Hits & Takes
John Lothian & JLN Staff
There are more regulatory Anglophiles in the U.S. data business today after the U.K.’s FCA announced it will be launching two market studies and gathering further information to investigate access to wholesale data. The FCA said it “heard concerns that limited competition in the markets for benchmarks and indices, credit ratings and trading data may increase costs for investors and affect investment choices.”
New York Times columnist and economist Paul Krugman gives his latest take on bitcoin with a piece titled “Crusading for God, Family and … Bitcoin?”
A World Health Organization official says over half of Europe could be infected with the coronavirus over the next two months, noting a “new west-to-east tidal wave sweeping across the region.”
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Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
The Cboe Options Institute is holding a webinar Wednesday, January 12, called “Expecting the Unexpected: Options for 2022,” at 12:00 p.m. ET with speakers Mandy Xu, chief equity derivatives strategist at Credit Suisse and Matt Moran, head of index insights at the Cboe Options Institute. You can go here to register.~SR
Nasdaq Partners with TRIBE Freedom Foundation to Support Survivors of Financial Crime; Partnership enables the build-out of TRIBE financial literacy program for survivors of human trafficking and modern slavery; Bolsters efforts to increase industry-wide awareness of financial crime
Today Nasdaq (Nasdaq: NDAQ) announced its partnership with UK-based charity TRIBE Freedom Foundation, a community focused on fighting human trafficking and modern slavery. Nasdaq will support TRIBE Freedom Foundation in the creation of TRIBE Survivor Financial Empowerment Programme, a centralized portal, including content, practical tools and educational financial literacy material, tailored for financial institutions and survivor support organizations to support survivors. Through its anti-financial-crime technology business, Nasdaq is focused on developing and leveraging advanced technology solutions to uphold market integrity and combat financial crime. The partnership with TRIBE Freedom Foundation is another step in Nasdaq’s ambitions to advance its support to communities and victims most affected by financial crime.
****** Nasdaq showing quality leadership again.~JJL
Opinion: A 27-year-old truck driver just became Robinhood’s first big headache of 2022
Thornton McEnery – MarketWatch
Less than a week into the new year, a 27-year-old truck driver from Connecticut might have given Robinhood a whole new thing to be worried about in 2022. On January 6, an arbitrator for the Financial Industry Regulatory Authority ruled that the zero-commission trading platform was liable for $29,460.77 in compensatory damages to Jose Batista, a retail investor who filed a complaint with the industry self-regulator in May, alleging that he had suffered significant investment losses due to Robinhood’s decision to restrict trading on certain meme stocks at the height of January 2021’s manic short squeeze.
****** This is one meme problem for Robinhood.~JJL
Fed Vice Chairman Richard Clarida to Resign
Clarida’s departure follows criticism of February 2020 financial transactions
Nick Timiraos – WSJ
Federal Reserve Vice Chairman Richard Clarida said he would resign from the central bank on Friday. His term on the central bank’s board expires at the end of this month. His resignation follows questions raised over financial transactions he conducted at the onset of the coronavirus pandemic. Mr. Clarida was a top lieutenant to Fed Chairman Jerome Powell, who played a key role in securing Mr. Clarida’s appointment from then President Donald Trump in April 2018. Mr. Clarida, a professor of economics at Columbia University and former economist at bond giant Pacific Investment Management Co., won Senate confirmation in September 2018.
***** I love it when people announce they are going to resign, as opposed to just resigning. Get it done with already.~JJL
These Are the Biggest Risks the World Faces in Next 10 Years
Alessandra Migliaccio – Bloomberg
Climate, fraying of social fabric among top risks in WEF study; Only one in 10 respondents sees economic revival quickening
There’s little faith in the global economic recovery accelerating, with officials and business leaders citing climate change and rising social tensions, alongside the pandemic, among their top risks, the World Economic Forum found.
*****The number one risk should be the inability to forecast risks out 10 years.~JJL
Surging Covid-19 Puts an End to Projected Return-to-Office Dates; Firms have quit trying to predict when they will be back in the workplace, and their landlords are worried about what might come next
Peter Grant – WSJ
If businesses have learned one thing from Covid-19, it is to stop trying to predict when they are going to be back in the office. Companies across the U.S. said they were returning to the workplace in September, only to put off those plans when the spread of the Delta variant accelerated. Many of those same firms were poised to dust off their office desks in January. Now major banks, technology companies and other firms have scrapped those plans thanks to the Omicron variant, and a sense that Covid-19 is going to linger longer than most first imagined.
