Investors blocked from betting on US congressional elections by regulator

Sep 25, 2023

First Read

Hits & Takes
John Lothian & JLN Staff

Cheryl and I are safely home from Bermuda and The World Federation of Exchanges Annual Meeting. We also celebrated our 34th wedding anniversary, so as the saying goes, happy wife, happy life. Now, back to work.

Today we have two sponsored content messages in JLN, one from JPX and the other from The Full FX. We normally don’t have two in the same edition of the newsletter, and the JPX is longer than normal, but we are making a couple of exceptions as we approach FIA EXPO. After all, what are friends for?

On Friday the CFTC issued a notice it disapproved KalshiEX LLC’s Congressional control contracts, saying, “the contracts involve gaming and activity that is unlawful under state law and are contrary to the public interest, and therefore, pursuant to section 5c(c)(5)(C) of the Commodity Exchange Act (CEA) and CFTC Regulation 40.11.”

These were binary contracts, which are difficult for many to describe without using gambling language. The question for a new contract is always, “What is the economic purpose of the contract and who are the natural hedgers?” A strong case could be made about who the natural hedgers are who would be impacted by a change in Congressional control, including Washington lobbyists. Though I am not a fan of binary contracts in general, I would like to see a more detailed analysis for how these were determined to involve gaming rather than have an economic purpose.

Also Friday, the U.S. Securities and Exchange Commission charged Citadel Securities for violating a provision of Regulation SHO, the regulatory framework designed to address abusive short selling practices, which requires broker-dealers to mark sale orders as long, short, or short exempt. Citadel Securities settled the charges for $7 million.

From the sounds of how the budget talks are going in Washington, DC, it looks like some kind of government shutdown is likely. That means FIA’s EXPO will not see CFTC Chairman Rostin Behnam give a live speech. I would bet the CFTC is fast at work this week on a recorded version of the speech just in case there is a shutdown and the chairman can’t show up.

Sometimes good intentions don’t work the way you thought they were going to. The maker of Legos has abandoned its “highest-profile effort to ditch oil-based plastics from its bricks after finding that its new material led to higher carbon emissions,” the Financial Times reported.

You have been waiting for it. Well it is here. Bloomberg has “This Fall’s 10 Most Anticipated New Books to Put on Your List.”

Crain’s Chicago Business reports “The average number of Chicago workers who are back in the office increased last week, nearing 54% occupancy. The city’s stats are still ahead of the nationwide average by 3.3 percentage points.”

The Wall Street Journal and Spotify have a podcast titled “The Journal” hosted by Kate Linebaugh and Ryan Knutson, and the latest episode is about the trial of Sam Bankman-Fried. It is titled “The Trial of Crypto’s Golden Boy Episode 1: The Limit Does Not Exist.” The subheading is “Before his downfall, Sam Bankman-Fried drew comparisons to Warren Buffett, J.P. Morgan and other titans of finance. As his trial approaches, WSJ’s Caitlin Ostroff charts the meteoric rise of crypto’s golden boy, exploring how he sold customers and powerful people on his ideas, while hiding secrets under the hood of his flashy crypto empire.”

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

*****
This week is the 8th anniversary of the UN Sustainable Development Goals, or SDGs, and today is SDG Flag day. Organizations worldwide are flying the SDG flag September 25 to support climate action, gender equality, biodiversity, and decent work worldwide. Follow the hashtag #TogetherForTheSDGs to view the campaign. Learn more from the UN Global Compact here. ~SAED

Is it smart to be dumb? No. But the United Kingdom thinks it is smart to pay attention to “Dumb Money”. Dumb Money: FCA takes new approach to cinema advertising and premieres innovative advert ahead of Hollywood’s chronicle of GameStop saga. “FCA advert references online forum chats to raise awareness of hype in high-risk investments.” Worth a look. ~JB

Our most read stories last Friday on JLN Options were:
OCC liquidity risk doubles to all-time high in Q2 from Risk.net.
New Cboe CEO Has Crisis Experience from Traders Magazine.
Wall Street Strategists Turn Ever Bullish Just as Stocks Slump from Bloomberg. ~JB

++++

Sponsored Content
Navigating Uncertainty: JPX Launches New Derivatives Amid Global Challenges
In a year shadowed by the Ukraine conflict, soaring inflation, environmental and geo-political crises, Japan Exchange Group (JPX) is fortifying its offerings with new derivatives products. This strategic move coincides with the 35th anniversary of Equity Index Futures trading in Japan, spotlighting the Nikkei 225 and TOPIX indices as enduring financial tools.

This milestone anniversary underscores the resilience of JPX’s flagship products, which continue to offer investors risk-hedging opportunities amid geopolitical and economic volatility.

Nikkei 225 Micro Futures: Inflation Hedge

While the Nikkei 225 soars to new decade highs, JPX’s newly launched Nikkei 225 Micro Futures cater to individual investors, offering a cost-effective way to navigate inflation and market volatility. The micronized contracts provide an accessible and affordable hedge against global economic unpredictability.

Nikkei 225 Mini Options: Geopolitical Risk Management

With geopolitical tensions in mind, JPX has introduced Nikkei 225 Mini Options. These instruments open risk management strategies to a broader audience, offering adaptability in a swiftly changing global landscape.

3-month TONA Futures: Addressing Rate Uncertainty

JPX’s 3-month TONA Futures assist institutions in managing liquidity during an unstable interest rate environment. As TONA emerges as a key rate benchmark, these futures serve as a strategic tool for financial adaptability. The offering completes the already robust JGB futures and vibrant JSCC IRS markets, cross margin efficiencies across the whole fixed income playbook are available through the JSCC clearing house.

Futureproofing and ESG

JPX is also preparing to implement Value-at-Risk (VAR) clearing in November 2023, offering a best-in-class margining methodology to further unleash portfolio efficiencies for market participants.

To deliver our part to global ESG concerns, JPX has launched a carbon credit market under the TSE brand, this offering will complement the already actively trading TOCOM Power market in the future. These anticipatory measures ensure JPX stays aligned with global sustainability initiatives.

These product launches, along with the upcoming VAR clearing system, cement JPX’s role as a resilient, forward-thinking player in the global financial landscape and to further stride to remain your exchange of choice!

—–

Author: Matthias Rietig, Senior Officer of OSE
Contact: Osaka Exchange / Tokyo Commodity Exchange Derivatives Business Development
E-mail: ose-dmg@jpx.co.jp

++++

Corzine Plans to Shut Hedge Fund and Return Capital to Investors; He says he plans to focus on philanthropy, teaching, family; MF Global failure in 2011 was among largest US bankruptcies
Miles Weiss – Bloomberg
Jon Corzine will shutter the hedge fund he started after the collapse of MF Global Holdings, marking the end of his bid to rebound from one of the largest bankruptcies in US history. JDC-JSC, Corzine’s New York-based money-management firm, terminated its registration with the Securities and Exchange Commission as of Sept. 22, according to the agency’s website. The firm’s lone investment vehicle, the JDC-JSC Opportunity Master Fund, had gross assets of about $510 million, including leverage, at the end of last year.
/jlne.ws/3PyZ58J

****** It is about time Mr. Corzine drifted into retirement.~JJL

++++

Can Scotland become Europe’s energy saviour? – Jeremy Grant
Next week at Britain’s embassy in Berlin, ministers of state from the UK government, counterparts in the German government and renewable energy experts will gather for a conference on what many see as the fuel of the future: hydrogen.
The Newsroom – The Scotsman
The half-day event is set to wrap up with a “green whisky” tasting, highlighting malt Scotch whisky produced by distilleries that are in the process of decarbonising their operations. At first blush there is no obvious connection between hydrogen, whisky and the two countries. But look at a map of Europe, recall that Scotland is not short of wind, think about what’s happening with energy security amid Russia’s war in Ukraine, and it starts to make sense.
/jlne.ws/3Pu9vpR

