Suspected Russian hackers spied on U.S. Treasury emails

Dec 14, 2020

First Read

$18,761/$300,000 (6.3%)

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Hits & Takes
John Lothian & JLN Staff

George Gero has passed away, reportedly after battling COVID-19. George was a widely respected futures industry statesman who was inducted into the FIA’s Hall of Fame in 2019. George was a leader in the New York markets, including as chairman emeritus of the discontinued Commodity Floor Brokers & Traders Association. This was an organization he created for all the independent brokers and traders so they could get health insurance. He was that kind of a guy, always looking out to help other people. He also always treated everyone the same, no matter what their station in life.

George was a true ambassador for the futures industry. I first met him at the Swiss Futures & Options Association Buergenstock Conference in 2004. I recall learning at the time that he spoke five different languages.

JLN will be publishing a remembrance page to honor George’s memory. If you would like to share a remembrance, please email me at johnlothian@johnlothian.com. We have three remembrances already, from CME Group’s Terry Duffy, FIA’s Walt Lukken, and former NYMEX member Frank Barbarino.

Lynn Martin, president of fixed income and data services at Intercontinental Exchange Inc., is to receive Manhattan College’s 2021 De La Salle Medal at the annual De La Salle Medal Dinner at The Pierre on Manhattan’s Upper East Side on Tuesday, May 25, 2021. The De La Salle Dinner raises essential, unrestricted income, the most critical form of funding for the College. Donations from this event are applied to a multitude of needs, particularly student scholarships and financial aid, making a Manhattan College education accessible for more students. Established by Manhattan College in 1951 in honor of Saint John Baptist de La Salle, founder of the Institute of the Brothers of the Christian Schools and patron saint of teachers.

Veteran lawyer and former regulator Ken Raisler is retiring from Sullivan & Cromwell at the end of January, he has informed clients and friends. He spent 29 years at the firm in the Commodities, Futures and Derivatives team, which just added former CFTC Director of the Division of Enforcement Jamie McDonald. Also on the Sullivan Cromwell team are David Gilberg, Katy McArthur, Ryne Miller and Steve Ehrenberg. Raisler is a highly respected attorney who has served the industry well during his many years at the CFTC and Sullivan & Cromwell. Congratulations to Ken on his retirement. It is well deserved.

FTSE Russell is putting on a webinar called “The Post-Pandemic Case for International Markets” on Tuesday, December 15 at 12 PM ET. Recent positive vaccine news is clearly changing the market narrative and posing very big questions for the 2021 global investment outlook. Will 2021 see a simultaneous rotation in growth and inflation expectations? Presenters are from FTSE Russell, Franklin Templeton and SGX. Register HERE.

Eurex is hosting a webcast “Eurex VSTOXX Derivatives – Trading Opportunities in European Volatility derivatives” on Wednesday, December 16 at 11 AM CST. Participating in the webcast are RCM-X, Shore Capital Research and Equity Armor Investments. They will look at Why volatility is so relevant in today’s markets and what factors would influence the spread between VSTOXX & VIX volatility indices among other issues. Register HERE.

MotherJones.com was the latest to take a shot at Sen. Kelly Loeffler and ICE in a story titled “How Kelly Loeffler’s Firm Facilitated an Enron-Like Scandal; Intercontinental Exchange provided a platform for “excessive speculation” that cost Georgians millions of dollars.” Loeffler is also defending posing for a picture with white supremacist and former Ku Klux Klan leader Chester Doles, according to a story in The Hill. For the record, Loeffler’s campaign spokesman, Stephen Lawson, was quoted by The Hill saying, “If she had she would have kicked him out immediately because we condemn in the most vociferous terms everything that he stands for.”

The Wall Street Journal has called for President Donald Trump to concede the election to President-Elect Joe Biden. Today the Electoral College vote will occur, which will make concessions a moot point.

Today is the CFTC’s Technology Advisory Committee Meeting.

The JLN MarketsWiki Education GoFundMe campaign has had 89 donors to date with $18,761 raised so far. We are very pleased with the broad-based support we have received from far and wide within the trading world. Help support our efforts to preserve industry history by giving to our GoFundMe campaign.

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

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The Association for Digital Asset Markets (ADAM) has appointed Michelle Bond as its CEO. She is an attorney with law firm experience as well as Finra, SEC and Capitol Hill experience. In a conversation with Eventus’s Travis Schwab last week, Bond identified fintech, including cryptocurrencies, as “the hot new policy area” and went on to provide her outlook for digital asset regulation.~Thom Thompson

John informed me over the weekend that George Gero, senior vice president with RBC Wealth Management, former Nymex & Comex member, and expert in the metals markets, has died. I spoke with Gero many times on the phone as research for my metals articles and he was a great help to me in learning the ins and outs of the markets. He really knew his stuff and was generous in sharing his time with reporters. I will miss him, and my heart goes out to his family and friends.~SR

JLN did a video interview with Gero a while ago. You can watch it on our web site to hear Gero tell his story in his own words.~SR

Saturday marked the ten year anniversary of the disappearance of Satoshi Nakamoto, the creator of bitcoin, whose offline identity remains a mystery to this day. While Nakamoto was known to have a few close collaborators, their online presence was the only time they appeared in public. Nakamoto’s last public post online was about securing bitcoin’s blockchain from cyber attacks on an online forum called BitcoinTalk; the post was dated December 12, 2020.~MR

SPIKES Futures (SPK) are scheduled to resume trading today on MGEX, the Minneapolis Grain Exchange, via the CME’s Globex platform. SPIKE Options are still trading on MIAX Options. For more information, check out this handy resource guide.~MR

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Sam Mehta and PEAK6 Capital Management Want to Change the World
JohnLothianNews.com

Sam Mehta and PEAK6 Capital Management Want to Change the World
John Lothian News
John Lothian News interviewed Sam Mehta, the new chief operating officer at PEAK6 Capital Management. PEAK6 Capital Management has a unique portfolio of investments, including capital market investments and something as bespoke as owning an Esports team.
https://bit.ly/3njJzho

Watch the video »

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The Spread: Brexit Stage Right
JohnLothianNews.com

This week on The Spread, MIH and MGEX complete their merger, Cboe’s Chief Marketing and Communications Officer Carol Kennedy and the CFTC’s Chairman Heath Tarbert announce their retirement, and more.

