SEC Chairman Says Banning Payment for Order Flow Is ‘On the Table’

Aug 31, 2021

First Read

$53,406/$300,000 (17.8%)


Hits & Takes
John Lothian & JLN Staff

FIA’s Walt Lukken sat down for a conversation with Leo Melamed in the latest episode of the FIA Speaks podcast. He could have talked to Leo all day long, but he instead focused on Melamed’s new book, “Man of the Futures.” You can listen HERE.

Also, the uber-talented Will Acworth of the FIA wrote a data spotlight piece for FIA MarketVoice titled, “Competition heats up in China equity index futures; HKEX, SGX and CFFEX battle for market share.” The article is available HERE.

Who is headed to IDX? Who from the states is going over? We want to talk to you.

Qontigo has a new whitepaper titled, “On the Way to Impact Investment: Mind the Gap between Theory and Practice.” You can find it HERE.

Today we have a video from The Path to Electronic Trading series featuring Joe Panfil, a longtime infrastructure technology executive with the CME. Panfil joined the CME when the first version of Globex was running and CME had just acquired the match engine that would become Globex 2, later renamed just Globex. He was there in the trenches, building and improving Globex. Thank you to Joe for sharing your story. Today, Joe works at the OCC.

The former Chicago bureau chief of Commodity News Service, Bob Bogda, who hired me back in 1984, is a player of the NY Times “Spelling Bee” game, which challenges players to make as many words as possible from a given slate of letters. He was given the letters N, O, L, A, I, H and T. He tried to use the word LOTHIAN as one of his selections and it came up as not in the word list. I feel very disrespected by the NY Times.

There were no new donations to the JLN MarketsWiki Education GoFundMe campaign yesterday.

On September 15, I am going to finally have the procedure to embed a spinal stimulator under my skin to help me manage my failed back surgery syndrome pain. I am hoping this will allow me to be more active again. Being in pain all the time is not fun.

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


In a continued exploration of the case for digital currencies, Collin Canright’s FinTech Rising newsletter recently featured a column that looks at the use of digital yuan by the Dalian Commodity Exchange to pay storage fees. Written by John Browning, founding partner of Hong Kong commodity and financial futures broker BANDS Financial, the piece notes that the practice allows companies to pay their bills without going through a series of bank transfers and asks if other exchanges like HKEX might follow suit. More details here.~SC


Joe Panfil’s Path to Electronic Trading Led Him to Building and Optimizing Globex

When Joe Panfil joined the Chicago Mercantile Exchange staff in 1997 as an information technology professional, the CME was still a member-owned, club-like organization focused on open outcry trading. However, the goal of making the CME the largest exchange in the world based on electronic trading was what attracted Panfil to the CME.

Watch the video »


CME Group Micro Futures and Options Surpass 1 Billion Contracts Traded
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that more than 1 billion Micro futures and options contracts have been traded to date. “Retail participation across CME Group continued to grow during the first half of the year, and our innovative, Micro-sized products help ensure that both individual and institutional clients can even more easily access our markets going forward,” said Julie Winkler, CME Group Chief Commercial Officer. “We continue to work closely with the broker community to help educate market users of all sizes on the many benefits of Micro futures trading, including deep liquidity in global benchmark products across nearly every investible asset class.”

***** That is one billion, but with a really big B! ~JJL


Apple Plans to Add Satellite Features to iPhones for Emergencies
Mark Gurman – Bloomberg
Device will be able to deliver messages without cell service; Apple plans an emergency-reporting tool for future iPhones
Apple Inc.’s push to bring satellite capabilities to the iPhone will be focused on emergency situations, allowing users to send texts to first responders and report crashes in areas without cellular coverage.

***** This is an excellent idea.~JJL


Five Climate Takeaways for Companies From IPCC Report
Sarah Fortt, Lindsay Hall, Austin J. Pierce – Vinson & Elkins LLP via Bloomberg Law
The recently released sixth assessment report of the Intergovernmental Panel on Climate Change yields a handful of takeaways for companies, Vinson & Elkins attorneys say. They lay out several important ones, including that the scenarios on which companies base their climate-change analyses are shifting and climate-risk disclosures may need to be updated. The Intergovernmental Panel on Climate Change’s (IPCC) sixth assessment report, published Aug. 9, focuses on the physical science of climate change. The results: human caused climate change is increasing temperatures faster than virtually all IPCC scenarios considered, and stringent emissions reductions are required.

***** I am trying to figure out if we are going to have the coldest or the warmest Christmas on record. It would seem one of the two is likely.~JJL


Monday’s Top Three
Our top story Monday was A Retired Hedge Funder Wants $160 Million for His 22-Acre California Compound, from The Wall Street Journal. Second was A SPAC Counterattack, from The New York Times. Third was Business Insider’s Meet Gary Gensler, a former MIT blockchain professor who now leads the SEC and could finally regulate the volatile crypto space.


MarketsWiki Stats
26,590 pages; 235,675 edits
MarketsWiki Statistics


Lead Stories

SEC Chairman Says Banning Payment for Order Flow Is ‘On the Table’
Avi Salzman – Barron’s
A controversial practice that has brought in billions of dollars to brokers and high-frequency trading firms is in the crosshairs of the Securities and Exchange Commission, and could be eliminated entirely. In an interview with Barron’s on Monday, SEC Chairman Gary Gensler said that a full ban of payment for order flow is “on the table.” Payment for order flow is a practice where brokers send trade orders to market makers that execute those trades in return for a portion of the profits.

