Hits & Takes
John Lothian & JLN Staff
You don’t want to miss the lead story today from ProPublica about Jeff Yass, the founder of Susquehanna and a major political donor to some of the leading causes of our times. He also has a unique approach to taxes that is mostly the focus of this article, which talks about how he pays long-term rates rather than short-term rates for what is mostly short-term trading.
Is Sam Bankman-Fried the new JP Morgan? According to a Bloomberg story, he is doling out credit lines to keep crypto firms in business, much as JP Morgan helped during financial crises of the early 20th century that led to the creation of the Federal Reserve. Bankman-Fried’s crypto trading platform FTX has extended a $250 million loan to BlockFi in the latest example of help to the troubled crypto community.
Bankman-Fried is famous for many reasons, including making more money than anyone under the age of 30 since Mark Zuckerberg. His espoused philosophy of “effective altruism” is a noble goal. The question is not whether he can make money. He has proven he can do that. The question is whether he can hold on to enough to be able to give it away in the end as he hopes. Here is to hoping he can.
Our friends at Trading Technologies did some catch up accounting work yesterday and gave to the MarketsWiki Education GoFundMe campaign, matching donations that were given by Maggie Sklar and Doug Ashburn some time back. Thank you to TT for their continued stewardship of MarketsWiki Education and our GoFundMe campaign.
Yesterday we released the Brian Hyndman video for The Path to Electronic Trading video series. As I interviewed Brian I was impressed by his story and how at the beginning of his career, our careers had parallels. We were both registered representatives, me in futures, he in equities. Because he graduated from college eight years after me, technology played a bigger role in the next steps of his career as he moved from Waterhouse Securities to National Discount Brokers. NDB, which was famous for its mallard duck logo, came up with an innovation in touchtone phone order entry for stock orders. This was the beginning of trading stocks on your phone, though the phone probably had a cord attached to it. Hyndman has a good story to tell about a career that took him from NDB to BRUT ECN to Sungard to Nasdaq to crypto and back to equities with Blue Ocean. You can watch the video HERE.
We also have another video from IDX, this one of Georgina Hallett, LME’s chief sustainability officer. She spoke to me about the LME’s Passport system and what it does to digitize information and what it accomplishes.
Bloomberg’s Future of Work feature has a video “The Metaverse Is Coming for Your Office” that takes a deep dive into what life after zoom might look like, whether VR, AR or old-fashioned desktops.
The Minneapolis Grain Exchange or MGEX announced today that it has agreed to clear trades for the Intelligent Medicine Exchange (IMX). MGEX is owned by Miami International Holdings, Inc. and offers a Derivatives Clearing Organization (DCO) for innovative exchanges to launch new products.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
LME’s Georgina Hallett Talks LME Passport, Responsible Sourcing and More in JLN IDX Interview
In London at FIA’s IDX, or International Derivatives Week, conference at The Brewery, John Lothian News interviewed LME’s Chief Sustainability Officer, Georgina Hallett, about the LME’s Passport, the electronic certificates of analysis (CoA) and digital credentials register.
Brian Hyndman’s Path To Electronic Trading Began Early
Brian Hyndman wanted to be a stockbroker growing up and that is what he became, starting out by working for Waterhouse Securities. But his career would be driven by the innovations and new technologies adopted by the markets and he would play a central part.
Hyndman was interviewed by John Lothian News for The Path to Electronic Trading video series.
The Fire Burning Beneath Crypto’s Meltdown; The cryptocurrency implosion followed rampant creation of new digital money, something that never ended well in the traditional world
James Mackintosh – WSJ
One of the simplest lessons of stock market history is that innovations often lead to bubbles and busts, from new tulip bulbs through canals and railways to the internet. Less well understood is that financial innovations count for double, as new tools expand the supply of what looks like money, allowing the bubble to grow larger—and the bust to be even more serious. The cryptocurrency implosion currently under way followed rampant creation of new digital money, something that never ended well in the traditional world either.
***** This will not be an easy story for crypto believers to read.~JJL
Is Sam Bankman-Fried a Modern-Day Robber Baron?
Daniel Kuhn – CoinDesk
FTX CEO Sam Bankman-Fried is like a modern day robber baron in at least one way. As the digital asset industry tumbles downward in fits and starts, the titan of industry who sometimes skips lacing his shoes is thinking about ways to prevent calamity – and perhaps profit. This weekend, Bankman-Fried discussed the “responsibility” he feels to bail out crypto firms in crisis. He repeated the sentiment on Twitter, where he said the principal concern is mitigating retail losses, disclosing risks and preventing bad debts from spreading across the sector.
***** Which definition of “robber baron” is Coindesk going for here? Merriam Webster: 1 : an American capitalist of the latter part of the 19th century who became wealthy through exploitation (as of natural resources, governmental influence, or low wage scales) 2 : a business owner or executive who acquires wealth through ethically questionable tactics.~JJL
Citadel Securities: A day in the life of a trader in NYC
Sarah Butcher – eFinancialCareers
Patrick Chi is a trader at Citadel Securities. He joined the firm in August 2020 after graduating from Columbia University with a degree in applied mathematics. 6.45am: I wake up and check my messages on Slack and look at Bloomberg just to see how markets did overnight. I’m a trader on the American Depositary Receipt (ADR) desk. We make markets in more than 3,000 ADRs, which means we provide our clients with liquidity in the form of a bid and offer on all of those names. ADRs are US listings of international securities. They give US investors an opportunity to invest in foreign companies. We think of the ADR as a derivative of the local market security, which trades when the US market is closed. Therefore, when I wake up, I look to see how our largest take-home risks performed in local markets overnight. This generally takes about 10 minutes or so. If all is well, I might then snatch another 20 minutes of sleep or go for a run. Either way, I get to the office around 8am. If I haven’t been for a run, I’ll walk to work; the office is about 30 minutes from my apartment…
***** Where is “eat the last slice of pizza from last night left out on the coffee table”?~JJL
Tuesday’s Top Three
Our most clicked story Tuesday was the New York Post’s FTX and other crypto firms ditch sports deals as market collapses. Second was Illinois governor’s race shapes up to be a battle of the billionaires, from The Financial Times. And third was As the Crypto Winter Hits Its Peers, Chicago Trading Firm Jump Is Ready for More Bets, from Bloomberg.