****** It is even difficult to forecast out say 4 to 6 weeks.~JJL
Monday’s Top Three
Our top story Monday was Bloomberg’s World’s Biggest Crypto Fortune Began With a Friendly Poker Game, to which John asked the question, “Is there really ever a “friendly” poker game?” (It’s about Binance CEO Changpeng Zhao.) Second was JLN’s Former Cbot General Counsel Scott Early – The History Of Financial Futures – Marketswiki Education, a video interview by John Lothian. Third was The Financial Times’s The EU vs the City of London: a slow puncture, about the continuing aftereffects of Brexit.
26,689 pages; 237,050 edits
Is SEC’s Gary Gensler the Skunk at the Fintech Party or the Adult in the Room? The regulator who shook up crypto now has his eye on how algorithms might influence investors.
Benjamin Bain – Bloomberg
You don’t have to look far to see how algorithms and machine learning can influence a market: Ask your kitchen smart speaker to play some Taylor Swift, and before long a computer formula will likely rack up songs by another artist her fans tend to like. What if a similar bit of black-box code could nudge you into buying a popular stock? U.S. Securities and Exchange Commission Chair Gary Gensler says that question might not be hypothetical for long. The pandemic hastened the already rapid rise of cryptocurrencies, robo-advisers, and apps that make it easier to trade and invest. In a recent speech—where he made the comparison to music streaming algos—Gensler said the changes “could be every bit as big as the internet was in the 1990s.”
London Metal Exchange Trading Resumes After Five-Hour Outage
Mark Burton – Bloomberg
Traders were able to trade via phone during the interruption; The bourse trades over $60 billion worth of base metals daily
The London Metal Exchange said electronic trading was back to normal after the world’s biggest base-metals exchange suffered a more-than-five-hour interruption caused by a power failure at a third-party data center.
UK financial watchdog to review cost of market data; FCA responds to complaints over pricing for benchmarks, indices, credit ratings and trading data
Philip Stafford – FT
The UK’s financial regulator is to review the availability and cost of market data after customer complaints that limited competition may be pushing up prices and affecting their investment decisions. The Financial Conduct Authority said on Tuesday that it was concerned about pricing in markets for benchmarks, indices and credit ratings, as well as the trading data distributed to customers by stock exchanges, information providers and alternative trading venues.
London Stock Exchange and Aflac Invest in Pricing Service BondCliQ; SEC is exploring the need for better price transparency in trading of corporate bonds
Matt Wirz – WSJ
London Stock Exchange Group LSEG 0.56% PLC and the venture arm of Aflac Inc. AFL 1.21% are betting on demand for better real-time bond pricing. The two companies invested in bond-market quoting system BondCliQ Inc.’s $7.5 million Series A funding round, a BondCliQ spokesman said. The amount of the investments wasn’t disclosed.
Tokyo Pushes to Reform Its $6.5 Trillion Stock Market. Analysts Aren’t Impressed.
Gearoid Reidy – Bloomberg
New ‘Prime’ section just 16% smaller than Topix First Section; Exchange president says reform is merely the starting line
Japan’s largest exchange operator disclosed the components of three new market sections on Tuesday, but the long-awaited shake-up of the country’s sluggish stock market is attracting more skepticism than excitement. Japan Exchange Group Inc. said 1,841 constituents would make up the new “Prime” section of the Tokyo Stock Exchange, which will replace the current First Section of companies that form the benchmark Topix index. But the shift is disappointing analysts who view it as little more than window-dressing, with just 16% fewer components than the First Section, which has 2,185 stocks.
U.S. stock exchanges and the China problem; Despite a lot of sabre-rattling by regulators and lawmakers, investors keep losing money from Chinese frauds and Chinese companies continue to list on U.S. stock exchanges.
Dan Hoicowitz and Francine McKenna – The Dig
Despite all the rhetoric from U.S. regulators and lawmakers, hyped-up and potentially fraudulent Chinese companies are still applying to list on US stock exchanges, continuing the chronic exploitation of U.S. investors.
The Euro Is Facing a Make-or-Break Year; Italy’s bloated debt load may finally doom the experiment with Europe’s shared currency.
Richard Cookson – Bloomberg
For good or bad, the future of the euro will probably be decided this year. In an attempt to generate inflation, central banks have cut short-term interest rates to nothing or less over the past 20 years or so and expanded their balance sheets to levels that would have been previously unimaginable. The European Central Bank has been particularly aggressive. Euro deposit rates are minus 0.5% and the ECB’s balance sheet is laden with 8.5 trillion euros ($9.66 trillion) of assets, four times more than at the beginning of 2015.
AQR quant fund kicks off the year with 10% gain after 2021 rebound; Strong run for Absolute Return fund bolsters hopes that ‘quant winter’ is thawing
Robin Wigglesworth – FT
A computer-powered investment fund run by AQR posted double-digit gains in the opening days of 2022, building on a strong performance last year that has bolstered industry hopes that the long “quant winter” has finally passed.
