London’s lost EU share trading could be gone for good, warn City figures; New York Stock Exchange Pressured to Push Ahead and Delist 3 Chinese Firms

Jan 6, 2021

First Read

$22,851/$300,000 (7.6%)
Sharad Kumar and James Toes

 

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Hits & Takes
John Lothian & JLN Staff

There is bad news, good news for Sen. Kelly Loeffler, depending on your point of view. She has lost her bid to be elected to the Senate, losing to Rev. Rafael Warnock, according to press organizations that have called the election. On the plus side, LeBron James has formed a group of investors to buy her out of her stake in the Atlanta Dream women’s basketball team. The Dream was a bit of a pain in her side during the recent election, wearing t-shirts supporting her opponent. The question that arises is whether Loeffler will go Bakkt to her old job.

There were some media reports that President Donald Trump planned a trip to Scotland the day before the inauguration of Joe Biden as president. The stories cited airport requests for landing and normal protocols that would happen for such a trip. However, the first minister of Scotland, Nicola Sturgeon, is quoted in a story in The Independent saying that President Trump is not welcome because of the travel restrictions around the COVID-19 outbreak, just like everyone else. Evidently coming to golf in Scotland is not an “essential purpose.”

Refinitiv has plans to launch a production Term SONIA benchmark on January 11, 2021. Back in July of 2020, Refinitiv had announced they would launch a prototype version of the same rate product.

For some people, $600 does not seem like a lot of money. That is the amount in the recent relief bill signed into law by President Trump. But that $600 in lots of Robinhood accounts represents a lot of extra firepower for those traders.

IBM has named former Goldman Sachs president Gary Cohn as its vice chairman, Bloomberg reported.

No more bringing your emotional support llama or any emotional support animals on American Airline flights anymore, the airline announced. Among the strangest emotional support animals that flew on airlines, according to this 2019 story in The Sun, are ducks, ponies, turkeys, kangaroos, squirrels, pigs, hamsters, roosters, peacocks and monkeys.

Sharad Kumar and James Toes are the latest to give to the JLN MarketsWiki Education GoFundMe campaign. Sharad, a relationship manager at Eventus Systems, is the latest to give to the JLN MarketsWiki Education GoFundMe campaign. Sharad is part of the growing talented team at Eventus, which is trying to help traders and firms manage their spoofing risk, which was the biggest epidemic around before COVID-19. Jim Toes is president and CEO at the Security Traders Association. He is a longtime reader and friend of JLN and represents the STA with integrity and grace. Thank you to Sharad and Jim and all who have given and all who have yet to give. Support our efforts to preserve industry history and give to our GoFundMe campaign.

If you would like an invoice sent for your 2020 subscription to this newsletter, please email me at johnlothian@johnlothian.com

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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Blockchain.com is the most recent cryptocurrency trading platform to announce that it will stop supporting trades of XRP, the digital asset created by Ripple, due to Ripple’s ongoing lawsuit with the SEC. Although XRP has held its position as one of the biggest digital assets by market cap for a long time, the coin and the company that makes it are really taking a beating thanks to this lawsuit – XRP’s market cap has decreased so much, it has been overtaken by Litecoin.~MR

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Democrat Raphael Warnock wins Senate race in Georgia; Jon Ossoff clings to narrow lead in second contest that will decide which party controls upper chamber
Lauren Fedor – FT
Raphael Warnock became the first African-American to win a US Senate seat in Georgia, as fellow Democratic contender Jon Ossoff clung to a narrow lead in a second contest that will decide which party controls the upper chamber of Congress.
/jlne.ws/2JULv1C

*****Will Sen. Loeffler contest this result? Given the current trends, I think I know the answer to this question.~JJL

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Ossoff Has Narrow Lead Over Perdue in Other Georgia Race; Democrats Edge Closer to Senate Control With Victory in Georgia; Second Race Too Close to Call
NY Times
The Rev. Raphael Warnock beat the Republican incumbent, Kelly Loeffler, while the other runoff was neck-and-neck. President Trump’s allies are planning a final attempt to subvert the election when Congress meets on Wednesday to formalize the Electoral College results.
/jlne.ws/2XhIgnK

*****The election looked a lot like the presidential election, with the Republicans taking an early lead as results came in, but then eventually losing the lead as the bigger metro areas with lots of Democratic voters arrived later. I went to bed at 11 PM with Warnock ahead by 35K votes and Ossoff behind by about 2000.~JJL

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Trump Adviser Cleta Mitchell Resigns From Law Firm After Georgia Call; Washington lawyer faced criticism after joining president to ask election officials to reverse Biden win
Sara Randazzo – WSJ
Cleta Mitchell, a Washington, D.C., lawyer who supported President Trump in making claims of election fraud on a weekend call with the Georgia secretary of state, resigned Tuesday from the partnership of a corporate law firm.
/jlne.ws/2L5Uldm

*****She worked for Foley & Lardner LLP. She will not be the last lawyer who flew too close to the sun in the recent political season.~JJL

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Refinitiv to launch production Term SONIA benchmark on January 11, 2021
Refinitiv
Today Refinitiv announced its plan to launch the Refinitiv Term SONIA benchmark on January 11, 2021. This follows the previous announcement in July 2020 that Refinitiv would launch the prototype version of the same rate.
/jlne.ws/3pYuoLp

*****This will be the year of short term interest rates.~JJL

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Tuesday’s Top Three
Our top story on Tuesday was Bloomberg’s Virtu Moving Workers to Florida as Pandemic Reshapes Wall Street. This is likely the first wave of a trend that will reshape major cities. Second was A Cure for Politicians’ Stock Trades, from The New York Times Dealbook, about a proposed solution to the controversy over stock trades by politicians (including Sen. Kelly Loeffler). And, speaking of Sen. Loeffler, our third top story was Kelly Loeffler’s new Facebook ad darkens skin of Raphael Warnock, her Black opponent, from Salon.com.