26,862 pages; 238,997 edits
Meet the Billionaire and Rising GOP Mega-Donor Who’s Gaming the Tax System
Justin Elliott, Jesse Eisinger, Paul Kiel, Jeff Ernsthausen and Doris Burke – ProPublica
One day in July 1985, three young men from Philadelphia, their lawyer and a burly Pinkerton guard arrived at a horse track outside Chicago carrying a briefcase with $250,000 in cash. Running the numbers on a Compaq computer the size of a small refrigerator, Jeffrey Yass and his friends had found a way to outwit the track’s bookies, according to interviews, records and news accounts. A few months earlier, they’d wagered $160,000, gambling that, with tens of thousands of bets, they could nail the exact order of seven horses in three different races. It was a sophisticated theory of the racing odds, honed with help from a Ph.D. statistician who’d worked for NASA on the moon landing, and it proved right. They bagged $760,000, then the richest payoff in American racing history.
Crypto exchange FTX bails out lending platform BlockFi; Rescue prompts comparisons between chief executive Sam Bankman-Fried and a crypto central bank
Scott Chipolina and Joshua Oliver – FT
FTX chief executive Sam Bankman-Fried has bolstered the stumbling $900bn crypto industry with his second bailout of a struggling digital assets company in as many weeks. The 30-year-old chief announced on Tuesday that his crypto trading platform FTX has extended a $250mn loan to BlockFi. Just last week, Bankman-Fried helped crypto broker Voyager Digital pull back from the brink with a loan that totalled about $485mn in cash and bitcoin. The rescues came as the crypto industry has tried to restore confidence during a period of accelerating pressure on the price of digital assets such as bitcoin, which has pushed even some of the biggest market participants in the industry into distress.
Crypto Billionaire Sam Bankman-Fried Doles Out Credit Lines to Stem Contagion
Yueqi Yang – Bloomberg
Sam Bankman-Fried, the crypto billionaire who co-founded digital-asset exchange FTX Trading Ltd., is providing credit lines to try to stem contagions for his beleaguered industry. Crypto lending platform BlockFi Inc., which had been raising funds at a reduced valuation, said on Tuesday that it secured a $250 million revolving line of credit from FTX. Last week, crypto exchange Voyager Digital Ltd., whose shares are down 90% this year on Toronto Stock Exchange, got a $200 million credit line — a mix of cash and USDC stablecoins — as well as a separate, 15,000-Bitcoin revolving facility from Alameda Research, Bankman-Fried’s trading firm.
Crypto.com Receives In-Principle Approval from the Monetary Authority of Singapore; Crypto.com Deepens Roots in Singapore with In-Principle Approval for Major Payment Institution License
Crypto.com, the world’s fastest growing cryptocurrency platform, announced today that it has received in-principle approval from the Monetary Authority of Singapore (MAS) for its Major Payment Institution License. Once granted, this license will enable Crypto.com to offer a range of payment services within the Payment Services Act, including Digital Payment Token (DPT) services to customers in Singapore.
Crypto’s frozen mystery: The fate of billions in Celsius deposits; A disruptive company with a charismatic leader threw a lot of wealth into uncertainty — and vividly demonstrates the end of the crypto party
Steven Zeitchik and Rachel Lerman – Washington Post
In 2018, Alex Mashinsky held a dinner at an upscale restaurant in New York. The entrepreneur’s goal was to attract “whales” — crypto-speak for large-scale currency holders who can move markets — to invest in a nascent entity he’d created called Celsius Network. The Ukraine-born, Israel-raised businessman spoke charmingly and passionately, according to a person who was at the dinner and described it on the condition of anonymity because it was a private event. He laid out his mission of “unbanking,” in which investors can deposit cryptocurrency outside the traditional financial system. Central to the pitch were unusually high yields for depositors in his Celsius Network — as much as 30 percent — made possible, the New York-based Mashinsky explained, because their money would be loaned out at high rates to those needing it for short-term crypto investments. “It was incredible to watch — everyone in the room was enthralled,” said the guest. “The whales were excited and ready to write checks. Even people who might have been skeptical were on board.”
MGEX to Provide Clearing-as-a-Service to Intelligent Medicine Exchange (IMX)
Minneapolis Grain Exchange (MGEXTM), a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), and Intelligent Medicine Exchange (IMXTM), developer of the first dedicated futures marketplace based on multiple aspects of the health care economy, today announced that they have entered into an agreement for MGEX to provide clearing services to IMX for certain cash-settled futures and options on futures contracts. The services will include managing exposures, clearing trades, and collecting and maintaining performance bonds and security deposits for participants.
CFTC advocates for expansion of cryptocurrency market jurisdiction
Daniel L. Stein, Matthew F. Kluchenek and Anna R. Easter – Reuters
More than a decade has passed since Bitcoin was created, yet lawmakers and regulators continue to wade through important questions, such as which regulator should be permitted to regulate digital assets. Despite a lack of digital asset legislation, federal regulators, including the Commodity Futures Trading Commission (CFTC), are adding resources to help police fraud in the digital asset markets in light of the rapidly increasing number of enforcement actions related to digital assets. The CFTC made its first official statement on its jurisdiction over “virtual currencies” (i.e., digital assets, including cryptocurrencies) as far back as 2014, when then Chairman, Timothy Massad, testified before the Senate Committee on Agriculture, Nutrition and Forestry…
Supreme Court dismisses case against SEC’s ‘no admit, no deny’ policy backed by Musk, Cuban
Chris Matthews – MarketWatch
The U.S. Supreme Court Tuesday rejected a challenge brought against the Securities and Exchange Commission by a former Xerox executive, and backed by Tesla CEO Elon Musk, against the Securities and Exchange Commission’s practice of barring those who agree to settlements with the agency from publicly proclaiming their innocence. The SEC’s so-called gag rule was adopted in 1972 in order to prevent those who settle with the agency from discrediting its enforcement of securities laws. Given that the SEC settles the vast majority of the cases it brings, the policy is seen as an important tool for a regulator that doesn’t have the resources to try in court all the violations it pursues. The justices declined to hear a case brought by former Xerox Holdings Corp. XRX, chief financial officer Barry Romeril that challenged the constitutionality of the gag order imposed by the SEC in 2003, when he settled claims that he directed his employees to make misleading accounting adjustments that inflated Xerox earnings, without admitting nor denying the allegations. He was forced to pay more than $4 million in penalties and disgorgements.
