Robert Birnbaum, Architect of Modern-Day Financial Markets, Dies at 94

Jan 10, 2022

First Read

Hits & Takes
John Lothian & JLN Staff

This morning we have an interview in JLN that we shot a couple of years ago in our now shuttered office. We interviewed attorney Scott Early, former general counsel of the Chicago Board of Trade during its go-go years of the 1980s. This interview is part of The History of Financial Futures video series. We will eventually weave Early’s interview into the broader series, but right now here is part one of our two-part interview with Early.

The U.S. seven-day average for Covid-19 cases hit 700,00 for the first time, Johns Hopkins University data showed, the Wall Street Journal reported. New York broke its record for new Covid cases with 90,132 on Saturday, and it passed 4 million cases since the start of the pandemic, Bloomberg reported. Australia also set a record, reporting more than 100,000 cases for the first time courtesy of including a backlog of home test results included in the daily tally, Bloomberg reported.

Today’s lead story about the death of Robert Birnbaum, former president of the New York Stock Exchange during the stock market crash of 1987, omits a couple of key details that would be helpful to the narrative. First, the criticism of the Chicago markets from New York was coming mostly from Richard Phelan, the chairman of the New York Stock Exchange. He was blaming stock index futures for the crash and the low margins the futures exchanges were charging compared to equities margins. The second is that Birnbaum and Bill Brodsky had both worked for the American Stock Exchange, which I am sure helped make the peacemaking easier between the NYSE and CME. Condolences to the family, friends and colleagues of Mr. Birnbaum.

Richard Sandor, the chairman and CEO of the American Financial Exchange, wanted to share this statement about Robert J. O’Brien, Sr.:

“We are sorry to hear of RJ O’Brien’s passing. On a professional level, he was a man who built a successful brokerage company that has adapted and flourished through many market cycles. I met him when I joined the CBOT in 1972 and working on the ag contracts. I was an ignorant academic and needed to learn about the real world of agribusiness. He was very willing to help and generous with his time. His leadership at the CME brought innovative changes as he spoke up for the ag industry. I was honored to have introduced him when he was inducted in the Futures Hall of Fame at Boca Raton, Florida, in 2007. He had the perseverance to understand what was important and would grow the agriculture industry, acting as a voice for the farmer. But after a long and full life, in my opinion his most important success was that he treated people with respect and earned the honor of their respect in return.”

The CME today announced they will launch 20-Year U.S. Treasury Bond futures on March 7, pending regulatory review. If all goes well, they can talk them up in Boca a week later.

Bloomberg reported “E3, Biggest U.S. Video Game Expo, Cancels June Conference.” I have heard about conferences being canceled or moved to virtual through March, but all the way to June is unusual.

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



Former CBOT General Counsel Scott Early – The History of Financial Futures – MarketsWiki Education

Scott Early first became involved with the Chicago Board of Trade as a litigator with the law firm of Kirkland & Ellis when the exchange had a case go before the U.S. Supreme Court in the 1970s. Then the Hunt Brothers silver corner hit and there were a lot more lawsuits for the CBOT to deal with, and Early grew closer to the CBOT as he helped the exchange deal with them.

Watch the video »


OCC Sets New Records; Cboe’s Reports Record Options Volume; Remembering R.J. O’Brien

– Alex Perry’s Optionstopia
– John’s Take
– Term of the Week

Watch the video »


The EU vs the City of London: a slow puncture; Brexit hurt the financial centre but lack of political will is holding back Europe’s efforts to reduce its dependence on the UK
Sam Fleming, Philip Stafford and Laura Noonan – FT
For someone who started their career working on the floors of the London Stock Exchange, the hours following the UK’s exit from the single market could hardly have been more wrenching. In a single day, Alasdair Haynes, chief executive of Aquis Exchange, a UK share-trading venue, watched virtually all share-trading business that he had courted over eight years being unceremoniously yanked out of London and transferred in January 2021 to EU exchanges.

****** The FT’s front page “Big Read”~JJL


Crypto Diehards Are About to Find Out If It Really Was a Bubble
Katherine Greifeld and Vildana Hajric – Bloomberg
To cryptocurrency true believers, Bitcoin is the ultimate store of value, the most solid hedge against the rampant inflation manufactured by reckless central banks and their money-printing. To skeptics, the crypto world as a whole is a mirage whose massive run-up past $2 trillion was simply the speculative byproduct of the extraordinary amount of easy cash that’s been sloshing around in the global economy — in effect, a big bubble. Both of those theories are about to face their biggest test yet. Bitcoin, the original cryptocurrency, emerged more than a decade ago out of the ashes of the global financial crisis as a bypass to the banks and government agencies mired in Wall Street’s great calamity at the time. The digital token steadily gained a following, inspired a rash of wannabes and endured some wild rides. But it wasn’t until the next big crisis, Covid-19, that the market really took off.

*****Crypto diehards may just find out who Bazooka “the Atom Bubble Boy” is and why he did not make it as a bubble gum marketing icon.~JJL


World’s Biggest Crypto Fortune Began With a Friendly Poker Game; With $96 billion, Binance CEO Changpeng Zhao is closing in on tech titans including Facebook’s Mark Zuckerberg and Google’s Larry Page and Sergey Brin.
Tom Maloney, Yueqi Yang, and Ben Bartenstein – Bloomberg
The Abu Dhabi Grand Prix draws princes, movie stars and world-famous athletes every year to party on Yas Island, the entertainment hub about 30 minutes from the center of downtown. Mingling among them last month was a figure charting an unlikely ascent: a former McDonald’s burger-flipper and software developer who, practically overnight, has vaulted into the ranks of the world’s wealthiest people — cryptocurrency pioneer Changpeng Zhao.

******I am going to call the story false. Is there really ever a “friendly” poker game?~JJL


Reddit ‘antiwork’ forum booms as millions of Americans quit jobs; Members of online community encourage each other to resign — and complain about the boss
Taylor Nicole Rogers – FT
Doreen Ford spent 10 years working in retail stores in the Boston area and hated it. So in 2017, when Ford’s grandmother suggested that she give up her traditional job altogether and leverage her love of dogs to make ends meet, she went for it. Ford walks dogs part-time, but otherwise has not held a traditional job since and says she has never been happier.

