Hits & Takes
John Lothian & JLN Staff
One of the issues that has emerged from the CME Group’s closing of the trading floors other than for Eurodollar options is that brokers who used a floor broker registration to manage off the floor business are now having to register in another capacity. They are losing their exclusion on September 30, 2021. The CME said in a notice from June 11, 2021, “Effective on October 1, 2021, absent an extension of the no-action relief, you will not be permitted to handle customer business unless you have obtained registration in another capacity.” Another issue is whether the floor brokers will have to take the Series 3 test, or whether they will be grandfathered in by some regulatory relief worked out by the CFTC and NFA.
If you are an impacted floor broker who has customer business, I would like to know what your plans are for handling that. I would like to follow this story and write more about it. Contact me at email@example.com.
Robin Liebowitz, formerly head of global marketing at AWS Financial Services, has joined Digital Asset as chief marketing officer.
Chess great Garry Kasparov made a surprise appearance at a chess tournament and had a disastrous result, losing 14 games, including one in seven moves, the FT reported. Needless to say, competing at the tournament for the former No. 1-ranked chess player in the world was the wrong move. — FT
Happy Bastille Day to all JLN’s friends in France.
There were no new donations to the JLN MarketsWiki Education GoFundMe campaign yesterday.
Today in JLN we have part two of our interview with [[Alex Lamb]] for The Path to Electronic Trading series. Later today we will publish our interview with Tim Brennan for The Path to Electronic Trading. Brennan is a former Morgan Stanley, Citadel, Merrill Lynch and ABN AMRO executive.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
The FOW/Global Investor Group’s first-ever virtual India International Derivatives Conference will take place on Tuesday, 20th July from 09:30 – 12:00 IST. This year’s conference will consist of two panel discussions along with a spotlight presentation. For more information and to register, go here. SR
Alex Lamb Aways Landed Amid Opportunity In Early Years Of European Futures Trading – Part 2
Alex Lamb pursued one opportunity after another in the burgeoning financial futures markets in Europe starting in the mid-1970s, then later with technology providers to markets around the world that migrated to electronic formats. After he hired Gary Kemp as a programmer to connect GMI and DTB and then develop a front-end screen that turned into Trading Technologies’ desktop offering, Kemp returned the favor and hired Lamb at TT.
While Lamb was working at Trading Technologies, a venture capital firm made a significant offer for a small percentage of the firm. Kemp and Lamb had made a presentation to the venture capital firm, which was unaware the futures markets were being “electronified.” Ultimately, Kemp would turn down the offer.
EU’s Months-Long Delay Picking Watchdog Head Draws Criticism
Silla Brush – Bloomberg
Incoming chair of ESMA was expected to take up role on April 1; MEP Regner calls for a female candidate to be appointed
Tensions are rising within the European Union over the failure to name a replacement to lead the bloc’s top financial-markets regulator. Paris-based European Securities and Markets Authority has been without a chair since Steven Maijoor’s mandate came to an end in March because of a political standoff at the Council of the European Union, which represents the national governments that make up the bloc. The delayed selection is damaging the watchdog, Evelyn Regner, a member of European Parliament, said in a letter to the presidency of the council.
******I sense a trend here.~JJL
Ex-Nomura banker stages Olympic hunger strike to win access to his children; French national Vincent Fichot has been battling Japan’s antiquated custody laws for three years
Leo Lewis – FT
A former Nomura banker who quit his job to stage a hunger strike close to Tokyo’s Olympic stadium expects his health to be dangerously compromised by the time world leaders gather for the games’ opening ceremony next week.
*****Japanese law versus what is morally right are the key components of this story.~JJL
U.S. Covid-19 Case Counts Have Doubled in Recent Weeks; Public health officials, epidemiologists say rise is being driven by Delta variant, summer socializing and younger, unvaccinated people
Talal Ansari – WSJ
New Covid-19 cases are on the rise in a number of states across the U.S., worrying health officials and epidemiologists as many Americans remain unvaccinated and the highly transmissible Delta variant spreads. The U.S. is averaging more than 23,000 new cases a day, double the seven-day average of around 11,300 cases three weeks ago, according to a Wall Street Journal analysis of data from Johns Hopkins University. On 17 of the past 18 days, the seven-day case average was higher than the 14-day average, also suggesting cases have been rising nationally.
*****By September the U.S. will be in full mask and social distancing mode again, I predict, as the cases soar.~JJL
Billionaires descend on Sun Valley in private jets to talk about climate change
Bradford Betz – Fox Business
A cabal of some of the most high-profile people in media, finance and technology descended on Idaho’s resort town of Sun Valley in private jets this week to tackle, among other things, climate change. On Tuesday, the day the conference kicked off, traffic from private jets got to be so busy that the Federal Aviation Administration temporarily banned planes on the West Coast from taking off.
***** In the COVID era, one travels privately as much as one can no matter how much money one has.~JJL
The Power of the Fed (full documentary) (Video)
FRONTLINE – PBS via YouTube
When COVID-19 struck, the Federal Reserve stepped in to try to avert economic crisis. As the country’s central bank continues to pump billions of dollars into the financial system daily, who is benefiting and at what cost?
FRONTLINE investigates “The Power of the Fed” — and how the central bank’s actions have played out over the years on Wall Street versus Main Street — in a gripping new documentary.
From the award-winning investigative team behind “Amazon Empire” and “The Facebook Dilemma,” the film traces how an experiment the Fed began after the 2008 crash has been dramatically changing the American economy — exploring criticisms that, while well-intentioned, the Fed’s efforts have contributed to wealth inequality, helped today’s financial world grow far removed from the real-world economy, and prompted fears of growing inflation and an impending crash.