‘I trusted them with my savings:’ Crypto investors scramble after accounts frozen
David Hollerith – Yahoo! Finance
Months ago, Sydney, Australia-based Hamish Tipene took out two loans with Celsius Network. Buying a new home above his pre-approval rate, he staunchly supported the crypto lender’s motto “Unbank Yourself” and used his crypto holdings as collateral instead of selling it for cash. But when the value of crypto started plummeting a week ago, the collateral Tipene put up for the loan rapidly dwindled and he received a margin call. He needed to add more collateral. Before he could, Celsius froze Tipene’s account, making it impossible to meet the margin call in time. The company liquidated 0.59 of one bitcoin, a value of $11,800 by today’s rate. He now faces another margin call that would wipe out another $13,000 in bitcoin, but with his account still frozen he’s up against the same dilemma.
CBDCs, Not Crypto, Will Be Cornerstone of Future Monetary System, BIS Says
Sandali Handagama – CoinDesk
Crypto’s structural flaws make it an unsuitable basis for a monetary system, according to the Bank for International settlements (BIS). Instead, monetary systems could be built around central bank digital currencies (CBDCs), which are digital representations of central bank money. The BIS, an association of the world’s major central banks, dedicates a 42-page chapter in its “2022 Annual Economic Report” to laying out a blueprint for the future of the global monetary system. In that vision, there is room for only some of crypto’s underlying technical features, like programmability and tokenization, not for cryptocurrencies themselves.
Tether Plans to Launch a Stablecoin Tied to the British Pound; GBPT will be available to trade in early July, Tether says; The crypto platform also has stablecoins tied to euro and yuan
Emily Nicolle – Bloomberg
Tether is releasing a crypto token tied to the value of the British pound as part of a push into new stablecoins. The GBPT token will be available to trade on the Ethereum blockchain from early July, according to a statement on Wednesday. The crypto platform also offers tokens pegged to the US dollar, euro, Chinese yuan and Mexican peso, having launched the latter last month.
Cryptocurrency fallout delivers sharp kick to decentralised finance dreams; Some networks have reneged on commitments to arms-length management.
Scott Chipolina – FT
Crypto networks that pledged to put users in control have put themselves in charge as they try to survive the deepening crisis gripping the digital asset market. In the past week, three decentralised finance groups have stepped in with emergency plans to protect their projects and users from economic pain in the face of tumbling cryptocurrency prices.
As Russia Threatens Captured American Vets, U.S. Invokes Laws of War
W.J. Hennigan – Time
A day after the Kremlin said two American veterans captured by pro-Russian forces in Ukraine had committed war crimes and could face the death penalty, the Biden Administration expressed outrage and called on Russia to abide by international law.
Russia says West is spreading lies about causes of world’s food crisis
Russia on Wednesday said the West was spreading lies about the causes of the global food crisis which Moscow said was being stoked by the sanctions imposed on Russia by the United States and European Union due to the invasion of Ukraine.
Dubai Becomes New Switzerland for Traders of Russian Commodities
Archie Hunter, Ben Bartenstein, Verity Ratcliffe and Isis Almeida – Bloomberg
Traders of Russian commodities are rushing to set up businesses in Dubai as Switzerland makes it increasingly challenging for them to deal with Moscow. Switzerland has for decades been home to middlemen helping to match Russian producers with buyers all over the world. Now, a ratcheting up of sanctions is prompting a migration to the emirate in the Persian Gulf.
IEA chief warns Europe to prepare for total shutdown of Russian gas exports; Fatih Birol says governments should keep ageing nuclear plants open and take other contingency measures
David Sheppard – FT
The International Energy Agency has warned that Europe must prepare immediately for the complete severance of Russian gas exports this winter, urging governments to take measures to cut demand and keep ageing nuclear power stations open. Fatih Birol, the head of the IEA, said Russia’s decision to reduce gas supplies to European countries in the past week may be a precursor to further cuts as Moscow looks to gain “leverage” during its war with Ukraine.
Olaf Scholz aide’s comments on future links with Russia trigger dismay; German foreign policy adviser Jens Plötner says relations with Moscow as big an issue as arms to Kyiv
Guy Chazan – FT
Politicians and commentators in Berlin have reacted with dismay to remarks by Chancellor Olaf Scholz’s foreign policy adviser, who said the media should focus more on Germany’s future relationship with Russia than on supplying Ukraine with heavy weapons. Jens Plötner was addressing accusations levelled at the German government by large parts of the media and opposition that it has been hesitant in its support for Ukraine and much slower to supply it with heavy weapons than the US, UK and France.
Finding Alternative Route for Ukraine’s Grain Exports Isn’t So Simple, Experts Say
Matthew Mpoke Bigg – NY Times
Russia’s blockade of the Black Sea has inflated global grain prices, raised fears of hunger in some countries and drawn widespread condemnation. It has also provoked a vexing problem: how to find a new route out for Ukraine’s agricultural exports.
