FIA IDX 2021 Panel: More Exchange-Trade Products On Path to Sustainability
‘It’s important that it’s the right product at the right time, not necessarily the perfect product.’
Suzanne Cosgrove — John Lothian News
Environmental markets are “transitioning to an asset class in their own right,” said Gordon Bennett, managing director of utility markets for ICE and a panelist at a FIA IDX’s Tuesday presentation, “Exchanges and the Roll Out of New Sustainability Products.”
“They’ve changed a lot in the last two to three years” and are not just about carbon markets anymore, Bennett said. “Clearly, more people are getting involved” in ESG-related markets, Bennett added, noting that data in the CFTC’s Commitments of Traders Reports are starting to reflect a wider diversity of market participants.
Products like the CME’s E-mini S&P ESG 500 Futures, launched in November 2019, and E-mini S&P Europe 350 ESG Index futures, launched in May 2021, are important, said Owain Johnson, CME Group managing director and global head of research and product development.
To read the rest of this story, go here.
Hits & Takes
John Lothian & JLN Staff
Lots of interesting news today. Dan Berkovitz took a demotion and went from serving as a commissioner of the CFTC to general counsel of the SEC. However, since the SEC is run by former CFTC head Gary Gensler, the SEC general counsel might actually outrank the CFTC commissioners in D.C. power circles these days.
Interactive Brokers was whacked by the CFTC for not being prepared for negative oil prices. They were told to pay back customers, which they had already done, and to pay a fine of $1.75 million. The actual charge was “failing to diligently supervise the handling of its customer accounts by not adequately preparing and configuring its electronic trading system to receive negative prices and calculate margin on April 20, 2020, in violation of CFTC Regulation 166.3.”
The CFTC also fined Kraken for “Offering Illegal Off-Exchange Digital Asset Trading and Failing to Register as Required.” The CFTC hit the company with a $1.25 million fine.
FINRA adopted a rule for bad firms, those with a significant history of misconduct. They are required to put up cash or securities in a segregated account.
ESMA published a MiFID II review report on algorithmic trading, which “concludes that no fundamental issues have emerged with respect to the MiFID II algorithmic trading regime which has overall delivered on its objectives.”
Also, we missed including this yesterday: The FIA released a policy paper “principles for cross-border regulation.” FIA said it believes that cross-border fragmentation is reduced by regulatory recognition. — FIA
In other regulatory news, the UK Financial Conduct Authority announced “that it will Compel ICE Benchmark Administration to Publish 1-, 3- and 6-Month Sterling and Japanese yen ‘synthetic’ LIBOR.”
The Wall Street Journal is out with a major story about conflicts of interests and ethics violations by U.S. federal judges titled “131 Federal Judges Broke the Law by Hearing Cases Where They Had a Financial Interest.” They also published a complete list of federal judges they found with financial conflicts.
And then there is the lead story from Bloomberg outlining the way insider trading has made many believe the equity markets are “rigged” and that they may be right. It appears Dan Berkovitz is in for a bigger job than he bargained for. The SEC has a lot of work to do to restore confidence in our securities markets.
Former Merrill Lynch CEO David Komansky has died at the age of 82, Charles Gasparino of the NY Post reported. — NY Post
Another team spotlighted by Wall Street Rides Far is Team STANY – Security Traders Association of New York. Their theme is: ‘Building Bridges and Drawing Attention to Worthy Causes.’ WSRF says this about Team STANY: “Of the numerous teams participating in this year’s Wall Street Rides FAR on October 2, the team representing Security Traders Association of New York (STANY) — the New York chapter of the leading trade organization for individual professionals in the securities industry — is among the most unique. The organization itself seeks to bring together individuals from across the space, and Team STANY serves a similar purpose, allowing individuals from member firms to ride together while drawing attention to the critical mission of the Autism Science Foundation.” — LinkedIn
Also, WSRF announced Bank of America as a new bronze-level sponsor.
FIA European Principal Traders Association has a campaign to celebrate its 10th anniversary titled “We Are Market Makers.” To mark the start of the campaign, the EPTA has a landmark report from Redlap Consulting Ltd released today. — LinkedIn — LinkedIn
FEX Global started trading a new Australian Dollar Iron Ore Futures Contract on September 27, 2021.
The Chicago Federal Reserve has scheduled its fourth annual Future Leaders Conference for October 8. This free half-day event is for 18-24-year-olds interested in careers in information technology, data and analytics, and cyber security. For more details and to register, click HERE.
Brian Mehta, formerly of Trading Technologies, has been named the CMO at ReserveBar, a growing startup in the luxury spirits business.
Mike Corley, who donated to the JLN MarketsWiki Education GoFundMe campaign last week, is the president of Mercatus Energy Advisors.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
The 2021 Annual Chicago Conference on Futures and Derivatives Webinar is today at 1 p.m. CT. The two-hour event focuses on regulatory and enforcement trends affecting the derivatives industry. Registration information can be found here. ~SC
Online registration for in-person attendees of STA’s 88th Annual Market Structure Conference ends Thursday. The conference, to be held in Washington, D.C. on October 6-8, will offer both in-person and virtual sessions. The link to register is here. ~SC
FIA releases principles for cross-border regulation
FIA today released a policy paper outlining seven principles to guide the regulation of cross-border activity in the derivatives markets. FIA is issuing the paper to address the threat of market fragmentation due to conflicts, inconsistencies, and duplication in cross-border regulation. Policymakers and regulators in many parts of the world are re-examining their approaches to cross-border activity, and some are favoring more insulated national policies that favor direct oversight of domestic and foreign entities. As FIA points out in the paper, these national approaches do not defer to home country regulation, and the resulting overlap of regulation on cross-border activity will lead to less efficient markets and higher costs for end-users.
****Why they stopped at seven principles I don’t know, except 7 is a lucky number.~JJL
Dimon says JPMorgan preparing for ‘potentially catastrophic’ US credit default
Celine Castronuovo – The Hill
JPMorgan Chase CEO Jamie Dimon said that the multinational investment bank has started to prepare for a “potentially catastrophic” situation in which the United States could default on the national debt. Dimon said in a Tuesday interview with Reuters that while the country’s largest lender has previously planned for such a scenario, and “every single time this comes up, it gets fixed,” he argued that the country “should never even get this close.”