***** Pay no attention to the man behind the curtain.~JJL
Humanoid Robot Keeps Getting Fired From His Jobs; Pepper, SoftBank’s robot, malfunctioned during scripture readings, took breaks in exercise class and couldn’t recognize the faces of family members
Miho Inada – WSJ
Having a robot read scripture to mourners seemed like a cost-effective idea to the people at Nissei Eco Co., a plastics manufacturer with a sideline in the funeral business. The company hired child-sized robot Pepper, clothed it in the vestments of Buddhist clergy and programmed it to chant several sutras, or Buddhist scriptures, depending on the sect of the deceased.
*****Bad ideas are bad ideas, robot or not.~JJL
Tuesday’s Top Three
Our top story on Tuesday was Farewell open outcry, a reminiscence of the Chicago trading floors, from The Trade. Second was the Financial Times’ The quest for the investment Holy Grail — an index of everything, about MSCI working on an “ultimate index” tracking the performance of all markets. Third was a Bloomberg opinion piece by Matt Levine, Goldman Doesn’t Want Mercenaries, about salaries for junior investment bankers, among other things.
26,460 pages; 234,443 edits
S.E.C. Says a SPAC Misled Investors About Its Space Deal; A civil settlement involving Momentus and Stable Road Acquisition was one of the first major moves by the agency since the start of the SPAC boom.
Matthew Goldstein – NY Times
A planned merger involving an upstart space transportation company may not get off the ground after securities regulators brought one of the first major enforcement actions targeting a cash-rich blank check company.
SEC Charges SPAC, Sponsor, Merger Target, and CEOs for Misleading Disclosures Ahead of Proposed Business Combination; Charges Relate to Planned Merger of Stable Road Acquisition Company and Space Transportation Company Momentus Inc.
The Securities and Exchange Commission today announced charges against special purpose acquisition corporation Stable Road Acquisition Company, its sponsor SRC-NI, its CEO Brian Kabot, the SPAC’s proposed merger target Momentus Inc., and Momentus’s founder and former CEO Mikhail Kokorich for misleading claims about Momentus’s technology and about national security risks associated with Kokorich. The SEC’s litigation is proceeding against Kokorich, against whom the SEC filed a complaint in the U.S. District Court for the District of Columbia. All other parties are settling with the SEC, with terms including total penalties of more than $8 million, tailored investor protection undertakings, and the SPAC sponsor’s forfeiture of founder’s shares it stands to receive if the merger, currently scheduled for August 2021, is approved.
Europe Rolls Out Vision for a Carbonless Future, but Big Obstacles Loom; An ambitious blueprint to reduce emissions 55 percent by 2030 promises tough haggling among 27 states, industry and the European Parliament.
Steven Erlanger – NY Times
Europe on Wednesday laid out an ambitious blueprint for a sharply decarbonized future over the next nine years, marking the start of what promises to be a difficult and bruising two-year negotiation among industry, 27 countries and the European Parliament.
ICE Bonds Connects to Investortools’ Perform Portfolio System; Provides straight-through access to ICE Bonds’ all-to-all municipal bond market
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of data, technology and market infrastructure, today announced that ICE Bonds has integrated with Perform, Investortools’ fixed income portfolio platform. Perform offers end-to-end portfolio management including trade allocation, compliance, trade messaging and performance attribution to global institutional and private wealth managers. With this connection, Perform customers will have access to ICE Bond’s trading protocols, including click-to-trade, portfolio trading and request for quote, as well as access to deep liquidity pools for Municipals, Corporates, Treasuries, Agencies and Certificates of Deposit.
ESMA warns firms and investors about risks arising from payment for order flow
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, is issuing a public statement to remind firms that the receipt of payment for order flow (PFOF) raises significant investor protection concerns. It also highlights key MiFID II obligations aimed at ensuring firms act in their clients’ best interest when executing their orders.
CFTC Market Risk Advisory Committee Adopts SOFR First Recommendation at Public Meeting
The Commodity Futures Trading Commission’s Market Risk Advisory Committee (MRAC) today adopted a market best practice known as SOFR First for consideration by the full Commission. SOFR First is a phased initiative for switching trading conventions from LIBOR to the Secured Overnight Financing Rate (SOFR) for U.S. Dollar (USD) linear interest rate swaps, cross currency swaps, non-linear derivatives and exchange traded derivatives. Acting Chairman Rostin Behnam is the sponsor of the MRAC.
SGX launches new FFA and futures contracts for LNG vessels
Singapore Exchange (SGX) is expanding its clearing services for seaborne freight by adding three new Forward Freight Agreement (FFA) and futures contracts for Liquified Natural Gas (LNG) vessels. The new contracts launched on Monday, 12 July, are listed out to three years forward, referencing the Baltic Exchange’s independent freight price assessments for LNG transported on LNG-powered carriers from Australia – the top LNG exporter in 2020 – to Japan1, US Gulf to Europe and US Gulf to Japan. These three routes constitute the bulk of global spot market LNG flows and the assessments serve as benchmark pricing for LNG freight.
Paul Hilgers to leave Deutsche Börse / Eric Leupold will take the helm at the Cash Market business
Paul Hilgers, Managing Director of Deutsche Börse’s Cash Market since September 2020, will leave the company at his own request on 31 August for family reasons. He will be succeeded by Eric Leupold, who has been with Deutsche Börse since 2009 and has headed the company’s corporate venture capital arm, DB1 Ventures, since July 2019.
Crypto exchange FTX sets sights on blue-chip acquisitions; The 29-year-old billionaire owner of FTX has ambitions as lofty as buying Goldman Sachs
Eva Szalay – FT
Some of the world’s most prestigious financial institutions could become acquisition targets for young cryptocurrency companies, according to the 29-year-old chief executive of digital coin exchange FTX.
