My Trip Down the Crypto Rabbit Hole in Search of the DAO Hacker

Sep 16, 2020

First Read

Blue Skies In a Post-COVID World: Downside Doesn’t Look as Deep, SocGen Says
By Suzanne Cosgrove – John Lothian News

One day the world will recover from the COVID-19 pandemic, but what will a recovery look like and when will it take place?

Societe Generale’s Klaus Baader, global chief economist, and Sophie Huynh, cross-asset strategist for the French bank, tackled those questions in a webinar last week by outlining possible scenarios for 2020 and 2021, although they acknowledged that the outcome of the U.S. presidential election and prospects for a coronavirus vaccine remain unknowns.

To date, activity has sprung back powerfully in many economic sectors from the collapse that took place amid COVID-related lockdowns, Baader said, putting the U.S. and much of Europe in what he characterized as a V-shaped recovery from the shock of the pandemic. The U.S. and Europe took similar hits in exports, he noted, but the Euro zone’s recovery began sooner.

“However, the initial rebound was the easy part,” Baader said. The hard part is keeping the expansion on course, and it will inevitably slow beyond the third quarter, he said. Growth “will require continued fiscal and monetary policy support, as well as a sound balance between public health and economic concerns.”

To read the rest of this story, go HERE.


Hits & Takes
John Lothian & JLN Staff

The CFTC published a consent order of permanent injunction against Edge Financial Technologies, LLC, an Illinois firm that provided software development and computer programming services for traders. This is the Jitesh Thakkar case, except that he is not mentioned in the press release. That is because, thankfully, the CFTC dropped all the charges against him, but did get him to agree to charges against his firm. See the story below and Thom Thompson’s comments.

The most interesting man in the world has agreed to become the most interesting Boy Scout fundraiser event chairman. Pat Kenny, senior vice president at CQG, chairman of the Association of Futures Markets and village president of Fontana, Wisconsin has agreed to serve as chairman of the 2020 LaSalle Street Trading Tech Awards event for the Pathway to Adventure Council of the Boy Scouts of America. He is going this with all his free time, now that two of his daughters were married off this summer.

Also, Kenny has been re-elected to a second two-year term as chairman of the Association of Futures Markets.

Peter Borish was interviewed by Gio Valiante on about his advice for traders.

Brendan Bradley announced on LinkedIn that he is the co-author of FinTech for Dummies, the ultimate #FinTech guide.

ICE announced a record trading volume for their physically-delivered bakkt bitcoin futures contracts. Bakkt bitcoin monthly futures traded a record 15,955 contracts on September 15, 2020, 36% more than the previous record of 11,706 on July 28, 2020.

Nasdaq’s Economic Research Team has a commentary titled “Switching to Nasdaq Is Good for Your Stock.” In other job saving news….

The Wall Street Journal has a story about the foods that help you control your emotions during the pandemic. Deep dish pizza and beer were not on the list. The story is titled “Foods That Battle Stress During the Coronavirus Pandemic; Berries. Nuts. Olive oil. How to craft an eating plan to help manage your emotions.” Amazingly, that is what my diet has been made of for the last few months.

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


Testimony in the Justice Department’s latest attempt to stamp out spoofing got underway Tuesday with two government witnesses. The case is USA v Vorley and Chanu, both traders at Deutsche Bank. A CME representative, the prosecution’s first witness, instructed the court about the mechanics of futures markets, how deception is never allowed, and how you may only place orders that you want to be executed. The defense, however, got them to admit that a stop loss order is always placed by a trader with the expectation (and hope) that it will not be filled, The second government witness was from the Analysis Group. They dazzled and confused with the help of market snapshots showing the individual defendants’ actual trading with orders on both sides of the market. Impressive as the testimony was, the defense extracted from the witness the fact that they couldn’t say if any or how many other traders had similar trading activity, making it look like the government’s case suffers from cherry picking. Vorley’s attorney is Richard Burlingame, who represented Navinder Sarao, a private trader who pleaded guilty to spoofing charges in 2016 and assisted the prosecution in its case against Jitesh Thakkar last year. ~Thom Thompson

Finally, something to look forward to: Thompson Coburn and Xchange Analytics are bringing the Annual Chicago Conference on Futures and Derivatives right to your laptop or computer on October 20. More information about this annual fall highlight is available here. ~Thom Thompson

The CFTC announced yesterday that it had squeezed a very unconvincing settlement out of Edge Financial. Having spent many hours reviewing testimony and evidence from the Justice Department’s unsuccessful case against Jitesh Thakkar as well as conducting its own discovery, the CFTC dropped their case against him. They nonetheless proceeded against Edge, extracting less than $75K in penalties. Unchastened, the Division of Enforcement wrapped up the whole mess by saying, “Establishing that entities can be held civilly liable for aiding and abetting such illegal conduct, as charged in this case of first impression, strengthens the CFTC’s enforcement mission. We will not hesitate to bring charges against entities and individuals for similar conduct in the future.” I am certainly not a lawyer, but pressuring a defendant to settle a case after years of impoverishing litigation does not seem a very reasonable basis for establishing sweeping new law. Maybe the division should deliberate long and hard before it charges any more software developers and other vendors, even when it is piling on top of criminal charges. ~Thom Thompson


Federal Court Orders Illinois Software Development Firm to Pay Penalty and Disgorgement for Aiding and Abetting Illegal Conduct
The Commodity Futures Trading Commission today announced that the U.S. District Court for the Northern District of Illinois entered a consent order of permanent injunction against Edge Financial Technologies, LLC, an Illinois firm that provided software development and computer programming services for traders. This ruling resolves a 2018 enforcement action brought in connection with the Division of Enforcement’s Spoofing Task Force. [See CFTC Press Release No. 7689-18]

*****Stop me if you’ve heard this one before.~MR


Bill Gates Sr., Father of Microsoft’s Co-Founder, Dies at 94
Peter Robison – Bloomberg
Lawyer who helped guide his son’s philanthropic foundation; The Bill & Melinda Gates Foundation is the world’s largest
William H. Gates Sr., a lawyer raised in the Great Depression who helped his son give away an immense fortune, has died. He was 94. He died Monday at his beach home on Hood Canal, Washington, according to Bill Gates III’s family office. The cause was Alzheimer’s disease.

*****Ninety-four is a good long run and he did a lot of good.~JJL


Kosher Crisis Hits $19 Billion Market With Rabbis Stuck at Home; To certify food, much of which originates in China, factory inspections are going virtual.
Bruce Einhorn – Bloomberg
In an ordinary year, Rabbi David Moskowitz would have spent the weeks before Rosh Hashanah, the holiday that celebrates the start of the Jewish New Year, working in China. For more than a decade, the native of New York’s Rockland County has run Shatz Kosher Services, which verifies that ingredients made in Chinese factories don’t contain pork or otherwise violate Jewish dietary laws. Late summer is usually a busy season, with companies gearing up to make products for Passover the following spring.

*****One terrible obstacle among the multitude of ways the coronavirus has made 2020 one of the most challenging years in our lifetimes.~MR


Tuesday’s Top Three
Our top story Tuesday was a repeat of our top story Monday: These 5 Habits Will Help You Stay Focused All Day. A Psychologist Explains Why, from Meditation, sleep, nutrition….now where have I heard that before? The new one, though, is “binaural beats.” I had not heard that one before. Second was Bloomberg’s At JPMorgan, Productivity Falls for Staff Working at Home. They are probably not using binaural beats. Third was Mohamed Bourouissa wins the Deutsche Börse Photography Foundation Prize 2020, from Deutsche Börse, celebrating the French-Algerian artist who won the prize for his project “Free Trade.”


