JPMorgan to pay $200m over staff messages on personal devices

Dec 20, 2021

First Read

Hits & Takes
John Lothian & JLN Staff

Omicron is surging, Davos is called off as a result, Germany considers tightening contact restrictions to soften the looming surge and Sydney shrugs off the Covid spike. The Dutch roll out stricter lockdown measures. The U.K. is suffering hundreds of thousands of new Omicron cases. U.S. equities continue to decline before the opening as year end approaches and Covid concerns increase.

If you thought there was a lot of investment in cryptocurrency in 2021 you would be right. In fact, Bloomberg reported there was more investment in crypto in 2021 that all previous years combined.

Johnny Isakson, the longtime senator from Georgia, died at the age of 76. He stepped aside with two years left in his Senate term and Kelly Loeffler was appointed to his seat. Isakson was the Georgia state senator who succeeded Newt Gingrinch in the House of Representatives when Gingrinch resigned as speaker of the House. ~NY Times

The “Trading Charity – Act and Help” campaign at Deutsche Börse and specialist securities trading banks on the Frankfurt stock exchange raised EUR129,000 in support of nonprofit organizations. That includes EUR57,000 to the association Help for children with cancer in Frankfurt eV and the FeM girls’ house. Deutsche Börse is donating a total of EUR72,000 to the Frankfurt Children’s Office and the Frankfurt Bürgerhospital. ~ Deutsche Börse

Betting on sports in the U.S. has become a big thing, with firms like DraftKings offering easy access to bet on NFA, NBA or NHL games. However, with Covid-19 surging because of the Omicron variant and many games being postponed, bettors have to turn to some lesser athletic competitions to bet upon. Table tennis betting anyone? ~Bloomberg

COVID-19 caused logistical issues and a peppermint crop shortfall has led to a candy cane shortage this Christmas, of all things, the New York Post reported. And this is having a ripple impact on gingerbread house sales, because you can’t build one without candy canes.

I forgot to offer my congratulations to Rostin Behnam on his confirmation by the Senate as the 15th chairman of the CFTC. Congratulations, Mr. Chairman. It is a great honor and I look forward to working with you.

Outgoing CFTC Commissioner Dawn Stump took the CFTC to task for regulatory overreach into fraud in cash market transactions. Of course, I would have been more concerned with the JP Morgan case of widespread use of texts and WhatsApp on personal devices to conduct business. The avoidance of firms’ surveillance and recording technologies, widespread at that, suggests potential widespread irregularities, some of which may be illegal. I would be more concerned with the potential impact on our markets from this kind of potential manipulation than a charge that does not mean anything and a fine that will never be paid.

We posted the new edition of The Spread on Friday. The options news portion by Alex Perry is now titled “Alex Perry’s Optionstopia.” In John’s Take, I took a look at the Cboe’s report on meme stocks and their impact on equities and options trading. “European-Style Options” is the Term of the Week by tastytrade’s Jermal Chandler.

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


Fed to Reduce Bond Purchases in March; Trader Bet $65 Million in Options; Blockbuster Options Activity Recorded

OPTIONS NEWS: Fed Moves Up Bond Taper, $65 Mln Option Bet & Blockbuster Options Activity in Alex Perry’s Optionstopia.
JOHN’S TAKE: Cboe looks at Meme Stock and Options Trading in John’s Take.
TERM OF THE WEEK: “European-Style Options” is the Term of the Week with tastytrade’s Jermal Chandler.

Watch the video »


Cannabis Shares Underperform Going Into Year-End Amid U.S. Regulatory Logjam

Although adult-use sales of cannabis remain robust in U.S. states where it is legal, Nasdaq IR Intelligence analyst Saleem Daya sees continued stock underperformance across the cannabis space going into year-end, building on activity in the second and third quarters of 2021.

Listen to the podcast »


The biggest market moments of 2021; From the GameStop saga to the Archegos debacle — these are the events that shaped the year
Katie Martin – FT
This has felt like a long year in financial markets, studded with events that offered insight in to the rapidly changing nature of trading and investment. From across the Financial Times’ markets team, here is our pick of the standout moments of 2021.

***** What were your biggest moments of the year? ~JJL


The year in asset management; Dealmaking, private assets and ETFs stole the show in 2021
Harriet Agnew – FT
When John Pierpont Morgan was asked what markets would do, the American financier is said to have replied “they will fluctuate”. In a similar spirit of avoiding bold predictions for 2022, which will probably be completely wrong anyway, I would instead point you to the FT’s biggest market moments of 2021 and the big market questions for 2022.

***** In 2022 stocks will continue to fluctuate, I agree.~JJL


South Korea politicians raise concerns over crypto brain drain; Financial regulators and police officers leaving public service to join exchanges
Song Jung-a in Seoul – FT
South Korean politicians are calling on public officials to stop joining crypto companies for bigger pay cheques as exchanges race to bolster compliance divisions. Rising numbers of financial regulators and police officers are leaving the public service for crypto groups that are scrambling to comply with new regulations, according to legislators.

