IDX 2021 Panel: The New Landscape For Clearing in the U.K. and EU
Sarah Rudolph – JLN
With the U.K. and EU having recently separated, concerns about cross-border equivalence for trading and clearing venues have come to the fore. The clock is ticking down, since a temporary 18-month equivalence for U.K. clearing houses will end in June 2022. People are worried that the European Commission in Brussels may try to force banks to move all clearing of euro-denominated derivatives from London to the Eurozone, which would be too much for EU clearing houses to process.
An IDX 2021 panel, “The Landscape in the U.K. and EU,” addressed this topic early Monday morning (for those of us in the U.S.). The moderator, FIA Europe’s Bruce Savage, said the European Commission has said the status quo was “unacceptable.”
Remarks of panel members included: There has been shifting market share and reduced market access for both U.K. and EU customers. Trading in euro-denominated derivatives has grown. A lot of U.K. trading venue activity has gone over to the US in the past year or so – about 2.4 trillion. European CCP activity has grown from around 5-6% pre-Brexit to just over 10% currently and has more than doubled in aggregate notional value.
To read the rest of this story, go here.
Hits & Takes
John Lothian & JLN Staff
Today was the beginning of the first FIA in-person event since the start of the pandemic. Walt Lukken, CEO and president of FIA, delivered his opening comments this morning in London. The title of his remarks was “IDX 2021: The Power of the Human Connection,” and he spoke about climate change, operations and standards and cross-border regulation, finishing with the agenda for IDX 2021. He also spoke about growing a mediocre beard during the pandemic and how he turned a Peloton into a laundry rack and still has the price tag on the electric bass guitar he bought with the intention of learning to play it. He made no mention of the Most Interesting Man in the World.
The lead story from the Wall Street Journal about options trading had this paragraph about volumes: “Nine of 10 of the most-active call-options trading days in history have taken place in 2021, Cboe Global Markets data show. Almost 39 million option contracts have changed hands on an average day this year, up 31% from 2020 and the highest level since the market’s inception in 1973, according to figures from the Options Clearing Corp.”
Eurex today launched futures contracts on the Bloomberg MSCI Fixed Income indexes that embed ESG criteria. This is the first exchange to “offer a standardized, listed and centrally cleared way to trade derivatives on fixed income indices that embed ESG criteria,” Eurex said.
A legendary investor from Japan, who set up Japan’s first low-cost mutual fund, published advertisements in the Nikkei and Asahi newspapers warning of a stock market bubble caused by excess liquidity. Atsuto Sawakami is a proponent of long-term investing, which prompts the question, “What is long-term investing when bubbles pop?”
The latest team of the week for Wall Street Rides Far is Team Cboe Global Markets. Their theme is: ‘Championing Autism Research, One Rider at a Time.’ Here is what WSRF says about Cboe: “Effective teams know that success requires not just respect for one another, but for those around them as well. The team at Cboe Global Markets — a global exchange operator and leading provider of market infrastructure and tradable products — prioritizes this ideal by acting as an exceptional global neighbor. Through its contributions to important causes in the communities where its employees work and live, Cboe is highly attuned to the universal nature of autism spectrum disorder (ASD) and, recognizing the deeply personal connection several of its employees have to the cause, is proud to champion the life-changing work enabled by the Autism Science Foundation.” — LinkedIn
On Friday I posted a podcast interview of Zubin Ramdarshan, who talks about Eurex’s bitcoin ETN futures. — John Lothian News
Also, continuing the European market theme of The Path to Electronic Trading started with the Brendan Bradley interview we posted, is an interview of Alan van Griethuysen, who talks about his career starting in Amsterdam at the options exchange there. — John Lothian News
John Lothian News is conducting a raffle of five minutes of video production from John Lothian News for any donation to the JLN MarketsWiki Education GoFundMe campaign over $100. Also, your donation will be matched by Trading Technologies. You can help support our efforts to preserve industry history, help tell your firm’s own story, and be part of it by making a donation to our GoFundMe campaign.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
In conjunction with the ongoing IDX conference, the FIA has released its 2021 Sustainable Finance Report, an update from last year’s, that details the derivatives industry’s initiatives to combat global climate change. The report covers both exchange-traded and non-exchange- traded products, highlighting contracts that support sustainability, including emission allowance contracts. The report is available here.~SC
Options volatility bounces back on Evergrande, Fed taper talk; John’s Take previews FIA’s IDX; How does the VIX calculate vol? – The Spread – September 24, 2021
– Options markets see spike in volatility, but ride out China Evergrande Group’s troubles, Federal Reserve taper expectations;
– John’s Take gives us a sneak peek at the FIA IDX 2021 conference and talks about Bryan Harkins and Wall Street Rides FAR;
– What does the VIX Index measure? A tutorial by Russell Rhoads, head of research at EQDerivatives, in the Term of the Week.
Alan van Griethuysen’s Dutch Path to Electronic Trading
Alan van Griethuysen wanted to be an officer in the Netherlands Royal Army, following in the footsteps of his father, who was a full colonel in the military police.
However, when he took a one-year leave while in school and worked in hotels in England, it started a path that led him to the options exchange in Amsterdam. That first job as a price reporter began a tenure of 32 years at the exchange, which saw many changes during van Griethuysen’s time.
Zubin Ramdarshan Talks About Eurex’s Bitcoin ETN Futures with John Lothian News
In this edition of the JLN European Market Podcast series we are talking to Zubin Ramdarshan of Eurex about Eurex’s recently launched bitcoin ETN futures.
Scaramucci Sees Institutional Investors Sitting Out Crypto Craze
Joanna Ossinger – Bloomberg
About 10% of financial services in blockchain ‘feeding frenzy’; SkyBridge founder sees potential for big-bank M&A in crypto
Headlines aside, the vast majority of money managers remain hesitant about cryptocurrencies and blockchain technology, according to SkyBridge Capital founder and noted crypto booster Anthony Scaramucci. The new asset class is dominated by what Scaramucci estimates to be about 10% of the financial-service community, he said in an interview Wednesday, calling it a “feeding frenzy” that reminded him of the 1990s dot-com boom.