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Lead Stories

London’s lost EU share trading could be gone for good, warn City figures; UK has given up about EUR6bn of daily volume since Brexit transition ended
Philip Stafford and Camilla Hodgson – FT
The EU share trading that flooded out of the City of London after the end of the Brexit transition is unlikely to return, banks and asset managers have warned.
/jlne.ws/38iInWA

New York Stock Exchange Pressured to Push Ahead and Delist 3 Chinese Firms; The exchange had said last week it would delist the telecom companies to comply with a Trump executive order, but it reversed the decision on Monday.
Alan Rappeport and Paul Mozur – NY Times
The Trump administration and members of Congress pressured the New York Stock Exchange on Tuesday to remove China’s three major state-run telecommunications companies from the exchange.
/jlne.ws/3oqzH6k

Covid-19 Aftermath Could Spell a ‘Lost Decade’ for Global Economy, World Bank Says; Bank lowers growth outlook as pandemic disrupts trade, investment and education
Yuka Hayashi – WSJ
Even before Covid-19, the World Bank had lowered its projections for global growth in the 10 years that began in 2020. The pandemic is exacerbating that trend, raising the prospect of a “lost decade” ahead, the World Bank said Tuesday, as it also cut its forecasts for the coming year.
/jlne.ws/2MAwOl7

Commodities Billionaire Came Within Weeks of a Debt Crunch
Jack Farchy – Bloomberg
Filing shows bulk of Credit Suisse loans were due by end 2020; Sale of 45% of trading house to ADQ was agreed in November
Margarita Louis-Dreyfus, the billionaire owner of one of the world’s largest agricultural commodity trading houses, struck a deal to sell a stake in her company just weeks before almost half a billion dollars in loans came due.
/jlne.ws/3ol7Cx8

LSE urges listing rules reform for fast growth companies; Submissions to government review highlights deep split in how far changes should go
Daniel Thomas and Philip Stafford – FT
The London Stock Exchange has joined City and business groups in urging the government to overhaul the rules for company listings in the UK in order to attract fast growth companies.
/jlne.ws/38XTovq

World’s Super-Rich Families Want More Hedge Funds, Survey Finds
Benjamin Stupples – Bloomberg
Family offices aim to boost allocations in wake of pandemic; More firms also are exploring sustainable-investing strategies
Family offices are heading back to hedge funds. More than a third of 185 investment firms for wealthy clans plan to boost allocations amid the economic upheaval caused by the Covid-19 pandemic, according to survey released Wednesday by BlackRock Inc. and Juniper Place, a London-based firm that helps asset managers raise capital.
/jlne.ws/3s22GPN

NYSE Takes Heat After Flip-Flop on Chinese Companies; Some investors felt whiplash from the moves; the three telecom stocks have gone on a wild ride
Alexander Osipovich – WSJ
The New York Stock Exchange is in the hot seat after a baffling flip-flop in which it first said it would delist three Chinese companies to comply with an executive order from President Trump, only to reverse itself four days later.
/jlne.ws/38hb3iA

EU urged to push UK harder on tackling tax avoidance and money laundering; MEPs warn of weaknesses in Brexit deal over financial transparency provisions
Sam Fleming and Philip Stafford – FT
The EU is being urged to withhold legal permits allowing UK financial services companies easy access to the single market until Brussels gets tougher commitments from London to crack down on money laundering and tax avoidance.
/jlne.ws/3nh3Gfn

Stocks, Bitcoin and More: Unusual Ways Americans Are Planning to Use Their $600 ‘Stimmy’; Some stimulus check recipients are considering investing their money or treating themselves after a tough 2020.
Misyrlena Egkolfopoulou – Bloomberg
Stimulus checks will provide a financial lifeline to millions of Americans, as they reel from the economic devastation brought on by the Covid-19 pandemic.
/jlne.ws/35gDP0T

Refinitiv to launch Term SONIA benchmark supporting resettlement of LIBOR; Following a positive reception from potential users Refinitiv is set to go live with Term SONIA benchmark supporting LIBOR migration.
Kiays Khalil – The Trade
Financial markets data and infrastructure provider Refinitiv will go live with a Term SONIA benchmark following a prototype run in July 2020. The new product will launch on 11 January and will support resettlement of GBP London InterBank Offered Rate (LIBOR).
/jlne.ws/3omEXrn

Hong Kong arrests 53 for plot to ‘overthrow’ government in latest crackdown on dissent
Yanni Chow, Yoyo Chow – Reuters
Hong Kong police arrested 53 people in dawn raids on democracy activists on Wednesday in the biggest crackdown since China last year imposed a new security law which opponents say is aimed at quashing dissent in the former British colony.
/jlne.ws/395cMH3

Goldman expects staff to return to offices by year-end – Bloomberg TV
Reuters Staff
Goldman Sachs Group Inc expects to have all its staff back at their offices by the end of the year as major drugmakers roll out COVID-19 vaccines, Chief Executive Officer David Solomon said in an interview to Bloomberg Television on Tuesday.
/jlne.ws/3hM2L5q

Coronavirus

England’s Covid lockdown rules may last until end of March; Legislation published ahead of Commons debate allows for restrictions to continue to Easter
Sebastian Payne and Jim Pickard – FT
England’s coronavirus restrictions may continue until the end of March, according to legislation published ahead of a House of Commons debate on the latest lockdown on Wednesday.
/jlne.ws/2L02T5E

Japan Hits Case Milestone; German Crisis Meeting: Virus Update
Bloomberg News
Germany’s daily Covid-19 death toll exceeded 1,000 for only the second time, and Chancellor Angela Merkel called an emergency meeting to accelerate the vaccine rollout. Britain is also racing to get shots to the most vulnerable after more than 1 million people were infected in England.
/jlne.ws/3nlwD9U

