JPMorgan Is Set to Pay $1 Billion in Record Spoofing Penalty; Westpac, one of Australia’s largest banks, hit with record $920 million penalty over money laundering scandal

Sep 24, 2020

First Read

Hits & Takes
John Lothian & JLN Staff

The biggest story of the day, reported by every major news organization, is President Trump’s declining to commit to a peaceful transfer of power after the election. This spells trouble for democracy and for the markets. The markets have been telling us to expect volatility up to and after the election. Trump yesterday even said that a new Supreme Court judge needed to be confirmed to replace Notorious RBG so the election could be decided by the court, and not a 4 to 4 tie. If you don’t know how to trade options, now would be a good time to learn to help you protect your portfolio, or to speculate if that is your cup of tea.

Cargill Incorporated was fined $500K by the CME Group for violating rules about engaging in conduct or proceedings inconsistent with just and equitable principles of trade and committing an act which is detrimental to the interest or welfare of the Exchange or to engage in any conduct which tends to impair the dignity or good name of the Exchange. The violations involved a grain merchant’s actions regarding the soft red winter wheat market.

We finally published the second installation of The Path to Electronic Trading series, an interview with Dan Gramza. Dan was very involved with helping SGX traders transition from the floor to the screen. He tells his story and then how he helped the SGX traders. Our friends at CQG are our sponsor for the episode with Gramza.

Yesterday was my 31st wedding anniversary. On September 23, 1989, Cheryl Lee Howard became Cheryl Lothian. For our honeymoon, we did the Circle Tour of Lake Michigan and stayed a couple of nights up on Mackinac Island in Michigan and then in Sister Bay in Wisconsin. For our 31st anniversary, I have convinced Cheryl to go camping. Cheryl has not camped since the kids were in Cub Scouts, so this is a major victory and opportunity.

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

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The SEC’s approval of a series of amendments Wednesday to its whistleblower program did not go down well with all parties concerned, according to Compliance Week and other publications. Democratic Commissioners Allison Herren Lee and Caroline Crenshaw, who joined the commission in August, voted no and excoriated an amendment that addressed the agency’s evaluation of large awards. The SEC discarded a proposal to allow staff to reduce awards of more than $30 million after outcry from whistleblower advocates.~SR

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Dan Gramza – The Path to Electronic Trading
JohnLothianNews.com

Dan Gramza sat for an interview with John Lothian News for the MarketsWiki Education The Path to Electronic Trading video series. Gramza tells the story of how he got started in trading with stock options in 1974. In 1980, he moved to the Chicago Board Options Exchange and traded delta neutral strategies. He realized he had not eliminated risks, but changed them. He moved to the Chicago Board of Trade on a rice membership to trade price. Then he started working for exchanges, including the SGX, teaching how to trade. He explains the difference between being a floor trader and an upstairs trader.

Watch the video »

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Stocks perform better when a Democrat is in the White House. History proves it.
Matt Egan – CNN
President Donald Trump has warned of economic and financial Armageddon if Joe Biden and the Democrats retake the White House next year. But history paints a very different story.
Both the stock market and the real economy tend to do better when Democrats, not Republicans, are in charge.
/cnn.it/32UJ6ug

***** There are always Democrats in the White House. Sometimes they are even in power.~JJL

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How an Amazon Bribery Scheme Became a $100 Million Swindle
Spencer Soper and Isabelle Lee – Bloomberg
It sounds like the plot of a made-for-Netflix crime drama. A Brooklyn businessman stuffs $8,000 in cash in a suitcase and calls an Uber to send it to accomplices. Hundreds of thousands of dollars crisscross the globe via MoneyGram, PayPal, and foreign bank accounts in a plot to swindle more than $100 million from the world’s most valuable internet retailer and its customers.
/bloom.bg/2G3hPNl

*****Everything is big with Amazon, even the swindles.~JJL

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CDC director says more than 90% of Americans remain susceptible to the coronavirus
Will Feuer – CNBC
A majority of the U.S. remains susceptible to a coronavirus infection, Dr. Robert Redfield, director of the Centers for Disease Control and Prevention, told lawmakers Wednesday.
/cnb.cx/3055gbq

******Don’t let your guard down. Stay vigilant. Stay safe. Stay smart.~JJL

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Airlines Face Desolate Future as Attempts to Reopen Crumble; With no return to normal in sight, they are desperate to cut costs and raise financing.
Anurag Kotoky, Angus Whitley – Bloomberg
Airlines have felt the pain of the coronavirus pandemic more than other companies. Almost overnight the bulk of their business ceased. But in mid-2020 there was at least hope that Covid-19 might not be as virulent as first thought; that warmer months would bring some respite; that travel corridors—agreements allowing passengers to fly between two countries without quarantine—might get people back in the air.
/bloom.bg/2RTbOFw

*****I predicted it would take five years before the travel industry would return to some kind of normal activity. Whether there will be a travel industry remains a question, it seems.~JJL

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The Most Important Climate Pledges Aren’t the Splashy Ones
Nathaniel Bullard – Bloomberg
It’s Climate Week in New York, which brings with it a raft of announcements from companies outlining their new decarbonization targets and clean investment strategies. Some of the declarations are hefty, like Walmart Inc.’s plan to reach zero emissions across its global operations in 20 years without relying on carbon offsets. Others, like Morgan Stanley’s commitment to reach “new net-zero financed emissions by 2050,” are long-dated and light on the details. Then there’s General Electric Co’s pledge to stop supplying equipment to new coal-fired power plants, 138 years after its founder, Thomas Edison, built the first coal power generating station in Lower Manhattan. (GE won’t be entirely out of the industry it created. It’ll still supply and service the existing coal plant fleet, but it won’t service its growth.)
/bloom.bg/3hXz6Vt

***** I like our world and want it to remain healthy. Maybe we should all work a little harder to keep it that way.~JJL

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Wednesday’s Top Three
Our top story Wednesday was Crain’s Chicago Business’s The chiefs of Cboe and CME have a warning for city hall. That warning is, basically, if you tax our financial transactions, we are outta here. Second was John Lothian News’s USA v Vorley and Chanu: DOJ Looking For Conviction Against Spoofers, Thom Thompson’s continued coverage of the spoofing trial taking place in Chicago. Third was the Financial Times’s Singapore and India exchanges end dispute over derivatives, about the SGX’s NSE Nifty 50 index futures.

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Lead Stories

JPMorgan Is Set to Pay $1 Billion in Record Spoofing Penalty
Benjamin Bain, Tom Schoenberg, and Matt Robinson – Bloomberg
Settlement would end Justice Department and regulators’ probes; Investigations focused on precious metals, Treasury securities
JPMorgan Chase & Co. is poised to pay close to $1 billion to resolve market manipulation investigations by U.S. authorities into its trading of metals futures and Treasury securities, according to three people with knowledge of the matter. The potential record for a settlement involving alleged spoofing could be announced as soon as this week, said the people who asked not to be named because the details haven’t yet been finalized. The accord would end probes by the Justice Department, the Commodity Futures Trading Commission and the Securities and Exchange Commission into whether traders on JPMorgan’s precious metals and treasuries desks rigged markets, two of the people said.
/bloom.bg/34aNDIL

Westpac, one of Australia’s largest banks, hit with record $920 million penalty over money laundering scandal
Laura He – CNN Business
Westpac, one of Australia’s largest banks, has agreed to pay a record-breaking penalty of nearly $1 billion for systematically allowing money laundering on its watch.
/cnn.it/366WRYS

Peak Oil Is Already Shifting Markets; Prospect of falling demand for crude could unleash a long-term scramble between rival producer nations
Rochelle Toplensky – WSJ
After decades of relative maturity, the oil market might be about to enter a second childhood. Although there is little consensus on the timing, most expect demand for crude to top out in the coming years—if it hasn’t already. Oil giant BP argues 2019 might be the peak. Others expect the decline to begin in the mid-2020s, or even as late as the mid-2030s. The threat of shrinking demand, whenever it comes, undermines a strategy that has regulated the market for nearly a century: In times of plenty, rival producers agreed to pump less today to boost prices for a more profitable tomorrow. This approach no longer makes sense if demand consistently falls. Producer nations will likely become impatient about selling their supplies and compete to get crude out of the ground.
/on.wsj.com/33UmAkB