****** Jeremy Grant with all things Scottish.~JJL

++++

The Band of Debunkers Busting Bad Scientists; Stanford’s president and a high-profile physicist are among those taken down by a growing wave of volunteers who expose faulty or fraudulent research papers
Nidhi Subbaraman – The Wall Street Journal
An award-winning Harvard Business School professor and researcher spent years exploring the reasons people lie and cheat. A trio of behavioral scientists examining a handful of her academic papers concluded her own findings were drawn from falsified data. It was a routine takedown for the three scientists-Joe Simmons, Leif Nelson and Uri Simonsohn-who have gained academic renown for debunking published studies built on faulty or fraudulent data. They use tips, number crunching and gut instincts to uncover deception. Over the past decade, they have come to their own finding: Numbers don’t lie but people do.
/jlne.ws/3RGm8Rk

****** We need a group like this in the financial markets.~JJL

++++

Sponsored Content
The Full FX at FIA Expo
The Full FX at FIA Expo on Wednesday October 3 takes place at the Sheraton Grand Riverwalk in Chicago on the sidelines of FIA Expo.
We have a full day of discussion lined up including fireside chats, panels, one-on-one interviews and, to close things out, The Chat Show – For FX’ Sake. Join us for a full day of lively debate with speakers from leading buy and sell side institutions as well as innovative technology providers.

We will be talking FX liquidity and execution; the evolution of FX swaps; how the post-trade evolution is looping back to the front office, and how close (or not) we are to the genuine institutionalisation of crypto markets.

With sustained volatility making a return to FX markets and regulation changing the way we have to think about our business, there is no better way to keep up with the latest trends than coming to The Full FX at FIA Expo to meet with your peers, your clients and hear from industry leaders as we drive thought leadership to help the FX industry evolve and succeed.
View the agenda and sign up here for The Full FX sessions.*

*Please note that registration for The Full FX does not grant admission to FIA Expo.

++++

Friday’s Top Three
Our top story Friday was the Chicago Tribune’s Editorial: The Ed Tilly scandal at the Cboe is bad news for Chicago, which was also our top story Thursday. Second was The Wall Street Journal’s The Way Young Adults Work Is Driving Their Parents Crazy. Third was Bloomberg’s Ex-Tiger Global Partner Fixel’s VC Firm Backs AI-Linked Trading Platform OneChronos.

++++

Lead Stories

Investors blocked from betting on US congressional elections by regulator; CFTC says political-control contracts offered by futures market would be ‘contrary to the public interest’
Stefania Palma – Financial Times
The main US derivatives regulator has thrown out contracts that would have allowed investors to place bets on congressional elections, as preparations for races in 2024 are kicking into high gear. The Commodity Futures Trading Commission on Friday said Kalshi, a retail-focused futures market, was barred from offering contracts that constitute bets on which political parties would be in control of different chambers of the US Congress.
/jlne.ws/3LwAdNl

How the US is crushing Europe’s domestic exchanges; Policymakers fight tooth and nail to retain big international companies on their home exchanges but lose out
Philip Augar – Financial Times
A hundred years ago, the UK had more than a dozen stock exchanges. London was the biggest but Aberdeen, Cardiff, Leeds and Edinburgh were among the provincial centres with their own flourishing exchanges raising and recycling capital for local businesses. Within 50 years they were all gone, merging with the London Stock Exchange in 1973 as access to the City’s deep pool of capital proved irresistible to companies seeking to raise funds.
/jlne.ws/3sZj6xm

The Hedge Fund Meltdown That Rescued Your Stock Portfolio; Long-Term Capital Management’s collapse 25 years ago started a habit hard to break-the ‘Fed put’
Justin Lahart – The Wall Street Journal
Before there was Silicon Valley Bank or Lehman Brothers or the housing meltdown, Long-Term Capital Management set the tone for every crisis that would come after it. The hedge fund, with its dream team of finance luminaries, including Nobel Prize winners, thought it had found a way to make a bundle with what seemed like hardly any risk. The banks that lent it tens of billions of dollars believed them. When the fund’s strategy fell apart, Federal Reserve officials coordinated an unprecedented rescue, and cut interest rates in a bid to shore up a falling stock market. Even 25 years later, the effects are with us. If there was a time the “Fed put” was born, it was during the LTCM crisis.
/jlne.ws/3t7iciy

Twenty-Five Years After LTCM, Emerging Markets Keep Burning Investors; Though developing economies have changed for the better, the benefits aren’t always convertible into dollars
Jon Sindreu – The Wall Street Journal
Emerging markets are in a much better place now than when Russian bonds sank Long-Term Capital Management a quarter-century ago. Emerging-market investments, not so much. Buying the local debt of developing-country governments and hedging out the foreign-exchange risk was among the most famous quantitative strategies deployed by LTCM. Although the 1990s was a period of constant currency crises-the Mexican “Tequila Crisis” in 1994, the Asian Financial Crisis in 1997-investors kept pouring money into emerging markets.
/jlne.ws/3RArUUS

Exclusive-SEC collects Wall Street’s private messages as WhatsApp probe escalates -sources
Chris Prentice and Carolina Mandl – Reuters
The U.S. securities regulator has collected thousands of staff messages from more than a dozen major investment companies, escalating its probe into Wall Street’s use of private messaging apps, said four people with direct knowledge of the matter. Previously, the Securities and Exchange Commission (SEC) had asked the companies to internally review the messages in its investigation of Wall Street’s use of WhatsApp, Signal and other unapproved messaging apps to discuss work.
/jlne.ws/45806tQ

Zero-day options now account for 50% of S&P options volumes; Carpe nulla diem
Robin Wigglesworth – Financial Times
Given their trajectory it was almost bound to happen but, according to JPMorgan, zero-day options trading volumes keep hitting record levels and have recently accounted for half of all S&P 500 index option trading.
/jlne.ws/3RzI2WK

Ending the LTCM Crisis Took Just One Bailout. We Should Be So Lucky Next Time; Future crises may involve many funds making similar bets
Telis Demos – The Wall Street Journal
Twenty-five years ago, the impending collapse of Long-Term Capital Management was so worrying to Wall Street that 14 of the biggest firms collectively coughed up billions of their own cash to rescue it. At the time, the gathering of leading investment bankers at the behest of the Federal Reserve felt like an extraordinary intervention. But looking back a quarter-century, and in light of all that followed, the resolution of the LTCM crisis now seems quaint: All it took was rescuing one firm.
/jlne.ws/46jlez3

Marex agrees to acquire Cowen’s legacy prime brokerage and outsourced trading business
Marex
Marex, the diversified global financial services platform, today announces that it has agreed to acquire Cowen’s legacy prime brokerage and outsourced trading business, as it continues to grow and diversify its offering and its client base. The transaction is expected to complete by the end of the year, subject to customary closing conditions, including regulatory approvals.
/jlne.ws/461X0cj

The IPO Market Is Open Again! At Least for the Moment; Arm, Instacart and Klaviyo popped on their first trading day, but their performance since then has muted
Corrie Driebusch – The Wall Street Journal
The initial public offering market has felt surprisingly normal over the past two weeks, at least on the surface. British chip-designer Arm Holdings brought fish and chips-and a makeshift British pub-to Nasdaq’s Times Square headquarters to celebrate its stock-market debut this month. On Tuesday, executives and employees gathered at grocery-delivery company Instacart’s San Francisco headquarters to ring in the first day of trading with a carrot-shaped bell. The next day, the floor of the New York Stock Exchange welcomed Klaviyo executives and backers to the podium to cheer on the marketing-automation platform’s IPO.
/jlne.ws/3t9Vw15