****** The official theme song of the group is by Johnny Paycheck, which is “Take this job and shove it.”


Friday’s Top Three
Our top story Friday was the press release Apex Fintech Solutions Acquires PDQ Enterprises, Parent Company of Auction-Based ATS Operator CODA Markets, from Businesswire. “The [acquired] company’s most recent innovation is CODA Fuse, a first-of-its-kind intraday auction product that helps equip investors to prioritize liquidity over speed by enabling a single order to trade simultaneously with multiple counterparties,” the release says. Second, courtesy of Deutsche Börse Group and Oper Frankfurt, was a lovely oboe solo that turned the performance of the DAX index into music, played by Johannes Grosso (via YouTube). Third was Remembering an Ag Advocate: Robert J. O’Brien’s children discuss his legacy and honor his life, a video from RedTV.


MarketsWiki Stats
26,685 pages; 236,682 edits
MarketsWiki Statistics


Lead Stories

Robert Birnbaum, Architect of Modern-Day Financial Markets, Dies at 94; He was renowned for his steady hand during the 1987 stock market crash. He later helped design circuit breakers to calm future panics.
Emily Flitter – NY Times
Robert J. Birnbaum, who as president of the New York Stock Exchange was credited with helping to navigate a major financial crisis during the U.S. stock market’s plunge on what became known as Black Monday in 1987, and who later helped design market circuit breakers to head off future panics, died on Dec. 23 at his home in Boca Raton, Fla. He was 94. His son, Gregg Birnbaum, said his death followed a long illness.

LME’s Metal Trading Hit Lowest Since 2010 Despite Record Prices
Mark Burton – Bloomberg
Trading activity fell 4.7% last year on top base metals bourse; But volumes bounced in October amid frenzied trading in copper
The London Metal Exchange’s trading volumes dipped to the lowest in more than a decade last year, marking a further slowdown in activity on the top industrial metals bourse even as prices hit record highs. Volumes declined for a third year, extending a slump seen in 2020 amid falling industrial output and the closure of its open-outcry pit in the wake of the Covid-19 pandemic. Fee-payable trading volumes in futures and options slipped 4.7% to 138.65 million contracts last year, the LME said by email.

A Trading Ban for U.S. Lawmakers That Makes Sense; Senator Jon Ossoff’s proposal to bar federal legislators and their family members from buying individual stocks deserves bipartisan support.
Timothy L. O’Brien – Bloomberg
Thanks to ethics legislation that Senator Jon Ossoff is considering, Congress will have to focus more purposefully on one of Washington’s most persistent and egregious financial conflicts: stock trading. The Georgia Democrat will seek to ban trading in individual stocks by federal legislators and family members; he is reportedly looking for a Republican co-sponsor before he introduces his bill.

Omicron Threatens to Spoil IPO Coming-Out Parties; Spreading Covid-19 variant is throwing a wrench in early 2022 stock debut timing
Corrie Driebusch – WSJ
It is a brand new year, but for listing exchanges and companies making stock-market debuts, the start of 2022 feels like a rewind to 2020. Soaring Covid-19 cases in the U.S. are sending Americans back into retreat. The wave also has companies that are on deck for initial public offerings re-evaluating their listing-day plans and, in some cases, delaying debuts.

U.S. Covid-19 Seven-Day Case Average Tops 700,000; Omicron variant has driven infection levels across the country
Jon Kamp – WSJ
The seven-day average for newly reported cases in the U.S. topped 700,000 for the first time, data from Johns Hopkins University show, as the highly infectious Omicron variant spreads throughout the country.

Sunflower Farmers Game Is Exposing the Weak Link of Crypto Networks
Olga Kharif – Bloomberg
Sunflower Farmers sends up transaction fees on Polygon PoS; Networks may need to adjust pricing to cope with rising demand
Another immensely popular play-to-earn crypto video game is showing just how fragile and unpredictable blockchains really are. Called Sunflower Farmers, the game lets players earn tokens for planting and harvesting crops, and its increased traction has resulted in so much network usage, it pushed transaction prices on the blockchain it runs on, Polygon PoS, to unheard of highs. Costs are now more than seven times higher than at the end of December, according to data tracker PolygonScan. Sunflower accounts for about 70% of all of the so-called gas used on Polygon by top accounts.

Crypto ‘Winter’ Slows Volume on Some of the Biggest Exchanges
Yueqi Yang – Bloomberg
Coinbase, FTX.US say trading volume fell during current slide; Oppenheimer says quarter may be another “mini crypto winter”
Some of the most popular cryptocurrency exchanges are starting to note what could be a troubling sign — individual investors are heeding to the industry mantra of “hodl” and shying away from trading as the crash in digital-asset prices deepens. FTX.US, the American affiliate of eponymous trading juggernaut, has seen lower trading volumes “across the board” in the last week, FTX.US President Brett Harrison said in an interview. “To me it looks like we’re in the period of just decreased volume and subdued trading activity following drops in general.”

World’s Top Exchanges Are Benefiting From Europe’s Energy Crunch
Isis Almeida and Jesper Starn – Bloomberg
Share of European gas traded on bourses ballooned to about 80%; ICE says it ‘did benefit from what’s happening in the market’
Gas and power traders are flocking to exchanges as energy companies seek to protect themselves from the risk of others collapsing. With volatility climbing to record levels, the share of European gas traded on the Intercontinental Exchange Inc., the European Energy Exchange and CME Group Inc. ballooned to about 80% at the end of last year, according to data compiled by price-reporting service ICIS. That’s up from almost 50% just a year earlier and about 40% at the end of 2019.

The Best Stock-Fund Managers of 2021; In another tumultuous but positive year, these are the stock pickers who came out on top—led by a 67.7% gain for a small-stock fund
Suzanne McGee – WSJ
A home builder. A defense contractor. A retailer specializing in cowboy boots and other Western wear. A subprime automotive lender. An industrial-metals processor. An asset-management company. Some of these publicly traded entities are small businesses; others are larger. They respond to different market cues and participate in different economic cycles. Some could be defined as “value” companies; others are favored by investors who seek out growth.