Fractured Libor transition halts US structured rates switch; Issuance of non-Libor caps and floors dries up as lending markets mull array of credit-sensitive SOFR rivals
Natasha Rega-Jones – Risk.net
Attempts to shunt US interest rate option products onto Libor replacements has stalled amid growing uncertainty over which benchmark will succeed the discredited rate for US dollar lending markets. Dollar-denominated caps and floors, which protect lenders and borrowers against interest rate fluctuations, still predominantly reference US Libor. Similar instruments linked to the secured overnight financing rate (SOFR) – the US regulator’s preferred risk-free successor – have struggled to gain
Reinventing the Euro for the 21st Century
Craig Stirling – Bloomberg
The European Central Bank is about to start reinventing the euro for the 21st century, as officials on Wednesday prepare to endorse an exploratory phase for a digital version of the currency. President Christine Lagarde reckons that period could take about two years, meaning ordinary citizens could ultimately be holding virtual central-bank money by the middle of this decade.
Is the ECB Ready for its Credibility Test? The markets may have yawned when the central bank released its new inflation metrics but Lagarde has taken an important step in reestablishing efficacy.
Lena Komileva – Bloomberg
The European Central Bank’s first strategy review in 18 years is about to get its first credibility test. President Christine Lagarde has fired the starting gun for the implementation of the ECB’s new policy framework. Just over a week from now, it will issue updated forward guidance on policy rates. That will be in preparation for a fresh program of quantitative easing to replace the current pandemic sovereign bond purchases — which runs out in March 2022 — probably to be detailed in stages.
The World Federation of Exchanges Seventh Annual Sustainability Survey shows continued increase in engagement
World Federation of Exchanges
The World Federation of Exchanges (WFE), the global industry group for exchanges and CCPs, today published the results of its seventh annual Sustainability Survey. The WFE Sustainability Survey is the only report that provides a picture of Environmental, Social and Governance (ESG) activity at market infrastructures across the world. It captures both the nature and extent of member engagement with ESG issues in both developed and emerging markets. Since its launch in 2014, the Sustainability Survey has consistently captured the growing engagement with ESG matters among the WFE membership.
Goldman Sachs’ Launch With GS Initiative Announces Investment in Female Founders Fund
Goldman Sachs’ Launch With GS initiative today announced an investment in Female Founders Fund (FFF), an early-stage fund investing in the next generation of transformational technology companies founded by women. Launch With GS is Goldman Sachs’ $1 billion investment strategy grounded in our data-driven thesis that diverse teams drive strong returns.
Big Banks Bet on a Brighter Future; Keeping powder dry might be right move in this environment
Telis Demos – WSJ
Sometimes playing for the long term means forgoing a dollar today. Many investors will look past JPMorgan Chase’s JPM 0.45% reserve release and related profit bump in Tuesday’s quarterly earnings report to measures of core revenue generation, particularly net interest income. Investors have generally hoped that measure would have started to look better by now.
TIAA Is Paying $97 Million to Settle Claims It Pushed Customers Into More Expensive Accounts; The firm also agreed to make significant internal reforms
Justin Baer – WSJ
Teachers Insurance and Annuity Association of America agreed to pay $97 million to settle U.S. and New York investigations alleging that the money manager misled customers and pushed them to move their money into more-expensive accounts.
How Vaccine Chaos Left a Covid-Zero Haven Locked Down and Exposed
Jason Scott – Bloomberg
Slow vaccine rollout set to keep nation isolated into 2022; Singapore, Taiwan also struggling to keep delta variant at bay
Just a few months ago, Australia’s virtually Covid-free status made it the envy of the world. Then the delta variant flipped the script.
Thailand Considers Blocking Exports of Locally Made AstraZeneca Shots
Randy Thanthong-Knight – Bloomberg
Thailand is weighing a temporary suspension of exports of locally made AstraZeneca Plc vaccines to bolster domestic supplies amid a surge in coronavirus infections driven by the more contagious delta variant.
U.S. Sending 1.5 Million Doses of Moderna Vaccine to Sri Lanka
Josh Wingrove – Bloomberg
Shipment is being sent through Covax international initiative; Biden promises to ship 80 million doses by the end of July
The U.S. is sending more than 1.5 million doses of Moderna Inc.’s coronavirus vaccine to Sri Lanka on Wednesday, the latest shipment as President Joe Biden begins sharing the American stockpile of shots abroad.
Here Comes Another Dubious Covid Cure; Ivermectin is the new hydroxychloroquine.
Faye Flam – Bloomberg
Better drugs to treat Covid-19 look more appealing than ever. The hope that vaccines would send the virus into retreat with herd immunity is fading as the more transmissible delta variant sweeps across the globe, cases rise, and the vaccine-hesitant millions dig in.
Companies wrestle with Covid safety as relaxation of rules in England looms; Businesses are taking different approaches in how to protect staff and customers
Daniel Thomas – FT
Companies are setting out different approaches to the government ending Covid-19 restrictions in England, with a split emerging between businesses planning to relax controls and those maintaining stricter measures after July 19.
Khan and Sturgeon rebuff Johnson by insisting on masks for transport; London mayor and Scottish government will enforce mandatory face coverings after July 19
Harry Dempsey, Andy Bounds in Huddersfield and Mure Dickie – FT
The London mayor and other UK leaders have broken with Boris Johnson’s government by insisting on the wearing of masks on public transport from July 19 when most Covid-19 restrictions come to an end in England.
Exchanges, OTC and Clearing
Miami International Holdings Reports June 2021 Trading Results, MIAX Exchange Group Sets New Market Share and Volume Records
Miami International Holdings, Inc.
Miami International Holdings, Inc. today reported June 2021 trading results for its U.S. exchange subsidiaries – MIAX®, MIAX Pearl® and MIAX Emerald® (together, the MIAX Exchange Group™) and the Minneapolis Grain Exchange (MGEX).