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Lead Stories

My Trip Down the Crypto Rabbit Hole in Search of the DAO Hacker; A reporter’s investigation of the massive heist that shook Ethereum leads from cyberspace to a Tokyo blockchain entrepreneur.
Matthew Leising – Bloomberg
In 2016 a spectacular series of hacks siphoned millions of dollars worth of the cryptocurrency ether from a virtual venture capital fund called the DAO. In a new book, Bloomberg News reporter Matthew Leising tells the story of the DAO hack and the growth of Ethereum—the Bitcoin-like blockchain technology that works with the ether token. The search for the name of anyone potentially associated with the hacks was twisty and mind-bending—so we’ve adapted this excerpt with footnotes to guide your way.

Mortgage Securities Are Flooding the Market. Thank the Fed; Surging supply of mortgage-backed securities hasn’t dampened investors’ demand for them
Orla McCaffrey – Bloomberg
People are taking out lots of mortgages. The Fed is gobbling them up. Low mortgage rates have spurred a boom in home refinancing, which in turn has spurred a boom in the issuance of mortgage-backed securities. The value of single-family mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac totaled almost $322 billion in August, a new monthly record, according to an analysis by industry-research firm Inside Mortgage Finance.

UK financial watchdog admits change needed after ‘too many scams’; FCA seeks input on reforms aimed at helping consumers better understand risks and protections
Matthew Vincent and Madison Darbyshire – FT
The UK financial regulator has admitted that the rules on selling investments need to change to restore consumers’ faith, after years of “too many scams and scandals”. In a request for ideas on improving the way savings products and advice are provided, the Financial Conduct Authority asked for input on several processes that have contributed to recent high-profile losses. These included “the regulation of financial promotions?.?.?.?to make it easier for people to understand the level of regulatory protections afforded to them”, which critics have said needs to be addressed after thousands of investors lost £236m in the collapsed mini-bond issuer London Capital & Finance, having wrongly assumed they were protected.

Europe Pitches Massive Economic Overhaul in New Climate Plan
Ewa Krukowska and Jonathan Stearns – Bloomberg
EU executive proposes toughening 2030 carbon-cut target to 55%; Stricter targets will leave no sector untouched in Europe
The European Union’s executive proposed toughening the bloc’s targets for fighting climate change in a move to cut industrial pollution and spur a green economic recovery. The 27-nation EU should tighten its emissions-cutting goal to at least 55% by 2030, European Commission President Ursula von der Leyen said on Wednesday. The current objective, agreed just six years ago, is a cut of 40% from 1990 levels. European Commission President Ursula von der Leyen Delivers State of the Union Address

EU set to extend access to London clearing houses to mid-2022; Central banks have warned of disruption without smooth post-Brexit transition
Philip Stafford and Jim Brunsden – FT
The EU is preparing to offer its banks an 18-month extension on access to London’s crucial markets infrastructure as it seeks to prevent a jolt to financial stability when the UK’s Brexit transition period expires at the end of the year. The European Commission has proposed that access to UK-based clearing houses — which sit between deals and prevent defaults from ricocheting through the rest of the market — should remain undisturbed until the middle of 2022, according to plans seen by the Financial Times.

Nasdaq Launches Anti-Money Laundering Investigation Technology
Nasdaq Automated Investigator to address gap in anti-money laundering (AML) investigations process
NEW YORK, Sept. 16, 2020 (GLOBE NEWSWIRE) — Today Nasdaq (Nasdaq: NDAQ) announced the launch of the cloud-deployed Nasdaq Automated Investigator for AML, the first automated solution for investigating anti-money laundering (AML) for retail and commercial banks and other financial institutions. Designed, built and offered in partnership with UK-based Caspian, Nasdaq Automated Investigator for AML further expands Nasdaq’s global efforts in combatting financial crime and promoting market integrity in the capital markets and beyond.

LCH clears first Israeli Shekel-denominated derivatives with Citi; Citi, Goldman Sachs, HSBC, and JP Morgan are among the brokers supporting clearing of Israeli Shekel swaps at LCH SwapClear.
Annabel Smith – The Trade
Clearing house LCH has cleared the first Israeli Shekel-denominated interest rate swaps with Citi and Israel’s Bank Leumi. LCH said Citi and Bank Leumi were among the first to clear a derivatives trade denominated in Israeli Shekel. Alongside Citi, Goldman Sachs, HSBC, and JP Morgan are also supporting the clearing of Israeli Shekel swaps.

US futures exchanges target retail investors with ‘mini’ contracts; New products come after rising stock markets lift notional value, and therefore fees, of popular bets
Philip Stafford – FT
The biggest US futures exchanges are producing miniature versions of some of their most popular contracts to attract traders being pushed out of the market by rising costs. CME Group, Intercontinental Exchange (ICE) and Cboe Global Markets have all created smaller versions of their widely traded futures contracts, which allow investors to place bets on the direction of share prices, for example, or the level of volatility in the market. The new products are a fraction of the cost to trade, as they come in smaller increments and are targeted at what the exchanges call the “sophisticated” retail investor.

Buy-side still overwhelmingly unprepared for uncleared margin rules from 2021; State Street polled 300 buy-side firms and found that less than a fifth were fully ready to comply with UMR from September 2021 or September 2022.
Joe Parsons – The Trade
A recent survey of asset managers and asset allocators has found the vast majority are still hugely unprepared for the uncleared margin rules (UMR) when it comes into force for them next year. The survey from State Street, which measured perceptions and readiness of 300 buy-side firms in 16 countries, showed 81% of firms with a September 2021 or September 2022 deadline are unprepared to comply with all facets of the rules.

ING-Led Banks Win Access to Citi Accounts in Agritrade Battle
Joyce Koh and Alfred Cang – Bloomberg
Singapore court grants banks’ request for Citi, SMBC accounts; ING among banks with $1 billion exposure to failed Agritrade
A group of banks led by ING Groep NV won a court order compelling Citigroup Inc. and Sumitomo Mitsui Financial Group Inc. to reveal account details linked to failed commodities firm Agritrade International Pte. The Singapore ruling makes the two lenders share client names, bank statements and fund transfer instructions, according to court documents obtained by Bloomberg News. The information obtained from the banks may only be used for legal proceedings, according to the Aug. 17 order.

Eurex strengthens its RFQ platform Eurex EnLight with two new functionalities; Simon Brown, product manager at Eurex, outlines how the Eurex EnLight RFQ platform has been enhanced by adding two new major functionalities.
The two additions to Eurex EnLight – Smart RFQ and Anonymous Negotiation – were requested by users and will further strengthen the platform’s functionality. Eurex EnLight is a selective request-for-quote (RFQ) platform, fully-integrated with straight through processing (STP) into the T7 trading system. It is designed to enhance market structure and bring together buying and selling interests from all types of market participants engaged in off-book trading. Eurex EnLight serves large scale execution requirements, not suited for the central limit order book.

Barclays unveils plans to launch FX trading engine in Singapore; A local version of BARX will be developed by Barclays as part of plans to launch a foreign exchange trading engine in Singapore by mid-2021.
Hayley McDowell – The Trade
UK investment bank Barclays has said it will launch a foreign exchange trading and pricing engine in Singapore next year, marking its fourth electronic FX trading hub globally.

Barclays to Set Up Its Fourth Electronic FX Trading Hub in Singapore
Chanyaporn Chanjaroen – Bloomberg
Barclays Plc will start a foreign exchange trading and pricing engine in Singapore in mid-2021, marking the British lender’s fourth electronic currency trading hub globally. Barclays will build out a local version of the trading system, known as BARX, adding to hubs in New York, London and Tokyo, the London-based bank said in a statement on Wednesday.