****** Is it a real issue? How many crypto people have you seen with holes in their heads and liquid draining out?~JJL


Friday’s Top Three
Our top story Friday was DV Group to Acquire Business of Allston Trading, a press release from DV Trading. Second was How Meme Stocks Impact Options Trading, from Cboe Insights. Third was Data spotlight – Growing number of regulated markets for crypto derivatives, from FIA Market Voice.


MarketsWiki Stats
26,680 pages; 236,597 edits
MarketsWiki Statistics


Lead Stories

JPMorgan to pay $200m over staff messages on personal devices; US regulators said that failure to preserve communications hindered investigations
Stefania Palma and Joshua Franklin – FT
JPMorgan has agreed to pay US regulators a record $200m for failing to keep records of staff communications on personal devices. The Securities and Exchange Commission on Friday said JPMorgan Securities, the bank’s broker-dealer subsidiary, will pay $125m after admitting that more than 100 employees exchanged tens of thousands of messages via WhatsApp, text messages and personal email accounts about business dealings, from at least January 2018 until November 2020.

Turkey suspends stock trading as currency strain spreads through markets; Drop in main index triggers circuit breaker as lira crisis deepens
Tommy Stubbington and Adam Samson – FT
Turkey’s main stock exchange halted trading on Friday after the country’s currency crisis, already stinging bonds, spread to equities. Borsa Istanbul announced a temporary so-called circuit breaker after its main Bist 100 index fell 5 per cent. After trading resumed, the benchmark was more than 8 per cent lower.

Why Wall Street’s top cop thinks it’s time to get tough
David Gura – NPR
In his new job as Wall Street’s top cop, Gary Gensler often thinks about one of his grandfather’s favorite aphorisms. “Ellis Tilles would say, ‘Figures don’t lie, but liars sure can figure,'” Gensler told NPR in a recent interview, noting that his grandfather immigrated to the U.S. from Lithuania at age 17. The chairman of the U.S. Securities and Exchange Commission first heard that adage when he was a kid, growing up in Baltimore.

Regulators: threats to US financial system remain elevated
Martin Crutsinger – AP
The nation’s top financial regulators told Congress Friday that threats to U.S. financial stability remain elevated even though the country has recovered from what appears to be the worst economic shocks from the pandemic. In its annual report on threats to the economy, the Financial Stability Oversight Council highlighted for the first time climate change as an emerging risk, citing among other things potential loan losses from floods and forest fires.

Crypto Attracts More Money in 2021 Than All Previous Years Combined; With digital assets and related projects exploding in popularity and many soaring in price, all manner of experimental projects are securing funding.
Crystal Kim – Bloomberg
Need more proof that this is the year digital assets went mainstream? How about the fact that venture capital funds have poured about $30 billion into crypto, or more than in all previous years combined for the little more than decade-old technology. That’s almost quadruple the previous high of around $8 billion in 2018, or the year following Bitcoin’s more than 1,300% breakthrough gain, according to transaction data compiled by PitchBook Data Inc.

How meme stocks changed Wall Street
Scott Nover – Quartz
At the start of 2021, no one would have suspected GameStop, then seen as a shopping mall relic, was about to embark on a vertiginous rally that would reconfigure Wall Street’s power dynamics. Propped up by a cadre of passionate retail investors dead set on hodling, the stock has defied the gravitational pull that eventually brings hyped-up public companies down to values in line with their business realities. Nearly a year after the WallStreetBets communities on Reddit and Discord orchestrated a massive short squeeze on GameStop shares, analysts and experts say the ordeal has not fundamentally changed the mechanics of Wall Street.

London banking job exodus to EU slows despite Brexit
Huw Jones – Reuters
The number of finance jobs shifting from Britain to the European Union due to Brexit is less than initially expected despite billions of euros in share trading moving to the bloc and London losing most of its access to EU capital markets, consultants EY said on Monday.

Davos World Economic Forum called off due to COVID – Sky News
The planned World Economic Forum in the Swiss mountain resort of Davos has been called off due to surging cases of the Omicron variant of COVID-19, Sky News reported on Monday, citing communication from organisers to delegates.

***Bloomberg, WSJ

Singaporean Faces More Charges in Alleged $1.1 Billion Scam
Chanyaporn Chanjaroen – Bloomberg
Latest accusations are tied to $124 million in cash, assets
Allegedly spent millions of dollars on jewelry, cars, artwork
A Singaporean businessman accused of masterminding a massive nickel trading scam was handed additional criminal charges tied to about $124 million in cash and assets ranging from luxury cars to jewelry and artwork. The additions brought the total number of accusations against Ng Yu Zhi to 75, according to charge sheets seen by Bloomberg News after a Singapore State Courts hearing Monday. The offenses allegedly took place between 2020 and February 2021, the documents show.