Data Spotlight – Competition heats up in China equity index futures; HKEX, SGX and CFFEX battle for market share
Will Acworth – FIA MarketVoice
On 20 August, Hong Kong Exchanges and Clearing received regulatory approval to launch futures on the MSCI China A50 Connect index. The new contract, which will begin trading in October, will strengthen the exchange’s position as the gateway to China’s onshore equity market, one of the largest and fastest growing in the world.

Members Exchange Urges Regulators to Allow Half-Penny Stock Prices; MEMX says its proposal would lower costs for investors by reducing bid-ask spreads
Alexander Osipovich – WSJ
Investors could see Apple Inc. and Bank of America Corp. stocks selling for $152.005 or $42.115 a share if regulators sign off on a proposal submitted this week. Members Exchange, a startup exchange backed by major Wall Street firms, said in a proposal that the Securities and Exchange Commission should allow some heavily traded stocks to be priced in increments of half a cent. The exchange, known as MEMX for short, said its proposal would lower costs for investors by reducing bid-ask spreads—the difference between the buying and selling prices of a stock.

The S.E.C. head is considering banning a key way Robinhood makes money.
Matt Phillips – NY Times
Gary Gensler, the chair of the Securities and Exchange Commission, said on Monday that a ban was “on the table” for a practice that underpins some of the most popular free stock-trading apps. Mr. Gensler told Barron’s in an interview that he would consider banning “payment for order flow” — the practice in which large trading operations pay to execute trades for clients of retail brokerage firms, such as Robinhood.

SEC To Monitor DeFi With Artificial Intelligence
Adrian Zmudzinski – Benzingsa
The United States Securities and Exchange Commission (SEC) signed a deal with blockchain analytics firm AnChain.AI to help its efforts in monitoring the decentralized finance (DeFi) space. What Happened: According to a Forbes report, AnChain.AI CEO and Co-Founder Victor Fang explained that the collaboration started because “the SEC is very keen on understanding what is happening in the world of smart contract-based digital assets,” and the firm can help with that.

Former Fed official warns of ‘urgent’ threat of another financial crisis
Chris Matthews – MarketWatch
Investors cheered Federal Reserve Chairman Jerome Powell’s Jackson Hole speech on Friday, with markets interpreting it to mean that the central bank would not too quickly wind down its support of the economy. But not every speaker at the annual gathering gave cause for optimism.

Robinhood Falls After SEC Hints at Payment for Order Flow Ban
Jesse Westbrook – Bloomberg
Robinhood Markets Inc. and its main rivals slid after U.S. Securities and Exchange Commission Chairman Gary Gensler told Barron’s that a full ban of payment for order flow is “on the table.”

Junior Bankers Have Been Underpaid for Way Too Long; Manipulating spreadsheets does not add a great deal of economic value, but it’s a critical part of Wall Street Darwinism.
Jared Dillian – Bloomberg
Young Wall Street analysts are benefitting from the war for talent among investment banks. Compensation has soared tens of thousands of dollars in recent months, with some firms now offering as much $120,000 a year. These numbers may seem outrageous for fresh-faced college graduates crunching spreadsheets, but they’re not.

The troubling parallels between supply chains and securitisation; Pandemic raises concerns about just-in-time inventory model for companies
Peter Atwater – FT
The 2008 US housing crisis revealed the shortcomings of securitisation. The opaque, highly complex, interdependent process that moved slices of Kentucky home loans to buyers such as municipalities in Norway was inherently fragile.

Crypto exchange FTX.US wades into derivatives with deal for LedgerX
Declan Harty – Fortune
FTX.US is pushing into the world of digital asset derivatives—and possibly beyond—with its first purchase. Sam Bankman-Fried’s U.S. affiliate of crypto exchange FTX has agreed to buy LedgerX, a derivatives exchange and clearinghouse regulated by the Commodity Futures Trading Commission, for an undisclosed amount. The deal, if completed, will provide FTX.US with the ability to offer options and futures contracts on Bitcoin and Ethereum to big and small investors alike, expanding on its current capabilities of permitting users to trade directly in a handful of cryptocurrencies.

Why this brand-new stock exchange ditched an opening bell; Are bells really the right message for sustainable capitalism?
Mark Wilson – Fast Company
The New York Stock Exchange, London Stock Exchange, and Tokyo Stock Exchange all open the same way: With the ringing of a bell. The sound was actually a practical way to signal to the trading floor: It’s time to buy and sell stocks. Today, stocks are traded digitally, and the bell is mostly a symbolic way to celebrate IPOs listing that day on the exchange. But when the Long-Term Stock Exchange (LTSE) Group was considering how to celebrate companies listing on its new exchange, its designers wondered if there was a better approach than the old bell.

Oil Industry Surveys Damage After Hurricane Ida Slams Louisiana; The storm disrupted fuel supplies, and the speed of the recovery will depend on how long it takes for refineries to come online amid flooding and power outages
Collin Eaton and Jennifer Hiller – WSJ
Energy companies were assessing the health of refineries, pipelines, petrochemical plants and offshore oil platforms along the central Gulf of Mexico on Monday, the day after Ida struck Louisiana as a powerful Category 4 hurricane.