How Brexit and Covid-19 combined to hit UK hedge funds; Already eclipsed by US rivals, the pandemic and doubts over future EU relations have further blunted London’s edge
Laurence Fletcher – FT
In early 2016 billionaire scientist David Harding opened a San Francisco office for his booming London hedge fund Winton Group. It was seen as a bold step by the firm — which at the time managed $34bn in client assets — to move into the world’s technology heartland. The company, competing with US tech giants such as Google and Facebook for talented staff, was hoping to tap into the Bay Area’s huge pool of coders and innovation.

Toronto Stock Exchange Announces the 2020 TSX30;
Canada’s premier equities market to celebrate top-performing companies today in a virtual market open ceremony
Toronto Stock Exchange (TSX) today announced the 2020 TSX30™, a flagship program that showcases TSX’s 30 top-performing stocks that represent sustained excellence over the long term. Founded in 2019, the TSX30 ranks stocks based on dividend-adjusted share price appreciation over a three-year period. The mining and technology sectors are well represented on the list of 2020 winners, including some of the largest growth stories in the ranking.

Bloomberg Expands Alternative Data Offering; Data License clients can now access alternative data from over 60 third-party providers via Bloomberg Enterprise Access Point
Bloomberg today announced that it has expanded its alternative data offering through Enterprise Access Point, the company’s web-based data marketplace, to include over 60 third-party providers.

LCH clears first Israeli Shekel-denominated swaps
LCH is the first clearing house to offer clearing of Israeli Shekel-denominated interest rate swaps; Launched in response to customer demand; SwapClear offers clearing for interest rate derivatives across 27 global currencies
LCH, a leading global clearing house, today announced that it has cleared the first Israeli Shekel-denominated interest rate swaps. Israeli Shekel is the latest currency to be cleared at SwapClear, which offers clearing for interest rate derivatives in 27 currencies.

SGX wins “Best Exchange for FX” at FX Markets e-FX Awards 2020; Award acknowledges SGX’s efforts to enhance capital efficiencies for market participants; bridging OTC and listed FX markets with its acquisition of BidFX as well as first-of-its-kind FlexC FX futures product offering
Singapore Exchange (SGX) has been named “Best Exchange for FX” at the FX Markets e-FX Awards 2020. The awards have been running for 18 years in recognition of the best-in-class in electronic FX trading globally. In 2018 and 2019, SGX won the “Best FX Exchange in Asia” and “Best FX Clearing House in Asia” by FX Week, now known as FX Markets, following voting by banks, dealers, brokers and currency managers in the Asia Pacific region.

Ray Dalio Warns of Threat to Dollar as Reserve Currency
Katherine Burton and Erik Schatzker – Bloomberg
The dollar’s decades-long position as the global reserve currency is in jeopardy because of steps the U.S. has taken to support its economy during the Covid-19 pandemic, according to Ray Dalio, founder of hedge fund giant Bridgewater Associates.

Citigroup Gives Wall Street a Sobering Message; The bank’s need to spend to upgrade risk systems make it hard to bet on a turnaround
Telis Demos – WSJ
Incoming Chief Executive Jane Fraser’s historic appointment last week shed a light on Citigroup’s C -6.94% upside potential. But investors hoping that might spark a rebound were greeted instead by news Monday that “the next phase” of the bank’s investment will be “strengthening” and “transforming” its risk and control environment—and a subsequent 8% correction in the shares over Monday and early Tuesday.

A Job That Isn’t Hard to Get in a Pandemic: Swindlers’ Unwitting Helper; Criminals are increasingly using people like Denise Newton to move their money, just as many have lost their jobs and are vulnerable.
Nathaniel Popper – NY Times
After the fitness center where Denise Newton worked closed down in April because of the coronavirus, she posted her résumé online to look for a new job. She soon got a call from a company she had never heard of.

EU emissions trading system: free allowances must be better targeted
European Court of Auditors
?Free allowances still make up over 40 % of all available allowances under the EU’s ‘cap and trade’ emissions trading system (ETS), according to a new report by the European Court of Auditors (ECA). These free allowances, distributed to industry, aviation and, in some Member States, the electricity sector, were not well targeted. In addition, the speed of decarbonisation in the power sector was significantly reduced. The Commission needs to update its procedure for targeting free allowances to reflect the Paris Agreement and recent developments.

Ex-Owner in $146 Million Elder Care Default Is Charged in Ponzi Case; Zvi Feiner and a business partner were indicted on fraud charges. Federal prosecutors say they bilked investors out of millions of dollars.
By Matthew Goldstein – NY Times
A Chicago-area rabbi, who formerly owned a nursing home chain at the heart of the biggest default in the history of a federal mortgage-guarantee program, has been indicted by federal authorities on charges he bilked millions of dollars from investors.

What JPMorgan Has To Say About Young Employees Working From Home
Shivdeep Dhaliwal – Bsnzinga
JPMorgan Chase & Co (NYSE: JPM) says it has noticed a troubling pattern with its work-from-home employees, particularly those who are of a younger age, Bloomberg reported Monday. What Happened: CEO Jamie Dimon told analysts Keefe, Bruyette & Woods in a private meeting that productivity was particularly affected on Mondays and Fridays, according to Bloomberg.


Covid-19 Antibody Drug Shown to Reduce Hospitalizations, Eli Lilly Says; Fewer people who got the therapy went to the hospital than those given a placebo in a Phase 2 clinical trial, drugmaker says
Peter Loftus – WSJ
An antibody-based drug derived from the blood of an early U.S. survivor of Covid-19 reduced the rate of hospitalization compared with placebo in a new study of people recently diagnosed with the disease, said Eli Lilly LLY 0.72% & Co., one of the drug’s developers.

COVID-19 case may derail JPMorgan’s back-to-work push
Thornton McEnery – NY Post
Jamie Dimon’s back-to-the-office push despite the pandemic has already run into trouble. JPMorgan Chase was forced to send some workers its New York City headquarters home this week after an employee in the bank’s equities trading and sales division tested positive for the deadly coronavirus, sources told The Post.

Nevada venue fined $3K for hosting 5,600-person indoor Trump rally
Vincent Barone – NY Post
The city of Henderson, Nevada, has reportedly fined a company $3,000 for hosting a 5,600-person indoor rally for President Trump. Xtreme Manufacturing was slapped with the fines over six violations pertaining to the state’s coronavirus regulations, which currently bar all gatherings above 50 people, the local Fox affiliate reported. The city had warned of impending penalties ahead of the president’s rally held on Sept. 13.

Covid-19 Live Updates: Trump Says He ‘Up-Played’ the Virus, Then Downplays It
NY Times
The president said at a town-hall-style event that the virus would disappear on its own and that the U.S. was “rounding a corner,” a view at odds with those of public health officials.

Insurance policyholders win Covid-19 High Court test case; Ruling represents ‘significant victory’ for claimants over business interruption payouts
Matthew Vincent, Oliver Ralph and Daniel Thomas – FT
Holders of business interruption insurance have won a “significant” victory in a High Court test case to determine whether the coronavirus pandemic should trigger payouts under their policies. Lawyers acting for the Financial Conduct Authority, the UK’s financial regulator that brought the case on behalf of the policyholders, said the judges had found in favour of claimants “on the majority of the key issues”.

UK coronavirus test results speed collapses since schools returned; Only 8% of people who received positive result on Tuesday had their test that day or on Monday
Chris Giles and Jasmine Cameron-Chileshe – FT
The UK government’s ability to inform people rapidly that they have tested positive for coronavirus has collapsed, with just 8 per cent of the people in England who were told they were infectious on Tuesday having had the test that day or on Monday.