Are Fossil Fuels the Next Cigarettes? California’s lawsuit against oil giants mirrors a legal strategy used in the 1990s against the tobacco industry.
Vivienne Walt, Michael J. de la Merced and Bernhard Warner – The New York Times
California is taking some of the world’s biggest energy companies, including Shell, Exxon Mobil and Chevron, to court, accusing them of concealing the damage caused by fossil fuels on the state for more than half a century. The state’s lawsuit is the most significant attempt to take on Big Oil over its role in climate change, as the energy majors report bumper profits and oil nears $100 a barrel.
/jlne.ws/3PRmbZo

The lawyer sending nastygrams for Ray Dalio and Ken Griffin
Felix Salmon – Axios
A forthcoming book has the potential to decimate the business of Bridgewater, one of the world’s largest and most successful hedge funds, and cause “many billions of dollars in damages.” Or so claimed letters sent by Bridgewater’s lawyer to the book’s publisher earlier this year. Why it matters: Bridgewater’s lawyer, Tom Clare, represented Dominion Voting Systems in its $787.5 million victory over Fox News. He fought publication of “Empire of Pain,” Patrick Radden Keefe’s book about the Sackler family’s involvement in the opioid crisis, and represented Adam Neumann in his fight against his portrayal by HBO.
/jlne.ws/3LCLI61

Sam Bankman-Fried (Probably) Won’t Get a 115-Year Prison Sentence
Nikhilesh De – CoinDesk
If he’s convicted of wire fraud and/or conspiracy charges, FTX founder Sam Bankman-Fried will probably spend quite a bit of time behind bars. But there’s a good chance the 31-year-old won’t spend the rest of his life in prison.
/jlne.ws/3ZC2Tus

The New Face of Nuclear Energy Is Miss America; The soon to be nuclear fuels engineer is trying to help the industry recapture public support
Jennifer Hiller – The Wall Street Journal
Does the U.S. need more nuclear power? Miss America thinks so. So do Oliver Stone, Elon Musk and Sam Altman. Atomic energy is elbowing its way back into the conversation about future energy supplies, with backers in the Biden administration and oil and gas industries alike.
/jlne.ws/461UQcH

Hong Kong JPEX scandal: who are the suspects arrested so far and how are they tied to cryptocurrency platform? While ringleaders are believed to have fled, police have taken 11 people into custody as they seek to piece evidence together; Suspects include social media influencer, YouTubers, director of restaurant group and corporate secretary of JPEX Technical Support Company, since renamed
Clifford Lo, Elizabeth Cheung – South China Morning Post
The ringleaders of Hong Kong’s largest alleged financial fraud are believed to be on the run, while the 11 suspects questioned by local police so far are unlikely to be key players in the mushrooming scandal, the Post has learned.
/jlne.ws/48pvLtR

A crypto firm sent a disability worker $10m by mistake. Months later she was arrested at an Australian airport; Crypto.com made global headlines for a multimillion-dollar error that went unspotted for months. A court case reveals how it all went wrong
Josh Taylor – The Guardian
Thevamanogari Manivel had a one-way ticket to Malaysia and close to $11,000 in cash when police arrested her attempting to board a plane at Melbourne airport in March 2022. Almost a year earlier, Crypto.com accidentally transferred more than $10m into the 41-year-old disability support worker’s Commonwealth Bank account. The cryptocurrency exchange had not picked up the error at the time – and only noticed seven months later during an audit.
/jlne.ws/3rpSXYa

The Hedge Fund That Made a Killing Betting Against Lina Khan; Pentwater Capital predicted that FTC attempts to block big deals would fail
Caitlin McCabe and Ben Dummett – The Wall Street Journal
The efforts by Federal Trade Commission Chair Lina Khan to protect Main Street are inadvertently enriching some on Wall Street, generating outsize profits for Pentwater Capital Management and other large hedge funds that bet on merger deals.
/jlne.ws/3t4ABN0

IRS to target ‘unscrupulous’ tax preparers amid crackdown of small business tax credit
Kate Dore – CNBC
Roughly one year after Congress approved tens of billions in IRS funding, the agency has unveiled plans to crack down on tax preparers with “questionable practices.” The news comes amid heightened scrutiny of a popular small business tax credit. “We are devoting more resources to addressing unscrupulous preparers who are leading their customers to underreport income or overclaim credits and deductions,” IRS Commissioner Danny Werfel said in a letter sent on Monday to Senate Finance Committee Chair Ron Wyden, D-Ore.
/jlne.ws/3RzDAHb

‘Witching day’ price spikes point to options market manipulation – study; Data reveals patterns that can be explained no other way, researchers say
Rob Mannix – Risk.net
Is someone manipulating options markets on expiration days? A controversial new study says the evidence suggests they are. Researchers have found signs in the settlement pricing of options that point to market manipulation with the potential to cost hedgers billions every year.
/jlne.ws/3PO446O

Does The CFTC Require Trading Screens And Technology Providers To Register As CTAs?
Barnes and Thornburg LLP
The Commodity Futures Trading Commission (CFTC) recently entered into a consent order for permanent injunction against defendants Ryan Masten and BareIt Media LLC (d/b/a SignalPush) relating to a September 2020 CFTC enforcement action regarding the marketing, sale, soliciting, fraud, trade execution, and promises of “quick returns” offered on certain websites. While a seemingly unremarkable enforcement action and complaint, the resulting industry commentary on the impact of certain CFTC statements about trade signaling and commodity trading advisors (CTA) in the Aug. 29 order has raised questions for fintech vendors who enjoyed certainty in their offerings.
/jlne.ws/3rA2I62

Wall Street Is Hoping $100 Oil Ain’t What It Used to Be; Will surging prices derail the Fed’s soft-landing? It is complicated
David Uberti – The Wall Street Journal
A string of inflationary shocks has challenged the Federal Reserve’s effort to control price increases. Investors are worried the latest could be $100-a-barrel oil. Crude’s march closer to that mark has made Americans’ commutes more expensive. Truckers who haul food cross-country are charging grocery stores more for diesel. Jet-fuel-reliant airlines are demanding higher fares. And manufacturers of everything from plastic toys to asphalt could face costlier ingredients.
/jlne.ws/3t8zZGd

Top EU energy official says US gas will be needed for decades; Bloc will have a ‘need for American energy’ says Ditte Juul Jørgensen
Amanda Chu and Jamie Smyth and Alice Hancock – Financial Times
Europe will have to rely on US fossil fuels for decades to come as it races to diversify from Russian natural gas and scale up its renewables sector to boost energy security, the EU’s top energy official has said. Ditte Juul Jørgensen told the Financial Times that the EU had “the instruments that we need” to endure another winter energy crisis in the aftermath of the Russia-Ukraine war. These included conservation and more renewable energy.
/jlne.ws/3t4Bo0i

Ukraine Invasion

The West’s Patience Is Running Shorter Than Ukraine’s War; US support is starting to waver, and while European governments are stepping up, their citizens are losing faith.
Niall Ferguson – Bloomberg
Nobody would deny that Volodymyr Zelenskiy gives a good speech. The Ukrainian president delivered another at the United Nations General Assembly on Tuesday. “The goal of the present war against Ukraine,” he declared, “is to turn our land, our people, our lives, our resources, into a weapon against you, against the international rules-based order.” And: “Evil cannot be trusted.”
/jlne.ws/46jfJzI

