To Start A Revolution, The Small Exchange Needs Revolutionaries
John Lothian – JLN
An Old Idea To Start A New Revolution
In a recent JLN interview, Donnie Roberts, the CEO of the Small Exchange, said he “want(ed) people to join a bit of a revolution that we feel we have started.” If Roberts is going to succeed, he is going to have to put on his Phrygian cap and start a real revolution.
Luckily for him, there is a revolution in retail trading happening right now.
One of the elements that has propelled the Small Exchange to its early success is also the thing that could hold it back from a revolution. That element is its strategic owners, who have strong ties to the dominant exchanges. Small Exchange’s strategic investors, like Citadel, PEAK6, Jump Trading, IBKR and Phillip Capital, need to balance their revolutionary zeal with their much larger business interests in the dominant exchanges, e.g., CME Group and Intercontinental Exchange.
For the rest of this commentary, click HERE.
Hits & Takes
John Lothian & JLN Staff
Do you have a ridiculous moment you have caught on video? You might have a fortune residing in your phone and not know it. A YouTube video titled “Charlie bit my finger” has sold as a non-fungible token for over $760,000. That is right, you might be able to pay off your home with a video sitting on your phone. — NY Post
Intercontinental Exchange, Inc. set a new open interest record of approximately 84.5 million contracts on May 21, 2021, surpassing the previous record set on March 12, 2020. — ICE
Attorney Douglas E. Harris has written a piece for the Futures and Derivatives Law Report, Volume 41, Issue 5 from Thomson Reuters titled “Boosting Financial Services C-Suite and Board Diversity is a Business and Regulatory Imperative.”
Matt Raebel has resigned from John J. Lothian & Company, Inc. He contributed to CryptoMarketsWiki and MarketsWiki and recently served as an editor of JLN Options. He also was the face of The Spread weekly video series and produced podcasts on crypto-related content.
Sarah Rudolph is stepping in to help Jeff Bergstrom edit JLN Options. Suzanne Cosgrove will take over the writing of The Spread. Thom Thompson continues moving content from CryptoMarketsWiki to MarketsWiki. We have not made a decision yet on the presenter for The Spread.
Note to Steve Cohen, owner of the New York Mets: I am a free agent and willing to play in New York if you run out of players and get really, really desperate for replacement players. — NY Post
Trading Technologies made their weekly match to the JLN MarketsWiki Education GoFundMe campaign. Thank you to TT for their match and pledge to match. Thank you to all who have given and all who have yet to give. Support our efforts to preserve industry history by giving to our GoFundMe campaign.
Morningstar Indexes’ Amelia Furr and Equileap co-founder Diana van Maasdijk will host a free webinar this morning at 9:00 a.m. CT on global trends in gender diversity policy — and the role the corporate sector can play in advancing the cause for equality. Register for “Investing Inclusively: Building Shareholder Value Through Gender Diversity,” here. ~ SC
Register for the virtual Asset Management Derivatives Forum
FIA and SIFMA AMG are bringing you a virtual take on the Asset Management Derivatives Forum in 2021. Join us for virtual programming on June 8 and 9, during which market participants from all sides of a trade and leading regulators will examine the latest developments impacting the use of derivatives by asset managers. This year’s keynote speakers are Dan Berkovitz, commissioner at the Commodity Futures Trade Commission, Catherine McGuinness, chair of the policy and resources committee for the City of London, and Allison Herren Lee, commissioner at the U.S. Securities and Exchange Commission. Learn more and register!
Meet the Hedge Fund Boss Who Just Bought Tribune’s Newspapers; Heath Freeman, president of Alden Global Capital, is known for pushing big cost reductions, which he says help to save newspapers
Lukas I. Alpert and Cara Lombardo – WSJ
Six weeks ago, it seemed as if hedge fund boss Heath Freeman was losing his grip on Tribune Publishing Co. TPCO 0.41% But he never let go—and now he has his prize. Mr. Freeman, the president of Alden Global Capital LLC, is poised to become the leader of the second-largest U.S. newspaper company, following the firm’s takeover of Tribune. Shareholders voted Friday to approve a sale to Alden, which previously had a roughly 32% stake in the company.
*****We will see what is left of the Chicago Tribune when he is done making his changes. The Tribune of today is a shadow of its former self as a world-class newspaper.~JJL
Monday’s Top Three
Our top story on Monday was Bloomberg’s Hong Kong Exchange’s New CEO Is Put on Cleanup Duty, about the new head of HKEX, Nicolas Aguzin. Second was a repeat from the previous top three, Kenilworth mansion with ties to World’s Fair takes 9 years to sell, from Crain’s Chicago business, about the former home of Gerald Putnam. Third was the New York Times’ How Humanity Gave Itself an Extra Life, about how the human life span doubled between 1920 and 2020.