Hitachi blames Covid-19 for pullout from UK nuclear project, Japanese conglomerate’s decision will cast a shadow over future of UK energy policy
Kana Inagaki, Jim Pickard – FT
Hitachi has pulled the plug on its nuclear power station project at Wylfa in Wales, blaming the global pandemic for a decision that will cast a shadow over the future of UK energy policy.

Europe Virus Stars Scramble After Declaring Victory Too Fast
Peter Laca and Milda Seputyte – Bloomberg
EU countries that were quick to lock down now see virus surge; Leaders struggle to fight virus while avoiding economic damage
When more than 2,000 people gathered on Prague’s medieval Charles Bridge in a “farewell party” for Covid-19 in June, it was to celebrate one of Europe’s most effective efforts to halt the virus’s spread. The Czech government, which had acted faster and more strictly than almost any other in the European Union, lifted rules on social distancing and mandatory masks wearing. Two months later, it’s trying to contain an explosion of new cases that has eclipsed numbers seen earlier this year when the virus raged across Europe.

Chipotle’s Chief Says the Online Boom Will Outlast the Pandemic; CEO Brian Niccol wants to protect employees, but won’t require them to get vaccinated.
Carol A Massar – Bloomberg
As the pandemic made people hesitant or unable to eat inside its restaurants, Chipotle Mexican Grill Inc. saw its online orders and delivery business take off. CEO Niccol thinks much of that digital business is here to stay. How has your business held up during the pandemic? We’ve been very fortunate in our restaurants, where I think we’re doing a lot of the right things. We put a lot of the right food safety practices and wellness practices in place. So that’s giving people confidence to basically use Chipotle as a meal solution. And our digital business is giving people access for that off-premise occasion that has become really critical.

British Airways Says 10,000 Jobs May Be Lost Due to Pandemic
Siddharth Vikram Philip
British Airways is expecting to cut as many as 10,000 jobs due to the Covid-19 pandemic even as the airline reached deals or agreements in principle with its various unions. The flagship U.K. carrier has seen 7,200 people leave as of last Friday, Chief Executive Officer Alex Cruz told lawmakers in London on Wednesday. The company remains in discussions with some labor groups, he said, and has rowed back on a plan to fire and rehire staff on new contracts.

New York City’s shutdown reduced spread of coronavirus by 70 percent, study finds
Paulina Firozi and Antonia Noori Farzan – Washington Post
Images of a nearly empty Times Square and a cleared-out Grand Central Terminal signaled the stillness of New York City under shutdown orders this spring — orders that led to about a 70 percent reduction in the spread of the novel coronavirus, according to a new study.

Covid Pandemic Turns America Into a Nation of Freelancers
By Alexandre Tanzi – Bloomberg
More than a third of the American workforce did at least some work on the side this year as the Covid-19 pandemic decimated jobs and wages. That translates to 59 million people, or 2 million more than in 2019, according to the Freelance Forward report released Tuesday by Upwork, a firm that helps businesses find labor.

New York City Prepares for a Second Wave, With a Chance to Blunt the Worst; A case at JPMorgan is the latest example of what will happen as workers and students come back
Drew Armstrong – Bloomberg
New York City officials know Covid-19 cases will climb this fall. The question they are watching as the city moves to reopen is, just how much? For months, the city’s Department of Health and Mental Hygiene has been working with academic groups at Columbia University and New York University. The academic teams have been asked to model case numbers, help predict needed hospital resources and to advise the city on how to open up workplaces, schools, restaurants and more.

Hospitals Failed to Fully Contain Covid-19 Inside Their Walls; CDC data suggests U.S. hospitals made improvements but could have done more to prevent in-house spread of the new coronavirus
By Melanie Evans – WSJ
An average of 120 patients a day became infected with the new coronavirus inside U.S. hospitals as the pandemic ebbed from its spring peak and rebounded into the summer, according to previously unpublished federal data.

Exchanges, OTC and Clearing

ICE Announces Record Trading Volume for Physically-Delivered Bakkt® Bitcoin Futures Contracts
Intercontinental Exchange
Intercontinental Exchange (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of mortgage technology, data and listing services, today announced record trading volume for its Bakkt® Bitcoin (USD) Physically Delivered Monthly Futures contracts.

TSE to launch TSE Timely Disclosure Corpus Service
With the aim of utilizing machine translation, etc. to meet the growing need for disclosure in English, from September 16, 2020, Tokyo Stock Exchange, Inc. (TSE) will launch its “TSE Timely Disclosure Corpus Data Service”.
Corpus is an accumulation of digitized natural language sentences utilized for research on natural language processing, etc. and in recent years, it is employed especially for machine translation.

OTC IRS New Release – SOFR Discounting and Price Alignment: Dress Rehearsal and Testing Phase 2
CME Group
As mentioned in advisory 20-321, please be advised that CME will hold a Dress Rehearsal over the weekend of Sept 18 – Sept 21 to simulate the end-to-end processing of the SOFR Discounting Transition. This event is held in our New Release environment and meant to test operational and technical impacts.

Performance Bond Requirements: Agriculture, Energy & Equity Margins – Effective September 16, 2020
CME Group
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below. Please email any questions to

Performance Bond Requirements: Energy & Agriculture – Effective September 16, 2020
CME Group
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below.

Change for Gold Brands
CME Group
The Exchange has made a change to the Gold (GC) and Gold (4GC) brand lists to reflect corresponding changes at the LBMA. These lists of brands are located in the “Gold (GC) Brands” and “Gold (4GC) Brands” tabs in the service providers table at the end of Chapter 7 of the COMEX Rulebook.

Change for Gold Kilo Brands
CME Group
The Exchange has made several changes to the Gold Kilo brand list to reflect corresponding changes at the LBMA. This list of brands is located in the “Gold Kilo (GCK) Brands” tab in the service providers table at the end of Chapter 7 of the COMEX Rulebook.

UPDATED – September 2020 Final Foreign Currency Settlement Prices
CME Group

Amendments to Rule 536.B. (“Globex Order Entry”), Rule 548 (“Priority of Execution”) and Rule 576 (“Identification of Globex Terminal Operators”) in Connection with Migration from iLink2 to iLink3
CME Group
Effective on trade date Thursday, September 17, 2020, and pending all relevant CFTC regulatory review periods, Chicago Mercantile Exchange Inc. (“CME”), The Board of Trade of the City of Chicago, Inc. (“CBOT”), New York Mercantile Exchange, Inc. (“NYMEX”), and Commodity Exchange, Inc. (“COMEX”), (collectively, the “Exchanges”) are adopting amendments to Rule 536.B. (“Globex Order Entry”), Rule 548. (“Priority of Execution”) and Rule 576. (“Identification of Globex Terminal Operators”) in connection with the migration from iLink2 to iLink3.

CME Group Global Head of Financial and OTC Products and Managing Director of Investor Relations to Present at Raymond James North American Equities Conference
CME Group
CME Group announced today that Sean Tully, Global Head of Financial and OTC Products, and John Peschier, Managing Director of Investor Relations, will present at the Raymond James 16th Annual North American Equities Conference on Thursday, September 17, at 9:40 a.m. (Eastern Time).

ASX is revising its temporary emergency capital raising measures
ASX is revising the temporary emergency capital raising measures that help listed entities affected by the COVID19 pandemic. The measures were introduced on 31 March 2020 and are due to expire on 30 November 2020. From 16 September 2020, any entity wishing to rely on the measures must satisfy ASX that it is raising capital predominantly for the purpose of addressing the existing or potential future financial effect on the entity from the COVID-19 health crisis, and/or its economic impact.