Russia’s Army Learns From Its Mistakes in Ukraine; Early in the war, the West was shocked at the Russian military’s poor performance. But Moscow has fixed many errors and adapted on the battlefield.
Matthew Luxmoore and Michael R. Gordon – The Wall Street Journal
More than a year after Moscow failed in its goal of a lightning victory in Ukraine, the Russian military has steadily adapted on the battlefield as it shifts to a strategy of wearing down Ukraine and the West. The poor performance of the Russian military in the early days of the war shocked many in the West and ultimately allowed Ukraine to resist, and then roll back, a large part of the Russian advance.
/jlne.ws/3ZsM3Ow

Senior leadership among those killed in strike on Russia’s Black Sea Fleet, Ukraine says; The attack left “dozens of dead and wounded,” Ukraine’s Special Operations Forces said in a statement.
Leila Sackur – NBC News
A strike on Russia’s Black Sea Fleet headquarters left dozens dead and wounded “including senior leadership,” the Ukrainian military said Saturday. Operation “Crab trap” was carried out “on time and accurately” during a meeting of the Russian navy’s senior members at the building in the Crimean city of Sevastopol on Friday, the country’s Special Operations Forces said in a statement posted to Telegram.
/jlne.ws/3Q0Uo9b

Ukrainian heavy artillery inflicts ‘hell’ on Russian lines near Bakhmut
Anna Voitenko – Reuters
The use of heavy weapons supplied by the West in the fierce battle raging on the outskirts of Bakhmut, which was captured by Russia in May, is inflicting a significant toll on enemy lines, Ukrainian commanders have told Reuters.
/jlne.ws/462VLtu

Russia pounds port of Odesa in latest air strikes against Ukraine; Moscow continues attacks aimed at hobbling Kyiv’s grain exports
Roman Olearchyk – Financial Times
Russian forces pummeled the Black Sea port city of Odesa in the early hours of Monday as they continued their months-long campaign of air strikes aimed at hobbling Ukraine’s grain exports. The Hotel Odesa, overlooking the provincial capital’s once picturesque harbour, was set ablaze in the overnight attack by missiles and drones while windows in the nearby passenger port where cruise ships docked before Russia launched its full-scale invasion last year, were blown out.
/jlne.ws/3PxpFyH

Biden to supply Kyiv with long-range ATACMS missiles after months of lobbying; Washington will send a version of the weapon that uses cluster munitions, according to people familiar with the matter
Felicia Schwartz and Christopher Miller – Financial Times
/jlne.ws/3Pu0DAQ

Exchanges, OTC and Clearing

CFTC’s clearing house recovery rule splits industry; Some fear CCPs will fast-track recovery, others say any rulebook will be ignored in emergency
Janice Kirkel – Risk.net
Market participants are divided over a regulator’s warning that proposed US recovery rules for clearing houses could increase the risk of a central counterparty (CCP) declaring a recovery event. Summer Mersinger, a commissioner at the US Commodity Futures Trading Commission (CFTC), originally sounded the alarm at an open meeting on June 7 where the proposal was adopted.
/jlne.ws/3ru6kGT

EGX Chairman Meets Hong Kong’s Minister Of Financial Services and Treasury
Mondovisione
Today, Saturday, September 23, 2023, Mr. Ahmed El-Sheikh – Executive Chairman of The Egyptian Exchange (EGX) met His Excellency Mr. Christopher Hui – The Secretary for Financial Services and the Treasury of Hong Kong and his corresponding delegation during his visit to Cairo.
/jlne.ws/3tcMbW8

Exchange Council welcomes positive market developments driven by extended EEX offering
EEX
The Exchange Council of the European Energy Exchange (EEX) held its third meeting this year on 21 September 2023, chaired by Dr. Bernhard Walter, Head of Market Design and Regulation at EnBW AG. The meeting focused on the changing political and regulatory environment, the successful launch and updates to the EEX product suite, as well as the positive outcome of a self-assessment on EEX’s compliance with respective MiFID II requirements.
/jlne.ws/46jlqyh

NSE Indices launches Nifty G-Sec Jul 2033 Index
NSE
NSE’s index services subsidiary, NSE Indices Limited today launched a new target maturity index Nifty G-Sec Jul 2033 Index. The Nifty G-Sec Jul 2033 Index follows a target maturity structure with maturity date of July 29, 2033. The index measures the performance of portfolio of 4 Government securities (G-Secs) maturing during the twelve month period ending July 29, 2033.
/jlne.ws/46qx0Hw

On the expansion of the list of instruments intended for qualified investors from October 2
MOEX
On October 1, 2023, Bank of Russia Directive No. 6347-U “On securities and derivative financial instruments intended for qualified investors” comes into force, which establishes a list of financial instruments, additional to the current regulation, that will be available only to qualified investors (individuals and legal entities). persons), as well as exceptions for a number of financial instruments that will continue to be available to non-qualified investors.
/jlne.ws/3sZhMuo

Fintech

Higher for Longer Interest Rates Threaten Fintech; Shares of Affirm, Block and PayPal have fallen since the Fed announcement
Angel Au-Yeung – The Wall Street Journal
The Federal Reserve’s message this week that higher rates are here to stay doesn’t sit well with fintech companies. The Global X Fintech ETF fell about 6% this week. It closed Friday at its lowest level since May, according to Dow Jones Market Data. Shares of the buy-now-pay-later company Affirm Holdings dropped 17% this week. Block, which owns a buy-now-pay-later company called Afterpay, was down 15%.
/jlne.ws/3rA3sYS

Amazon to Invest Up to $4 Billion in Anthropic as AI Arms Race Escalates; Deal, which includes broad partnership, follows Microsoft’s multibillion-dollar stake in rival startup OpenAI
Tom Dotan, Berber Jin and Deepa Seetharaman – The Wall Street Journal
Amazon said it has agreed to invest up to $4 billion in artificial-intelligence company Anthropic, the latest big startup investment by tech giants jockeying for an edge in the AI arms race. Amazon said that, as part of the deal, Anthropic would be using its custom chips to build and deploy its AI software. Amazon also agreed to incorporate Anthropic’s technology into products across its business.
/jlne.ws/3LAzQkV

ChatGPT Can Now Chat Aloud With You (And Yes, It Sounds Pretty Much Human); Plus, you can now upload photos, and the chatbot can interpret them
Joanna Stern – The Wall Street Journal
You’ll have two reactions to hearing my conversation with the now-vocal ChatGPT:
1) Holy crap! This is the future of communicating with computers that sci-fi writers promised us.
2) I’m building an underground bunker and stockpiling toilet paper and granola bars.
Yes, OpenAI’s popular chatbot is speaking up-literally. The company on Monday announced an update to its iOS and Android apps that will allow the artificially intelligent bot to talk out loud in five different voices. I’ve been doing a lot of talking with ChatGPT over the past few days, and testing another new tool that lets the bot respond to images you show it.
/jlne.ws/48tJAHv

The Internet Is About to Get Much Worse
Julia Angwin – The New York Times (opinion)
Greg Marston, a British voice actor, recently came across “Connor” online – an A.I.-generated clone of his voice, trained on a recording Mr. Marston had made in 2003. It was his voice uttering things he had never said. Back then, he had recorded a session for IBM and later signed a release form allowing the recording to be used in many ways. Of course, at that time, Mr. Marston couldn’t envision that IBM would use anything more than the exact utterances he had recorded. Thanks to artificial intelligence, however, IBM was able to sell Mr. Marston’s decades-old sample to websites that are using it to build a synthetic voice that could say anything. Mr. Marston recently discovered his voice emanating from the Wimbledon website during the tennis tournament. (IBM said it is aware of Mr. Marston’s concern and is discussing it with him directly.)
/jlne.ws/3Rv93KR