First Korean bank goes live with client clearing at LCH ForexClear; LCH has added Hana Bank as the first Korean bank to offer client clearing through ForexClear for FX derivatives.
Hayley McDowell – The Trade
Hana Bank has gone live as the first Korean bank to clear FX derivatives through the London Stock Exchange Group’s LCH ForexClear. LCH ForexClear said Societe Generale will act as Hana Bank’s clearing broker under the arrangement, which will allow Hana Bank to manage risk and gain margin, capital and operational efficiencies.
Eurex expands client scope of buy-side access to cleared repo business
Expansion of the ISA Direct access model allows for additional clients – including, among others, hedge funds – access to the centrally cleared European repo business; Launch announcement accompanied by publication of new whitepaper on “Capital efficiencies through direct access repo clearing models for the buy-side”
Eurex’s established direct access model for the buy-side, ISA Direct, will be extended to broaden its availability to a greater range of market participants, including hedge funds. These firms, and their counterparty dealer banks, will now be able to benefit to an even larger degree from the capital and risk management advantages that come through direct access to repo clearing at Eurex. Go live of the expanded model, ISA Direct Indemnified, is planned for the fourth quarter of this year after having recently received regulatory approval.
ETFs: Trading volumes of sustainable investment products triple
Monthly trading volumes of ESG ETFs on Xetra reach EUR2.7 billion; With more than 350 products, Xetra offers the largest selection of listed ESG ETFs in Europe; Information offering based on the Sustainable Financial Disclosure Regulation (SFDR) supports investors in their ESG investment decisions
The sustainability boom in the European ETF market continues to gain momentum: with EUR2.7 billion in trading turnover per month, ESG ETFs now account for more than 16 per cent of total ETF trading turnover on Xetra. In the first half of last year, monthly turnover still averaged around EUR780 million. ESG ETFs thus recorded growth of 251 per cent year-on-year in the first half of 2021. This makes Xetra the leading exchange in Europe for ESG ETFs as well.
Initial Listing of Three-Month Bloomberg Short-Term Bank Yield Index (BSBY) Futures Contract
Withdrawal of Regularity in Wheat
Pursuant to Rule 707, notice hereby is given that The Board of Trade of the City of Chicago, Inc. (CBOT) has approved a request from Bunge North America for a withdrawal of regularity for the delivery of wheat at the below locations. There are no registered shipping certificates outstanding from these facilities
Nodal Exchange Named Exchange Of The Year By Energy Risk For Third Year In A Row
Nodal Exchange has been named 2021 Exchange of the Year by Energy Risk magazine. The global Energy Risk Awards recognize excellence in energy risk management across the entire supply chain, from producers to traders and consumers, and all firms in between that facilitate risk management.
Mercury Derivatives Trading Renews Contract with Trading Technologies and Expands Use of TT® Platform Services
Mercury Derivatives Trading (Mercury), a Hertshten Group portfolio company, and Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, infrastructure and data solutions, today announced Mercury has renewed its contract with TT for use of the TT trading platform.
XTX Markets adds execution algo to BidFX; BidFX clients can now access the implementation shortfall execution algorithm from XTX Markets as FX algo trading continues to increase.
Annabel Smith – The Trade
London-based market maker XTX Markets has made one of its execution algorithms available on the BidFX hub to meet increased demand for FX algo trading. The implementation shortfall execution algorithm from XTX, which aims to reduce slippage to arrival price, went live on BidFX last year in an initial targeted client rollout and is now available to all BidFX clients.
UBS deploys FlexTrade OMS for US outsourced trading desk; Execution Hub at UBS will combine FlexTrade’s open technology stack together with its own proprietary automation technology to route orders to the best liquidity provider.
Annabel Smith – The Trade
UBS has partnered with FlexTrade to integrate the trading technology provider’s order management system into its newly launched US outsourced trading desk.
Battle for the trading desk: revisited webinar – Q&A; Participants in The TRADE’s recent outsourced trading webinar answer some of the questions from the audience.
Editors – The Trade
Following the recent webinar exploring the key outsourced trading trends presented in The TRADE’s digital feature, Battle for the trading desk, participants answer questions asked by the audience.
Railsbank raises $70M to build out its fintech-as-a-service platform
Ingrid Lunden – Techcrunch
Financial services-as-a-service — where entities like neobanks, retailers and others can create and sell their own financial products by way of a few lines of code and APIs — has been one of the bigger trends in the world of fintech in recent years, with embedded finance on its way to being a $7.2 trillion market by 2030, according to forecast from Bain Capital. Now, one of the companies building and providing those APIs is announcing some growth funding to expand.
Microsoft Patch Tuesday, July 2021 Edition
Brian Krebs – Krebs on Security
Microsoft today released updates to patch at least 116 security holes in its Windows operating systems and related software. At least four of the vulnerabilities addressed today are under active attack, according to Microsoft. Thirteen of the security bugs quashed in this month’s release earned Microsoft’s most-dire “critical” rating, meaning they can be exploited by malware or miscreants to seize remote control over a vulnerable system without any help from users.
How Public Cybersecurity Companies Performed in 1H 2021
Richard Stiennon – Security Boulevard
A good way to monitor the overall health of the IT security industry is to track the publicly traded companies in the space. I previously reported on the performance of 20 cybersecurity companies in 2020. This is an update on those 20 companies with the addition of newly minted SentinelOne, trading on NASDAQ with the symbol S. Without the additional $10.15 billion from SentinelOne, these 20 companies increased in valuation 13% to $265.62 billion total. It was not that long ago that no cybersecurity company had a market cap over $25 billion. Now there are five.
Germany’s spy chief warns of cyber attacks on Bundestag election
Guy Chazan – FT
Germany’s spy chief has warned that foreign intelligence agencies could be seeking to influence September’s Bundestag election, with a spike in phishing attacks on German MPs and regional politicians. Since February this year, Germany’s domestic intelligence agency, the BfV, has recorded “intensive attacks” by the “Ghostwriter” cyber group that appeared to be linked to a foreign intelligence service.