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|CryptoMarketsWiki, our archive of the cryptocurrency and blockchain world, is going strong and keeping pace as this area of finance grows and evolves.Recently Updated Pages
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Libor Replacements Multiply in Shift That Could Fracture Markets
Alex Harris – Bloomberg
Ameribor, BSBY and others look to carve out niche post-Libor; Wall Street content to support development of multiple rates
A slew of newer and lesser known reference rates are staking their claim to a share of the post-Libor landscape as the outlook for the space grows increasingly fractured. Once largely considered afterthoughts in the race to replace the London interbank offered rate, a clutch of upstart challengers, from Ameribor and BSBY to ICE’s Bank Yield Index, have been gaining traction, or at least garnering more attention, in recent weeks. Their ascent comes as borrowers and bankers increasingly question whether the Federal Reserve’s long-preferred replacement, the Secured Overnight Financing Rate, is the best option for the multitude of markets that must ditch scandal-tainted Libor by year-end.
HKEX’s new chief Aguzin vows to keep a steady course connecting China with the world’s markets, focus on sustainability; Hong Kong’s bourse operator and its unit London Metal Exchange will support China’s market opening and green investment initiatives; LME will launch four new products to support sustainable investment such demand for metals used in making electric vehicles
Enoch Yiu – South China Morning Post
Nicolas Aguzin, the new chief executive of Hong Kong Exchanges and Clearing Limited.
Hong Kong will provide Chinese investors with financial products and the platform to sharpen its role as the gateway between the world’s second-largest economy and the global capital markets, said Nicolas Aguzin, the new chief executive of the Hong Kong Exchanges and Clearing Limited (HKEX).
Don’t Bet Against Beijing’s Efforts to Smother Bitcoin; China has several reasons to further crack down on cryptocurrencies
Mike Bird – WSJ
Bitcoin has recovered some of its losses after Chinese Vice Premier Liu He’s pledge to crack down on mining and trading on Friday. But investors should be cautious with all crypto as far as China is concerned. The government has its own reasons for smothering the sector, and a track record that suggests it will follow through effectively. The first and most obvious reason is the stated one: to limit the risk of financial excesses becoming a broader social issue.
Bitcoin’s True Social Cost Is Impossible to Ignore; The cryptocurrency’s future growth is now linked inextricably to real-world sustainability issues that go beyond carbon.
Lionel Laurent – Bloomberg
As Bitcoin attempts its latest price rebound after a 40% slump in three days, its long-term potential as an investable asset is becoming linked inextricably to its cost for the rest of society. This is increasing the pressure on policy makers to do more. The U.S. Federal Reserve’s Lael Brainard nodded to this on Monday, when she warned that a proliferation of alternative payments systems might lead to fragmentation and increased costs for households and businesses, suggesting there was a need to expand crypto’s regulatory “perimeter.”
The Hidden Risk Beneath Crypto’s UnFunnyNotMoney; There’s a danger that market neophytes are confusing trading with investing.
Mark Gilbert – Bloomberg
One reassuring aspect of the rollercoaster ride that saw Bitcoin lose half its value in less than two months is the immunity of the real financial world to contagion from crypto tokens, which I increasingly think of as UnfunnyNotMoney. But there is a danger that speculators, particularly if they’re young and inexperienced, have a “once bitten, twice shy” reaction to losses that could harm their propensity to allocate cash to long-term savings.
Brainard Lays Out Cost Benefits of Central Bank Digital Currency
Craig Torres – Bloomberg
CBDC could foster retail payments innovation and inclusion; Cautions new private money could pose financial-stability risk
Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast. The Federal Reserve is stepping up its research on digital currencies, Governor Lael Brainard said, amid growing demand for digital payments. Brainard said three other topics — the growing role of digital private money, plans for using digital currency for cross-border payments by foreign central banks, and possible benefits for financial inclusion — have sharpened the Fed’s focus on central bank digital currency.
Deutsche Bank’s Nightmare Decade Is Gone, But Not Yet Forgotten; The firm is sparking some hope after years as the sick man of European finance.
Steven Arons, Nicholas Comfort and Donal Griffin – Bloomberg
On the day before one of the biggest margin calls in history, Deutsche Bank AG chief Christian Sewing joined an urgent meeting with a not-unfamiliar message: there was a problem, and billions of dollars were at stake. But as executives on the late-March call briefed him on the bank’s exposure to Archegos Capital Management, this time it wasn’t all bad news. Risk managers had been concerned by the family office’s rapid growth for some time, and had been collecting additional collateral. And the firm’s traders stood ready to quickly offload the slumping assets.
BoE’s post-Libor clearing plan leaves yen swaps in limbo; Sonia and EURSTR will be mandated for clearing, while Tonar must wait until liquidity settles Risk.net montage
Helen Bartholomew – Risk.net
Japanese yen swaps will be exempt from mandatory clearing in the UK from December 6 under new proposals from the Bank of England designed to cement the shift away from Libor rates. The plans, which were released for consultation on May 20, would see most Libor swaps removed from the UK’s clearing obligation for over-the-counter derivatives on a staggered schedule ahead of the benchmark’s year-end cessation. The BoE expects to issue new clearing mandates for swaps referencing the replacement
EU funds shudder at Mifid transaction reporting plan; Repeated Esma recommendations would increase costs of single portfolio management services
Samuel Wilkes – Risk.net
You wouldn’t catch a miner going down a shaft littered with dead canaries. Nor will you catch the buy side wanting to start reporting under a regime their peers are still wrestling with three years after it was implemented. And yet, repeated recommendations by the European Union’s watchdog have pressured legislators to push buy-side firms into scope of a dreaded reporting regime set out within Europe’s markets rules.