AI poses ‘bracing test’ to multilateral system, says UK deputy prime minister; Oliver Dowden says ‘engaging with China’ on developing technology is necessary to deal with societal-scale risks
Andrew Edgecliffe-Johnson – Financial Times
Artificial intelligence poses a “bracing test” to the multilateral system, the UK government has warned, as it seeks to align countries including China behind its vision for regulating the technology’s “societal-scale” risks.
/jlne.ws/45bo8UN

Axel Weber joins advisory board of Raisin as deposits soar to EUR50bn; Former UBS chair and Bundesbank president to take on role at German fintech in December
Olaf Storbeck – Financial Times
Raisin has appointed former UBS chair and Bundesbank president Axel Weber to its advisory board as the German retail deposit broker revealed a 66 per cent jump in assets under management to EUR50bn.
/jlne.ws/48p3zXT

Ex-Wall Streeters Help Washington Divvy Up $100 Billion to Win the Global Chip Race; Commerce Department draws on Wall Street for management; Raimondo, former venture capitalist, leads semiconductor plan
Mackenzie Hawkins, Jenny Leonard, Ian King, and Eric Martin – Bloomberg
For years the titans of finance have argued Wall Street could spend money more efficiently than the government can. Now a handful of bankers will get the chance to see if they’re right.
/jlne.ws/3tbyDKQ

The ever-evolving landscape of the trading desk; The TRADE speaks to Gordon Noonan, head of FX and rates trading at Schroders, about ways to future proof trading desks, the opportunities DLT can provide and how execution styles can be adjusted to improve liquidity targeting.
Wesley Bray – The Trade
How can technology stacks, operational processes and trader skills be adapted to help future proof trading desks? As trading technology further advances along with the increase in availability of datasets, it has become even more essential for trading desks to leverage these capabilities to improve execution decisions, maximise efficiency and reduce risks. Traders will need to be able to develop skills that will allow us to use these tools to solve for trading challenges. This can range from improving programming skills (python, SQL, etc.) data visualisation (Tableau/Power BI) and understanding electronic communication protocols (FIX connectivity, FDC3). In the future, there will be an increased focus on the use of data science to improve performance in our industry.
/jlne.ws/3LwBYKr

Leaders in Trading 2023: Fintech of the Year Award shortlist announced; The winner will be revealed during The TRADE’s flagship gala awards night at The Savoy Hotel in London on 8 November.
Editors – The Trade
The TRADE is delighted to announce the shortlisted nominees for this year’s Leaders in Trading 2023 Fintech of the Year award, in partnership with Instinet. Recognising the most innovative pioneers in the industry, the Fintech of the Year Award is one of our most highly regarded categories, with previous winners going on to shape the trading and execution landscape.
/jlne.ws/3POzgmj

The TRADE’s Q3 Magazine: Now available online! The latest edition of The TRADE Magazine launches with a wealth of new content: check out the highlights here.
Editors – The Trade
It’s been another eventful quarter for fixed income, exacerbating existing trends already developing in the space. Fragmented liquidity, reduced balance sheet on the sell-side, drooping volatility and increased regulatory burdens have continued to push fixed income traders into the arms of electronic algo-driven and automated solutions.
/jlne.ws/3rpGzaA

Cybersecurity

How Much Cybersecurity Expertise Do Boards Really Have?
Rob Sloan – The Wall Street Journal
The number of directors at S&P 500 companies who have cybersecurity experience has increased sharply since last year. But the amount of cybersecurity expertise on boards remains relatively low, at a time when boards are under increased scrutiny for security failings. As of Aug. 31, 107 directors at 113 companies had professional experience in cybersecurity, according to research conducted by WSJ Pro Research. Together, those directors held a total of 124 S&P 500 board seats and represented 2.3% of the directors on the boards of companies in the index. This same research conducted last November found 86 directors at 91 companies held 100 board seats.
/jlne.ws/454XUmT

Cisco Impacts Observability & Security Markets w/ Splunk Acquisition
Steve McDowell – Forbes
Last week, Cisco announced its intention to acquire Splunk for $157 per share in cash, representing approximately $28 billion in equity value. Upon the close of the acquisition, Splunk President and CEO Gary Steele will join Cisco’s Executive Leadership Team, reporting to Chair and CEO Chuck Robbins. While the deal directly is beneficial to Cisco’s ongoing business transformation and shift towards more software and subscription-based services, it will doubtlessly cause short-term churn in the market, beneficial to Splunk and Cisco’s competitors in observability and cybersecurity.
/jlne.ws/46tdlGR

How generative AI changes cybersecurity
Michiel Prins – InfoWorld
The concern at the top of mind for most people, when they consider the consequences of LLMs and AI technologies, is how they might be used for adverse purposes. The reality is more nuanced as these technologies have made tangible positive differences in the world of cybersecurity.
/jlne.ws/3RBZs4O

Cryptocurrencies

JPEX scandal erodes public trust in cryptocurrencies, sets back Hong Kong’s virtual asset hub ambitions: analysts
South China Morning Post
The JPEX scandal, which is suspected to have ensnared at least 2,305 victims involving about HK$1.43 billion (US$182 million) of investments, has dealt a heavy blow to public trust in cryptocurrencies, casting a shadow over Hong Kong’s ambitions to become a global virtual asset hub.
/jlne.ws/3rzPxlD

SEC has lost again. What’s next for digital assets
Zac Townsend – Forkast
Once again, the U.S. Securities and Exchange Commission’s aggressive regulatory strategy for digital assets, which has been aptly dubbed “regulation by enforcement,” has come under fire. In a significant turn of events, Grayscale has emerged victorious in a legal battle against the SEC, leading to the SEC’s reconsideration of Grayscale’s application for a Bitcoin exchange-traded fund. This decision stands to pave the way for broader retail and institutional access to Bitcoin, eliminating concerns regarding custody and providing individuals direct access from their brokerage accounts.
/jlne.ws/3Ztw1UC

Hong Kong to Disclose All Crypto License Applicants After JPEX Probe
Sam Reynolds – CoinDesk
Hong Kong’s securities watchdog, the Securities and Futures Commission (SFC) said that it’s going to publish a list of crypto exchange license applicants in the wake of the JPEX probe, which has led to multiple arrests in the territory.
/jlne.ws/3ZC3xbm

Hong Kong’s Crypto Ambitions Hurt by a Scandal
Elaine Yu – The Wall Street Journal
Hong Kong wants to be a crypto hub. It is now dealing with a crypto scandal. The city’s Securities and Futures Commission promised more disclosures on Monday, amid an outcry over JPEX, an unregulated crypto exchange.
/jlne.ws/3Q0XA4F

Coinbase nears acquisition deal for FTX Europe, eyeing crypto derivatives expansion
Investing.com
Coinbase (NASDAQ:COIN), the major U.S. cryptocurrency exchange, is reportedly nearing a deal to acquire FTX Europe, as part of its strategy to expand in areas with clear cryptocurrency regulations. This move comes after the bankruptcy of FTX’s parent company in the United States last year. Coinbase’s interest in FTX Europe is driven by the latter’s “highly profitable” derivatives business and growing customer base.
/jlne.ws/3Lwh3HK