Citi Confronts Vaccine Holdouts in No Jab, No Job Mandate
Jennifer Surane – Bloomberg
Staffers allowed to apply for exemptions; compliance tops 90%; Small but vocal minority takes to social media to fight rule
Citigroup Inc. was the first major Wall Street bank to impose a strict Covid-19 vaccine mandate: Get a shot or face termination. With its deadline fast approaching, the company is preparing for action. Office workers who don’t comply by Jan. 14 will be placed on unpaid leave, and their last day of employment will come at the end of the month, according to a message to staff seen by Bloomberg. While some of the employees will be eligible for certain year-end bonus payments, they’ll have to sign an agreement that states they won’t pursue legal action against the company to receive the funds, according to the message.

Citi’s `No Jab, No Job’ Won’t Wash in Europe; Stricter rules on personal privacy and data protection mean employers must tread much more carefully.
Paul J. Davies – Bloomberg
Vaccines are now the main battleground in ending Covid disruptions and some U.S. companies are taking a hard line. Citigroup Inc., the first big bank to issue a “no jab, no job” edict last October, told holdouts last week they’d have to comply by Friday or they’ll be out by the end of January.

2022 Is When Oil Supply Panic Replaces Fears About Demand; Unless the need for oil slows dramatically, the prospect of inadequate supply and triple-digit prices is real.
Julian Lee – Bloomberg
If oil producers were hoping for a quiet 2022, they may be disappointed. There are two very different schools of thought emerging on what the oil market is going to look like this year. The one thing they agree on: It’s not going to be serene. The bears see supply running ahead of demand, rising inventories and the OPEC+ producer group perhaps needing to consider another round of output cuts. The bulls focus on low stockpiles, dwindling spare production capacity amid a dearth of investment, and the prospect of triple-digit prices before 2022 is out. Unless demand growth slows dramatically, the latter argument looks more convincing.

Credit Suisse chairman to be rebuked by board over COVID-19 rule breach – paper
Credit Suisse (CSGN.S) Chairman Antonio Horta-Osorio is likely to be rebuked by the bank’s board after an internal investigation found he breached COVID-19 rules a second time, Tages-Anzeiger newspaper reported on Saturday.

Inside Iceland’s probe into the 2008 financial crash; Former lead investigator for the Icelandic regulator shares his insights into how fraud was unearthed and bankers jailed
Ian Fraser – FT
Following the global financial crisis, Iceland came down hard on its bankers. As of 2018, 25 of them — including the chief executives of leading banks — had been jailed. The approach won plaudits among some because it was seen as a way to enable the country to reform its financial sector and rebuild its economy.

Institutional investors begin to influence digital asset market structure; Following increased activity in digital assets from traditional institutional investors, the market structure is evolving to meet their needs and preferences.
Wesley Bray – The Trade
Digital asset market structure, initially built to address the needs of retail and high-net-worth investors primarily, is coming under the increasing influence of institutional investors. A new report by Coalition Greenwich, “Digital Asset Market Structure: Institutions Take the Reins”, predicts that crypto market structure will increasingly be influenced by the demands of institutional investors and traders.


Hong Kong’s Covid Strategy Has Failed. Miserably; It’s impossible to keep the virus outside the territory’s borders. Time for authorities to admit the folly of this premise and develop a real plan for moving on.
Anjani Trivedi – Bloomberg
Hong Kong’s veneer of normalcy has been shattered — and it’s exposed just how misguided and unrealistic the territory’s Covid-19 containment strategy has become two years into the pandemic. After months of no local Covid infections, Hong Kong reported a string of positive cases over the past week. The territory’s so-called fifth wave was set off by an aircrew employee who didn’t fully comply with his medical surveillance rules — a special concession for airlines. He went to a restaurant for lunch and it quickly spread from there. Several senior government officials, including the territory’s police chief, immigration head and financial services secretary, were ordered into quarantine after attending a birthday party that flouted warnings to avoid large gatherings.

N.Y. Breaks Covid Case Record as Total Infections Pass 4 Million
Ian Fisher – Bloomberg
New York reported a record 90,132 new Covid-19 cases on Saturday as the state passed 4 million total infections since the start of the pandemic. Another 154 people died, one of the highest daily figures in almost a year. Hospitalizations continued to increase to 11,843 and the state’s health-care system remains significantly strained.

UK records 141,472 new COVID-19 cases, 97 deaths
Britain reported 141,472 new cases of COVID-19 on Sunday, down from 146,390 cases on Saturday, while the number of new deaths reported fell to 97 from 313, official figures showed. Britain has seen a surge of cases linked to the Omicron variant of COVID-19 in recent weeks, though death rates have been lower than during previous waves of the disease.

Australia’s Daily Covid Cases Surpass 100,000 for First Time
Nabila Ahmed – Bloomberg
Surge comes as omicron spreads, home test results are counted; Officials are bracing for hospitalization numbers to climb
Australia reported more than 100,000 new Covid-19 cases for the first time in a single day, as a backlog of home test results were included in the tally and states began reintroducing restrictions to help hospitals hit by the fast-spreading omicron variant.

Cypriot Scientist Says Deltacron Covid Variant Isn’t Error
Georgios Georgiou – Bloomberg
A Cypriot scientist defended his assertion that a new strain of Covid-19 exists that combines characteristics of the delta and omicron variants. Other scientists have speculated that Leonidos Kostrikis’s findings are a result of laboratory contamination. But he told Bloomberg in an emailed statement Sunday that the cases he has identified “indicate an evolutionary pressure to an ancestral strain to acquire these mutations and not a result of a single recombination event.”

Labs Limit Covid-19 Test Access as Demand Soars; With Omicron variant spreading, some labs give priority to people with symptoms to speed turnaround times
Brianna Abbott – WSJ
Escalating demand for Covid-19 tests is prompting some laboratories to ration access, giving priority to people with symptoms or other health concerns as the Omicron variant quickly spreads. Triaging who is eligible for Covid-19 tests can help ensure that patients who need a test the most get results fast enough to isolate or get treatment, pathologists and public-health experts say. The strategy, however, risks perpetuating the virus’s spread if some people get turned away from testing altogether.

How Reliable Are Covid-19 Rapid Tests for Detecting Omicron? Rapid tests help us navigate risk during the current wave, but studies raise questions about their ability to detect the Omicron variant
Sumathi Reddy – WSJ
The fast-spreading Omicron variant has made us increasingly reliant on at-home rapid antigen tests to tell us whether we have Covid-19. Yet recent studies raise questions about the tests’ effectiveness at detecting Omicron. The good news: Rapid antigen tests can definitely detect Omicron. The bad news: Some research indicates that rapid tests may be less sensitive to Omicron than they are to other variants.