Swamped Hospitals Expose Depth of Britain’s Unfolding Crisis; The U.K. government is banking on a strict lockdown and accelerated vaccine program to keep its health service afloat.
James Paton, Emily Ashton, and Jill Ward – Bloomberg
If the British government’s goal throughout the coronavirus pandemic has been to protect the health service, the next few weeks will be the biggest challenge yet. After overtaking Italy again as the country with Europe’s highest death toll, the U.K. is at the epicenter of the continent’s struggle to contain Covid-19. Daily infections are at a record—one in 50 people in England now have the disease—while Prime Minister Boris Johnson this week shut schools and ordered the population to stay at home.
/jlne.ws/2MyxWFP

Governments need to step in to ramp up vaccine production; Private manufacturers currently have little financial interest in expanding capacity massively
Gustav Oertzen – FT
The coronavirus vaccines are coming too slowly, and the cost of waiting is enormous. Current production and procurement plans mean it will take up to two years before the world gets close to having enough doses for everyone. This may be optimal for manufacturers, but it is not for society. There needs to be a plan B.
/jlne.ws/3bfpgi2

India’s Vaccine Colossus Is a Model for the World to Follow; Serum Institute to manufacture vaccines not just for the world’s second-most populous country, but likely many others too
Mike Bird – WSJ
India has authorized two Covid-19 vaccines for use, putting its enormous vaccine-manufacturing capacity in the spotlight. Large parts of the rich world may have something valuable to learn. The Serum Institute of India is the world’s largest manufacturer of vaccines by volume, founded over 50 years ago by now-multibillionaire Cyrus Poonawalla. It will likely provide not only almost all the vaccines administered in India, but many elsewhere in the world too, once exports are permitted later in the year.
/jlne.ws/38j7pF

Coronavirus Variant Is Indeed More Transmissible, New Study Suggests; Researchers warn that the British variant is so contagious that new control measures, including closing down schools and universities, may be necessary.
Carl Zimmer and Benedict Carey – New York Times
A team of British scientists released a worrying study on Wednesday of the new coronavirus variant sweeping the United Kingdom. They warned that the variant is so contagious that new control measures, including closing down schools and universities, might be necessary. Even that may not be enough, they noted, saying, “It may be necessary to greatly accelerate vaccine rollout.”
/jlne.ws/3ndtqta

Covid-19 Case Studies Make Their Way Into M.B.A. Curricula; Many business school students are studying corporate pandemic challenges, crisis management
Patrick Thomas – WSJ
It is spring 2020, Covid-19 is exploding world-wide, and you are leading a pharmaceutical company seen as behind rivals in finding a vaccine. Should you accept government money, and the strings attached with it, to try to catch up?
/jlne.ws/2XeYBJV

One in 50 people in England has coronavirus, England’s chief medical officer says
Richard Greene – CNN
About one in 50 people across England now has coronavirus, England’s chief medical officer Chris Whitty said Tuesday, calling the figure “really very high.” The Covid-19 case rate across the United Kingdom increased by 70% in the two weeks to Dec. 30, Whitty said.
/jlne.ws/3pRZqVq

Exchanges, OTC and Clearing

NYSE Abruptly Reverses Plan to Delist Three Chinese Telecoms
Shirley Zhao and Lianting Tu – Bloomberg
Exchange’s reversal whipsaws investors after Monday selloff; China Mobile, China Telecom, Unicom rally in Hong Kong trading
The New York Stock Exchange has abruptly reversed plans to delist three major Chinese telecommunications companies after consulting regulators about an investment ban ordered by President Donald Trump. Coming days before the companies were to be delisted — and just over two weeks before Trump is to leave the White House — the U-turn avoids a step that threatened to heighten U.S.-China tensions further.
/jlne.ws/2XdKjJK

LCH executive to replace promoted chief risk officer in LSEG risk leadership shake up; David Horner, head of risk at LCH, replaces Dennis McLaughlin as he is promoted to group head of financial risk at LSEG, according to an internal memo.
Annabel Smith – The Trade
LCH’s head of risk rates and services has replaced the chief risk officer following his promotion to group head of financial risk at the London Stock Exchange Group (LSEG). According to an internal memo seen by The TRADE, David Horner was appointed as chief risk officer of the UK clearing house earlier this week after its current chief risk officer, Dennis McLaughlin, was promoted to group head of financial risk at LSEG.
/jlne.ws/38nWz0J

Intercontinental Exchange Reports December, Fourth Quarter and Full Year 2020 Statistics
Energy Open Interest +7% y/y; 2020 Futures & Options ADV +6% y/y including Energy +15% y/y
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of mortgage technology, data and listings services, today reported December, fourth quarter and full year 2020 trading volume and related revenue statistics, which can be viewed on the company’s investor relations website at https://ir.theice.com/ir-resources/supplemental-information in the Monthly Statistics Tracking spreadsheet.
/bit.ly/3pX6Oiu

IM, default fund resources fell at Eurex in Q3
Louie Woodall – Risk.net
Participant contributions to Eurex’s default fund were almost one-third lower at end-September 2020 than three months prior. Total initial margin (IM) posted by clearing members was also much reduced quarter on quarter.
/jlne.ws/3s7gNUj

Farmer sentiment rises as income prospects improve, concerns about key policy issues remain
CME Group
There was a modest improvement in producer sentiment according to the December Purdue University/CME Group Ag Economy Barometer. The barometer increased 7 points from November to a reading of 174. Both of the barometer’s sub-indices, the Index of Current Conditions and the Index of Future Expectations, were also higher in December than in November. The Index of Current Conditions climbed 15 points to 202 and the Index of Future Expectations increased by 5 points to a reading of 161. The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted from December 7-11, 2020.
/jlne.ws/2XsU7zL