Politics

The Open Plot to Dismantle the Federal Government; “I can’t overstate my level of concern about the damage this would do.”
Russell Berman – The Atlantic
Of the many targets Donald Trump has attacked over the years, few engender less public sympathy than the career workforce of the federal government-the faceless mass of civil servants that the former president and his allies deride as the “deep state.” Federal employees have long been an easy mark for politicians of both parties, who occasionally hail their nonpartisan public service but far more frequently blame “Washington bureaucrats” for stifling your business, auditing your taxes, and taking too long to renew your passport. Denigrating the government’s performance is a tradition as old as the republic, but Trump assigned these shortcomings a sinister new motive, accusing the civilian workforce of thwarting his agenda before he even took office.
/jlne.ws/3LFqBA3

This GOP hopeful got on Trump’s bad side last year. Now he might decide control of the Senate; Dave McCormick launched his second Senate campaign on Thursday.
Ally Mutnick – Politico
Dave McCormick really wants you to know he’s from Pennsylvania. Flanked by two official state flags as he launched his second Senate campaign on Thursday in a museum devoted to western Pennsylvania history and named after the iconic Pittsburgh Heinz family, McCormick offered up a detailed family history to a cheering crowd. His ancestors had been in the state for some 200 years, he said. His dad was the state’s chancellor for higher education. He, himself, was a proud Bloomsburg High School Panther.
/jlne.ws/3ru4B4n

Lawmakers warn that US is heading for shutdown as budget talks stall; The economy could take a hit in less than a week if hardline Republic holdouts do not strike a deal
James Politi – Financial Times
US lawmakers have warned that a government shutdown is increasingly certain as hopes dwindle of a last ditch compromise to resolve a budgetary stand-off in the world’s largest economy. Speaking on Sunday, both Democrats and Republicans said time was running out for a deal before October 1, when current funding for federal operations ends.
/jlne.ws/3Rv7Bbn

Biden ESG rule survives challenge from 25 red states
Zack Budryk – The Hill
A federal judge sided with the Biden administration Thursday on an administration rule that would allow retirement advisers to include climate and environmental factors in their calculations. In the ruling, Judge Matthew Kacsmaryk of the Northern District of Texas, a Trump appointee, granted the administration’s petition to dismiss a lawsuit by 25 Republican state attorneys general, led by Texas’s Ken Paxton and Utah’s Sean Reyes.
/jlne.ws/45biDp7

Regulation

Deutsche Bank’s DWS to Pay $25 Million to Settle SEC Probes; DWS failed to follow marketing claims on ESG, SEC says; SEC found no misstatements in financial disclosures, DWS says
Nicholas Comfort – Bloomberg
Deutsche Bank AG’s DWS asset management arm agreed to pay a total of $25 million to settle Securities and Exchange Commission probes into alleged greenwashing and anti-money laundering lapses.
/jlne.ws/465byYz

City of London Watchdogs to Ask Firms to Lay Out Diversity Plans
Leonard Kehnscherper – Bloomberg
UK regulators want to boost diversity and inclusion in the financial services sector by requiring firms to set targets and collect more data on their efforts. The proposals also include new rules and guidance “to make clear that misconduct such as bullying and sexual harassment poses a risk to healthy firm culture,” the Financial Conduct Authority said in a statement Monday. The guidance is meant to help firms “take decisive and appropriate action” against employees who misbehave, the FCA said.
/jlne.ws/3Px0Wux

SEC says Citadel Securities broke short-sale labeling rules
Austin Weinstein – Bloomberg
Citadel Securities broke rules for labeling short sales and may have incorrectly marked millions of trade orders over a five-year span, according to the Securities and Exchange Commission. The firm, which didn’t admit to or deny the allegations, agreed to pay a $7 million penalty. The SEC said that the lapses resulted from a coding error in the firm’s automated system, and that Citadel Securities provided inaccurate data to the regulator over the period.
/jlne.ws/3RxEGmQ

Tyson and Perdue Are Facing Child Labor Investigations; The Labor Department has opened inquiries into whether migrant children were working inside slaughterhouses owned by the poultry-processing giants.
Hannah Dreier – The New York Times
Tyson Foods and Perdue Farms, which together produce a third of the poultry sold in the United States, are under federal investigation into whether they relied on migrant children to clean slaughterhouses, some of the most dangerous work in the country.
/jlne.ws/3PpRjhc

CFTC Staff Extends No-Action Position for Certain Reporting Obligations Under the Ownership and Control Reports Final Rule
CFTC
The Commodity Futures Trading Commission’s Division of Market Oversight (DMO) today issued a no-action letter that extends the current no-action position for reporting obligations under the ownership and control reports final rule (OCR Final Rule). The OCR Final Rule, approved in 2013, requires the electronic submission of trader identification and market participant data.
/jlne.ws/3PRNB1p

Statement of Commissioner Caroline D. Pham Regarding Political Event Contracts
CFTC
Consistent with my earlier vote to abstain in May 2023, I abstain from voting on this order because I continue to believe that the United States Court of Appeals for the Fifth Circuit’s Order in Clarke v. CFTC,[1] may prevent the Commission from taking action on KalshiEx, LLC’s (Kalshi) congressional control political event contracts.
/jlne.ws/3EP2qLI

CFTC Orders California Resident to Pay $300,000 for a Fictitious Sales Scheme
CFTC
The Commodity Futures Trading Commission today issued an order simultaneously filing and settling charges against Jie “Elaine” Yu of Irvine, California, for engaging in a fictitious sales scheme. The order requires Yu to pay a $300,000 civil monetary penalty, cease and desist from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged, and it imposes six-month trading and registration bans.
/jlne.ws/3Lzad49

CFTC Disapproves KalshiEX LLC’s Congressional Control Contracts
CFTC
The Commodity Futures Trading Commission today issued an order disapproving congressional control political event contracts self-certified by KalshiEX LLC. The contracts would have been cash-settled, binary contracts based on the question: “Will be controlled by for ?” After reviewing the complete record, the CFTC determined the contracts involve gaming and activity that is unlawful under state law and are contrary to the public interest, and therefore, pursuant to section 5c(c)(5)(C) of the Commodity Exchange Act (CEA) and CFTC Regulation 40.11, the contracts are prohibited and cannot be listed or made available for clearing or trading on or through Kalshi.
/jlne.ws/3rxdABE

SEC Charges Citadel Securities for Violating Order Marking Requirements of Short Sale Regulations
SEC
The Securities and Exchange Commission today announced settled charges against broker-dealer Citadel Securities LLC for violating a provision of Regulation SHO, the regulatory framework designed to address abusive short selling practices, which requires broker-dealers to mark sale orders as long, short, or short exempt. These records are routinely used by regulators in policing prohibited short selling activity. To settle the SEC’s charges, Miami-based Citadel Securities agreed to pay a $7 million penalty.
/jlne.ws/3LApGkw

Deutsche Bank Subsidiary DWS to Pay $25 Million for Anti-Money Laundering Violations and Misstatements Regarding ESG Investments
SEC
The Securities and Exchange Commission today charged registered investment adviser DWS Investment Management Americas Inc. (DIMA or DWS), a subsidiary of Deutsche Bank AG, in two separate enforcement actions, one addressing its failure to develop a mutual fund Anti-Money Laundering (AML) program, and the other concerning misstatements regarding its Environmental, Social, and Governance (ESG) investment process. To settle the charges, DIMA agreed to pay a total of $25 million in penalties.
/jlne.ws/469natF

Goldman to Pay SEC $6 Million in Penalties for Providing Deficient Blue Sheet Data
SEC
The Securities and Exchange Commission today announced settled charges against Goldman Sachs & Co. LLC for failing to provide complete and accurate securities trading information, known as blue sheet data, to the SEC. Goldman agreed to pay a $6 million penalty to resolve the SEC’s charges.
/jlne.ws/3ZzbhdZ