NYC Commercial Property Crisis Signals Hazards for Local Banks
Hannah Levitt – Bloomberg
New York Community Bancorp, Signature confront downturn; Biggest threat is from retail real estate loans, analyst says
Before the pandemic emptied the city, few lenders benefited from the heady local real estate market as much as regional players New York Community Bancorp Inc. and Signature Bank.
/bloom.bg/32YTqld

This Bout of Stock Market Angst Looks Much Darker; We’ve gone from correcting excess to questioning the basic assumptions of a pandemic recovery that underpinned the rally.
John Authers – Bloomberg
The stock market sold off again Wednesday. It has done so more often than not this month. But it would be a mistake to draw a line between the latest bout of negativity and those that preceded it. Earlier sell-offs involved an attempt to correct obviously excessive prices in some of the dominant tech names. The latest sell-off was about rethinking the basic assumption that the U.S. and world economies can continue to recover, buoyed by continuing Fed largesse. This wasn’t so much “we took things too far” as “we might have taken things in completely the wrong direction.”
/bloom.bg/3iYWljr

Wall Street’s Penchant for London Remains Even as Brexit Nears
Silla Brush and Nicholas Comfort – Bloomberg
U.S. banks moved small share of assets by end of 2019; Greater shift could start happening in the coming months
Wall Street’s big banks may have started shifting some assets from the U.K., but their European Union operations have a way to go before they can match those in the City of London. JPMorgan Chase & Co. is moving about 200 billion euros ($230 billion) of total assets to its Frankfurt-based subsidiary by the end of the year as a result of Britain’s exit from the EU. Other banks have also been beefing up operations in the bloc.
/bloom.bg/3iUIIlb

JPMorgan Nears Deal to Pay About $1 Billion to Settle Spoofing Probes; Authorities target illicit practice of submitting misleading orders to exchanges
Dave Michaels and David Benoit – WSJ
JPMorgan Chase JPM -1.62% & Co. is nearing an agreement with federal prosecutors and regulators to pay a fine to settle civil and criminal charges that its traders rigged futures and securities markets, people familiar with the matter said. The bank would pay about $1 billion to wrap up several investigations into whether its trading desks manipulated prices for metals and Treasury securities, one of the people said.
/on.wsj.com/3018UD5

Working from home may be bigger test for City of London than Brexit; WFH bears down on the Square Mile; Tesco chief urges shoppers to stay calm
Kate Burgess – FT
City workers are executing a clumsy hokey cokey in response to the government’s reversed guidance on returning to offices. Boris Johnson has strong public health justifications for urging staff to stay home. But the longer it continues, the worse the damage will be to the City of London as a financial centre.
/on.ft.com/3mNrI2G

Covid-19 has exposed the world’s fragile, complex food supply chains; Disrupted distribution has amplified concerns about the ethics and ecology of what we eat
Wendell Steavenson – FT
In early July, as shops and restaurants were just beginning to open up again, I went to Suffolk to visit Hodmedod’s, a company that sells British-grown pulses and grains. Like many in the food sector, Josiah Meldrum, one of the three founders and directors, was coming up for air, trying to understand the magnitude of what has happened to his business this year and what the future would look like.
/on.ft.com/3kJ4N6H

Madrid vs New York: a tale of two cities during Covid-19; They were epicentres of the pandemic. But differing approaches to easing lockdown have seen their fortunes diverge
Daniel Dombey, Joshua Chaffin and John Burn-Murdoch – FT
In May, Madrid sought to break free from the nightmare of Covid-19. Death rates and infections had fallen since the days when the Spanish capital’s international exhibition centre had been converted into a 1,000-bed intensive care unit and an ice rink into a morgue, but economic life lagged far behind.
/on.ft.com/3kGpQa7

HSBC Loyalists Lose Faith After Stock’s $83 Billion Plunge
Bloomberg News
China risk, money-laundering report add to list of troubles; ‘You want the shares to recover? Don’t even think about it’
HSBC Holdings Plc’s tumbling stock price is testing the patience of even the bank’s most loyal investors. Choi Chen Po-sum, a former vice chair of Hong Kong’s exchange who has owned HSBC shares for more than 40 years, now calls her investment a mistake. Simon Yuen, a money manager who has lobbied unsuccessfully for the bank to reinstate its dividend, says the stock’s slump to a 25-year low may have further to go. Ping An Insurance Group Co., HSBC’s biggest shareholder, has passed on opportunities to express confidence in the bank, saying only that its holding is a “long-term financial investment.”
/bloom.bg/3073FC1

Snowflake’s Record Debut Raises Questions About the IPO Model; A look at the debate among Bloomberg editors over the significance of the cloud computing company’s market splash.
Bloomberg News
Cloud software company Snowflake Inc. had its initial public offering at $120 a share and on Sept. 16 promptly shot above $300. It’s now trading at about $235. Here’s a peek at how Bloomberg’s editors and reporters responded to the news.
/bloom.bg/364THFe

Trading by Phone Holds Back Korea’s $52 Billion FX Market
Hooyeon Kim and Daedo Kim – Bloomberg
Exporters and asset managers handle FX deals via phone, chats; Companies say the system is too slow and lacks transparency
Change is afoot for South Korea’s $52-billion-a-day foreign-exchange market. In a country known for cutting-edge Samsung devices and super-fast Internet connection, a chunk of its currency transactions are still done over the phone. Money brokers and the nation’s finance ministry are now looking at doing more by electronic trading due to the coronavirus pandemic.
/bloom.bg/2FZg4ku

Switzerland ready to hold down franc with sharper interventions; Country’s haven currency under intense upward pressure due to Covid-19 crisis
Sam Jones – FT
The Swiss National Bank said it was ready to accelerate huge interventions in foreign currency markets as successive bouts of economic uncertainty have placed upward pressure on the franc.
/on.ft.com/3613sUM

Banks Are Loving 2020 Market, but Market Doesn’t Love Them Back; While investors are still sour on bank stocks, industry executives say parts of business are booming
David Benoit – WSJ
Among 2020’s many oddities, add this paradox: The stock market is crushing the banks, even as the banks are crushing it in the market. After warning that their trading revenues would fall steeply from the second quarter, several top banking executives recently said that the third quarter wasn’t as bad as they had feared. Clients remained active through the normally dull July and August, and September delivered a fresh bout of market volatility.
/on.wsj.com/33SEIeN

Wells Fargo CEO apologizes for saying the Black talent pool is limited
Chris Isidore and Matt Egan, CNN Business
Wells Fargo CEO Charlie Scharf has apologized after he blamed the lack of diversity at the bank on “a very limited pool of Black talent to recruit from.” In a memo to employees released by the bank, Scharf apologized for what he was was “an insensitive comment reflecting my own unconscious bias.”
/cnn.it/3kJgD0D

Robinhood Raises Cool $660M in Extended Funding Round
Paddy Baker – Coindesk
Unicorn trading app Robinhood has taken over $600 million in an extended funding round as it rides the summer’s retail trading wave.
/bit.ly/2Et0Wv1

The U.S. behaved like a ‘gangster’ to ‘rob’ TikTok from China and Beijing has ‘no reason’ to approve the deal: Chinese media
Pierre Briançon – MarketWatch
An agreement on the ownership of TikTok’s U.S. operations approved by Washington last weekend is a “dirty and underhanded trick” based on “bullying and extortion,” state-owned English language newspaper China Daily wrote in an editorial on Wednesday. It went on to compare the U.S. administration to “a gangster forcing an unreasonable and unfair business deal on a legitimate company.”
/on.mktw.net/3iZoF5h