The Indices Linked To BME Growth Change Name
BME has agreed to carry out a modification of the Technical Standards for the composition and calculation of the stock market indices. These changes take place following MAB’s rebranding as BME Growth, after the Spanish stock market supervisor, CNMV, granted this market the European Growth Market status, called Mercado de Pymes en Expansión in Spain.

London Stock Exchange Sees Europe’s Largest Ever eCommerce Listing
UK tech company THG opened London’s markets for trading today, celebrating their listing on London Stock Exchange’s Main Market. The global ecommerce technology platform raised £1.88 billion pre greenshoe, the market capitalisation at IPO was £5.4 billion.


Regulating Fintech as It Becomes Pervasive
Brian P. Brooks and Charles W. Calomiris of the Office of the Comptroller of the Currency promote troubling?misperceptions in “Fintech Can Come Out of the Shadows”?(op-ed Sept. 10), casting doubt on the safety of financial services used every day by millions of Americans. The state system works well and benefits both fintech companies and consumers.

McKinsey: sluggish funding in fintech may need improvement
Joanna England – Fintech Magazine
Fintech companies have seen explosive growth over the past decade particularly, but since the global pandemic, funding has slowed, and markets are far less active. For example, after growing at a rate of more than 25% a year since 2014, investment in the sector dropped by 11% globally and 30% in Europe in the first half of 2020. This poses a threat to the Fintech industry.

BTON Financial Appoints Former Tradeweb Heavyweight Andrew Bernard As NED – Promotes Regulatory Expert Caroline Holmes To COO

GoldenSource Launches Quant Workbench Solution As Financial Return Pressures Mount For Financial Institutions
GoldenSource has launched a new Quant Workbench tool that enables financial institutions to better leverage their data by running superior analytics and quantitative research directly on best available reference and pricing data.

Stripe Workers Who Relocate Get $20,000 Bonus and a Pay Cut
By Anders Melin – Bloomberg
Moving out of Bay Area, NYC may come with pay cut of up to 10%; Other tech firms have also mulled cuts for workers who move
Stripe Inc. plans to make a one-time payment of $20,000 to employees who opt to move out of San Francisco, New York or Seattle, but also cut their base salary by as much as 10%, according to a person familiar with the matter.


BNP Paribas Securities Services joins forces with Digital Asset to develop DLT trade and settlement apps
BNP Paribas Securities Services today announces a new partnership with Digital Asset to design a number of real-time trade and settlement apps using DAML[1] smart contracts
/ Eclipses Tesla With Bitcoin Sweepstakes, Discounts
Olga Kharif – Bloomberg has been on a blitz marketing its digital token. With risk appetite running rampant again in global markets, the campaign is turning into a case study on how to sway emboldened speculators. The provider of cryptocurrency debit cards and trading services is running a slew of promotions, encouraging people to accumulate its coin, commonly known as CRO, that involve everything from discounts and referrals to sweepstakes.

Bahamas to launch its digital currency next month
Yogita Khatri – The Block
The Central Bank of The Bahamas is said to be launching its sovereign digital currency, Sand Dollar, next month. Bloomberg reported the news on Tuesday, saying that Sand Dollar will be rolled out across the Bahamas islands in October. The central bank began piloting the digital currency last December. Once live, Sand Dollar would allow individuals and businesses to make payments via mobile, even when they are offline.

Ethereum 2.0 transition is approaching, Serenity Phase 0 proposal submitted
Yogita Khatri – The Block
The long-awaited transition to Ethereum 2.0 is finally approaching. Danny Ryan, a core developer at the Ethereum Foundation, has today officially submitted a proposal, for moving the Ethereum blockchain to a proof-of-stake (PoS) consensus mechanism from the current proof-of-work (PoW) algorithm. The proposal, once approved by Ethereum core developers, will see the rollout of Serenity Phase 0 or the Beacon Chain that will mark the execution of PoS. It is expected to go live later this year or early next year.

Leaked EU Draft Proposes All-Encompassing Laws for Crypto Assets
Ian Allison – Coindesk
A leaked version of rules to be issued later this month by the European Commission proposes an all-encompassing set of regulations covering the trading or issuance of digital assets across the 27-nation bloc. Europe’s Markets in Crypto-Assets (MiCA) draft legislation provides legal certainty around crypto assets – cryptocurrencies, security tokens and stablecoins – along the same lines as Europe’s Markets in Financial Instruments Directive (MiFID), a legal framework for securities markets, investment intermediaries and trading venues.

Unikrn agrees to pay $6.1 million fine to SEC, disable its UKG token
Michael McSweeney – The Block
The U.S. Securities and Exchange Commission said Tuesday that it has settled charges with Unikrn Inc. for conducting an unregistered initial coin offering (ICO). As a result of the settlement, Unikrn will pay a $6.1 million penalty, which will be distributed to investors, without admitting or denying the regulator’s findings. According to a court order, Unikrn will “permanently disable UKG within 10 days of the date of this Order.”

SEC Commissioner Peirce Says Unikrn-Killing Fine to Have Chilling Effect
Kevin Reynolds – Coindesk
Noted cryptocurrency advocate and Securities and Exchange Commissioner Hester M. Peirce issued a public dissent after the SEC levied a $6.1 million fine on online gaming and gambling platform Unikrn for conducting an initial coin offering (ICO) in 2017, a penalty that effectively amounts to the size of the company’s current assets.

Diginex Moves Closer to Backdoor Nasdaq Listing With Merger Approval
Sebastian Sinclair – Coindesk
Blockchain services firm Diginex is officially merging with publicly traded 8i Enterprises Acquisition Corp., a key part of its plan for a “backdoor” Nasdaq listing. Announced Wednesday, 8i shareholders overwhelmingly approved the proposed “business combination transaction” with Hong Kong-based Diginex at a special meeting, with 81% in favor. Diginex is the parent company of derivatives platform which had been hoping to become the U.S.’s first publicly traded crypto exchange later this month.

State bank regulators approve ‘comprehensive exam’ for payments, crypto firms seeking MSB approvals
Michael McSweeney – The Block
Money services businesses that operate across U.S. state lines will have access to a more streamlined approval process, according to a Tuesday statement by the Conference of State Bank Supervisors (CSBS). Some forty-eight states are participating in the initiative, as reported by Reuters. Described as “a single comprehensive exam to satisfy all state regulatory requirements,” the initiative, known as MSB Networked Supervision, will “apply to 78 of the nation’s largest payments and cryptocurrency companies that combined move more than $1 trillion a year in customer funds.”

‘Sharing Economy’ Startup ShareRing Tapped for China’s Blockchain Service Network
Jaspreet Kalra – Coindesk
ShareRing, a blockchain-powered platform for the “sharing economy” pioneered by the likes of Uber and Lyft, was picked to join China’s state-backed blockchain initiative, the Blockchain Service Network (BSN). According to a press release emailed to CoinDesk, ShareRing has developed a custom blockchain-enabled platform that can help integrate services such as travel, insurance, logistics and marketplaces into one shared platform.


CNBC host Jim Cramer calls Pelosi ‘Crazy Nancy’ to her face during interview
Ebony Bowden – NY Post
CNBC host Jim Cramer called House Speaker Nancy Pelosi “Crazy Nancy” to her face during an interview on Tuesday morning — a taunt for the California liberal typically used by President Trump. The outlandish host of “Mad Money” and former hedge fund manager was interviewing Pelosi on stalled negotiations on a fourth coronavirus stimulus package when the insult appeared to slip out.