US hospitals strained with influx of patients amid latest COVID-19 surge, staffing shortages
Omicron and delta are putting additional pressure on an overtaxed health system.
Arielle Mitropoulos and Dr. John Brownstein – ABC News
For nearly two years, day after day, under exhausting and often dangerous conditions, health care workers across the country have continued to care for the nation’s sickest Americans who have fallen victim to coronavirus. As the highly infectious omicron sweeps through the country, the United States is now facing its most significant coronavirus infection surge to date, putting additional pressure on an overtaxed health care system.

Moderna Sees Another Round of Covid Boosters Needed in Fall
Naomi Kresge – Bloomberg
Boosters given late in year should last until spring, CEO says; Impact of more widespread immunity to omicron unclear
Moderna Inc. Chief Executive Officer Stephane Bancel said another round of vaccine boosters against Covid-19 will probably be needed this fall, even if immunity to the rapidly spreading omicron variant becomes widespread.

Early Data Hints at Omicron’s Potential Toll Across America
Lauren Leatherby and Eleanor Lutz – NY Times
The extremely transmissible Omicron variant is spreading quickly across the United States, making up a vast majority of U.S. cases after becoming dominant in the week before Christmas. The Centers for Disease Control and Prevention have said that it is still too soon to predict the full impact Omicron could have on deaths and illness across the country. But data in some of the earliest-hit cities is beginning to show what the future could hold.

U.K. Weighs Cutting Covid-19 Isolation Period to Five Days – Bloomberg
Covid Test Misinformation Spikes Along With Spread of Omicron – NY Times

Exchanges, OTC and Clearing

Cryptocurrency Certificates Gain Popularity in Germany; Trading volume related to crypto certificates crossed EUR1 billion on FCE in 2021; Overall trading volume came in at EUR18.4 billion in 2021.
Bilal Jafar – Finance Magnates
In Germany, innovative financial trading products are gaining popularity among young traders. In its recent report, Deutsche Borse Group revealed that cryptocurrency certificates topped the list of most traded products on the Frankfurt Certificate Exchange (FCE) in 2021. Last year, the trading volume related to crypto certificates jumped above EUR1 billion. Deutsche Borse expanded its crypto offerings significantly in 2021 and listed several new cryptocurrency products. In April 2021, Deutsche Borse enhanced its digital asset offering with the addition of Litecoin ETN.

Frankfurt Certificate Exchange: Crypto certificates will again be the most traded products in 2021
Trading volume remains at a high level at EUR 18.4 billion
Deutsche Börse Group
Certificates on crypto currencies were once again the most popular products on the Frankfurt Certificate Exchange in 2021, with sales of over one billion euros, which is celebrating its 15th anniversary this year. The total trading volume last year was EUR 18.4 billion (2020: EUR 21.1 billion). While the total number of trading orders in structured products fell slightly from 3.9 million in the previous year to 3.4 million, the average order size remained stable at EUR 5,438 (2020: EUR 5,450).

Australian Securities Exchange is ‘On Top Downunder’
The WFE Focus Team
The pandemic has brought many changes to the way we work. In your view, what changes are here to stay that will shape the workplace of the future? The desire of employees for flexible work arrangements is here to stay. Those businesses that can adapt to this without compromising overall productivity will have a competitive advantage, including when it comes to attracting and retaining talent.

SIX’s Acquisition of BME Highlights the Increased Importance of Scale and Free Market Access 
The WFE Focus Team
The pandemic has brought many changes to the way we work. In your view, what changes are here to stay that will shape the workplace of the future?   Almost overnight, we had to switch to digital collaboration. SIX was in the middle of the bidding process for BME. This was a big challenge, which we successfully mastered. In the future, international collaboration will be easier, teams will no longer have to travel so much and will work together efficiently and successfully regardless of their location. However, digital collaboration will never replace physical collaboration, but it will complement it.

Kazakhstan Stock Exchange: Looking forward to new opportunities
The WFE Focus Team
The pandemic has brought many changes to the way we work. In your view, what changes are here to stay that will shape the workplace of the future? During the global pandemic, the Kazakhstan Stock Exchange (KASE) and other exchanges around the world had to switch to an online format. Regardless of the COVID-19 situation, the rule of business continuity remains the key focus for us, especially for our main departments such as IT, Trading, Clearing and Settlement. Despite the fact that at various times up to 80% of the exchange’s employees were working online, we ensured the continuous availability of our services and infrastructure for all market participants.

BRVM Relies on Experience to Overcome Pandemic’s Effects
The WFE Focus Team
The pandemic has brought many changes to the way we work. In your view, what changes are here to stay that will shape the workplace of the future? This past year has been far from an ordinary one for our regional market. According to the experts, it has been the worst year in decades for many countries because of the pandemic, which has killed more than 2 million souls globally. We were not expecting a crisis of this nature. The pandemic brought many changes, from greater flexibility in working times and conditions to high reliance on digital supports.

ICE launches broker-dealer quotation transparency service for fixed income; The new service is aimed at helping participants meet new requirements resulting from recent amendments to the Securities and Exchange Commission (SEC) rules.
Annabel Smith – The Trade
Intercontinental Exchange has launched a new quotation transparency service for broker dealers operating in the fixed income markets. The service helps participants to obtain and review issuer information about fixed income securities before publishing or submitting a quotation, in a quotation medium in accordance with amendments to the US securities regulator’s Rule 15C2-11 which governs the publication or submission of quotations for securities in a quotation medium other than on a national exchange.

TP ICAP completes first trades on crypto asset equity instruments; Initial trade completed with Goldman Sachs and market makers including DRW, Flow Traders and Jane Street.
Wesley Bray – The Trade
Market infrastructure provider TP ICAP has seen its Digital Assets business reach a major milestone following the first trades completed on crypto asset equity instruments with Goldman Sachs.

Annual Eurex Deutschland exchange participant due diligence
Eurex Deutschland needs to verify that all exchange participants are compliant with the admission criteria of Eurex Deutschland on an annual basis. The applicable regulatory requirements are stipulated in Commission Delegated Regulation 2017/584 of 14 July 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council regarding regulatory technical standards specifying organisational requirements of trading venues.