***** Seatbelts, people, seatbelts.~JJL
SEC Taps Dan Berkovitz to Serve as General Counsel; Berkovitz recently announced his departure from the Commodity Futures Trading Commission, where he has served as a commissioner since 2018
Paul Kiernan – WSJ
The Securities and Exchange Commission said it has hired a former aide to Chairman Gary Gensler to serve as its top legal officer. Dan Berkovitz, who announced plans earlier this month to leave his role as a commissioner at the Commodity Futures Trading Commission, will join the SEC as general counsel on Nov. 1, the agency said in a news release.
***** Interesting career move, but one that reunites Berkovitz with his former boss Gary Gensler.~JJL
University Endowments Mint Billions in Golden Era of Venture Capital; Some schools, including Washington University in St. Louis and Duke University, gained more than 50%
Juliet Chung and Eliot Brown – WSJ
Large college endowments have notched their biggest investment gains in decades, thanks to portfolios boosted by huge venture-capital returns and soaring stock markets. The University of Minnesota’s endowment gained 49.2% for the year ending June 30, while Brown University’s endowment notched a return of more than 50%, said people familiar with their returns, which aren’t yet public.
***** For those to whom much is given, much is required.~JJL
U.K. to Deploy Soldiers, More Tankers to Ease Fuel Shortage
Stuart Biggs – Bloomberg
Government says supplies to gas stations are stabilizing; Decision to use Army drivers will help plug labor gaps
U.K. Business Secretary Kwasi Kwarteng said a fleet of reserve fuel tankers will be available on Wednesday and soldiers will be deployed within “days” to help drive trucks, as the government moved to ease the shortages that triggered chaos at gas stations.
***** This is an emergency and it is just starting. We aren’t even into winter yet.~JJL
What the Metaverse Is, Who’s In It and Why It Matters
Nate Lanxon – Bloomberg
The metaverse is a virtual world that blends aspects of digital technologies including video-conferencing, games like Minecraft or Roblox, cryptocurrencies, email, virtual reality, social media and live-streaming. Quite how these pieces will fit together is a work in progress, but investors and executives including Facebook Inc. Chief Executive Officer Mark Zuckerberg are already interested in the commercial potential.
***** I want a metaverse where my back pain goes away.~JJL
Tuesday’s Top Three
Our top story Tuesday was SEC Charges Two Individuals for Wash Trading Scheme Involving Options of “Meme Stocks” from the SEC. Second was a tie between the latest edition of The TRADE Magazine, Autumn 2021 issue, and the MarketsWiki page for Pat Kenny, aka “The Most Interesting Man in the World.” Third was How the Far Right Embraces Crypto to Move Millions and Fund Hate, from Bloomberg.
26,622 pages; 235,922 edits
‘Most Americans Today Believe the Stock Market Is Rigged, and They’re Right’
New research shows insider trading is everywhere. So far, no one seems to care.
Liam Vaughan – Bloomberg
Jimmy Filler made his considerable wealth buying and selling scrap metal in Birmingham, Ala. Now approaching 80 and mostly retired from business, he has dabbled as a collector of antique cars and casino memorabilia, acquired a 20,000-square-foot mansion in the hills outside the city, and donated $1 million to help build a practice facility for the University of Alabama at Birmingham football team. This largesse has made Filler a big name in his hometown—but he’s an even bigger deal among a certain class of stock trader.
131 Federal Judges Broke the Law by Hearing Cases Where They Had a Financial Interest; The judges failed to recuse themselves from 685 lawsuits from 2010 to 2018 involving firms in which they or their family held shares, a Wall Street Journal investigation found
James V. Grimaldi, Coulter Jones and Joe Palazzolo – WSJ
More than 130 federal judges have violated U.S. law and judicial ethics by overseeing court cases involving companies in which they or their family owned stock. A Wall Street Journal investigation found that judges have improperly failed to disqualify themselves from 685 court cases around the nation since 2010. The jurists were appointed by nearly every president from Lyndon Johnson to Donald Trump.
Libor Deadline Extension Would Be ‘Huge Relief’ for Markets
William Shaw – Bloomberg
Banks in the U.K. and Japan appear to have won critical breathing space just three months before the London interbank offered rate is retired in those markets. U.K. regulators announced plans on Wednesday to make the ICE Benchmark Administration — the rate’s administrator — keep publishing an artificial Libor number through 2022. Firms in the sterling and yen markets could continue using the rate in all legacy contracts except cleared derivatives, the Financial Conduct Authority said in a consultation document.
UK Financial Conduct Authority Announces that it will Compel ICE Benchmark Administration to Publish 1-, 3- and 6-Month Sterling and Japanese yen “synthetic” LIBOR
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today noted that the UK Financial Conduct Authority (FCA) will compel ICE Benchmark Administration Limited (IBA), the authorized and regulated administrator of LIBOR®, to publish the 1-, 3- and 6-Month sterling and Japanese yen LIBOR settings under a changed, unrepresentative, “synthetic” methodology for a limited time period after the end of 2021.
Citadel Securities denies involvement in ‘meme stock’ trading restrictions
Citadel Securities did not ask Robinhood or any other firm to restrict or limit trading on GameStop and other so-called “meme stocks” at the height of the retail-driven trading frenzy in January, the market-maker said on Tuesday.
Ken Griffin, Robinhood Strike Back at Fresh Outrage Over GameStop
Annie Massa and Katherine Doherty – Bloomberg
Citadel Securities fires off tweets, Robinhood CEO pens op-ed; Retail investors file class-action suit after meme-stock saga
Robinhood Markets Inc. and Citadel Securities responded to renewed criticism of their actions during January’s meme-stock frenzy, after retail investors filed a class-action lawsuit last week. Citadel Securities, whose founder Ken Griffin testified about the episode during a February congressional hearing, fired off a series of tweets late Monday denying allegations that it pressured Robinhood to restrict trading. Robinhood, led by Chief Executive Officer Vlad Tenev, said in an emailed statement Tuesday that the lawsuit paints “a false narrative of collusion” with Citadel Securities.