UK energy supplier Bulb’s hedging strategy led to collapse, report shows; Documents reveal risky policy behind failure that led to biggest UK state bailout since RBS
Michael O’Dwyer and Nathalie Thomas – FT
Bulb Energy, the failed UK supplier propped up by the biggest state bailout since Royal Bank of Scotland more than a decade ago, collapsed because it had a risky hedging strategy to manage wholesale energy market volatility and ran out of credit lines as prices surged, new documents show. A report prepared by the administrators for Bulb’s parent Simple Energy, seen by the Financial Times, also shows they have started talking to potential advisers about a combined sales process for the two companies.
Federal Judge Steps Aside From High-Profile Amazon Case, Citing Financial Conflict; The WSJ notified judge of his family’s Amazon stockholding; a new judge has been assigned
Joe Palazzolo – WSJ
A federal judge removed himself from a nearly two-year-old Amazon.com Inc. case, citing a financial conflict, after a Wall Street Journal report about his family’s Amazon stockholdings. U.S. District Judge Liam O’Grady had ruled in Amazon’s favor during the 20 months he oversaw the civil case, in which the online retailer accuses two former employees of taking kickbacks from a real-estate developer and violating Amazon’s conflict-of-interest policies.
Citadel Securities to Receive First Outside Investment; Sequoia Capital’s and Paradigm’s $1.15 billion investment values the electronic-trading firm at around $22 billion
Cara Lombardo, Alexander Osipovich – WSJ
Citadel Securities is set to receive its first outside investment in a deal valuing the electronic-trading firm majority owned by hedge fund billionaire Ken Griffin at around $22 billion. Venture-capital firm Sequoia Capital and cryptocurrency investor Paradigm have agreed to invest $1.15 billion in the Chicago-based firm, the company told The Wall Street Journal. Sequoia partner Alfred Lin will also join Citadel Securities’ board.
Pfizer Begins Making Shot That Targets Omicron, Original Virus
Riley Griffin – Bloomberg
Drug giant also exploring higher doses, different regimens; Modified shot could be submitted for U.S. clearance in March
Pfizer Inc. is developing a hybrid vaccine that combines its original shot with a formulation that shields against the highly transmissible omicron variant, the drug giant’s top executive said.
A market-based solution to the anti-vaxxer problem; Requiring those unvaccinated by choice to pay for their Covid hospital care is more ethical than mandatory vaccination
Andreas Utermann – FT
As the world grapples with the fast-spreading Omicron variant and its potentially devastating consequences, a major policy dilemma revolves around how governments might nudge the unvaccinated or partially vaccinated to join the ranks of those who are fully protected.
Are Throat Swabs Better at Detecting Omicron in Covid-19 Rapid Tests? Some scientists say the nose-only approach is missing early infections, but the FDA warns against throat swabbing
Sumathi Reddy – WSJ
A growing debate surrounds whether people testing for Omicron should swab their throats. Most people in the U.S. have been doing Covid-19 rapid tests with nasal swabs. That is what the Food and Drug Administration endorses and what rapid tests sold in the U.S. instruct. But some scientists say a throat swab may be more effective at detecting Omicron. Some are calling on the FDA and test manufacturers to better study throat swabs, saying that the reliance on nasal swabs may be one reason why rapid tests seem to be less sensitive in detecting Omicron than previous variants.
Record Covid-19 Cases, Driven by Omicron, Pressure Hospitals in U.S., Europe; Even though the disease is milder, hospitalizations are climbing
Stephen Fidler – WSJ
A record number of Covid-19 cases driven by the Omicron variant is putting hospitals under increasing pressure in parts of the U.S. and Europe. Omicron continues to appear milder than earlier coronavirus variants, scientists and doctors said, particularly in people who have been vaccinated or have suffered a previous infection. But its heightened transmissibility has pushed Covid-19 infections to unprecedented levels, resulting in large numbers of hospitalizations.
Japan’s Foreigner Ban Over Omicron Raises Memories of Isolation History; Kishida government enjoys strong poll ratings after shutting the country to new arrivals for extended period
Miho Inada, Peter Landers – WSJ
Jiaul Baksh, an aspiring doctor in Kolkata, India, hasn’t been able to sleep well lately, and the news Tuesday won’t help. Japan said it would keep barring almost all foreigners from entering the country until at least the end of February, citing the Omicron variant of Covid-19.
Over Half of Europe Could Be Infected in Next 2 Months, W.H.O. Says
An official for the agency cited “a new west-to-east tidal wave sweeping across the region.” In the U.S., Chicago’s mayor announced a deal with teachers over coronavirus safeguards that would reopen classrooms.
As an E.R. Doctor, I Fear Health Care Collapse More Than Omicron
Craig Spencer – NY Times
As the Omicron tsunami crashes ashore in New York City, the comforting news that this variant generally causes milder disease overlooks the unfolding tragedy happening on the front lines.