Watch the video »

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ErisX and RSBIX Introduce Sporting Event Based Futures Contracts
ErisX
ErisX is pleased to announce that today we filed a product self-certification to introduce fully-collateralized, financially settled sporting event-based futures contracts in collaboration with RSBIX. This is ErisX’s first strategic collaboration to provide listing and clearing services enabled by our recent DCO order amendment permitting us to clear derivatives on any commodity.
/bit.ly/37i7V5E

*****Diversification and innovation are the lifeblood of any organization. Spread your bets while helping people spread their bets seems like a pretty good plan.~JJL

*****Here is ErisX’s self certification at the CFTC: CFTC Regulation 40.2(a) Certification. Notification Regarding the Initial Listing of Eris Exchange RSBIX NFL Futures (Eris Exchange Submission #2020-11E)

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Adena Friedman, CEO of Nasdaq, on the Red-Hot Market and Critics of Her Diversity Plan
Eben Shapiro – Time
Last week was pretty typical for Nasdaq CEO Adena Friedman in 2020. Another record-high close. Another buzzy multibillion-dollar IPO (on Dec. 10, Airbnb’s stock doubled on its first day of trading, valuing the company at $100 billion, the latest sign of the market’s animal spirits). Meanwhile, the Wall Street Journal attacked Friedman’s proposal to increase board diversity on Nasdaq-listed companies. And the FTC and many state attorneys general filed a federal lawsuit seeking to break up Facebook, alleging anti-competitive behavior. Facebook is one of the five FAANG (Facebook, Amazon, Apple, Netflix, Google) stocks that all trade on Nasdaq and that have powered much of the market’s somewhat perplexing rise in 2020, in a year where pandemic shutdowns battered the real economy and more than 10 million Americans are out of work.
/bit.ly/3qVQgbA

*****I can’t even imagine trying to keep up with Adena Friedman.~JJL

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20% Americans have reportedly gotten hurt while setting up Christmas trees in 2020: Survey
Cortney Moore – Fox News
You better watch out. Christmas tree-related injuries are on the rise. At least that’s what a survey from LendingTree’s insurance comparison resource ValuePenguin says. According to its survey, 1 in 5 Americans have reportedly been injured while setting up their Christmas tree this year. This number is 122% higher than what ValuePenguin reported last year.
/fxn.ws/3qWypRW

*****Christmas trees can get their fir up if mishandled.~JJL

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What’s the Right Way to Give in a Pandemic? Charities and donors are facing a holiday season like no other. But they have come up with solutions.
Steven Kurutz – NY Times
Talk to the staff members of charitable organizations these days and they will tell you they have never seen a year like 2020, with the Covid-19 pandemic and the hardships it has wrought. Millions of Americans are out of work or newly living in poverty and many others are socially isolated, creating a greater-than-ever demand for services. Kenneth Hodder, the national commander of the Salvation Army, described the present moment as “a tsunami of human need” in a telephone interview.
/nyti.ms/37dO33z

*****Where there is a will, there is a way!~JJL

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Friday’s Top Three
Our top story Friday by a wide margin was Bloomberg’s special report, The Essex Boys: How Nine Traders Hit a Gusher With Negative Oil. Second was the CFTC’s video, Chairman Tarbert: It has been a privilege to be the Chairman and Chief Executive of the CFTC. Third was the CFTC’s Statement of Chairman Heath P. Tarbert Announcing His Future Plans, in which Tarbert does not announce his future plans, other than to say he will resign as chairman of the CFTC early next year.

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Lead Stories

Suspected Russian hackers spied on U.S. Treasury emails – sources
Christopher Bing – Reuters
Hackers believed to be working for Russia have been monitoring internal email traffic at the U.S. Treasury and Commerce departments, according to people familiar with the matter, adding they feared the hacks uncovered so far may be the tip of the iceberg.
/reut.rs/2WfDcQy

US orders emergency action after huge cyber security breach; Homeland security tells all federal agencies to disconnect from widely used software
Kiran Stacey and Richard Waters and Hannah Murphy – FT
The US has issued an emergency warning after discovering that “nation-state” hackers hijacked software used by almost all Fortune 500 companies and multiple federal agencies to gain entry to secure IT systems.
/on.ft.com/2ISwxss

How exchange operators have grown bigger and bigger; A handful of groups are pushing beyond operating exchanges into financial data and analytics
Philip Stafford – FT
After a year in which a handful of companies have tightened their grip on the trading infrastructure and financial data that underpin financial markets, all eyes will turn to Brussels next month. EU competition regulators have until January 21 to decide whether to approve the London Stock Exchange’s $27bn acquisition of data and trading group Refinitiv, a blockbuster takeover first agreed in August 2019 and one that authorities opened an in-depth investigation into in June.
/on.ft.com/3oONPpD

When the Robinhood Crowd Buys for the Long Haul; Some new investors are using fractional-share buying programs as a way to get broad exposure to stocks through exchange-traded funds
Julia Carpenter – WSJ
Fractional shares are an easy way for small investors to buy a piece of Tesla or Apple, but many are using it as a way to slowly accumulate exchange-traded funds that give them a small piece of the broader market. Cari Swanger, a 33-year-old pharmacist living in Seattle, opened her first SoFi Invest account this summer after she finished paying off her student loans. Ms. Swanger chose fractional investing and ETFs because they allowed her to diversify and minimize her risk.
/on.wsj.com/2Wk2mgB

Action Needed on the DTO
ISDA
In a matter of weeks, EU and UK firms will no longer be able to trade certain liquid derivatives with each other unless they shift their business onto US swap execution facilities (SEFs), a change that will result in higher costs and operational complexity for end users in both the EU and UK. As we pointed out in a recent joint letter with other trade associations, the best way to resolve the issue is to grant equivalence for trading venues – but time is running out.
/bit.ly/2W5DE3F