***** The Mooch should have a pretty good feel for this, considering the SALT conference just ended.~JJL
Commodity Boom Is Too Much of a Good Thing for Many Traders; Rising prices require traders to borrow more money. For smaller players, that funding has been hard to come by.
Joe Wallace and Julie Steinberg – WSJ
It has been a banner year for fossil-fuel, metals and agricultural markets. For many commodity traders, the boom in prices has had an unexpected effect: a credit crunch that is reshaping the industry in favor of the largest players. Higher prices are requiring traders to borrow more money to finance the same volume of oil, copper or coffee. In some instances, extreme or unusual weather is causing gyrations in commodity prices, prompting traders to amass cash in a pinch.
***** These are the times to make sure you have your seatbelt buckled when you are trading. ~JJL
Bitcoin mining company buys Pennsylvania power plant to meet electricity needs
Jimmy Pezzone – TechSpot
What just happened? Crypto mining companies are continuing to find innovative solutions to power problems despite concerns regarding Bitcoin mining’s immense power requirements and ecological impacts. A holding company in Pennsylvania recently purchased the financially challenged Scrubgrass power plant. The plant currently produces enough power for 1,800 Bitcoin miners, with output increases planned to support more than 20,000 miners by 2022.
***** Vertically integrated bitcoin mining?~JJL
A hamster has been trading cryptocurrencies in a cage rigged to automatically buy and sell tokens since June – and it’s currently outperforming the S&P 500
Matthew Fox – Markets Insider
A hamster in Germany is redefining “A Random Walk Down Wall Street” author Burton Malkiel’s belief that a blindfolded monkey throwing darts at a stock ticker list in the newspaper could do just as good as a human investment professional. The livestreamed hamster, named Mr. Goxx, has been independently trading a portfolio of various cryptocurrencies since June 12, and so far its performance has been impressive. As of Friday, the portfolio was up nearly 24%, according to the @mrgoxx twitter feed that documents daily performance, along with every trade made by the hamster. Mr. Goxx’s performance outpaces bitcoin and the S&P 500 over the same time period.
****** The lesson here is that any rodent can trade the market and be right for a while.~JJL
Friday’s Top Three
Our top story Friday was Reuters’ U.S. ‘pink sheets’ in shakeup as securities regulator looks to stamp out fraud. Second was JLN’s Small Exchange Says It Plans To List Crypto Stock Index Futures Contract by Suzanne Cosgrove. Third was China Widens Ban on Crypto Transactions; Bitcoin Tumbles, from Bloomberg News.
26,622 pages; 235,907 edits
Individuals Embrace Options Trading, Turbocharging Stock Markets; Short-term traders flock to the low upfront cost and potential quick gains in options markets, fueling bigger swings and many rallies
Gunjan Banerji – WSJ
Shares of Robinhood Markets Inc. HOOD -2.24% had mostly disappointed the trading app’s fans since their initial public offering. But Harsh Patel felt sure that was about to change. Mr. Patel, a 27-year-old nurse in Columbus, Ohio, figured its price would rise after he saw chatter about Robinhood light up a stock market chatboard. So on Aug. 4, he paid $600 for a call option—a contract that confers the right, though not the obligation, to purchase 100 shares at a stated price by a certain date.
Derivatives Set for $15 Trillion Switch in Libor Test Run
William Shaw – Bloomberg
Global banks are about to get a comprehensive blueprint for how derivatives worth several hundred trillion dollars may be finally disentangled from the London Interbank Offered Rate. Clearing houses are preparing a synchronized shift of about 13 trillion euros ($15 trillion) of interest-rate swaps to the new euro short-term rate, ESTR, next month. The process is a critical step toward retiring the Euro Overnight Index Average, part of the bedrock of Europe’s financial system.
An end to super-cheap money? Central banks begin tightening cycle; Having made billions available to households, companies and governments to borrow during the pandemic, the brakes are now being applied
Chris Giles and Colby Smith – FT
The world’s financial markets rarely sit glued to their screens waiting for the no-nonsense Norges Bank to pronounce its verdict on Norway’s monetary policy. This week was different. The 0.25 percentage point rise in its interest rate was the most visible expression yet of a turn in the monetary policy cycle that is spreading across the world.
Traders take up derivatives tied to Libor replacement; Sofr-linked futures and swaps gather volume despite lenders’ hesitation over new benchmark
Kate Duguid and Philip Stafford – FT
Lenders have been slow to adopt the official substitute for the scandal-tarred Libor interest-rate benchmark, but derivatives traders are now giving it an enthusiastic welcome. Action in futures, options and swaps markets tied to the new secured overnight financing rate — Sofr — has shot up since this summer. These derivatives enable users to hedge against fluctuations in interest rates.
Cryptocurrency Exchanges Curb Trading From China After Beijing’s Warning; Huobi Global said it stopped allowing new customers in mainland China to register accounts
Elaine Yu – WSJ
One of the world’s largest cryptocurrency exchanges said it would close all user accounts in mainland China by the end of the year, days after the country’s central bank declared all crypto-related transactions illegal. Huobi Global, which was founded in 2013 and currently operates from offices in Singapore, South Korea, the U.S. and other countries, over the weekend said it stopped allowing new customers in mainland China to register accounts. The exchange will also gradually retire existing accounts in China by the end of 2021 to ensure the safety of its customers’ assets, it added.
Europe’s Energy Crisis Is Coming for the Rest of the World, Too; Millions of people around the globe will feel the impact of soaring natural gas prices this winter.