Exchanges, OTC and Clearing
Record Volume of Environmental Contracts Traded on ICE in 2021 Equivalent to an Estimated $1 Trillion in Notional Value
Intercontinental Exchange (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today announced that a record volume of environmental contracts traded in 2021. A total of 18 billion tons of carbon allowances traded in 2021, equivalent to an estimated $1 trillion in notional value and equal to over half the world’s estimated total annual energy-related emissions footprint.
Oil’s Phantom Weekend Price Plunge Catches Traders off Guard
Devika Krishna Kumar and Alex Longley – Bloomberg
CME says it was doing routine testing when market was shut; Traders said they thought WTI was open and bought futures
On Saturday morning, a few bewildered oil traders thought they were busy buying CME Group Inc.’s flagship U.S. crude futures contracts. The trouble was, the market is closed on Saturdays — and in reality it was. But those participating in the activity said they thought the trading was real, and started buying what appeared to be the day’s near $2-a-barrel dip.
BondCliQ’s receives LSEG and buy-side backing for European expansion; The exchange, alongside Aflac Ventures and SEI, raised $7.5 million for BondCliQ in a Series A funding round while Vanguard has engaged as a strategic partner.
Annabel Smith – The Trade
The London Stock Exchange Group (LSEG) has led a buy-side backed Series A funding round into centralised quote system BondCliQ, in a bid to support its expansion into Europe. BondCliQ is Wall Street’s first consolidated corporate bond quote system. The firm claims to aggregate 70,000 pre-trade bid and offer quotes on 15,000 bonds daily from 40 dealers.
CME Group to expand offering with launch of 20-Year US Treasury Bond futures; New futures will provide improved efficiency in managing exposure at the 20-year maturity point on the US Treasury curve.
Wesley Bray – The Trade
Derivatives marketplace CME Group will expand its benchmark US Treasury futures and options offering to include 20-Year US Treasury Bond futures on 7 March, subject to regulatory review. According to CME Group, the new futures will allow for delivery of original issue 20-year US Treasury bonds, with remaining terms to maturity at delivery of at least 19 years 2 months and not more than 20 years.
TMX Group Equity Financing Statistics – December 2021
TMXTMX Group today announced its financing activity on Toronto Stock Exchange and TSX Venture Exchange for December 2021. TSX welcomed nine new issuers in December 2021, compared with 25 in the previous month and 10 in December 2020. The new listings were four exchange traded funds, two mining companies, two life sciences companies and one technology company. Total financings raised in December 2021 decreased 52% compared to the previous month, and were down 35% compared to December 2020. The total number of financings in December 2021 was 56, compared with 60 the previous month and 53 in December 2020.
NYSE US Exchanges to Close in Observance of Martin Luther King Jr. Day
In observance of Martin Luther King Jr. Day, the New York Stock Exchange, NYSE American Equities, NYSE Arca Equities, NYSE Chicago, NYSE National, NYSE American Options, NYSE Arca Options, and NYSE Bonds markets will be closed on Monday, January 17, 2022.
JPX Monthly Headlines – December 2021
JPX group companies undertake various initiatives and disseminate information with the aim of providing the most attractive markets to all users.
— Delisting of Houston Ship Channel Natural Gas (Platts IFERC) Basis Futures Contract – CME
— Performance Bond Requirements – Energy, Interest Rate Margin – Effective January 11, 2022 – CME
— Performance Bond Requirements: FX Futures Spot Charge Rates – Effective January 12, 2022 – CME
Fintech Duo From Once Hot U.K. IPO Lose Billions on Kazakh Riots
Alexander Sazonov – Bloomberg
Kaspi shares fell record 31% Jan. 5 as unrest escalated; Kazakhstan was rocked by biggest protests in decades this year
Kazakhstan’s unrest that led to an internet outage and closure of banks is hitting hard the billionaires behind fintech giant Kaspi.kz JSC. Vyacheslav Kim and Mikheil Lomtadze, the company’s largest shareholders, have lost almost $3 billion combined this year as the London-traded stock sank a record 31% on Jan. 5 amid the chaos. The clashes led the government to declare a state of emergency, and the internet was blocked for several days. While the president has since declared victory over the uprising, shares of the online bank are still down 26% since the end of December.
Indian Fintech Gives Out $1 Billion a Year in Gold-Backed Loans
Saritha Rai – Bloomberg
Rupeek raises $34 million from investors including Lightbox; Valuation of Bangalore-based startup reaches $634 million
Rupeek Fintech Pvt, a startup that lends against gold as collateral, raised $34 million to accelerate its efforts to monetize India’s $1.5 trillion private stash of the precious metal.