CDS market prepares to join Libor transition; Ice and LCH will switch to new rates for margin interest; Isda to follow in standard model update
Helen Bartholomew – Risk.net
The credit derivatives market will lend its weight to Libor transition efforts from next month, as three clearing houses adopt new risk-free rates in a key part of the clearing chain for $2.3 trillion of credit default swaps. The co-ordinated move is part of a grander plan to embed RFRs – the regulator-endorsed replacements for Libor – throughout the financial markets.
OSTC Expands Its Global EdTech Business With Acquisition Of FSTP – Acquisition Of EdTech Provider Is OSTC’S Third In Six Months
OSTC, the global derivatives trading and education business, today announced the acquisition of industry-leading financial training and education specialist FSTP, in a stock-and-cash transaction, with some of the consideration subject to future financial performance.
Wisdom From The Women Leading The Cybersecurity Industry, With Kate Kuehn of vArmour; An Interview With Jason Remillard
Jason Remillard – Medium
Avoid trying to be an expert; instead, maintain a beginner’s mindset. When people start out learning something new, there is a fearlessness in failure, a try-and-try again attitude that is almost magical. As we advance, many so-called experts lose that fearlessness, maintaining confidence only in their own knowledge. Cybersecurity is ever changing, and we need that fearlessness in brainstorming and in leadership if we are to win the war we face against attackers. A beginner’s mindset is important as we face daily changes in our experience with adversaries — and will allow us to tackle challenges.
Carbon pricing is an economic bomb and a tax on everything
Gregory Zerzan – The Hill
Special Presidential Envoy for Climate John Kerry, the American Petroleum Institute and Democrats in Congress have all recently spoken in support of “putting a price on carbon.” This policy, if enacted, could raise the cost of nearly everything Americans buy, build and eat. A carbon price would make it more difficult for American entrepreneurs and innovators to create clean, reliable and affordable alternatives to coal, gas and oil.
France Weighs New Border Restrictions With U.K. Against Variant
Ania Nussbaum – Bloomberg
France will likely decide on Wednesday whether additional restrictions are needed at its border with the U.K. to fend off a coronavirus variant first identified in India. The U.K. is trying to make a case to France that extra curbs aren’t necessary, citing the large share of its vaccinated population, a person familiar with the discussions said. About 70% of adults in Britain have received at least one vaccine dose, and 40% both doses, but a new and potentially more contagious strain of coronavirus is spreading fast.
Covid Long-Haulers Baffle Doctors With Symptoms Going On and On
Robert Langreth – Bloomberg
One patient suffering blowtorch-like pain takes 10 drugs; No consensus has emerged on long-haul diagnosis, therapies
Tasha Clark tested positive for Covid-19 on April 8, 2020. The Connecticut woman, now 41, was relieved that her symptoms at the time — diarrhea, sore throat and body aches — didn’t seem particularly severe. She never got a fever and wasn’t hospitalized. So she figured that if the virus didn’t kill her, within weeks she’d go back to her job and caring for her two children.
Cuba Bets Big on Its Own Vaccines as Covid Surges; The communist government is inoculating hundreds of thousands of people with two local drugs, which it could end up selling to other countries.
Jim Wyss – Bloomberg
Cuba is taking a high-risk gamble that it can solve a worsening Covid-19 crisis on its own, with vaccines made by local labs. The communist nation is inoculating hundreds of thousands of people with the shots even as they’re still being tested. Unlike almost every other nation in the Americas, Cuba hasn’t reached out to third parties—such as the global Covax program—seeking vaccines being used elsewhere.
World’s biggest rapid Covid test maker to start producing in UK; California-based Innova to manufacture millions of tests each day in Wales from summer
Anna Gross – FT
The world’s biggest rapid Covid-19 test maker will start manufacturing in the UK, with a factory in Wales set to begin producing millions of tests a day this summer.
Moderna Shot Effective in Teens, Opening Path for Clearances
Robert Langreth – Bloomberg
Company will submit for regulatory authorization in early June; Shot was 93% to 100% effective in study of 12 to 17 year olds
Moderna Inc.’s Covid-19 vaccine was highly effective in 12 to 17 year-old adolescents in a large study, paving the way for regulatory submissions around the world by early June. In a news release, the company said its vaccine was between 93% and 100% effective in preventing symptomatic Covid in a study of teenagers, depending on whether very mild cases are included in the count. The study met its primary goal of showing that immune responses to the vaccine in 12 to 17 year-olds were as good as those produced in adults, and no significant safety concerns were observed, according to the company.