The Cybersecurity 202: There are three big theories about why a major ransomware gang disappeared online
Joseph Marks and Aaron Schaffer – The Washington Post
Cyber watchers are stuck with more questions than answers after the notorious REvil ransomware gang, which had become a locus of U.S.-Russia conflict, mysteriously dropped offline. The disappearance came less than two weeks after the Russia-based criminal group took credit for the mammoth Kaseya attack, which locked up the information of up to 1,500 organizations over the Fourth of July weekend, Ellen Nakashima, Rachel Lerman and Gerrit De Vynck report. The attack prompted President Biden to pledge the United States will take “any necessary action” to defend U.S. infrastructure. U.S. officials also blamed REvil for a May attack on the meat processor JBS that threatened U.S. meat supplies.
Cryptocurrencies require EU-wide regulation, says France; AMF calls for more powers to be granted to EU’s financial markets watchdog
Chris Flood – FT
France wants EU governments to give the responsibility for overseeing cryptocurrencies to the pan-European markets watchdog, instead of national supervisors.
China Crypto Miners Squeezed Further as Anhui Halts Projects
China dealt another blow to its beleaguered cryptocurrency industry, with Anhui province becoming the latest to pledge to crack down on the practice of using power-hungry machines to mint Bitcoin and other virtual currencies.
Anhui plans to shut down all crypto mining projects within the next three years due to a power supply shortage, hf365.com reported. The province, which is located in eastern China less than three hours away from Shanghai via high-speed train, will also curb new projects that require large amounts of energy or power consumption and build data centers in an orderly manner, according to the news portal, which belongs a media group affiliated with the government of Hefei, Anhui’s capital. It did not cite anyone.
The Crypto Revolution Will Not Be Public
Tyler Cowen – Bloomberg
A revolution is pending in finance, and the world is only beginning to realize the transformations it is likely to bring. Financial institutions will have to take a radically different approach to information technology just to stay in business.
Bullish Global, a crypto firm, is planning to go public this year, with an expected valuation of $9 billion. Circle Internet Financial Inc., the company behind stablecoin, is also planning to be publicly listed, as is cryptocurrency platform Bakkt Holdings. Financial markets are difficult to predict, but at this point, 12 years after the inauguration of Bitcoin, it is hard to argue that this is all a bubble.
Crypto trading volumes have fallen to a 9-month low as Europeans ditch bitcoin, although US investors are still buying: CoinShares
Camomile Shumba – Markets Insider
Cryptocurrency trading volumes fell to their lowest in nine months in the latest week, as bitcoin continued to fluctuate in a relatively narrow range, according to data from digital asset manager CoinShares on Tuesday.
Outflows picked up speed in Europe, where regulators have toughened their scrutiny of cryptocurrency trading in general, while US investors were net buyers of crypto assets, according to CoinShares data.
S&P Dow Jones Launches 5 More Crypto Indexes; One Tracks 240 Coins
Danny Nelson – Coindesk
S&P Dow Jones Indices on Tuesday rolled out five new cryptocurrency index products, the first major expansion of its digital assets benchmarking tools since entering the market in May.
Headlining the tranche is a “broad digital market,” or BDM, index that includes over 240 coins, a press release said. “The new subindices also provide different slices and dices of the BDM by market cap so that investors can track different segments of the market,” an S&P spokesperson told CoinDesk.
It’s not exactly clear from which assets BDM and its subsets build their market “snapshot.”
Oh good, someone’s opening a nuclear-powered crypto mining facility
Jorge Jimenez – PC Gamer
A report from Data Center Dynamics (via Techspot) says Talen Energy, a US power company, plans on building a 300MW crypto mining facility and data center next to its nuclear Susquehanna Steam Electric Station in Pennsylvania.
The business responsible for the crypto mining operation, Cumulus Coin, is a subsidiary of Talen Energy and expects the project to come online in the spring of 2022, with the first phase of development having 164MW of capacity. The goal is to have at least 300MW of onsite power by completion and the ability to expand to 1GW capacity in the future.
Crypto Payment Factors Every Firm Should Consider
Sean Stein Smith – Forbes
There has been a flurry of headlines and announcements related to crypto payments, with industry giants like Visa and Mastercard making waves by entering this fast moving space. The concept surrounding crypto, at least at the beginning, was to serve as a cheaper, faster, and more efficient way of conducting transactions. While the sector has certainly evolved in any number of directions – including decentralized finance and non-fungible tokens – the overarching goal of many cryptoasset developments is connected to this original goal.
Following the latest bull run, and reinforced by the increasing number of new institutional users entering the cryptoasset ecosystem, this idea seems to increasingly be becoming reality.
Crypto not yet a financial stability risk, says Bank of England
Ryan Browne – CNBC
Cryptocurrencies aren’t yet big enough to pose a systemic risk to financial stability, Bank of England Deputy Governor Jon Cunliffe said Wednesday.
“The speculative boom in crypto is very noticeable but I don’t think it’s crossed the boundary into financial stability risk,” Cunliffe told CNBC’s Joumanna Bercetche in an exclusive interview.
India’s ICICI Bank Stops Customers From Making Overseas Crypto Investments
Omkar Godbole – Coindesk
ICICI Bank, one of the biggest private lenders in India, recently intensified its crackdown on cryptocurrency trading, asking customers not to use foreign remittances to invest in digital assets.
According to a July 9 report in The Economic Times, the bank has modified the “Retail Outward Remittance Application” form to include a declaration that “remittance is NOT for investment/purchase of bitcoin/cryptocurrencies/virtual currencies (such as ethereum, ripple, litecoin, dash, peercoin, dogecoin, primecoin, chinacoin, ven, bitcoin or any other virtual currency/cryptocurrency/bitcoin).”