Trump Claims Coronavirus Vaccine May Be Ready Within Four Weeks
Josh Wingrove and Mario Parker – Bloomberg
Drug company executives, Fauci have offered longer timeline; President raises prospect of achieving herd immunity
President Donald Trump again raised hopes — and concern — about swift U.S. approval for a coronavirus vaccine, saying at a town hall event hosted by ABC News that the shot could be ready within four weeks.

Japan’s Parliament Elects Yoshihide Suga as New Prime Minister
Isabel Reynolds – Bloomberg
Parliament vote caps former Abe aide’s ascent to top office; Suga expected to continue policies including monetary easing
Japan’s parliament formally elected ruling party stalwart Yoshihide Suga — the 71-year-old son of a strawberry farmer — to be the country’s first new prime minister in almost eight years. The Liberal Democratic Party’s majority in the powerful lower house secured Suga a landslide victory in Wednesday’s vote, enabling him to take over from his former boss, Shinzo Abe. A taciturn northerner known for his work ethic and pragmatism, Suga takes the helm of the world’s third-largest economy as it battles the coronavirus and its economic fallout, which led to Japan’s worst contraction on record in the second quarter of this year.

Fed Nominee Judy Shelton Lacks Senate Backing, Key Republican Says; Economist won’t attract enough votes to be confirmed, according to Sen. John Thune
Nick Timiraos – WSJ
President Trump’s nomination of economist Judy Shelton to the Federal Reserve’s board of governors lacks enough votes for confirmation, a top Senate Republican said Tuesday. Ms. Shelton’s confirmation is a “priority for the White House,” said Sen. John Thune (R., S.D.), the No. 2 GOP leader in the Senate. “We’re not going to bring it up until we have the votes to confirm.”

U.S. Orders Al Jazeera Affiliate to Register as Foreign Agent; The Justice Department says AJ+, a media outlet backed by the royal family of Qatar, engages in “political activities.”
Marc Tracy and Lara Jakes – NY Times
The Justice Department ordered a digital news network based in the United States and owned by Al Jazeera, the media company backed by the royal family of Qatar, to register as a foreign agent, surprising a high-level delegation from Doha just as officials from the two nations met to strengthen diplomatic and economic alliances.


Christopher Woolard to chair review of unsecured credit market regulation
The Financial Conduct Authority (FCA) has announced that Chris Woolard will chair a review of the future regulation of the unsecured credit market, reporting to the FCA Board.

FCA publishes Decision Notice against Corrado Abbattista for market manipulation
The FCA has published a Decision Notice today in respect of Corrado Abbattista, an experienced trader and a portfolio manager, partner and Chief Investment Officer at Fenician Capital Management LLP, for market abuse, imposing a financial penalty of £100,000 and prohibiting him from performing any functions in relation to regulated activity.

Coronavirus (COVID-19) Update—Extension to Certain Regulatory Relief for FCMs, RFEDs, IBs and SDs
The CFTC recently issued no-action letter 20-26 extending through January 15, 2021, certain no-action relief issued in response to the COVID-19 pandemic. The relief, previously set to expire on September 30, 2020, applies exclusively to certain regulatory obligations of FCMs, RFEDs (i.e., FDMs), IBs and SDs. NFA is also extending through January 15, 2021 similar relief for Members that are in compliance with the terms of the CFTC’s no-action relief. Specific relief subject to this extension is detailed in NFA’s Notice to Members I-20-13.

CFTC Staff Provides Relief and Further Guidance Regarding FCM Separate Account Practices
The Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (DSIO) and Division of Clearing and Risk (DCR) today issued a joint staff letter containing an advisory and time limited, conditional no-action relief related to the treatment by futures commission merchants (FCMs) of separate accounts for a particular customer.

CFTC Staff Provides No-Action Relief to Registrant from SEF Reinstatement Requirements
The Commodity Futures Trading Commission’s Division of Market Oversight (DMO) today granted temporary no-action relief to Tassat Derivatives LLC, a CFTC-registered swap execution facility (SEF), from SEF reinstatement requirements under CFTC Regulation 37.3(d), subject to certain conditions.

Unregistered ICO Issuer Agrees to Disable Tokens and Pay Penalty for Distribution to Harmed Investors
The Securities and Exchange Commission today announced charges against Unikrn Inc., an operator of an online eSports gaming and gambling platform headquartered in Seattle, Washington, for conducting an unregistered initial coin offering (ICO) of digital asset securities. Unikrn agreed to settle the charges by paying a $6.1 million penalty, substantially all of the company’s assets, to be distributed to investors through a Fair Fund.

Filing Guidance – Public Offering Review

Augmenting the Exam and Risk Monitoring Program with Data Analytics and Technology
Technology is opening up new possibilities when it comes to solving business challenges. And that’s important when it comes to optimizing an organization’s most valuable limited resource: its people.

FCA proves it can be Fast, Competent and Adept in insurance test case; Judges interrupt insurers’ objections; Short interest in Sainsbury escalates
Cat Rutter Pooley – FT
The High Court judgment on business interruption insurance handed down on Tuesday makes the Financial Conduct Authority look Fast, Competent and Adept. For once. The test case brought by the watchdog scrutinised 21 policy wordings across eight insurers, including Zurich, Ecclesiastical, RSA and Hiscox. The process, launched in May, aimed to bring clarity and certainty to policyholders left in the lurch after insurers disputed whether Covid-19 business interruption claims were covered.

Canadian securities regulators provide update on timing of annual report on women on boards and in executive officer positions
The securities regulatory authorities in Alberta, Manitoba, New Brunswick, Nova Scotia, Ontario, Québec and Saskatchewan (the participating jurisdictions) are providing an update on the timing of the annual report on women on boards and in executive officer positions. The report summarizes results from the participating jurisdictions’ review focusing on disclosure requirements regarding the representation of women on boards and in executive officer positions, as set out in National Instrument 58-101 Disclosure of Corporate Governance Practices.

British Columbia Securities Commission: Total Market Value Of British Columbia’s Publicly Listed Companies Grows After Initial Impact Of COVID-19
The total value of British Columbia’s publicly listed companies dropped 26 per cent in the first few weeks of the COVID-19 pandemic, but then climbed above December 2019 levels, according to a new report from the British Columbia Securities Commission (BCSC).

Statement on SEC Settlement Charging Token Issuer with Violation of Registration Provisions of the Securities Act of 1933
Commissioner Hester Peirce
Today’s settlement with Unikrn, Inc., is the latest in a growing line of enforcement actions arising from initial coin offerings.[1] While many SEC enforcement actions in this space include allegations of fraud, Unikrn falls within the narrower category of token issuers charged only with violating Section 5 of the Securities Act.[2] In other words, Unikrn is alleged to have offered and sold its tokens in an unregistered offering and in a manner that did not qualify for an exemption; it is not alleged to have engaged in any fraud in doing so. Registration violations, even standing alone, are serious, and our enforcement actions can serve to deter such violations and protect harmed investors. We should strive to avoid enforcement actions and sanctions, however, that enervate innovation and stifle the economic growth that innovation brings. I believe that this action and its accompanying sanctions will have such consequences.

Starbucks Sales Recovery Has ‘a Ways to Go’ as Pandemic Quiets Cities; Coffee chain works to add suburban locations, gain future breaks from landlords
Heather Haddon – WSJ
Starbucks Corp. SBUX 1.25% said its sales recovery in the U.S. is at least another six months away as consumers continue to work from home and many of its stores in central business districts remain closed.