Exchanges, OTC and Clearing
Dutch Natural Gas Futures Set Record on ICE as Benchmark Increasingly Used in Global Trade
Jamison Cocklin – Natural Gas Intelligence
Intercontinental Exchange Inc. (ICE) said its Title Transfer Facility (TTF) futures contract, a leading European natural gas benchmark that’s become increasingly tied to global trade of the fuel, reached an all-time open interest record of 1.93 million contracts earlier this month.
EuroCCP to provide clearing for Euronext Oslo Growth Market; The extension by EuroCCP to clear Norwegian growth stocks remains subject to regulatory approval and is expected to launch on 28 June this year.
Annabel Smith – The Trade
Pan-European equity clearinghouse EuroCCP is set to provide clearing services to the Euronext Oslo Growth Market from next month. EuroCCP said it expects to go live clearing for the Oslo Bors growth market segment from 28 June. All trades executed on the in the Norwegian growth market and cleared by EuroCCP will be reported with the MIC in the daily CIF files, and member testing will be supported from 2 June.
ICE Reports Record Total Futures and Options Open Interest of 84.5 Million Contracts; Total Open Interest +8% y/y
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today announced record open interest of approximately 84.5 million contracts on May 21, 2021, surpassing the previous record set on March 12, 2020.
Milling Yield Premium and Discount Schedule Effective September 1, 2021 in Rough Rice Futures
Effective September 1, 2021, The Board of Trade of the City of Chicago, Inc. (“CBOT” or “Exchange”) will amend the milling yield premium and discount fee schedule for the Rough Rice Futures contract. The United States Department of Agriculture (“USDA”) has announced the 2021 rice loan rates by class.
Notice of Summary Action
Member: E D & F Man Capital Markets Inc.
Rule Violation: Rule 576. Identification of Globex Terminal Operators
Each Globex terminal operator shall be identified to the Exchange, in the manner prescribed by the Exchange, and shall be subject to Exchange rules. If user IDs are required to be registered with the Exchange, it is the duty of the clearing member to ensure that registration is current and accurate at all times. Each individual must use a unique user ID to access Globex. In no event may a person enter an order or permit the entry of an order by an individual using a user ID other than the individual’s own unique user ID.
PENALTY: On May 5, 2021, E D & F Man Capital Markets Inc., pursuant to Rule 512 (“Reporting Infractions”), was issued a $2,000 fine for its violation of Rule 576.
CME Group to launch Bloomberg interest rate futures to support Libor transition;The interest rate futures by CME Group will be based on the Bloomberg short-term bank yield index.
Annabel Smith – The Trade
US derivatives exchange CME Group has set out plans to launch a new set of interest rate futures based on Bloomberg’s short-term bank yield index (BSBY) in the third quarter. The launch comes as the market continues to transition away from the Libor benchmark to other alternative reference rates including SONIA and SOFR.
SGX and TNS to Enhance Colocation Options and Market Access for Traders
Singapore Exchange (SGX) and Transaction Network Services (TNS) are working together to expand the range of hosting, colocation and connectivity options available to traders wishing to access SGX’s derivatives and securities markets.
TNS can now offer its full suite of services, including TNS Layer 1 raw market data and order routing, from a new Managed Hosting presence within the Tier 1 area of SGX’s data center.
SIGTech integrates with IHS Markit Data Lake; SIGTech becomes the first quant platform to integrate with IHS Markit Data Lake providing seamless access to over 1,500 proprietary datasets.
The SIGTech and IHS Markit Data Lake integration facilitates access to over 1,500 proprietary datasets curated by IHS Markit, enabling quantitative fund managers to seamlessly access these financial and alternative datasets in making the best investment decisions.
Guggenheim Founder Morley Is Backing a New York Blockchain Tower
Sonali Basak – Bloomberg
Todd Morley, a co-founder and former executive of finance behemoth Guggenheim Partners, is turning his attention to blockchain. The financier is backing a new blockchain tower in midtown Manhattan, he said Monday in a Bloomberg Television interview. The skyscraper will incorporate a wireless network that improves access to digital ledgers, a set of technologies that underpin digital currencies like Bitcoin, he said. The building at 111 West 57th Street will include a museum for NFTs, the digital assets linked to art, music files or other assets.
Square Takes Aim at JPMorgan With Checking, Savings Accounts
Mark Gurman, Kurt Wagner, and Jennifer Surane – Bloomberg
Hidden iPhone, iPad app code indicates offerings nearing debut; Square Financial Services recently approved for bank charter
Square Inc., whose technology has already upended the way small businesses take card payments, is quietly preparing to offer checking and savings accounts to those customers, taking direct aim at behemoths such as JPMorgan Chase & Co. Square’s shares jumped on the news.