Stephen Stapczynski – Bloomberg
This winter, the world will be fighting over something that’s invisible, yet rarely so vital—and in alarmingly shorter supply. Nations are more reliant than ever on natural gas to heat homes and power industries amid efforts to quit coal and increase the use of cleaner energy sources. But there isn’t enough gas to fuel the post-pandemic recovery and refill depleted stocks before the cold months. Countries are trying to outbid one another for supplies as exporters such as Russia move to keep more natural gas home. The crunch will get a lot worse when temperatures drop.
Boris Johnson prepares to call in army as panic buying drains UK petrol pumps; Competition rules eased with half of garages outside motorway network estimated to have no fuel
David Sheppard in London and Sebastian Payne – FT
Boris Johnson is preparing to draft in hundreds of soldiers to tackle the UK’s fuel crisis as at least half of petrol stations outside the motorway network have run out of fuel after Britons engaged in panic buying. The prime minister will meet senior ministers and officials on Monday to examine the latest data following the disruption to fuel supplies caused by a scarcity of tanker drivers. One senior government insider said: “The situation in England is very bad.”
The US and EU should talk about competition; They can find common ground by agreeing on rules for the 21st century economy, rather than allying against China
Rana Foroohar – FT
Observing last week’s tussle between the US and France over the Aukus security deal, which has threatened to derail this week’s inaugural US-EU Trade and Technology Council meeting in Pittsburgh, I was reminded of a famous line from the film Cool Hand Luke: “What we’ve got here is failure to communicate”.
Major banks and other key financial institutions are working to tokenize assets ‘behind the scenes,’ says ‘Big Four’ firm EY; Paul Brody, global blockchain leader at accounting giant Ernst & Young, predicts major banks will start offering ‘a curated selection of [decentralized finance] services’ in the coming months
Frances Yue – MarketWatch
Ernst & Young Global, one of the “Big Four” accounting firms, said it is building technology and designing programs for some major banks and other key financial institutions to tokenize financial assets, such as stocks DJIA, +0.10%, bonds and real estate O, -1.95%.
Quants Are Taking Over the World of Bonds in a Big Invesco Poll
Justina Lee – Bloomberg
The quant revolution in fixed income is here at long last, if the latest Invesco Ltd. poll is anything to go by. With the work-from-home era fueling a boom in electronic trading, the majority of investors in a $31 trillion community say they now deploy factor strategies in bond portfolios.
UK energy companies are like macho banks circa 2007; Crisis raises questions over governance, risk controls and regulation in sector
Patrick Jenkins – FT
A government keen to boost consumer choice. A string of upstart operators with aggressive business practices. A sleepy regulator which failed to challenge those operators. And then a big market shock. We might be back in 2007, when Northern Rock — and a host of other macho banks — collapsed, ushering in a global financial crisis.
Boston Fed’s Rosengren, citing need for kidney transplant, to retire Sept. 30
Boston Federal Reserve president Eric Rosengren announced he will retire on Thursday, Sept. 30, revealing that he had qualified for a kidney transplant in June and wanted to make “lifestyle changes” to protect his health.
SEC Punts on ‘Unreasonable’ Rule That Surprised Bond Traders
Jack Pitcher – Bloomberg
The U.S. Securities and Exchange Commission is giving bond markets at least three more months to prepare for a rule revision that industry insiders say would upend trading for some debt securities. The amendment to SEC Rule 15c2-1, set to go into effect on Tuesday, is intended to protect investors in over-the-counter trading markets from pump-and-dump schemes often seen with penny stocks. The change mandates that “broker-dealers, in their role as professional gatekeepers to this market, do not publish quotations for an issuer’s security when current issuer information is not publicly available.”
Veteran Japan Investor Takes Out Full-Page Ads to Warn of Bubble
Gearoid Reidy – Bloomberg
A legendary figure in Japan’s equity markets warned of a bubble caused by excess liquidity in a series of full-page advertisements printed in Japan’s broadsheets on Monday. Atsuto Sawakami, who set up Japan’s first low-cost mutual fund and helped to promote long-term investing in local stocks, published the advertisements in newspapers including the Nikkei and the Asahi.
How China Plans to Avert an Evergrande Financial Crisis; Control of the banking system gives Beijing the tools to stop a broader collapse, officials believe, while censorship and police powers can stifle protests.
Keith Bradsher – NY Times
In any other country, the sudden collapse of a corporate titan with more than $300 billion in debt would send shock waves across the economy. Headlines would blare. Banks would shudder. Investors would panic.
Credit Investors Follow the Workers; Wages, labor shortages and supply-chain snarls are pointing bond-picking investors toward winners and losers
Julia-Ambra Verlaine – WSJ
Labor shortages and supply-chain disruptions have become make-or-break factors for some investors weighing bets on corporate debt. Tom Murphy, portfolio manager and head of global investment-grade credit at Columbia Threadneedle, said the asset manager is placing companies in two buckets: those that can offset increased wages, bottlenecks and shortages with higher prices, and those that can’t without losing business. That has him avoiding packaged-goods makers and department stores.
Covid Cuts Two Years Off the Life Expectancy of U.S. Men
Jason Gale – Bloomberg
American men, women led the losses in a study of 29 countries; Denmark and Norway avoided declines in survival rates in study
American men lost 2.2 years of life expectancy last year because of Covid-19, the biggest decline among 29 nations in a study of the pandemic’s impact on longevity. Deaths among working-age men contributed the most to declining lifespans in the U.S., according to research led by demographers at the U.K.’s University of Oxford. Only Denmark and Norway, who have excelled at controlling their outbreaks, avoided drops in life expectancy across both sexes, the study published Sunday in the International Journal of Epidemiology found.
India to Roll Out Digital Health IDs for Over 1.3 Billion People
Bibhudatta Pradhan – Bloomberg
Indian Prime Minister Narendra Modi launched a program that will create a unique digital health identity for over 1.3 billion people and allow them to access their records online, part of an effort to enhance efficiency in a healthcare system constrained by the pandemic.