The Winners of Remote Work; There are already examples of how gains are captured by the few and not the many.
Dror Poleg – NY Times
Who wins and who loses when companies can hire from anywhere? Some employees and freelancers who can work remotely will have vastly expanded opportunities and the possibility of significant increases in pay, but remote workers in general figure to face more competition and have a higher dependence on luck. One thing that seems unavoidable, research suggests, is an intensification of inequality.

Fidelity Is Going on a Hiring Spree; Move to meet investing demand will boost company’s workforce to more than 60,000, up at least 22% from last year
Justin Baer – WSJ
Fidelity Investments plans to hire another 9,000 employees this year to help its businesses keep pace with the surge in demand for stock-trading and other personal-investing services. Fidelity’s hiring spree is its third in the past year, when millions of new investors flocked to brokerages like Fidelity, Charles Schwab Corp. and Robinhood Markets Inc. HOOD -6.89% Including the latest push, Fidelity’s total workforce is expected to grow more than 22% this year, to over 60,000 employees.


Moderna Creates Twice as Many Antibodies as Pfizer, Study Shows
Jason Gale – Bloomberg
Moderna Inc.’s Covid vaccine generated more than double the antibodies of a similar shot made by Pfizer Inc. and BioNTech SE in research directly comparing immune responses to the inoculations.

South African Scientists Say New Variant May Have ‘Increased Transmissibility’
Antony Sguazzin – Bloomberg
C.1.2. variant identified in May, spread to seven countries; Mutation types associated with increased transmissibility
South African scientists said they identified a new coronavirus variant that has a concerning number of mutations.nThe so-called C.1.2. variant was first identified in May in the South African provinces of Mpumalanga and Gauteng, where Johannesburg and the capital, Pretoria, are situated, the scientists said in a research paper. By August 13, it had been found in six of South Africa’s nine provinces as well as the Democratic Republic of Congo, Mauritius, Portugal, New Zealand and Switzerland.

AstraZeneca requires its U.S. employees to be vaccinated.
Lauren Hirsch – NY Times
AstraZeneca has mandated that its U.S.-based employees be vaccinated against the coronavirus if they are returning to the workplace or visiting customers, the company confirmed on Monday.

Covid-19 Booster Shots Get Support From Expert Panel; The panel, which advises the CDC, says health-care workers and nursing-home residents should get the extra doses first
Felicia Schwartz and Jared S. Hopkins – WSJ
Health experts advising the U.S. government on vaccines expressed initial support for giving booster shots to people vaccinated against Covid-19, starting with healthcare workers, nursing-home residents and others immunized earliest.

Covid-19 Delta Variant Pummels China’s Services Sector; August reading of official nonmanufacturing PMI marks first time the measure has dropped into contractionary territory since February 2020
Jonathan Cheng – WSJ
China’s services sector suffered an unexpectedly severe blow in August as a wave of coronavirus infections sparked new lockdowns across the country, sending an official gauge of nonmanufacturing activity into contractionary territory for the first time since the country’s pandemic recovery began more than a year ago.

Exchanges, OTC and Clearing

CME pulls client default rule change after pushback; FCMs claim proposal gave clearing house too much power in customer defaults Photo:
Marco Mourselas –
CME Group has temporarily withdrawn a controversial rule change after pushback from major clearing firms, who argued the proposal gave the bourse too much power to intervene in the management of a client default. Futures commission merchants (FCMs) managing a client in default often look to transfer the stricken firm’s positions to their own house account. But in a filing with the US Commodity Futures Trading Commission on August 11, CME proposed barring such transfers unless the CME’s chief

HKEX Held Bonus From Listing Head Amid Bribery Case, Court Hears
Kiuyan Wong – Bloomberg
Hong Kong Exchanges & Clearing Ltd. delayed paying its retiring head of listing a discretionary bonus on the condition for his full cooperation in a bribery investigation involving one of his subordinates that started in 2019. HKEX told David Graham, who retired in December 2019, they would withhold his HK$5 million ($642,530) bonus until the investigation into the former co-head of IPO vetting, Eugene Yeoh Kim-loong, was concluded, or after a reasonable time of about two years, according to a Feb. 28, 2020, letter that was submitted to a Hong Kong court on Tuesday by Yeoh’s lawyer, MK Wong.

LME launches digital provenance register for metals
LME via Finextra
The London Metal Exchange (LME) today launched LMEpassport, a centralised digital register that stores electronic Certificates of Analysis (CoAs) and sustainability credentials for LME-listed metals.
LMEpassport stores digital versions of the previously paper-based CoAs, which are key specification and quality assurance documents that must accompany shipments of LME metals into and out of warehouses. Existing paper and PDF format CoAs can be easily scanned and digitised on the platform, transforming previously unstructured data into information that can be easily queried and reported on.

Nodal Exchange and IncubEx Collaborate to Launch Ten First of Their Kind Renewable Futures & Options
Business Wire
Nodal Exchange and IncubEx announced today the upcoming launch of ten new Renewable Energy Certificate (“REC”) futures and options contracts, adding to the world’s largest suite of environmental products.

SGX welcomes Shanxi Securities International Futures as Derivatives Trading Member
Singapore Exchange (SGX) today welcomed Shanxi Securities International Futures Limited (SSIFL) as a Trading Member of its derivatives market. Based in Hong Kong, SSIFL primarily deals in global futures and options for Chinese and international clients. It is a wholly owned subsidiary of Shanxi Securities Co., Ltd, a listed securities firm on Shenzhen Stock Exchange in China, providing securities brokerage, asset management, futures trading, investment management, and financial products underwriting services.