Performance Bond Requirements: Agriculture and Energy Margins – Effective January 06, 2021
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.
/jlne.ws/2XdldKL

Performance Bond Requirements: Agriculture, Energy, Equity & Metal Margins – Effective January 06, 2021
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. Please email any questions to Clearing.RiskManagement@cmegroup.com.
/jlne.ws/2LsY989

Notice of Summary Action
CME Group
MEMBER: STONEX FINANCIAL INC.
RULE VIOLATION: MARKET REGULATION ADVISORY NOTICE 2011-5 (DOCUMENTATION OF CUSTOMER ORDERS AND SUBMISSSION OF SUSPENSE ACCOUNTS ON CME GLOBEX)
Recognizing that on occasion a customer-specific or EAM-specific account may not be available at the time an order is entered into Globex, de minimis usage of an Execution Operation Suspense Account will be permitted, provided the following requirements are met.
PENALTY: On December 16, 2020, StoneX Financial Inc., pursuant to Rule 512 (“Reporting Infractions”), was issued a $4,000 fine for its violation of MRAN 2011-5. The allocation of the fine across exchanges is based on the activity at each Designated Contract Market.
/jlne.ws/2LnPFzh

Notice of Summary Action
CME Group
MEMBER FIRM: ADM INVESTOR SERVICES, INC.
RULE VIOLATION: MARKET REGULATION ADVISORY NOTICE 2011-5 (“DOCUMENTATION OF CUSTOMER ORDERS AND SUBMISSTION OF SUSPENSE ACCOUNTS ON CME GLOBEX”)
Recognizing that on occasion a customer-specific or EAM-specific account may not be available at the time an order is entered into Globex, de minimis usage of an Execution Operation Suspense Account will be permitted, provided the following requirements are met.
PENALTY: On December 16, 2020, ADM Investor Services, Inc., pursuant to Rule 512 (“Reporting Infractions”), was issued a $2,000 fine for its violation of MRAN 2011-5.
/jlne.ws/2Xf5smJ

Borsa Italiana Monthly Update December 2020
Mondovisione
/jlne.ws/3onZIms

Fintech

Big tech rather than banks to drive fintech M&A in 2021 with payments a key area
S&P Global Market Intelligence
Banks will still have the appetite for fintech M&A in 2021, but the economic uncertainty created by the coronavirus pandemic will make them more cautious in their dealmaking, analysts said.
The COVID-19 crisis has put pressure on banks to improve their digital offering as lockdowns have forced customers to use applications and online banking rather than visit branches. Buying up small, innovative fintechs can be a faster and more effective way for banks to improve their tech offerings, and the infrastructure that supports them, than building their own solutions. But given the punishing year that lenders have had, and the bleak economic outlook for 2021, their capacity for larger deals will be constrained.
Big techs such as Facebook Inc. and Alphabet Inc. on the other hand, have deeper pockets.
/jlne.ws/2LaJpuV

What’s going on with fintech venture capital investment?
Alex Wilhelm – TechCrunch
Over the next few weeks, the venture capital industry will compile and release data concerning its Q4 2020 performance, capping a year that saw the world of private capital freeze, thaw and burn.
But we can get a peek at a critical part of the VC universe early, thanks to a preview of global fintech investment results from CB Insights. The dataset deals with worldwide investments into fintech companies from the start of October through December 12.
/jlne.ws/3s0QdvW

Concordium Joins FinTech Association of Japan to Support Financial Service Innovation
Press Release via Yahoo Finance
Concordium, the privacy-centric, public enterprise blockchain, has become the first blockchain corporate member of the FinTech Association of Japan (FAJ). The Japanese non-profit organization is dedicated to creating an environment for supporting new technology-based financial services. It features more than 260 corporate members and 130 startups, and the Association works with over 20 international fintech companies including JP Morgan, Visa, and PayPal.
/jlne.ws/3bcK49Z

White & Case nabs fintech leader Douglas Landy from Milbank
Caroline Spiezio – Reuters
White & Case on Tuesday announced it has hired Douglas Landy, who previously led Milbank’s regulatory and fintech practices, as a New York-based partner in its global financial services regulatory practice.
/jlne.ws/35dBROM

Cryptocurrencies

Bitcoin Tops $35,000 for Fresh Record as Wild Swings Resume
Dave Liedtka and Eric Lam – Bloomberg
Cryptocurrency had posted biggest drop since March on Monday; A year-end surge helped Bitcoin to quadruple in 2020
Bitcoin jumped to another all-time high on Wednesday as extreme swings continued to buffet the world’s largest cryptocurrency. The famously volatile digital coin advanced as much as 6% to $35,842, surpassing the previous high set Jan. 3, and was trading at $34,988 as of 6:47 a.m. in New York. It had plunged as much as 17% on Monday. Bitcoin quadrupled in 2020.
/jlne.ws/390YdEs

Scaramucci Sees Massive Gains for Bitcoin in Comparison to Gold
Vildana Hajric – Bloomberg
SkyBridge Capital launched a crypto-centric fund this week; Wall Street’s Bitcoin fever spreads in wake of 300% rally
SkyBridge Capital’s Anthony Scaramucci is the latest Wall Street maven to get on the Bitcoin bandwagon, launching a crypto-centric fund this week and predicting the digital asset could be poised for massive gains.
/jlne.ws/3okalXn

Gamblers Could Use Bitcoin at Slot Machines With New Patent
Olga Kharif and Luke McGrath – Bloomberg
IGT patents a way for crypto users to move funds onto slots; The option may help casinos cater to younger customers
International Game Technology Plc, the world’s largest maker of slot machines, may be looking at offering cryptocurrency as a payment option on casino games like Megabucks and Wheel of Fortune.
/jlne.ws/2XsNeyp