Exchanges, OTC and Clearing
UAE’s ADX launches FADX 15 Futures, the exchange’s first index derivatives; FADX 15 futures are cash-settled contracts that will replicate the price performance of the benchmark FADX 15 index
Abu Dhabi Securities Exchange (ADX) has launched FADX 15 futures contracts trading on its derivatives platform. The futures, based on the FTSE ADX 15 (FADX 15) Index, are the first index derivatives to be listed on the ADX. FADX 15 futures are cash-settled contracts that will replicate the price performance of the benchmark FADX 15 index, which comprises the most liquid and the largest 15 companies listed on the ADX main market. Each FADX 15 Index futures contract is equivalent to the dirham value of the FADX 15 index. The FADX 15, launched in March 2022, selects companies by free float adjusted market capitalisation and median trading value.
LCH RepoClear and Euronext Clearing go live with new VaR model; The two clearinghouses’ new risk models will utilise an enhanced Value at Risk (VaR) methodology across the debt markets that they clear.
Wesley Bray – The Trade
LCH RepoClear and Euronext have concurrently launched Value at Risk (VaR) methodologies across the respective debt markets they clear. LCH’s VaR methodology covers the 13 Euro debt markets that it clears and is based on three key pillars: better recognition of diversified portfolios; adjusted anti-procyclical measures to support stability and predictability of the margin requirement; and an enhanced capacity to adapt to market volatility.
CME Group Chairman and Chief Executive Officer Terry Duffy to Appear Before U.S. House of Representatives Agriculture Committee
CME Group Chairman and Chief Executive Officer Terry Duffy will appear at a hearing of the House Agriculture Committee on Thursday, May 12 to review an FTX proposal to launch an altered clearing model that could inject significant systemic risk into the U.S. financial system. “FTX’s proposal is glaringly deficient and poses significant risk to market stability and market participants,” Duffy said. “FTX proposes to implement a ‘risk management light’ clearing regime that would significantly increase market risks by potentially removing up to $170 billion of loss-absorbing capital from the cleared derivatives market, eliminating standard credit checks, and destroying risk management incentives by limiting capital requirements and mutualized risk. Under false claims of ‘innovation,’ FTX’s proposal is nothing more than cost-cutting measures that would come at the expense of risk management best practices, market integrity, customer safety and, ultimately, financial stability.”
Cboe Global Markets To Launch FLEX Micro Options on June 27
Will have a one-multiplier instead of the standard 100; Available for key broad-based index options including SPX, XSP, RUT, DJX, MXEA and MXEF; Smaller notional contract will allow greater precision when hedging portfolios
Eurex launches first futures on thematic indices
Deutsche Börse Group
Contracts are based on STOXX Thematic Indices; New segment extends Eurex’ leading role in sector and ESG derivatives; Complementing the eco-system for thematic investing
Eurex, one of the world’s leading derivatives exchanges, has introduced a new segment with the launch of its first thematic index futures. The new contracts are based on three indices from the STOXX Thematic Indices family, which are calculated by sister company Qontigo. Eurex is thus responding to the growing demand from many asset managers to align their investments with projected long-term structural trends that are transforming modern economies and societies.
CME Group Delivery Dates for July 2022
Listed below are the relevant delivery dates for the July 2022 contracts for the Chicago Mercantile Exchange Inc. (“CME”), Board of Trade of the City of Chicago, Inc. (“CBOT”), New York Mercantile Exchange, Inc. (“NYMEX”), Commodity Exchange Inc. (“COMEX”) and the Dubai Mercantile Exchange Limited (“DME”):
Clearstream automates collateral management with OSCAR
Deutsche Börse Group
OSCAR supports definition of intelligent eligibility criteria for collateral baskets; First collateral management tool in the market uniquely combining several AI techniques including knowledge representation and reasoning, machine learning and (structured) natural language processing; Reduced time to market from weeks to hours; Development together with fintech Intelli-Select
Clearstream takes the next step in automating collateral management by launching OSCAR (Own Selection Criteria with Automated Reasoning), the first collateral management tool in the market uniquely combining several artificial intelligence (AI) techniques including knowledge representation and reasoning (KRR), machine learning (ML) and (structured) natural language processing (NLP). As of Q4/2022, OSCAR will allow participants to easily define, create, negotiate and exchange optimised eligibility profiles of collateral baskets. https://bit.ly/3OfDiRl
Euronext Clearing introduces a new VaR-based margin methodology
Euronext Clearing, Euronext’s multi-asset clearing house formerly known as CC&G, today announced the introduction of a new VaR-based margin methodology on government bonds traded on MTS cash and repo platforms and BrokerTec and on MOT, EuroTLX and Hi-MTF platforms.
HKEX launches new research funding scheme
New funding scheme to support innovative research projects that connect today with tomorrow; Run in partnership with Hong Kong’s universities and focused on supporting projects in finance, business, biotechnology, green finance and ESG
Hong Kong Exchanges and Clearing Limited (HKEX) is today (Wednesday) pleased to announce the launch of the HKEX Research Funding Scheme, a new HKEX Foundation programme to nurture local talent and support the research and development capabilities at Hong Kong’s universities and tertiary institutions.
Deliverable bonds / Conversion Factors
Deliverable bonds and conversion factors of JGB Futures (except for mini-10-year JGB Futures (Cash-Settled))
Self-certification: Amendments to the rules of Bourse de Montreal inc. To introduce cybersecurity incident reporting requirements
The Rules and Policies Committee of Bourse de Montréal Inc. (the “Bourse”) and the Special Committee of the Regulatory Division of the Bourse approved amendments to the Rules of the Bourse in order to introduce cybersecurity incident reporting requirements.
US Exchanges to Close in Observance of Independence Day
MARKETNYSE, NYSE AMERICAN, NYSE AMERICAN OPTIONS, NYSE ARCA EQUITIES, NYSE ARCA OPTIONS, NYSE BONDS, NYSE CHICAGO, NYSE NATIONALSERVICETRADING
In observance of Independence Day, the New York Stock Exchange, NYSE American Equities, NYSE Arca Equities, NYSE Chicago, NYSE National, NYSE American Options, NYSE Arca Options, and NYSE Bonds markets will be closed on Monday, July 4, 2022.
