Retail trading boom spills over into fine wine market; US banks rack up $200bn in fines and penalties over 20 years

Dec 24, 2020

First Read

$18,961/$300,000 (6.3%)


Hits & Takes
John Lothian & JLN Staff

Yesterday was the last day for SEC Chairman Jay Clayton, one million people in the U.S. have received the vaccine and Tennessee is now the U.S. COVID-19 epicenter. So much for the trip to Nashville for the holidays.

Boris Johnson is declaring victory for the UK for Brexit because that is what blowhards do. Are you ready for the roaring 2020’s? I know I am.

Robinhood Financial has been hit with a class-action suit for selling stock orders, which sounds like someone did not read the small print.

The new virus strain transmissibility is said to cause more deaths, according to a study, in case you were looking for some bad news.

The Block’s Frank Chaparo reports that Jump Trading and Mike Novogratz’s Galaxy Digital, two of the largest crypto trading market makers |have stopped making markets for XRP after the SEC filed suit against Ripple.

The Washington Post’s Sarah Ellison wants to know what happened to Maria Bartiromo. She went from respected financial journalist to Trump apologist.

FINRA wished me happy holidays with this card. Happy holidays to all my friends at FINRA too!

Alas, egads, there were no new donations to the JLN MarketsWiki Education GoFundMe campaign yesterday. Help support our efforts to preserve industry history by donating to our GoFundMe campaign.

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


It’s been nearly a year since recreational cannabis was fully legalized in Illinois on January 1, 2020. Sales have been hot, with the state tallying more than $580 million in recreational weed sales for the year through November. However, applicants for state-issued social equity and craft grower licenses remain in limbo, waiting to get in on the action after a July 1 issuance deadline was delayed. The Illinois Craft Cannabis Association, a group of mostly minority small-business owners who invested heavily in the application process, held a Zoom rally Wednesday afternoon to lobby Gov. J.B. Pritzker to get the ball rolling on their grower, infuser and transporter applications. It was an oddly timed rally, right before the Christmas holiday, but it was when ICCA members were promised a ruling by Cook County Circuit Court Judge Allen Walker on their request for an expedited writ of mandamus that would require the state to issue the long-overdue licenses. As of late Wednesday evening, they were still waiting.~SC

Things are not going well for Ripple, creator of the digital asset XRP. News broke this week that the SEC was suing Ripple for selling XRP without registering a securities sale with the regulator. I guess that means XRP is a security? Maybe? Since word of the lawsuit broke, lots of folks are either liquidating their XRP positions or barring XRP trading from their trading platforms. Cryptocurrency asset manager Bitwise has reportedly $9.3 million worth of XRP in its crypto index fund. Chicago-based HFT firm Jump Trading, as well as Galaxy Digital, have ceased market making operations for XRP until further notice. Cryptocurrency payments processor Simplex has also begun blocking XRP transactions.~MR


The CryptoMarketsWiki Podcast Episode 16: A Year of Highs and Lows

In this episode of the CryptoMarketsWiki Podcast, Matt Raebel and Thom Thompson discuss their picks for the biggest cryptocurrency and blockchain stories of 2020.

Listen to the podcast »


Conferences Plot a Comeback Even Before Vaccines Are Widely Distributed; Singularity University’s Abundance 360, which abruptly scaled back an event for next month, is one of many organizers anxious to reopen.
Sarah McBride – Bloomberg
It could take a while before the handshake comes back, if it ever does. Business conferences, however, are set to restart in the U.S. the moment health code allows. And despite uncertainty around when exactly that will be, convention organizers are holding out hope—and event space—for a possible return in the coming weeks.

*****The idea is that folks are sick of Zooming all day and want to get their suits out of dry cleaning bags.~SC


U.S. Warns Crypto Stablecoins on Money Laundering, Risk Controls
Benjamin Bain – Bloomberg
President’s Working Group issues statement on stablecoins; Group says tokens should be backed by adequate cash reserves
Top U.S. financial regulators are warning firms behind an important part of the cryptocurrency market to tighten protections against money laundering. At issue are so-called stablecoins that traders rely on to facilitate payments for digital tokens. In a Wednesday statement, the Treasury Department and other agencies said they should be used in a way that “effectively manages risk and maintains the stability of the U.S. domestic and international financial and monetary systems.”

*****My one theory on where bitcoin gets its value from, its marginal utility as a means to launder money, fits stablecoins too. The risk of laundering money is the change in value of the medium which you are using. If bitcoin is very volatile, if the velocity of the medium is high, it can drive up the cost of laundering money. But if you have a stablecoin that is more stable, then you drive down the cost of laundering money. Now this is just one part of many reasons to own bitcoin, or just one theory.~JJL


UK company launches $30 bottled air range for homesick expats
Tamara Hardingham-Gill – CNN Travel
Thanks to ever-changing Covid-19 travel restrictions, many people around the world have found themselves stranded far away from home this year. Over in the UK, a fast-spreading new coronavirus variant has led to several countries around the world imposing bans and restrictions on travel to the nation, meaning a large number of residents currently abroad will not be able to return any time soon. However, relocation website My Baggage has dreamed up a special gift for homesick residents that’s quite literally a breath of fresh air. The company is currently selling bottles of “authentic” air from England, Scotland, Wales and Northern Ireland to provide UK residents overseas with the scent of home.

*****And just like that my pet rock doesn’t feel like a dumb purchase anymore. ~JB


CFTC Announces Review of RSBIX NFL Futures Contracts Proposed by Eris Exchange, LLC
The Commodity Futures Trading Commission today announced it has initiated a review, pursuant to CFTC Regulation 40.11(c), of RSBIX NFL futures contracts self-certified by Eris Exchange, LLC (ErisX) on December 15, 2020. ErisX self-certified three RSBIX NFL futures contracts: one based on the moneyline; the second on the point spread; and the third on total points for individual NFL games. Beginning today, the CFTC has 90 days—or longer as agreed to or requested by ErisX—to review and make a determination with respect to the submissions.