Citadel Securities Faces New Pressure Over GameStop Frenzy; Electronic trading firm rejects ‘Internet conspiracies’ assailing its handling of meme stocks
Alexander Osipovich – WSJ
Billionaire Ken Griffin’s electronic trading firm, Citadel Securities, is under fire again over its role in the January trading frenzy in shares of GameStop Corp. GME -5.74% after new information surfaced in a lawsuit. Citadel Securities in a statement Tuesday rejected “Internet conspiracies and Twitter mobs” that have again accused the firm of pushing Robinhood Markets Inc. HOOD -0.31% and other brokerages to limit trading in GameStop and other meme stocks on Jan. 28, a move that resulted in losses for many small investors.
Trading Technologies adds another futures broker to China network; TT gives traders more ways to access iron ore, crude oil and other futures in China
Will Acworth – FIA MarketVoice
As Chinese futures exchanges gradually increase the number of contracts that can be traded from abroad, technology providers to the global futures industry are extending their services to support inflow of trading interest. In the latest example of the trend, Trading Technologies International is expanding the number of brokers connected to its network that can provide direct connectivity to Chinese futures exchanges.
DeFi makes Western Europe the world’s largest ‘crypto economy’
David Hollerith – Yahoo Finance
China banned all crypto transactions last week, in the country’s latest crackdown on digital currency activities. But according to new data from blockchain analysis firm Chainalysis, China’s growth in crypto trading by volume was falling well before last week’s restrictions.
Swiss markets watchdog approves first crypto assets fund
Switzerland’s financial markets supervisor said on Wednesday it had approved the country’s first fund that invests primarily in crypto assets. The Crypto Market Index Fund is restricted to qualified investors and categorised under “other funds for alternative investments” with particular risks, the Swiss Financial Market Supervisory Authority (FINMA) said in a statement.
Wall Street Banks Questioned by Fed on Evergrande Exposure
Chanyaporn Chanjaroen, Jesse Hamilton and Hannah Levitt – Bloomberg
Federal Reserve officials have questioned several big U.S. banks about their exposure to China Evergrande Group, joining other global regulators in examining the potential fallout from the property developer’s debt crisis.
What do we actually mean by a firm’s culture?
The Financial Conduct Authority’s exec director of consumers and competition gave an interesting speech last week about diversity and inclusion in the context of assessing a firm’s culture. He highlighted the aspects that the regulator takes into consideration when assessing individual firms and whether they exhibit the “key characteristics of a healthy culture”. This is a relatively tricky topic to tackle as a regulator and one that can be incredibly divisive, depending where you sit on the political spectrum. But what exactly do we mean by “culture” and should firms go beyond making changes to things like remuneration policies to address it?
Americans Are Getting Covid-19 Boosters—No Questions Asked; People say they are securing third vaccines by attesting that they meet the latest requirements
Robbie Whelan – WSJ
Doctors and pharmacies are rapidly signing up patients for Covid-19 booster shots, many without requiring proof of eligibility under standards that federal officials set last week.
Exchanges, OTC and Clearing
Warby Parker Given $40 Reference Price for NYSE Direct Listing
Crystal Tse and Michael Hytha – Bloomberg
Eyewear retailer going public in week’s second direct listing; Amplitude opened trading at $50; had reference price of $35
Eyewear retailer Warby Parker Inc. was assigned a reference price of $40 a share by the New York Stock Exchange as it prepares for its Wednesday trading debut in the week’s second direct listing.
Warby Parker to Start Trading on NYSE; Eyewear maker will test investor interest in the popular, but still unprofitable, brand
Charity L. Scott – WSJ
Shares of eyewear maker Warby Parker Inc. are set to begin trading Wednesday morning, in a direct listing that will test the market appeal of the direct-to-consumer brand. The New York Stock Exchange set a reference price of $40 a share, which is simply a guidepost to where it could open.
FX derivatives: Amendments of contract specifications
The Management Board of Eurex Deutschland took the following decisions with effect from 1 November 2021:
Amendment of the Contract Specifications for Futures Contracts and Options Contracts at Eurex Deutschland in accordance with the Attachment.
ASX to consider all recommendations in RBA Financial Stability Standards Report
Results of Annual General Meeting
AGM Addresses by the Chairman and the Managing Director and CEO
Samsung Asset Management Selects ICE Data Indices for KODEX Europe Carbon Allowance Futures ICE(H) ETF Covering ICE EUA Futures Contracts
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of data, technology and market infrastructure, today announced that Samsung Asset Management has licensed the ICE EUA Carbon Futures Index for a new exchange traded fund (ETF), the KODEX Europe Carbon Allowance Futures ICE(H) ETF.
Bloomberg’s BQuant Enterprise Accelerates Financial Services Firms’ Time to Market for Generating Quantitative Investment Strategies; Cloud-based BQuant Enterprise Platform Integrates with Existing Enterprise Infrastructures and Offers the First Data Science Solution with Operation-Ready Access to Bloomberg’s Expansive, Multi-Asset-Class Data Offerings
Bloomberg today introduced BQuant Enterprise, a public/private-cloud-based analytics platform (the BQuant Enterprise Platform) for quantitative analysts and data scientists in the financial markets. This customizable, turnkey solution accelerates financial services firms’ ability to compete more aggressively by incorporating quantitative approaches to all aspects of their investment processes. In addition, BQuant is the first data science solution from Bloomberg that is designed specifically for financial markets and offers operation-ready access to Bloomberg’s comprehensive range of high-quality, market leading, multi-asset-class financial and alternative data sets.
Bank-backed futures utility criticised as too ambitious; Osttra’s Joanna Davies urges industry to look for “quick wins”
Luke Clancy – Risk.net
Efforts to simplify the futures trade lifecycle should be guided by pragmatism rather than grand designs of overhauling existing workflows, a top industry executive has said. Dealers have backed the creation of a new utility to prevent a repeat of the operational bottlenecks that crippled futures trade processing during last year’s pandemic-induced market meltdown. The project is being led by FIA Tech, a for-profit subsidiary of the Futures Industry Association, which plans to simplify the
Neptune announces new CEO
Neptune Networks Ltd.