Pakistan Arrests 40 People for Faking Vaccination Certificates
Ismail Dilawar and Faseeh Mangi – Bloomberg
Authorities in Pakistan have arrested more than 40 people for issuing fake vaccination certificates, as Prime Minister Imran Khan’s government looks to safely reopen the economy. The arrests took place over the past month and a half, Sanaullah Abbasi, director general at Pakistan’s Federal Investigation Agency, said at a briefing in Islamabad Monday.
Covid sparks biggest fall in life expectancy since second world war; Oxford study of developed nations finds American men hit hardest by pandemic
Jamie Smyth – FT
The Covid-19 pandemic has triggered the largest falls in life expectancy since the second world war in most developed nations, with American men suffering the most severe losses.
Should You Put Your Covid-19 Vaccination Status on Your Résumé? Many Hiring Managers Say Yes; Job candidates may have a new line item to add as more companies require measures to protect against the coronavirus
Patrick Thomas – WSJ
Job seekers are considering a new addition to their résumés: Covid-19 vaccination status. As employers make vaccine rules for workers and some limit hiring to the vaccinated, people are starting to volunteer their vaccination status on job applications, in résumés and on their LinkedIn profiles.
We Did the Research: Masks Work, and You Should Choose a High Quality Mask if Possible
Jason Abaluck, Laura H. Kwong and Stephen P. Luby – NY Times
Masks, especially surgical ones, substantially reduce the risk of getting Covid-19. Getting more people to wear them — through mandates or strategies like handing out masks at churches and other public events — could save thousands of lives each day globally and hundreds each day in the United States.
Exchanges, OTC and Clearing
Bloomberg facilitates trades on newly launched Southbound Bond Connect service; Following the launch of Southbound Bond Connect, Bloomberg claimed to have facilitated trades for seven Hong Kong market makers via its Bloomberg Terminal.
Wesley Bray – The Trade
Bloomberg has gone live facilitating trades for Hong Kong market makers on the newly launched Southbound Bond Connect service. Initially announced earlier this month, the Southbound Bond Connect program went live on 24 September with the aim of further connecting Mainland and Hong Kong institutional investors.
Euroclear offers insight into settlement fails with new data service; SettlementDrive gives a view on the number and value of transactions which settled or failed in the Euroclear central securities depositories.
Jonathan Watkins – The Trade
Euroclear is set to launch a new data service offering in-depth insights into the level of settlement fails observed on individual instruments it processes. SettlementDrive is set to provide insight into settlement fails at a critical juncture as Europe readies for incoming regulation which imposes cash penalties on failed trades, along with the introduction of mandatory buy-ins.
Eurex launches futures on Bloomberg MSCI Fixed Income indexes that embed ESG criteria
Today, Eurex confirms its pioneering role in both the Fixed Income and ESG spaces, becoming the first exchange globally to offer a standardized, listed and centrally cleared way to trade derivatives on fixed income indices that embed ESG criteria.
Marketnode, an SGX and Temasek digital asset venture, announces partners ahead of key product launches
Marketnode, a Singapore Exchange (SGX) and Temasek digital asset joint venture, today announced its partnership with Barclays, BNP Paribas, BNY Mellon, Citi, Deutsche Bank, HSBC, Orient Securities International, Standard Chartered, Societe Generale and UOB, ahead of its upcoming product launches focused on digital issuance services, ESG bond data and digital asset depository infrastructure. These components will play a key role in the buildout of an end-to-end DLT-enabled fixed income infrastructure.
Implementation Date of Partial Revisions to Business Regulations, etc. in Connection with Optimization of Tick Sizes for ETFs and Other Products
Tokyo Stock Exchange, Inc. (TSE) previously announced it would implement the following changes with respect to ETFs, ETNs, and leveraged products: Application of tick sizes applied to TOPIX constituents, in principle, to all issues, Revision of procedures for expansion of daily price limits, TSE has now decided to implement said changes on November 29, 2021.
Eligible contract months of Platts Dubai Crude Oil Futures in the Market Maker Program
To ensure the smooth trading implementation for investors and improve liquidity in the futures and options markets, Tokyo Commodity Exchange (TOCOM) has implemented the Market Maker Program which requires designated market makers to post continuous two-way quotes under the conditions prescribed by TOCOM.
Establishing “Study Group on SPAC etc.”
Today, Tokyo Stock Exchange, Inc. has set up the “Study Group on SPAC etc.” The study group will discuss the advantages and relevance of “SPAC” (special purpose acquisition company) found on financial instruments exchanges in the United States and other countries, based on the practice in Japan, and further investigate the necessity of listing a similar instrument in Japan. The study group will also examine and propose issues to be address, if SPAC were to be introduced in Japan.
The Regulatory Application to Launch Electricity Futures (Permanent listing) and LNG Futures (Trial listing)
Tokyo Commodity Exchange, Inc. (TOCOM) applied to the Minister of Economy, Trade and Industry on September 27, 2021 for approval to transfer the status of its Electricity futures from the trial listing to the permanent listing, and to launch LNG futures as trial listing (3 years) in around April 2022
— Changes to Aluminum Brands 24 Sep 2021 — CME
— Amendments to Align CME Globex and CME ClearPort Listing Schedules of Nine (9) FX Options — CME
— Summary Action – MEMBER FIRM: BARCLAYS CAPITAL INC., NYMEX RULE VIOLATION: RULE 576. IDENTIFICATION OF GLOBEX TERMINAL OPERATORS — CME
— Summary Action – MEMBER FIRM: BARCLAYS CAPITAL INC., CBOT RULE VIOLATION: RULE 576. IDENTIFICATION OF GLOBEX TERMINAL OPERATORS — CME
— Clearing Transformation Trade Type – Effective April 25, 2022 — CME
— Summary Action – MEMBER FIRM: STONEX FINANCIAL INC., NYMEX RULE VIOLATION: RULE 576. IDENTIFICATION OF GLOBEX TERMINAL OPERATORS — CME
— Summary Action – MEMBER FIRM: STONEX FINANCIAL INC., CME RULE VIOLATION: RULE 576. IDENTIFICATION OF GLOBEX TERMINAL OPERATORS — CME
— Summary Actions – MEMBER FIRM: STONEX FINANCIAL INC., CBOT RULE VIOLATION: RULE 576. IDENTIFICATION OF GLOBEX TERMINAL OPERATORS — CME
Ant-Backed Ascend Money Becomes Thailand’s First Fintech Unicorn
Anuchit Nguyen and Yoolim Lee – Bloomberg
Ascend Money reaches $1.5 billion valuation after new funding; U.S. investor Bow Wave Capital joined round of $150 million
Ascend Money, a startup backed by Jack Ma’s Ant Group Co. and Charoen Pokphand Group, has become Thailand’s first fintech unicorn with a valuation of $1.5 billion following a new funding round.