CoinDesk Buys TradeBlock, Joining Rush for Bitcoin Analytics; Deal indicates the surging demand for data and indexes used to track and trade cryptocurrencies
Paul Vigna – WSJ
CoinDesk Inc., a bitcoin-focused media company, has acquired analytics company TradeBlock Inc., in a bid to capitalize on demand for data-driven products in the burgeoning cryptocurrency industry. TradeBlock is a data and trading firm that publishes both free and subscription data. Its most notable product is a bitcoin price index called the XBX that is used as the reference rate, or benchmark price, for investment funds such as the Grayscale Bitcoin Trust. Terms of the deal weren’t disclosed. CoinDesk is owned by Digital Currency Group, or DCG, which had been a minority investor in TradeBlock. DCG also owns Grayscale Investments, which sponsors the bitcoin trust. Reference rates are an important feature of the traditional capital markets, used in areas such as exchange-traded funds and lending rates. They offer transparency and standardized pricing, which helps improve liquidity and lower costs to investors.
jlne.ws/3bdtyq1

Open interest on Ethereum derivatives hit an all-time high on Sunday
MK Manoylov – The Block
The aggregated open interest on Ethereum (ETH) options and futures broke records this past weekend, according to data compiled by The Block Research.
Ethereum futures peaked at $2.65 billion on January 3, growing 28.6% from December’s peak. Binance held the largest share at 23.8%, with OKEx in second place with 17.8% and Huobi’s 14.4% in third.
jlne.ws/38eVcBa

Grayscale Drops XRP From Large Cap Crypto Fund Following Ripple SEC Suit
Nathan DiCamillo – Coindesk
Digital asset manager Grayscale Investments is following Bitwise’s footsteps in removing XRP from its large-cap crypto fund. The firm, which is owned by CoinDesk parent company Digital Currency Group, announced Tuesday it would no longer hold XRP in the Grayscale Digital Large Cap Fund, which is also made up of BTC, ETH, BCH and LTC.
jlne.ws/2Xdp76n

The UK’s ban on crypto derivatives is set to go into effect on Wednesday
Ryan Weeks – The Block
A ban on the sale of crypto derivatives and exchange-traded notes (ETNs) is set to come into force in the U.K. on Wednesday, January 6. Announced by the Financial Conduct Authority in October after a long and heated period of consultation, the ban forbids the sale, marketing and distribution of CFDs, options, futures and ETNs that reference cryptocurrencies to retail investors. The regulator reckons it will prevent in the region of £53m in harm, but industry commentators have raised concerns that it will instead drive consumers onto unregulated exchanges or indeed offshore — and, thus, beyond the FCA’s reach.
jlne.ws/2L85g6b

The number of XRP ‘whales’ has fallen since the SEC filed suit against Ripple
MK Manoylov – The Block
The number of addresses holding in excess of 1 million XRP — a signifier of so-called “whales” with significant asset holdings — has fallen more than 8% in the past two weeks. According to new data from Coin Metrics, as of yesterday, the number of addresses with that amount held fell from 1,705 as of December 22 to 1,562 as of Monday. On December 22, the U.S. securities regulator charged Ripple and two of its senior leaders.
jlne.ws/2KYRl2B

BitGo Launches Wrapped Bitcoin, Ether on Tron Blockchain
Zack Voell – Coindesk
BitGo’s Ethereum-based tokenized bitcoin project, Wrapped Bitcoin (WBTC), has expanded to its second blockchain, Tron. The crypto custodian has also launched Wrapped Ether (WETH) on Tron as well. BitGo clients are already minting WBTC and WETH as TRC-20 tokens on Tron, according to the company’s public orderbooks. After a few test mints executed by BitGo in mid-December, nearly 100 BTC (roughly $3.4 million at current prices) have been wrapped and minted as TRC-20 WBTC tokens by Alameda Research and CoinList.
jlne.ws/38fQ7IR

Tetragon Sues Ripple to Force Stock Redemption
Danny Nelson – Coindesk
One of Ripple Labs’ big financial backers is looking to reverse its bet on the XRP issuer. Tetragon Financial Group LTD, the multi-billion asset manager-turned-plaintiff, had led Ripple’s $200 million funding round in December 2019. On Monday night the U.K.-based firm moved to exit its position in a sealed filing in Delaware Chancery Court, according to Bloomberg. Just weeks ago the U.S. Securities and Exchange Commission put Ripple’s future in doubt with a blockbuster suit alleging XRP to be an unregistered security. That’s spooked the XRP markets and now, apparently, Ripple investors, too.
jlne.ws/3pQN4Nl

Veteran Investor Bill Miller Calls Bitcoin a ‘Rat Poison,’ but for Cash
Omkar Godbole – Coindesk
Investor Bill Miller, whose flagship mutual fund in 2020 beat the S&P 500 for the straight second year, said he believes bitcoin could replace cash and markets are underpricing inflation risk.
/jlne.ws/3pQMM9d

Politics

Swamped Hospitals Expose Depth of Britain’s Unfolding Crisis; The U.K. government is banking on a strict lockdown and accelerated vaccine program to keep its health service afloat.
James Paton, Emily Ashton, and Jill Ward – Bloomberg
If the British government’s goal throughout the coronavirus pandemic has been to protect the health service, the next few weeks will be the biggest challenge yet. After overtaking Italy again as the country with Europe’s highest death toll, the U.K. is at the epicenter of the continent’s struggle to contain Covid-19. Daily infections are at a record—one in 50 people in England now have the disease—while Prime Minister Boris Johnson this week shut schools and ordered the population to stay at home.
/jlne.ws/2MyxWFP