Webcast Details for Half-Year Results and 2022 Key Dates

CME Group to Launch 20-Year U.S. Treasury Bond Futures on March 7
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it will expand its benchmark U.S. Treasury futures and options offering with the addition of 20-Year U.S. Treasury Bond futures on March 7, pending regulatory review.

CBOT Treasury Futures Trading at Settlement (TAS) Transaction Fee Amendments Effective February 1, 2022


Fintech Startup Pine Labs To Seek $500 Million in U.S. IPO
Manuel Baigorri, Saritha Rai and Baiju Kalesh – Bloomberg
Pine Labs Pvt, an Asian digital payments provider backed by Sequoia India and Mastercard Inc., is moving ahead with preparations for a U.S. listing and seeks to raise about $500 million, according to people familiar with the matter.

Pico Acquires Redline Trading Solutions; Transaction combines Redline’s award winning software solutions with Pico’s global ultra-low latency infrastructure and network underpinned by Corvil Analytics
Pico, a leading provider of mission critical technology, data and analytic services for the financial markets community, today announced that it has acquired Redline Trading Solutions (“Redline”), a multi award-winning provider of high performance trading and market data software solutions.

Bob Push joins Finadium – Industry expert and former Treasury Services exec takes on role as Senior Consultant
Finadium is pleased to welcome Robert (Bob) Push to our team as a Senior Consultant. Bob’s years of experience in repo and treasury markets make him an ideal fit for Finadium. In his new role, Bob will lead consulting projects and participate in Finadium’s globally recognized research and event activities.

N26 got it wrong on global expansion and crypto, co-founder admits; Max Tayenthal says EUR7.8bn fintech should have prioritised expanding its services over ‘putting flags’ in more countries
Olaf Storbeck – FT
The co-founder of N26 admits that the German online bank rushed to be global too quickly and missed out on the cryptocurrency boom, as it battles to justify its status as one of Europe’s most highly valued fintechs.


Hackers Have Been Sending Malware-Filled USB Sticks to U.S. Companies Disguised as Presents; The “malicious USB stick” trick is old but apparently it’s still wildly popular with the crooks.
Lucas Ropek –
Word to the wise: If a stranger ever offers you a random USB stick as a gift, best not to take it. On Thursday, the FBI warned that a hacker group has been using the US mail to send malware-laden USB drives to companies in the defense, transportation and insurance industries. The criminals’ hope is that employees will be gullible enough to stick them into their computers, thus creating the opportunity for ransomware attacks or the deployment of other malicious software, The Record reports.

Over Half of SMEs Have Experienced a Cybersecurity Breach
James Coker – Infosecurity Magazine
Over half (51%) of SME businesses and self-employed workers in the UK have experienced a cybersecurity breach, according to a new study by insurance firm Markel Direct.
The findings were taken from a survey of 1000 SME firms and self-employed individuals in the UK, underlining fears that these organizations are at particularly high risk of cyber-attacks due to lack of resources and cybersecurity expertise. This issue has been exacerbated by the digital shift during COVID-19.

Cybersecurity in federal IT
Federal News Network
Danny Jenkins, CEO, and co-founder of ThreatLocker joined host John Gilroy on this week’s Federal Tech Talk to give his perspective on cybersecurity for federal information technology.
The beginning of the interview focused on the issues brought up by the Log4j incident. CISA Director Jan Easterly has said Log4j is “The most serious vulnerability I have ever seen in my decades-long career.” Jenkins said that many free tools are available to manage open-source software, and this is an example of one of them.


Hong Kong Crypto Exchange Allegedly Hit by Frozen Funds
Sarah Zheng – Bloomberg
Customers of a Hong Kong-based cryptocurrency exchange say they can’t withdraw money or tokens from the bourse, and at least seven have reported the matter to police. Dozens of clients have been unable to make withdrawals from Coinsuper since late November, based on a review of messages on the firm’s official Telegram chat. Five customers told Bloomberg News that they’d filed police reports after withdrawals were apparently frozen, leaving them unable to retrieve about a combined $55,000 of tokens and cash.

Pudgy Penguins NFTs Infighting Turns Ugly as Crypto Mania Cools
Olga Kharif – Bloomberg
Owners of the digital birds are trying to oust their creators; Daily average sales of NFTs are falling as token prices plunge
The infighting is getting ugly among the Pudgy Penguins virtual community as one of the most successful non-fungible token projects gets swept up in the collapse in crypto prices. Community dissatisfaction with the speed at which the founding team was developing the project come to a head in recent days with owners of the virtual collectibles seeking their ouster. That’s a far cry from July, when the cherubic-like cartoon creatures became an overnight sensation and were snapped up by buyers worldwide.

Ethereum Beats Rivals With ‘Trade-Offs,’ Pantera’s Krug Says
Akayla Gardner – Bloomberg
Crypto-centric hedge fund is bullish, long on Ethereum; Grayscale’s Grider says it’s not a ‘winner-take-all’ market
An explosion in the growth of crypto networks vying to take market share from Ethereum is unlikely to threaten the dominance of the world’s most used blockchain, according to Joey Krug, co-chief investment officer at digital-asset investment firm Pantera Capital.

TP ICAP Starts Crypto ETP Trading for European Clients; The company has executed its first trade with Goldman Sachs; It also has plans to launch the service in the United States.
Finance Magnates
TP ICAP, which is the largest inter-broker dealer, has started offering crypto-linked exchange-traded products (ETPs) trading to its clients in Europe. Announced on Monday, the company has already executed the first trade of a crypto asset equity instruments with Goldman Sachs. It traded ETC Group Physical Bitcoin on an outright basis and against the CME Bitcoin Future in the form of an exchange for physical (EFP).

Cryptos & Online Gaming: Is A Marriage Of Convenience Between Them Possible?
Rajnish Mishra –
Online gaming, now a multi-million-dollar industry within a few years after setting foot in India, could have found an answer to one of its most nagging problems with the help of crypto space, an almost equally old and rapidly growing tech sub-sector in the country. However, despite facing bans and resultant financial disruptions in some of the high-revenue states, the Indian gaming industry has by and large refrained from opting for cryptocurrencies as a possible overt or covert mode of payment.

Crypto Firms Brace for New Tax-Reporting Rules to IRS
Allyson Versprille – Bloomberg
Treasury likely to clarify who is a crypto broker within weeks; Move follows controversial legal requirements passed in 2021
The Biden administration is poised to specify which cryptocurrency firms will be forced to report reams of customer data to the Internal Revenue Service, said people familiar with the matter.