Deutsche Bank May Move Half of New York Staff Elsewhere
Daniel Schaefer – Bloomberg
Deutsche Bank AG may move as much as half of its 4,600 Manhattan staff to smaller hubs across the U.S. in the next five years, the head of its Americas business told the Financial Times. The German lender could “conceivably” cut its New York headcount by half in that time period, depending on the evolution of “smaller hubs and pockets,” Americas Chief Executive Officer Christiana Riley said in an interview with the newspaper published Sunday.
/bloom.bg/3neWIZ6

Deutsche Bank raises prospect of moving half its New York staff; US chief says employees could be shifted to lower-cost areas of country in next five years
Laura Noonan and Olaf Storbeck – FT
Deutsche Bank could move as many as half its 4,600 Manhattan staff to smaller US hubs in the next five years, the lender’s US head told the Financial Times, underlining the threat to New York’s dominance as a corporate centre in the aftermath of the pandemic.
/on.ft.com/2IOc2wY

Ken Moelis Gives His Bankers Blessing to Move Wherever They Want
Erik Schatzker – Bloomberg
Pandemic is ‘moment of enlightenment’ to rethink old habits; CEO sees SPACs and Zoom ushering in capital markets revolution
At first it was just one. Then another and another and another until some 20 bankers had told Ken Moelis they wanted to pack up and move to Florida. His answer: OK. “We’re a talent business,” Moelis, the chairman and chief executive officer of Moelis & Co., said in a Bloomberg “Front Row” interview. “I want to attract, I want to motivate and I want to retain the greatest talent in the world. And if that talent wants to do it in Florida, that’s where we’ll support them.”
/bloom.bg/2WoUOJT

Executives No Longer Spooked by Pot Jobs: Cannabis Weekly
Tiffany Kary – Bloomberg
Industry luring managers from companies like Hershey, Hostess; Competition for workers sparks offers like five-day weekends
Professionals used to shy away from jobs in the marijuana industry — or at least keep them hush hush. Now, the tables have turned. Liesl Bernard, chief executive of San Diego-based CannabizTeam, which places both managers and temps at cannabis companies, said she used to have to “beg people to take a chance on cannabis” when she started her business in 2016. Executives were concerned that working with marijuana, which is illegal on the federal level in the U.S., could cause them to lose professional licenses in areas such as accounting or law.
/bloom.bg/3maaATa

U.K. to Set Up Its Own Carbon Trading System After Brexit
Will Mathis – Bloomberg
U.K. ETS to begin on Jan. 1, 2021 to regulate pollution; Putting a price on carbon is key to the country’s climate plan
The U.K. will start its own carbon market at the beginning of next year to help cut emissions after Brexit. The move announced Monday answers the long-awaited question of whether Prime Minister Boris Johnson’s government would put a price on carbon or a simple tax. It leaves open the possibility to link the U.K. emissions trading system with the larger European one at some point in the future.
/bloom.bg/3mia99e

Goldman Strategists Say SPACs May Spur $300 Billion M&A Activity
Joanna Ossinger – Bloomberg
Blank-check companies looking for deals could lead to $300 billion in mergers and acquisitions over the next two years, according to Goldman Sachs Group Inc.
/bloom.bg/2WfiYWQ

Analysis-Amateur traders’ euphoria leaves red-hot U.S. IPOs with money on the table
Joshua Franklin, Krystal Hu – Reuters
Wild stock gains on the first day of trading of Airbnb Inc and DoorDash Inc show how unprecedented demand this year from individual investors is making it difficult not to leave big money on the table, investment bankers say.
/reut.rs/3mjkK3O

When the Stock Market Is Too Much Fun; Robinhood sure is entertaining. But it’s also steering investors toward risky behaviors that could go wrong.
Jason Zweig – WSJ
Technology can make investing easy and fun. It can also downplay risk in ways that may lead novices astray. In last week’s column, I described my experience on the popular Robinhood brokerage app, especially how trading became hard to stop once I started. Now let’s look at how Robinhood may encourage risky behaviors that could backfire.
/on.wsj.com/3mb1lSO

Intercontinental Exchange Launches 10 New MSCI® Index Futures; Four New Contracts Help Manage Climate Risk and Are Only Available on ICE Futures U.S.; The Additional Six Contracts Provide Specific Regional Exposure
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of mortgage technology, data and listings services, today announced the launch of futures on an additional 10 MSCI Indices.
/bit.ly/2LBnPzJ

Coronavirus

Sweden’s Covid Workers Are Quitting in Dangerous Numbers
Niclas Rolander – Bloomberg
Sweden faces a shortage of health-care workers as the number of resignations ticks up after a relentless year of caring for Covid patients. Sineva Ribeiro, the chairwoman of the Swedish Association of Health Professionals, says the situation is “terrible.”
/bloom.bg/3nsGOKE

Sweden’s neighbours offer medical help as second Covid wave intensifies; Stockholm region reports 99% of its intensive care beds are full but Finland and Norway stand ready to assist
Richard Milne – FT
Finland and Norway have offered medical assistance to Sweden, as their neighbour faces an increasingly severe second wave of coronavirus that has stretched clinical staff and intensive care capacity to the limit in some areas.
/on.ft.com/2W8ujrU

How to Beat Pandemic Fatigue; We don’t just need more regulations and mandates. We need clearer information on how the virus works so that we can avoid it.
Brooke Sample – Bloomberg
A clutter of unhelpful pandemic rules is wearing people down. One-way systems in stores, outdoor mask mandates, ceaselessly cleaning groceries and packages — should these things be our top priorities for limiting the spread of Covid-19?
/bloom.bg/3niHZwh

Covid-19 Is Creating a New Kind of Financial Midlife Crisis; The pandemic has disrupted professional trajectories, forcing people to focus on other areas of life — perhaps for the first time in years.
Abby Ellin – Bloomberg
The Covid-19 pandemic has created such a shock to people’s lives, it’s prompted a financial reckoning akin to a midlife crisis. Just ask Stacy Small, 51. The Maui resident’s profitable high-end travel business had allowed her to buy her dream beach house and drive a Porsche Cayenne. On March 20, she was forced to cancel a year’s worth of bookings, losing hundreds of thousands of dollars in income. Within a week, she cut ties with 28 independent contractors. Around the same time, three close friends were diagnosed with Stage 4 cancer, while others battled Covid.
/bloom.bg/3a89QM4