Crypto exchange FTX sets sights on blue-chip acquisitions
Eva Szalay – Financial Times
Some of the world’s most prestigious financial institutions could become acquisition targets for young cryptocurrency companies, according to the 29-year-old chief executive of digital coin exchange FTX.
Sam Bankman-Fried told the Financial Times the company he founded in 2019 could consider buying an established financial institution such as US banking giant Goldman Sachs or exchange CME Group, once it overtakes rivals Coinbase and Binance.
Ethereum ETF to List on Brazil’s Stock Exchange; The fund will trade on the Sao Paulo-based B3 exchange under the ticker QETH11, QR Capital said.
Jamie Crawley – Coindesk
Blockchain investment firm QR Capital is to list an ethereum exchange-traded fund (ETF) on Brazil’s stock exchange after winning approval from the markets regulator.
Competition enforcement is harder than it looks; Novel antitrust cases complicate efforts to tackle climate change and healthcare
Brooke Masters – FT
Everywhere you turn, competition authorities are sharpening their claws. Dubbing himself a 21st-century “trust buster”, US president Joe Biden on Friday unveiled a wide-ranging crackdown on everything from airline ticket pricing to non-compete clauses in employment contracts. The next day, China’s competition regulator blocked a domestic merger for the first time, a Tencent-proposed deal to create a dominant video-game streaming operator. On Tuesday, France slapped a record EUR500m fine on Google over its use of news content.
Brussels to unveil landmark plan to reduce Europe’s carbon footprint; ‘Fit for 55’ targets key industries and trading relationships
Mehreen Khan – FT
Brussels will set out plans on Wednesday for the EU to become the world’s first mover on achieving net zero emissions in order to limit global warming, with a decarbonisation strategy targeting all sectors of the economy and international trade.
The G20 has failed to meet its challenges; Lack of a truly global response to the pandemic augurs badly for common action on climate change
Martin Wolf – FT
Humanity has outsmarted itself. With its ingenuity, this tribal ape has created a world its tribalism cannot manage. Intellectually, we know this: it is why we created institutions like the UN, the IMF and the G20. But we do not know it in our bones. In our bones, we know that each tribe is out for itself and the devil take the hindmost. In our bones, we think people who feel otherwise are “globalists”, which is synonymous with “traitors”.
Opening Statement of Acting Chairman Rostin Behnam before the Market Risk Advisory Committee
Good morning and welcome to the CFTC’s Market Risk Advisory Committee (MRAC or Committee) summer meeting. I want to thank Commissioners Quintenz, Stump, and Berkovitz for joining today’s meeting. I also want to thank and acknowledge the MRAC members and the subcommittee chairs who will present reports today…
Chicago banker who sought Trump Cabinet post convicted; Stephen Calk was found guilty on Tuesday by a U.S. jury in Manhattan on financial institution bribery and conspiracy counts.
A Chicago banker was convicted of federal charges that he sought to trade $16 million in bank loans to former Trump campaign chief Paul Manafort for the chance at a top administration post. Stephen Calk was found guilty on Tuesday by a U.S. jury in Manhattan on financial institution bribery and conspiracy counts. The founder and longtime chief executive of Federal Savings Bank wanted to be former President Donald Trump’s treasury secretary, defense secretary or a top ambassador and approved the 2016 and 2017 loans to Manafort with that goal in mind, prosecutors said at a trial that began last month.
The BoE’s mixed messages on UK banks; If lenders can pay dividends, they can contribute to their rainy-day fund
The editorial board – FT
As messages go, it was not the clearest. The Bank of England pronounced this week that the calamitous economic consequences of the coronavirus pandemic were abating and that lenders could once again pay out dividends, with immediate effect. But at the same time, the central bank spared those lenders from the “countercyclical buffer” — an extra cushion of shareholders’ money to absorb losses, almost like a rainy-day fund — in practice for at least another 18 months. The BoE’s reasoning is understandable but risks inconsistency. If banks are healthy enough to have restrictions on dividends lifted, they should be healthy enough to contribute to the buffer.
UK regulator will not block Provident’s payout plan for customers; FCA’s decision not to go to court contrasts with its treatment of subprime lender Amigo
Nicholas Megaw – FT
The Financial Conduct Authority has said it will not block an effort by Provident Financial to cap compensation payouts to customers who were mistreated by its doorstep lending division, despite believing the plan is “inconsistent” with the regulator’s rules and objectives.
NSW director disqualified from managing corporations for four years
Vito Peter Pennimpede of Balgownie, NSW, has been disqualified from managing corporations for four years after his involvement in four failed companies. Mr Pennimpede was a director of four companies between 2016 and 2019, namely:
SEC Announces $97 Million Enforcement Action Against TIAA Subsidiary for Violations in Retirement Rollover Recommendations; SEC and N.Y. Attorney General Secure Significant Relief for Investors and Reforms at TIAA
The Securities and Exchange Commission today announced that TIAA-CREF Individual & Institutional Services LLC (TC Services), a subsidiary of Teachers Insurance and Annuity Association of America (TIAA), will pay $97 million to settle charges of inaccurate and misleading statements and a failure to adequately disclose conflicts of interest to thousands of participants in TIAA record-kept employer-sponsored retirement plans (ESPs).
ESMA Consults On EMIR Reporting Guidelines
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today launched a public consultation on its draft Guidelines for derivatives reporting under EMIR.
ESMA publishes methodology for assessing third country CCPs systemic importance
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today published a methodology for assessing whether a third country central counterparty (TC-CCP) or some of its clearing services are of such substantial systemic importance that the TC-CCP should not be recognised to provide certain clearing services or activities in the European Union.