Benoît Cœuré says regulators likely to agree crypto framework in 2022; BIS innovation hub chief calls year ‘wake-up’ call for watchdogs, saying consistent regulation is needed
Laura Noonan – FT
Financial regulators should agree a global framework for crypto next year after the rapid growth of decentralised finance gave them a “wake-up call”, one of the most senior figures in the debate told the Financial Times. Benoît Cœuré, chief of the Bank for International Settlements’ innovation hub, said conversations about high level global principles for cryptocurrency and decentralised finance had intensified in recent months.

Wellness Exchange

Europe Braces for More Covid Lockdowns as U.K. Cases Surge
Corinne Gretler – Bloomberg
European nations desperate not to repeat the U.K. pattern; Netherlands enacts new lockdown, Germany tightens travel curbs
Europe’s biggest countries are introducing more curbs to fight a surge in Covid-19 infections, from another lockdown in the Netherlands to stricter travel restrictions at the height of the holiday period. The continent faces a critical week of decisions that could disrupt people’s Christmas and New Year’s plans as the spread of the highly-transmissible omicron strain slams already weary populations. At the same time, a debate continues to rage over whether the omicron variant produces milder illness than previous strains, and how to effectively combat the mutation.

European countries impose travel curbs to slow Omicron’s spread; The Netherlands, Germany and Austria are among countries that have introduced restrictions
Andy Bounds and Erika Solomon – FT
European countries are tightening restrictions to reduce the spread of the Omicron coronavirus variant after the Netherlands reimposed a strict nationwide lockdown on Saturday. Germany set new entry requirements for people from the UK and several other European countries, with Berlin on Sunday designating the UK a “virus variant region”, triggering the country’s toughest travel regulations.

Don’t Be Surprised When You Get Omicron; America is in for a lot more breakthrough infections. Here’s what to do if you fall sick.
Yasmin Tayag – The Atlantic
My breakthrough infection started with a scratchy throat just a few days before Thanksgiving. Because I’m vaccinated, and had just tested negative for COVID-19 two days earlier, I initially brushed off the symptoms as merely a cold. Just to be sure, I got checked again a few days later. Positive. The result felt like a betrayal after 18 months of reporting on the pandemic. And as I walked home from the testing center, I realized that I had no clue what to do next.

What to Do if You Test Positive for Covid-19 as Omicron Variant Surges; Whom should you tell, how long should people quarantine, and when should you call your doctor? Here are answers to your questions.
Sumathi Reddy – WSJ
The highly contagious Omicron variant of Covid-19 is gaining traction in the U.S. and more people are testing positive for the virus, including people who have been vaccinated or boosted. After nearly two years of pandemic, figuring out what you’re supposed to do after receiving a positive test result is still tricky, and varying vaccination status among the population makes the questions more complex.

Omicron cases doubling in 1.5 to 3 days in areas with local spread – WHO
Stephanie Nebehay – Reuters
The Omicron coronavirus variant has been reported in 89 countries and the number of cases is doubling in 1.5 to 3 days in areas with community transmission, the World Health Organization (WHO) said on Saturday. Omicron is spreading rapidly in countries with high levels of population immunity, but it is unclear if this is due to the virus’ ability to evade immunity, its inherent increased transmissibility or a combination of both, the WHO said in an update.

— The CDC has over-counted the number of people who are partially vaccinated by regularly including second doses and boosters as first jabs, report says – Business Insider
— Moderna says booster dose appears protective against Omicron – Reuters
— Israel bans travel to U.S. over Omicron concerns
— Novavax expected to start delivering COVID-19 shots to EU in first quarter 2022 -EU source – Reuters
— U.S. administers 495 mln doses of COVID-19 vaccines – CDC – Reuters
— Germany considers contact restrictions to soften looming COVID-19 wave – Reuters
— The Dutch Roll Out Stricter Lockdown Measures as Omicron Spreads – Bloomberg
— Moderna Covid booster produces strong antibody response against Omicron – FT
— Moderna Says Covid-19 Booster Dose Works Against Omicron Variant in Lab Tests — WSJ
— Is That Sniffle a Cold? Or Is It Covid? In New York City, the slightest runny nose has people canceling holiday gatherings and lining up for hours outside coronavirus testing centers. – NY Times
— Covid Live Updates: Most Vaccines Unlikely to Prevent Infection from Omicron, Studies Show – NY Times

Exchanges, OTC and Clearing

NYSE US Exchanges to Close in Observance of the Christmas Holiday
In observance of the Christmas holiday, 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 Friday, December 24, 2021.

Micro Ether Futures Surpass 100,000 Contracts Traded
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that Micro Ether futures volume surpassed 100,000 contracts in the new contract’s first two weeks of trading. “Participation in our Micro Ether futures contract has grown rapidly since its launch two weeks ago, and we are encouraged by the strong customer adoption and support thus far,” said Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products. “At 1/500th the size of our larger Ether futures, this new, smaller contract allows traders of all sizes to better manage their Ether price risk in an efficient, cost-effective way.”