*****What is the over-under on this getting approved and where can I lay off my risk?~JJL


PEAK6 Acquires Switzerland-Based Hardcastle Trading
PEAK6, a financial technology business, announced today that it has acquired Hardcastle Trading AG, a trading firm based in Rapperswil, Switzerland.

*****Don’t underestimate this company. They are inspired.~JJL


Wednesday’s Top Three
The leading story on Wednesday was John Lothian’s commentary, In the Georgia Senate Elections There Is No Winning With Your Reputation Intact. Number two was
the SEC press release, SEC Charges Ripple and Two Executives with Conducting $1.3 Billion Unregistered Securities Offering, and the third was a Bloomberg story, Silicon Valley Wins as SEC Allows New Direct Listing


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Lead Stories

Retail trading boom spills over into fine wine market; Investors seek opportunities in haven asset that has dodged 2020’s big swings
Laurence Fletcher – FT
In a former Bath stone mine 100ft below the rolling Wiltshire countryside, one low-profile company is benefiting from a renewed thirst this year among retail investors for trading markets.

US banks rack up $200bn in fines and penalties over 20 years; Legal settlements have been more frequent since financial crisis, says Better Markets group
Laura Noonan – FT
The six largest US banks are close to hitting a milestone $200bn paid out in fines and penalties globally since the turn of the century, according to a new tally by advocacy group Better Markets. The report card from the Washington-based group, founded to hold banks to account in the aftermath of the 2008 financial crisis, covers Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo. Together they have paid $195bn since 2000, disbursed among government agencies and the investors and consumers harmed by their conduct.

Pandemic prompts Wall Street to look south for Florida’s life and work benefits
Svea Herbst-Bayliss – Reuters
A bevy of Wall Street executives, bankers and fund managers are abandoning New York for Florida, embracing the Sunshine State over metropolitan New York as the coronavirus pandemic has eliminated many benefits of working from a global financial hub.

Robinhood Financial Hit With Class-Action Suit for Selling Stock Orders
Peter Blumberg – Bloomberg
Robinhood Financial LLC was sued in a proposed class action for allegedly failing to inform clients it was selling their stock orders to trading firms and effectively charging back-door commission fees. The complaint filed Wednesday in San Francisco federal court follows the company’s $65 million settlement last week with the U.S. Securities and Exchange Commission over similar allegations.

Britain and EU poised to announce Christmas Eve Brexit deal; Work on legal text goes on through night but agreement reached on fair competition and fishing rights
George Parker and Sam Fleming and Jim Brunsden – FT
Britain and the EU were on Wednesday night finalising a historic post-Brexit deal that will define their future trading relationship, reducing the risk of the UK crashing out of the European single market on January 1.

Markets Have Infinite Reasons to Be Cheerful; The $5.6 trillion of central bank stimulus means investors should keep faith in the recovery trade.
Marcus Ashworth – Blomberg
As we head toward the end of 2020, we’ve spent the final run-up to Christmas much as we have the rest of the year: worrying about Covid-19. The beginning of this week saw a switch into risk-off mode in financial markets as a fast-spreading new virus strain emerged in Britain and Western health systems remained under pressure. That has shaken confidence in a positive start for 2021.

High-Flying Crypto Fund Dumps XRP With Ripple in SEC ‘Hot Water’
Katherine Greifeld – Bloomberg
Coronavir8% position in token after SEC lawsuit; XRP may become more difficult to trade and transact in: BI
Bitwise Asset Management is dumping what was the world’s third-largest cryptocurrency after Ripple Labs Inc. and its top executives were accused by U.S. regulators of selling more than $1 billion of unregistered virtual tokens. The Bitwise 10 Crypto Index Fund (ticker BITW) — which has surged nearly 180% since its Dec. 9 launch — has liquidated its position in digital asset XRP, which comprised 3.8% of its holdings, according to a Wednesday statement.

How UK-EU trade deal would change relations between Britain and Brussels; Centrepiece of historic accord is set to be a trade agreement, plus co-operation on fighting crime and terrorism
Sam Fleming and Jim Brunsden – FT
The future relationship deal close to being struck between the UK and the EU would bring far-reaching changes, as both sides are forced to adapt to the end of Britain’s 30-year membership of the European single market.

With Alibaba Investigation, China Gets Tougher on Tech; Jack Ma and other entrepreneurs prospered under Beijing’s laissez-faire attitude toward the business side of the internet. The dynamic is shifting as the companies have grown in power.
Raymond Zhong – NY Times
China’s internet giants came to dominate segments of the world’s No. 2 economy because Beijing’s authoritarian government largely looked the other way while they grew and grew. Now the companies have the regulators’ full attention.

Johnson Claims Brexit Victory Over EU as Spin Battle Begins
Edward Evans, Joe Mayes, and Ian Wishart – Bloomberg
Deal hasn’t been published, but U.K. touting a series of wins; Prime minister still needs to secure MPs’ backing for a deal
The Brexit deal may not be signed yet, but Boris Johnson’s government has already started trying to sell it at home, claiming victory over the European Union.

Relentless Hacking Is Turning All of Us Into Data Nihilists; No matter how hard we try to defend ourselves, in cyberspace the attackers always have the advantage.
Joshua Brustein – Bloomberg
The world has a way of reminding us of our own helplessness. The year 2020 has had more than its share of examples to choose among, but for those who prefer to direct their existential dread toward the inability of anyone to protect digital data, the recent revelation of one of the most significant cybersecurity attacks in history is an excellent place to start.