Podcast: Introducing Stephanie Dumont
FINRA’s Market Regulation and Transparency Services department sits at the center of the U.S. securities markets, conducting ongoing oversight within and across markets and providing transparency to help investors make informed decisions.
Statement of Commissioner Dawn D. Stump before the Market Risk Advisory Committee;
LIBOR Transition Presents Opportunity to Improve U.S. Clients’ Access to Global Clearing Infrastructure
As derivatives market participants transition from using the London Interbank Offered Rate (LIBOR) to using other benchmarks, namely the Secured Overnight Financing Rate (SOFR), I am pleased that Commodity Futures Trading Commission (CFTC) Acting Chairman Behnam today noted the important work we will soon undertake to ensure that existing clearing mandates for interest rate swaps can transition to preserve their effectiveness. Mandatory clearing is an important element of the post-financial crisis reforms that I wholeheartedly support. And as the use of LIBOR ceases, all of the CFTC’s clearing mandates for interest rate swaps need to be revisited.
FCA bans convicted fraudster from carrying out regulated activity
The FCA has banned director Matthew Creed from performing any regulated activity. This decision follows an FCA investigation that found Mr Creed failed to inform the FCA about his bankruptcy and a disqualification as a company director.
FCA publishes second letter of concerns in relation to Provident’s proposed scheme of arrangement
The FCA has published a second letter of concerns explaining to Provident why it does not support its proposed scheme of arrangement (the scheme). We expect that Provident will bring our letter to the court’s attention at the sanction hearing, which is scheduled for 30 July 2021, when the Court will be asked to sanction the scheme.
FMA issues infringement notice to Equitise
The Financial Markets Authority (FMA) – Te Mana Tatai Hokohoko – has issued an infringement notice to equity crowdfunding service provider Equitise Pty Ltd for failing to file financial statements by their due date.
Hong Kong Securities And Futures Commission Obtains Court Order To Disqualify Former Executive Director Of Anxin-China Holdings Limited For Eight Years
The Securities and Futures Commission (SFC) has obtained a disqualification order in the Court of First Instance against the former executive director of Anxin-China Holdings Limited (Anxin), Mr Lin Supeng (Notes 1 to 5).
US charges Greek national for selling insider trading subscriptions in the Dark Web; “TheBull” offered customers insider information, tips, and pre-release earnings.
Charlie Osborne – ZDnet
According to both the US Department of Justice (DoJ) and the Securities and Exchange Commission (SEC), Apostolos Trovias is facing criminal charges “in connection with his scheme to solicit and sell stock trading tips and pre-release earnings and deal information regarding public companies.”
ISDA Response to the DSB Consultation Papers 1 and 2 on the UPI Fee Model
ISDA’s response to the Derivatives Service Bureau (DSB) Consultation Papers on the UPI Fee Model: ‘Industry Views Sought on the Principles Underlying the Fee Model for the Unique Product Identifier Service, submitted 5 March 2021; and Consultation Paper 2 ‘Follow up Proposals on the Principles Underlying the Fee Model for the Unique Product Identifier (UPI) Service – based on Industry Feedback to First Consultation Paper’, submitted 9 July 2021.
Investing and Trading
Ex-Lawyers Whose Fund Rose 53% This Year See Markets as ‘Frothy’
Aoyon Ashraf – Bloomberg
LM Asset Management outperforms in first half on commodities; Managers are cautious on high valuations across most assets
A duo of ex-corporate lawyers turned money managers are sounding the alarm on the bullish rally seen across most asset classes after their fund outperformed most of its peers this year.
Global investors’ exposure to Chinese assets surges to $800bn; Investors snap up stocks and bonds at record pace despite Beijing’s geopolitical belligerence
Hudson Lockett – FT
Global holdings of Chinese stocks and bonds have surged about 40 per cent to more than $800bn over the past year as investors bought assets at a record pace in spite of souring relations between Beijing and the international community.
Private credit joins private equity to freeze out banks; Recent $6.6bn buyout of Stamps.com reveals shift in financing for leveraged deals
Joe Rennison, Eric Platt and Sujeet Indap – FT
Private equity group Thoma Bravo’s $6.6bn acquisition of Stamps.com last week came with a surprising twist in the deal documents: the absence of a traditional bank financing the leveraged buyout.
Covid hit women investors hard — but there are silver linings; Better-run companies, more sustainable investments, and homeworking will have lasting benefits
Maike Currie – FT
“How’s your pandemic been?” As we gradually emerge from lockdowns, this is a question we’re likely to hear a lot more often. The answer will no doubt vary from “hard” to “hell”.
Christie’s Sells $3.5 Billion of Art in First Half of 2021; Art market roars back as crypto-collectors and millennials in Asia drive sales on everything from NFTs to blue-chip art
Kelly Crow – WSJ
After a turbulent year, Christie’s said Tuesday that millennials in Asia and cryptocurrency collectors are splurging on blue-chip art, bidding up everything from jewelry to Jean-Michel Basquiat.
Environmental, Social and Corporate Governance
Singapore Carbon Tax Needs to Be Raised at Faster Pace, MAS Says
Selina Xu – Bloomberg
Singapore’s low carbon tax makes it an “outlier” and the city-state needs to boost the levy at a faster rate to meet its commitments to climate change, the head of the central bank said Wednesday.
China to Quickly Expand Top Carbon Market to Add More Polluters
National emissions trading system to begin this month: MEE; Market will initially cover about half of nation’s emissions
China is aiming to rapidly expand its national carbon market to add more heavy polluting industries once the system begins trading this month.
Why Pricing Carbon Is Still More Theory Than Reality
Lars Paulsson – Bloomberg
It’s an idea that’s been around for more than two decades: To slow climate change, make polluters pay for the damage they cause. Worldwide, more than 60 nations, states and cities have adopted what’s known as carbon pricing. The approach is held up by environmentalists, politicians and even many oil companies as an elegant, free-market approach compared with direct regulation. But while the concept may have broad support, the actual working of such systems have proved hugely controversial in Canada, Australia and other countries.