Coronavirus

Lockdown Lite Is Europe’s New Strategy for Fighting Covid-19
Naomi Kresge, Rachel Chang and Jason Gale – Bloomberg
Europe adopts a patchwork of policies as infections flare anew; Asia’s experience provides lessons as countries try to respond
Fresh off a summer of relative freedom after harsh lockdowns at the beginning of the pandemic, Europe is trying a new strategy to halt the coronavirus’s next surge: Lockdown Lite.
/bloom.bg/3kHIcYf

U.K. Weighs First-Ever Vaccine Trials Exposing People to Virus
James Paton – Bloomberg
The U.K. government is considering carrying out the first studies that would deliberately expose healthy people to the coronavirus in a bid to accelerate the development of a vaccine.
/bloom.bg/2HtfbBj

France Curbs City Life in Europe’s Battle to Contain Virus
Francois De Beaupuy and William Horobin – Bloomberg
Paris faces limits on public events and private gatherings; All bars and restaurants shut in Marseille as infections jump
France introduced new measures to fight the rapid resurgence of the coronavirus pandemic in major cities, adding to risks weighing on an already slowing economic recovery in Europe. The first significant tightening of restrictions on French daily life since the end of the lockdown in May includes closing bars at 10 p.m. in Paris and several other large urban centers. The tougher restrictions follow similar moves in the U.K., while Austria banned apres-ski partying for the upcoming winter season, as Europe reemerges at a hot spot for the disease.
/bloom.bg/2FVyZge

Chinese Vaccine Maker to Offer Shots First to Testing Nations
Bloomberg News
Sinovac expects interim data from Brazil trial as soon as Nov; China has promised to prioritize doses for over 62 countries
Chinese vaccine developer Sinovac Biotech Ltd. said that countries running its final-stage clinical trials like Brazil, Indonesia and Turkey will get its coronavirus shots at the same time as China, underscoring how vaccine supply agreements could cement diplomatic ties in the Covid-19 era.
/bloom.bg/362eLMv

Israel Controversially Tightens Lockdown as Virus Cases Soar
Amy Teibel – Bloomberg
Ministers balk at proposal to shut synagogues on Yom Kippur; New virus cases ballooned to nearly 7,000 on Tuesday
The Israeli government sharply tightened its lockdown restrictions for the next two weeks to try to rein in a galloping Covid outbreak, over the objections of the economy’s stewards and the country’s coronavirus czar. Just last week, the government imposed its second lockdown since the pandemic began. With daily new infections surging dramatically, the cabinet voted early Thursday to clamp down even harder during a season of major Jewish holidays, taking the unprecedented step of shuttering all workplaces except those deemed essential. Markets slumped.
/bloom.bg/33QjDBA

Managers of Canary Wharf avoid quarantine to return to office; Employees complain after pair returned to One Canada Square following US and Spain trips
George Hammond — FT
Top executives at Canary Wharf Group avoided quarantine after overseas trips, coming into the office at the London financial district that they manage and drawing complaints from employees.
/on.ft.com/367rBJh

Europe, Shunning New Lockdowns, Fights Resurgent Coronavirus With Local Restrictions; Cities tighten social-distancing restrictions in a continent eager to avoid returning to full-blown lockdowns
How Mask Culture Has Changed in Europe
Xavier Fontdegloria, Noemie Bisserbe and Max Colchester – WSJ
The Feito Río bar in Madrid was still recovering from this spring’s lockdown when city authorities, reacting to a resurgence of Covid-19 infections, this week imposed a 10 p.m. curfew on bars and restaurants—right around the hour when many Spaniards like to head out for tapas. “People who go out for dinner won’t have it at five o’clock, but at nine or even later. If this place has to be closed and empty at 10, you tell me how to do it,” said Javier Huerta, the Feito Río’s manager. He expects the bar to lose more than half…
/on.wsj.com/33TCRGx

Good Vaccine Progress, Bad Politics; A fourth candidate enters Phase 3, never mind the carpers.
The Editorial Board – WSJ
Johnson & Johnson announced Wednesday that its vaccine candidate for Covid-19 will enter Phase 3 trials, the fourth to do so. The speed of vaccine development is remarkable, and credit goes to scientific advances and some smart government decisions.
/on.wsj.com/2RVWUhS

Exchanges, OTC and Clearing

CME Group’s EBS combines EMS with IHS Markit thinkFolio; Through the partnership, thinkFolio clients will be able to access the EBSI EMS execution functionality to reduce trading costs.
Annabel Smith – The Trade
CME Group’s FX trading platform EBS has integrated its execution management system (EMS) with the investment management platform from IHS Markit, thinkFolio. The combination of the EBS Institutional (EBSI) EMS and thinkFolio will grant mutual clients access to EBSI’s execution functionality and thinkFolio’s cash and currency management capabilities, analytics for enhanced liquidity, and reduced trading costs.
/bit.ly/32ZQ4ye

EBS Institutional Connects to IHS Markit’s thinkFolio Investment Management Platform
CME Group
EBS, a leading provider of electronic trading platforms and technology services in foreign exchange markets, today announced the connectivity between its EBS Institutional (EBSI) execution management system and thinkFolio, a leading multi-asset investment management platform from IHS Markit.
/bit.ly/32YKwUP

Eurex named ‘European derivatives exchange of the year’ by Global Capital
Eurex
Being recognized and awarded for one’s performance is always nice, especially when the jury at the Global Derivatives Awards 2020 – hosted by Global Capital – pays tribute to the”excellent understanding of the competitive landscape and intelligent product creation” at Eurex.
/bit.ly/2ExxLak

Withdrawal of admission of Single Stock Futures, options and Total Return Futures due to corporate actions
Eurex
Due to corporate actions, the Management Board of Eurex Deutschland took the following decisions with effect from 5 October 2020:
/bit.ly/2G4WtPE

MSCI index options: Adjustment of Non-disclosure limits
Eurex
As of 19 October 2020, Non-disclosure limits for MSCI options will be amended.
/bit.ly/3j333oC

MarketAxess takes over Deutsche Börse Group’s Regulatory Reporting Hub
Deutsche Börse Group’
MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a leading electronic fixed income trading platform and provider of market data and post-trade services for the global fixed income markets, has signed an agreement closed for takeover of the Regulatory Reporting Hub of Deutsche Börse Group. MarketAxess will acquire Deutsche Börse’s regulatory reporting services division through Trax NL BV, its wholly owned subsidiary in the Netherlands.
/bit.ly/3mKwiyD

Increase in maximum precision of Eurodollar and SOFR strike prices – Effective October 12, 2020
CME Group
Effective Monday October 12, 2020, listing rules for certain CME options on Three-Month Eurodollar futures and on Three-Month SOFR futures will be modified to allow creation of strikes at intervals of 0.0625 index points. Currently, the interval is 0.125. Thus, the maximum number of decimal places needed to represent a strike price will change from three to four.
/bit.ly/3cpOA3x

Performance Bond Requirements: Energy – Effective September 24, 2020
CME Group
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below
/bit.ly/2RTw0HF

REVISED: Product Modification Summary: Amendments to the Exercise Price Rule of the Options on Three-Month Eurodollar and Three-Month SOFR Futures Contracts – Effective October 12, 2020
CME Group
Amendments to the Exercise Price Rule of the Options on Three-Month Eurodollar and Three-Month SOFR Futures Contracts.
/bit.ly/3hYUOsm

Amendment to the Listing Cycle and Subsequent Delisting of the KC HRW-Chicago SRW Wheat Intercommodity Spread Options Contract
CME Group
Effective Sunday October 11, 2020, for trade date Monday, October 12, 2020, and pending all relevant CFTC regulatory review periods, The Board of Trade of the City of Chicago, Inc. (“CBOT” or “Exchange”) will amend the listing cycle of the KC HRW – Chicago SRW Wheat Intecommodity Spread Options contract (the “Contract”) to cease listing new expirations. Following the expiry of the last listed contract on June 25, 2021, the Contract will be delisted
/bit.ly/3kNSKFp