State Street and LSEG Expand Relationship
London Stock Exchange Group
State Street Corporation and London Stock Exchange Group, today announced their agreement to extend their relationship. Building on their longstanding relationship, the agreement includes a wide range of capabilities to support State Street across its business, enhancing its offerings to clients.

Estrima S.p.A. lists on Euronext Growth Milan
38th listing of 2021 on Euronext Growth Milan; Estrima S.p.A. brings the total number of companies listed on Euronext Growth Milan to 169; Total placement volume of the offering equal to EUR15.0 million
Borsa Italiana, part of the Euronext Group, today congratulates Estrima S.p.A. on its listing on Euronext Growth Milan. Estrima S.p.A. is an Italian player active in the electric micro-mobility sector that carries out R&D, design, production and marketing of vehicles under the Birò brand, the smallest, 100% electric, four-wheeled vehicle in the world. Estrima S.p.A. represents the 38th listing since the beginning of the year on Borsa Italiana’s market dedicated to small and medium sized companies and it brings the total number of firms currently listed on Euronext Growth Milan to 169.

CO2 Capsol lists on Euronext Growth Oslo
Market capitalisation of approximately NOK 1.38 billion; 204th listing on Euronext markets and 67th on Oslo Børs markets in 2021
Oslo Børs, part of the Euronext Group, today congratulates the Norwegian carbon capture company CO2 Capsol on its listing on Euronext Growth Oslo (ticker: CAPSL). This is the 67th listing on Oslo Børs markets so far this year, and the 59th on Euronext Growth Oslo.

EURO STOXX® 50 Index Options and DAX® and Mini DAX® Index Futures: Introduction of additional expirations
With effect from 24 January 2022, the Management Board of Eurex Deutschland took the following decisions: EURO STOXX 50® Index Options (OESX): Introduction of five further monthly expirations
DAX® and Mini-DAX® Index Futures (FDAX/FDXM): Introduction of nine further quarterly expirations

Direct Market Access (DMA): Clarification regarding electronic DMA order validation
This circular outlines important information regarding changes to the Direct Market Access (DMA) flow validation at Eurex Deutschland (Eurex) and in particular the usage of the field “OrderOrigination” (DMA Flag). This information is only relevant for Exchange Participants intending to grant another person (Indirect Trading Participant) direct access to the Eurex market via its infrastructure for the transmission of orders pursuant to § 61 of the Exchange Rules of Eurex Deutschland (“DMA Providers”). Starting from 31 January 2022, the Eurex T7 system will reject orders, where tag 1724 “OrderOrigination” is set to “true”, i.e. “5”, but the Exchange Participant is not authorized as DMA Provider with Eurex.

Trading Charity at the Frankfurt Stock Exchange brings in EUR 129,000 in donations
Deutsche Börse
With the “Trading Charity – Act and Help” campaign, Deutsche Börse and the securities trading banks (“specialists”) active on the Frankfurt stock exchange raised a donation of EUR 129,000. The stock exchange operator and the nine trading houses support a total of four non-profit organizations: The specialists donate a total of EUR 57,000 to the association Help for children with cancer in Frankfurt eV and the FeM girls’ house. Deutsche Börse is donating a total of EUR 72,000 to the Frankfurt Children’s Office and the Frankfurt Bürgerhospital.

— January 2022 Delivery Date Memo – Effective December 17, 2021 — CME


JPMorgan develops blockchain system for Siemens’ payments; Banks are looking for new applications for digital ledger technology
Joshua Franklin – FT
US banking giant JPMorgan Chase has partnered with Siemens to develop a blockchain system for the German industrial group’s payments, in what the two companies said was a first-of-its-kind application.

The TRADE predictions series 2022: the cloud; The market has seen numerous major participants and exchange operators commit to their cloud migration in the last few months and these participants predict this trend will continue into next year.
The Trade
Next year will be the year when financial markets firms start putting real time and money into reimagining their trading operations for an inevitable cloud-based future. Exchanges such as CME – recently partnered with Google Cloud – and Nasdaq – recently partnered with AWS – have already announced their intentions to move their matching engines. Firms need to decide whether they pursue a public, private or hybrid model.


Unified cyber security task force by March: Source
Pankaj Doval – The Times of India
Alarmed at the growing danger from cyberattacks and threats to national security, the government is in the process of setting up a unified national-level cyber security task force with a special focus on the risks emanating from the telecom sector. The move comes at a time when the government is also finalising a “trusted sources” list for procuring telecom gear as the country moves towards 5G and other sophisticated telecom and immersive technologies, but with negligible procurement from China and other countries inimical to India’s security interests.

Cybersecurity Saas company ZeroFox to go public via merger with SPAC in deal valued at about $1.4 billion
ZeroFox Inc., a cybersecurity software-as-a-service company, said Monday it is going public via a merger with special-purpose acquisition corporation L&F Acquisition Corp. LNFA, +0.40% in a deal with an expected equity value of about $1.4 billion. As part of the deal, ZeroFox will acquire IDX, a digital privacy protection and data breach response service company. The new company will be renamed ZeroFox Holdings Inc. and is expected to trade under the ticker “ZFOX.”