We need to look beyond the market to beat climate change; The interaction of humanity with nature has become increasingly mediated by the profit motive
Joe Spearing – FT
The 21st century appears to present humanity with huge challenges. Climate change will, if unaddressed, lead to significant social, economic and political disruption. Dealing with climate change appears only slightly less economically catastrophic, requiring an overhaul of the market-based growth model which has served as the basis of global policy for the past 40 years.
Green-Tech Startups Are Getting Fresh Wave of Cash; Investor and government funds pour into battery makers and others after a chill dating back to the failure of Solyndra
Scott Patterson – WSJ
A flood of investment into clean tech propelled onetime startups such as Tesla Inc. into the stratosphere. For most young companies in the sector, the past decade was a fight to raise the funds needed for takeoff. That is changing amid a boom in green investing. The new wave of cash is helping startups get from laboratory to market.
TradeStation Securities Now Offers Micro WTI Crude Oil Futures from CME Group; TradeStation continues its commitment to make futures trading more accessible to clients by offering the latest CME Micro futures products
TradeStation Group, Inc.
TradeStation Securities, Inc. (“TradeStation”), a Monex Group company and award-winning* broker-dealer and futures commission merchant, now offers its futures clients the ability to trade Micro WTI Crude Oil futures contracts through CME Group.
BofA Struggles With Tepid Loan Income as Consumers Shun New Debt
Kevin Orland – Bloomberg
Net interest income falls short of analysts’ estimates; Pandemic relief programs keep consumers flush with cash
Bank of America Corp. is struggling to build back its lending income as consumers, flush with cash from government stimulus programs, avoid taking on new borrowings.
Goldman and JPMorgan pivot to M&A as Covid trading boom fades; Banks benefit from surge in fees from advising on deals and initial public offerings
Joshua Franklin and Imani Moise – FT
JPMorgan Chase and Goldman Sachs are benefiting from a boom in dealmaking activity just as trading revenues plunge from the record levels reached during the early stages of the Covid-19 pandemic.
Hedge fund Sand Grove appoints Citi prime-broking executive as CEO
Appointment of Daniel Caplan comes as special situations funds are looking to tap into M&A surge
Laurence Fletcher – FT
Sand Grove Capital, one of Europe’s best-performing hedge funds during the pandemic, has poached a top banker from Citigroup, as money managers betting on corporate events try to profit from a dealmaking boom.
Bank of America’s Profit More Than Doubles; Like its peers, the bank continued to release money it had set aside for the coronavirus recession
Ben Eisen – WSJ
Bank of America Corp. BAC -1.90% said the economic rebound helped to more than double its profit, but low rates weighed on its revenue. The nation’s second-largest bank by assets posted earnings Wednesday of $9.22 billion in the second quarter, up from $3.53 billion a year earlier. The bank earned $1.03 per share, beating the 77 cents forecast by analysts polled by FactSet.
Hong Kong’s Exodus Is Real and Painful; The migration is accelerating and will likely be permanent. Officials and businesses are wrong to downplay the impact on a hub fast losing financial and global appeal.
Clara Ferreira Marques – Bloomberg
Casual conversations in Hong Kong these days turn quickly to departures: Where to go, how to find work or school places. Subway station advertisements tout developments in London commuter towns. Thousands of the territory’s 7.5 million people, faced with the reality of Beijing’s rapidly tightening grip, have already left for new lives elsewhere. Many thousands more will likely follow as pandemic restrictions lift — not just a handful of young activists, but average families, galvanized by child arrests and the advent of a pro-China school curriculum.
The China Trade May Be Just Starting to Unravel; Beijing’s monetary easing is a bad sign for global reflation prospects and risk appetite.
John Authers – Bloomberg
What RRR the Chinese Authorities Up To?
The biggest financial news to start the week is that China is cutting its reserve requirement ratios, or RRRs, for all banks. This means that they can lend more, and so injects more money into the Chinese economy. It is a loosening move that means more liquidity.
Zombie Mines Are Coming Back to Life on Soaring Metals Prices
James Thornhill – Bloomberg
Producers study reopening uranium, nickel, platinum projects; Plan to revive silver mine after 30-year post-civil war hiatus; The Veovaca mine in Bosnia and Herzegovina in Sept. 2020.
A silver mine in Bosnia and Herzegovina that sat derelict through the years of civil strife that gripped the region from the early 1990s may soon be taken out of mothballs to benefit from an optimistic price outlook.
Qatar Wealth Fund Builds Regional Hub in Singapore to Diversify
Nicolas Parasie, Vinicy Chan, and Simone Foxman – Bloomberg
Singapore office will bolster QIA’s efforts to invest in Asia; Sovereign fund looks to continue diversifying in the region
Qatar’s $300 billion sovereign wealth fund is building a regional hub in Singapore, people familiar with the matter said, as part of its efforts to diversify a portfolio weighted toward Europe and the U.S.
China Traders to Scrutinize Maturing Mega Loan for Policy Clues
Livia Yap – Bloomberg
Size of 400 billion yuan medium-term loan rollover watched; ANZ sees rollovers lagging amount of loans maturing Thursday
An upcoming maturity of policy loans in China will offer clues on how far its central bank will go in loosening policy. A rollover of all 400 billion yuan ($61.8 billion) of medium-term lending facilities due Thursday, after a surprise reserve requirement ratio cut last week, will signal a significant shift to easing, according to Xing Zhaopeng, senior China strategist at Australia & New Zealand Banking Group Ltd. In contrast, the central bank’s recent comments that there’s no change in policy may be reinforced if the funding is reduced or withdrawn.