Neptune Networks Ltd. (Neptune), the fixed income pre-trade market utility, announces the appointment of John “Coach” Robinson as permanent Chief Executive Officer (CEO). Robinson commenced in the role on the 9th of September 2021. Robinson has worked with Neptune as a senior consultant since November 2020.
VoxSmart acquires GreenKey Technologies to expand NLP capabilities
VoxSmart Ltd., the global leader in communications surveillance, has announced the acquisition of GreenKey Technologies Inc., the industry-leading automated speech recognition (“ASR”) and natural language processing (“NLP”) provider, to further bolster its communications surveillance offering to global financial institutions.
Beware the known unknowns when finance meets AI; Regulators face a dilemma in anticipating this new technology’s obscure risks for financial systems
John Thornhill – FT
The Collingridge Dilemma sounds like the title of a Sherlock Holmes mystery. It is, in fact, one of the best explanations for how difficult it can be to control risky technologies. In essence, it concerns the imbalance between imperfect information and entrenched power.
Marketnode announces partners ahead of upcoming product launches; New partners will work alongside Marketnode to increase the usage of its platform, improve product development and co-create DLT solutions.
Wesley Bray – The Trade
Marketnode has partnered with ten institutions ahead of its upcoming product launches focused on digital issuance services, ESG bond data and digital asset depository infrastructure.
Russia arrests cyber security expert on treason charge; Ilya Sachkov is founder of Group-IB, which specialises in preventing ransomwear and has worked with Interpol
Max Seddon – FT
The founder of one of Russia’s largest cyber security companies has been arrested on suspicion of state treason and will be held in a notorious prison run by the security services for the next two months, a Moscow court said on Wednesday.
Managing Cybersecurity Risk: Four Options For CEOs, CFOs And Risk Officers (Part 2)
Garrett Silver – Forbes
In my previous article on this topic, we discussed the need to manage cybersecurity risk as a key component of an overall risk management strategy. CEOs, CFOs, risk officers, board members, audit committees and C-suite executives face material financial risk from cybersecurity incidents. Those leading mid-sized and smaller organizations are challenged to assess and manage the risk due to limited resources and expertise.
Best careers with a cybersecurity degree
Genevieve Carlton – ZDNet
Companies around the world depend on cybersecurity professionals to stop security breaches and investigate cybercrimes. Cybersecurity professionals play a vital role in diverse industries, including the energy sector, government, and tech. They implement security procedures, test systems for vulnerabilities, and prevent cyberattacks.
A cybersecurity degree opens the door for many jobs in information assurance and cybersecurity. Graduates work as information security analysts, penetration testers, and forensic computer analysts. With experience, they move into management-level roles like cybersecurity manager or chief information security officer.
Will Hybrid Working Change Corporate Cybersecurity Forever?
Ian Pratt – Forbes
The pandemic has changed many things about our daily lives that will persist long after vaccines have hopefully neutered the virus. Mask wearing and online shopping are the most obvious. But right up there with them is the way we work. As societies open up once again, new hybrid working practices are set to emerge. But with them come new security challenges for organizations and opportunities for threat actors.
Mitigating these risks effectively will require a focus on the endpoint as the first line of corporate cyber-defenses and a new layered approach to security built around zero-trust principles.
Akamai acquires cybersecurity firm Guardicore for $600 million
Charlie Osborne – ZDNet
Akamai Technologies has acquired Guardicore to enhance the content delivery network (CDN’s) cybersecurity portfolio.
The deal was announced on Wednesday. Under the terms of the agreement, Akamai will pay roughly $600 million to acquire all outstanding equity.
Crypto’s Road Gets Harder With Biden Pick for Bank Watchdog
Jesse Hamilton and Akayla Gardner – Bloomberg
President Joe Biden may have just dashed any remaining hopes that Washington would warm to cryptocurrencies under his watch. The White House nominated Saule Omarova last week to lead the Office of the Comptroller of the Currency, all but confirming that U.S. financial regulators will be void of any crypto allies for at least the next three years.
Robinhood’s Tenev says SEC regulatory push is about ‘control,’ not investor protection; CEO argues his company’s business model ‘threatens the existing order’
Chris Matthews – MarketWatch
Robinhood CEO Vlad Tenev took aim at U.S. regulators’ plans for stricter rules governing smartphone trading apps and the payment-for-order-flow business model that has turned his company into a $38 billion titan in the brokerage industry in an op-ed in the Wall Street Journal Tuesday.
Former US treasurer takes to Twitter to clarify crypto statement
Fasika Zelealem – Coin Rivet
Former US treasurer Rosie Rios has clarified some comments made about cryptocurrency by claiming developers globally are pursuing other use-cases, including store of value and medium of exchange.
Elon Musk wants US regulators to just let cryptocurrencies fly – saying the assets aren’t the ‘second coming of the Messiah’
Shalini Nagarajan – Business Insider
Elon Musk said he thinks US authorities should stand away from regulating cryptocurrencies, as their intervention could hold back growth. “It is not possible to, I think, destroy crypto, but it is possible for governments to slow down its advancement,” he said in an interview at the Code Conference in Los Angeles on Tuesday.
Security tokens will grow to $162 trillion in trading volume by 2030
Sam Cooling – Coin Rivet
The global listed trading volume of security tokens is expected to grow to $162.7tn by 2030, with a total security token issuance worth more than $4tn in the same period. This comes as leading analysts tip security tokens as the shining crypto asset class of the coming decade.
China is combating crypto with a push for the digital yuan
Jane Li – Quartz
As part of its quest to be an advanced economy, China initially appeared to embrace cryptocurrency. In 2011, just two years after bitcoin was born, the country opened its first bitcoin exchange. By 2016, as both a center of trading and a maker of equipment used to mine bitcoin, China was a deeply influential player in the industry.