Dubai Financial Market Cancels Minimum Trading Commission From 1st Of September 2021
Dubai Financial Market (DFM) today announced that the minimum trading commission will be waived as of 1st of September 2021, as part of its numerous initiatives aimed at promoting retail investors’ participation in the market and enabling them to avail its lucrative investment opportunities that include a diversified range of asset classes and financial products.

IEX finance chief departs for Tradeweb; New chief financial officer at Tradeweb previously worked for two decades in senior roles at Morgan Stanley and Bank of America Merrill Lynch.
Annabel Smith – The Trade
IEX Group’s chief financial officer has left the US equity exchange operator after five years to join Tradeweb as its financial chief. Sara Furber will join the fixed income electronic trading platform in September, succeeding Robert Warshaw who is leaving the company following a transition period after 12 years in his role, Tradeweb confirmed.

Eurex Exchange Readiness Newsflash | T7 Release 10.0: Simulation start and publication of documentation
With this Newsflash we would like to draw your attention to the upcoming simulation start and the publication of the system documentation for T7 Release 10.0. Since the simulation phase for T7 Release 10.0 will start on 13 September 2021, we strongly urge all Trading Participants to take part in the simulation and to test various scenarios to ensure readiness.

CME Group
Effective on trade date Friday, October 1, and pending all relevant CFTC regulatory review periods, this Market Regulation Advisory Notice will supersede CME & CBOT Market Regulation Advisory Notice RA0804-3 from March 11, 2008. It is being issued as a CME-only Advisory Notice in connection with amendments to CBOT Rule 527 that become effective on October 1, 2021.

All-or-None Transactions
CME Group
Effective on trade date Friday, October 1, 2021, and pending all relevant CFTC regulatory review periods, this Market Regulation Advisory Notice will supersede CME & CBOT Market Regulation Advisory Notice RA1504-3 from June 8, 2015. It is being issued as a CME-only Advisory Notice in connection with the September 30, 2021, closure of the trading floor for all products other than options on CME Eurodollar futures and options on CME SOFR futures.

Registration and Identification of Broker Associations
CME Group
Effective on trade date Friday, October 1, 2021, and pending all relevant CFTC regulatory review periods, this Market Regulation Advisory Notice will supersede CME Market Regulation Advisory Notice RA1902-2 from December 17, 2019. It is being issued to eliminate references to intra-association trading restrictions in Standard & Poor’s 500 Stock Price Index futures in connection with the September 30, 2021, closure of the trading floor for all products other than options on CME Eurodollar futures and options on CME SOFR futures.

Reminder Regarding Giving and Receiving of Gratuities
CME Group
As a reminder, CME Rule 508 (“Giving and Receiving of Gratuities”) prohibits members, member firms and broker associations and employees of these individuals and entities from giving gifts or gratuities in excess of $100 per year to any employee of another member, member firm or broker association. This rule is substantially similar to the restrictions imposed under FINRA Rule 3220 (“Influencing or Rewarding Employees of Others”).

Use of Wireless LAN Equipment on the Trading Floor
CME Group
CME Group offers connections to a wireless network on the trading floor to facilitate the use of wireless local area networks (LAN) by all market participants. The wireless network is designed to alleviate the need for each interested member firm to design, purchase, install, and maintain its own wireless network antennas on the trading floor as well as to significantly increase the number of wireless devices that can be used by the trading floor community. CME Rule 507 (“Electronic Devices”) governs the use of electronic devices on the trading floor. The text of CME Rule 507 appears on Page 2 of this Advisory Notice.

Cabinet Transactions in Option Products
CME Group
Effective on trade date Friday, October 1, 2021, and pending all relevant CFTC regulatory review periods, this Market Regulation Advisory Notice will supersede CBOT Market Regulation Advisory Notice RA1602-1 from August 31, 2016.

Pre-Execution Communications
CME Group
Effective on trade date Friday, October 1, 2021, and pending all relevant CFTC regulatory review periods, this Market Regulation Advisory Notice will supersede CME Group Market Regulation Advisory Notice RA2015-5 from October 26, 2020.

Disclosing Orders Prohibited
CME Group
Effective on Friday, October 1, 2021, and pending all relevant CFTC regulatory review periods, this Market Regulation Advisory Notice will supersede CME Group Market Regulation Advisory Notice RA1615-5 from December 12, 2016.

— Amendments to the Contract Specifications of the Silver Futures Contract to Expand the Definition of Eligible Silver — CME
— Delisting of Singapore Fuel Oil Bunker 380 cst (Argus) Futures Contract — CME
— CME ClearPort Transactions – Copper Futures, Copper TAS, Copper Spot TAS — CME
— Computerized Trade Reconstruction (“CTR”) Monthly Edit Programs — CME
— Performance Bond Requirements: Energy & Agriculture – Effective August 31, 2021 — CME
— Documentation of Customer Orders and Submission of Suspense Accounts on CME Globex. — CME
— Supervisory Responsibilities for Employees — CME
— Simultaneous Buy and Sell Orders for Different Beneficial Owners; Trading Against Customers’ Orders Prohibited — CME
— Accurate Submission of Customer Type Indicator (CTI) Codes — CME
— Product Modification Summary: Delisting of Singapore Fuel Oil Bunker 380 cst (Argus) Futures Contract — CME


Robinhood shares tumble after PayPal news, SEC scrutiny of key revenue stream
Herbert Lash – Reuters
Shares of Robinhood Markets Inc, a popular gateway for trading meme stocks, tumbled nearly 7% on Monday on news that PayPal Holdings Inc may start an online brokerage and a report saying regulators were looking at a possible ban on a practice that accounts for the bulk of the company’s revenue.