Senate Confirms John Sherman as Pentagon’s Tech Chief
Brandi Vincent – Nextgov
He’s poised to steer the Pentagon through a maze of cybersecurity, AI and data challenges.
The Senate on Tuesday confirmed John Sherman to serve as the Defense Department’s permanent chief information officer.
When he’s sworn in, the long-time national security- and technology-focused federal employee from rural Texas will steer major modernization initiatives that span the Pentagon’s massive enterprise.

Financial regulators propose joint standard on minimum requirements for cybersecurity and cyber resi : Clyde & Co
Clyde & Co.
On 15 December 2021, the Prudential Authority (PA) and Financial Sector Conduct Authority (FSCA) jointly published a proposed Joint Standard titled “Cybersecurity and Cyber Resilience Requirements” in terms of section 107 and 108(1) of the Financial Sector Regulation Act, 9 of 2017.
The objective of the Draft Joint Standard is to ensure that financial institutions have adequate cybersecurity and cyber resilience practices and processes.

Cybersecurity spending trends for 2022: Investing in the future
Mary K. Pratt – CSO Online
Enterprise spending on cybersecurity is expected to hold steady in 2022, as studies show that nearly all CISOs are getting a budget increase or level funding in the new year—only a small fraction of security chiefs will see their budgets fall.
CSO’s 2021 Security Priorities Study found that 44% of security leaders expect their budgets to increase in the upcoming 12 months; that’s a slight bump-up from the 41% who saw their budgets increase in 2021 over 2020. Fifty-four percent of respondents say they expect their budgets to remain the same over the next 12 months. Only 2% said they’re expecting a decrease—a much smaller figure than the 6% who saw their spending drop from 2020 to 2021.

Ransomware persists even as high-profile attacks have slowed
In the months since President Joe Biden warned Russia’s Vladimir Putin that he needed to crack down on ransomware gangs in his country, there hasn’t been a massive attack like the one last May that resulted in gasoline shortages. But that’s small comfort to Ken Trzaska.


Bitcoin ‘May Not Last Much Longer,’ Economist Says; ‘I don’t think it’s going to have any fundamental value other than whatever investors’ faith leads it to have,’ said Eswar Prasad.
Dan Weil – The Street
While many investors have gone gaga over bitcoin in recent months, Cornell University trade policy professor Eswar Prasad is more circumspect. “Bitcoin itself may not last that much longer,” he told CNBC. “Given that bitcoin is not serving well as a medium of exchange, I don’t think it’s going to have any fundamental value other than whatever investors’ faith leads it to have.”

India Set to Defer Introduction of Crypto Bill in Parliament
Vrishti Beniwal and Shruti Srivastava – Bloomberg
India’s much-awaited cryptocurrency bill is unlikely to be presented in the ongoing session of parliament as the government has yet to finalize details of the legislation, according to people with knowledge of the matter. Prime Minister Narendra Modi’s administration wants wider consultations on the matter before finalizing the rules to govern digital currencies and there isn’t enough time as the current session ends Dec. 23, the people said, asking not to be identified as the discussions are private. Also, the Cabinet hasn’t approved the proposed legislation.

Crypto and Its Many Fees: What to Know About the Hidden Costs of Digital Currency
Crypto networks are run on a voluntary basis and fees are incentives for keeping them alive. Here are some FAQs.
Paul Vigna – WSJ
Cryptocurrencies are designed to trade across online networks, without the need for banks or government support. Many new investors are surprised, however, to learn there are costs to using digital cash, including unexpected fees. Below are some frequently asked questions.

Robert Mondavi Bids for Relevance With NFT, Art and a Porcelain Bottle


Vaccine Mandates Win in Court, Not a Moment Too Soon; With the omicron variant surging in the U.S., requiring shots for workers will save lives.
Timothy L. O’Brien – Bloomberg
A federal appeals court overseeing the consolidation of dozens of legal challenges to the Biden administration’s Covid-19 testing and vaccine mandates for businesses ruled on Friday evening that the White House’s effort can move forward.

Rahm Emanuel confirmed as Japan ambassador
The Senate confirmed former Chicago Mayor Rahm Emanuel to be the U.S. Ambassador to Japan. Emanuel—a former congressman, chief of staff to former President Barack Obama, Chicago mayor and long-time power broker in Democratic politics—lost some support in his own party due to his handling of the Laquan McDonald shooting in 2014.

Germany Picks Bundesbank Veteran Nagel as Central Bank Chief
Alexander Weber and Birgit Jennen – Bloomberg
He used to lead market operations at the Frankfurt institution; Weidmann resigned and will leave post at end of December
Germany’s new coalition government picked Joachim Nagel, a former Bundesbank senior official, as the central bank’s next chief, touting his ability to help tackle soaring inflation.