Bitcoin ETF Goes From Boom to Bust After a Record U.S. Debut
Vildana Hajric – Bloomberg
BITO, down 9% this week, has slumped alongside crypto prices; Tough timing for industry’s benchmark debut: BI’s Psarofagis
The crypto bloodbath has transformed a famous Bitcoin ETF that launched the most successful debut ever into one of the biggest losers for an issuer in their first two months of trading. With a 30% drop, the ProShares Bitcoin Strategy exchange-traded fund, ticker BITO, is now one of the 10 worst performers when looking at returns two months after a public listing, Bloomberg Intelligence data analyzed by Athanasios Psarofagis show.

PayPal Explores Launch of Own Stablecoin in Crypto Push
Mark Gurman and Jennifer Surane – Bloomberg
Company says it would work with regulators ahead of launch; Evidence of ‘PayPal Coin’ work found in company’s iPhone app
PayPal Holdings Inc. is exploring the launch of its own stablecoin as part of its cryptocurrency push, according to the company, which confirmed the development after evidence of the move was discovered inside its iPhone app. “We are exploring a stablecoin; if and when we seek to move forward, we will of course, work closely with relevant regulators,” Jose Fernandez da Ponte, senior vice president of crypto and digital currencies at PayPal, said in a statement to Bloomberg News. Stablecoins are cryptocurrencies backed and priced by the value of an existing currency or commodity.

For Wine This Year Expect a Champagne Shortage, NFT Surplus; A critic’s predictions for 2022.
Elin McCoy – Bloomberg
Last year brought both good and bad news to the wine world. Happily, the U.S. lifted tariffs on European bottles, drinkers cautiously returned to tasting rooms and restaurants, and we all continued to buy wine online with gusto. On the downside, extreme weather—floods, fires, frost, hail, and scorching heat— devastated many of Europe’s wine regions, reminding us that the effects of climate change in 2022 will be unpredictable at best.


U.S. Republican Senator Thune announces 2022 re-election bid
Pete Schroeder – Reuters
U.S. Republican Senator John Thune announced on Saturday that he planned to seek re-election in 2022, boosting chances this his party would retain the South Dakota seat in the fall. Thune, a member of the Senate Republican leadership, had been reportedly considering retirement after serving in the chamber since 2005.

Oligarch of Oligarchs; Is Vladimir Putin secretly the richest person on earth?
Bradley Hope – Project Brazen
It was about time we confronted one of the big candidates in our search for the world’s richest person head-on. There’s no better place to start than Vladimir Vladimirovich Putin, a former intelligence operative who went on to become one of the most powerful and long-running leaders in Russian history. Along the way, he’s won a reputation for ruthlessness and a seemingly unending appetite for international skulduggery and amassing power.

Boris Johnson Calls Out U.K. Anti-Vaxxers ‘Spouting Nonsense’ Online
Kitty Donaldson – Bloomberg
Boris Johnson slammed anti-vaxxers spreading “nonsense” about Covid-19 on the internet, a change in tone he said was driven by the “tragedy” that so many people admitted to U.K. hospitals are not vaccinated. “I want to say to the anti-vax campaigners, who are putting this mumbo jumbo on social media, they are completely wrong,” Johnson told reporters at a vaccination center in the East Midlands on Thursday. “And you haven’t heard me say that before, because I want a voluntary approach.”

NFTs Offered by Candidates as Crypto Creeps Into U.S. Politics
Ken Doyle – Bloomberg
House, Senate contenders use tokens like campaign merchandise; Regulation, public awareness questions linger in midterms
Congressional candidates are beginning to break into the world of cryptocurrency by selling non-fungible tokens to help finance their campaigns in the midterm elections. Democrat Shrina Kurani, an engineer who’s running for a House seat in California, and Republican Blake Masters, who’s vying for the Senate in Arizona, have offered NFTs as incentives for donors, to varying degrees of success.

Crypto industry boosts political clout with Westminster group; Companies want rules that ‘support innovation’
Joshua Oliver – FT
The UK’s crypto lobby has stepped up its influence in Westminster with the launch of a cross-party group of lawmakers, as politicians on both sides of the Atlantic intensify efforts to regulate growing digital asset markets. The Crypto and Digital Assets Group, composed of UK MPs and members of the House of Lords, will work to make sure that new rules for the digital asset industry “support innovation”, according to SNP MP Lisa Cameron, who will chair the group.

Top Democrat says the Fed must release more details on its trading scandal.
Jeanna Smialek – NY Times
Senator Elizabeth Warren, Democrat of Massachusetts, asked the Federal Reserve in a letter sent Monday to release more information about a series of financial trades that several top officials made in 2020, when the Fed was actively propping up markets.


Filinvest’s Investree Gets Permanent SEC Permit for Crowdfunding
Siegfrid Alegado – Bloomberg
A Filinvest Development Corp. venture has secured a permanent license to raise funds for startups and small businesses, according to the nation’s Securities and Exchange Commission.

UK financial regulators to step up scrutiny of cloud computing giants; The Prudential Regulation Authority is concerned at risk of disruption to banks if cloud services fail or are hacked
Stephen Morris and Laura Noonan – FT
UK financial regulators are preparing to step up their scrutiny of cloud computing providers amid growing fears that an outage or hack of their services could severely disrupt a banking system increasingly reliant on them. The Prudential Regulation Authority is exploring ways to access more data from cloud providers Amazon, Microsoft and Google, including on the operational resilience of their services, according to people familiar with the matter.

SEC Pushes for More Transparency From Private Companies; ‘Unicorn’ firms have a huge impact and ‘absolutely no visibility’ for regulators, says SEC Commissioner Allison Lee
Paul Kiernan – WSJ
The Securities and Exchange Commission is preparing to force more transparency from big private companies, as regulators grow concerned about the lack of oversight of the private fundraising that has fueled their rise.

ESMA Seeks Investor Protection And Intermediaries Experts For Stakeholder Panel
The European Securities and Markets Authority (ESMA) has extended the deadline for the call for candidates to renew the composition of its Consultative Working Group (CWG) which advises its Investor Protection and Intermediaries Standing Committee (IPISC).