Crypto is helping faster-growing economies build financial rails: CEO
Zack Guzman – Yahoo Finance
Developing economies are once again leapfrogging prior waves of technological innovation with the help of cryptocurrency. Much like the way consumers in India and Indonesia a decade ago skipped landlines for cellphones, institutions in Africa are embracing the advancements in crypto over alternatives offered by the traditional plumbing of the global financial system.
Elon Musk suggests China’s cryptocurrency crackdown is related to the Communist Party maintaining its grip on power
Kali Hays – Business Insider
Elon Musk suggested that China’s recent crackdown on bitcoin and other cryptocurrencies was driven by the ruling Communist Party’s concern that the technology could undermine its power.
A Government Shutdown Is Looming. What It Means for the Stock Market.
Sabrina Escobar – Barron’s
The White House told federal agencies to prepare for a shutdown beginning next week if Congress fails to come to an agreement over government funding. How did the stock market react? The S&P 500 and Dow Jones Industrial Average finished the week with slight gains.
MMT Slammed in France as Political Manifesto, Not Economics
William Horobin – Bloomberg
Modern monetary theorists shouldn’t expect a warm welcome in Paris: according to a working paper by Bank of France economists, their ideas are “more of a political manifesto than of a genuine economic theory.”
Democrats rush to raise debt ceiling and avoid ‘catastrophic’ default; Party leaders running out of options and time after Republicans block increase in spending limit
Lauren Fedor – FT
Democrats in Congress are scrambling to find a way to raise the US debt ceiling and avert what a chorus of executives and policymakers are warning would be a “catastrophic” default in less than three weeks.
The strange death of American democracy; A constitutional crisis looms as Trump tightens his grip on the Republicans ahead of 2024
Martin Wolf – FT
“An American ‘Caesarism’ has now become flesh.” I wrote this in March 2016, even before Donald Trump had become the Republican nominee for the presidency. Today, the transformation of the democratic republic into an autocracy has advanced. By 2024, it might be irreversible. If this does indeed happen, it will change almost everything in the world.
Fumio Kishida to Become Japan’s Next Prime Minister After Party Election Win; Former foreign minister defeated Taro Kono in runoff vote to win leadership of ruling Liberal Democratic Party
Peter Landers – WSJ
Fumio Kishida, a former foreign minister who has called for Japan’s missile defenses to be beefed up, was elected ruling party leader on Wednesday, assuring him of becoming the nation’s next prime minister.
The U.K.’s Gas Crisis Is a Brexit Crisis, Too; Until now, the government has blamed Covid-related restrictions for a spate of shortages. But as virus restrictions ease and fuel runs short, the focus is shifting to Britain’s exit from the E.U.
Mark Landler – NY Times
Few things are more likely to set teeth on edge in Downing Street than the tentative winner of an inconclusive German election declaring that Brexit is the reason Britons are lining up at gas stations like it’s 1974.
FMA appoints Karen Chang as Acting General Counsel
The Financial Markets Authority (FMA) – Te Mana Tatai Hokohoko – has appointed its current Head of Enforcement, Karen Chang, as Acting General Counsel until the FMA’s new Chief Executive joins next year.
Kraken to Pay $1.25M in Settlement With Commodity Futures Trading Commission; Kraken must pay the civil monetary penalty and must cease and desist from further violations from the Commodity Exchange Act (CEA), which regulates the trading of commodities in the US, CFTC said.
Jacquelyn Melinek – Blockworks
The Commodity Futures Trading Commission issued a $1.25 million penalty fine against Kraken to settle charges against the crypto exchange company after it allegedly offered illegally margined digital asset services, among other violations, according to a CFTC press release on Tuesday.
CFTC Imposes A $1.25 Million Penalty against Kraken for Offering Illegal Off-Exchange Digital Asset Trading and Failing to Register as Required
The Commodity Futures Trading Commission today issued an order filing and settling charges against respondent Payward Ventures, Inc. d/b/a Kraken (Kraken) for illegally offering margined retail commodity transactions in digital assets, including Bitcoin, and failing to register as a futures commission merchant (FCM). Kraken, founded in 2011, is one of the largest digital asset exchanges in the U.S.
CFTC Orders Interactive Brokers LLC to Pay a $1.75 Million Penalty for Supervision Failures
Failures for Electronic Trading System’s Inability to Handle Negative Crude Oil Futures Prices on April 20, 2020
The Commodity Futures Trading Commission today filed and simultaneously settled charges against Interactive Brokers LLC, a registered futures commission merchant, for failing to diligently supervise the handling of its customer accounts by not adequately preparing and configuring its electronic trading system to receive negative prices and calculate margin on April 20, 2020, in violation of CFTC Regulation 166.3.
CFTC Orders Nevada Man and His Company to Pay $374,000 for Fraudulent Solicitation and Misappropriation in Forex Scheme
The Commodity Futures Trading Commission today issued an order filing and settling charges against Cody Ryan Porter of Nevada and his company KatchPips FX LLC, a Nevada limited liability company, for misappropriating customer funds and for fraudulently soliciting more than $200,000 from over 18 individuals to invest in a forex commodity pool.
Further arrangements for the orderly wind-down of LIBOR at end-2021
The sterling, Japanese yen, Swiss franc and euro LIBOR panels are ceasing on 31 December 2021. Today, the FCA is confirming that to avoid disruption to legacy contracts that reference the 1-, 3- and 6-month sterling and Japanese yen LIBOR settings, it will require the LIBOR benchmark administrator to publish these settings under a ‘synthetic’ methodology, based on term risk-free rates, for the duration of 2022. These 6 LIBOR settings will be available only for use in some legacy contracts, and are not for use in new business.
New U.S. SEC rules to call on hedge funds, endowments to disclose votes
Katanga Johnson and Ross Kerber – Reuters
The top U.S. securities regulator on Wednesday will propose requiring large hedge funds and endowments to disclose how they vote on executive pay, bringing this clutch of influential investors in line with other top funds that have made their pay votes public for a decade.
Britain’s energy regulator should have tightened rules sooner, ex-boss says; Former Ofgem chief says that with hindsight he would have imposed ‘stronger licence conditions’ on suppliers earlier
Nathalie Thomas – FT
Britain’s energy market regulator should have introduced tougher rules much earlier to ensure the financial resilience of household suppliers, Ofgem’s former chief executive has said.