Bloomberg launches broker-dealer quotation transparency product for fixed income; New data license product aims to help market participants meet revised requirements resulting from the amendments to SEC Rule 15c2-11.
Wesley Bray – The Trade
Following on from the ICE announcement we brought to you yesterday, Bloomberg has jumped on board with a similar offering – launching a quotation transparency product for broker-dealers operating in the fixed income markets. The product will provide broker-dealers with information that can be integrated into their compliance program to help identify fixed income securities that may be impacted by the SEC Rule 15c2-11.
LPA seeks to strengthen its asset management proposition with new appointment; The new hire was formerly sales manager for Europe with FE fundinfo.
Wesley Bray – The Trade
Capital markets technology and advisory firm LPA Group has appointed a new head for its asset management business across the UK, Ireland and the Nordics. Alexander Ehmann takes on the role and will oversee sales and business development, especially for LPA’s newly rebranded platform for cross-border fund regulatory reporting solutions, Capmatix Regulations (previously known as acarda).
Cybersecurity, space add to climate change, pandemic challenges, WEF reports: NPR
Cybersecurity and space are emerging risks to the global economy, adding to existing challenges posed by climate change and the coronavirus pandemic, the World Economic Forum said in a report Tuesday.
The Global Risks Report is usually released ahead of the annual elite winter gathering of CEOs and world leaders in the Swiss ski resort of Davos, but the event has been postponed for a second year in a row because of COVID-19. The World Economic Forum still plans some virtual sessions next week.
Four Tips For Adjusting Your Cybersecurity Strategies In 2022
Stefan Leipold – Forbes
Without a doubt, the years 2020 and 2021 were not only challenging for many businesses financially but also on the human level. With a 400% increase in cybersecurity attacks, remote workers face an entirely new challenge of securing remote environments while accessing corporate infrastructures.
The cost increase and damages from cybersecurity breaks are projected to go from $3 trillion in 2015 to $10.5 trillion in 2025, which, of course, only reflects reported numbers. So the estimated number with unreported cases is likely much higher. With all that in mind, here are four tips to adjust your IT practices for 2022.
2021 was a terrible year for cybersecurity. Without action, 2022 could be even worse
Anna Solana – ZDNet
Early in December 2021, the Catalan government suffered its worst distributed denial of service (DDoS) cyberattack ever. In the space of a few hours, attackers routed 350Gbps of data to the Generalitat’s information systems, representing 100 times more traffic than it would typically receive within the same timeframe. The incident was contained within three hours.
New Cybersecurity Rule Prompts Banking Review
Crowe & Dunlevy – JDSupra
A new rule requiring banks to report cybersecurity incidents to federal regulators within 36 hours will go into effect April 1. The Federal Reserve System’s Board of Governors, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency recently approved nationwide requirements pertaining to banks and their service providers. The change also requires banks to inform customers of any computer security incident lasting more than four hours.
Stablecoins Get Their Moment as Crypto Selloff Drives Yield Hunt
Joanna Ossinger – Bloomberg
The sharp selloff in crypto tokens since late November has done little to dent appetite for stablecoins, their less exciting cousins. While the likes of Binance Coin, Solana, Cardano and Polkadot have dropped 36% or more from their record levels, the market value of stablecoins — whose value are pegged to another asset, often the U.S. dollar — has continued to expand. Tether (USDT) now has a market cap of $78.5 billion, according to CoinGecko data, putting it behind just Bitcoin and Ether. USD Coin (USDC) recently edged out Solana to take the fifth spot at $44 billion.
Crypto Firms Gear Up for Battles Over New Rules in Washington
Joe Light – Bloomberg
Federal push for new crypto rules leads to dozens of new hires; Crypto execs amp up campaign contributions ahead of midterms
The cryptocurrency industry is bracing for an onslaught of regulatory and enforcement action this year, flooding Washington with money, snapping up lobbying firms, and building up their trade associations in an effort to curb new rules.
One Coin’s 99% Jump Shows Power of Crypto Memers on Social Media; Baby Doge — one of several Shiba Inu-inspired tokens that have little inherent value — has surged this year while other digital assets have tumbled.
Alice Kantor – Bloomberg
The recent rally of a digital asset with no inherent value based on a puppy dog shows that the memecoin boom isn’t quite ready to be snuffed out yet. The first weeks of 2022 have been rough for many memecoins, most which sell for fractions of a U.S. dollar. Dogecoin, Shiba Inu and Floki have all dropped between 9% and 32% since the beginning of the year, according to data from cryptocurrency tracker CoinMarketCap.com. But another — called Baby Doge — has been bucking the trend and has jumped 99% in 2022.
What you need to know about crypto-backed IRAs
Investors are looking to grow their nest egg through self-directed individual retirement accounts (IRAs) that invest in cryptocurrency. Yet, increasing crypto regulation has some experts urging caution.