How Hong Kong Stands Out as a Top Fintech Hub
Eric Chin – Yahoo Finance
Hong Kong has taken a leap to develop in the fintech industry over the past decade. Yet, to win the vigorous competition, it is essential to have strong fundamental building blocks.
As the Covid-19 pandemic has changed consumer behavior, startups have been pushed to go beyond innovation and digital transformation. The rise of fintech is now coming into the limelight than ever for financial institutions. With well-developed information and communication technology, Hong Kong has ramped up its efforts and made its way to become an international fintech hub despite its small size.
Share sale values British fintech firm OakNorth at $5 billion
Ryan Weeks – The Block Crypto
Shares in OakNorth have changed hands in a deal that values the British fintech bank at $5 billion — more than double its last reported valuation.
Indiabulls Housing Finance Limited, which took a 40% stake in OakNorth in 2015, has sold a portion of its stake for 251 crores (roughly $34 million), according to a regulatory filing on September 24. It is not clear which investors bought the shares.
Itiviti’s OEMS – A Client-Focused Trading Platform, Now and Into the Future
With Dan Smalley, SVP, Head of Business Development, Itiviti, a Broadridge Business
In the order/execution management system (OEMS) marketplace, firms have historically been reluctant to switch or make wholesale changes to their legacy platforms — even if the technology was out-of-date. Usually, there were three reasons for this reluctance to change:
Cybersecurity Training Trends 2021
Sarah Hunt – Datamation
Cybersecurity training trends reflect the urgent need for organizations of all sizes to harden their infrastructure against increasing external and internal attacks.
In 2020, some 37 billion records were compromised in nearly 4,000 reported data breaches, according to RiskBased Security’s 2020 Year End Data Breach QuickView Report.
Organizations that fail to invest in cybersecurity training are leaving their networks more vulnerable.
Rethinking the current cybersecurity landscape
Sam Rehman – Security Magazine
As digital-based technology advances in complexity, traditional cybersecurity loses its potency, leaving many businesses vulnerable to exploitation. These unintended consequences worsen from cyberattacks which continue to increase in frequency and sophistication. Businesses of every size and industry can no longer afford to rely on obsolete security practices while the cost of cybercrime skyrocket to $6 trillion in 2021.
Pay shortage: Thousands of cybersecurity jobs going unfilled across state governments
Austin Moody wanted to apply his cybersecurity skills in his home state of Michigan, teaming up with investigators for the State Police to analyze evidence and track down criminals.
But the recent graduate set the idea aside after learning an unpaid internship was his only way into the Michigan agency.
“I don’t know many people that can afford to take an unpaid internship, especially when it’s in such high demand in the private sector,” Moody said of fellow cybersecurity job seekers. “Unpaid internships in cyber aren’t really a thing beyond the public sector.”
Cybersecurity, AI, and 5G: Top tech features in new Defense spending bill
Nihal Krishan – Yahoo News
The House passed major Defense funding legislation last week, and provisions related to cybersecurity, artificial intelligence, the digital workforce, and 5G wireless capabilities are the top tech-related amendments that made the bill.
The National Defense Authorization Act funds the Department of Defense’s 2022 budget, and both parties voted Thursday to pass the bill and increase the budget by nearly $25 billion, to roughly $768 billion.
China banned all crypto transactions on Friday, but experts say the move was mostly priced in for bitcoin
Isabelle Lee – Bloomberg
China on Friday intensified its crackdown on digital assets by banning all cryptocurrency transactions, in what’s been seen as the country’s strongest restriction on the sector so far.
Crypto Recovery Suggests Players Want to Move Past China Ban
Joanna Ossinger – Bloomberg
Bitcoin makes up much of Friday’s 9% tumble within two days; Huobi and Binance stop accepting new mainland China clients
China’s fiercest shot yet across the bows of the cryptocurrency world appears to have left investors mostly unruffled. Though Bitcoin and some of its peers tumbled Friday after the People’s Bank of China issued a statement banning crypto transactions and vowing to root out the mining of digital assets, they have largely rebounded since. Bitcoin rallied close to $44,000 Monday, near the level it was at before China’s announcement. Ether broke above last week’s $3,100 level.
Cryptocurrency exchanges start cutting off Chinese users; Overseas operators restrict services after Beijing bans all digital currency activities
Ryan McMorrow and Tabby Kinder – FT
Cryptocurrency exchanges have begun cutting links with customers in China after Beijing declared more activities related to digital coins “illegal” last week, in its latest broadside against the virtual currency industry.
China’s crypto crackdown signals further pressure on offshore trading venues; National regulators seek greater control of activity beyond their borders
Adam Samson – FT
China is pointing its regulatory bazooka at a lucrative and sprawling part of the digital asset market: crypto exchanges that set up shop abroad to dodge local regulations. In the latest of a series of crypto crackdowns, the country’s central bank said on Friday that overseas facilities offering services inside China are “illegal”. It warned that any local staff who help these businesses operate, or even provide marketing and technical support, “shall be investigated”.