Amazon taps Affirm for installment financing
Lynne Marek – Payments Dive
Online retail giant Amazon has agreed to work with buy now-pay later company Affirm to offer some of its online customers the option to pay for goods in installments, Affirm said in a Friday press release. For now, they’re testing the new service with a subset of Amazon customers, but in the months ahead they expect to make it available more broadly to the retailer’s customers.

Ant Group’s IPO Relaunch Seen at Risk Due to Hangzhou Probe
Lulu Yilun Chen – Bloomberg
Ant Group Co.’s aspiration to revive its initial public offering could be jeopardized by recent investigations into Hangzhou’s top political leaders, according to Bloomberg Intelligence.

Zoom Hits $1 Billion in Quarterly Revenue, but Shows Signs of Easing Growth; Company raises full-year guidance, reports more than half a million customers with more than 10 employees
Maria Armental – WSJ
Zoom Video Communications Inc.’s ZM 1.96% quarterly revenue surpassed $1 billion for the first time in the company’s history, though the strong demand for its videoconferencing services that made it ubiquitous during the pandemic is showing signs of easing as regular activities resume.

Google, Apple Hit by First Law Threatening Dominance Over App-Store Payments; South Korea will require the companies to allow competing payment systems, threatening their 30% cut of most in-app digital sales
Jiyoung Sohn – WSJ
Google and Apple Inc. AAPL 3.04% will have to open their app stores to alternative payment systems in South Korea, threatening their lucrative commissions on digital sales. A bill passed Tuesday by South Korea’s National Assembly is the first in the world to dent the tech giants’ dominance over how apps on their platforms sell their digital goods. It will become law once signed by President Moon Jae-in, whose party strongly endorsed the legislation.

SBI expands smartTrade partnership for crypto derivatives trading; The FX liquidity provider division at Japan’s SBI has expanded its relationship with smartTrade Technologies for crypto derivatives trading.
Hayley McDowell – The Trade
Japan’s SBI has expanded its long-standing partnership with electronic trading services provider smartTrade Technologies to bolster its crypto derivatives trading operations. smartTrade will work with SBI Liquidity Market to support its crypto derivatives trading activities and the FX and derivatives liquidity provider will move its trading facility into the vendor’s Tokyo data centre.


How Hackers Hammered Australia After China Ties Turned Sour; Wave after wave of cyberattacks has shaken the country. Experts say even the wealthiest nations are at risk if they annoy China enough.
Jamie Tarabay – Bloomberg
A few days after Prime Minister Scott Morrison called for an independent international probe into the origins of the coronavirus, Chinese bots swarmed on to Australian government networks. It was April 2020.

Indonesia Probes Million Data Breach at Old Covid Tracking App
Rieka Rahadiana – Bloomberg
Government disabled the application as mitigation effort; More than a million personal records were exposed, group says
Indonesia is investigating a potential leak of more than a million personal records stored in an old Covid-19 tracking application, the second data breach that hit the government in three months.

Regulators Tighten Scrutiny of Data Breach Disclosures by Companies; Errors and misleading statements in disclosures are leading to fines
James Rundle – WSJ
Companies must pay closer attention to what they say after hackers strike, lawyers warn, as regulators crack down on inaccurate disclosures and Congress debates mandatory reporting of cybersecurity breaches. Several regulatory actions in recent weeks have focused on breach notifications, media statements and investor communications issued by companies after incidents that watchdogs say were deceptive.

Kevala raises $21M to improve tools for managing energy grid infrastructure
Rebecca Bellan – TechCrunch
Kevala, the startup that collects and analyzes energy grid infrastructure data for utility companies, renewable energy providers, EV charging companies, regulators and other energy industry stakeholders, has raised $21 million in a Series A round. The company says it will use the funds to grow its team from 60 employees to around 100 by the end of 2021 and increase the deployment of its grid analytics tools.

How N.H.’s Local Governments Can Defend Themselves Against Cybersecurity Scams
Jackie Harris and Rick Ganley – NHPR
The town of Peterborough was recently scammed out of $2.3 million in taxpayer money in a cyber attack. More towns are being targeted by highly sophisticated cyber scammers who are able to identify any weak security protections. Jason Sgro, a cyber security expert, says local governments need to invest in cyber security when taxpayers’ money is at stake.

Watchdogs crack down on inaccurate disclosures amid cybersecurity debates
Today UK News
Companies must pay closer attention to what they say after hackers strike, lawyers warn, as regulators crack down on inaccurate disclosures and Congress debates mandatory reporting of cybersecurity breaches.Several regulatory actions in recent weeks have focused on breach notifications, media statements and investor communications issued by companies after incidents that watchdogs say were deceptive. On 30 August, the US Securities and Exchange Commission settled charges against five Cetera Financial Group business units alleging lax controls and misleading errors in breach notifications to some clients. The Cetera units, which offer brokerage services and investment advice, must pay a $300,000 penalty.