Shanghai International Energy Exchange has released its Notice on the Approval of SDIC Oil & Gas Terminal Yangpu Co.,Ltd. to be the Delivery Storage Facility for Crude Oil Futures as follows:
This is to acknowledge our receipt of the application of SDIC Oil & Gas Terminal Yangpu Co.,Ltd. as the delivery storage facility for crude oil futures. In accordance with the Delivery Rules of the Shanghai International Energy Exchange and other applicable rules, we hereby issue the following response based on inspection and review results:
Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and Montréal Exchange Closed for Canada Day
Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and Montréal Exchange will be closed on Friday, July 1, 2022, for the Canada Day holiday. The Exchanges will re-open and resume regular trading hours on Monday, July 4, 2022.
China Approves Plan for ‘Healthy’ Development of Fintech Sector
Chinese President Xi Jinping chaired a meeting Wednesday that approved promoting the “healthy” development of the payment and fintech sectors, a sign that a broad crackdown on tech companies like Ant Group Co. may be easing. The meeting of the central commission for deepening overall reform also backed enhancing regulation of major payment platforms, state broadcaster China Central Television reported, adding that companies would be encouraged to return to their roots while the authorities will improve regulation.
Bloomberg, MarketAxess and Tradeweb take the wheel in European fixed income tape plans; The three platforms have set out plans to apply to become the consolidated tape provider through the public procurement procedure.
Annabel Smith – The Trade
Major fixed income execution platforms Bloomberg, Tradeweb and MarketAxess have confirmed they will be collaborating on how to push through plans for a consolidated tape for fixed income in Europe. The three entities have set out plans to apply to become the consolidated tape provider through the public procurement process organised by ESMA. As part of this process, Tradeweb, Bloomberg and MarketAxess are now preparing a competitive request for information process to begin reviewing independent third-party partners that have the potential to offer the consolidated tape service.
New EMS from ION seeks to simplify fixed income trading; Developed for both the buy and sell-side, The TRADE can exclusively reveal the launch of ION’s new fixed income execution platform.
Laurie McAughtry – The Trade
ION Markets has created a new fixed income execution management system (EMS) for both buy and sell-side traders, The TRADE can reveal. Designed to ease challenges around selecting counterparties and sourcing liquidity, the new platform aims to digitise the entire dealer to customer (D2C) trading process.
Biden signs cyber bills into law
Zach Schonfeld – The Hill
President Biden on Tuesday signed two bipartisan bills into law aimed at enhancing federal, state and local governments’ cybersecurity measures.
The bills’ passage comes following an increased pace of cyber incidents in recent years against government entities, including the SolarWinds hack, which involved Russian agents compromising nine federal agencies and at least 100 private sector groups.
7 Cybersecurity Best Practices for Financial Services Firms
Last year was a record setter for cybercrime, and the finance sector was one of the main targets. According to the FBI, the amount paid to ransomware scammers has reached nearly $1 billion annually. Overall, the financial services industry has the second highest number of security breaches. What are some of the ways you can better protect a financial institution from a cyberattack? Here are seven of the best cybersecurity practices your financial firm should live by.
‘Enormous Outflows’ From Largest Bitcoin ETF May Have Triggered BTC Crash
Krisztian Sandor – Coindesk
The world’s largest bitcoin (BTC) spot exchange-traded fund lost half of its assets under management last Friday, which might have exacerbated bitcoin’s crash on Saturday. The Purpose Bitcoin ETF saw an outflow of 24,510 bitcoins on Friday, the most severe redemption in a single day since the fund made its debut on the Canadian Stock Exchange in April 2021, according to the Norway-based Arcane Research.
Citibank Chooses Swiss Firm Metaco for Digital Asset Custody
Ian Allison – Coindesk
Banking powerhouse Citibank (C) has selected Swiss cryptocurrency custody firm Metaco to develop the bank’s digital assets safekeeping capabilities. Citi, which holds about $27 trillion assets under custody, intends to fully integrate Metaco’s “Harmonize” crypto custody platform, the companies said on Wednesday.
Crypto is based on the greater fool theory: Philippines’ incoming central bank chief
Monika Ghosh – Forkast
“The only reason you’re using this [cryptocurrencies] is you think somebody else will buy it from you at a higher price. That’s a very scary investment,” the future central bank chief told Business World.
Crypto broker FalconX valued at $8 billion after $150 million raise led by GIC
David Hollerith – Yahoo Finance
Crypto broker FalconX, a crypto platform and financial wholesaler for Wall Street, has raised $150 million at an $8 billion valuation, cementing itself as a crypto “unicorn” eight times over. Led by B Capital and Singapore’s sovereign wealth fund, GIC, the series D more than doubles the prime broker’s August 2021 valuation.
Crypto Crash Survivors Could Become Tomorrow’s Amazons, BOE Says; UK central banker compares crypto crash to dotcom bubble; Consultation on digital currency due by end of the year
Philip Aldrick – Bloomberg
The survivors of the rout in cryptoassets could become the technology companies of the future rivaling Amazon.com Inc. and eBay Inc., Bank of England Deputy Governor Jon Cunliffe said. Cunliffe compared the crash that has wiped more than $1 trillion off the value of Bitcoin and other crypto currencies this year to the dotcom collapse at the start of the millennium.
Grab Your Sunblock, Your Digital Assets, and Head to Bitcoin Beach; El Salvador’s millennial president Nayib Bukele is all in on digital currency, creating the first vacation spot payable in Bitcoin
Victoria Vergolina – Bloomberg
El Salvador’s millennial president Nayib Bukele is no tourist when it comes to Bitcoin. Last year, under his leadership, El Salvador became the first country in the world to approve Bitcoin as a form of legal tender. That means if you want to pay for something in El Salvador, you have two currency options: Bitcoin or US dollars.
Staff at crypto operator Terraform Labs hit with flight ban; South Korean prosecutors take action as they investigate company behind $40bn luna wipeout
Song Jung-a and Scott Chipolina – FT
South Korean prosecutors have banned Terraform Labs employees from leaving the country as an investigation into the company and its co-founders deepens after the $40bn implosion of its cryptocurrency.