UPDATE: Amendments to the Exercise Price Rule of the Options on Three-Month Eurodollar and Three-Month SOFR Futures Contracts – Addition of 6.25 Basis Point Strike Price Intervals
CME Group
Effective Sunday, October 11, 2020 for trade date Monday, October 12, 2020, Chicago Mercantile Exchange Inc. (“CME” or “Exchange”) will amend the Exercise Price rules of the Options on Three-Month Eurodollar Futures (Rulebook Chapter 452A) and Options on Three-Month SOFR Futures contract (Rulebook Chapter 460A) (the “Contracts”) for trading on the CME trading floor, the CME Globex trading platform (“CME Globex”) and for submission of clearing via CME ClearPort (collectively, the “Rule Amendments”).
/bit.ly/3kKavFA

SGX named Asia-Pacific Derivatives Exchange of the Year by GlobalCapital for seventh consecutive year
SGX
SGX demonstrates role as flight-to-quality marketplace amid COVID-19 uncertainties; Exchange kept its platforms open round-the-clock even during early days of pandemic
Singapore Exchange (SGX) has been named “Asia-Pacific Derivatives Exchange of the Year” by GlobalCapital for a seventh consecutive year, underscoring its strengths in an especially challenging environment for market infrastructure.
/bit.ly/364m5XO

Fintech

Robinhood adds $460 million in funding, but remains No. 2 valued fintech
Cromwell Schubarth – Silicon Valley Business Journal
Robinhood Markets Inc. topped off last month’s $200 million funding with a $460 million extension of its Series D round, the online brokerage said on Tuesday.
It’s still the second most valuable fintech in the world with the valuation of about $11.7 billion it won when the first tranche of the round was announced in August. San Francisco-based online bank Chime Financial Inc. passed it with a $485 million Series F round last Friday that came at a valuation of $14.5 billion.
/bit.ly/306LcFF

Paya and FinTech III Announce Filing of Definitive Proxy Statement in Connection with Proposed Transaction
Press Release
Paya, a leading integrated payments and commerce solution provider, and FinTech Acquisition Corp. III (NASDAQ: FTAC) (“FinTech III”), a special purpose acquisition company, announced today that FinTech Acquisition Corp. III Parent Corp. has filed a Form S-4 with the U.S. Securities and Exchange Commission (“SEC”), which includes FinTech III’s definitive proxy statement / prospectus in connection with the proposed transaction between FinTech III and Paya. FinTech III will commence mailing the definitive proxy materials to FinTech III stockholders of record on or about September 25, 2020. The filing can be accessed by searching for FinTech Acquisition Corp. III Parent Corp. on the SEC’s website at https://www.sec.gov/edgar.shtml or directly at https://www.sec.gov/cgi-bin/browse-edgar?CIK=1819881&owner=exclude.
/bwnews.pr/2FOp2RT

Fintech Startup SpotOn Raises $60M, Plans to Double Chicago Headcount
Gordon Gottsegen – Built In Chicago
On Wednesday, payment processing startup SpotOn announced that it raised $60 million in a Series C funding round led by DST Global.
This new funding round comes just six months after its $50 million Series B round in March. But needless to say, a lot has changed since then.
/bit.ly/3i0M1pM

Cryptocurrencies

Winklevoss Twins’ Crypto Exchange Is Expanding Into the U.K.
Nate Lanxon and Olga Kharif – Bloomberg
Gemini says exchange among the first in registration process; Customers will be able to use the pound for all transactions
Cryptocurrency exchange Gemini Trust Company LLC is expanding into the U.K. after being granted an electronic-money license from the Financial Conduct Authority. The New York-based firm was founded by Tyler and Cameron Winklevoss, who after claiming Mark Zuckerberg took their idea for a social-networking website to start Facebook Inc., moved on to become entrepreneurs in the digital-asset industry.
/bloom.bg/302wCiq

This Is What Happened When They Tried to Fix Journalism Using Blockchain
Joe Weisenthal and Tracy Alloway – Bloomberg
Back in 2017, during the Bitcoin boom, there were a number of different attempts to use blockchain technology to improve a host of businesses and industries. Many of those were cynical attempts to cash in on the bubble, but some did have loftier ambitions. On this episode of Odd Lots, we speak with Maria Bustillos, who was the co-founder of a project called Civil, which aimed to fund a series of newsrooms, backed by their own Ethereum-based token. Maria talked about what the vision was, why it didn’t work, and the lessons learned for journalism business models and new endeavors.
/bloom.bg/2FVB4J4

Brazil’s JBS turns to blockchain to shine light on Amazon cattle supply; World’s largest meatpacker faces investor pressure to show livestock do not come from illegally deforested lands
Bryan Harris – FT
JBS, the world’s largest meatpacker, is turning to blockchain to ensure the traceability of the tens of thousands of cattle it processes every day in Brazil, following intense pressure from both investors and activists over its environmental record.
/on.ft.com/33TCBY5

EU Plans to Regulate Cryptocurrencies in Digital Finance Push
Alexander Weber – Bloomberg
The European Union is taking a major step to regulate crypto assets in the bloc, seeking to protect its financial markets without depriving citizens and companies of the new technologies. Under the initiative unveiled on Thursday the EU’s executive arm seeks to establish clear ground rules for cryptocurrencies, which often aren’t captured by traditional rules and can leave investors without protection.
/bloom.bg/2S887MF

$1 Billion in Bitcoin Options Expire Friday. Here’s What It Means
Robert Stevens – Decrypt
Almost a billion dollars worth of Bitcoin options contracts, a little under half in existence, are set to expire on Friday, per data from Skew analytics. And Ethereum isn’t far behind. About $450 million worth of ETH options contracts expire on the same day. This could potentially introduce a whole lot of crypto back into the market as traders look to dump or HODL. Here’s what to expect.
/bit.ly/3mYvYwq

PureStake raises $1.4 million to launch Ethereum-compatible network on Polkadot
Yogita Khatri – The Block
Blockchain startup PureStake has raised $1.4 million in seed funding to launch Moonbeam Network — the Ethereum-compatible smart contract platform built on top of Polkadot. The seed round was led by Hypersphere Ventures, Polkadot co-founder Robert Habermeier’s venture firm, with participation from Arrington XRP Capital, HashKey, and Bitcoin.com Exchange, among others. Moonbeam is a Polkadot parachain, Katie Butler, director of marketing at PureStake, told The Block, adding that it is focused on making it easy for Ethereum developers to deploy existing smart contracts to a Polkadot-based environment. It means Ethereum developers can use the same developer tools and code they already use and can get access to the Polkadot ecosystem, said Butler.
/bit.ly/2FWhvQP

MakerDAO Users Hosed by March Flash Crash Won’t Get MKR Payouts, Say MKR Whales
William Foxley – Coindesk
MakerDAO will not compensate victims of March 12’s “Black Thursday” flash crash that left some of the decentralized finance (DeFi) platform’s investors out $8.33 million, according to a vote that closed Tuesday. The Maker community had initially voted in early April to refund sunken investors.
/bit.ly/32XH10B

Coinbase is creating a new ‘Platforms’ team, hires executives from Venmo and Adobe
Yogita Khatri – The Block
Crypto exchange Coinbase is building a new “Platforms” team and has hired two executives from Venmo and Adobe to join this team. Shilpa Dhar, former head of product at Venmo, has joined Coinbase as VP of product. Ravi Byakod, former head of commerce engineering at Adobe, has joined Coinbase as VP of engineering. Dhar and Byakod will lead Coinbase’s Platforms team and help the company focus on creating a “strong, scalable, and compliant infrastructure that can keep up with the growing cryptoeconomy,” said Surojit Chatterjee, chief product officer at Coinbase. Before Venmo, Dhar worked for PayPal for more than ten years, and Byakod has had stints at Google, eBay and Flipkart.
/bit.ly/3mO58a9