Investing and Trading

U.S. Gas Exporters Eye Europe’s Surging Prices; Gas shipments are expected to pick up as the price recovery in Europe makes exports to the region profitable again
Joe Wallace – WSJ
Natural-gas prices have surged in Europe following a plunge in the spring, offering much-needed relief to U.S. exporters. Spot prices for gas in the Title Transfer Facility, a virtual trading hub in the Netherlands, have rallied 265% from their trough in late May, even after slipping over the past week. Prices have gone from just under $1 per million British thermal units to $3.63 in under four months, according to S&P Global Platts.

Hurricane Sally Barrels Into the Gulf Coast; Storm makes landfall near Gulf Shores, Ala., as a Category 2 hurricane
Hurricane Sally slammed into the Alabama coast as a Category 2 hurricane early Wednesday, with forecasters expecting life-threatening flooding along parts of the Gulf Coast. The slow-moving storm, which strengthened overnight, made landfall near Gulf Shores, Ala., with maximum sustained winds of 105 miles an hour, according to the National Weather Service. Overnight footage showed strong winds and torrential rains lashing coastal cities.

US shale producers bleed cash despite slashed spending; North American oil and gas groups suffer dismal second quarter
Derek Brower – FT
North American shale producers far outspent their revenue in the second quarter despite making deep spending cuts to survive the worst oil price crash in decades.

Vanguard votes against pay at Alphabet, Uber and Ocado; World’s second largest asset manager takes public stand on corporate governance failings
Chris Flood – FT
Vanguard voted against chief executive pay awards at Alphabet, Uber and Ocado as the world’s second largest asset manager signalled it was taking a tougher stance on controversial corporate governance issues.

Investing vs gambling: a fine line to tread; Some platforms promote investments that carry a considerably higher level of risk
Moira O’Neill – FT
There’s no doubt that investing can be exciting. A quick win on the markets can make you feel buoyed up and hooked on finding the next opportunity. But there’s a fine line between investing and gambling and you need to be sure you’re on the right side of it.

Richest Americans Got Richer in Past Decade, Far Outpacing Poor
Katia Dmitrieva – Bloomberg
Wealthiest 5% of Americans saw biggest jump in average income; Government data shows poverty improved but income gaps persist
Over the past decade, during an economic expansion that benefited most Americans, the richest made out the best. The top 5% of households — those making $451,122 on average last year — have seen their inflation-adjusted incomes jump 28% since 2009, according to annual figures published by the Census Bureau on Tuesday.

Why Liquidity Is a Simple Idea But Hard to Nail Down
Stephen Spratt – Bloomberg
In the financial world, liquidity is cited constantly but rarely explained. It’s a term used in different ways depending whether the subject is economics, markets or banks. Regardless of which context, an old market adage often rings true: Liquidity is a coward that disappears at the first sign of trouble.

World Economy Seen Withstanding Virus Better Than Forecast
Fergal O’Brien and William Horobin – Bloomberg
The global economic slump won’t be as sharp as previously feared this year, though the recovery is losing pace and will need support from governments and central banks for some time yet, according to the OECD.

Fed Debates Next Steps After Shifting Approach to Rate-Setting; The Federal Reserve, which unveiled a new strategy last month that will leave interest rates low for longer, could provide hints on Wednesday about how it will reinforce its commitment.
Jeanna Smialek – NY Times
Federal Reserve officials are contemplating their next steps after announcing a new approach to interest rate-setting last month, one that could lay the groundwork for longer periods of low unemployment and rock-bottom borrowing costs.

Rich Economies Set to Recover More Quickly From Covid-19 Contractions; OECD says the global economy will contract less sharply than previously thought, but a number of poor countries are set to suffer larger falls in output
Paul Hannon – WSJ
China and the rich countries will suffer less economic damage from the coronavirus pandemic than previously feared, according to the Organization for Economic Cooperation and Development, but the global public-health emergency will exact a higher toll on the economies of poor countries.

Environmental, Social and Corporate Governance

A Path to ESG Disclosure
Troutman Pepper – JDSupra
Regardless of your view of the efficacy of ESG disclosure for publicly-traded companies, investors increasingly are insisting on it, and the advisors that can profit from it the most – proxy advisory firms, large accounting firms and consultants – are heavily promoting it. For the 100 or so largest public companies, adding ESG disclosure to their current disclosure process generally is not a big deal. Many already publish reports consistent with GRI guidelines, and some publish reports that are even broader. For the 6,000 or so other public companies, it can be a tougher task and one that must be managed carefully to avoid becoming ineffective and costly. Below we provide some thoughts on what those other public companies may consider.

MAR and Sustainable Investing/ESG
Latham & Watkins LLP – JDSupra
Historically, “profit maximisation” has been regarded as the sole (or predominant) objective for investors. Today, however, an ever-increasing proportion of investors have additional/alternative — sustainability (or ESG)-related — objectives[i]. These investors are not seeking profit at all costs — rather, “cleaner” profits that derive from the sustainable/green activities of investee companies. They are perhaps willing to forego some element of (near-term) profit in return for the environmental and societal benefit, brought about by the investee company, that (they hope) will accrue over time. Many such investors will believe that, in the long run, they may in fact end up maximising their returns — on the premise that sustainability-focused companies are more likely to survive (and thrive) in the future, while others will ultimately fail.

ESG assets expected to top $53 trillion by 2022: Celent
Nicole Casperson – InvestmentNews
The COVID-19 pandemic has spurred more interest in environmental, social and corporate governance investing as global assets are expected to surge to $53 trillion by 2022, according to a Celent analysis published last Thursday.
The potential growth in assets would be up from the $45 trillion that ESG investing is set to encapsulate by the end of this year, according to research from J.P. Morgan.

Board accountability for ESG – five governance tips
Stephen Shergold – Lexology
“What oversight should our board exercise over the environmental and social performance of our business?”, is the question of the moment from clients who sense the increased momentum and enterprise risk associated with ESG. In recent weeks, we have witnessed tangible impacts of scrutiny from investors, consumers and local communities. Share prices have collapsed in the wake of supply chain labour issues. Court actions alleging breaches of human rights have multiplied. Senior executives have resigned over “breaches” of the “social licence” to operate. As the impact of civil society intensifies, this is an important moment for boards to pause and reflect on:

Oil Giant Vitol Bulks Up Power Trading in Shift to Electricity
Andy Hoffman, Laura Hurst, and Rachel Morison – Bloomberg
The company is preparing for a transition to cleaner power; High-profile power hires said to include BP trader Flowerdew
Vitol Group is bulking up its power trading business as the world’s biggest independent oil trader eyes a looming shift to cleaner fuels. Chief Executive Officer Russell Hardy confirmed in an interview that the oil trading giant is boosting investment in its power operations with a series of high-profile hires. It’s part of a long-term transition toward electricity and renewable fuels and away from hydrocarbons, the bedrock of the company for more than half a century.

California Fires Are Emitting Record Amounts of Carbon Dioxide; Satellite tracking shows emissions from wildfires spiking in Western U.S. states
Laura Millan Lombrana and Akshat Rathi – Bloomberg
Giant fires are releasing unprecedented amounts of carbon dioxide and particulate-matter pollution into the atmosphere in California and Oregon, leading to the first increase in wildfire emissions in the U.S. since 2015.

Business Shifts From Resistance to Action on Climate; Business Roundtable’s support for putting a price on carbon is evidence of a sea change in corporate attitudes on climate action
Greg Ip – WSJ
When Congress last pushed for comprehensive climate legislation a decade ago, much of corporate America was either neutral or hostile. In a sign of how much corporate attitudes have changed, the Business Roundtable, one of the country’s most prominent business groups, is throwing its support behind broad-based measures to slash greenhouse gas (GHG) emissions. In a statement of principles released Wednesday, the Business Roundtable said it “supports a goal of reducing net U.S. GHG emissions by at least 80% from 2005 levels by 2050.” To achieve that, it endorses putting a price on carbon. It didn’t say whether that should be through a carbon tax or a system of tradable emissions permits.