NFTs heat up in China as ‘digital collectibles’ despite tough regulatory environment banning profits; Tech giants Alibaba, Tencent, and Bilibili, among others, all have their own ‘digital collectibles’ to cash in on the NFT craze despite government scrutiny; China’s tough regulatory environment has companies shunning the term NFT and barring users from selling their digital assets for cash
Ann Cao – South China Morning Post
When Simon Gao, an engineer in China’s eastern city of Hangzhou, decided to join a lucky draw to buy a “digital collectible” profile photo on Bilibili last Friday, he did not expect the process to be so difficult.
Fed Vice Chairman to leave two weeks early in wake of ethics debacle
Brian Cheung – Yahoo Finance
Federal Reserve Vice Chairman Richard Clarida will leave the central bank two weeks earlier than planned, following increased scrutiny into financial transactions he made in 2020 — while the Fed was taking action to save the U.S. economy.
Boris Johnson Faces Resignation Calls Over New Pandemic Party Claims
Joe Mayes and Kitty Donaldson – Bloomberg
U.K. premier’s office hosted party during lockdown, ITV says; Labour deputy leader Rayner says Johnson should stand down
Boris Johnson is facing opposition calls for his resignation, as his office confirmed officials are talking to U.K. police over an alleged drinks party at his Downing Street office while pandemic curbs were in place in 2020.
EU Parliament Told to Fix Illegal Export of Covid Data to U.S.
Stephanie Bodoni – Bloomberg
Test data was sent via Google and Stripe tracking cookies; Privacy group Noyb publishes Jan. 5 order following complaint
The European Parliament was given a one-month ultimatum to fix a privacy flaw that allowed lawmakers’ Covid-19 test data to be illegally sent to the U.S. via tracking cookies owned by Google and digital payments company Stripe Inc.
European parliament president David Sassoli dies aged 65; Italian Democrat had been due to step down next week under power-sharing deal with European People’s party
Andy Bounds – FT
David Sassoli, president of the European parliament, has died at the age of 65. He was admitted to hospital in his native Italy on December 26 after a “dysfunction of his immune system”, his spokesperson said, and passed away at 1.15am on Tuesday morning.
For Europe’s Hot Carbon Market, Politics Is the Ceiling; Carbon credits’ spectacular rally has caught investors’ attention, but the sky isn’t the limit for these niche assets
Rochelle Toplensky – WSJ
European Union carbon credits aren’t so much a commodity as a political tool. That has underpinned a stunning rally over the past year, but it also caps the market’s potential for financial speculation. The EU’s emission trading scheme, or ETS, is the world’s largest regulated market for carbon allowances. Annually, European polluters in selected industries, notably power production, must redeem a credit for each metric ton of carbon dioxide they emit. A diminishing number of allowances are granted with the rest being auctioned off. Initially market prices languished, but have been rising since a 2018 reform. On Tuesday, they traded at 82 euros, equivalent to roughly $93, up from just EUR34 a year ago.
GOP Leader McCarthy may institute ban on lawmakers trading stocks if Republicans retake House
Chris Matthews – MarketWatch
House Minority Leader Kevin McCarthy is considering instituting a ban on lawmakers holding and trading stocks of individual companies, if the Republicans win a majority in the House of Representatives in November’s elections, according to a report in Punchbowl News.
Crusading for God, Family and … Bitcoin?
Paul Krugman – NY Times
Josh Mandel, a Trump disciple seeking the Republican Senate nomination in Ohio, recently tweeted out what he stands for: “Ohio must be a pro-God, pro-family, pro-Bitcoin state.” Indeed, there has long been a strong connection between support for Bitcoin and right-wing extremism — like the traditional association between conservatism and an obsession with gold, only more so.
Finra Fines Jefferies For TRACE Non-Compliance
Jennifer Léa Reed – Financial Advisor
For the third time, Finra has fined New York-headquartered investment banking and brokerage firm Jefferies LLC for non-compliance regarding the reporting of certain securities transactions, this time with a $55,000 penalty, said an agency filing. Jefferies failed to update the Trade Reporting and Compliance Engine (TRACE) with 4,039 transactions in eligible corporate debt securities in August, September and October of 2018 and June through November of 2019, according to last week’s filing.
FCA to launch investigation into data competition concerns; Two-pronged investigation will explore data access and fees, with a focus on whether limited competition in trading data is pushing up costs.
Annabel Smith – The Trade
The UK’s Financial Conduct Authority (FCA) is set to launch a two-pronged review of the wholesale data market to investigate competition concerns including in trading data. In its ongoing review, the FCA will launch two-phased market studies examining both the cost of and access to data, while simultaneously gathering information on whether limited competition in trading data specifically could increase costs and have a potential impact on the assets bought and sold by investment managers.