Volante Technologies and Deloitte Enter Into Strategic Alliance Agreement To Accelerate Payments Modernisation; Cloud-native payments technology provider to include Deloitte insight and integration services in its offerings
Volante Technologies, the global leader in cloud payments and financial messaging, and Deloitte are joining forces to offer clients an innovative new service that enables financial institutions to transform how they run their payments business. Volante’s cloud-based technology solutions for financial institutions will now include added insight and integration services from Deloitte as part of a broader strategic alliance agreement.
Commerce Department security unit evolved into counterintelligence-like operation, Washington Post examination found
Shawn Boburg – The Washington Post
An obscure security unit tasked with protecting the Commerce Department’s officials and facilities has evolved into something more akin to a counterintelligence operation that collected information on hundreds of people inside and outside the department, a Washington Post examination found.
High-Profile Hacks Leave Ransomware Gangs With Unwanted Publicity; Hackers move further underground after Colonial Pipeline, Irish health system attacks bring increased scrutiny and scorn
David Uberti – WSJ
Ransomware groups may be trying to retreat from the spotlight—and preserve their business models—after high-profile attacks in recent weeks disrupted daily life in two countries and sparked widespread condemnation.
Suddenly Bitcoiners and Ethereans Just Swapped Talking Points
Joe Weisenthal – Bloomberg
Everything’s getting weird in the crypto world. But to understand what’s going on, I want to go back to our recent podcast episode with Aaron Lammer, an Ethereum true believer, who was asked what he thought about Elon Musk going after Bitcoin over green concerns.
This Bitcoin Chaos Will Blow Up Your Cyberpunk Utopia; The latest frenzy is only making the case stronger for a stable, centralized, state-controlled rival. Enter digital cash.
Andy Mukherjee – Bloomberg
Bitcoin’s wild gyrations in 2021 have made sure of one thing: The future of money will be electronic, but it won’t remotely resemble a cyberpunk utopia. People’s power will bow to sovereigns’ might. The mania and panic that have gripped decentralized cryptocurrencies are heightening the attraction of their coming rivals: digital cash, issued by central banks. These tokens will be staid, centralized and state-controlled. That’s exactly what users will want in an Internet of Things world where machines need to settle claims with one another all the time, instantaneously, but without contributing to global warming
Bridgewater’s Ray Dalio Says He Prefers Bitcoin to Bonds
Katherine Burton – Bloomberg
Crypto popularity could hurt money-raising of governments; ‘Bitcoin’s biggest risk is its success,’ Dalio says at event
Ray Dalio, founder of Bridgewater Associates, said he would rather own Bitcoin than a bond. Should cryptocurrencies continue to gain traction, investors might decide to invest in them rather than government bonds, Dalio said in a recorded interview that was presented Monday at CoinDesk’s Consensus 2021 conference. The result is that governments lose control over their ability to raise money.
The IRS Is Aggressively Pursuing Taxes on Cryptocurrency Transactions—Part 1
If you happened to prepare your own tax return this year or at least looked at the top of the first page, you might have noticed that the IRS has literally moved cryptocurrency transactions to the top. David Zaslowsky and Scott Frewing of Baker McKenzie in Part 1 of a two-part article look at the disparate ways that the various U.S. government agencies define cryptocurrency, as well as efforts by the IRS to increase the revenue stream to the government from cryptocurrency transactions. In Part 2, the authors look at other enforcement efforts by the IRS, as well as reporting and withholding obligations that might come to the fore based on past IRS enforcement activity.
How an unemployed day-trader burned by both GameStop and dogecoin ended up owning 20 billion units of a cryptocurrency known as ASS coin
Natasha Dailey – Insider
38-year-old Eric Hackney put $500 into a cryptocurrency called Australian Safe Shepherd, which is more commonly known as A$$ coin, Bloomberg reported.; He now owns 20 billion units of the altcoin; Hackney invested in ASS coin after losing money on GameStop and missing out on gains in dogecoin, both social media favorites.
One millennial investor vowed to “never again” miss out on gains from hyped-up cryptocurrencies. One $500 investment later, he’s now the proud owner of 20 billion units of Australian Safe Shepherd, also known as A$$ coin, Bloomberg reported.
YIELD App announces ground-breaking new DeFi insurance product, Steady State
Leading decentralized finance (DeFi) wealth management platform YIELD App is pleased to announce it is partnering with its new partner project, cutting-edge new DeFi insurance protocol Steady State, which plans to completely transform the cryptocurrency protection landscape.
Goldman lobbyist joins crypto exchange Coinbase; Faryar Shirzad was with the investment bank for 15 years
Joshua Franklin – FT
A senior Goldman Sachs lobbyist has joined Coinbase as its new chief policy officer, bolstering the cryptocurrency exchange’s connections in Washington as US regulators voice concerns over lax rules in the crypto sector.
Goldman’s not giving up hope on Bitcoin; Where there’s a prime brokerage opportunity, there’s a way. And if there’s a whale, there’s a will.
Izabella Kaminska – FT
If there’s one meme to really sum up the past week in crypto, it’s probably this: For those who don’t know, cryptocurrencies experienced one of their wildest rides ever after Chinese authorities said on Wednesday that they would ban financial institutions and payment companies from offering crypto services.