The ingredients of ECB success will be boldness and clarity; Central bank must remove ambiguity over its inflation target
Reza Moghadam – FT
The European Central Bank ended 2020 with a flourish, following up the successful stabilisation of markets with fresh measures to ensure easy financing conditions in the coming year. So is that the end of the line for monetary stimulus? What should we expect in 2021?

A migration: transitioning from the sell-side to the buy-side; While exploring career moves across the industry, Annabel Smith uncovers that compensation, juniorisation and automation are key forces behind the decision to move from the sell-side to the buy-side.
Annabel Smith – The Trade
When addressing the key differences between the lifestyle of a sell-side or buy-side trader the phrase ‘the grass is always greener’ has never been more appropriate… or has it? Every year individuals make the move from the buy-side to the sell-side or vice versa. But why do more traders transition to the buy-side instead of the other way around?

Are You Ready For the Roaring 2020s? Hopes for a vaccine recovery have people itching to buy anything more glam than loungewear and furniture.
Andrea Felsted – Bloomberg
First, we stocked up on sweatpants, then we made home improvements. Next will we be booking vacations and buying beach bags? It’s not the most outrageous idea.

SEC’s Clayton Says He Will Depart Regulator Wednesday
Benjamin Bain – Bloomberg
Agency’s chairman says he informed Trump of decision; Clayton had already said he would leave by end of year
U.S. Securities and Exchange Commission Chairman Jay Clayton announced that Wednesday will be his last day leading Wall Street’s top regulator. Clayton, in a statement posted on the agency’s website, said he submitted a letter to President Donald Trump informing him of his decision to leave the SEC Wednesday.

Two of the largest trading desks in crypto have alerted clients that they will stop making markets in XRP
Frank Chaparro – The Block
Jump Trading, the secretive Chicago-based high-frequency trader, and Mike Novogratz’s Galaxy Digital have stopped making markets in XRP after the Securities and Exchange Commission filed a lawsuit against Ripple, according to sources

Ant group says will strictly comply with all regulatory requirements
Reuters Staff
China’s Ant Group on Thursday said it has received a meeting notice from regulators, and will strictly comply with all regulatory requirements.

Fidelity’s Largest Money Market Fund Waives $247 Million of Fees
Miles Weiss – Bloomberg
Fidelity Government fund’s waivers grew along with assets; Fund firm took the step to avoid negative yields for investors
Fidelity Investments has waived nearly $250 million in fees and expenses for its largest money market fund, a sign of how low yields pressured the products in an unprecedented year.

Stacie Hartman Named Vice Chair of ABA Derivatives & Futures Law Committee
Steptoe partner Stacie Hartman has been tapped to serve as vice chair of the American Bar Association’s Derivatives & Futures Law Committee. The mission of the committee is to focus on federal regulation of futures, swaps and other derivatives markets.


Nurses Celebrating Covid-19 Vaccines Battle Social Media Scorn
Sarah Frier – Bloomberg
Frontline workers posting shot photos become anti-vax targets; ‘They’re getting beat up on social media’ for taking vaccine
When the first Covid-19 vaccines were administered last week, many frontline health-care workers across the U.S. posted celebratory photos on social media. In what was meant to be a triumphant moment, some found themselves the targets of skeptical or even scornful comments from people opposed to vaccines.

Vaccination Pace Trails Expectations as U.S. Sends Out Shots
Angelica LaVito – Bloomberg
Getting shots into arms is lagging the pace of distribution; Minnesota reports shipment delays with Moderna’s vaccine
The push to get Americans vaccinated against the coronavirus is proceeding more slowly than expected, an official in charge of the effort said, even as the number of shots given reached 1 million.

Iran Finds Way to Buy Covid Vaccine Despite U.S. Sanctions
Patrick Sykes – Bloomberg
Iran has found a way to buy coronavirus vaccines despite U.S. sanctions, in a breakthrough for the country fighting the worst outbreak of the virus in the Middle East. The central bank received an agreement from an unidentified bank to transfer a 200 million-euro ($244 million) payment for a vaccine, Central Bank Governor Abdolnaser Hemmati said on Thursday in an Instagram post, without giving further details of the payment mechanism or the vaccine supplier.

UK vaccine lottery ‘overlooks’ vulnerable minorities; Emphasis on over-80s leads to concerns about fairness and efficiency of programme
Sarah Neville and Anna Gross and Andy Bounds – FT
One of England’s most prominent council leaders has warned that ethnic minority communities most at risk from coronavirus are in danger of missing out on the first waves of the mass inoculation programme, fuelling concerns that a postcode lottery is marring its implementation.

How British Scientists Tracked Down the New Covid-19 Variant; Researchers are trying to determine whether the variant will cause more-serious disease and evade vaccines
Joanna Sugden and Stephen Fidler – WSJ
British public-health officials were mystified. Nationwide restrictions were driving down the spread of coronavirus across much of the country by late November. But in one part of southeast England infections were inexplicably surging.

In the Rio Grande Valley, Death Has Become a Family Affair; Christmas will be quieter in the Texas borderlands, where aunts and uncles, grandparents and adult siblings often live under the same roof. That closeness let the coronavirus ravage families.
Edgar Sandoval – NY Times
Days after her Thanksgiving feast was prepared, served and eaten, Maribel Rodriguez tried to muster the will to unpack the tree, lights and decorations of boisterous Christmases past.