Covid-19 Poses Christmas Quandary for Families; Debates fly over whether and how to celebrate together as officials try to limit travel and gatherings
Ruth Bender – WSJ
Every year for Christmas, members of Mariachiara Montera’s family converge from all corners of Italy on her birthplace in the south, where they share stories and regional favorites from spaghetti with clams to fried fish and the classic dessert panettone.
/on.wsj.com/3oMXiO1

London Mayor Wants Schools to Close to Stem Tide of Coronavirus
Emily Ashton, Kitty Donaldson, and Alex Morales – Bloomberg
Lawmakers warned infections rising rapidly across U.K. capital; Mayor calls for London schools to close early for Christmas
London is heading for the highest level of coronavirus restrictions this week, health officials warned U.K. lawmakers, as the city’s mayor Sadiq Khan called for schools to close and face coverings to be made compulsory in shopping streets to stem a surge in cases.
/bloom.bg/3gKY8YR

City of London plans ‘back to work’ week to revive Square Mile; Lord mayor confident workers will return to financial district for reopening in April
Daniel Thomas – FT
The City of London will call on office workers to return for a “reopening” week in April to help revive the bars, restaurants and other venues across the financial district, vowed William Russell, the lord mayor of London.
/on.ft.com/3nhHJhh

Young People Have Less Covid-19 Risk, but in College Towns, Deaths Rose Fast; Links between university outbreaks and deaths in the wider community are often indirect and difficult to document, but some health experts say there are clear signs of a connection.
Danielle Ivory, Robert Gebeloff and Sarah Mervosh – NY Times
When college students returned to campuses around the country this fall, spurring a spike in new coronavirus infections nationwide, people like Phyllis Baukol seemed at little risk.
/nyti.ms/385TpwW

Exchanges, OTC and Clearing

Hexagon Purus lists on Euronext Growth Oslo
Euronext
Oslo, 14 December 2020 – The clean energy company Hexagon Purus has today been admitted to trading on Euronext Growth Oslo (ticker code: HPUR). Hexagon Purus is the spin-off of Hexagon Composites’ e-mobility business. Recently, the company raised NOK 750 million through issuing new shares. “The placement attracted strong interest from both existing Hexagon Composites shareholders and new investors wishing to support Hexagon Purus in enabling zero emission mobility,” stated Hexagon Purus.
/bit.ly/3r2AUT5

SGX welcomes Aedge Group Limited to Catalist
SGX
Singapore Exchange (SGX) today welcomed the listing of Aedge Group Limited on its Catalist under the stock code “XVG”. Aedge Group is a Singapore-based multi-services provider of a diverse range of services. It provides three principal services, namely (i) engineering services to various industries, such as oil & gas, petrochemical, marine and offshore and construction, (ii) transport services, namely premium bus services, school bus services and private bus charter, and (iii) security and manpower services including unarmed guard and patrol services, cleaning solutions and services as well as workforce solutions for different manpower needs.
/bit.ly/3mhulbx

Publication of JPX Working Paper, Special Report “Report on Pilot Test of DLT Information Sharing Platform in the Field of Securities Post-Trade (Project Name: B-POST)”
JPX
Japan Exchange Group, Inc. (JPX) today published JPX Working Paper, Special Report “Report on Pilot Test of DLT Information Sharing Platform in the Field of Securities Post-Trade (Project Name: B-POST)”. JPX Working Papers highlight research and studies on changes in the market and regulatory environment with the aim of raising competitiveness. Conducted by officers and employees of JPX, its subsidiaries, and affiliates, as well as outside researchers, JPX Working Papers are intended to draw comments widely from academia, research institutions, and other market participants and observers.
/bit.ly/2WdbrYH

Nasdaq to remove four Chinese companies’ shares from indexes after U.S. order
Kanishka Singh and Ross Kerber – Reuters
Nasdaq said on Friday it will remove shares of four Chinese construction and manufacturing companies from indexes it maintains in response to a U.S. order restricting purchase of their shares.
/yhoo.it/2KoWQ9M

Fintech

TD Securities Makes Strategic Investment in Data Services and Analytics to Accelerate its Digital Transformation Journey; Bloomberg selected to help enable data strategy
High-quality, comprehensive and integrated data that is accessible, shareable and utilized effectively across our TD Securities organization is critical to supporting the evolving needs of our clients.
/go.td.com/3a2pI2z

RBC Taps Salesforce and Others for Broker, Wealth Custody Platform; The full platform, leveraging an open API architecture and multiple third-party providers, will enter beta testing in early 2021.
Max Bowie – Waters Technology
?RBC Clearing & Custody, Royal Bank of Canada’s newly-rebranded Correspondent and Advisor Services division, is building a new investment platform for servicing broker-dealer and registered investment advisor (RIA) clients. As part of an ongoing technology refresh to support a major growth spurt, the platform will use an open API architecture and a backbone based on Salesforce.
/bit.ly/2K0L6L0

EY fraud unit found ‘red-flag indicators’ at Wirecard in 2018; Audit partners signed off accounts despite warnings from colleagues
Olaf Storbeck – FT
An EY anti-fraud team warned in 2018 that “red-flag indicators” at Wirecard pointed to potential accounting manipulation and required further investigation, according to documents seen by the Financial Times.
/on.ft.com/2IKIBvA

Feel the difference – it’s time for a new data philosophy
David Nicol, CEO, LedgerEdge – The Trade
Prints, orders, prices, axes, levels, direction, colour… market data is the most valuable asset in the world. Participants directing trillions of dollars in trades use data to form and hone their ideas, and then inform the expression of those positions in the market. They are created using a subtle mix of art and science.
/bit.ly/3qYnyXY

BestEx Research secures $5 million funding to fuel FX and futures algo rollout; The Series A funding round at BestEx Research Group was led by QC Ventures and took the company’s valuation to $50 million.
Annabel Smith – The Trade
Algorithmic trading platform provider BestEx Research has closed a $5 million Series A funding round to support its development of futures and foreign exchange (FX) products. The funding round was led by QC Ventures, an affiliate of quantitative investment manager Quadrature, and took BestEx’s valuation to a total of $50 million.
/bit.ly/3aavb7m