Jack Dorsey says plan for ‘TBD’ bitcoin project is to build a decentralized exchange
Michael McSweeney – The Block
Last month, Square CEO Jack Dorsey disclosed plans for a project called TBD that, at the time, would focus on the development of a platform for open-source financial services dedicated to bitcoin.

Coinbase mistakenly told 125,000 users their 2FA settings had changed
Kris Holt – Engadget
Major cryptocurrency exchange Coinbase said it mistakenly told around 125,000 customers that their two-factor authentication settings had been changed. The email and SMS notifications were sent due to an “internal error” and were not the result of a hack, the company told

El Salvador Adopting Bitcoin Is “An Inadvisable Shortcut”: International Monetary Fund
Adrian Zmudzinski – Benzinga
The International Monetary Fund (IMF) heavily criticized El Salvador’s decision to adopt Bitcoin (CRYPTO: BTC) as a legal tender. What Happened: Alongside a blog post published on Sunday, the IMF tweeted that the risk of “privately issued crypto assets like Bitcoin” makes it so that “making them equivalent to a national currency is an inadvisable shortcut.”

This Canadian Company is Building a Safe, Compliant and Regulated Crypto Industry
NetCoins – Benzinga
Earlier this month, a hacker stole $600 million worth of cryptocurrencies from crypto protocol, Poly Network. It was a vulnerability in Poly Network that allowed the hacker to steal the funds (in what is considered to be one of the largest cryptocurrency heists ever). After days of urging the hacker to return the money, the hacker finally agreed to do so at no cost.

Jane Street latest institution to join DeFi Pyth Network; Market maker Jane Street joins growing list of data contributing members on the Pyth Network including Hudson River Trading which joined earlier this month.
Annabel Smith – The Trade
Quantitative trading firm Jane Street has become the latest financial institution to join the growing decentralised finance (DeFi) data network Pyth Network. The market maker will initially contribute real-time crypto market data to the network with plans to later expand into equities and other products later in the year.


Why a debt-ceiling stalemate could push reverse repo demand to $1.4 trillion in next 3 months
Joy Wiltermuth – MarketWatch
Record demand for the Federal Reserve’s overnight reverse repo program could touch a new milestone of $1.4 trillion by year’s end, says Barclays rates strategist Joseph Abate. That’s mainly because he sees demand for the facility climbing if debt-ceiling negotiations in Washington drag out through the fall, which could cause the already dwindling supply of Treasury bills to shrink even further.

The EU’s Guidelines on U.S. Visitors Sound Like Trade War Diplomacy; The people of the European Union have been kept out of America for almost two years because of Covid. It’s time the bloc showed some teeth.
Lionel Laurent – Bloomberg
In reimposing travel curbs on Americans, the European Union is sending a message to the U.S. that is as much about diplomacy as it is about epidemiology. Sure, there is data to nominally support the decision. A surge in cases driven by the delta variant’s spread has put the U.S. well beyond the recommended limits for non-essential travel to the EU. There have been 588 new cases per 100,000 inhabitants in the two weeks ending Aug. 22, versus the guideline of 75. The U.S. was classified as “high-risk” by Germany back on Aug. 15.

Fed Chair Race Spotlights Powell-Brainard Wall Street Rule Split
Jesse Hamilton and Rich Miller – Bloomberg
Top contenders for Fed chair diverge on financial regulation; Progressives say Powell easy on Wall Street, Brainard tougher
President Joe Biden’s choice of who will lead the Federal Reserve may come down to a debate about regulating Wall Street.
Jerome Powell is viewed as the favorite to get the nod for another term leading the central bank, but progressive Democrats like Massachusetts Senator Elizabeth Warren and New York Representative Alexandria Ocasio-Cortez have lambasted the Republican chair for easing regulations on big banks. And some have praised Fed Governor Lael Brainard — widely seen as the leading rival to Powell for the top spot — for opposing those efforts.


SEC Launches Review of Online Strategies Used by Brokers, Advisers; Wall Street watchdog’s request for public comment may presage new rules for brokers such as Robinhood
Paul Kiernan and Peter Rudegeair – WSJ
The Securities and Exchange Commission launched a wide-ranging review Friday of the online strategies that brokers such as Robinhood Markets Inc. HOOD -2.60% and investment advisers use to interact with customers, aiming to determine whether tools like smartphone notifications are in the best interests of investors.

SEC Announces Three Actions Charging Deficient Cybersecurity Procedures
The Securities and Exchange Commission today sanctioned eight firms in three actions for failures in their cybersecurity policies and procedures that resulted in email account takeovers exposing the personal information of thousands of customers and clients at each firm. The eight firms, which have agreed to settle the charges, are: Cetera Advisor Networks LLC, Cetera Investment Services LLC, Cetera Financial Specialists LLC, Cetera Advisors LLC, and Cetera Investment Advisers LLC (collectively, the Cetera Entities); Cambridge Investment Research Inc. and Cambridge Investment Research Advisors Inc. (collectively, Cambridge); and KMS Financial Services Inc. (KMS). All were Commission-registered as broker dealers, investment advisory firms, or both.

Firms reminded about potential financial crime risks linked to Afghanistan; Developments in Afghanistan have highlighted the continuing need for robust systems and controls that respond to changing risks.
Firms should be aware of the possible impact these events may have on patterns of financial activity when they assess risks related to particular customers and flows of funds. We expect firms to establish and maintain systems and controls to counter the risk they might be used to further financial crime. Firms must also comply with their legal obligations under the Proceeds of Crime Act 2002 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (‘MLRs’ as amended).