Black Doctor Dies of Covid-19 After Complaining of Racist Treatment; “He made me feel like a drug addict,” Dr. Susan Moore said, accusing a white doctor of downplaying her complaints of pain and suggesting she should be discharged.
John Eligon – NY Times
Lying in a hospital bed with an oxygen tube hugging her nostrils, the Black patient gazed into her smartphone and, with a strained voice, complained of an experience all too common among Black people in America.

How Confident Can You Be in a Coronavirus Test? Things like which kind of test it was, and the reason for taking it, should factor into how much credence to give a positive or negative result.
Katherine J. Wu – NY Times
In mid-November, David Piegaro tested positive for the coronavirus. His results came too late. The night before, Mr. Piegaro, a member of the National Guard, had driven to New Jersey to visit his family after receiving two negative rapid test results, two days in a row. By the next morning, he was gone. But the single overnight stay was enough to spread the virus Mr. Piegaro was unknowingly carrying to multiple members of his family, including his grandfather, who ended up spending two weeks in the hospital.

One million Americans vaccinated for COVID; Tennessee new epicenter
Gabriella Borter, Dan Whitcomb – Reuters
Tennessee emerged alongside California on Wednesday as an epicenter of the latest COVID-19 surge even while more than 1 million Americans have been vaccinated as U.S. political leaders sought to guard against a highly contagious coronavirus variant sweeping across Britain.

New Virus Strain’s Transmissibility to Cause More Deaths: Study
Corinne Gretler – Bloomberg
The mutated coronavirus strain that’s been spreading in the U.K. appears to be more contagious and will likely lead to higher levels of hospitalizations and deaths next year, a new study showed.

Exchanges, OTC and Clearing

CME Globex Notices: December 21, 2020
CME Group
Critical System Updates
New Resource for Critical Configuration Files
New – iLink 3 Configuration File Enhancement – January 10, 2021 NEW
iLink 2 on MSGW Decommission – February 26, 2021
Update on Order Routing and Front-End Audit Trail Requirements for iLink 3
iLink 3 SBE Schema Update – January 24, 2021
Phase 1 CME FX Link Enhancements – February 21, 2021
Phase 1 CME FX Link Enhancements: Drop Copy Impact – February 21, 2021

CME STP Notices: December 23, 2020
CME Group
CME STP Support of BrokerTec Markets – January 18, 2021
New Aggressor Indicator Flag on CME STP – January 24, 2021
Enhancements for Exercise and Assignment Trades on CME STP – January 25, 2021
BrokerTec Stream on CME STP – February 1, 2021
CME STP FIXML API Connectivity Documentation


Sky’s the limit as tech investors pile into cloud start-ups; Valuations soar in Silicon Valley with venture capitalists racing to find next big thing
Miles Kruppa – FT
The surging value of cloud software companies on public markets this year has been matched by a frenzy of interest in the private market, creating a wave of start-ups valued at hundreds of times their revenues.

The TRADE’s Crystal Ball 2021: FinTech, RegTech and crypto; Gaze into The TRADE’s crystal ball for insights from FinTech and RegTech providers, as well as participants in the crypto space on their predictions for the year ahead.
Hayley McDowell – The Trade
Today only one third of regulatory reporting systems are in-house built. Unsurprisingly, given their DNA and legacy systems, the largest financial institutions are the least likely to be using vendors. However, it’s increasingly clear that regulatory reporting is a necessary obligation rather than a business differentiator and that regulators will not accommodate late or inaccurate reporting.

The TRADE’s Crystal Ball 2021: Technology and data; Gaze into The TRADE’s crystal ball for insights from trading technology and analytics providers on their predictions for the year ahead.
Hayley McDowell – The Trade
2020 has undoubtedly led to an acceleration of a number of technology trends that are set to continue into 2021 and beyond. They broadly sit under one common theme and that is ‘the future of work’.

The Biden administration can change the world with new crypto regulations
Asheesh Birla – TechCrunch
The U.S. government is failing us with regard to fintech and blockchain regulation. Devoid of any regulatory framework in the past four years we’ve been operating in limbo when it comes to the development and advancement of crypto products. Innovators in the fintech and blockchain industries have the ability and vision to build products that solve real problems for everyone from individuals to large banks to governments, but without a clear path forward, these products are unable to grow and scale to their full potential. Regulation shouldn’t be a guessing game. Since 2019, when the Securities and Exchange Commission declared that neither Bitcoin (BTC) nor Ethereum (ETH) are securities, the industry’s been at a standstill. Without clarity, blockchain innovation will be limited to just two coins — the industry is much larger than this. A lack of regulation stifles the immense potential that crypto and blockchain provide.


Michael Saylor, the CEO Who Turned a Software Company Into a Bitcoin Company
Joe Weisenthal and Tracy Alloway – Bloomberg
This past summer, the business intelligence software company MicroStrategy made waves when it put some of its extra cash into Bitcoin. Then, as Bitcoin ran up, it bought more, and the stock has now soared thanks to the bet. But what’s the reasoning behind the move? We speak with MicroStrategy’s CEO, Michael Saylor, on why he thinks Bitcoin is the best reserve asset for any company.

How Vaccine Nationalism Could Extend the Pandemic’s Run
James Paton – Bloomberg
Early agreements to purchase Covid-19 vaccines are beginning to pay off for the likes of Britain, the U.S., Canada and the European Union, but much of the world is waiting. Although there are ambitious efforts to ensure that the shots reach low- and middle-income countries, it’s unclear when that will happen. Public health specialists warn that delays are likely to prolong the pandemic, bringing more suffering and economic pain. The health crisis has already exacerbated global inequality. Now, there’s the prospect that frontline health workers in poorer nations could lag vast numbers of people in wealthier regions in gaining access to shots.