NFT of iconic ‘Charlie bit my finger’ video sells for over $760K
Will Feuer – NY Post
The iconic YouTube video “Charlie bit my finger” has sold as a non-fungible token for over $760,000 — becoming the latest piece of internet history to cash in on the NFT craze. It’s unclear who won the auction, which took place on CharlieBitMe.com, but a bidding war between users “3fmusic” and “mememaster” sent the price soaring, before 3fmusic ultimately won out for $760,999. Bidding closed on Sunday.
Elizabeth Warren Floats $31.5 Billion Plan to Pursue Tax Cheats
Laura Davison – Bloomberg
Those earning $2 million and more would face bigger fines; Plan requires banks to report account flows of wealthy clients
Senator Elizabeth Warren is proposing to nearly triple the Internal Revenue Service’s budget to help identify wealthy individuals who are cheating on their taxes. The Massachusetts Democrat is proposing to give the IRS a mandatory annual budget of $31.5 billion, up from the $11.9 billion the agency received from Congress for fiscal year 2021. Warren’s legislation would remove the agency’s funding from the annual appropriations process, so that it wouldn’t change based on the year-to-year whims of Congress.
G7 is close to deal on taxation of world’s largest companies; Accord would curtail the ability of companies to shift profits to low tax jurisdictions
Chris Giles and James Politi – FT
The Group of Seven top advanced economies are close to an accord on the corporate taxation of multinationals, paving the way for a global deal later in the year to create new rules for the imposition of levies on the world’s largest companies.
Florida’s New Law Bars Twitter, Facebook and Others From Blocking Political Candidates; Gov. Ron DeSantis said the new law aims to protect social-media users
John D. McKinnon – WSJ
Florida Gov. Ron DeSantis signed a bill on Monday aimed at making big tech platforms more accountable for their content decisions, a move with political overtones that appeared likely to draw legal challenges.
Effective date for NFA Member swap dealer and major swap participant dues increases
NFA Bylaw 1301 imposes annual dues on NFA Member swap dealers (SD) and major swap participants (MSP). The current annual dues amounts have remained unchanged, except for a reduction in MSP annual dues, since NFA established its swap regulatory program in 2013. Given the expansion of NFA’s swaps regulatory program over the past eight years, NFA’s Board of Directors, on May 20, 2021, unanimously approved the following increases to these annual dues amounts:
40th Annual Government-Business Forum on Small Business Capital Formation
Commissioner Hester Peirce – SEC
Thank you, Martha [Miller]. I am pleased to be here on the first day of our fortieth annual Government-Business Forum on Small Business Capital Formation. These events are a wonderful opportunity to bring people together to discuss the nuts and bolts of capital formation, a topic of heightened importance this year as the economy begins the long transition back from virtual to in-person. With that transition, we hope that small businesses that have held on through the pandemic will regain momentum. We also look forward to seeing new businesses, the brainchildren of entrepreneurs stuck at home during the pandemic, get off to a strong start.
Living in a Material World: Myths and Misconceptions about “Materiality”
Commissioner Allison Lee – SEC
Keynote Remarks at the 2021 ESG Disclosure Priorities Event Hosted by the American Institute of CPAs & the Chartered Institute of Management Accountants, Sustainability Accounting Standards Board, and the Center for Audit Quality Thank you, Neil [Stewart] for the introduction and for having me today as you discuss the important and timely topic of climate and ESG disclosures. I very much look forward to hearing from Janine [Guillot] and Julie [Bell Lindsay]. You both bring years of experience and significant expertise to these issues, and your organizations, SASB and CAQ, have contributed significantly to the development and understanding of ESG disclosure and assurance related to such disclosures.
ESMA launches call for evidence on digital finance
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today publishes a call for evidence on digital finance. The call for evidence aims to gather relevant information on particular issues including value chains, platforms and groups’ provision of financial and non-financial services. The feedback will contribute to ESMA’s technical advice to the European Commission.
National Futures Association: Amendments to NFA Member Dues for Swap Dealer and Major Swap Participant Members – NFA Bylaw 1301 regarding Schedule of Dues and Assessments
FCA response to Amigo’s Scheme being rejected by the High Court
The Court has refused to sanction the Scheme of Arrangement proposed by Amigo (the Scheme). The FCA had objected to the proposed Scheme and is now carefully considering the Court’s judgment and Amigo’s response.
Investing and Trading
A Game of Chicken Is Clouding Tax Debate in Top Copper Nation
Valentina Fuentes and Daniela Sirtori-Cortina – Bloomberg
Chile government sees taxes reaching 82%; opposition says 56%; Gap is explained by whether or not existing system is repealed
As a controversial copper windfall tax goes before Chile’s senate, debate is being stymied by huge differences in estimates for the impact on producers. Advisers to the bill’s left-leaning proponents say it will increase the total tax burden for companies like BHP Group to 56% at current prices. But the center-right government projects 82%, making Chile by far the most onerous major copper jurisdiction and jeopardizing billions of dollars in investments.