LSEG’s Refinitiv to pay $650,000 for swap data reporting failures; According to the CFTC, Refinitiv’s swap execution facility failed to report certain categories of swap data from 2016 to August last year.
Annabel Smith – The Trade
The Commodity Futures Trading Commission (CFTC) has ordered Refinitiv’s swap execution facility (SEF) to pay a civil monetary penalty of $650,000 for swap data reporting failures.
Mizuho Capital Markets to pay $1.5 million penalty for swap dealer requirement failures; The order filed by CFTC found that Mizuho Capital’s compliance and supervision failures occurred from around 2013 to at least April this year.
Wesley Bray – The Trade
The Commodity Futures Trading Commission (CFTC) has filed and settled charges against Mizuho Capital Markets for failing to comply with certain swap dealer requirements. According to the regulator, the failed requirements include reconciling swap portfolios with its counterparties, providing disclosures to counterparties concerning the daily mid-market mark of swaps, reporting swap transactions to a swap data repository (SDR) and related supervision failures.
SEC Bars Two Individuals from Whistleblower Award Program
The Securities and Exchange Commission today announced that it has barred two individuals from the SEC’s whistleblower award program, each of whom filed hundreds of frivolous award applications. The bars were issued pursuant to the 2020 amendments to the Whistleblower Program Rules, which were designed to allow the whistleblower program to operate more effectively and efficiently and to focus on good faith whistleblower submissions.
SEC Obtains Emergency Relief Against New York Real Estate Developer Charged with EB-5 Securities Fraud
The Securities and Exchange Commission today announced that it filed an emergency action and obtained an asset freeze, among other relief, against Richard Xia (aka Yi Xia) and his company, Fleet New York Metropolitan Regional Center LLC (formerly known as Federal New York Metropolitan Regional Center LLC), for committing securities fraud in connection with two real estate projects in Queens, New York.
SEC Atlanta Regional Office to Co-Host “Money and Markets: Trends and Risks for Retail Investors”
The Securities and Exchange Commission’s Atlanta Regional Office and the University of Georgia School of Law will co-host a panel discussion on “Money and Markets: Trends and Risks for Retail Investors” on Thursday, Oct. 5, 2021, from 5-6:15 p.m. ET.
Dan Berkovitz Named SEC General Counsel; John Coates to Leave SEC
The Securities and Exchange Commission today announced that Commodity Futures Trading Commission (CFTC) Commissioner Dan Berkovitz has been named SEC General Counsel, effective Nov. 1. John Coates will leave the agency in October and return to teaching at Harvard University. Michael Conley, currently the SEC’s Solicitor, will serve as Acting General Counsel upon Coates’s departure until Berkovitz joins the agency.
ESMA publishes MiFID II review report on algorithmic trading
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today published the MiFID II/MiFIR review report on algorithmic trading. The Final Report concludes that no fundamental issues have emerged with respect to the MiFID II algorithmic trading regime which has overall delivered on its objectives. ESMA nevertheless makes in the report some recommendations which aim at both simplifying the regime and making it more efficient.
FINRA, NASAA and SEC OIEA Urge Investors to Establish a Trusted Contact to Increase Investor Protection
In a combined effort to provide additional protection for investors, FINRA and the North American Securities Administrators Association (NASAA) today announced a new campaign urging investors to provide their financial firms with a trusted contact. The U.S. Securities and Exchange Commission’s Office of Investor Education and Advocacy (SEC OIEA) is also collaborating on this initiative.
FINRA Adopts Rules to Address Firms With a Significant History of Misconduct
FINRA has adopted new rules to address firms with a significant history of misconduct.1 New Rule 4111 (Restricted Firm Obligations) requires member firms that are identified as “Restricted Firms” to deposit cash or qualified securities in a segregated, restricted account; adhere to specified conditions or restrictions; or comply with a combination of such obligations. New Rule 9561 (Procedures for Regulating Activities Under Rule 4111) and amendments to Rule 9559 (Hearing Procedures for Expedited Proceedings Under the Rule 9550 Series) establish a new expedited proceeding to implement Rule 4111.
Investing and Trading
Panic-buying signs emerge—not selling—in Tuesday trade despite sharp tumble for broader stock market as yields climb
Mark Decambre – MarketWatch
While the Nasdaq Composite Index on Tuesday morning was suffering a decline of more than 2%, market internals suggest investors in the Nasdaq-listed stocks are buying rather than selling stocks. The Arms Index Arms Index, a volume-weighted breadth measure, fell to 0.426, while many on Wall Street see declines below 0.500 as suggesting panic buying.
MIT Study Finds Older Men Are More Likely to Panic Sell Stocks
Lynn Thomasson – Bloomberg
Researchers at the Massachusetts Institute of Technology are diving into the demographics of people that panic sell stocks during a market crash. Investors who are male, over the age of 45, married or consider themselves as having “excellent investment experience” are more likely to “freak out” and dump their portfolio during a downturn, according to a paper published last month that analyzed more than 600,000 brokerage accounts.
‘Can’t Lose’ Mentality Puts S&P 500 in Bigger Trouble, BofA Says
Lu Wang – Bloomberg
The S&P 500 Index has managed to stay above its recent bottom amid a renewed selloff, but Bank of America Corp. is urging investors to keep their guard up.
U.K. Spot Power Prices Surged to Highest on Record in September
Jesper Starn – Bloomberg
Most expensive month in records dating back more than a decade; Soaring fuel prices and low wind pushes power cost higher
Average U.K. power prices this month were almost three times higher than any other September in records dating back to 2010. With average wind levels down by a third compared to same month last year, U.K. power prices were fully exposed to the European energy crunch, marked by soaring natural gas and carbon prices. The nation’s day-ahead electricity prices surged to a record 424.61 pounds ($574.20) per megawatt-hour in an auction for Sept. 15, the same day an interconnector to France was knocked out by a fire.