Crypto staking must be regulated along with Bitcoin, demands first major supervisor
Christiaan Hetzner – FORTUNE
The staking and lending of cryptocurrencies could eventually fall under regulatory purview alongside Bitcoin thanks in part to a market crash that has grabbed headlines the world over. Staking is the practice of locking up a specific amount of cryptocurrency in order to validate transactions on certain blockchains. Like an ante in poker, it’s the entry ticket that must be paid to earn rewards, and it can be forfeited or lost as a penalty for a fraudulent transaction. Speaking a week after crypto lender Celsius froze all withdrawals, European Central Bank president Christine Lagarde emerged as the first to explicitly call for greater oversight of the practice during testimony to the European Parliament.
Coinbase’s Latest Move Will Keep Me on the Sidelines for Now: Here’s Why
Jon Quast – The Motley Fool
Rather than reacting, management should have proactively anticipated this situation. A little more than six months ago, the entire cryptocurrency space had a market capitalization of around $2.8 trillion, according to CoinMarketCap. This valuation has aggressively dropped about 67% since. Therefore, it shouldn’t come as much of a surprise that cryptocurrency exchange Coinbase Global (COIN 12.24%) is laying off about 18% of its workers. These layoffs are logical for Coinbase, given what’s going on in the space. However, the decision will keep me from buying Coinbase stock at this time.
Yes, NFTs Can Be Taxed, Too
Karen Hube – Barron’s
Collectors went on a bender buying nonfungible tokens, or NFTs, last year, driving up sales to $24.9 billion from $94.9 million in 2020, according to industry publication DappRadar, and many are only now realizing that an unexpected guest wants in on the fun: the Internal Revenue Service. The tax implications for folks who trade, receive, or sell NFTs can be onerous and confusing, and the IRS is beginning to crack down. “There are a lot of misconceptions that NFTs aren’t taxable until you sell them for dollars,” says Matt Metras, an enrolled agent at MDM Financial Services in Rochester, N.Y., who specializes in crypto accounting and has himself accrued a tax bill for receiving NFTs as rewards in a videogame. “I am the bearer of bad news for many clients.”
NFT marketplace Magic Eden raises $130 million
David Hollerith – Yahoo! Finance
Magic Eden, a Solana-focused NFT marketplace, has clocked $130 million in funds for its series B raise. Co-led by venture firms Electric Capital and Greylock as well as Lightspeed Ventures, the startup now carries a $1.6 billion post-money valuation. With fresh capital in hand, the company plans to use the funds to improve its marketplace for creators and traders as well as integrating it with other blockchain ecosystems beyond Solana. “NFTs are a much more emotional and relatable use case for blockchain technology. They’re fun, social, cultural, in short, an amazing way to build community on the internet,” Jack Lu, Magic Eden CEO and cofounder, told Yahoo Finance. “We see Magic Eden as the company and platform that’s going to use NFTs to bring the next billion users to Web3.”
Binance.US Eliminates Spot Trading Fees on Bitcoin; Exchange’s users can trade bitcoin for the U.S. dollar, tether, other stablecoins without spot trading fees
Vicky Ge Huang – WSJ
Cryptocurrency exchange Binance.US said it is eliminating fees on spot bitcoin trading for all customers. The move by Binance.US, the U.S. affiliate of the world’s largest crypto exchange, effectively allows customers to trade spot bitcoin for the U.S. dollar, tether, USD Coin and Binance USD—or vice versa—without paying spot trading fees.
Western Brands Are Up for Grabs in Sanctioned Russia
Yuliya Chernova – WSJ
Soon after McDonald’s closed its restaurants in Russia, a local burger chain launched a new menu with the iconic brand’s red and yellow colors and a name that started with “Mac” in Russian.
Bulgarian party’s U-turn boosts hopes for EU expansion in western Balkans; Vote in Sofia after former PM’s move could unlock accession talks for North Macedonia and Albania
Ben Hall and Henry Foy – FT
Bulgaria’s main opposition party has said it will support lifting the country’s veto on the start of EU accession talks with North Macedonia, in what could herald a significant boost for hopes of a breakthrough in the stalled process of the bloc’s enlargement in the western Balkans.
Ford Picks Spain for Production of New Electric Vehicle
William Boston – WSJ
Ford Motor Co. will build a next generation of electric vehicles at its factory in Spain as the U.S. auto maker moves to drive down costs and prepare for a potential European ban on production of gas and diesel vehicles after 2035. Stuart Rowley, head of Ford of Europe, said the shift to electric cars would result in a significant reduction of the company’s workforce both at the Spanish plant in Valencia and at the German plant that was in the running to build the next EV model.
Biden Will Push Congress for a Three-Month Gas Tax Holiday
Vulnerable Democrats have championed the move ahead of midterm elections, but experts remain skeptical that suspending the federal tax would benefit consumers much.
Zolan Kanno-Youngs and Lydia DePillis – NY Times
President Biden plans to call on Congress on Wednesday to temporarily suspend the federal gas tax, an effort to dampen the soaring fuel prices that have stoked frustration across the United States. During a speech on Wednesday afternoon, Mr. Biden will ask Congress to lift the federal taxes — about 18 cents per gallon of gasoline and 24 cents per gallon of diesel — through the end of September, just before the fall midterm elections, according to senior officials speaking on the condition of anonymity to discuss the announcement on Tuesday night. The president will also ask states to suspend their own gas taxes, hoping to alleviate the economic pain that has contributed to the president’s diminishing popularity.
Georgians turn against government after being put in EU accession slow lane; Demonstrators blame pro-Kremlin leaders for thwarting membership aspirations
Nadia Beard – FT
Tens of thousands of Georgians took to the streets of Tbilisi this week to show support for their country’s EU aspirations and protest against the government in one of the largest demonstrations in the nation in years. The atmosphere was warm as friends and families, some carrying children or dogs on their shoulders, marched towards parliament on Monday night. When Beethoven’s “Ode To Joy” blared over the loudspeakers, demonstrators held their phones in the air, their torches illuminating “We Are Europe” placards and the night sky above.
