The curious case of rising stocks in the night-time

Jan 28, 2022

First Read

Hits & Takes
John Lothian & JLN Staff

Congratulations to uber journalist Jacob Bunge on being promoted to the role of Chicago deputy bureau chief for The Wall Street Journal. Bunge has been with the Journal since 2008, when he came over from Reuters. He has held two significant reporter beats out of the Chicago bureau: the exchanges and trading beat, which he covered from 2008 to 2013, and the agriculture beat, which he has held since 2013.

Bunge is an enterprising journalist, thoughtful colleague and all-around good guy. The Journal made an excellent selection in this promotion. Congratulations, Jacob!

Two big legal cases are in the news. One is that two Deutsche Bank traders had their Libor-rigging cases overturned. The second is that traders who sued over the “meme-stock” selling restrictions had their case dismissed.

One of my favorite sections of the Financial Times newspaper is the “How to Spend It” section. One can only dream about most of their items, including simply traveling. An entry today is titled “Perfect nights inn: the best UK pubs with lodgings.” Besides the travel fantasy, it does seem like something I could handle.

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 History Behind SGX; An Interview with Rama Pillai for The History of Financial Futures – a JLN Interview Series
JohnLothianNews.com

In 1978, the Gold Exchange of Singapore (GES) was created by some Singaporean bullion dealers. Then in the early 1980s, the Monetary Authority of Singapore and financial community leaders sent teams around the world to examine different market structures. One was sent to Chiago to examine the Chicago Mercantile Exchange, Pillai said. The Singaporean team sent to Chicago liked the CME model and felt it would work well in Singapore. This led to the creation of the Singapore International Monetary Exchange or SIMEX.

Watch the video »

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BSTX receives regulatory approval for blockchain-based US securities exchange; New securities exchange will provide benefits including shorter on exchange settlements and proprietary blockchain data feeds.
Wesley Bray – The Trade
BSTX has received approval from the US Securities and Exchange Commission (SEC) as an equity trading facility of BOX Exchange. BSTX, which is a joint venture of BOX Digital Markets and tZERO Group, claims to be the first fully-automated, price/time priority execution exchange for trading securities that is both regulated by the SEC and leverages existing private blockchain technologies.
/jlne.ws/3g30Vgy

***** News like this is enough to make your blood Boyle. I mean, former BOX CEO Ed Boyle has to be happy this has finally been approved. ~JJL

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Paris Wants to Become the Mayfair of Europe for Hedge Funds
Alexandre Rajbhandari and Nishant Kumar – Bloomberg
Back in 2016, trying to get an ambitious young financier to choose France over Britain was an often hopeless task. “When I was going to London to tell people to relocate to Paris, the answer of my contacts was, ‘Paris, never!'” says Arnaud de Bresson, whose job is to promote his city as an attractive location for international finance firms.
/jlne.ws/3KRTHtT

****** Paris does not want to become anything. Paris is Paris and will always be Paris. ~JJL

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The Gamification of Finance May Be a Good Thing After All; Video game techniques can help us take a longer-term view on retirement saving, a study shows.
Mark Gilbert – Bloomberg
The gamification of finance, which blurs the line between speculating for profit and investing for the long run, has always made me nervous. But it turns out that some of the techniques used to hook players on video games can be used to help us develop healthy financial habits. Specifically, gaming elements can encourage adopting a long-term view of money, an important aspect for building wealth.
/jlne.ws/35qp8eB

***** Gamification of finance is only a good thing if the game is Dungeons and Dragons. Otherwise, no.~JJL

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Robinhood Crypto Revenue Falls as Meme Coin Frenzy Fades
Yueqi Yang – Bloomberg
Crypto trading revenue declines while Dogecoin mania eases; ‘Everyone’s waiting for’ Shiba Inu listing, BI’s Chariell says
Robinhood Markets Inc.’s cryptocurrency trading revenue fell in the fourth quarter and missed Wall Street expectations, marking a second-consecutive quarter-over-quarter decline in the wake of the meme coin frenzy early last year. Crypto revenue was $48 million, a 6% decline from the prior quarter, missing the $55 million average estimate of analysts surveyed by Bloomberg. Still, it increased 304% from a year ago. Shares of Robinhood fell about 12% in post-market trading after the firm reported total revenue that was also short of Wall Street estimates.
/jlne.ws/35kK6vp

****** There is a reason Robinhood’s stock has dropped and dropped. A deep dive into the numbers tells the story.~JJL

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Thursday’s Top Three
Our top story Thursday was (for the third time) Here’s how much money you have to earn to be in the top 1% in every US state, from CNBC. Second was our MarketsWiki page for Clare Black, who just became managing director at Streets Consulting. Third was Facebook gives up on crypto ambitions with Diem asset sale, from The Financial Times.