Retail investors riding the bull market could spur a populist backlash; Democratisation of markets is only an unalloyed good if the risks are managed sensibly
Ruchir Sharma – FT
Arguably, the bull market of 2021 is the same one that started in 2009, with one big change. Retail investors, who sat on the sidelines for so many years, rushed in after the pandemic-induced flash crash last year and have since been buying every dip with mounting enthusiasm. They represent not only a new cohort of investors but a new voting bloc, increasing the risk of populist backlash should one of the dips turn into another bear market.

Senators Own Cryptocurrency Assets as They Shape Rules for Industry Sens. Pat Toomey and Cynthia Lummis, members of Senate Banking Committee, say their cryptocurrency experience gives them crucial expertise
Chad Day, Julie Bykowicz and Paul Kiernan – WSJ
Sens. Pat Toomey (R., Pa.) and Cynthia Lummis (R., Wyo.) sit on the powerful Senate Banking Committee and have been advocates for a light government touch toward the growing—and largely unchecked—cryptocurrency market. They also own cryptocurrency assets. Ms. Lummis’s roughly $250,000 of bitcoin makes her the most heavily invested U.S. lawmaker in the digital asset. Mr. Toomey has smaller holdings in crypto-related investment vehicles. Together they are the only two senators with such investments, according to a Wall Street Journal review of public financial disclosures.

AOC pushed back on Nancy Pelosi’s stance against banning congressional stock-trading: ‘We write major policy and have access to sensitive information’
Bryan Metzger – Business Insider
Democratic Rep. Alexandria Ocasio-Cortez pushed back against House Speaker Nancy Pelosi’s rejection of a ban on members of Congress from trading and holding individual stock while in office. In a series of tweets on Friday evening, Ocasio-Cortez reiterated her prior opposition to members trading individual stock while in office, writing that the practice is inappropriate when members “write major policy and have access to sensitive information.”


Federal Court Orders Washington State Feedyard to Pay $263 Million for Phantom Cattle Fraud Scheme and Violating Position Limits
The Commodity Futures Trading Commission announced today that Chief Judge Stanley A. Bastian of the U.S. District Court for the Eastern District of Washington issued an order granting a permanent injunction against Easterday Ranches, Inc., and requiring it to pay a combined $263 million in restitution and civil monetary penalty in connection with a phantom cattle fraud scheme.

Dissenting Statement of Commissioner Dawn D. Stump Regarding Settlement with Easterday Ranches, Inc.
Easterday Ranches, Inc. (a cattle feedyard) made false statements to, and violated position limits established by, a futures exchange regulated by the Commission. Accordingly, the Commission appropriately brought (and today settles) charges against Easterday Ranches of violating provisions of the Commodity Exchange Act (“CEA”) that specifically address these types of misconduct.

SEC delays decisions on Bitwise and Grayscale’s Bitcoin ETFs; The SEC now expects to decide whether to approve or disapprove Bitwise and Grayscale’s Bitcoin exchange-traded offerings in early February.
The United States Securities and Exchange Commission continues to delay decisions on Bitcoin (BTC) exchange-traded funds (ETF), issuing two fresh deadline extension notices. On Wednesday, the SEC postponed two major Bitcoin exchange-traded offering proposals, including NYSE Arca’s “actual” Bitcoin ETF, named Bitwise Bitcoin ETP Trust, and Grayscale Bitcoin Trust’s Bitcoin ETF.

SET chief wary of planned tax on stock trades; Planned 0.1% on monthly volume more than B1m seen affecting a third of trades
Bangkok Post
Stock trading volume will be impacted if the government introduces a transaction tax on securities trades on the Stock Exchange of Thailand, the bourse president said on Friday.

StanChart Hit With $61 Million Fine After Spreadsheet Error
Harry Wilson – Bloomberg
Lender made reporting errors on U.S. dollar liquidity metric; Penalty is highest-ever fine in a PRA-only enforcement case
Standard Chartered Plc has been handed a record fine by the U.K.’s top banking regulator after a spreadsheet error resulted in the emerging markets-focused lender overestimating its access to U.S. dollar funding. The Bank of England’s Prudential Regulatory Authority imposed a 46.6 million pound ($61 million) penalty on the lender for five reporting errors between March 2018 and May 2019, according to a statement Monday. That was compounded in one case by Standard Chartered only notifying the PRA of a miscalculation after a four-month internal investigation.


JP Morgan fined $125 million over staff using personal emails, texts and WhatsApp for securities business matters; The Securities and Exchange Commission highlights “widespread and longstanding” failures by JP Morgan Securities in communication and record-keeping violations.
Jonathan Watkins – The Trade
JP Morgan has been landed with a $125 million penalty over failings in preserving written communications, as staff were found to be using personal devices, text messages, WhatsApp, and their own email accounts to discuss securities-related business matters.

CSDR: An industry united, a regulation divided; It has been a bumpy road on the journey to implementing CSDR in Europe, but with communication from legislators over the delayed introduction of mandatory buy-ins, it’s time to assess where we stand.
Jonathan Watkins – The Trade
And so, we finally have clarity on the Settlement Discipline Regime (SDR) in Europe. The three aspects of the regulation under the Central Securities Depositories Regulation (CSDR) – mandatory buy-ins, penalties, and failed trades reporting – will be implemented at different times in the coming years.