Cryptocurrencies

What Is Bitcoin Worth? There Is Little Consensus in Fragmented Market; Digital currency’s resurgence spurs demand for better tracking tools
Paul Vigna – WSJ
Bitcoin enthusiasts agree the digital currency hit a record recently. What they don’t agree on is the level of that milestone or even when it was set. Data provider Refinitiv recorded an all-time high of $19,510 on Nov. 25. Research and news site CoinDesk recorded the high at $19,921 on Dec. 1. Another startup-data provider, Messari, put the high at $19,931, also on Dec. 1. Other exchanges and data providers have their own numbers.
/on.wsj.com/3al0PiX

JPMorgan Says MassMutual’s Bitcoin Foray Signals Widening Demand
Joanna Ossinger – Bloomberg
A recent investment in Bitcoin by Massachusetts Mutual Life Insurance Co. highlights the potential for additional institutional demand for the cryptocurrency in coming years, according to JPMorgan Chase & Co. The $100 million purchase suggests adoption of Bitcoin is spreading from family offices and wealthy investors to insurance firms and pension funds, strategists including Nikolaos Panigirtzoglou said in a note Friday. The latter two are unlikely to ever make high allocations, but even a small shift toward the cryptocurrency could be significant, according to the strategists.
/bloom.bg/34b1HCS

The Wealthy Are Jumping Into Bitcoin as Stigma Around Crypto Fades
Edward Robinson and Benjamin Stupples – Bloomberg
Christian Armbruester wishes he’d bought more. Armbruester, the founder of Blu Family Office, a London-based investment firm for wealthy clients, dabbled in cryptocurrencies a few years ago. But the onetime investment banker, whose family made a fortune in metals and manufacturing, believes cryptocurrencies have earned a place in a diversified portfolio. With Bitcoin surging more than 270% since its 12-month low in March, he’s ratcheting up his investments in the space and eyeing big gains.
/bloom.bg/2WduKBc

Bitwise Crypto Trust Jumps 72% Since Debut While Market Sags
Todd White – Bloomberg
The Bitwise 10 Crypto Index Fund has vaulted more than 70% since its debut Wednesday, the latest sign of an insatiable appetite for risk assets in global financial markets. The fund, which is listed under the ticker BITW, jumped about 23% to $44.75 on Friday, bringing gains since its over-the-counter trading kick-off to 72%. About 565,000 shares have changed hands daily on average over that period. Meanwhile, the Bloomberg Galaxy Crypto Index slipped about 3% during the same timespan.
/bloom.bg/3gKbrZH

Meet the 19-Year-Old Ukrainian Lawmaker With Millions in Monero
Anna Baydakova – Coindesk
Rostislav Solod, 19, is the youngest lawmaker in the city of Kramatorsk, Ukraine. He’s also a crypto millionaire. Solod is the son of two national parliament members, Yuri Solod and Natalia Korolevska. He entered politics this autumn, fresh out of school. In his obligatory property declaration, he said he owned 185,000 monero, or $24.5 million worth of the cryptocurrency. This was, in fact, the only piece of property the young lawmaker owned himself. Everything else in his declaration, including real estate, cars and trademarks, belongs to his parents.
/bit.ly/37huXd6

Fidelity’s bitcoin custody business has been ‘incredibly successful,’ says CEO
Yogita Khatri – The Block
Fidelity Investments chairman and CEO Abigail Johnson has said that the firm’s bitcoin custody business has been “incredibly successful” and has a “tremendous pipeline.” While Johnson did not provide specific details, she said Fidelity is putting a lot of effort into connecting the legacy world with the future of digital currencies. “Building those on and off ramps around facilitating the trading between fiat currencies and cryptocurrencies is something that’s happening now, and I’m glad it’s moving along,” Johnson said in an interview with Barron’s last week.
/bit.ly/3a5O0c1

The IRS has officially moved its crypto tax question to the top of Form 1040, making it much more prominent
Aislinn Keely – The Block
Last year the Internal Revenue Service (IRS) indicated it wanted to know who holds cryptocurrency by asking taxpayers directly on their 1040A forms. Now, it’s made that form-based question much more prominent to ensure everyone answers. The IRS announced today that it has formally moved a question — “At any time during 2020, did you receive, sell, or otherwise acquire any financial interest in any virtual currency?” — to the 1040 form. The question sits at the top of the form, right below the boxes that ask for identification. Crypto tax professionals say if it wasn’t clear the IRS meant business before, it’s crystal now.
/bit.ly/2WdgVCP

Ethereum options trade volume surged in November to hit $1.76 billion for the month
Michael McSweeney – The Block
November saw a significant jump in monthly trade volume for Ethereum options, according to data collected by The Block Research. The November figure — $1.76 billion — represents a 153% increase from October’s $695 million. It’s the highest reported monthly volume, surpassing August’s record of $1.03 billion.
/bit.ly/3a9Kxcw

Crypto Bank Sygnum Tokenizes Shares, Eyes Public Offering
Tanzeel Akhtar – Coindesk
Sygnum, a digital asset finance firm with a Swiss banking license, has tokenized its shares on its own distributed ledger platform as it develops plans for a public offering. The firm said Monday that it has now become the first bank to use distributed ledger technology to issue digital representations of shares. For the issuance, Sygnum used its in-house developed Desygnate platform, which it said is compatible with a Swiss blockchain law coming into force from February 2021. The platform further associates the shares with their associated legal rights and obligations.
/bit.ly/3gJqVgo

Bank of France official: CBDC trials could lead to regulatory changes
Michael McSweeney – The Block
France’s central bank began to experiment with central bank digital currency (CBDC) applications and use cases this spring. As previously reported, the Banque du France is specifically testing a so-called digital euro in the context of clearing and settlement of tokenized assets. And at the time, the central bank stressed that such experiments were just that — trials, nothing more.
/bit.ly/37UYIPG

Politics

US economy: Trump will leave office with a historically bad economic record
John Harwood – CNN
President Donald Trump still can’t accept the numbers measuring his loss to Joe Biden: more than 7 million popular votes and 74 electoral votes.
But another set of numbers adds insult to his psychological injury. They show that — notwithstanding lies as promiscuous as the ones he tells about election fraud — Trump will leave office in January with a historically bad record on the economy.
/cnn.it/37gYRhy