Investing and Trading

Young retail investors’ risk appetite shows no signs of being curbed
Alexandra Semenova – Yahoo Finance
The pandemic bore a new era for markets — one of a more powerful and influential retail investor. With extra cash and more free time as pandemic lockdowns ensued, droves of individuals betting on stocks showed Wall Street a year of reckoning and changed investing forever.

Risk Bubbles Are Deflating Everywhere, Some Market Watchers Say
Emily Graffeo – Bloomberg
For those concerned that the decade-long super-easy monetary policy has created asset bubbles around the world, the first signs of trouble may be in the making for inflated markets. To Bank of America strategists including Michael Hartnett, a bubble is “simultaneously popping” in assets including cryptocurrencies, palladium, long-duration technology stocks, and other historically risky areas of the market. The winding down in speculative areas comes as investors brace for the U.S. Federal Reserve to pick up the pace of policy tightening.

Deere Goes Autonomous With Its Farmer-Free Tractor
Eric J. Savitz – Barron’s
The farm equipment giant introduces its first self-driving tractor with a teller attached at CES. The machine can drive itself, detect obstacles, and till the soil like an expert. And it doesn’t get tired.

We’re one step closer to self-farming farms; John Deere will start selling autonomous tractors later this year
Adam Clark Estes – Recode
The new self-driving John Deere R8 tractor can be controlled via smartphone. John Deere
The most exciting gadget of the year isn’t a TV that displays NFTs or a foldable tablet computer or anything related to the metaverse. It’s an autonomous tractor. More specifically, it’s the self-driving John Deere 8R tractor that can plow fields, avoid obstacles, and plant crops with minimal human intervention. It looks a lot like any other John Deere tractor — it’s green and yellow — but there are six pairs of stereo cameras that use artificial intelligence to scan the surroundings and maneuver accordingly. The farmer doesn’t need to be anywhere near the machine to operate it, either, as there’s a smartphone app that controls everything. The tractor goes on sale later this year, just in time for an extra special robotic harvest season.

Proxy Voting: What Fund Investors Should Know About It—and How It Is Changing; Giant asset-management firms wield great power, though individual investors are angling to have more of a voice
Ari I. Weinberg – WSJ
For America’s public companies, election day comes every year when common shareholders get to vote on directors, executive compensation and other company issues. But if you are an investor whose primary exposure to stocks is through mutual funds and retirement accounts, your role in this “shareholder democracy” is likely to be limited. That’s because votes aren’t typically awarded to small investors in mutual funds or exchange-traded funds. Instead, the asset-management company that runs the fund votes, by proxy, on behalf of the investors.

Stock Funds Rose 22.5% in 2021; For a third straight year, stock-fund investors pocketed big gains, but bond funds continued to get more investor cash
William Power – WSJ
Stocks aren’t quite immune to the virus, but they continue to overcome it. For a third straight year, stock-fund investors pocketed big gains. The average diversified U.S.-stock fund rose 22.5% for the year, according to Refinitiv Lipper data—following gains of 19.1% in 2020 and 28.3% in the pre-pandemic year before that.

Capstone hedge fund CEO warns of ‘wickedly dangerous’ volatility risk as raging bull market tops 600%; Paul Britton says a raging bull market has led to some long-term investors ignoring volatility risks in their portfolios
David Ricketts – Financial News
A raging bull market that has lasted more than a decade has blindsided some long-term investors to volatility risks in their portfolios, according to one hedge fund boss. Paul Britton, chief executive of New York-based Capstone Investment Advisors, said some investors are too focused on achieving certain investment returns without factoring in the volatility they might experience in the process.

Inside private equity’s race to go public; As share prices surge, a new cohort of buyout groups is preparing to list
Kaye Wiggins and Antoine Gara – FT
Most of the private equity industry has been enriched during the pandemic — but a select group has had a particularly good time. Eleven listed private equity firms collectively gained nearly $240bn in market value in 2021. Against that backdrop, a growing number of privately held buyout groups are rushing to join them on the public markets.

Retirement Funds Bet Bigger on Private Equity; Costs and transparency issues don’t deter pensions hungry for yield
Heather Gillers – WSJ
Government retirement funds are pumping record sums into private equity, defying concerns about risk and cost as they try to plug pension shortfalls. U.S. pension funds’ private-equity investments swelled to an average 8.9% of holdings in 2021 after three years of straight growth, according to analytics company Preqin. That amounts to roughly $480 billion of state and local pension fund assets tracked by the Federal Reserve, up from about $300 billion in 2018.

Environmental, Social and Corporate Governance

One of the World’s Biggest Wealth Funds Targets Sustainable Finance; Kuwait’s $700 billion fund has a mandate to prepare the OPEC member state for a post-oil future.
Fiona MacDonald – Bloomberg
Kuwait Investment Authority wants to make its entire portfolio compliant with environmental, social and governance standards, its managing director said, as Gulf nations reliant on crude move toward life after oil.


Bank of America Sweetens Bonuses to Make Up for Its Restraint Last Year
Katherine Doherty – Bloomberg
Firm plans to increase rewards for bankers by more than 40%; Fixed-income traders whose 2021 revenue fell may get much more
Bank of America Corp., tallying its haul from a second banner year for Wall Street securities firms, is shifting its philosophy on bonuses and dramatically sweetening rewards after a bout of restraint a year ago.

Reddit Taps Morgan Stanley and Goldman Sachs for IPO
Katie Roof and Crystal Tse – Bloomberg
Social media company could go public as soon as March; Reddit could be valued at as much as $15 billion in listing
Reddit Inc., the social media company that helped fuel 2021’s meme stock frenzy, is working with Morgan Stanley and Goldman Sachs Group Inc. to go public as soon as March, according to people with knowledge of the matter.

Dirty-Money Ties Worried Some at Swedbank While Bosses Kept Mum
Niclas Rolander, Aaron Eglitis, and Anton Wilen – Bloomberg
Emails, accounts suggest bankers suspected laundering breaches; Ex-CEO was told in 2018 that exposure was “not looking good”
In the summer of 2018, a senior anti money-laundering official at Swedbank AB appeared anxious as he read reports that its competitor Danske Bank A/S could be fined by U.S. authorities for alleged crimes in the Baltics. N”I’m afraid that if they are sentenced, we will be in focus,” he wrote in an email to then-Chief Compliance Officer Cecilia Hernqvist. She replied: “Fingers crossed.” Danske, which has since admitted handling suspicious funds in one of Europe’s largest-ever money laundering scandals, is still awaiting judgement by regulators in the U.S. But Swedbank executives were right to be concerned. In the months that followed, Swedbank was also sucked into the maelstrom of the Nordic-wide revelations of dirty money flows from the former Soviet Union.