ESMA issues no-action relief for buy-in regime amid deadline uncertainty; The official delay of buy-ins under CSDR is not expected to enter force ahead of the February deadline, so ESMA tells national regulators not to act.
Jonathan Watkins – The Trade
Europe’s markets watchdog has asked national regulators not to act through supervisory actions in relation to the application of the buy-in regime under the Central Securities Depositories Regulation (CSDR). The announcement comes as great relief to the industry, as it is unlikely an official delay of the rules will be adopted before the 1 February 2022 deadline.

James E. Grimes Named Chief Administrative Law Judge at SEC
The Securities and Exchange Commission today announced that James E. Grimes has been named the agency’s Chief Administrative Law Judge. Judge Grimes will lead the SEC’s impartial Office of Administrative Law Judges that conducts hearings, issues initial decisions, and adjudicates matters in administrative proceedings before the agency. Judge Grimes succeeds Brenda Murray, who retired after 25 years of service as the SEC’s Chief Administrative Law Judge.

Staff Statement Regarding Form CRS Disclosures; Standards of Conduct Implementation Committee
[1]Form CRS is a brief relationship summary designed to help retail investors make informed choices regarding what type of relationship—brokerage, investment advisory, or a combination of both—best suits a retail investor’s particular circumstances and investment objectives. SEC-registered broker-dealers and investment advisers (each, a “firm”) offering services to retail investors must file with the Commission and provide to retail investors a relationship summary containing plain English disclosures on specific topics under standardized headings and in a prescribed order. The relationship summary is intended to promote transparency, comparability and better-informed decision-making, through clear, concise disclosures, and by summarizing in one place selected information about a particular firm. This format is designed to allow retail investors to more easily compare different firms’ services, fees, conflicts of interest, disciplinary history and other important information.

FINRA Updates the OTC Equities High Price Dissemination List
FINRA is publishing its quarterly OTC Equities High Price Dissemination List for the third quarter of 2021. This updated list of OTC equity securities eligible for trade report dissemination for trades of fewer than 100 shares is effective as of December 17, 2021. To view changes, visit the Daily List: Security Attribute Changes page, select the “Unit of Trades” filter and enter December 16, 2021 as the “Start” date and December 17, 2021 as the “End” date.

CFTC Orders JPMorgan to Pay $75 Million for Widespread Use by Employees of Unapproved Communication Methods and Related Recordkeeping and Supervision Failures
JPMorgan Admits Employees Used Texts and WhatsApp on Personal Devices to Conduct Business
The Commodity Futures Trading Commission today issued an order simultaneously filing and settling charges against JPMorgan Chase Bank, N.A., J.P. Morgan Securities LLC, and J.P. Morgan Securities plc (collectively, JPMorgan), for failing to maintain, preserve, and produce records that were required to be kept under CFTC recordkeeping requirements, and failing to diligently supervise matters related to its businesses as CFTC registrants. JPMorgan admits the facts in the order and acknowledges that the conduct violated the Commodity Exchange Act (CEA) and regulations.

Statement on supervision of commodity derivatives position limits
In December 2020, we published a Supervisory Statement setting out our approach to operating the MiFID markets regime after the end of the EU withdrawal transition period. This approach included a change to our supervisory and enforcement actions for commodity derivative position limits in the light of evidence of potential constraints on market functioning highlighted during the coronavirus (Covid-19) crisis. Liquidity providers’ ability to take on positions was impaired because of position limits, at a time when liquidity provision was most critical for the market

NFTs are taking over and selling for millions—here’s how to make and sell one
Felicia Hou – Fortune
From a $69 million piece of artwork to a $379,000 song created using the genetic sequence of COVID-19, NFTs are the Internet’s latest obsession. And they have the potential to make real money, too— the CEO of crypto exchange Coinbase said last month that the NFT market could quickly surpass the company’s cryptocurrency trading business. So how can someone get in on the action? Here’s what you should know.

Investing and Trading

Forget Making Money in IPOs. They’re Europe’s Biggest Losers
Kat Van Hoof and Swetha Gopinath – Bloomberg
THG, InPost shares plunge after high-profile listings; E-commerce providers hit as economies reopened from pandemic
One of the few groups to lose out in this year’s hot European stock market has been investors who bought overpriced initial public offerings. Half of the year’s 10 biggest decliners in the Stoxx Europe 600 Index went public in the past 15 months, with THG Plc, Auto1 Group SE, SA, Deliveroo Plc and InPost SA all slumping 39% or more, even as the benchmark surged 19%. That’s not a good look for Europe’s IPO market, which is clocking its busiest year since 2007 and preparing for a blockbuster start to 2022.