U.S. Agencies Hacked in Foreign Cyber Espionage Campaign Linked to Russia; Russia’s foreign intelligence service is suspected of being behind effort to breach government networks
Dustin Volz – WSJ
Multiple federal government agencies, including the U.S. Treasury and Commerce departments, have had some of their computer systems breached as part of a widespread global cyber espionage campaign believed to be the work of the Russian government, according to officials and people familiar with the matter.
/on.wsj.com/3mpPXCN

Regulation

China to prosecute rating agency manager over ‘massive’ bribes; People’s Bank of China has pledged to improve its supervision of the sector
Hudson Lockett and Thomas Hale – FT
Chinese authorities are to prosecute the former general manager of a leading credit rating agency for allegedly taking “massive” bribes, as Beijing vows to improve oversight of the industry in the wake of unprecedented bond defaults. The Central Commission for Discipline Inspection announced on Monday that Jin Yongshou, former general manager of Golden Credit Rating, would be prosecuted for allegedly taking bribes from issuers covered by the agency and helping numerous companies improve their credit ratings.
/on.ft.com/3mlT8el

Eurozone banks set to restart dividend payments under strict limits; Regulators expected to announce conditions tighter than those outlined by Bank of England
Martin Arnold – FT
Europe’s top financial regulators are putting the finishing touches to new recommendations allowing the region’s strongest banks to restart dividend payments within strict limits, ending a nine-month hiatus imposed due to the coronavirus crisis.
/on.ft.com/381eSau

SEC Schedules Vote on Controversial Extractive Industry Rule; The latest version of the rule seeks to reduce the compliance burden on oil, gas and mining companies, but has drawn opposition from anticorruption advocates
Dylan Tokar – WSJ
The U.S. Securities and Commission is scheduled to vote this week on a rule mandating the disclosure of payments made by oil, gas and mining companies to foreign governments. A vote on the rule, scheduled for Wednesday, could bring to close another chapter in a decadelong attempt to enact a controversial provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act that was designed to help stave off corruption by companies in resource extraction industries.
/on.wsj.com/2Wa7bJs

CFTC chair Tarbert to step down early next year; Heath Tarbert was appointed chair and commissioner of the CFTC in 2019 and will resign as chair when Joe Biden takes office in 2021.
Annabel Smith – The Trade
The head of the US derivatives watchdog has confirmed plans to step down from his position early next year. Heath Tarbert, chair and commissioner of the US Commodities Futures Trading Commission (CFTC), will resign in January when president-elect Joe Biden takes office.
/bit.ly/347Bdll

ESMA Reports on Annual Market Share of Credit Rating Agencies
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has published its annual market share calculation for EU registered credit rating agencies (CRAs).
/bit.ly/2Wae0L4

SEC Charges Sequential Brands Group Inc. with Deceiving Investors by Failing to Timely Impair Goodwill
SEC
The Securities and Exchange Commission today charged New York-based brand-management company Sequential Brands Group Inc. with failing to impair its goodwill as required by accounting principles and the federal securities laws.
/bit.ly/3a5MSVP

Statement on the Departure of Director Stephanie Avakian
Commissioner Elad L. Roisman – SEC
Director Avakian is among the most talented and hard-working lawyers I have had the pleasure of working with during my career. She brought to her role extensive legal experience, a spirit of dedication, unwavering persistence, unremitting candor, and congenial practicality. I benefitted from all of these qualities in countless consultations with her throughout my tenure. The Commission and investors have been lucky to have her fighting on their behalf. As she always says, the Commission and its mission are in good hands going forward, due to the work of her excellent staff. Her exceptional leadership has left our Enforcement Division in a continued position of strength.
/bit.ly/37YRcUg

FCA publishes first consultation on new prudential regime for UK investment firms
UK FCA
The FCA is seeking views on its proposed rules to introduce the UK Investment Firm Prudential Regime (IFPR) for FCA prudentially-regulated investment firms (FCA investment firms).
/bit.ly/347ELnF

Commerce Department Has Been Quietly Investigating Wilbur Ross’ Finances For Years
Dan Alexander – Forbes
Secretary of Commerce Wilbur Ross, one of President Trump’s longest-serving cabinet members, has been under investigation for most of his tenure in office, according to a report issued Thursday by the inspector general of the commerce department.
/bit.ly/2IQWVTw

Investing and Trading

Mutual Funds Bleed $469 Billion as ETFs Triumph in Zero-Sum 2020
Katherine Greifeld – Bloomberg
ETFs attract $427 billion as mutual funds see record outflows; Well-timed regulations, Fed ETF buying help accelerate shift
The arms race between mutual funds and their exchange-traded brethren turned into a beat-down in 2020. Roughly $427 billion has poured into U.S. exchange-traded funds this year, divided almost evenly between equity and fixed-income funds, according to Bloomberg Intelligence data. Meanwhile, mutual funds have bled roughly $469 billion of assets in 2020, on track for the worst year on record in Investment Company Institute data going back to 1990.
/bloom.bg/2Wi9Lgp

A Stock Trader’s Guide to the Global Covid Vaccine Rollout
Gearoid Reidy and Morwenna Coniam – Bloomberg
Billions of shots to be administered in coming months; Distribution, supply chains offer chances to traders worldwide
As Covid-19 vaccines start to receive emergency approvals, the race is on to distribute the one product that billions of people across the world will want. That’s creating investment opportunities as traders examine the companies involved in the global rollout.
/bloom.bg/37cPcIO

The ‘Savings Glut’ Is Really a Dearth of Investment; American business is pumping too little money into growth opportunities.
Peter Coy – Bloomberg
The interest rate is simply the price of money. And the price of money, like any price, is determined by the balance of supply and demand. So why has the price of money—measured by inflation-adjusted interest rates—fallen so steeply over the past few decades?
/bloom.bg/3mg1C6W

Roblox to Delay IPO as Affirm Weighs Its Timing
Crystal Tse and Katie Roof – Bloomberg
Roblox Corp. told employees it would delay its initial public offering until next year as another IPO candidate Affirm Holdings Inc. weighs a similar move, according to people familiar with the matter.
/bloom.bg/2WbMLzQ