Japan Hits Case Milestone; German Crisis Meeting: Virus Update
Bloomberg News
Germany’s daily Covid-19 death toll exceeded 1,000 for only the second time, and Chancellor Angela Merkel called an emergency meeting to accelerate the vaccine rollout. Britain is also racing to get shots to the most vulnerable after more than 1 million people were infected in England.
/jlne.ws/3nlwD9U

China Says U.S. Flip Flops ‘All the Time’ Amid NYSE Reversals
Bloomberg News
China said the U.S. “has been flipping flopping all the time” and urged it to respect market principles after investors were whipsawed by uncertainty over the status of three major Chinese telecommunication giants traded on the New York Stock Exchange.
/jlne.ws/3bcSsWR

Mike Pence: a loyal vice-president at breaking point; Republican stalwart has faced pressure from Donald Trump to nullify Joe Biden’s victory
Courtney Weaver – FT
As Donald Trump has desperately tried to overturn November’s election results during the past two months, his vice-president Mike Pence has performed a delicate balancing act.
/jlne.ws/35bPfmv

Trump moves to ban Chinese payment apps including Alipay; US president ratchets up tech tensions with Beijing days before Joe Biden’s inauguration
James Politi and Eric Platt and Yuan Yang – FT
US president Donald Trump moved to ban transactions with Chinese payment applications including Alipay, WeChat Pay and Tencent’s QQ Wallet on Tuesday, stoking tensions with China with just days remaining in his presidency.
/jlne.ws/3hMUX3u

Joe Biden must take a global lead on climate risk disclosure; Incoming president can use existing regulatory powers to unlock sustainable growth
Laura Tyson – FT
As US president-elect Joe Biden prepares to take office, many see the challenges he faces as similar to those confronted by Franklin Roosevelt in 1933. Just as Roosevelt’s ambitious proposals were essential to pulling America out of the Depression, an equally ambitious agenda from Mr Biden is essential to rescue the country from the Covid-19 pandemic and combat climate change.
/jlne.ws/3beOkG4

Pence Said to Have Told Trump He Lacks Power to Change Election Result; A day before he presides over a joint session of Congress to ratify Joseph R. Biden Jr.’s victory, the vice president tried to lower the president’s expectations while seeking ways to mollify him.
Maggie Haberman and Annie Karni – NY Times
Vice President Mike Pence told President Trump on Tuesday that he did not believe he had the power to block congressional certification of Joseph R. Biden Jr.’s victory in the presidential election despite Mr. Trump’s baseless insistence that he did, people briefed on the conversation said.
/jlne.ws/3s0Goy4

Despite Trump pressure, Pence will not block Biden’s election certification: advisers
Jeff Mason – Reuters
Despite pressure from U.S. President Donald Trump to help overturn his election loss, Vice President Mike Pence will stick to his ceremonial duties and not block Wednesday’s certification by Congress of President-elect Joe Biden’s victory, advisers said.
/jlne.ws/2MEhiEZ

U.S. Congress braces for marathon protest by Republicans over Trump’s election defeat
Richard Cowan – Reuters
Donald Trump’s flailing effort to overturn President-elect Joe Biden’s victory comes down to the U.S. Congress on Wednesday in a showdown led by a band of Republican lawmakers that could stretch proceedings past midnight but is almost certain to fail.
/jlne.ws/35dyaIU

Regulation

ESMA launches a Common Supervisory Action with NCAs on the supervision of costs and fees of UCITS
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, is launching a Common Supervisory Action (CSA) with national competent authorities (NCAs) on the supervision of costs and fees of UCITS across the European Union (EU). The CSA will be conducted during 2021.
/jlne.ws/2XeY4aT

ESMA promotes transparency for TLTRO III transactions
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, issues today a public statement promoting transparency in the IFRS financial statements of banks regarding accounting for the third series of the European Central Bank’s (ECB) Targeted Longer-Term Refinancing Operations (TLTRO III).
/jlne.ws/3oj6Hxe

Reminder: Compliance Date for NFA’s Swaps Proficiency Requirements is January 31, 2021
NFA
As a reminder, the compliance date for NFA’s Swaps Proficiency Requirements is January 31, 2021. NFA Members with associated persons (AP) required to satisfy NFA’s Swaps Proficiency Requirements must ensure these individuals do so by January 31, 2021. Individuals who do not satisfy the Swaps Proficiency Requirements by the compliance date will be unable to engage in swaps activities until they have done so. Further, those individuals’ Associate Membership and AP registration will be withdrawn after the compliance date if the individual exclusively engages in swap activities on behalf of an NFA Member FCM, IB, CPO, or CTA.
/jlne.ws/2JNMjoM

EU watchdog starts review of customer charges in funds sector
Reuters Staff
The European Union’s markets watchdog launched a review on Wednesday to assess whether customers in the bloc’s 10.8 trillion euro investment funds sector are being overcharged.
/jlne.ws/395BIOP

Investing and Trading

Swiss franc shrugs off being put on the naughty step by US; Flood of money unleashed by the Fed has put dollar under pressure against other currencies
Eva Szalay – FT
For many foreign exchange traders, the US Treasury’s decision to designate Switzerland as a currency manipulator last month comes nearly six years too late and with a good dose of irony.
/jlne.ws/3ns6pmx

Clean-air legislation fuels breathtaking rally in rhodium; Niche material used in catalytic converters has soared alongside its sister metal, palladium
Henry Sanderson – FT
Stricter rules on car emissions have helped drive a dramatic rally in rhodium, a niche metal used in catalytic converters, in the latest sign of how the environmental agenda is reshaping commodity markets.
/jlne.ws/3s0DI3u