China Announces ‘Zero Tolerance’ Crackdown on Commodities Trading
Barbara Kollmeyer – Barron’s
Chinese authorities issued a “zero tolerance” warning to commodity speculators on Monday, sending the prices of some assets tumbling. Fresh guidelines were posted by China’s National Development and Reform Commission in a notice on its website. That followed a meeting between the body and industry leaders and associations for commodities such as copper, aluminum, iron, steel and nonferrous metals.
Reddit forum discussions swing from meme stocks to cryptocurrencies; Research shows day traders swayed by ‘narrative’ of bitcoin and other digital assets
Madison Darbyshire and Joshua Oliver – FT
Discussion on Reddit’s main cryptocurrency forum has overtaken activity on the “meme stock” forum WallStreetBets this month, reflecting how many day traders have switched their focus from the equity market to digital coins in the hunt for quick returns and a bit of fun.
Latest US energy merger creates $17bn oil and gas group; Cimarex and Cabot announce ‘merger of equals’ as consolidation following pandemic price crash continues
Derek Brower – FT
The latest deal in a wave of US energy consolidation was announced on Monday, with shale oil producer Cimarex Energy and Cabot Oil & Gas revealing a “merger of equals” that will create a group with an enterprise value of $17bn.
The Federal Reserve is no longer markets’ best friend; Central bank and markets face tricky pivots to avoid damage from a policy mistake
Mohamed El-Erian – FT
I vividly remember a meeting in late 2007 with the head of a major US bank. The executive drew an inverted U in response to me asking where financial markets stood. When told that we were near the top, I immediately asked about the bank’s risk positioning. “Max risk on” was the rather surprising answer.
House prices are acting like stock prices; And good riddance to cold calling
Robert Armstrong – FT
Yesterday’s note about Jeremy Grantham provoked a lot of email saying that he is a mean old permabear who always has something bad to say about stocks. My own view is that his best call was bullish, made precisely as the market bottomed in 2009 (see here).
Environmental, Social and Corporate Governance
EU Leaders Set for Spat Over Distribution of Carbon-Cut Burden
Ewa Krukowska – Bloomberg
East European nations seek to avoid surge in green shift costs; Opposition building against plans to extend EU carbon market
European Union leaders are poised for a wrangle over how to distribute the burden of the EU’s bolstered plan to stem climate change.
Taiwan’s Sudden Unraveling Masks a Serious Climate Problem
Adam Majendie and Raymond Wu – Bloomberg
Government faces stark choices over energy, water supplies; Taiwan temperatures have risen twice the global average
Taiwan is being squeezed by a resurgent coronavirus on one side and a yearlong drought that is disrupting agriculture, industry and power supplies on the other. Only one of those forces is likely to go away.
U.K. Financial Firms Enable More Emissions Than Canada Produces
Alastair Marsh – Bloomberg
Loan books and investment portfolios add to global warming; Banks and asset managers contribute to high-carbon sector
If the U.K. finance sector were a country, it would have a bigger carbon footprint than Canada, according to a report from Greenpeace and World Wildlife Fund.
Greenwashers Can’t Hide Forever, Top Australian ESG Fund Says
Thuy Ong – Bloomberg
Fund manager says sustainability practices are ‘good business’; The fund has beat 95% of peers according to Bloomberg data
Perpetual Ltd.’s Nathan Hughes has a message for companies trying to greenwash: You will be caught. The 34-year-old is the portfolio manager of the A$804 million ($622 million) Perpetual Wholesale Ethical SRI Fund that invests in Australian equities and focuses on engaging with companies on environmental, social and governance goals to help preserve returns. The sustainability practices are just “good business,” he says.
A bold step forward in climate-related financial risk supervision; Banque de France’s Denis Beau explains the results of a pilot exercise, and what comes next
Denis Beau – Risk.net
The pilot exercise on climate risk conducted by France’s Autorité de Contrôle Prudentiel et de Résolution (ACPR) is unprecedented. It is the first time a supervisor has organised such a comprehensive and challenging exercise for the banking and insurance groups under its responsibility, to assess their exposure and potential responses to the transition and physical risks related to climate change.
IBM Turnabout Adds Pressure to Keep Corporate Diversity Promises; Activist investors are setting records for support and wins on diversity demands.
Jeff Green and Saijel Kishan – Bloomberg
The year 2021 is shaping up to set records for diversity proposals at U.S. company annual meetings. Nine out of 10 investors backed a call last month for International Business Machines Corp. to produce an annual diversity report. Five other companies, including renewable energy firm First Solar Inc. and chemical giant DuPont de Nemours Inc., saw more than 80% of shareholders backing diversity proposals.