Scholz Tells U.K. That Brexit Is to Blame for Trucker Shortage
Iain Rogers – Bloomberg
With the U.K. in the throes of a fuel crisis due to a shortage of truck drivers, the man tipped to become chancellor was asked if Germany could help the country out. The question was asked by a British reporter at a news conference with Olaf Scholz, who last night won the election by the slimmest of margins. It was met with laughter and the Social Democrat took it in his stride and in fluent English reminded the Brits that their troubles are also a consequence of Brexit.
Singapore Signals Any Wealth Taxes Must Fit Progressive System
Philip Heijmans – Bloomberg
All options under consideration within fair, progressive rules; Also seeking to stabilize health care protocols and capacity
Singapore’s finance minister said Monday that any form of wealth tax should fit into the nation’s progressive tax system, stressing that discussions on such a move are premature amid a recent debate over inequality and revenues.
Why the World Started Fighting About Climate Change Every Year; Former U.S. EPA Chief William Reilly reflects on the beginning of climate diplomacy and what we should expect for the future.
Eric Roston – Bloomberg
As chief of the U.S. Environmental Protection Agency under President George H.W. Bush, William Reilly helped set in motion both global climate diplomacy and a critical law — the Clean Air Act Amendments of 1990 — that prevents an estimated 370,000 pollution-related premature deaths a year. On the eve of November’s United Nations negotiations in Glasgow, Scotland, Reilly looked back at the birth of global climate debates and what their future may bring. The transcript has been edited for length.
Finland Reports Widespread Espionage Around Politics, High Tech
Kati Pohjanpalo – Bloomberg
Russia, China among those spying in Finland, including via web; Finnish Security and Intelligence Service publishes report
Finland is a target of a broad range of unlawful intelligence gathering and operations intended to sway public opinion, the Finnish Security and Intelligence Service said. The activity originates from Russia and China in particular and is intended to secure “insights into the preparation of major policy positions and details of state-of-the-art technology,” the organization said in an update on Monday.
Pension funds balk at No 10 appeal to fuel UK investment boom; Call to back government plans with retirement schemes’ cash raises concerns on cost and complexity
Josephine Cumbo – FT
The UK government’s ambition to fuel a post-Covid “investment Big Bang” with billions of pounds of pension money risks petering out after retirement funds balked at Downing Street’s call to plough more cash into projects.
Japan regulator hands Mizuho improvement order
NHK World Japan
Japan’s Financial Services Agency has issued a business improvement order to Mizuho Financial Group following a series of system failures at its banking unit.
Grant Thornton fined £2.3m for Patisserie Valerie audits; Financial Reporting Council says there was ‘a serious lack of competence in conducting the audit work’
Michael O’Dwyer – FT
Grant Thornton has been fined more than £2.3m for a “serious lack of competence” in its audits of UK café chain Patisserie Valerie, which collapsed in January 2019 amid allegations of fraud.
A Crypto Guru Goes on Trial for Allegedly Advising North Korea; Virgil Griffith is charged with conspiring to violate a federal law prohibiting U.S. citizens from exporting technology to the communist country
James Fanelli – WSJ
A cryptocurrency expert is set to begin trial Monday on a charge that he conspired to violate U.S. law by traveling to North Korea to give a presentation on how to use blockchain technology to launder money and evade sanctions. Virgil Griffith, a former senior researcher for the Ethereum Foundation, was arrested in November 2019 after attending a conference in Pyongyang earlier in the year. A federal grand jury convened by the U.S. attorney’s office for the Southern District of New York indicted Mr. Griffith for allegedly conspiring to violate the International Emergency Economic Powers Act, which prohibits U.S. citizens from exporting goods, services or technology to North Korea. He faces up to 20 years in prison.
ESMA recommends European Commission to delay controversial buy-in rules; Delay suggested to avoid a collision with the final EC legislative proposal for the review of CSDR and the expected entry into force of the current CSDR settlement discipline regime.
Wesley Bray and Jonathan Watkins – The Trade
The European Securities and Markets Authority (ESMA) has written to the European Commission (EC) urging it to consider a delay of the mandatory buy-in regime under the Settlement Discipline Regime (SDR) currently scheduled for 1 February 2022.
ASIC cancels Australian financial services licence of Pure Strategy Pty Ltd
ASIC has cancelled the Australian financial services (AFS) licence of Pure Strategy Pty Ltd (Pure Strategy), effective 16 September 2021. This was due to Pure Strategy’s failure to comply with its general obligations
ASIC bans Queensland adviser for four years
ASIC has banned Queensland-based financial adviser Frederick Steven Ackerman from providing financial services and performing any function involved in the carrying on of a financial services business for four years. Mr Ackerman was an authorised representative of Pure Strategy Pty Ltd (Pure Strategy) from 22 May 2019 to 16 September 2021. He was also the sole director of Pure Strategy from 26 May 2019.
SEC Charges Two Companies and Their Principals with Misleading Investors in More Than a Dozen Oil and Gas Securities Offerings
The Securities and Exchange Commission today charged Thomas Powell and Stefan Toth, and their entities, Resolute Capital Partners LTD LLC and Homebound Resources LLC, with making material misrepresentations and omissions in connection with more than a dozen unregistered oil and gas securities offerings. Powell and Toth were also charged with acting as unregistered brokers. All respondents have agreed to settle the SEC action.
SEC Delivers Report to Congress with Recommendations from the 40th Annual Small Business Forum
Today the Office of the Advocate for Small Business Capital Formation delivered a report to Congress on the Securities and Exchange Commission’s 40th Annual Small Business Forum. The 2021 Forum took place virtually on May 24 – 27, 2021, with each session featuring panelists with in-depth knowledge of the issues facing small businesses across the country, spotlighting the following topics:
SEC Awards Approximately $36 Million to Whistleblower
The Securities and Exchange Commission today announced an award of approximately $36 million to a whistleblower whose information and assistance significantly contributed to the success of an SEC enforcement action as well as actions by another federal agency.