SEC Charges Private Equity Fund Adviser American Infrastructure Funds for Breaching Its Duties
SEC
The Securities and Exchange Commission today announced that American Infrastructure Funds LLC (AIM), a Foster City, California-based registered investment adviser to private funds, agreed to pay more than $1.6 million to settle charges resulting from its acceleration of portfolio company monitoring fees, for transferring a private fund asset from funds nearing the end of their term to a new fund, and for loaning money from one private fund to another private fund advised by an affiliate.
/jlne.ws/3Q0YDl7

SEC Charges Additional Persons for Their Roles in a South Florida $196 Million Ponzi Scheme
SEC
The Securities and Exchange Commission today filed actions against four individuals, Nathalia I. Burgos, Christian A. Cuesta, Steven A. Fernandez, and Monica M. O’Mealia, for their roles in the alleged $196 million securities fraud perpetrated by MJ Capital Funding, LLC. The SEC’s complaints against Burgos, Cuesta, Fernandez, and O’Mealia were filed in federal district court in the Southern District of Florida.
/jlne.ws/3PSjjM3

SEC Obtains Final Judgment Against Brokerage Firm Charged with Anti-Money Laundering Violations
SEC
On September 13, 2023, the U.S. District Court for the Southern District of New York entered a final consent judgment against J.H. Darbie & Co., Inc., a New York City-based brokerage firm, in connection with its alleged failure to report suspicious activity related to transactions in tens of billions of shares of low-priced securities – or “penny stocks” – that were traded in over-the-counter markets.
/jlne.ws/3PwdvGD

SEC Charges South Florida Company and Principal in Offering Fraud Scheme
SEC
The Securities and Exchange Commission announced today it filed an action against Empirex Capital LLC and its owner and manager, Florida resident Rafael Alberto Vargas Gonzalez a/k/a Rafael Vargas.
/jlne.ws/3Puf6wn

Investing and Trading

Chinese Gold Buying Is Driving a Paradigm Shift in Bullion; The relationship between gold and real rates has unraveled; Prices have been supported by central bank buying, investors
Eddie Spence and Yvonne Yue Li – Bloomberg
What determines the price of gold? For much of the past decade the answer was easy: the price of money. The lower rates fell, the higher gold climbed, and vice versa. Gold is the quintessential “anti-dollar” – a place to turn for those who distrust fiat currency – so it seemed natural that prices would rise in a world of low real interest rates and cheap dollars. Or when rates went up, gold, which pays no yield, naturally became less attractive, sending prices tumbling.
/jlne.ws/465xEtW

Private Equity’s Slow Carnage Unleashes a Wave of Zombies; A historic shakeup is threatening to snare many small, struggling or fading money managers unable to raise fresh funds.
Dawn Lim, Layan Odeh, and Linly Lin – Bloomberg
In its heyday, Fenway Partners snapped up a fleet of companies from outposts overlooking Manhattan and Los Angeles. Decades later, a three-man team manages its remnants from a beach town in Rhode Island.
/jlne.ws/3rh3ZPC

America’s Billionaires Love Japanese Stocks. Why Don’t the Japanese? Japan’s government wants cash-hoarding households to invest more
Akane Otani – The Wall Street Journal
Japan’s government is on a mission to make buying stocks hot again. Many of America’s biggest investors are bullish on Japan. Warren Buffett shared that he increased his investments in Japanese companies during an April visit to the country. Ken Griffin is preparing to reopen an office in Tokyo for his hedge fund, Citadel, and investment banks Goldman Sachs and Morgan Stanley have issued optimistic outlooks for Japan’s stock market.
/jlne.ws/3ERVMUV

Hedge funds rush to unwind bets against gilts; Short positions in UK government debt this week fell to their lowest level since at least 2006
Mary McDougall – Financial Times
Hedge funds have been rushing to unwind bets against Britain’s £2.5tn government bond market as investors become increasingly convinced that the Bank of England is nearing the end of its rate rising campaign.
/jlne.ws/48sKyUn

Environmental, Social and Corporate Governance

How War and Aging Dams Left Libya Exposed to a Climate Superstorm; More than 15,000 Libyans ended up dead or missing as a result of a single night of flooding, a stark demonstration of what happens when warming temperatures collide with aging infrastructure and chronic political instability.
Laura Millan and Salma El Wardany – Bloomberg
The mother of five knew something was wrong with the rain. The windows of her home in the Libyan city of Derna had started leaking, and when she opened them she saw a wall of water sweeping away screaming children and adults. Floating debris killed people in its path.
/jlne.ws/3Po5L9u

U.S. Housing Crisis Thwarts Recruitment for Nature-Based Infrastructure Projects; Even when the funding is lined up for green restoration efforts in northern Wisconsin, a lack of affordable housing makes it hard to attract workers and get started.
Lydia Larsen – Inside Climate News
Northern Wisconsin’s landscape is defined as much by the stunning shores of Lake Superior or the Bad River as the region’s seemingly endless winters. But as climate change accelerates, attention is shifting to ways of controlling a steep increase in stormwater, which means doubling down on existing management practices and turning to nature for inspiration.
/jlne.ws/3PQ1qMH

Why Municipal Bonds Might Not Be Protected From Climate Risk Forever
Evie Liu – Barron’s
Three months ago, the redevelopment agency of Paradise, California-the town nearly wiped out by wildfires in 2018-missed payments for its municipal bonds issued in 2009. The funds were raised to develop the city’s commercial neighborhood and backed by incremental tax revenue from the areas. As economic losses from the fire drained the agency’s cash reserves and no new revenue came in, a default had been expected.
/jlne.ws/45057EY

Climate change: Hong Kong-listed companies aren’t yet ready for stock exchange’s new environmental risk disclosure rules, Grant Thornton report finds; There is a gap between their ESG reporting and climate disclosure rules expected to come into effect as early as January, says the accounting giant; Only a handful of them made quantitative disclosures of the impact of climate risks and opportunities on the finances of the company, it found
Yujie Xue – South China Morning Post
There is still a gap between the environmental, social and governance (ESG) reporting of Hong Kong-listed companies and new mandatory climate-related disclosure rules expected to come into effect as early as January, according to accounting firm Grant Thornton. Companies need to accelerate their ESG strategies and reporting, while the stock exchange should provide more support to help listed firms overcome challenges arising from the introduction of the tougher requirements, it said on Friday.
/jlne.ws/48pvwyX

Wind Power Package for Europe to be Presented in October; Wind developers face supply-chain and financing problems; Europe wants to boost clean tech investment under Green Deal
Ewa Krukowska – Bloomberg
The European Union is planning to unveil measures to help its ailing wind sector next month, after supply-chain bottlenecks and higher financing costs have put a brake on projects. The package is set to accelerate permitting for wind projects, help ensure stable supplies and improve the existing rules on auctioning, European Commission President Ursula von der Leyen said last week. It’s due on Oct. 24, according to diplomats with knowledge of the matter, and the EU’s executive arm will probably opt for a strategy or weave changes into regulations already being considered by lawmakers rather than present brand new legislation.
/jlne.ws/45lrrsZ

The death of carbon neutrality? Also in today’s newsletter, ‘Burning Man for climate geeks’
Kenza Bryan – Financial Times
Until a few months ago, chasing carbon neutrality was a demonstrably Good Thing for businesses committed to reaching net zero emissions by 2050. Then things got messy. Fiercely contested allegations that the majority of nature-based carbon credits were less effective than they first seemed pushed prices and trading volumes down.
/jlne.ws/3ZwX2X7