Goldman Sachs wins approval for wealth management deal with China’s ICBC; Foreign asset managers are rushing to capitalise on China’s vast pool of savings
Thomas Hale – FT
Goldman Sachs Asset Management has won initial approval for a wealth management joint venture with ICBC, one of China’s largest banks, as Wall Street groups expand their presence in the country. Goldman will hold a 51 per cent stake in the venture, while ICBC wealth management, a subsidiary of the bank, will own the rest.
State Street’s role as manager of Hong Kong’s largest ETF under scrutiny; US manager’s future could rest on whether Biden decides to maintain a blacklist on investing in certain Chinese companies
John Sedgwick and Echo Huang – FT
Hong Kong’s central bank is working with the supervisory board of the Tracker Fund to review State Street Global Advisors’ role as manager of the territory’s largest exchange traded fund in the territory.
Former Citi FX algo execution head joins FairXchange as strategic advisor; The new strategic advisor at data science firm FairXchange has previously spent 16 years at Citi as head of FX algorithmic execution.
Annabel Smith – The Trade
A former head of FX algorithmic execution at Citi has joined a data science and execution performance analytics specialist, FairXchange, as a strategic advisor. James Dalton takes on the new role at FairXchange, responsible for assisting the firm on its strategy, product development and growth of its client base of banks, hedge funds and FX brokers globally.
Re-bundling unlikely to counter decline in SME liquidity, Liquidnet report suggests; In a report, Liquidnet said the insights required by asset managers have evolved, making re-bundling a redundant solution to the SME investment problem.
Annabel Smith – The Trade
The decision to roll back unbundling requirements for research on smaller companies in the UK and Europe is unlikely to boost investment and liquidity, a research report from Liquidnet has suggested.
RISK QUANTUM Morgan Stanley, Bank of America push VAR limits the most; Largest losses-to-VAR ratios at the two firms were the highest among the eight systemic US banks in Q1
Alessandro Aimone – Risk.net
Of the eight US global systemically important banks (G-Sibs), Morgan Stanley and Bank of America have been operating closest to their value-at-risk estimates over the first quarter of the year. Banks must disclose their three largest trading losses each quarter as a percentage of VAR. The largest losses-to-VAR ratio at Morgan Stanley was 90.73%, the highest of the US G-Sibs. Bank of America was close behind, with a ratio of 89.42%.
As the Algo Wheel Turns
Shanny Basar – MarketsMedia
Eric Stockland, managing director in electronic trading at BMO Capital Markets, said the buy side should ask brokers to experiment with their algo wheels in order to incentivize innovation. Stockland spoke at Trader Forum’s annual member conference on the broker perspective on the implementation of algo wheels.
U.S. Warns Against Japan Travel, Sowing New Doubt About Olympics
David Wainer and Michelle Fay Cortez – Bloomberg
State Department raises advisory just two months before Games; U.S. Olympic Committee says Americans can safely compete
The U.S. said Americans should avoid traveling to Japan, with the country under a state of emergency over a widening Covid-19 outbreak that has sown doubts about Tokyo’s plans to host the Olympics in less than two months.
A $278 Billion Brexit-Like Showdown With EU Looms Over the Swiss
Catherine Bosley – Bloomberg
Med-tech firms get saddled with more bureaucracy from May 26; EU says Swiss access to single market comes with obligations
From Zurich and Basel to the Lake Geneva region, Swiss makers of everything from prosthetic knees to hearing aids have been put on notice. Come May 26, the country’s medical-technology companies won’t be able to freely export their wares to the European Union like they’ve been doing for years. Instead, they’ll be knocked down to “third country” status, requiring them to establish a representative within the bloc and meet the EU’s product-labeling specifications, while also saddling them with other red tape.
Swedish Minister Targets ‘Horrendous’ Wealth Gap Between Sexes
Charles Daly – Bloomberg
Sweden’s minister for gender equality is taking aim at what she says is a “horrendous” difference in wealth between the sexes. Marta Stenevi, who’s been a minister in Sweden’s Social Democrat-Green coalition since February, says women are currently at a lifelong disadvantage when it comes to accumulating capital. She wants government policy to fix that imbalance.
Covid Fears Paralyze Global Carmakers in India’s Detroit
Upmanyu Trivedi, Ragini Saxena and Ganesh Nagarajan – Bloomberg
Renault Nissan, Hyundai reduce shifts after employee deaths; Workers fear infection with automakers exempt from lockdown
Automakers with plants in Tamil Nadu, the industry’s hub in India, are suspending operations and reducing shifts as employees threaten to go on strike due to health concerns about Covid-19 in the southern state.
Emerging-Market Bonds Prove Covid Resistant; Foreign investors continue to buy bonds in developing countries despite a climb in infection rates
Matt Wirz – WSJ
Covid-19 is spreading rapidly in large developing countries such as Argentina and India, sparking concerns of long-term economic hardship, but prices of their government bonds have barely budged. The disconnect boils down to two factors, analysts and fund managers say. Loose monetary policy and economic reopening in developed countries is fueling global growth. At the same time, some emerging economies can’t afford to shut down. Under those circumstances, investors are willing to hang on to the relatively high-yielding debt, even as cases climb.