SEC weighing ban on controversial PFOF payment system
The Securities and Exchange Commission Chairman Gary Gensler said a full ban of the controversial payment for order flow (PFOF) practice is “on the table,” financial newspaper Barron’s reported on Monday, citing an interview. SEC staff is reviewing the practice and could come out with proposals in the coming months, the report here said.

DAC Pensions Limited enters liquidation – advice on next steps and how to protect yourself from scams
On 31 August 2021, DAC Pensions Limited was placed into creditors’ voluntary liquidation. Liquidators are now winding up the firm’s personal pension scheme, known as the Davies & Co SIPP. This article gives advice to DAC clients on the steps they should take and also advice on how to protect against scams.

Investing and Trading

Should I Sell When the Stock Market Wobbles? Some Advice; How to limit the fallout from market stumbles, while remaining true to the principles of long-term wealth accumulation.
Stuart Trow – Bloomberg
A little more than a week ago financial markets appeared on the edge of a precipice, about to be overwhelmed by the delta variant’s insidious spread and the plateauing economic recovery. Yet just days later, the S&P 500 put in back-to-back record highs.

Asset Income Is a Growing Source of Wealth — and of Geographic Inequality; Income inequality is often measured by wages alone. But looking at wealth generated from assets across the U.S. reveals immense geographic disparity.
Tony Frangie Mawad – Bloomberg
Income inequality in the U.S. is usually measured by wages, but that’s far from the only way Americans accumulate more wealth. Income from assets — like stocks, rental properties and interest — now makes up one-fifth of total personal income in the U.S. Yet most Americans have few assets besides their primary residence and retirement account, and even those are usually out of reach for low-income workers.

Metals Traders Zero In on Aluminum as Green Revolution Arrives
Mark Burton – Bloomberg
Aluminum climbs to 10-year high as deepening deficits loom; investors increase speculative exposure to aluminum on LME
Investors have been piling into aluminum during its ascent to a decade high, with a combination of booming demand and seismic supply reforms helping the lightweight metal to avoid a speculative exodus seen in other metals markets.

US investors bank on derivatives to guard against stocks slowdown
Money managers seek to protect double-digit gains as Delta variant and slowing global growth temper expectations
Eric Platt and Joe Rennison – FT
Investors are increasingly turning to derivatives strategies to guard against a slowdown in the $51tn US equity market, suspecting that the white-hot rally this year is starting to run out of steam. Large institutional money managers have already shown a nervy tilt in recent weeks, opting for funds likely to do well in tougher economic or market environments.

Environmental, Social and Corporate Governance

Carbon offsets: a licence to pollute or a path to net-zero emissions? A task force launched by Mark Carney is seeking to bring order to a market criticised for its quality and lack of regulation
Camilla Hodgson and Billy Nauman – FT
Can planting trees in Guizhou province cancel out emissions from natural gas burned for energy in offices and homes across China? That’s the idea behind a deal struck in July by oil major Shell to supply PetroChina with an undisclosed quantity of liquefied natural gas branded “carbon neutral”.

DWS probes spark fears of greenwashing claims across investment industry; Poor data and conflicting standards on ESG open up asset managers to potential claims misleading clients
Attracta Mooney and Chris Flood – FT
Asset managers fear exaggerated claims over sustainability-focused investments could become a mis-selling scandal across the industry after regulators on both sides of the Atlantic sharpened their focus on environmental, social and governance investing at Germany’s DWS.

End of leaded petrol marks milestone in global development; Algeria had last refinery in the world and has now exhausted its supplies
Leslie Hook – FT
The world is officially free of leaded petrol after the last supplies in Algeria were finally depleted, consigning the toxic fuel to history. The end of leaded petrol, which impairs the mental development of children, will help to avoid an estimated 1.2m premature deaths each year, according to the UN Environment Programme.

Carbon price rises above EUR60 to set new record; Tighter rules and potential for greater winter reliance on coal help push up prices
Leslie Hook – FT
The EU carbon price touched an all-time high on Monday, as the prospect of tighter environmental regulations, as well as a brief reduction in supply this week, pushed the market to a new record.

Worrying About Your Carbon Footprint Is Exactly What Big Oil Wants You to Do
Auden Schendler – WSJ
Mr. Schendler is the senior vice president of sustainability at the Aspen Skiing Company, the chairman of the board of the group Protect Our Winters and the author of “Getting Green Done.” Everybody’s going carbon neutral these days, from the big boys — Amazon, Microsoft, Unilever, Starbucks, JetBlue — to your favorite outdoor brand, even ski resorts. Probably your neighborhood coffee roaster, too.


Why a $2 Billion Foundation Scrapped Its Entire Hedge Fund Portfolio; The University of Nebraska Foundation is forgoing hedge funds in favor of real assets and private equity.
Alicia McElhaney – Institutional Investor
After years of lagging returns, some asset owners have cut back their hedge fund exposure in favor of better-performing private assets. But the University of Nebraska Foundation has gone a step further. In 2020, the $2 billion foundation completely jettisoned its hedge fund portfolio, which made up roughly 15 percent of its endowment.

Firms With $3 Trillion Eye Hedge Funds, Europe Amid Turmoil
David Ramli and Matthew Burgess – Bloomberg
As if the pandemic wasn’t warping global markets enough, China’s regulatory crackdown is suddenly adding new unpredictability. So how best to invest in these strange times?