Short Sellers Mount Attack on ESG Stocks Bloated From Green Hype; Blue Orca CIO says he’s finding ‘great shorts’ across ESG; ESG seen ripe for shorting after being inundated with capital
Ishika Mookerjee and Sheryl Tian Tong Lee – Blomberg
Hedge fund managers are piling into short positions in ESG stocks as they hunt for bogus green claims and valuations inflated by record stimulus. Bloated prices can be found “all over ESG,” according to Soren Aandahl, the founder and chief investment officer of Texas-based Blue Orca Capital LLC. He says he didn’t set out to target ESG but, here and now, the “great shorts just happen to be in the ESG space.”
/jlne.ws/3PMTdK9

Carbon Market Watch: Climate policy is failing to prevent offsetting from slowing emissions cuts
Cecilia Keating – BusinessGreen
/jlne.ws/3POKjMi

‘Greener and healthier future’: TfL rolls out next phase of e-scooter trial
Stuart Stone – BusinessGreen
/jlne.ws/3PSfWVp

Protecting environment and health: Commission adopts measures to restrict intentionally added microplastics
European Commission
/jlne.ws/46pie3z

Shutdown Threatens to Undercut SEC’s Momentum on ESG Oversight
Andrew Ramonas – Bloomberg Law
/jlne.ws/3t4wDE6

Institutions

Goldman, HSBC join forces with other banks on client disclosures
Sinead Cruise and Elizabeth Howcroft – Reuters
Goldman Sachs and HSBC are among a group of five banks adopting a common global approach to disclosing clients’ stock positions, a move which participants say could help cut costs and bolster transparency.
/jlne.ws/3rjTRph

VanEck commodities ETF highlights complexities of investing; CMCI investors have to take views on inflation expectations, the transition economy and how long they plan to hold it
Emma Boyde – Financial Times
VanEck’s decision last month to launch an exchange traded fund version of its $570mn constant maturity commodities index mutual fund highlights some of the issues around using such ETFs. Despite VanEck’s strong conviction in the strategy, it has taken it 13 years since the launch of the mutual fund to unveil an ETF version.
/jlne.ws/3Pz3Per

Singapore banks tighten scrutiny of clients after money-laundering scandal; Customers from China in spotlight as waiting times stretch to four months to open accounts
Mercedes Ruehl – Financial Times
Banks in Singapore are stepping up scrutiny of customers from a range of countries including China and intensifying efforts to identify the sources of wealth as the city-state reels from a ballooning S$2.4bn (US$1.8bn) money-laundering scandal.
/jlne.ws/3LAseiA

Goldman Sachs in Talks With Malaysia to Resolve Latest 1MDB Clash; Bank’s 1MDB Saga spawned one of its costliest transgressions; Goldman struck deals to pay more than $5 billion to end probes
Sridhar Natarajan and Haslinda Amin – Bloomberg
Three years after Goldman Sachs Group Inc. agreed to fork over more than $5 billion for its role in the plundering of Malaysia’s 1MDB investment fund, the Wall Street giant has struggled to put the scandal to bed.
/jlne.ws/3Q10K8x

Work & Management

How To Build Influence Without Authority At Work
Caroline Castrillon, Senior Contributor – Forbes
Imagine this scenario. After months of asking for a promotion, your boss finally offers you an opportunity. She has a high-profile initiative that she wants you to oversee, and you are thrilled. The only drawback is that it’s not a promotion. She’s asking that you act as a team lead. Situations like these are prevalent, especially in matrix organizations with multiple reporting obligations. If you’re tasked with leading a project “unofficially,” you must master the art of building influence without authority at work.
/jlne.ws/3ZxEwOc

Gen Z can’t work alongside people with different views because they ‘haven’t got the skills to disagree’ says British TV boss
Orianna Rosa Royle – Fortune
Gen Z workers are already getting flack from businesses for lacking the basic skills needed to navigate the working world-and now, the boss of a major British TV channel has added to the mounting criticism.
/jlne.ws/3ZrOiBL

Wellness Exchange

Paternity leave in finance: ‘The more men do it, the less of a big deal it becomes’; City and Wall Street employers are introducing better benefits for new fathers – but there is more to do
Emma Jacobs – Financial Times
Shortly before his second stint of extended parental leave, City lawyer Adam was left embarrassed in front of clients when a senior partner asked why he was taking time off instead of his wife. After he returned, the sexist comments continued, along the lines of: “Your job is to be here…the wife should be bringing up the kids”, he says.
/jlne.ws/48qykf7

Regions

China bans Nomura senior investment banker from leaving mainland -sources
Reuters
Authorities in China have ordered a senior Nomura Holdings banker overseeing the firm’s investment banking operations there not to leave the mainland, two sources with knowledge of the matter said. The ban comes as concerns grow among Western businesses about darkening prospects in the world’s second-largest economy at a time of slowing growth, coupled with new laws that make for tougher operating conditions.
/jlne.ws/3Zv8eU6

Nato’s euro1bn venture fund offers defence start-ups an alternative to China; US-led military alliance to boost financial clout for companies from ‘multi-sovereign’ VC investors
Ivan Levingston, Henry Foy and Tabby Kinder – Financial TImes
A Nato-backed euro1bn venture capital fund plans to inject some financial firepower into defence start-ups to boost the US-led military alliance’s technological edge and fend off competition from China. The innovation scheme, which was launched last year, aims to fill a gap in funding for companies working on technology with military capabilities, amid fears that western start-ups lack the financial muscle provided by Beijing to their own companies.
/jlne.ws/3PQVJPH

Russia dodges G7 price cap sanctions on most of its oil exports; Shift in seaborne trade suggests Kremlin will benefit from rising prices despite west’s $60-a-barrel cap
Chris Cook and David Sheppard – Financial Times
Russia has succeeded in avoiding G7 sanctions on most of its oil exports, a shift in trade flows that will boost the Kremlin’s revenues as crude rises towards $100 a barrel. Almost three-quarters of all seaborne Russian crude flows travelled without western insurance in August, a lever used to enforce the G7’s $60-a-barrel oil price cap, according to an analysis of shipping and insurance records by the Financial Times.
/jlne.ws/46gFvVy

Miscellaneous

Jimmy Carter visits peanut festival seven months after entering hospice care; Former US president, who has been in ill-health for several years, is set to turn
The Guardian
Former president Jimmy Carter and his wife, Rosalynn, have made a surprise appearance at a peanut festival in their Georgia home town, the Carter Center wrote in a social media post on X, formerly known as Twitter. The former president, who was also once a peanut farmer, and his wife are seen in a video riding through the Plains Peanut Festival in a black SUV.
/jlne.ws/3ESJSds

UK press slams axing of Facebook News as ‘urgent threat to democracy’; Newspaper groups warn Meta that decision will hurt both the industry and society
Daniel Thomas – Financial Times
British newspaper groups have attacked Meta’s decision to scrap the Facebook News service and axe funding for local journalism in a hard-hitting letter warning about the move’s impact on democracy and society. In a letter sent to Meta global affairs president Nick Clegg, a former British minister, the social media group was warned that its decision posed an “urgent threat to democracy by choking trusted news”. The letter, sent by the News Media Association on Thursday and seen by the Financial Times, said the move was both “financially damaging” for newspapers and “deeply concerning for democracy and society”.
/jlne.ws/464dqRs

We visit more than 100 financial news websites daily (Would YOU do that?)

The Spread

MSCI and Cboe Global Markets enter into a strategic collaboration

Observations & Insight Options Discovery Episode 30: Risk Management For Options Portfolios; Hilary Till, Principal At Premia Capital Management, Discusses This And More With JLN's Asma Awass. JohnLothianNews.com In this episode of Options Discovery, Asma Awass...

Past JLN Newsletters

Pin It on Pinterest

Share This Story