Ripple: Davos man no longer; How the SEC’s case against Ripple Labs knocks crypto’s establishment dreams.
Izabella Kaminska – FT
Back in 2016, within the taupe-coloured finishings of the main Davos conference centre used by the World Economic Forum to shut down the Swiss ski resort every year, this reporter and the FT’s Gillian Tett met with Chris Larsen, then head of Ripple Labs. It was January 22, the last formal day of the week-long Alps fest.

Bitcoin’s Rally Has Already Outlasted 2017’s Epic Run; The digital currency has tripled in price this year and is holding its gains longer
Paul Vigna – WSJ
Bitcoin approached $20,000 in 2017 and finally topped the mark in 2020. What drove the rallies, and what happened in the days following the peaks, show how much the market has changed in three years. The digital currency, which has more than tripled in price this year, hit its first record of the year 24 days ago and has continued climbing, trading as high as $24,273 on Sunday. On Wednesday, it closed at $23,299. In previous rallies, such gains have quickly reversed course.

FinCEN’s Proposed Crypto Wallet Rule Might Hit DeFi
Nikhilesh De – Coindesk
A proposal by the U.S. Financial Crimes Enforcement Network (FinCEN) that would require crypto exchanges to collect personal information, including names and home addresses, from individuals seeking to transfer cryptocurrencies into their own wallets is poorly defined and could have widespread repercussions, say a number of regulatory experts.
The proposed rule, unveiled last Friday, would require crypto exchanges to collect this personal information from customers who transfer an aggregate of $3,000 per day to “unhosted” wallets (which are also referred to by FinCEN as self-hosted or self-custodied wallets; crypto users may know them as private wallets or, simply, wallets). Transfers of over $10,000 per day would require the exchange to file a Currency Transaction Report (CTR) to FinCEN, reporting these transactions and the individuals making them to the federal government.

New anti-money-laundering regulations should exclude Hong Kong’s bitcoin ATMs to sustain innovation, says industry body
Georgina Lee – South China Morning Post
As Hong Kong’s financial regulators tighten their scrutiny of cryptocurrencies, the machines that dispense bitcoin and other digital tokens may soon be among the last remaining avenues for individual retail traders. A broader set of rules currently being considered would subject the city’s virtual currency exchange platforms to licensing requirements by the Securities and Futures Commission, and forbid them from servicing retail investors. But the bitcoin automatic teller machines (ATMs) could also eventually find themselves off limits if an appeal from the cryptocurrency community for the government to exclude them from the extended regulations designed to tackle money laundering goes unheeded.

Crypto firm BitGo touts record assets as PayPal deal falls through
Jeff John Roberts – Fortune
In October, rumors swirled that PayPal was poised to acquire BitGo, one of the country’s oldest cryptocurrency firms. That deal will not happen, according to multiple sources, and BitGo is now charting a new path. In a recent interview with Fortune, BitGo CEO Mike Belshe noted that his company now holds over $16 billion worth of cryptocurrency assets for its customers and that it’s acquiring several significant clients every week.

White House releases stablecoin report, says regulators could consider limiting ‘multi-currency stablecoins’
Aislinn Keely – The Block
The White House has released a statement on regulatory considerations for stablecoins — and it includes the potential for limitations on “multi-currency stablecoins.” The statement comes from the President’s Working Group on Financial Markets, which is a Treasury-centric working group that makes recommendations to the president and federal regulators. The group highlighted the importance of anti-money laundering and counter financial terrorism measures, including on-chain know-your-customer (KYC) verification among all parties, even unhosted wallets. This comes after the Financial Crimes Enforcement Network unveiled a proposed rule that would also create heightened KYC requirements for transactions between money service businesses and unhosted wallets.

Binance Korea is shutting down just eight months after its launch
Yogita Khatri – The Block
Binance Korea, a crypto-to-crypto exchange of Binance for Korean users, is shutting down next month. In a notice published Thursday, Binance Korea said it is difficult to operate because of tight liquidity and low transaction volumes. The closure comes just eight months after the exchange’s launch in April 2020. Binance Korea was leveraging the functionalities of Binance, such as its liquidity and order matching engine. But according to a forthcoming law in South Korea, crypto exchanges can no longer share their order books with other exchanges. “It is forbidden to allow customers to trade virtual assets with customers of other virtual asset operators through partnerships with other virtual asset operators,” per the law, which is coming into force on March 25. It could get implemented earlier as well, according to local reports.

Crypto Hedge Fund Founder Stefan Qin Accused of Fraud by SEC
Tanzeel Akhtar – Coindesk
The Securities and Exchange Commission (SEC) has accused the founder of hedge fund Virgil Capital which specializes in cryptocurrency arbitrage, of fraud. Stefan Qin, the 23-year-old founder of Virgil Capital has been accused by the SEC of “fabricated records,” for failing to redeem $3.5 million in investments and attempting to withdraw $1.7 million in investor funds to pay off Chinese loan sharks, the SEC said. On Tuesday, the SEC applied to the U.S. District Judge Lorna Schofield for an emergency order to suspend $25 million in digital assets owned by another fund managed by Qin.


Republicans Will Keep Trying to Limit Fed’s Emergency Loan Power; Political wrangling over the central bank’s crisis tools sets the stage for a future showdown.
Christopher Condon, Laura Davison, Matthew Boesler – Bloomberg
A last-minute compromise that helped break a monthslong congressional impasse on Covid-19 relief may set up a political clash over how the Federal Reserve can respond to future crises.

Russian Hackers’ Motive Baffles U.S.: Mere Espionage, or Worse?
William Turton – Bloomberg
Attackers accessed emails, suggesting espionage was purpose; Investigation into widespread computer breach in early stages
As researchers from Silicon Valley to Washington race to understand the full impact of the massive cyber-attack that breached computer networks in the government and private sector, one of their thorniest unanswered questions centers on motive.