Wall Street IPO bonanza stirs uneasy memories of 90s dotcom mania; Investors warn of ‘frothiness’ as retail investors race to get a slice of hot offerings
Eric Platt, David Carnevali and Michael Mackenzie – FT
The frenzy surrounding Airbnb’s Wall Street debut began hours before the first trade. As bankers worked to establish an opening price, the number of options contracts changing hands in robotics maker ABB skyrocketed. The apparent flub came down to a single letter: ABB was missing an N in its ticker that would otherwise denote Airbnb.
/on.ft.com/37gGdpX

Sizzling Tech IPO Market Leaves Investors Befuddled; DoorDash and Airbnb both rocketed in their public debuts. Now, Roblox has pulled its offering as questions mount about soaring valuations.
Eliot Brown and Maureen Farrell – WSJ
A frenzy has hit the market for newly listed tech stocks. Last week, searing demand sent DoorDash Inc.’s stock up 86% in its trading debut Wednesday, while Airbnb Inc.’s shares more than doubled in their debut a day later. Airbnb Chief Executive Brian Chesky was at a loss for words in a Bloomberg TV appearance when he was told of the company’s opening share price, while multiple investors in the two blistering offerings said they were puzzled by the extraordinary enthusiasm in the market.
/on.wsj.com/3nmLIcg

Reclusive Billionaire’s Bond Bets Backfire; Mark Coombs built a nearly $100 billion investment franchise that is now under attack as competitors short its stock and clients like Goldman Sachs exit
Matt Wirz – WSJ
British billionaire Mark Coombs made his fortune winning outsized bond wagers in emerging markets like Brazil and Russia. Recently, his luck has soured. Big trades he made in Argentina, Ecuador and Lebanon all backfired simultaneously in 2020. Ensuing losses hammered shares of his investment firm, Ashmore Group, ASHM 0.87% and cost the reclusive trader around $325 million in personal paper losses, according to data from S&P Capital IQ.
/on.wsj.com/2Wdl0XF

Tesla to Replace Real-Estate Stock in S&P 500; When it takes the place of Apartment Investment & Management, Tesla will be the biggest-ever single-stock addition to the index
Michael Wursthorn – WSJ
Apartment Investment & Management Co. AIV -0.49% will exit the S&P 500 to make room for Tesla Inc., TSLA -2.72% setting the stage for the biggest-ever single-stock addition to the index.
/on.wsj.com/37eyLeS

Dividends Will Have Their Day Again; Dividend-paying stocks haven’t been superstars lately and in theory they shouldn’t be, but companies that pay them could shine once more
Spencer Jakab – WSJ
What do you call an investment strategy that would have left the likes of Amazon, AMZN 0.48% Facebook, Tesla, Netflix NFLX 0.43% and Google parent Alphabet out of your portfolio? Aside from some unprintable words, “stodgy” might come to mind. But until recently, a portfolio that mechanically excluded such nonpayers of dividends would have done very well. They might again in practice, even if they shouldn’t in theory.
/on.wsj.com/3gMjNQs

Environmental, Social and Corporate Governance

Longest Arctic Sailing Season Tops Off a Year of Climate Disasters; Record temperatures in the Arctic are benefiting natural gas exporters, who are speeding up warming by sailing more ships.
Anna Shiryaevskaya, Laura Millan Lombrana, and Olga Tanas – Bloomberg
Thinning ice in the Arctic Ocean made this year’s navigation season for natural gas tankers the longest on record, the latest sign that the pace of climate change is accelerating in the Earth’s northernmost latitudes.
/bloom.bg/3gL1yL7

Is ESG investing a price bubble?
Guido Giese, Navneet Kumar, and Zoltán Nagy – ETF Strategy
Inflows into environmental, social, and governance (ESG) funds have soared in recent years and months, in part motivated by outperformance since the COVID-19 pandemic erupted.
But have these inflows become a self-fulfilling prophecy, creating an ESG bubble?
Over the past four years, inflows into ESG funds have surged. For instance, the growth in ETFs tracking MSCI ESG indexes has risen sharply, measured in terms of the number of ETFs and assets under management (see exhibit below).
/bit.ly/3gRWAwj

ESG Investing: A Sizzling Sector That Will Get Even Hotter Under President Biden
Jason Bisnoff – Forbes
In the months leading up to the presidential election in 2016, socially responsible investing was gaining popularity on Wall Street. In February Larry Fink, CEO of the world’s largest asset manager, $7 trillion BlackRock wrote an open letter to global CEOs: “Generating sustainable returns over time requires a sharper focus not only on governance, but also on environmental and social factors facing companies…BlackRock has been undertaking a multi-year effort to integrate ESG considerations into our investment processes, and we expect companies to have strategies to manage these issues.”
/bit.ly/2WdxWga

Mexico’s ESG Bond Has Skeptics Questioning Do-Good Bona Fides
Justin Villamil – Bloomberg
The sustainable bond industry’s push into developing nations is sparking concerns about how sure investors can be that the money is being used for good, with Mexico’s sale the latest to raise eyebrows among skeptics.
The issue has come to the fore as Latin America becomes the new frontier for investors looking to do good at the same time they make money. Mexico issued 750 million euros ($910 million) of sovereign sustainable bonds in September, and the notes have since made their way into funds and indexes focused on securities that are supposed to help make the world a better place.
/bloom.bg/2WfAaf8

Institutions

BNY Mellon Wealth Management Appoints Vincent Hayes as Head of Global Family Office
BNY Mellon Wealth Management
BNY Mellon Wealth Management has appointed Vincent Hayes as Head of the Global Family Office segment. Vincent will join the Wealth Management leadership and will report to Catherine Keating, the CEO of Wealth Management.
/prn.to/3gJ68cY

Credit Suisse Blow-Ups Give Gottstein a Crash Course in Risk
Patrick Winters, Donal Griffin, and Marion Halftermeyer – Bloomberg
Loan losses, scandals, fund implosions taint CEO’s first year; Gottstein is scheduled to give update on strategy Tuesday
Two months after Thomas Gottstein took over at Credit Suisse Group AG following a damaging spying scandal, the new chief executive found himself defending losses the bank had incurred in one of Asia’s most spectacular accounting frauds: Luckin Coffee Inc.
/bloom.bg/3gKtY8c