Venezuela Legalizes Crypto Mining but Will Force Industry Into National Pool
Daniel Palmer – Coindesk
Venezuela’s government has given cryptocurrency miners mixed news this week. Firstly, the government department responsible for regulating cryptos has legalized the mining industry, local industry news site CriptoNoticias reported Tuesday. The new decree was published in the Official Gazette on Monday and authorized by Joselit Ramirez, head of National Superintendency of Crypto Assets and Related Activities (SUNACRIP). It states that any local entity wishing to mine cryptos must apply for a licence and be listed on a government register.
/bit.ly/3i0K3po

First Mover: Bitcoins Hit Exchanges as Bloomberg Touts Crypto and DeFi Hedge Fund Seeks $50M
Bradley Keoun – CoinDesk
First Mover: Bitcoins Hit Exchanges as Bloomberg Touts Crypto and DeFi Hedge Fund Seeks $50M
The upcoming U.S. presidential election has become one of the most contentious in history, fraught with searing divisions over everything from the economy to race to the continued health of democracy itself.
/yhoo.it/302iVAg

This Ethereum Startup Is Building a ‘DeFi Firewall’ for Institutional Investors
Ian Allison – Coindesk
As decentralized finance (DeFi) balloons to a roughly $10 billion market, infrastructure builders are coming up with ways to reduce the associated risks.
/bit.ly/2HjkXVV

Blockchain Commons Internship Introduces New Developers to Open Source
Colin Harper. – Coindesk
When Christopher Allen received applications for the 2020 Blockchain Commons internship, he had a problem: He had more applications than he had ever received in the internship’s history, and all from stellar applicants.
/yhoo.it/361UiHt

MakerDAO Users Hosed by March Flash Crash Won’t Get MKR Payouts, Say MKR Whales
William Foxley – Coindesk
MakerDAO will not compensate victims of March 12’s “Black Thursday” flash crash that left some of the decentralized finance (DeFi) platform’s investors out $8.33 million, according to a vote that closed Tuesday. The Maker community had initially voted in early April to refund sunken investors.
/bit.ly/32XH10B

Politics

How A Few Battleground States Will Decide the Race Between Trump and Biden
Gregory Korte and Reade Pickert – Bloomberg
The multiple crises of 2020 have redrawn the political map, as the pandemic, the economic crash and racial justice protests have shaken the competitive states that will decide the presidential election. Combined with strong reaction to President Donald Trump’s style, the changes will make for a different campaign and a chaotic election night.
/bloom.bg/3mW7svZ

Donald Trump refuses to commit to peaceful transfer of power; US president also links need for Supreme Court appointment to a disputed election result
Demetri Sevastopulo – FT
Donald Trump refused to commit to a peaceful transfer of power if he loses the election, sparking further concern about the November 3 poll. “We’re going to have to see what happens,” the president said when asked at a news conference.
/on.ft.com/303Tluy

Brussels ready to clamp down on sweetheart corporate tax deals; Commission wants to use article in EU treaty to root out schemes that distort single market
Sam Fleming and Mehreen Khan – FT
Brussels is stepping up its campaign against sweetheart corporate tax deals in the EU as pressure builds for companies and wealthy individuals to bear more of the fiscal burden imposed by the deep recessions sweeping Europe. Paolo Gentiloni, the EU’s economics commissioner, told the Financial Times that Brussels wanted to pressure capitals to root out “structures that facilitate aggressive tax planning” as part of their national reform plans under its EUR750bn recovery fund.
/on.ft.com/2FPB8ds

US investor Michael Calvey’s hopes of release fade in Russian dispute; Back-channel efforts to reduce embezzlement charges founder as Kremlin hardliners dig in
Max Seddon and Henry Foy – FT
A year after Russian secret services shocked Moscow’s business community by arresting Michael Calvey, the US private equity executive was diagnosed with a liposarcoma the size of a tennis ball in his leg.
/on.ft.com/361U578

Eric Trump Must Appear for Deposition Before Election, Judge Says; Trump Organization is also ordered to produce documents in New York attorney general’s fraud investigation
Corinne Ramey – WSJ
Eric Trump and others who have done work for the Trump Organization must sit for depositions by next month as part of a civil fraud investigation conducted by the New York attorney general, a state court judge ruled Wednesday.
/on.wsj.com/302H49E

DOJ to Seek Congressional Curbs on Immunity for Internet Companies; The legislation is unlikely to pass during an election year, but Congress could take it up next year
Ryan Tracy and Brent Kendall – WSJ
The Justice Department on Wednesday proposed to Congress ways to curb longstanding legal protections for internet companies such as Facebook Inc., Alphabet Inc.’s Google and Twitter Inc. and force them to shoulder more responsibility for managing content on their platforms.
/on.wsj.com/2HszP4y

The One and Only Question for Trump’s Nominee; Democrats should use the upcoming Supreme Court hearings to highlight Trump’s plan to steal the election.
Francis Wilkinson – Bloomberg
It’s not certain that there will be anything like normal hearings on President Donald Trump’s next nominee to the U.S. Supreme Court, which Trump has said he will announce on Saturday. The Republican Party is Trump’s party, and it does not operate by democratic rules of transparency, accountability or deliberation. It seizes power when and how it can.
/bloom.bg/3mLSRD3

Trump claims White House can overrule FDA’s attempt to toughen guidelines for coronavirus vaccine
Paul LeBlanc, CNN
President Donald Trump claimed Wednesday that the White House could override the US Food and Drug Administration if the agency released tougher standards for the authorization of a Covid-19 vaccine, casting such a move as “political.”
/cnn.it/33Qy8W2

Regulation

SEC Raises Bar for Shareholder Resolutions; Critics say move could chill corporate democracy; companies cite costs caused by gadfly investors
Paul Kiernan – WSJ
The Securities and Exchange Commission raised the bar for investors to submit proposals for a vote at companies’ annual meetings, a win for executives who have bristled at shareholder efforts to influence corporate policies on social and political issues.
/on.wsj.com/3kJ7zJ9

FCA drops probe into BoE ‘audio hack’; Regulator says it found no misconduct around central bank’s market-sensitive press conference feeds
Philip Stafford – FT
The UK markets regulator has dropped its investigation into the company at the centre of a controversy around the Bank of England’s market-sensitive press conference feeds, clashing with the BoE’s assertion that the business had “misused” the feed.
/on.ft.com/33SOehS

FCA closes investigation into Bank of England audio hack by hedge funds; The audio feed contained no inside information and no activity of concern or misconduct was identified by the FCA following the audio hack at the Bank of England.
Hayley McDowell – The Trade
The UK’s financial watchdog has ended an enquiry into an alleged audio feed hack at the Bank of England last year by hedge funds, stating it found no evidence of misconduct.
/bit.ly/2RSKcQT

ASIC issues no-action position in relation to ongoing fee arrangement obligations for Victorian financial advice businesses
ASIC
ASIC acknowledges that due to COVID-19 restrictions, some financial advice businesses in Victoria may find it difficult to comply with the fee disclosure statement (FDS) and renewal notice obligations.
/bit.ly/304OHfS

ASIC restricts certain retail offers of ‘stub equity’ in takeovers to maintain investor protection
ASIC
ASIC has modified the Corporations Act to prevent stub equity offers of scrip in a proprietary company being made to large numbers of retail target holders in takeover bids and schemes of arrangement.
/bit.ly/3kJN1jF

ESMA consults on MiFIR reference data and transaction reporting
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today launched a Consultation Paper (CP) reviewing the reference data and transaction reporting obligations under the Market in Financial Instruments Regulation (MiFIR).
/bit.ly/3041aQW

ESMA Publishes Outcomes of MRA Review
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today published a review of the Market Abuse Regulation (MAR). The Report is the first in-depth review of the functioning of MAR since its implementation in 2016, and its recommendations will feed into the European Commission’s (EC) review of MAR.
/bit.ly/30627Z4

ESMA makes proposals to help prevent and detect WHT reclaim schemes
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today published the Final Report on its inquiry into Cum/Ex, Cum/Cum and withholding tax (WHT) reclaim schemes. ESMA’s key proposal is that national competent authorities (NCAs) for securities markets should be empowered to share information with the tax authorities, to assist in detecting WHT reclaim schemes.
/bit.ly/367z6jp

