife died on Aug. 17.
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‘Very Harmful’ Lack of Data Blunts U.S. Response to Outbreaks; Major data gaps, the result of decades of underinvestment in public health, have undercut the government response to the coronavirus and now to monkeypox.
Sharon LaFraniere – The New York Times
After a middle-aged woman tested positive for Covid-19 in January at her workplace in Fairbanks, public health workers sought answers to questions vital to understanding how the virus was spreading in Alaska’s rugged interior. The woman, they learned, had underlying conditions and had not been vaccinated. She had been hospitalized but had recovered. Alaska and many other states have routinely collected that kind of information about people who test positive for the virus. Part of the goal is to paint a detailed picture of how one of the worst scourges in American history evolves and continues to kill hundreds of people daily, despite determined efforts to stop it.
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Rise of the climate optimists, pushing back against gloom
Xander Peters – Christian Science Monitor
There’s a sense of calmness in rural Iowa. Its beauty isn’t lost on Marcy Franck. But the beautiful vastness of corn and soybean fields across the horizon isn’t what sticks with Ms. Franck each time she pays a visit to her parents-in-law in the Midwest. Rather, it’s the wind turbines she sees in the distance. It’s the thought of how the machines’ gently rotating blades generate clean energy destined to travel across the region, and into peoples’ lives. It’s the fact of progress in innovation.
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Regions

Hong Kong Bankers Might As Well Be Quiet Quitting Now; This market downturn has brought some welcome breathing room. Just be ready when it all kicks off again.
Shuli Ren – Bloomberg
Quiet quitting, where you don’t quit the job but no longer subscribe to the culture that work is your life, is alien to Hong Kong’s diligent finance worker bees. But conditions are ripe for them to stop hustling for a while. Say no to 12-hour days and late-night conference calls. This year, few are expecting blow-out bonuses that would give them the financial freedom to, say, retire by 50. Equity sales receive commissions when there is trading. But turnover on the Hong Kong bourse has been at its lowest in two years, as the Hang Seng Index bleeds towards the March 2020 low.
/jlne.ws/3qRcs8b

China’s $1.2 Trillion Wealth Fund Loses Two More Team Leaders; Sheng Fuxin, Winston Chen worked for unit of CIC Capital; Direct investment unit was reorganized earlier this year
Bloomberg News
?China’s $1.2 trillion sovereign wealth fund lost two more team leaders after merging its direct investment arm with the main overseas operations, extending a talent exodus. ? Sheng Fuxin, who headed one of the infrastructure teams at China Investment Corp. resigned recently to seek other opportunities, according to people familiar with the matter. Winston Chen, a team leader for technology, media and telecommunications investments, has left, the people said, declining to be identified discussing private information.
/jlne.ws/3xBSDFH

Germany to sign LNG contracts in UAE, German economy minister says
Reuters
German Chancellor Olaf Scholz is expected to sign contracts for liquefied natural gas (LNG) during his visit to the United Arab Emirates on Sunday, his deputy chancellor said, as Germany looks for new partners to replace Russian energy imports. “The gas offering is slowly broadening. The government is permanently in talks with many countries,” Economy Minister Robert Habeck said, pointing to his own trip to Qatar and the UAE in March.
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Swiss Imports of Russian Gold Rise to Most Since April 2020
Eddie Spence – Bloomberg
Switzerland’s imports of Russian gold surged to the highest in more than two years, a sign that more old bullion from the country may be being remelted to make it easier to sell. About 5.7 tons — worth $324 million — of Russian metal was imported by the refining hub in August, according to data from the Swiss Federal Customs Administration. That’s the most since April 2020.
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Saudi Aramco Says Global Oil Buffers May Vanish When Demand Recovers; Energy crisis will be ‘severe and prolonged,’ says CEO Nasser; Saudis say world must recognize need for more oil investments
Paul Wallace – Bloomberg
Saudi Aramco said a lack of investment in fossil fuels was to blame for the global energy crisis and warned that spare production capacity in the oil market might be wiped out once economies rebound.
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Mexico Quake Had 0.00075% Chance of Repetition, Expert Says; Math whizzes try to calculate improbability of Mexico quake; Earthquake happened on the same day in 1985, 2017 and 2022
Maya Averbuch – Bloomberg
The odds of an earthquake occurring on this day — the same day that one toppled buildings in Mexico City in 1985 and then seemed to come back to haunt people in 2017 — left math whizzes trying to calculate just how improbable it was. Soon after noon, people looked up as the humming sound of an alarm reverberated across the capital and many states, a drill meant to test the readiness of earthquake warning systems. Right after 1 p.m., the shaking started. A 7.5-magnitude quake had struck.
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Credit Suisse Dismisses 21 Brazil Wealth-Management Workers
Cristiane Lucchesi – Bloomberg
Credit Suisse Group AG dismissed 21 employees from its wealth-management business in Brazil, according to people familiar with the matter. The staff reductions, which primarily affected support personnel, is part of a reorganization to “strengthen and simplify our operating model,” the bank said in an emailed statement Monday. “Certain redundancies were identified” after a merger between the wealth-management business in Brazil and the rest of Latin America, which started in March, according to the statement.
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U.S. Return-to-Office Rates Hit Pandemic High as More Employers Get Tougher; Office use on average was 47.5% of early 2020 levels for five business days recently in 10 major metro areas
Peter Grant – The Wall Street Journal
Workers are returning to U.S. offices at the highest rate since the pandemic forced most workplaces to temporarily close in 2020, as infection rates continue to fall and more companies intensify efforts to bring employees back. Office use on average was 47.5% of early 2020 levels for workers in the office over the five business days from Sept. 8 to Sept. 14 in the 10 major metro areas monitored by Kastle Systems. The company, which tracks security swipes into buildings, said that was the highest percentage since late-March 2020. Midweek days were especially strong, with office use for Tuesday and Wednesday last week at about 55% of the prepandemic workforce, also a high during the pandemic for those days, Kastle said. The data through last Wednesday were the most recent weekly figures available.
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Miscellaneous

Beyond Meat COO Arrested for Biting Man’s Nose After College Football Game
Daniela Sirtori-Cortina and Deena Shanker – Bloomberg
Beyond Meat Inc.’s chief operating officer was arrested on Saturday on allegations that he bit a man’s nose during an altercation after a college football game in Fayetteville, Arkansas. Doug Ramsey was arrested on charges of terroristic threatening and third-degree battery, court records show. Ramsey was allegedly at a parking garage when a Subaru inched in front of his Bronco, coming into contact with the front tire on the passenger’s side, according to a report by local station KNWA/KFTA.

Film Financing Mavens, Banks Flirt With the Wild West World of Cryptocurrency
Angus Finney – Variety
“Computers are useless,” Pablo Picasso exclaimed more than 50 years ago. “They can only give you answers.” No doubt he would be turning in his grave at today’s alliance of computer programs, tech companies and digital artists clustering together to create non-fungible tokens (NFTs). It’s a quickly evolving and potentially very risky world for filmmakers, producers and others looking for new ways to raise funding but should be approached with caution, research and a good look at recent history.
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China commodity trader woe a setback for Glencore

China commodity trader woe a setback for Glencore

First Read Hits & Takes John Lothian & JLN Staff Congratulations to Larry Tabb. STA announced Larry as the 2022 Dictum Meum Pactum (DMP) Award recipient. Here is a success story for you. The Greenwood Project placed four interns at Goldman Sachs this summer...

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