Pound’s Worst Day in a Year Revives Emerging-Market Parallels
Greg Ritchie – Bloomberg
RBC sees sterling’s gyrations more appropriate to EM than DM; Comparisons continue to pop up after Brexit spurred volatility
Sterling’s worst session in a year has analysts once again comparing its gyrations to currencies like the Mexican peso or South African rand, rather than the dollar or euro.
Inflation and Supply Shortages Are Waking Up the Bond Bears; Debt yields are rising, along with concerns about faster inflation.
Mark Gilbert – Bloomberg
Central bankers continue to insist that the recent price pressures that are driving inflation higher will prove temporary. But based on what’s happening to bond yields and in the inflation swaps market, investors are growing less convinced. Something’s got to give.
World’s Richest Family Reveals $5 Billion Worth of Stock Picks; A firm that helps invest the Walton clan’s Walmart fortune held low-cost ETFs and company stakes including in Apollo Global.
Miles Weiss and Devon Pendleton – Bloomberg
The Walton family is shedding light on its stock picks, revealing it held almost $5 billion in equities at the end of June through a little-known firm that helps invest its Walmart Inc. fortune.
Evergrande Investors Say They’re Yet to Get Dollar Bond Coupon
Developer has $45.2 million in interest due Sept. 29 on note; Firm has sparked contagion concern across financial markets
Two holders of a China Evergrande Group dollar bond with a coupon due Wednesday said they hadn’t received payment as of 5 p.m. Hong Kong time. Evergrande owes $45.2 million in interest on the note due 2024, according to data compiled by Bloomberg. There’s a 30-day grace period before any default could be declared. The bondholders asked not to be identified because the matter is private.
Bond sell-off is a warning to the Fed; The longer central bank ‘tapering’ is delayed, the more the risk of a disruptive markets move
Mohamed El-Erian – FT
The combination of extremely low and relatively stable US government bond yields has confounded many market watchers for quite a while now, also challenging traditional economic analyses.
Valuing stocks: why investors should look harder at expectations; Many believe they examine assumptions of future cash flows in their decisions, but few do so rigorously and explicitly
Alfred Rappaport – FT
A stock price contains a treasure trove of information about the market’s expectations of a company’s future performance. Investors who properly read market expectations and anticipate revisions increase their odds of achieving above-average returns.
Soaring pea costs set to hit plant-based meat producers; French supplier warns droughts and wet harvests have led to ‘unprecedented situation’
Emiko Terazono – FT
Plant-based meat companies that rely on the pea as a key ingredient are set to be hit by the severe drought in Canada this year that has led to soaring crop prices, a leading supplier has warned.
Environmental, Social and Corporate Governance
Fund Managers Start Axing ESG Buzzword as Greenwash Rules Bite
Steven Arons and Frances Schwartzkopff – Bloomberg
Some of Europe’s biggest asset managers are starting to drop a once-ubiquitous ESG label from their company filings amid concern that regulators will no longer tolerate vague descriptions of environmental, social and governance investing.
‘Wild West’ of ESG Ripe for a Crackdown, Veteran Investor Says
Saijel Kishan – Bloomberg
Patsky says managers are ‘slapping ESG labels on anything’; ESG asset managers increasingly policed for greenwashing
There’s a veteran of ESG investing who can’t wait for tougher regulations to stamp out the false claims by fund managers in the $35 trillion industry he helped champion.
Banks Are Really Cashing In on ESG Bonds; The industry as a whole is making more money underwriting ESG-related bonds than debt for fossil fuel companies.
Tim Quinson – Bloomberg
While many banks have been condemned for contributing to the climate crisis by helping fossil fuel producers raise cash in debt markets, the banking industry as a whole is making more money from underwriting ESG-related bond sales.
FTSE Russell launches new Russell US ESG Indexes based on flagship US equity benchmarks
FTSE Russell, a leading global index, data and analytics provider, has launched the Russell US ESG Indexes, designed to integrate ESG into institutional-grade US equity indexes. The six new indexes are constructed using robust ESG screening criteria and the target exposure methodology ensures they closely match risk and return characteristics of the underlying benchmarks. FTSE Russell’s target exposure approach provides a transparent mechanism for exercising complete and precise control over both investability and ESG objectives.
Zimbabwe Raises Greenhouse Gas Emissions Reduction Target to 40%
Godfrey Marawanyika – Bloomberg
Zimbabwe increased its carbon emissions reduction target to 40% from an initial 33% by widening industries to include not just energy, but waste, industrial processes and agriculture.
Poor ESG standards hold back funds’ ability to do good, study suggests; Most sustainability funds focus on metrics extracted from self-reported data, London-based fintech says
Jackie Noblett – FT
Environmental, social and governance funds do little to drive change, largely because they rely on ESG rankings and other data that set the bar for good corporate citizenship “abysmally low”, research suggests.
SSE’s renewable energy output drops almost a third; Company blames low winds and dry weather for wind and hydro shortfall
Sarah Provan – FT
SSE’s renewable energy output over spring and summer was almost a third lower than planned, as low winds and dry weather combined with high gas prices to push up energy prices.
Investors With $29 Trillion Demand Science-Based Climate Targets
Alastair Marsh – Bloomberg
A coalition of financial firms overseeing a combined $29.3 trillion of assets are calling on some of the world’s biggest corporate emitters to “urgently” set science-based emissions reduction targets that are compatible with 1.5° Celsius of global warming.
Marex to Acquire Volcap Trading
Marex expands structured products offering and commodities business
Marex has agreed to acquire Volcap Trading (‘Volcap’), which will further expand the group’s offering in bespoke structured products and commodities. Since it was established in 2015, Volcap has built an award-winning soft commodity and bespoke structured product business that designs, structures and implements investment strategies across a wide range of financial assets. The business operates out of offices in London and Paris, with 19 employees and an extensive network of corporate customers, private banks, asset managers and family offices clients across Europe, Middle East, Asia and the Americas.
Marex reports further strong set of results – H1 sees strong revenue growth and further strategic progress
The Group continues its strong growth trajectory, with reported net revenues up 21% at $259.0 million (2020: $214.4 million) compared to the first half of 2020, primarily reflecting the benefit of recent growth investments, including XFA trading which was acquired in November 2020.