Companies Brace for Impact of New Forced Labor Law
Billions of dollars could be at stake as a law banning imports of products from China goes into effect.
Ana Swanson – NY Times
A sweeping new law aimed at cracking down on Chinese forced labor could have significant — and unanticipated — ramifications for American companies and consumers.
The law, which went into effect on Tuesday, bars products from entering the United States if they have any links to Xinjiang, the far-western region where the Chinese authorities have carried out an extensive crackdown on Uyghur Muslims and other ethnic minorities.
Former manager at crypto exchange Huobi accused of illicit trading; Employee allegedly made $5mn after setting up a retail account in his father’s name
Kadhim Shubber and Chan Ho-him – FT
A former senior manager at Huobi, one of the world’s largest crypto exchanges, is being prosecuted in Hong Kong after accusations that he made $5mn by secretly trading against a company account he controlled. The case, which has not been previously reported, concerns trades allegedly made in February and March 2020 by a then-senior manager in Huobi’s institutional clients department, Chen Boliang.
Index regulation is tricky but necessary; The growing importance and influence of financial indices cannot be denied
Alex Matturri – FT
Earlier this week the Securities and Exchange Commission announced that it was exploring whether index providers should be regulated as “investment advisers” — just like any money manager. It was a bombshell that many have seen coming.
Glencore Subsidiary Pleads Guilty to Bribery Charges in U.K.; Unit enters a guilty plea in London as part of a series of deals the commodities giant struck with authorities in the U.S., U.K. and Brazil last month over allegations of bribery and market manipulation
Dylan Tokar – WSJ
A subsidiary of commodities giant Glencore PLC entered a corporate guilty plea in the U.K. on Tuesday as part of a series of deals with authorities in that country, the U.S. and Brazil to resolve allegations of bribery and market manipulation. The subsidiary, Glencore Energy (UK) Ltd., admitted to paying more than $28 million in bribes to secure access to oil across its operations in five African countries—Nigeria, Cameroon, Ivory Coast, Equatorial Guinea and South Sudan—according to an indictment filed in London’s Southwark Crown Court.
Holiday Reminder Regarding FINRA Market Transparency Reporting Systems
In observance of Independence Day, FINRA’s Market Transparency Reporting Systems will be closed on Monday, July 4, 2022. Affected applications include:
Alternative Display Facility (ADF)
Over-the-Counter Reporting Facility (ORF)
Trade Reporting and Compliance Engine (TRACE)
FINRA/Exchange Trade Reporting Facilities (TRFs)
SEC Charges Egan-Jones Ratings Co. and CEO with Conflict of Interest Violations
The Securities and Exchange Commission today charged Haverford, PA-based Egan-Jones Ratings Company, a nationally recognized statistical rating organization (NRSRO) registered with the Commission in certain ratings classes, with violating conflict of interest provisions. The SEC also charged the company’s founder and chief executive officer, Sean Egan, with causing certain of those violations.
SEC Obtains Final Judgment Against Former Pharmacy Chain Employee Charged with Insider Trading
On June 17, 2022, the U.S. District Court for the Middle District of Pennsylvania entered a final consent judgment against now former Rite Aid Corp. employee Steven J. Sheinfeld, who was charged with insider trading based on nonpublic information regarding a potential merger between Walgreens Boots Alliance, Inc. and Rite Aid.
Suspected scam: nesbittrusteeslimited.com
FMA New Zealand
We are concerned that nesbittrusteeslimited.com (‘the website’) is involved in a scam. The website claims to offer crypto trading and crypto mining services with guaranteed daily profits. The website falsely claims to be registered in New Zealand and is using details of a NZ entity, Nesbit Trustees No 1 Limited (‘Nesbit’), without permission. Nesbit has confirmed that they are not associated with the website.
FCA seeks re-trial in insider dealing case
The Financial Conduct Authority will pursue a re-trial of Stuart Bayes and Jonathan Swann for insider dealing offences.
FCA fines insurance broker JLT Specialty Limited £7.8m for financial crime control failings
The Financial Conduct Authority (FCA) has fined JLT Specialty Limited (JLTSL) £7,881,700 for financial crime control failings, which in one instance allowed bribery of over $3m to take place.
Bank of Japan Review: Progress toward resolvability to address TBTF problem
Financial Services Agency, Bank of Japan and Deposit Insurance Corporation have jointly published Bank of Japan Review that focuses on the resolution of global systemically important banks (G-SIBs) and highlight the progress toward resolvability in Japan to address the Too-Big-To-Fail (TBTF) problem since the publication of the Key Attributes of Effective Resolution Regimes for Financial Institutions by the Financial Stability Board in 2011.
Speech by Mr Heng Swee Keat, Deputy Prime Minister and Coordinating Minister for Economic Policies, at the opening of Point Zero Forum on 22 June 2022
At the opening of the Point Zero Forum, Mr Heng Swee Keat, Deputy Prime Minister and Coordinating Minister for Economic Policies spoke about three double helixes of – Swiss-Singapore collaboration, Digital-Sustainability drivers, and Regulator-Industry partnership.
SFC publishes Annual Report 2021-22
The Securities and Futures Commission (SFC) today published its Annual Report 2021-22 which sets out its priorities for upholding market integrity and strengthening Hong Kong’s status as a premier international financial centre amidst a fast-changing environment.
Investing and Trading
Americans Have an Uneasy Feeling, and Inflation Is a Big Reason Why; Price increases have a unique power to make people fear life is spiraling out of control.
James Ellis – Bloomberg
In a 1997 paper for the National Bureau of Economic Research titled Why Do People Dislike Inflation?, Nobel laureate Robert Shiller and a team of graduate assistants interviewed hundreds of people in the US, Germany, and Brazil. While few of those ordinary Joes knew much about the economic term in question, they were all uniformly against it. Even when one researcher told a survey respondent that inflation might help raise his wages, he remained steadfastly opposed. “I suspect that an important difference between economists and laymen is that, to some extent, we speak different languages,” wrote Harvard’s N. Gregory Mankiw in his review of Shiller’s project.