Julius Baer in talks to settle Fifa corruption case with US authorities; ‘Advanced discussions’ with Department of Justice may result in payment of tens of millions of dollars
Harry Dempsey and Owen Walker – FT
Julius Baer is in “advanced discussions” with the US Department of Justice to resolve allegations in a money laundering and corruption case linked to international football’s governing body Fifa, in a step towards drawing a line under the scandal for the Swiss bank.

Asset managers overhaul money market funds after March rout; Shake-up is focused on ‘prime’ funds that buy short-term corporate debt
Joe Rennison and Colby Smith – FT
Some of the world’s largest asset managers are shutting down US investment vehicles that have suffered rapid outflows in times of stress, threatening an important source of short-term funding for companies across America.

JPMorgan Says $200 Billion May Flow Out of Stocks This Quarter
Joanna Ossinger – Bloomberg
Bank says institutions are poised to rebalance portfolios; Strategists say a drop in shares would be buying opportunity
Pension and sovereign wealth funds are set to offload about $200 billion of equities as they rebalance their portfolios, posing a risk for global shares, according to JPMorgan Chase & Co. This would be the most negative quarterly adjustment since the pandemic hit, strategists led by Nikolaos Panigirtzoglou said Tuesday. The overall figure stems from calculations spanning U.S. defined-benefit pension portfolios, Japan’s Government Pension Investment Fund and Norway’s oil fund.

Sweden’s Biggest Bank Says Cost Cuts to Hit 1,000 Employees
Hanna Hoikkala – Bloomberg
Svenska Handelsbanken AB unveiled a series of cost cuts as part of a digital revamp it says will affect about 1,000 employees. Sweden’s biggest bank intends to almost halve its branch network, which has long been a hallmark of its business model, according to a statement on Wednesday. At the same time, management will invest about 1 billion kronor ($114 million) in technology, it said.


India equity sales hit record high even as Covid-19 upends IPOs; Companies in country sold $33.3bn of stock in 2020 despite harsh coronavirus lockdown
Hudson Lockett and Benjamin Parkin – FT
Equity fundraising by India’s listed companies has hit a record high in 2020, even as initial public offerings ran dry due to the coronavirus pandemic upending operations at businesses that had sought a market debut. Companies in Asia’s third-largest economy have raised $33.3bn since the start of the year, according to Dealogic data, as a rebound in local stocks from the Covid-19 crisis encouraged Indian firms to sell shares.

Czech Central Banker Finds Comfort in Inflation as Virus Soars
Krystof Chamonikolas -Bloomberg
Deputy governor sees fast price growth boosting consumption; Nidetzky expects no Czech rate hike for at least one year
As central banks around the world expand their help to economies hit by the coronavirus pandemic, Czech policy makers can sit tight and let inflation do its work. After cutting interest rates the most in the European Union this year, the Czech central bank is probably done with easing, Deputy Governor Tomas Nidetzky said in an interview on Monday. It should keep the benchmark at 0.25% for at least a year before considering raising it, he said, as resilient price growth will support a recovery from a virus-triggered recession.

Argentina Tightens Currency Controls Further as Dollar Gap Soars
Patrick Gillespie and Scott Squires – Bloomberg
Country announces new restrictions for dollar purchases; Controls unveiled as Argentina sends first budget to congress
Argentina is further tightening the screws on its foreign exchange market in an attempt to restrict demand for U.S. dollars as reserves dwindle. Central bank chief Miguel Pesce announced late on Tuesday new measures including a 35% tax on dollar purchases by retail savers, which will apply on top of the previous 30% so-called solidarity tax. The extra levy will also affect credit card purchases in dollars, he said.


Boris Johnson tries to head off Tory revolt over Brexit treaty; Prime minister holds talks with rebels opposed to his new internal market legislation
George Parker and Sebastian Payne – FT
Boris Johnson has ordered ministers to head off a growing Conservative rebellion over his plans to break international law on Brexit, amid claims that government concessions could be on the way.

Why Keir Starmer wants to ‘Get Brexit Done’; Britain’s opposition leader supported remaining in the EU but now seeks to move on from the battles of the past
Jim Pickard – FT
It was only last year that Keir Starmer emerged as a figurehead for Britain’s anti-Brexit movement, pushing a reluctant Jeremy Corbyn into backing a second referendum on EU membership.

How Brexit and Covid-19 combined to hit UK hedge funds; Already eclipsed by US rivals, the pandemic and doubts over future EU relations have further blunted London’s edge
Laurence Fletcher – FT
In early 2016 billionaire scientist David Harding opened a San Francisco office for his booming London hedge fund Winton Group. It was seen as a bold step by the firm — which at the time managed $34bn in client assets — to move into the world’s technology heartland. The company, competing with US tech giants such as Google and Facebook for talented staff, was hoping to tap into the Bay Area’s huge pool of coders and innovation.

Brexit: Advice issued to civil servants worried about breaking law
Lewis Goodall – BBC News
Junior civil servants asked to work on Brexit policy that they fear might break the law, have been advised to inform their managers, BBC Newsnight has learned. The email advice – from senior civil servants in a major government department – sets out what staff should do if they are asked to work on a policy which might be “inappropriate”. It follows the publication of the Internal Market Bill, which ministers accept contains provisions which would break international law as agreed between the UK and EU.

Exclusive: Britain has moved to break fisheries deadlock in Brexit trade talks – EU sources
Gabriela Baczynska – Reuters
Britain offered tentative concessions on fisheries in trade talks with the European Union last week, two diplomatic sources told Reuters, just as London was publicly threatening to breach the terms of its divorce deal with the bloc. The sources, who did not attend last week’s talks between the sides’ chief negotiators but were briefed on them by the EU negotiating team, described the offer as a possible bid by London to overcome a key obstacle to a new trade deal from 2021.

Boris Johnson’s Brexit has always been a swindle. Now Ireland will pay the price
Rafael Behr – The Guardian
There are cases in history of national leaders being coerced into treaties. Yet only Boris Johnson claims to have signed an international agreement by mistake. In the prime minister’s telling, the UK was bamboozled into a substandard Brexit deal last year. Events were moving “at pace”; the politics were “challenging”; European rules were smuggled into the small print. So parliament must pass a law disagreeing with the agreement. To fix the deal, the deal must be broken.


Can Steven Cohen’s Billions Solve the Mets’ Problems? Not So Fast; Major League Baseball is filled with cautionary tales about the danger of assuming money alone can build a consistent winner. Just ask the Angels.
Tyler Kepner – NY Times
The Mets once spent $91 million to give Mike Piazza the richest contract in major league history. Steven Cohen, who signed an agreement this week to be the Mets’ new owner, spent $91 million last year on a three-and-a-half-foot rabbit, made of stainless steel, by the artist Jeff Koons.

Tradition Clashes With Zoom Over How to Properly Honor Your Ancestors; Amid the pandemic, tech-savvy priests are offering their help online for Nepal’s yearly ritual appreciation
Krishna Pokharel – WSJ
With the monsoon rains ending, the season for the ritual appreciation of ancestors is under way in Nepal. The ceremonies usually involve a priest and a crowd of relatives, and are considered critical to ease ancestors’ journey in the afterlife. With coronavirus cases in the country still growing, tech-savvy priests are offering to help families pay their respects over video calls.

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Past JLN Newsletters

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