ESMA publishes appropriateness and execution-only MiFID II guidelines; The final guidelines follow a public consultation with participants and aim to enhance clarity and foster convergence in the industry’s approach to investor protection under MiFID II.
Annabel Smith – The Trade
The European Securities and Markets Authority (ESMA) has published a final set of industry guidelines relating to appropriateness and execution-only requirements under MiFID II regulation.
SEC Issues Awards Totaling More Than $4 Million to Whistleblowers
The Securities and Exchange Commission today announced two awards totaling more than $4 million to whistleblowers who provided information and assistance in two separate covered actions. In the first order, the SEC issued an award of approximately $2.6 million to one whistleblower. The whistleblower, who reported internally before reporting to the Commission, provided significant new information during an existing investigation that alerted SEC staff to misconduct occurring overseas, which would have been difficult to detect in the absence of the whistleblower’s information.
PODCAST: What to Expect: The CE Transformation & Maintaining Qualifications Program
In 2020, FINRA and the CE Council embarked on the biggest transformation of the continuing education program in 25 years. And in the months ahead, those major changes are going into effect. On this episode, we hear from Patricia Monterosso of FINRA’s Credentialing, Registration, Education and Disclosure team and Elizabeth Hansen, the 2021 CE Council Chair, about what firms and reps can expect and why these changes will have such a big impact.
FCA has decided to register the first UK securitisation repositories
The Financial Conduct Authority (FCA) announces that it has completed its assessment of applications received from European DataWarehouse Ltd and SecRep Limited as Securitisation Repositories (SRs) under the UK Securitisation Regulation and has decided to register both entities with effect from 17 January 2022.
FCA to review competition concerns in wholesale data markets
The FCA will launch 2 market studies and gather further information to investigate access to wholesale data. In response to a call for input, the FCA heard concerns that limited competition in the markets for benchmarks and indices, credit ratings and trading data may increase costs for investors and affect investment choices.
Investing and Trading
Crypto Can’t Beat Gold as an Inflation Hedge, Says Barrick Boss
Matthew Martin – Bloomberg
Price risk for gold ‘is on the upside,’ says CEO Bristow; Gold’s status as a store of value under threat from Bitcoin
The world’s second-biggest gold miner is confident prices will hold firm this year, if not rise, as investors use the metal rather than cryptocurrencies to hedge against inflation and jewelry demand picks up.
Nagel Takes Charge of Bundesbank With Warning on Inflation Risks
Jana Randow – Bloomberg
Monetary policy must be ‘on guard’ to defend price stability; New chief vows to follow established German line on policy
New Bundesbank President Joachim Nagel warned in his first speech on the job that inflation may remain elevated for longer than currently expected, urging his colleagues at the European Central Bank to be vigilant.
Companies raise $100bn on global debt market in brisk start to 2022; Corporate executives seek to secure cheap borrowing ahead of expected rate rises
Joe Rennison – FT
Companies raised more than $100bn on the bond market in the first week of this year as finance chiefs kicked off an effort to lock in low borrowing costs before benchmark interest rates start to climb
KPMG admits ‘misconduct’ as regulator alleges forgery by Carillion auditors; FRC opens case against accounting firm that is expected to last five weeks
Michael O’Dwyer – FT
KPMG auditors misled regulators during inspections of their work on the audits of outsourcers Carillion and Regenersis, the accounting firm’s UK boss said. The Financial Reporting Council accused the Big Four firm and six of its former auditors of forging documents and misleading its inspectors as the UK accounting watchdog opened its case before an industry tribunal on Monday.
Environmental, Social and Corporate Governance
This Agtech Firm Wants To Make Sustainable Farming Profitable; Farmers Business Network, Environmental Defense Fund start fund rewarding farmers who cultivate soil health
Elizabeth Elkin – Bloomberg
Agriculture technology firm Farmers Business Network and the nonprofit Environmental Defense Fund are trying to incentivize farmers to adopt more sustainable growing methods.
ESG Study Shared With SEC Reveals Fund Labels Are Often Useless
Tim Quinson – Bloomberg
Inconsistent standards fueling an ESG ‘Wild West,’ Behar says; Behar seeks a common glossary to press for ‘truth in labeling’
Investing in ESG funds is like trying to navigate “the Wild West” as both regulations and enforcement fall short, according to Andrew Behar, the chief executive of As You Sow. The shareholder advocacy group spearheaded a study that found 60 of 94 ESG funds failed to adhere closely to the principles of environmental, social and governance investing. The findings, which have been shared with the U.S. Securities and Exchange Commission, indicate that “one can’t tell the difference between a prospectus for true ESG offerings vs. greenwashing mutual funds and ETFs,” the nonprofit said Tuesday.