Loomis Sayles Teams Up With State Street for a Rare ETF Foray
Katie Greifeld – Bloomberg
Loomis, Sayles & Co. is making a rare foray into the ETF world as the $358 billion money manager teams up with State Street Corp. to launch an active fixed-income product.
Citigroup Finds Most Clients Are Braced for ‘Sticky’ Inflation
Anchalee Worrachate – Bloomberg
Crash more likely than rally but modest S&P gain is base case; Continued bond selloff seen, pressuring 60/40 portfolios
A majority of investors harbor fears of persistently high inflation, with a 20% pullback in stocks seen as more likely than a 20% rally, according to a Citigroup Inc. survey of clients.
Singapore Questions Top Banks on Exposure to Evergrande Fallout
Chanyaporn Chanjaroen – Bloomberg
City-state’s three banks all operate in China and Hong Kong; Singapore’s DBS says it has no exposure to Chinese developer
Singapore’s financial regulator has questioned the nation’s three banks about their exposure to China Evergrande Group, joining other global centers in examining the potential fallout from the property developer’s debt crisis.
Is it time to scrap the Irish banking pay cap? Bank of Ireland’s chief financial officer latest big name to jump ship due to EUR500,000 limit, a legacy of banking crisis
Jude Webber – FT
When one senior Irish banker working abroad was considering moving back home, he ran into an insurmountable hurdle: his pay packet. “There was an opportunity I looked at pretty hard,” he said, asking not to be named. But he would have had to take a “very severe” pay cut and “that was one of the reasons I turned it down”.
Former Merrill Lynch CEO Dave Komansky dead at 82
Charles Gasparino – NY Post
There was a time when it didn’t matter what school you went to or whether you had a fancy MBA. If you were smart and hungry, you could have a career on Wall Street — and even run a big firm. Dave Komansky, the former longtime CEO of Merrill Lynch, who epitomized that largely forgotten part Wall Street, died Monday of natural causes. He was 82.
China’s power crunch dwarfs Evergrande’s troubles in investors’ eyes
Samuel Shen and Alun John – Reuters
China’s power supply crunch, that has shut factories across the country, may pose a much bigger threat to the economy than the debt crisis at Evergrande Group, prompting investors to shun industries vulnerable to power shortages such as steelmaking and construction.
China has made $385 billion worth of hidden loans abroad, report says
Steve Goldstein – MarketWatch
China has authored $385 billion worth of so-called hidden loans, charging more than western development agencies so that poorer countries do not have to disclose their existence, a report released Wednesday showed.
Jewelers Sell $1 Gold Online as Indians Warm Up to Internet Buys
Jewelers in India have started selling gold for a little over $1 online after the pandemic upended sales, forcing them to reassess traditional ways of doing business. Sales crashed last year in the second-biggest consumer after a nationwide lockdown shuttered stores across the country. But it also led to a bump in India’s nascent market for online gold sales. That’s pushed jewelers such as Tata Group’s Tanishq, Kalyan Jewellers India Ltd., PC Jeweller Ltd. and Senco Gold and Diamonds to launch offers to sell gold for as little as 100 rupees ($1.35) either directly on their websites or through tie-ups with digital gold platforms. Consumers can take delivery once they have invested enough for at least 1 gram of gold.
China’s Coal Shortage Means Higher Prices for the World
Stephen Stapczynski, Ann Koh and Isis Almeida – Bloomberg
China, the world’s top coal consumer, is in dire need of more supply and is willing to pay any price — a move that threatens to leave less fuel for energy-starved rivals.
China Considers Hiking Industrial Power Prices to Ease Supply Crunch
The Chinese government is considering raising power prices for industrial consumers to help ease a growing supply crunch.
Japan state pension fund shuns renminbi-denominated sovereign bonds; GPIF takes decision as foreign investor concerns mount over risks of Chinese markets
Leo Lewis – FT
Japan’s Government Pension Investment Fund will shun renminbi-denominated Chinese sovereign bonds from its $1.73tn portfolio, citing liquidity concerns and other risks in the world’s second-largest economy.
Baseball’s Wall Street-Style Executives Get Titles to Match; As M.L.B. front offices get more and more corporate, titles have steadily inflated. Yesterday’s general manager is today’s president of baseball operations … or chief baseball officer.
Joe Lemire – NY Times
The Tampa Bay Rays recently bestowed a new contract and a new title on their baseball operations leader, Erik Neander. He began the season with dueling corporate epaulets — senior vice president of baseball operations and general manager — and is now president of baseball operations. This was not, however, an elevation in rank.
Green Bay Packers Running Back Aaron Jones Joins FTX Ambassador Team through Long-Term Partnership; Jones also to become a shareholder in FTX Trading LTD
West Realm Shires Services Inc. and FTX Trading Ltd, the companies behind FTX US and FTX.COM (“collectively referred to as FTX”), today announced a long-term partnership with Green Bay Packers Running Back Aaron Jones. In addition to being a FTX ambassador, Jones purchased an equity stake in FTX. As part of the deal, Mr. Jones’ compensation will be paid in cryptocurrency.
Fanatics Trading Cards Valuation Rises to $10.4 Billion as New Firm Aims to Expand Its Reach; New business, which took over the future trading card business with a flurry of deals, received $350 million in Series A funding as it sets its sights on changing the industry
Andrew Beaton – WSJ
The new trading card venture launched by Fanatics Inc., which just last month upended the industry with a series of surprise deals, has received $350 million in Series A funding that values the firm at $10.4 billion, according to people familiar with the matter.
One Man’s Endless Hunt for a Dopamine Rush in Virtual Reality; From Burning Man to spaceships, the technology has carried him through a 10-year fascination that delights, disappoints and continues to improve.
Cade Metz – NY Times
On a recent Thursday evening at the City Life Community Center in Missoula, Mont., Wolf Heffelfinger played laser tag. Wearing a pair of heavy goggles, he bobbed across the gymnasium, firing faux laser guns with both hands. It was not all that different from any other game of laser tag — except he was playing in virtual reality.