SEC Adopts Amendments to Modernize Shareholder Proposal Rule
SEC
The Securities and Exchange Commission today voted to adopt amendments to modernize its shareholder proposal rule, which governs the process for a shareholder to have its proposal included in a company’s proxy statement for consideration by all of the company’s shareholders. The principal requirements for: (1) initial inclusion in the proxy statement — the amount and length of ownership of the proposing shareholder — and (2) for subsequent resubmission if the proposal is not approved — the amount of support from other shareholders — have not been substantively amended since 1998 and 1954, respectively.
/bit.ly/304NVzD

SEC Adds Clarity, Efficiency and Transparency to Its Successful Whistleblower Award Program
SEC
The Securities and Exchange Commission today voted to adopt amendments to the rules governing its whistleblower program that are designed to provide greater clarity to whistleblowers and increase the program’s efficiency and transparency. Concurrently, to provide additional efficiencies, as well as clarity and transparency in the award determination process, the SEC’s Office of the Whistleblower published guidance regarding the process for determining award amounts for eligible whistleblowers.
/bit.ly/362w7sw

SEC Obtains Emergency Asset Freeze, Charges Ring of Microcap Stock Manipulators Targeting Retail Investors
SEC
The Securities and Exchange Commission today announced that it has obtained an asset freeze and other emergency relief to halt a series of microcap market manipulation schemes that defrauded retail investors. According to the SEC’s complaint, from 2013 to 2019, the defendants engaged in various schemes to manipulate microcap stocks and defraud retail investors, obtaining a total of over $6 million in illicit profits.
/bit.ly/305zafF

Modernizing the Shareholder Proposal Framework for the Benefit of All Shareholders
Chairman Jay Clayton – SEC
Over the past three years, we have engaged in a number of retrospective reviews of the rules that implement our securities law framework. These reviews often, but not always, have yielded the unassailable conclusion that modernization is necessary and appropriate. This should come as no surprise given how much has changed in the past 20, 30, 40 or more years since key rules were last comprehensively reviewed. At a macro level, I note that interaction among market participants, including trading, disclosures and other information-based interactions, is now largely electronic, adding tremendous efficiencies but also new challenges. Virtually all trading in equities is electronic. The days of disclosure reports and proxy materials being filed in paper form, but not electronic form, with the Commission are well behind us. In addition, as I have noted at other recent open Commission meetings, our Main Street investors generally have shifted from investing directly in our public companies to investing through mutual funds and ETFs.[1] For many small and medium-sized companies, our private capital markets are the only reasonable means for obtaining financing to grow their businesses. As I often say, the core principles are the same as they were in the 1930s, but the landscape is far different.
/bit.ly/303GPv7

Statement on Procedural Requirements and Resubmission Thresholds under Exchange Act Rule 14a-8
Commissioner Elad L. Roisman – SEC
Change is difficult. Especially when something has been a certain way for as long as you can remember. Twenty-two years have passed since the Commission last updated Rule 14a-8. In particular, the submission threshold was last substantively reviewed and amended in 1998, and the resubmission thresholds have not been updated since 1954. Yet, over the last several decades, not only has the composition of public company ownership changed drastically, but the ways in which shareholders communicate with companies, and with each other, have evolved with the times as well. I believe that the only constant in our markets is the fact that they will change. It is a regulator’s job to adjust rules to respond to, if not to anticipate, such dynamics. It is our responsibility to adjust these rules to reflect our current markets, and the time is now.
/bit.ly/35YCVrc

Statement at Open Meeting on Procedural Requirements and Resubmission Thresholds under Exchange Act Rule 14a-8
Commissioner Hester Peirce – SEC
Thank you, Chairman Clayton. I support today’s amendments to certain procedural requirements and the resubmission thresholds under the shareholder proposal rule. While it can be difficult to discern the signal from the noise around today’s amendments, the reality of the situation is that we are making simple, sensible, and long over-due changes to the shareholder proposal rule.
/bit.ly/362DqQV

Statement on the Amendments to Rule 14a-8
Commissioner Allison Herren Lee – SEC
The final rules represent the capstone in a series of policies that will dial back shareholder oversight of management at the companies they own. Last year, the Commission adopted guidance on proxy advisors and proxy solicitation that made it more difficult and costly for investment advisers to vote shares on behalf of their clients in reliance on independent proxy voting advice.[1] Then, earlier this year, the Commission adopted new rules and additional guidance related to proxy advisors that injected further cost and complexity into the voting process and mandated greater issuer involvement in proxy voting decisions.[2] Having made it more difficult for shareholders to exercise their voting rights, the Commission now adopts amendments that will narrow access to another important mechanism for shareholder oversight: the shareholder proposal process. These actions collectively put a thumb on the scale for management in the balance of power between companies and their owners.[3]
/bit.ly/365kAsG

Statement on Procedural Requirements and Resubmission Thresholds under Exchange Act Rule 14a-8
Commissioner Caroline A. Crenshaw – SEC
Today the majority of the Commission is approving amendments to the procedures governing shareholder proposals. The amendments are described as a “modernization,”[1] designed to reduce costs for corporations. Even if I agreed that was necessary, I cannot agree with the method.
/bit.ly/33W82AX

Strengthening our Whistleblower Program
Chairman Jay Clayton – SEC
Good morning. This is an open meeting of the U.S. Securities and Exchange Commission, under the Government in the Sunshine Act. This morning, we have two items on the agenda. Before we begin with today’s agenda, I want to note the passing of Justice Ruth Bader Ginsburg and the joint statement of the Commission recognizing her as a giant of the law who authored many opinions that meaningfully impacted the lives of all Americans, including our nation’s investors. Of particular relevance to our work at the Commission was United States v. O’Hagan, which upheld the misappropriation theory of insider trading and has served as a critical element of our securities law framework.
/bit.ly/2HtZLwE

Amendments to the Commission’s Whistleblower Program Rules
Commissioner Hester M. Peirce – SEC
Thank you, Mr. Chairman. The whistleblower program has, in its decade of existence, become an integral part of our enforcement program. People have brought us countless tips, and many of those tips inform us for the first time of misconduct that needs to be investigated or help us connect the dots in an existing investigation. Many of these whistleblowers would have come to us even in the absence of the prospect of an award. Our ability to pay awards, however, enables us to recognize whistleblowers’ contributions to the integrity of our markets in a concrete way. As Justice Ginsburg explained in Digital Realty Trust, Congress “recognize[ed] that ‘whistleblowers often face the difficult choice between telling the truth and committing ‘career suicide’.'”[1] An award may encourage an individual to make the difficult choice to tell the truth by replacing the income she loses if she is fired from her job and by providing some offset for the reputational, personal, and even physical threats that whistleblowers can endure as a result of alerting us to wrongdoing.
/bit.ly/3kEGWF6

Statement on the Commission’s New and Improved Whistleblower Program Rules
Commissioner Elad L. Roisman – SEC
Good morning. I am happy to vote in favor of the staff’s recommendation to update the rules governing our whistleblower program. The Chairman has already thanked everyone individually, but I would like to add my thanks to the staff in the Office of the General Counsel, the Division of Enforcement—particularly the Office of the Whistleblower (“OWB”)—and the Division of Economic and Risk Analysis for this fine work.
/bit.ly/2FMNtiz

Statement of Commissioner Caroline Crenshaw on Whistleblower Program Rule Amendments
Commissioner Caroline A. Crenshaw – SEC
The remarkable Justice Ginsburg once wrote that the Commission possessed a “robust whistleblower program designed to motivate people who know of securities law violations to tell the SEC”.[1] Our nation has a long history of motivating whistleblowers to come forward, dating all the way back to 1777, when the Continental Congress passed our first whistleblower protection law.[2] And over time our laws have evolved to not just protect whistleblowers, but also to incentivize and encourage them to take personal and professional risks to help our government stop wrongdoing.
/bit.ly/35YDzoC