Are commodities an inflation hedge or the opposite? Navigating a course between Scylla, Charybdis and a permabear.
Bryce Elder – FT
Seems we’re at the stage of the sell-off where analysts turn Homeric. Here’s the latest from Goldman Sachs’ commodities desk:
Environmental, Social and Corporate Governance
Money Funds May Be Next Target in Fight Against Greenwashing; An often overlooked part of the burgeoning ESG industry could soon encounter greater global scrutiny from regulators.
Tim Quinson – Bloomberg
An often overlooked part of the burgeoning ESG industry may soon encounter greater global scrutiny from regulators. Analysts at Fitch Ratings expect rulemakers to push for better transparency from managers of money market funds. This comes as other ESG-related offerings that fall short on the standards front increasingly struggle to keep and attract investors.
Digital Advertising Companies Look to Reduce the Industry’s Carbon Footprint; Digital ads require a lot of computing power, but the exact amount of electricity they consume is hard to pin down
Megan Graham – WSJ
Digital advertising has an energy problem: As the business has become more complex, concern about its carbon footprint has grown. It’s difficult to calculate the precise amount of electricity that online advertising consumes. But according to a study on the topic released in 2018, roughly 10% of the energy usage of the internet comes from online ads, an estimate the researchers say was based on conservative assumptions. Online advertising makes up at least 1% of global energy consumption, says Mikko Kotila, one of the researchers for the study and currently chief technology officer at Cavai, a Norwegian advertising technology company.
Investors ‘Willing’ to Sacrifice Performance for ESG
Research finds that more than half of US investors would prioritize impact or sustainability credentials over performance to some extent
More than half of US investors are willing to sacrifice investment returns in favor of ESG goals, according to a survey.
Eurex launches first futures on thematic indices
Press Releases – Qontigo
Eurex, one of the world’s leading derivatives exchanges, has introduced a new segment with the launch of its first thematic index futures. The new contracts are based on three indices from the STOXX Thematics Index family, which are calculated by sister company Qontigo. Eurex is thus responding to the growing demand from many asset managers to align their investments with projected long-term structural trends that are transforming modern economies and societies.
Credit Suisse Client’s Losses Put at $607 Million in Fraud; Judge estimated billionaire’s losses at $553 million in March; Credit Suisse let $60 million be laundered in case: prosecutor
Hugo Miller and Marion Halftermeyer – Bloomberg
Credit Suisse Group AG, sued by a Georgian billionaire over a fraud scheme run by one of its ex-bankers, lost about $607 million in the case, according to an estimate of his losses introduced in a Bermuda court, which is expected to soon rule on damages in the case. The figure was cited during a hearing Tuesday overseen by Bermuda Supreme Court Chief Justice Narinder Hargun after he told forensic accountants in March on both sides of the case to go away and come up with a more accurate assessment of Bidzina Ivanishvili’s losses.
Fund manager files lawsuit against Credit Suisse over Vatican property deal; Raffaele Mincione faces criminal proceedings for his role in purchase of London building
Owen Walker and Miles Johnson – FT
The fund manager at the centre of an ill-fated investment by the Vatican in the London property market has filed a lawsuit against Credit Suisse over claims the Swiss bank did not disclose that the funds were from donations intended for the needy. WRM Group, which was founded by former banker Raffaele Mincione, filed a claim in Luxembourg against Credit Suisse and fund administrator Citco this month. The suit alleges that Credit Suisse and Citco did not tell Mincione that investments made in his fund came from a unit of the Vatican that manages charitable donations, known as Peter’s Pence.
Moderna calls for approval of two-strain Covid vaccine booster; US biotech group says shot targeting both first strain and Omicron could help avert ‘large rise’ in cases
Jamie Smyth and Hannah Kuchler – FT
Moderna is urging regulators to authorise its new two-strain Covid-19 vaccine booster, after releasing data that shows it increases immunity against the fast-spreading Omicron subvariants. The US biotech group said the vaccine — which contains the genetic code for the original strain and Omicron — demonstrated a “potent neutralising antibody response” to the subvariants BA.4 and BA.5.
Russian Oil Is Reaching More Corners of China’s Refining Sector
Cheap Russian oil is finding its way into more corners of China’s refining industry, with buyers from coastal and inland regions snapping up cargoes that the US and Europe can’t touch. Chinese companies registered in nine administration regions across the nation imported a record quantity of Russian crude last month, customs data show. Shipments also reached the most number of entities since January 2020, suggesting they are finding new customers in Asia’s largest refining market.
Egypt’s Maait Says It’s Time to Rethink Carry-Trade Reliance
Mirette Magdy – Bloomberg
Egypt should focus on attracting more foreign direct investment and boosting exports so it relies less on its once-lucrative carry trade, Finance Minister Mohamed Maait said. The North African country has been racing to limit its exposure to the economic impact of Russia’s invasion of Ukraine, which has imperiled crucial wheat imports and could curb its post-pandemic tourism revival. Egypt’s seen some $20 billion in foreign outflows this year as investors in local debt exited what had been a favorite market.
Dallas Cowboys Owner Scores on Billion-Dollar Natural-Gas Gambit; Jerry Jones bought control of Comstock Resources at the depths of the gas bust, and now his stake is worth more than twice what he paid
Ryan Dezember – WSJ
Football season is months away, but Dallas Cowboys owner Jerry Jones already has notched a big win this year betting on natural gas. Mr. Jones took control of producer Comstock Resources Inc. four years ago at the depths of the natural-gas bust with an eye toward the liquefied natural gas export terminals along the Gulf of Mexico, just south of the company’s drilling fields. Now, because of booming LNG exports and the highest gas prices in years, his stake is worth about $2.7 billion, more than twice the roughly $1.1 billion that he invested.