Trump vetoes $740bn defence bill to set up fresh clash with Congress; Move could see lawmakers override a veto from the president for the first time
Demetri Sevastopulo – FT
Donald Trump has vetoed the annual US defence spending bill worth $740bn, setting up yet another clash in Congress, where leading Republicans and Democrats have already vowed to override any attempt by the president to torpedo the legislation.

Donald Trump’s pardoning spree tests boundaries of authority; Historians say US president is notable for granting clemency to a number of political allies
Kiran Stacey – FT
During the deliberations over whether to ratify the US constitution in 1788, George Mason, the Virginian politician and scholar, warned against one particular inclusion: the right of a president to pardon people.

Donald Trump wreaks havoc during waning days of office; President throws spanner into legislative works and issues string of controversial pardons
Demetri Sevastopulo – FT
As Donald Trump prepared to head to his Florida resort for the holidays, he gave Congress two unwelcome Christmas presents, sparking fears of a government shutdown and casting doubt on a $900bn relief package for Americans suffering from the economic fallout of the pandemic.

Covid-19 Stimulus Package Delivers a Christmas Haul for Loggers; Timber industry was largely denied coronavirus aid money until Congress stepped in
Julie Bykowicz – WSJ
A few months ago, those who supply America’s homes with fresh Christmas trees were approved for special aid by the U.S. Department of Agriculture to help against the economic ravages of the coronavirus pandemic.

Sen. Loeffler to weigh $2,000 payments if it ‘repurposes wasteful spending’
Emily Jacobs – NY Post
Sen. Kelly Loeffler will consider President Trump’s call for Congress to amend the $900 billion COVID-19 relief bill to increase direct payments to eligible Americans from $600 to $2,000 — if it “repurposes wasteful spending.” Loeffler (R-Ga.), who is in the political fight of her life in a race that will help decide which party holds the Senate — and has previously said $600 was sufficient — made the comment while speaking to reporters Wednesday at a campaign event with black business owners.


Ripple: The SEC filing highlights
How a crypto company became its own central bank.
Izabella Kaminska – FT
Just before we pop off for the holidays we thought we would bring you some of the highlights of the SEC’s filing against Ripple Labs. Because its 71 pages really were hugely insightful reading. Emphasis ours throughout.

The European Securities and Markets Authority (ESMA) will be closed from Wednesday 23 December and will reopen on Monday 4 January 2021.

FINRA Requests Comment on Enhancements to TRACE Reporting for U.S. Treasury Securities
In consultation with the U.S. Department of the Treasury (Treasury Department), FINRA is soliciting comment on potential enhancements to the information reported to FINRA’s TRACE facility regarding transactions in U.S. Treasury securities. Specifically, FINRA is seeking comment on potential changes to TRACE reporting for U.S. Treasury securities that would require: (1) more granular execution timestamps; (2) a shortened trade reporting timeframe; (3) new indicators to identify non-alternative trading system (ATS) trading venues and method of execution, the trading unit within a firm executing a trade, and the method used to clear and settle a transaction; (4) new modifiers to identify additional multi-leg transactions and whether a transaction is priced at the current market; (5) standardized price reporting; and (6) separate reporting of per-transaction ATS fees. FINRA also is soliciting views on whether these proposed changes should apply to all TRACE-eligible securities uniformly, if applicable.

SEC Issues Statement and Requests Comment Regarding the Custody of Digital Asset Securities by Special Purpose Broker-Dealers
The Securities and Exchange Commission today issued a statement and request for comment regarding the custody of digital asset securities by broker-dealers in order to encourage innovation around the application of Securities Exchange Act Rule 15c3-3 to digital asset securities.

SEC Chief of Staff Sean Memon Announces Plans to Conclude Tenure
The Securities and Exchange Commission today announced that Sean Memon will conclude his tenure as the agency’s Chief of Staff in January 2021. Mr. Memon joined the SEC as Deputy Chief of Staff in May 2017 and was named Chief of Staff in June 2019. As Chief of Staff, Mr. Memon served as principal advisor to Chairman Clayton on legal, policy and management matters affecting each aspect of the agency’s mission, including rulemaking, enforcement, examinations and internal agency operations. Often representing the SEC in interagency policy initiatives, Mr. Memon worked closely with cross-divisional teams within the SEC and with other federal agencies and international bodies, including the Department of the Treasury, the Federal Reserve, the CFTC, the FDIC, and the OCC as well as the Financial Stability Oversight Council and Financial Stability Board. Mr. Memon played a key role in the SEC’s efforts to ensure continued orderly market operations in response to the COVID-19-related economic stresses in 2020.

Staff Statement Regarding Nasdaq Rule Proposal, by Brett Redfearn, Director, Division of Trading and Markets
The staff recognizes that fair, orderly, and efficient market function and competition is the hallmark of our securities markets.[1]

Statement on the Tenure of SEC Chairman Jay Clayton, by Commissioner Elad L. Roisman
t is hard to sum up my gratitude and admiration for Chairman Clayton’s leadership of this agency. During his tenure at the SEC, he has focused on bringing together its talented and dedicated staff to make major strides in advancing the Commission’s tri-partite mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation. Chairman Clayton made clear from the outset that this mission would guide every part of our work, and then he led us in developing and executing an agenda to effectively carry it out.

Statement of SEC Chairman Jay Clayton
Chairman Jay Clayton – SEC
I recently submitted a letter to President Donald J. Trump informing him that today, December 23, 2020, will be my last day as Chairman of the Securities and Exchange Commission. The text of the letter is included below.