‘Best of British’ stocks and where to find them; Tomorrow’s UK market stars are not always in obvious sectors
Maike Currie – FT
“Be fearful when others are greedy, and greedy when others are fearful.” Applying Warren Buffett’s investment adage to the UK, most investors have been firmly lodged in the “fearful” camp for a long time.
/jlne.ws/3nfxkBT

U.S. 10-Year Treasury Yield Hits 1% for First Time Since March
Sam Goldfarb and Joanne Chiu – WSJ
The yield on the benchmark 10-year U.S. Treasury note rose above 1% for the first time since March, after returns from Georgia’s closely watched runoff elections fueled bets that Democrats could win narrow control of the Senate.
By late morning in Europe on Wednesday, the yield on the benchmark 10-year U.S. Treasury note was 1.033%, according to Tradeweb, up from 0.955% at its 3 p.m. ET close on Tuesday.
/on.wsj.com/2L6677z

What Georgia Means for the Markets; Investors react to Democrats’ strong showing in Senate runoffs.
Andrew Ross Sorkin, Jason Karaian, Michael J. de la Merced, Lauren Hirsch and Ephrat Livni – NY Times
It was a big night for President-elect Joe Biden, as the results in Georgia’s Senate runoff elections appear set to give Democrats control of the chamber, and therefore Congress. That makes it more likely that Mr. Biden will be able to advance his policy agenda — within limits.
/jlne.ws/3onZnQI

Famed investor ‘doubling down’, says stock market a ‘real humdinger’ of a bubble
Mark DeCambre – MarketWatch
That is Jeremy Grantham, co-founder and chief investment strategist at Boston-based money manager Grantham, Mayo, Van Otterloo & Co., in a research report dated Tuesday after a particularly withering year for his investment outfit in 2020.
/jlne.ws/3no0GOm

Environmental, Social and Corporate Governance

Carlyle Makes $374 Million Commitment to Renewable Developer Amp
Brian Eckhouse – Bloomberg
Carlyle Group Inc. has committed $374 million in equity capital to Amp Solar Group Inc., a Canada-based global renewables developer. The investment is intended to spur growth in North America, Japan, Australia, Iberia and the U.K., according to a statement. Terms of the deal weren’t disclosed.
/jlne.ws/394efNL

Rio Tinto’s pledge on cultural heritage policies faces big test; US set to release study on huge Arizona copper project opposed by Native American tribes
Neil Hume – FT
Rio Tinto’s vow to improve its cultural heritage policies faces a test with the publication of a long-awaited report on the development of a huge underground copper mine in Arizona.
/jlne.ws/2MtgHFV

Henry Paulson Returns to Finance, to Run Climate-Focused Fund; The venture aims to push climate-friendly businesses into the mainstream.
Andrew Ross Sorkin – NY Times
This past fall, Henry M. Paulson Jr., the former Treasury secretary, got a call from Paul David Hewson, better known as Bono. The musician-activist-investor had an idea and “an ask”: Bono, who helped found TPG’s $5 billion Rise funds focused on “impact investing,” told Mr. Paulson that the investment firm wanted to create an even bigger platform to focus exclusively on combating climate change — and he wanted Mr. Paulson to run it.
/jlne.ws/2XdSeGG

‘They’re making water a commodity.’ Investors see opportunity in the Colorado River.
NY Times
In the West, few issues carry the political charge of water. Access to it can make or break both cities and rural communities. It can decide the fate of every part of the economy, from almond orchards to ski resorts to semiconductor factories. And with the worst drought in 1,500 years parching the region, water anxiety is increasing.
/jlne.ws/35cOOZu

Institutions

Billionaire Christopher Hohn Hedge Fund Recoups Pandemic Losses
Nishant Kumar – Bloomberg
The Children’s Investment Fund recovers amid surging markets; Returns continue Hohn’s streak of gains since financial crisis
Billionaire activist investor Christopher Hohn’s hedge fund has racked up a 12th straight year of gains, overcoming record losses at the onset of the pandemic. The Children’s Investment Fund made about 14% in 2020 as its concentrated stock portfolio rose amid surging markets, according to people with knowledge of the details. That took the fund’s assets to about $35 billion, a separate person said, asking not to be identified because the information is private.
/jlne.ws/3of1wOJ

Hedge fund Winton’s assets plunge $26bn from peak after 2020 rout; David Harding’s firm was among biggest hedge funds but suffered in coronavirus crisis
Laurence Fletcher – FT
Winton Group, once one of the world’s biggest and most successful hedge fund firms, has suffered a nearly 80 per cent drop in its assets over the past five years, with poor returns and client withdrawals accelerating in a tough 2020.
/jlne.ws/2LnicFk

Regions

Hong Kong police round up dozens of pro-democracy politicians; US citizen among those detained in one of biggest purges under Beijing’s security law
Primrose Riordan and Nicolle Liu – FT
Hong Kong police have arrested 53 pro-democracy politicians in one of the biggest purges of the city’s opposition since Beijing imposed a tough new national security law on the city last year.
/jlne.ws/35eX2zY

Record rise in government debt will hit emerging markets harder, Fitch says
Reuters
A record increase in government debt globally will hit emerging markets disproportionately, with developing nations not benefiting from lower interest rates and debt service burdens providing a cause for concern, Fitch Ratings said on Wednesday.
/jlne.ws/2LnBzOy

Short-selling bans take their toll on securities finance revenues in 2020
Jonathan Watkins – The TRADE
The global securities finance industry generated $7.66 billion in revenue for lenders in 2020, representing an 11.6% decrease from the previous year as the fallout from the pandemic hit the sector. Securities lending revenue is calculated as the amount paid by borrowers – typically broker-dealers – on behalf of their hedge fund clients, to temporarily borrow equity and fixed income securities from long-holders of these assets, known as beneficial owners. The statistics – released by DataLend, the market data division of EquiLend – showed the biggest declines were seen across Asia-Pacific (APAC) and Europe, at 26.8% and 19.2% respectively. These were regions that saw the strictest short-selling bans installed in response to heightened market volatility during the second quarter of 2020.
jlne.ws/391r4bx