Dominic Barton appointed Rio Tinto chair; Former McKinsey boss will succeed Simon Thompson after leaving his post as Canada’s ambassador to China
Neil Hume – FT
Canada’s departing ambassador to Beijing has been appointed chair of Rio Tinto, the global miner that draws the bulk of its revenues from supplying China’s steel industry with iron ore.

Environmental, Social and Corporate Governance

China’s Solar Giants Fall After U.S. Climate Plan Failure
Bloomberg News
Solar firms in China fell Monday after a $2 trillion U.S. economic plan with crucial climate provisions suffered a potentially fatal setback in Congress. Trina Solar Co. fell as much as 7.7% and Longi Green Energy Technology Co. slipped as much as 3.3% in Shanghai. The Build Back Better Act, rejected in a surprising decision by Senator Joe Manchin, would have included a record $550 billion for climate measures in the U.S., the world’s second-biggest market for renewable energy after China.

Investors Balk at Plan to Buy Coal Mines and Close Them, Citigroup and partners shelved investment fund they said would put end date on thermal-coal mines to lower carbon emissions
Ben Dummett, Joe Wallace – WSJ
Citigroup Inc. C -2.59% and its partners abandoned the creation of a fund that aimed to shorten the life of coal mines after the group struggled to convince investors of the plan’s green-energy merits, according to people familiar with the matter.


How to Trade Futures on Tradestation
Jay and Judy Hawk – Benzinga
Futures trading offers significant advantages to traders who seek to diversify their portfolios and take advantage of the constantly changing world economy. Futures allow traders access to highly liquid markets and to capitalize on trading opportunities round the clock with increased leverage.

Jefferies CEO Handler says he tested positive, isolated for COVID
Jefferies Financial Group Inc (JEF.N) Chief Executive Officer Richard Handler said on Instagram on Sunday that he had tested positive for COVID three days after deciding this month to ask Jefferies staff to work from home again.

Deutsche Bank Replaces Spain CEO Amid Revamp of Europe Units
Rodrigo Orihuela, Macarena Munoz Montijano, and Steven Arons – Bloomberg
Deutsche Bank AG appointed a new chief executive officer for its Spanish unit amid a revamp of its operations in several European countries.

BMO Agrees to Buy BNP’s Bank of the West for $16.3 Billion
Alexandre Rajbhandari – Bloomberg
BMO to finance the takeover mainly with excess capital; BNP Paribas plans to return some cash through buyback
Bank of Montreal agreed to buy BNP Paribas SA’s Bank of the West unit for $16.3 billion, extending its presence in the U.S. and giving the French seller a windfall before its new strategic plan.


Sequoia’s stealthy wealth management fund shakes up its portfolio; Partner-backed Sequoia Heritage beat its own target to triple investor capital in a decade
Miles Kruppa – FT
Sequoia Capital, one of Silicon Valley’s largest venture firms, has quietly built a $14bn fund to invest the wealth of its partners and start-up founders. Now the fund’s managers are offloading some of the high-flying tech companies that have made Sequoia wealthy.


Thailand May Impose Stock-Trading Tax to Lift Government Revenue
Anuchit Nguyen – Bloomberg
Thailand’s Ministry of Finance is considering imposing a tax on stock trading to boost government revenue after the novel coronavirus pandemic and economic slowdown slashed its receipts.

Tips for Surviving Hong Kong’s 21-Day Covid Quarantine; Christmas in isolation wouldn’t be so bad if I could get a decent cup of coffee.
Shuli Ren – Bloomberg
I recently had the good fortune to take a five-week work trip to meet colleagues, friends and contacts in London and New York. But the price I had to pay, upon my return to Hong Kong, was the city’s mandatory three-week hotel quarantine.

Day Traders Jump Into India Stocks as They Start to Collapse
Nupur Acharya and Ishika Mookerjee – Bloomberg
First time investors have helped drive gains in the Sensex; Market strategists say Indian stocks have become pricey
Nithin Kamath, the chief executive officer of India’s largest online brokerage, estimates that his platform handles 10 to 12 million orders on the average day. They’re increasingly from first-time investors under the age of 30, executing dozens of trades at lightning speed off their mobile phones.

China Offshore Bond Defaults Hit Record in December
Bloomberg News
December is poised to be a record month for Chinese offshore corporate defaults after missed payments by indebted companies including China Evergrande Group and Kaisa Group Holdings Ltd.

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The Spread

Volatility ETFs Aren’t Flashing Signs of Market Fear

Observations & Insight The FIA is seeking fintech startups for its annual fintech showcase, the Innovators Pavilion, at the Futures and Options Expo in Chicago November 14-15. All selected fintech startups will participate in a pitch competition and one will be...

Past JLN Newsletters

SEC charges 11 in ‘massive’ crypto Ponzi scheme

SEC charges 11 in ‘massive’ crypto Ponzi scheme

First Read Hits & Takes John Lothian & JLN Staff Here is your mood brightener of the day from a story in The New York Times by Farnaz Fassihi and Michael Levenson. The lead paragraph reads: The secretary general of the United Nations warned on Monday that...

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