Staff Statement on the President’s Working Group Report on Money Market Funds
Dalia Blass – SEC
In March, the short-term funding markets came under sharp stress from the economic concerns related to the COVID-19 pandemic and an overall flight to liquidity and quality among investors.[2] The President’s Working Group on Financial Markets (“PWG”) has studied the effects of the COVID-19 pandemic on the short-term funding markets and, in particular, on money market funds.[3] The results of this study are included in a report issued on December 22, 2020 and attached to this statement as an Appendix (the “Report”).[4]

Statement on Primary Direct Listings
Today, the Commission approved a new listing rule from the New York Stock Exchange (“NYSE”) which fundamentally shifts how companies can access the public markets.[1] The new listing standard will allow primary direct listings of companies seeking to go public and, importantly, raise capital outside of the traditional initial public offering (“IPO”) process.[2] NYSE’s proposal represents what could have been a promising and innovative experiment. Unfortunately, the rule fails to address very real concerns regarding protections for investors. As a result, we are unable to support this specific approach.[3]

Brexit countdown for UK financial services sector
With one week to go until the end of the Brexit transition period, the FCA is urging financial services companies to ensure they are ready. Customers should also be aware of any changes that may apply to them. Irrespective of the outcome of the negotiations between the UK and the EU on a free trade agreement, firms will need to be prepared for the end of the transition period.

Investing and Trading

Has the Fed Rewritten the Laws of Investing? Things probably aren’t different this time with market valuations so high, but if they are then that still might not be so good.
Justin Lahart – WSJ
The only way to argue that stocks aren’t wildly expensive is to say that something fundamental has changed about the market environment. Thanks to the Federal Reserve, such a change might actually have occurred — but investors could pay a heavy price if they turn out to be wrong.

U.S. Government-Bond Yields Rise on Post-Brexit Trade Deal Hopes
Sam Goldfarb – WSJ
U.S. government-bond prices fell Wednesday as investors reacted to signs that U.K. and European Union officials were closing in on a new trade accord that would avoid tariffs being imposed at the start of next year. In recent trading, the yield on the benchmark 10-year U.S. Treasury note was 0.960%, according to Tradeweb, compared with 0.917% Tuesday. Yields, which rise when bond prices fall, initially declined early in the overnight session after President Trump criticized the roughly $900 billion coronavirus relief deal passed by Congress, raising questions about whether he might veto the legislation.

Everything You Need to Know About Trading Futures; A futures contract is an agreement to buy or sell a commodity at a set future price and date.
Mark Reeth – US News
FUTURES TRADING IS ONE method for investors looking to maximize profits. But this particular trading instrument, which involves an agreement to buy or sell an asset at a predetermined future price and date, can seem opaque and hard to understand.

Flash Surge in World’s Biggest ETF Linked to ‘Outlandish’ Trades
Bloomberg News
At 1:25 p.m. in New York on Monday, something unusual happened to the world’s largest exchange-traded fund. After opening at $364.97 per share and straying less than 0.9% in either direction for almost four hours of trading, the price suddenly rocketed. The SPDR S&P 500 ETF Trust (SPY) shot to $378.46, the highest level it has ever reached. More than 150,000 trades were executed at $370 or above, totaling almost $58 million. Then, just as suddenly, the price dropped back to about $367.50. The whole thing took less than one second.

Environmental, Social and Corporate Governance

Exxon and the Oil Giants Face the Carbon Future; Change is inevitable, adaptation speed varies.
Aaron Rutkoff – Bloomberg
This is a big story about what Exxon Mobil knows. But it’s also about what Exxon—and its peers in the oil industry as a whole—want investors, decision makers and the public to see about how their long-term business plans correspond to the climate future.

Decarbonisation goals require huge commitment to critical metals; It will take a minimum of seven to 10 years to develop the new mines we will need
John Dizard – FT
Climate policymaking often seems to be little more than changing a label on a green coloured arrow in a PowerPoint slide from “electric” to “hydrogen”. Of course, oil companies will endorse huge commitments based on superficial briefings. Their investors are encouraging their transformation into cost-plus green energy utilities.

Carbon Prices Jump Despite Record Drop in Emissions; European Union’s decision to curb greenhouse gases is driving the latest rally, putting carbon credits on par with gold
David Hodari – WSJ
Credits tied to carbon emissions are having a banner year despite a record drop in output from the power plants and steel mills that need them to operate. The price of carbon credits, used by governments in Europe to curb greenhouse gases and traded by hedge funds and other investors, has risen 30% this year, putting it on a par with gold as one of the best performing commodity-linked assets. Intercontinental Exchange carbon futures traded Thursday for EUR32.03 a ton, equivalent to $39.14, just below their record highs hit earlier this month.


Covid crisis opens chasm between hedge fund winners and losers; Difference in performance of top and bottom managers hits widest level since 2009
Laurence Fletcher – FT
The Covid-19 crisis has created the widest gulf in performance between top and bottom hedge funds in more than a decade, with sharp gains generated by several managers helping to revive interest in the industry.

European ETF investors pull $7.8bn from S&P 500 funds; Data for first 11 months of year show Nasdaq 100 and ESG funds were main attraction
Steve Johnson – FT
European ETF investors have shunned funds tracking the S&P 500, the dominant US equity benchmark this year, instead piling into the tech-heavy Nasdaq 100 and a melange of sector and “sustainable” indices.

Owl Rock, Dyal Strike Deal to Combine and Go Public; Agreement through special-purpose acquisition company would value combined entity, Blue Owl, at $12.5 billion
Cara Lombardo and Miriam Gottfried – WSJ
Owl Rock Capital Partners LP and Dyal Capital Partners agreed to merge in a complicated deal that would take them public through a blank-check company. The new company, to be named Blue Owl, would combine one of the biggest owners of private-equity firm stakes with Owl Rock, a rapidly growing credit investor. It would be valued at about $12.5 billion.