Bank of America fights war for tech talent by retraining own employees; Internal staff account for more than 80% of new hires at technology and operations unit
Imani Moise – FT
Like many financial groups, Bank of America has been facing a shortage of technology workers for its digital operations. Its response has been to turn inward, retraining its own workers at an internal online “university”.

ETFGI Reports Assets In The Global ETFs Industry Reach A Record US$9.46 Trillion At The End Of July 2021
ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs and ETPs ecosystem, reports assets in the Global ETFs industry reach a record 9.46 trillion US dollars at the end of July. ETFs and ETPs listed globally gathered net inflows of US$80.45 billion during July, bringing year-to-date net inflows to a record US$739.54 billion which is higher than the US$373.01 billion gathered at this point last year. Assets invested in the global ETFs/ETPs industry have increased by 1.2% from US$9.35 trillion at the end of June 2021, to US$9.46 trillion at the end of July, according to ETFGI’s July 2021 Global ETFs and ETPs industry landscape insights report, the monthly report which is part of an annual paid-for research subscription service. (All dollar values in USD unless otherwise noted.)

Private Equity Firms All Want the Same Thing: British Companies; Flush with capital, the funds have gone bargain hunting in Britain, snapping up everything from supermarkets to defense companies.
Eshe Nelson – NY Times
It began as a market stall in West Yorkshire, selling eggs and butter just before the turn of the 20th century. Today that market stall is Morrisons, Britain’s fourth-largest supermarket chain, with nearly 500 stores and the prize in a 7 billion-pound ($9.6 billion) bidding war between American private equity groups.

State Street appoints electronic trading and prime brokerage expert as global markets head in Europe; Former global head of electronic trading sales and prime clearing at Baader Bank joins State Street as head of global markets for Europe.
Annabel Smith – The Trade
State Street has appointed an electronic trading and prime services specialist as head of global markets Europe and as a member of its board, pending regulatory approval. Simon Stoytchkova joins the Boston-based investment bank in Frankfurt from IG Deutschland where she was previously chief executive officer and a member of IG Europe’s board for the last two years.

The perplexing departure of Tom Montag — and who could fill Bank of America’s power vacuum when he leaves
Alex Morrell – Business Insider
Bank of America insiders aren’t surprised to learn that Chief Operating Officer Tom Montag is retiring. But they didn’t picture it quite this way: an announcement on a sleepy late-August day when Wall Street is typically emptied out, with no successor named.


World’s Top Canola Grower Anticipates Smallest Crop in 9 Years
Marcy Nicholson – Bloomberg
The world’s biggest canola grower expects to harvest its smallest crop of the oilseed in nine years after high temperatures and drought slashed yields. Canada is expected to harvest 14.7 million metric tons of canola this year, down almost a quarter from the prior year and its lowest since 2012, Statistics Canada said Monday in a production report. Wheat output is forecast to plunge to a 14-year low.

ETF Securities Releases Semiconductors ETF In Australia – Enabling Investors To Participate In This Indispensable Industry
The ongoing semiconductor shortage caught many businesses off guard as production of chips slowed down during the global pandemic. From domestic appliances to cars, almost every technological device relies on semiconductors, and the global shortage has taken its toll: car manufacturers idled their production lines[1] or – on the more creative side – utilized dummy chips in their production, which will be replaced by functional semiconductors as soon as the capacity allows it[2]. While there is a shortage, demand for semiconductor technology increases in the light of a global 5G rollout, interconnectivity, and smarter consumer technology. Major Australian issuer ETF Securities now releases an ETF, the ETFS Semiconductor ETF (ASX: SEMI). This fund is the first Australian passive investment product in that space.

Hong Kong plans new risk controls to prevent Archegos-style collapse; Project to track dangerously concentrated exposures to stocks has garnered attention of US regulators
Tabby Kinder – FT
Hong Kong’s central bank and top financial regulator are developing a system to track dangerously concentrated exposures to stocks as part of efforts to prevent an Archegos Capital-style blow-up, according to two people familiar with the matter.


Misinformation Is Bigger Than Facebook, But Let’s Start There; Social networks’ addictive algorithms continue to provide safe harbor for anti-vaxxers. They need to change.
Daniel Zuidijk – Bloomberg
As the pandemic wears on, social media isn’t getting much healthier. A succession of dodgy cures, unsubstantiated theories, and direct anti-vaccination lies continues to spread in Facebook groups, YouTube videos, Instagram comments, TikTok hashtags, and tweets. Multiple members of Congress were suspended from Twitter or YouTube for peddling misinformation around the time President Joe Biden spoke out against social media platforms’ penchant for spreading false information.

The Story Of J.P. Morgan’s ‘Personal Librarian’—And Why She Chose To Pass As White
This summer on Code Switch, we’re talking to some of our favorite authors about books that taught us about the different dimensions of freedom. In our last installment, we talked to author Julia Alvarez about her poetry collection The Woman I Kept To Myself and how difficult it can be to share your many selves with the world. Next up, a conversation with authors Marie Benedict and Victoria Christopher Murray on their book The Personal Librarian.

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First Read $53,406/$300,000 (17.8%) ++++ Hits & Takes John Lothian & JLN Staff A gentle reminder. The NFA and NIBA announced a joint webinar about navigating regulatory requirements in a hybrid environment. The webinar is scheduled the day of my 31st wedding...

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