U.S. Bank hires Dr. Julie O’Brien, formerly of WW, as head of behavioral science
US Bank
Her charge is simple: Help U.S. Bank customers achieve their goals, whether financial or otherwise.
What does weight loss have in common with financial success? According to Dr. Julie O’Brien, the head of behavioral science and coaching at U.S. Bank, a lot.

Tribunal throws out ex-Lloyds employee’s claims of ‘discrimination against white heterosexual males’; Ex-staffer, who missed out on roles and had poor performance reviews, claimed women and non-white candidates were treated favourably
Justin Cash – Financial News
An employment tribunal has dismissed a former Lloyds employee’s claim of a “widespread culture of institutionalised discrimination against white heterosexual males” at the bank.

Credit Suisse disputes SoftBank chief’s account of Greensill deal; Swiss bank claims ‘material discrepancy’ between Masayoshi Son’s words and email from Lex Greensill
Owen Walker – FT
Credit Suisse is disputing SoftBank founder Masayoshi Son’s account of a controversial deal the Japanese group struck with Greensill Capital, as once-close ties between the companies turn increasingly bitter. The Swiss bank last month launched legal action in the US over $440m owed to its wealthy clients by Katerra, a Californian construction group that was backed by SoftBank’s $100bn Vision Fund and also a client of supply chain finance group Greensill.


China Venture Funding Hits Record $131 Billion Despite Crackdown
Coco Liu – Bloomberg
Semiconductor, robotics and biotech among new favorites; China chip deals draw six times more funds than U.S.
When China’s government launched a sweeping crackdown on the technology industry over the summer, panicky venture capital investors stopped writing checks and startup valuations began to plummet. It looked like the country’s historic innovation boom was over.

Investors pay the price for brokerage houses’ forgery
Ahsan Habib – The Daily Star
Amran Hossain, a private service-holder, invested around Tk 8 lakh in the stock market through Dawn Securities in 2009. On a morning in 2010, he suddenly came to know that the brokerage firm’s trading was halted for fraudulence. He rushed to the office of the company only to find that his shares were sold without his consent and the money was siphoned off.

Ex-IMF Official Urges China to Add Carbon to Monetary Goals
Bloomberg News
China should take into account carbon neutrality goals when setting monetary policies, local media Securities Times cited Zhu Min, a former deputy managing director of the International Monetary Fund, as saying at a forum on Sunday. The Chinese central bank should be innovative and it should evolve to add carbon neutrality as the third pillar of its monetary policy goals, on top of stabilizing prices and supporting economic growth, said Zhu, who is now chairman of the National Institute of Financial Research at Tsinghua University, at the New Financial Forum in Beijing.

Two Chinese Startups Tried to Catch Up to Makers of Advanced Computer Chips—and Failed; Foundries with ties to a little-known Chinese entrepreneur set out to match TSMC and Samsung, but never commercially produced an advanced semiconductor
Yoko Kubota – WJK
China has spent billions of dollars in recent years trying to catch up to the world’s most advanced semiconductor makers. Two foundry projects, led in part by a little-known entrepreneur then in his 30s, help show why China has yet to succeed. The projects, in the Chinese cities of Wuhan and Jinan, were supposed to churn out semiconductors nearly as complex as the more-sophisticated chips made by industry leaders Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. , which have decades of chip-building experience.

German Broker flatexDEGIRO Sees 55% Jump in 2021 Client Accounts; The broker ended the year with 2.06 million customer accounts; It is expecting to end the year with this between 2.7 million and 2.9 million accounts.
Arnab Shome – Finance Magnates
flatexDEGIRO, a German retail online broker, has published some key performance metrics for 2021, showing impressive growth across all parameters. In addition, it turned to be a record year for the broker.

Turkey Discards Bill to Use Bonds to Pay Banks in Lira Plan
Tugce Ozsoy – Bloomberg
Turkey discarded a plan to use bonds to pay for banks’ possible losses from a new government tool to bolster the lira. President Recep Tayyip Erdogan’s governing AK Party voted on Friday to remove the clause on payments in bonds — instead of cash — according to minutes of a meeting of the parliamentary Planning and Budget Committee.

China Vows to Speed Up Investment in Effort to Stabilize Growth
Measures will remain targeted with excess liquidity avoided; State Council makes pledge at meeting chaired by Premier Li
Bloomberg News
China will accelerate investment in key projects and boost domestic consumption to help stabilize economic growth amid renewed downward pressures, according to a cabinet meeting chaired by Premier Li Keqiang, China Central Television reported.

Israel’s First Digital Bank Clears Final Regulatory Hurdle
Daniel Avis – Bloomberg
Israel’s first digital bank, One Zero Digital Bank Ltd., has received final approval to begin operations after raising sufficient capital and passing the necessary regulatory checks, the Bank of Israel announced on Monday.


Forbes hires Ivry as executive editor of enterprise
Chris Rousch – Talking Biz News
Forbes has hired longtime business journalist Bob Ivry to be executive editor of enterprise. It’s new position that will oversee value-added reporting. Ivry will report to editor in chief Randall Lane.

Why Influencer Journalists Should Not Be the Future of Journalism
Jessica E. Lessin – The Information
A new year is a cause for reflection—and for resuming this column, which I intend to write regularly, but not every week. You may recall I took a break to have my third child. All is well—and busy—in the Lessin household, and at The Information, which is growing rapidly.

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The Spread

Volatility ETFs Aren’t Flashing Signs of Market Fear

Observations & Insight The FIA is seeking fintech startups for its annual fintech showcase, the Innovators Pavilion, at the Futures and Options Expo in Chicago November 14-15. All selected fintech startups will participate in a pitch competition and one will be...

Past JLN Newsletters

SEC charges 11 in ‘massive’ crypto Ponzi scheme

SEC charges 11 in ‘massive’ crypto Ponzi scheme

First Read Hits & Takes John Lothian & JLN Staff Here is your mood brightener of the day from a story in The New York Times by Farnaz Fassihi and Michael Levenson. The lead paragraph reads: The secretary general of the United Nations warned on Monday that...

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