Huntington Bancshares Agrees to Merge With TCF Financial; The all-stock deal would be the latest in a recent string of regional-bank tie-ups
Cara Lombardo and Orla McCaffrey – WSJ
Huntington Bancshares Inc. HBAN -0.77% agreed to merge with TCF Financial Corp. TCF -2.50% in the latest in a recent string of regional-bank tie-ups. The companies on Sunday announced an all-stock deal, confirming an earlier report by The Wall Street Journal. It would be one of the larger recent bank combinations, valuing Detroit-based TCF at nearly $6 billion, or about an 11% premium. Columbus, Ohio-based Huntington has a market value of $13 billion.
/on.wsj.com/37gX8J5

State Street, UBS Are in Talks to Merge Asset-Management Businesses; Firms had appeared to be close to reaching an agreement this summer
Justin Baer – WSJ
State Street Corp. STT 1.49% and UBS Group AG UBS -1.41% are in talks to merge their asset-management businesses, according to people familiar with the matter. The firms have held discussions since early 2020, and by this summer appeared close to an agreement, the people said. It is unclear why a deal didn’t materialize at that time, but the two sides remained in touch.
/on.wsj.com/2WaljlY

Regions

Bank of Israel Expands Repo Deals to Boost Small Business Credit
Ivan Levingston – Bloomberg
Israel’s central bank is expanding its set of monetary tools by offering repurchase transactions to non-bank credit providers, according to a Sunday announcement.
/bloom.bg/3maaWcs

China’s Spoiled Rich Kids Learn to Avoid the Wrath of Xi Jinping; As inequality grows, the second generation of China’s ultra-rich class wants to avoid becoming a target.
Bloomberg News
Over the years, China’s rich kids have become synonymous with obscene displays of wealth: Posing next to Bentleys and Lamborghinis, showing off stacks of yuan on social media and giving pets gold Apple watches, to name a few.
/bloom.bg/2LxHNeK

Oil Sands Win Favor on Wall Street After Years in Shale’s Shadow
Robert Tuttle and Michael Bellusci – Bloomberg
Morgan Stanley, Goldman latest to recommend buying stocks; Ability to generate cash next year makes industry attractive
After years in the shadow of the U.S. shale boom, the Canadian oil sands are emerging from 2020’s historic market crash with a slew of upbeat outlooks from Wall Street equity analysts. Morgan Stanley and Goldman Sachs Group Inc. are the latest firms to point out the industry’s ability to generate healthy cash flow next year as a reason to buy stocks like Suncor Energy Inc., Canadian Natural Resources Ltd. and MEG Energy Corp. That follows similar reports from BofA Securities and BMO Capital Markets.
/bloom.bg/2Wagk4M

China Sees New Surge in Pork Prices With Imports Under Scrutiny
Bloomberg News
Pork prices have rebounded in China as demand strengthens before a major holiday season and supply tightens because of a virus-linked crackdown on imports. Wholesale pork prices jumped almost 6% in the first week of December from a week earlier to 41.98 yuan ($6.41) per kilogram, posting the biggest gain in a year, according to data from the commerce ministry. This has the potential to push up consumer inflation, which recently threatened to slip below zero.
/bloom.bg/2KogAus

China Fines Alibaba, Tencent Unit Under Anti-Monopoly Laws
Coco Liu and Shiyin Chen – Bloomberg
Alibaba, China Literature didn’t declare deals to regulators; SAMR is scrutinizing the proposed merger of Huya and DouYu
China’s antitrust watchdog fined Alibaba Group Holding Ltd. and a Tencent Holdings Ltd. unit over a pair of years-old acquisitions and said it’s reviewing an impending Tencent-led merger, signaling Beijing’s intention to tighten oversight of internet sector deals.
/bloom.bg/3nkiVoF

Mexico Central Banker Says Contentious Bill Would Aid One Firm
Michael O’Boyle – Bloomberg
One company would be the main beneficiary of contentious legislation to force the central bank to buy potentially dirty dollars from Mexican banks, a deputy central bank governor said on Saturday. “There are quite a few arguments against the reforms to the Banco de Mexico law. One of the most important is that it is not worth reforming a law to favor a single company, especially one with a negative record with the U.S. SEC,” Banco de Mexico deputy governor Jonathan Heath said on Twitter.
/bloom.bg/2Wavrew

Brexit

Brexit staff shortages cause alarm in London; Civil service has 2,000 vacancies as widespread disruption looms if UK fails to agree EU trade deal
Jim Pickard and Peter Foster – FT
The UK civil service has more than 2,000 vacancies for Brexit-related roles, prompting fears of departmental understaffing ahead of potential widespread disruption in the case of a no-deal Brexit next month.
/on.ft.com/3niukFp

Hedge funds look beyond Brexit risks in bet on beaten-down UK stocks; Marshall Wace among firms hunting for bargains after gloomy year for British equities
Laurence Fletcher – FT
Hedge funds are betting that UK stocks are set for a rebound, despite concerns over whether a trade deal can be reached with the EU before the end-of-year deadline.
/on.ft.com/2IR52Q0

Lobbyist for Europe’s EUR17.6tn fund industry believes in Brexit balancing act; Tanguy van de Werve of Efama is keen to raise the European investment industry’s profile but UK exit poses a challenge
Siobhan Riding – FT
Having a big personality tends to lend itself to being a chief executive. But Tanguy van de Werve, who runs Europe’s main investment management lobby group, says the opposite is true in his case.
/on.ft.com/3gJx645

Brexit negotiators make progress on key issue in trade talks; Officials see possible way forward on regulatory level playing field for companies
Sam Fleming and Jim Brunsden and George Parker – FT
Barely 48 hours after Boris Johnson declared it was “very, very likely” that UK-EU trade deal talks would fail, the UK prime minister agreed to junk a Sunday deadline for a firm decision on their fate, and sent his officials back to the negotiating table.
/on.ft.com/3gKvJSQ

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