Brexit

Brexit red tape prompts rethink on cross-Channel trade; Deal between London and Brussels leads some UK SMEs to pause trade and others to give up on cross-border business altogether
Peter Foster and Daniel Thomas – FT
While British importers and exporters wrestle with the UK’s new EU trade border this January, some businesses have taken a more radical approach to addressing the challenges posed by life after Brexit: give up on cross-Channel trade altogether.
/jlne.ws/38iIpOc

‘Hardships’ coming for traders at N.Ireland’s post-Brexit borders, lobby groups say
Reuters Staff
Traders selling goods between Northern Ireland and the rest of the United Kingdom will face “real hardships” in the coming weeks after the post-Brexit regulatory border shattered normal operations, lobby groups said on Wednesday.
/jlne.ws/3rWL481

How UK finance can thrive after Brexit
FT Editorial Board
It would be fanciful to think that the City of London has only sunlit uplands ahead. Finance was all but absent from December’s Brexit trade deal and the EU has so far resisted granting the UK “equivalent” regulatory status to aid market access. This week’s lurch of euro share trading from London to Paris, Amsterdam and Frankfurt was ominous — suggesting that the low tally of fewer than 10,000 jobs lost from the City so far could indeed rise towards earlier predictions of up to 75,000.
jlne.ws/3bd59kt

UK touring musicians hit by ‘double whammy’ of Brexit and Covid
Lanre Bakare – The Guardian
British musicians are being hit by a “double whammy” of Covid-19 restrictions and costly post-Brexit bureaucracy that could decimate European touring, according to industry figures and artists who are calling for changes to trade agreement with the EU. Under the Brexit deal British musicians planning to play in Europe will now have to secure work permits for each individual country on a tour and face further red tape when it comes to transporting equipment and crew. Naomi Pohl, the deputy general secretary of the Musicians’ Union, said work permits were going to be a particular problem when touring with larger classical groups.
jlne.ws/3s2httN

Pound Optimism Fades Along With Brexit Glow for Asset Managers
William Shaw – Bloomberg
The pound’s Brexit deal honeymoon looks well and truly over, with the currency off to the worst start to the year among its Group-of-10 peers. Allianz Global Investors has taken a short position on sterling against the euro, citing the bare-bones nature of the U.K.’s trade agreement with Brussels. BlueBay Asset Management LLP remains bearish given the economic headwinds, while Mediolanum SpA says it’s too soon to go overweight as the threat of the coronavirus remains.
jlne.ws/2JPdTC5

Johnson Starts Charm Offensive to Sell Brexit Deal to UK Plc
Alex Morales and Thomas Seal – Bloomberg
Prime Minister Boris Johnson will hold a call with U.K. business leaders to spell out details of the last-minute trade deal he struck with the European Union. The call, planned for Wednesday at 4:30 p.m., will also include Chancellor of the Exchequer Rishi Sunak, Business Secretary Alok Sharma and Trade Secretary Liz Truss, according to four people familiar with the matter. It’s the latest step in a charm offensive by Johnson’s government to sell the trade agreement to British firms that spent the bulk of 2020 clamoring for clarity on the nature of economic ties with the bloc. The post-Brexit transition period ended on Dec. 31 and businesses were kept waiting until Dec. 24 for a deal to be struck.
jlne.ws/3s14tEM

Miscellaneous

The BBC, Fleet Street and the future of journalism; Precarious finances loom large in two books that chart the battles over public broadcasting and fake news
Alex Barker – FT
When the BBC made its first big push into news gathering, a few years before the second world war, it did not send reporters or correspondents into the field. That wasn’t allowed. The BBC radio journalists had another name: “mobile topicality assistants”.
/jlne.ws/3nkRxpV

Former Goldman Sachs partner Richard Sharp to become BBC chair; Appointment ends search for successor to Sir David Clementi
Alex Barker and Sebastian Payne – FT
Richard Sharp, a former Goldman Sachs partner and adviser to the chancellor, is to be made chair of the BBC in a move suggesting Boris Johnson’s government is taking a more tempered approach to the public service broadcaster.
/jlne.ws/3nhmlaP

LeBron James Proposes Forming Ownership Group for Atlanta Dream; Discusses ‘Push for Change’ After Jacob Blake Ruling
Madeline Coleman – Sports Illustrated
While the Lakers beat the Grizzlies on Tuesday night and LeBron James scored 26 points, the 36-year-old knew there were more important things happening across the country that would impact his and his kids’ futures.
/jlne.ws/3bcZFpW

Newspapers And TV Stations Got Special Access To PPP Loans. Digital Media Didn’t; Republicans blocked language that would have broadened access to COVID-19 relief to web-only news outlets.
Arthur Delaney and Tara Golshan – Huff Post
The latest COVID-19 relief law gives media companies special access to loans, but Sen. Marco Rubio (R-Fla.) made sure online-only outlets were excluded. The $900 billion COVID-19 relief legislation passed in late December included a second phase of the Paycheck Protection Program, which essentially covers payroll costs for firms that avoid layoffs for at least eight weeks. The law also included more money for federal unemployment benefits and direct payments of $600 per person to most U.S. households.
/jlne.ws/3bfBFT8

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ETF trading surges on European stock exchanges

First Read $26,851/$300,000 (9.0%) Denise Knabjian ++++ Hits & Takes JLN Staff The U.S. has surpassed the 25 million Covid-19 infections level, according to data reported Sunday by Johns Hopkins University. JPX has signed a memorandum of understanding, or MOU,...

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