Agricultural Advisory Committee Releases Agenda for September 24 Public Meeting
CFTC
The Agricultural Advisory Committee (AAC) today released the full agenda for its upcoming public meeting [See CFTC Press Release No. 8236-20] on September 24, 2020, at 2:00 p.m. EDT. The meeting will be conducted via teleconference in accordance with the agency’s implementation of social distancing due to the COVID-19 (coronavirus) pandemic. CFTC Chairman Heath P. Tarbert is the sponsor of the AAC.
/bit.ly/3kEH2MY

First firms to begin move to new data collection platform, RegData
UK FCA
The first firms will be moved from Gabriel to RegData over the weekend of 17 and 18 October. Those firms will then complete their regulatory reporting on RegData. Firms will continue to be moved to RegData from Gabriel in the coming months as we move users across in stages, based on their reporting requirements.
/bit.ly/305GsAb

Update on the FCA enquiry into the Bank of England audio issue
UK FCA
In late 2019 concerns were raised regarding the use of an audio feed from the Bank of England’s press conferences.
/bit.ly/2FRAKLe

Investing and Trading

Harvard’s Chetty Finds Economic Carnage in Wealthiest ZIP Codes; The celebrated economist has built a data tool with a God’s-eye view of the pandemic’s damage—and soaring inequality.
Ben Steverman – Bloomberg
Raj Chetty hasn’t eaten at a restaurant in months. In fact, he’s barely left his home near Harvard, where he’s an economics professor. The MacArthur genius grant recipient has been getting his haircuts from a stem cell biologist—his wife.
/bloom.bg/2FZ9hrd

Sovereign Wealth Funds Shake Up World of Direct Lending
Rachel McGovern – Bloomberg
Mubadala and Qatar Investment Authority strike investor deals; Apollo, Barings, Credit Suisse expand private credit role
A series of mammoth investor tie-ups aimed at financing corporate buyouts is upending the world of direct lending, a corner of the credit market once dominated by boutique funds.
/bloom.bg/306QUHL

Fed’s Run-Hot Inflation Approach Is Making Waves in Some Corners
Liz McCormick – Bloomberg
First Eagle’s McLennan says policy adds to inflation kindling; Firms with oligopolistic power, gold among good plays, he says
Asset managers who’ve guarded against inflation during a decade of easy money and ballooning deficits have little to show for their efforts. That’s still not stopping some from hedging that risk.
/bloom.bg/364Tbqr

Active Managers Are Suffering a Perilous Pandemic; The failure of stock pickers to outpace their benchmarks poses an existential risk to the active fund management industry. It turns out their bond counterparts are equally bad.
Mark Gilbert – Bloomberg
The failure of equity fund managers to deliver outsize returns commensurate with the fees they charge for their stock-picking services continues to be a source of ammunition for advocates of lower-cost index tracking products. Less scrutinized, although equally dreadful, is the seeming inability of their bond brethren to offer a fixed-income alternative that can generate benchmark-beating performance.
/bloom.bg/3crXQE2

Environmental, Social and Corporate Governance

Hydrogen Breaks Through as the Hottest Thing in Green Energy
Vanessa Dezem – Bloomberg
Wind and solar power are the main focus in the fight against climate change, but there are sources of greenhouse gases they can’t clean up. Manufacturing steel, cement and chemicals has traditionally required fossil fuels, either to burn to create the extreme temperatures needed, or as raw materials and catalysts for chemical reactions. That’s why hydrogen is becoming the new climate bet. It burns far more cleanly than fossil fuels, can stand in for carbon in some reactions and so-called green hydrogen — gas produced using electricity from renewable sources — is essentially emissions free. Hydrogen is also seen as a clean solution for fueling cars, trucks and ships and heating buildings. All that involves vast expense and work of creating a new energy industry almost from scratch, and bringing costs down to competitive levels.
/bloom.bg/3mMrloY

Food proves hard for ESG investors to digest; The sector’s social and governance impacts resist easy measurement
Billy Nauman – FT
Food is at the nexus of practically every major sustainability issue: what we eat today determines not just our own health tomorrow, but also that of the planet. So the sector should be an obvious focus for ESG investors, who want their money to contribute to environmental, social and governance goals.
/on.ft.com/2FZj9B4

Big Four firms release ESG reporting metrics with World Economic Forum
Michael Cohn – Accounting Today
The Big Four accounting firms have developed a set of metrics for companies to use for environmental, social and governance reporting internationally.
The metrics were released Tuesday by the World Economic Forum in conjunction with the fourth annual Sustainable Development Impact Summit, which coincided with Climate Week in New York. They come a week after five ESG standard-setters — the Carbon Disclosure Project, the Climate Disclosure Standards Board, the Global Reporting Initiative, the International Integrated Reporting Council and the Sustainability Accounting Standards Board — agreed to work together more closely on aligning their various sets of standards and frameworks after being urged to do so by international securities regulators (see story).
/bit.ly/33UEp39

Swedbank Robur Says It’s First Out With ‘Paris Aligned’ Funds
Hanna Hoikkala and Rafaela Lindeberg – Bloomberg
Swedbank Robur, the asset management arm of one of Sweden’s biggest lenders, says some of its funds have broken new ground by being formally aligned with the 2015 Paris Agreement on climate change.
/bloom.bg/304Uan3

Institutions

Trend-following hedge funds struggle in topsy turvy year; Strategy that proved its worth in 2008 has lost some of it in 2020
Robin Wigglesworth and Laurence Fletcher – FT
Savage stock market drops, soaring rallies and a frenzied retail trading boom. This should be a fertile environment for quantitative trend-following hedge funds. Instead, the $280bn industry has experienced widely diverging fortunes this year.
/on.ft.com/3mPU6Rx

Banks reap gold trading bonanza from Covid-19 disruption; Highly unusual gap between London and New York prices during pandemic opened up opportunity
Henry Sanderson – FT
Banks are set to report bumper profits from gold and silver trading this year following a record-breaking price rally and the disruption to global supply chains triggered by coronavirus. Precious metals revenues at the world’s 50 largest investment banks are set to double this year to a nine-year high of $2.5bn, concentrated among a handful of banks, according to consultancy Coalition.
/on.ft.com/3kKewd3

Vanguard bolstered by ETF sales amid mutual fund outflows; Asset manager’s $4.4tn long-term mutual funds range bled $41bn in year to end of August, Morningstar data show
Joe Morris – FT
ETF sales have been supporting Vanguard’s business this year amid sizeable outflows from its mutual funds range, new data show. The asset manager’s $1.3tn ETF line attracted $113bn in net inflows in the year to the end of August, while its $4.4tn in long-term mutual funds bled $41bn, according to data from Morningstar. At Vanguard, ETFs are share classes of their mutual funds.
/on.ft.com/3027qJ6

Crédit Agricole insurance unit stops offering H2O funds; Move marks the highest-profile partner so far to cut ties with EUR22bn investment firm
Cynthia O’Murchu and Robert Smith – FT
Crédit Agricole has stopped marketing H2O Asset Management’s funds through one of its life insurance subsidiaries, cutting off the troubled investment firm from a key network of distributors at France’s largest retail bank. In late August, the French market regulator forced H2O to temporarily suspend trading in a series of its funds because of concerns over the valuations of its investments in illiquid bonds. The London-based subsidiary of French bank Natixis, which manages EUR22bn in assets, initially said this suspension would last about four weeks.
/on.ft.com/33TcMHv

Credit Suisse, UBS reportedly held tie-up talks backed by both chairmen
Reuters
The chairmen of UBS and Credit Suisse supported a merger of equals between Switzerland’s two largest banks during discussions earlier this year, Swiss magazine Bilanz reported on Wednesday, adding talks had since stagnated.
/bit.ly/3i0McBt

Jamie Dimon is ready to pay higher taxes, just not on his wealth
Thornton McEnery – NY Post
Jamie Dimon says it would help the economy if he and his fellow billionaires paid more taxes — but he claims a wealth tax wouldn’t work. “There are taxes which will slow down growth, like taxes on capital formation or labor, and there are taxes which will not affect growth, like taxes on, you know, well-to-do people like me,” the JPMorgan chief told CNBC on Wednesday,
/bit.ly/3cqjbhc