ESMA recommends to European Commission to delay buy-in rules
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has written to the European Commission (EC) regarding the implementation of the Central Securities Depositories Regulation (CSDR), urging it to consider a delay of the mandatory buy-in regime.
ESMA consults on the review of the Short Selling Regulation
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today launches a consultation paper (CP) on the review of the Short Selling Regulation (SSR).
ESMA consults on proposals for a review of the MiFID II best execution reporting regime
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today launches a consultation on proposals for improvements to the MiFID II framework on best execution reports. These proposals aim at ensuring effective and consistent regulation and supervision and enhancing investor protection.
Productive finance working group publishes recommendations addressing the barriers to investment in less liquid assets
The Productive Finance Working Group has today published a series of recommendations which could facilitate greater investment in longer-term, less liquid assets. The Group is industry led, co-chaired by the Governor of the Bank, the Chief Executive of the FCA, and the Economic Secretary to HM Treasury.
Japan regulator hands Mizuho improvement order
Japan’s Financial Services Agency has issued a business improvement order to Mizuho Financial Group following a series of system failures at its banking unit.
Investing and Trading
Facebook Is Entering an Age of Uncertainty for Its Investors; The exposure of poor internal practices will fuel its regulation problems. Shareholders must be starting to worry.
Parmy Olson – Bloomberg
For years Facebook Inc. stock has been a must own. The company enjoyed constant growth, regular user engagement and ad revenues that grew even with scandals tied to user data and fake news. But investors should be starting to worry a little.
Evergrande Pain Spreads to Wealthy Investors as More Interest Payments Missed; Rich trust buyers join 70,000 retail investors who suffered losses and are demanding their money back
Tens of thousands of Chinese households who bought high-yield investments risk being sucked into the spectacular unraveling of China Evergrande Group after the embattled developer missed payments on funds sold through shadow banks, which have funneled billions into its construction projects.
Tax Breaks and Property Curbs Are Driving One of the Hottest Art Booms; Retail investors in South Korea are looking to alternatives as government curbs dent the appeal of real estate as a vehicle for building wealth.
Heesu Lee – Bloomberg
There’s a new craze blazing through South Korea, the country that got the world hooked on K-Pop, high-tech beauty products and Parasite. Now, it’s paintings and sculptures that are in hot demand. Some of the surge in interest may just be a passing fad — driven by the desire for the cultural cachet that comes with owning a Banksy or the simple pleasure of just buying something beautiful. But there is a bigger financial incentive at work too — taxes — that gives the trend stronger legs.
Soaring Spac redemptions signal their fall from favour; Withdrawals cast doubt over claims of greater deal certainty than traditional IPOs
Ortenca Aliaj and James Fontanella-Khan and Nicholas Megaw – FT
Investors are pulling cash out of special purpose acquisition companies at increasingly higher rates, with a number of vehicles having their trust accounts almost wiped out as more than 90 per cent of their shareholders redeemed investments.
When the long run in markets goes wrong; UK equities are still below the level at the turn of the millennium
Philip Coggan – FT
It is a truth universally acknowledged that equities will always go up in the long run. But anyone who backed a fund based on the UK’s FTSE 100 index must be starting to have their doubts. On the last trading day of the second millennium, the index marked a then record high of 6,930.2, a story this journalist reported for the Financial Times.
Passive investment blamed for inflating stock market bubble; Research suggests index funds have insulated US equities from threat of a sustained bear market
Steve Johnson – FT
The trillions of dollars that have flooded into passive funds in recent years have inflated valuations, radically reshaping the US stock market and insulating it from the threat of a sustained bear market, research has claimed. Vincent Deluard, global macro strategist at brokerage StoneX, argued that the unprecedented flows have led to structurally higher stock valuations disconnected from company fundamentals, benefited large and growth stocks at the expense of value and small-cap shares and resulted in fewer, and shorter lived, market corrections.
After Early Investors Flee SPAC Deals, Day Traders Rush In; Large withdrawals in blank-check mergers often are sparking wild stock swings in the beaten-down sector
Amrith Ramkumar – WSJ
Day traders are targeting some companies that recently closed SPAC mergers, reinvigorating some of the meme-stock excitement that helped make such deals popular early in the year. The latest special-purpose-acquisition-company excitement focuses on firms like cybersecurity firm IronNet Inc. IRNT 8.28% that suffered significant investor withdrawals ahead of going public by closing SPAC mergers. High withdrawals leave the companies going public with less cash to put into their businesses and can make it harder for them to meet the growth projections they made as part of the deals with so-called blank-check companies.
Wall Street Scans the Lots as Used Cars Prod Inflation; The Manheim Used Vehicle Value Index, an obscure tracker of wholesale used-car prices, has become closely watched by the finance world’s high rollers.
Matt Phillips – NY Times
The hottest ride on Wall Street right now is the humble used car. The cost of clunkers and dealership trade-ins has suddenly become market-moving information, with analysts, economists and traders fixating on an obscure indicator called the Manheim Used Vehicle Value Index.
Environmental, Social and Corporate Governance
Oil’s Going to Have a Good Winter, Even If You and I Don’t; A combination of strong demand and weak supply is sending crude toward $80 a barrel. That won’t help those already worried about gas and electricity prices.
Julian Lee – Bloomberg
Fears of an oil glut are receding, as stronger demand and curtailed supply are set to tighten the market and lift prices. It’s going to be a good winter for oil producers, but a further hit to consumers who are already reeling from soaring gas and electricity costs.