Germany Faces ‘Gigantic’ Task Meeting Energy, Climate Goals
Frank Jordans – AP
Germany’s new climate minister said Tuesday that the country faces a “gigantic” task if it wants to achieve its goals for reducing greenhouse gas emissions while ensuring sufficient energy for its energy-hungry industry.
Biden’s $3.5 Billion Bet on Carbon Capture Was the Easy Part; Now the U.S. has to take a billion tons of CO2 from the air each year—and get the cost down to $100 a ton.
Leslie Kaufman – Bloomberg
To avoid catastrophic global warming, the Intergovernmental Panel on Climate Change estimates, humans will need to remove 100 billion tons to 1 trillion tons of carbon dioxide from Earth’s atmosphere by the year 2100. To reach the upper end of the range, we’d have to suck up all the carbon that’s already been emitted this century—and then some. Today global carbon removal stands at about 40 million tons, mostly straight from smokestacks. For purpose-built projects that grab CO2 from the open air, the number is more like 8,000 tons, at a cost of $600 apiece or more. At that rate there isn’t enough money in the world to get to 1 trillion tons.
ESG ETF growth accelerates in Asia
Peter Ortiz – FT
Exchange traded funds focused on environmental, social and governance themes have garnered only about 4 per cent of total Asia Pacific ETF assets, but their market share is growing fast.
Cerberus to Sell Large Stakes in Deutsche Bank and Commerzbank
Steven Arons, Kat Van Hoof, and Swetha Gopinath – Bloomberg
Buyout firm to sell more than 45 million shares in two banks; Cerberus has sought to play a role in both banks’ turnarounds
One of the biggest shareholders in German banking giants is scaling back an investment that hasn’t panned out in the last four years. Cerberus Capital Management is selling shares in Deutsche Bank AG and Commerzbank AG worth about 450 million euros ($509 million), according to terms seen by Bloomberg. The U.S. buyout firm is selling about a third of its holding in Deutsche Bank and a slightly higher amount in its rival.
Jefferies and Antares Capital pitch loan tied to tarnished Libor; Deal exposes challenge of outlawing tainted interest rate benchmark from all corners of the market
Joe Rennison – FT
US investment groups Jefferies and Antares Capital began pitching a $395m loan tied to Libor to investors on Thursday, highlighting the challenges of weaning the financial industry off the dying interest rate benchmark.
UBS Targets Less-Wealthy Customers With Advice by Device; The new platform for U.S. customers is a test case for the Swiss bank’s digital-savvy chief executive, Ralph Hamers
Margot Patrick – WSJ
UBS Group AG UBS -0.57% doubled profit in its U.S. wealth business over the past five years by wooing rich families with white-glove service. For its next act, it is going after the not-as-rich with cheaper digital advice. The Swiss bank bills itself as one of the world’s largest wealth managers, with access to more than half of all billionaires, and managing $3.2 trillion invested assets. It was on track at the end of the third quarter to make $2 billion in pretax profit in its Americas wealth unit for 2021.
Apollo Leads $225 Million Investment in Alternatives Platform CAIS; Apollo and fintech-focused private-equity firm Motive Partners are leading the investment that values CAIS at more than $1 billion
Miriam Gottfried – WSJ
Apollo Global Management Inc. APO -0.88% is investing in CAIS, a platform that gives independent financial advisers access to alternative investment products, the latest in a string of moves by the private-equity giant aimed at reaching wealthy individuals.
The IMF bashes the IMF over Argentina
INFLATION IN ARGENTINA had intensified, the IMF lamented. The cost of living had increased by some 50% over the course of the year. “The most important source of inflation”, the fund explained, “was government-deficit spending, financed by borrowing from the central bank.” The deficit, in turn, reflected excessive wage demands and the failure of the country’s utilities to raise prices in line with costs. The year was 1958. At the end of it, Argentina turned to the fund for its first “standby arrangement”, a line of credit accompanied by a plan to stabilise the economy.
IMF names UC-Berkeley’s Gourinchas as next chief economist
David Lawder and Andrea Shalal – Reuters
The International Monetary Fund said on Monday it has appointed French-born University of California-Berkeley economist Pierre-Olivier Gourinchas as the Fund’s next chief economist, replacing Gita Gopinath, who is joining the IMF management team this month.
Hong Kong Home Prices to Fall As Residents Leave, UBS Says
Shawna Kwan – Bloomberg
Population outflow, rate hikes set to reduce demand for homes; Locals, expats are leaving amid political tension, Covid rules
Hong Kong’s home prices are set to decline in 2022 as residents continue to leave the city, according to UBS Group AG. Residential property values in Hong Kong will fall by around 5% this year due to persistent population outflow and imminent interest rate increases, John Lam, head of China and Hong Kong real estate research at UBS, said in a media briefing Monday.