The Big Short Meets the Sovereign Wealth Fund; Rolls-Royce is reportedly mulling sovereign wealth fund support for a capital hike. That might be a sign of market fatigue. But an anchor investor would more than compensate.
Chris Hughes – Bloomberg
Europe’s big short may face a new challenger. The jumbo cash calls of pandemic-hit companies have been easy prey for hedge funds betting the stocks will fall. But the potential involvement of a sovereign wealth fund in a fundraising by Rolls-Royce Holdings Plc could herald a shift in the balance of power between short sellers and ordinary shareholders.
/bloom.bg/3iZtOKl

State Street appoints new Charles River CEO in leadership overhaul; Boston-based State Street has appointed a new CEO of Charles River Development and expanded the role of its head of front-to-back platform strategy.
Joe Parsons – The Trade
State Street has named a new CEO of Charles River as part of a series of leadership changes for its front-to-back platform, Alpha, aimed at boosting its software and outsourcing capabilities. Spiros Giannaros has been named CEO of Charles River Development, the Boston-based bank’s front-office software provider.
/bit.ly/3hSXS9i

Regions

Austrian Alps to Open for Skiing With Ban on Apres-Ski Parties
Boris Groendahl – Bloomberg
Alpine visitors will have go ‘without apres ski,’ Kurz says; Austria has been sued for lax controls at Ischgl resort
Austria’s ski resorts will open up again this winter, though tourists will have to do without the usual off-piste partying, Chancellor Sebastian Kurz said. Restaurants and bars will only be allowed to serve seated customers, Kurz said, as the government tries to prevent the spate of coronavirus outbreaks that marred the last winter season. He also called on Austrians to help bring down the number of infections which have led to travel warnings.
/bloom.bg/3075HC9

Lebanon Needs You to Buy Its Wines. And, Yes, They’re Really Good; Making wine here has never been easy. But with every bottle exported, a bit of hope and resilience follows the disaster in Beirut.
Elin McCoy – Bloomberg
Massive explosions rocked Beirut’s huge port last month, killing more than 200 people. The owners of Château Marsyas winery were injured in their commercial office just 600 meters away and crawled through debris from fallen walls and ceilings to escape. Two weeks later, they were harvesting grapes at their vineyards in Lebanon’s Bekaa Valley.
/bloom.bg/3kKcolz

Why Modi’s Laws to Liberalize Farming Worry Farmers
Pratik Parija and Atul Prakash – Bloomberg
New legislation in India aims to fundamentally overhaul the way farm goods are produced and sold in the country of 1.3 billion people, almost half of whom depend on agriculture for their livelihood. A decades-old system of farmers selling mainly through state-run wholesale markets is being opened up in what Prime Minister Narendra Modi says marks a watershed moment that will help make India more self-reliant. Opposition parties and even one of Modi’s allies say it will leave those working the land vulnerable to exploitation by big private buyers. Farmers, who make up a powerful voting bloc, worry their income could fall, despite Modi’s promises to the contrary.
/bloom.bg/302eFAs

Japanese bank says it miscounted investor votes at 1,000 companies; Sumitomo Mitsui Trust’s admission raises doubts over credibility of AGM proceedings
Leo Lewis and Kana Inagaki – FT
Japan’s biggest provider of shareholder services said it miscounted investor votes at the annual meetings of nearly 1,000 listed companies including Toshiba, casting doubt on the credibility of AGMs in one of the world’s biggest stock markets.
/on.ft.com/304HPiA

Retail boom drives ‘crazy’ rally in Chinese brokerage stocks; Internet trading propels valuations to levels on par with big international banks
Thomas Hale and Hudson Lockett, and Sun Yu – FT
A surge in internet trading by China’s retail investors has boosted the country’s brokers, awarding some of them a valuation in line with the world’s best-known banks.
/on.ft.com/3kNN6Dd

Swedish corporate bond market is dysfunctional, says central bank; Riksbank declines to give detail on corporate bond market for fear of compromising purchase programme
Richard Milne – FT
Sweden’s corporate bond market is immature, illiquid and dysfunctional, according to the country’s central bank. The Riksbank recently commissioned asset manager BlackRock to write a report on the functioning of the market and the possible design of the bond-buying programme the central bank is conducting to counter the economic impact of coronavirus.
/on.ft.com/33SDMah

Brexit

Investors exit UK equity funds on pandemic and Brexit fears; Proportion of assets British retail investors allocate to domestic stocks at record low
Siobhan Riding – FT
The proportion of retail investor assets sitting in UK equity funds has plummeted to a record low after savers withdrew nearly £13bn from the strategies on the back of Brexit and coronavirus fears.
/on.ft.com/3mMIS0n

Brexit: Seven things changing in January and others that remain unresolved
Paul Kerley – BBC News
Many aspects of the UK and the European Union’s future relationship remain uncertain – but we already know some things will change from 1 January 2021. Here are some of the most important things for individual citizens to think about, and others which still remain unresolved.
/bbc.in/362EK6l

Wall Street’s Penchant for London Remains Even as Brexit Nears
Silla Brush and Nicholas Comfort – Bloomberg
Wall Street’s big banks may have started shifting some assets from the U.K., but their European Union operations have a way to go before they can match those in the City of London. JPMorgan Chase & Co. is moving about 200 billion euros ($230 billion) of total assets to its Frankfurt-based subsidiary by the end of the year as a result of Britain’s exit from the EU. Other banks have also been beefing up operations in the bloc. The Square Mile’s current dominance is such that plenty more banks would have to shift as many assets as JPMorgan to start undermining it.
/bloom.bg/3iUIIlb

‘My bank is shutting my account because of Brexit’
Darin Graham – BBC News
“I was shocked to receive a notification saying that my bank account is going to be closed in two months,” says Sharon Clarke, a Briton who has been living in the Netherlands for 20 years and who banks with Lloyds. “They said that unless I provide a UK address, my account will be closed and I’ll have to cut up my card.” She is one of thousands of British expats living in the EU who are being told their bank accounts will be closed because of Brexit.
/bbc.in/304WudM

The battered North East firms not ready for Brexit
Simon Jack – BBC News
At any other time the prospect of the biggest change in the UK’s trading arrangements with its biggest economic partner would dominate the thinking of almost every business. But Covid-ravaged firms who have been in a fight for survival for the last six months have found it hard to find the time, money or bandwidth to give much thought to Brexit. Although the UK left the EU in January, it’s business as usual until 31 December when the transition period ends and the reality of Brexit becomes apparent.
/bbc.in/33YNlV9

Miscellaneous

Harold Evans, Crusading Editor of Sunday Times, Dies at 92
David Henry – Bloomberg
His paper exposed a U.K. intelligence agent as a Soviet spy; He became editor at Random House after moving to the U.S.
Harold Evans, the editor of the Sunday Times who broke news on British scandals before becoming an authority on the U.S. with his books “The American Century” and “They Made America,” has died. He was 92. The son of a railway driver from northern England, Evans led the newspaper for 14 years and made it a force on London’s Fleet Street with his investigative reporters. Known as the Insight team, they highlighted the damage caused by the deformity-causing drug Thalidomide, triggering a campaign that led to more compensation for its child victims and a change in British laws inhibiting the reporting on civil cases.
/bloom.bg/304ckVE

*****Here is the FT version of the story.~JJL

2021 Best Colleges in America: Harvard Leads the University Rankings; The Ivy League dominates this year’s Wall Street Journal/Times Higher Education College Rankings. But the future of U.S. universities has never been murkier.
David M. Ewalt – WSJ
The more things change, the more they stay the same—at least at some of the oldest, most prestigious universities in the U.S. That’s one of the takeaways from this year’s Wall Street Journal/Times Higher Education College Rankings, which award Harvard University the top spot for the fourth straight year, followed by its next-door neighbor, the Massachusetts Institute of Technology, in second place, and Yale University in third.
/on.wsj.com/302NXb0

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