Energy crisis is moment of truth for Europe’s green ambition; Today’s soaring bills reflect unfinished work and the need to galvanise climate politics
Martin Sandbu – FT
The EU’s “green deal” is about more than saving the planet. It is a stab at hegemony. European leaders sense that the decarbonisation agenda will force fundamental reform on the world’s economies, and want Europe to be at the front of that technological and policy revolution.
PwC advised DWS on sustainability while investigating greenwashing claims; Probe that dismissed concerns may have suffered from conflict of interest, whistleblower says
Olaf Storbeck – FT
PwC was advising DWS on sustainability at the same time as the accounting firm was investigating and dismissing whistleblower allegations of large-scale greenwashing at the asset manager, raising questions over the independence of the probe.
Credit Suisse Greensill Funds to Pay Back Another $400 Million
Marion Halftermeyer – Bloomberg
Credit Suisse Group AG said it plans to return about $400 million to investors in supply-chain finance funds that invested in Greensill Capital products, the fifth such disbursement since the bank was forced to freeze the money pools this year.
Decision Time for Credit Suisse. It Can’t Dawdle; Greensill emanated from the asset management division. Archegos from investment banking. How will the bank choose to reform?
Paul J. Davies – Bloomberg
As the board of Credit Suisse Group AG meets this week to discuss a strategic review, the names of external forces can be attached to the bank’s troubles: Greensill and Archegos, two broken finance businesses that hurt its bottom line and its clients. But the ongoing crisis at the Zurich-based institution springs from within: Credit Suisse was desperate to hit profit targets and stopped looking at how it made them.
Norway’s $1.4 Trillion Wealth Fund Set to Get Strict CO2 Mandate
Lars Erik Taraldsen – Bloomberg
Norway election winner wants wealth fund to set emissions goal; Landmark decision will have ramifications for major oil stocks
The world’s biggest owner of publicly traded stocks, Norway’s sovereign-wealth fund, is about to get the political go-ahead to insist that all companies in its portfolio have clear targets for cutting CO2 emissions.
The tale of Ray Dalio, Chinese officials and the $10 ‘miracle devices’; Plus, inside the conflicts of interest engulfing DWS’s greenwashing allegations, and how ‘Trad-Fi’ is pushing back on stringent crypto rules
Harriet Agnew – FT
Welcome. This is the first edition of FT Asset Management, our revamped newsletter which will land in inboxes every Monday morning. The topic is the world of fund management, namely the movers and shakers behind a multitrillion-dollar global industry.
Macro hedge funds find 2021 has not gone to script; Bond yields defy expectations of some of the big names in industry
Laurence Fletcher – FT
So far 2021 has not quite gone to plan for macro hedge funds. They will be hoping that a prospective rise in inflation will soon start providing some more attractive trades.
China’s Power Crisis Moves From the Factory Floor to Homes
Dan Murtaugh – Bloomberg
Shortage of coal and gas now affecting residential life; Guangdong asks people to turn off lights, use less air-con
China’s energy crisis is beginning to hit people where they live, adding the risk of social instability to an economic slowdown and global supply chain disruptions. Residents in several northern provinces have already been dealing with blackouts, while traffic lights being turned off are causing chaos on the roads in at least one major city. Guangdong, a southern industrial hub with an economy bigger than Australia’s, is asking people to use natural light in homes and limit air-conditioner use after implementing big power cuts to factories.
Turkey Central Bank Member Skipped Rate Meet After Getting Covid
Cagan Koc – Bloomberg
A member of Turkey’s monetary policy decision-making body could not attend last week’s rate-setting meeting which unexpectedly cut rates because he tested positive for Covid-19, according to people with direct knowledge of the matter.
End of Covid job schemes still leaves US, EU and UK short of workers; Few expected the labour shortages now crimping developed economies — but few also now expect them to end soon
Delphine Strauss – FT
Chris Gray has a closer view than many of the labour shortages plaguing businesses across the developed world. As UK managing director for Manpower, the recruitment agency, he is seeing British companies raise wages, pay for training, relax job requirements — in fact do almost anything “to find the arms and legs to do the job”, as he puts it.
Chinese cities seize Evergrande presales to block potential misuse of funds; State intervention gathers pace as second bond deadline looms for indebted property developer
Sun Yu – FT
At least two local governments in China have taken control of sales revenue from Evergrande properties, even as Beijing remained silent about the unfolding liquidity crisis at the world’s most indebted developer and investors braced for more missed bond payments.
Indonesian tech start-ups abandon US Spac deal plans in favour of going local; Blockbuster domestic IPO of ecommerce group Bukalapak ‘fired the starting gun’ for fundraising
Mercedes Ruehl – FT
The blockbuster domestic listing of Indonesian ecommerce group Bukalapak has prompted other start-ups in the country to abandon plans for overseas share offerings in favour of going local, signalling a payday for their foreign backers.
China’s Electricity Curbs Risk Wider Damage This Time; Beijing’s latest crackdown in the energy sector could go further than investors expect
Jacky Wong – WSJ
Investors are used to periodic campaigns against energy intensive sectors like steel and cement in China. But a new round of power cuts driven by Beijing’s ambitious climate targets now threatens to do wider damage. Particularly worrying: some of China’s most export-oriented, dynamic provinces are among the worst energy guzzlers, according to Beijing.
Scotland’s Oil Industry Is Fading as Wind Energy Beckons; Oil and gas production in the North Sea is not the economic juggernaut it once was. Can floating wind turbines offer an alternative?
Stanley Reed – NY Times
It’s easy to see how vital oil is to this venerable port city on Scotland’s northeast coast. Step out the door of the small international airport and you are buffeted from across the road by the roar of helicopters ferrying crews back and forth to oil platforms scattered across the North Sea.
China Vows Further Curbs on ‘Disorderly Expansion’ by Tech Firms
China will take further steps to rein in internet companies, a senior cyberspace official said, citing the shared economy, online health care and smart delivery as areas of concern.