China Targets Jack Ma’s Alibaba Empire in Monopoly Probe
Lulu Yilun Chen and Coco Liu – Bloomberg
Regulators to summon Ant as watchdog probes affiliate Alibaba; Beijing is amping up scrutiny over powerful internet sector
China kicked off an investigation into alleged monopolistic practices at Alibaba Group Holding Ltd. and summoned affiliate Ant Group Co. to a high-level meeting over financial regulations, escalating scrutiny over the twin pillars of billionaire Jack Ma’s internet empire

Turkish Farmers Eye $3 Billion Profit Jackpot From Gold Find
Tugce Ozsoy – Bloomberg
Technical partners being sought to help with mining operations; Gubretas parent Tarim Kredi to use proceeds to start bank
A Turkish fertilizer producer expects to net $3 billion of profit from a recent gold discovery that may allow its parent company to fulfill its ambitions of starting an Islamic bank. Those earnings would be more than five times the annual sales of Gubretas, which earlier this month announced it found 3.5 million troy ounces of gold reserves worth about $6 billion at current prices.

Iraq’s Currency Devaluation May Not Be Enough to Salvage Sinking Economy
Abeer Abu Omar and Khalid Al Ansary – Bloomberg
Move will add inflation to the many problems Iraqis face; OPEC’s No. 2 producer is reeling from low oil prices and Covid
Iraq’s currency devaluation will add inflation to the list of hardships facing a population recovering from a devastating war with Islamic State. Without deep spending cuts, it won’t be enough to prevent even deeper economic pain.

Pandemic Exposes Hurdles to Developing India’s Credit Market
Rahul Satija and Ayush Damani – Bloomberg
Publicly sold corporate bonds were under 1% of 2020 issuance; From 2021, buyers can make online bids for new public deals
Efforts by Indian policy makers to open up rupee corporate bond sales to more investors took a step backward during the pandemic, as borrowers shunned tighter regulations in the public market in a record dash for funds.

Turkey raises interest rates again in bid to rebuild credibility; Borrowing costs hit highest level in more than a year as new central banker unwinds past policy
Laura Pitel – FT
Turkey has raised interest rates for a second month in a row as the country’s new central bank chief pushes on with a drive to rebuild its shattered credibility.

Chocolate is a treat but leaves a sour taste in cocoa farmers’ mouths; For families growing the crop in west Africa, the farmgate price is low and the life uncertain
Orla Ryan – FT
For Larbi Siaw, a cocoa farmer in Ghana’s western north region, this is one of the busiest times of year. Like millions of smallholders across west Africa, he and his family are chopping down ripe yellow pods, scooping out white pulpy beans and leaving them to dry on reed mats in the heat.


Brexit Deal Gets Held Up by Last-Minute Haggling Over Fish
Ian Wishart, Alberto Nardelli, and Alex Morales – Bloomberg
The two sides are on the brink of clinching historic accord; Officials still putting finishing touches to the agreement
U.K. and European Union negotiators are locked in talks in Brussels over the final details of a historic post-Brexit trade accord, with both side engaged in last-minute haggling over fishing rights.

Gold Treads Water as Markets Await Historic Brexit Trade Deal
Krystal Chia and Swansy Afonso – Bloomberg
Gold steadied and most base metals advanced as the dollar weakened, with investors awaiting the final announcement of a historic post-Brexit trade deal. While the outline terms of the deal, including broad fishing quotas, were agreed on Wednesday, negotiators have hit a last-minute disagreement over the precise number of each species EU boats will be able to catch in U.K. waters, officials said. It isn’t clear how long it will now take for the discussions to reach a conclusion.

‘Please help us’: child refugees running out of time to reach UK before Brexit
Harriet Grant – The Guardian
The Home Office has said it will not allow a group of stranded refugee children to join their families in the UK if their cases do not make it through the Greek asylum system by 31 December when the EU family reunification programme comes to an end. Around 20 children who are eligible to join their relatives in the UK under the current family reunification scheme are still waiting for their cases to be completed in Greece, before the UK government ends the programme when it leaves the EU on the 31st December. The NGO Safe Passage, which is assisting the children, says some are currently homeless and that many cases are experiencing delays getting through the Greek asylum system on time.

Covid: Food bank stockpiling for no-deal Brexit and end of furlough
BBC News
A food bank is stockpiling food in anticipation of a surge in demand caused by the furlough scheme ending and a potential no-deal Brexit. Before the first national lockdown in March, Spires Foodbank in Sheffield served about 30 people a week. Now it has 250 weekly users and manager Andru Keel says they are “bringing in more storage units” to cope with demand for tinned and dried goods. The government said it had provided money to support food aid charities. Mr Keel said the charity, based in the Arbourthorne area, had struggled at the height of the pandemic “when the numbers went through the roof”.

Brexit trade deal marathon heads to the finish line
Gabriela Baczynska, John Chalmers – Reuters
Britain and the European Union appeared close to clinching a long-elusive trade agreement on Wednesday, raising hopes that they were now set to avoid a turbulent economic rupture on New Year’s Day. A senior British government source said Prime Minister Boris Johnson was poised to do a trade deal with the EU, after media reports said the agreement had already been done, just over a week before Britain completes its journey out of the bloc.

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CME to permanently close most trading pits

CME to permanently close most trading pits

First Read $40,626/$300,000 (13.5%) Anonymous ++++ Hits & Takes John Lothian & JLN Staff Without fanfare or amplification from its executives, the CME Group shut the books on most -- but not all -- of its floor trading history Tuesday afternoon with the...

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