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MarketsWiki Stats
26,700 pages; 237,174 edits
MarketsWiki Statistics

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Lead Stories

The curious case of rising stocks in the night-time; An ex-hedge fund analyst has a conspiratorial theory why equities do better after the market closes
Robin Wigglesworth – FT
The “witching hour” was long said to be the time of night where demons, ghosts, ghouls and witches were at their most powerful. It turns out that it is also when the US stock market is at its mightiest. American bourses officially open between 9.30am and 4pm in New York, yet weirdly most of the gains actually accrue in the sparser, more informal after-market trading that happens on various electronic exchanges, according to a study by the New York Federal Reserve. Early morning returns, on the other hand, tend to be negative. The phenomenon has long puzzled many analysts.
/jlne.ws/3HaBwgZ

Ex-Deutsche Bank traders have Libor-rigging convictions overturned; New York appeals court acquits Matthew Connolly and Gavin Black of manipulating benchmark
Joe Rennison and Jessica Dye – FT
A US federal appeals court has overturned the convictions of two former Deutsche Bank traders charged in connection with an alleged scheme to rig the Libor benchmark, a blow to prosecutors who have struggled to prosecute individuals for actions that netted billions of dollars in fines from banks.
/jlne.ws/3G3ADpb

Traders’ ‘meme stock’ lawsuit against Robinhood dismissed by federal judge
Ariel Zilber – Bloomberg
A federal judge has dismissed a lawsuit against the brokerage app Robinhood that was filed by retail traders who claimed they lost billions after they were stopped from selling so-called “meme stocks” that were artificially inflated by internet chat groups. Chief US District Judge Cecilia Altonaga of Miami federal court ruled that the retail investors could not sue Robinhood for negligence and breach of fiduciary duty because of the terms of agreement that each customer must accept upon registration.
/jlne.ws/3rYHET1

Why aren’t we trying to create a financial sector for all? Post-Brexit regulation is preoccupied with the sector’s concerns and disregards everyone else
Helen Thomas – FT
In 1810, Henry Duncan started a “penny bank” for his parishioners in the farming community of Ruthwell in Scotland. The institution he created, which has a rather tenuous connection with the TSB of today, aimed to be “an economical bank for the savings of the industrious”. Everyone, no matter how much they had, would have a place to put it. Duncan’s spirit of inclusiveness seems sadly absent from the UK’s thinking about how the financial sector should operate and be regulated after Brexit. What has been dubbed a once-in-a-generation opportunity to rethink the system could be squandered.
/jlne.ws/33RCkch

Record 1.3 Million SOFR Futures Contracts Traded on January 26 as Liquidity Continues to Shift to SOFR; SOFR futures open interest surpasses record 2.8 million contracts
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that SOFR futures volume surpassed 1 million contracts for the first time, reaching a new, single-day trading volume record of 1,308,621 contracts and setting a new open interest (OI) record of 2,804,640 contracts on January 26.”These trading milestones reflect that market participants are increasingly turning to CME Group’s deeply liquid SOFR futures and options to manage their risk,” said Agha Mirza, CME Group Global Head of Rates and OTC Products. “Since the start of 2022, liquidity has continued to shift to our SOFR-based derivatives at an accelerated pace, with SOFR futures open interest now equivalent to nearly 25% of all Eurodollar futures open interest.”
/jlne.ws/35xyLs8

IMF warns crypto rout could lead to systemic risk, backs Fed digital coin
Jennifer Schonberger – Yahoo Finance
The International Monetary Fund says cryptocurrencies and stocks are likely to see more volatility, with the Federal Reserve set to raise interest rates, and as increasing correlations between the two asset classes create risks to the financial system. Digital coins have gotten off to a rocky start in 2022, with a deep sell-off obliterating billions in market value. Since hitting a record high in November, the value of Bitcoin (BTC-USD) has been shaved nearly in half. “The Fed needs to tighten financial conditions, that means that interest rates have to come up, risky asset prices have to come down, and that could be painful to some degree,” Tobias Adrian, director of the IMF’s Monetary and Capital Markets Department, told Yahoo Finance in an interview.
/jlne.ws/3r8e2Dy

The Coinbase model: profit from the crypto assets it lists; FT analysis shows how one of the world’s biggest cryptocurrency exchanges blurs the division between market-maker and investor
Miles Kruppa – FT
In December, a cryptocurrency issued by the social networking start-up Decentralized Social soared in value after Coinbase allowed it to begin trading on the company’s exchange. The listing provided a jolt to the start-up’s fortunes, with its token price briefly doubling to a high of $187. It also boosted the fortunes of another key partner, Coinbase, which had backed the start-up as part of a $200m round of funding announced three months earlier.
/jlne.ws/3r9DwR9

Credit Suisse changes bonus rules in a bid to retain senior staff; Bankers are warned they will have to give up some of their cash award if they leave within three years
Stephen Morris and Jim Pickard and Joshua Franklin – FT
Credit Suisse has warned senior bankers they will have to give up some of their cash bonus if they leave within three years, a controversial step designed to retain staff as the lender battles to recover from a series of crises.
/jlne.ws/342jGOJ

Robinhood’s growth loses steam a year after meme stock frenzy; Shares of retail brokerage fall on earnings miss as it expects revenues to decline 35% in the current quarter
Madison Darbyshire – FT
Shares of retail brokerage Robinhood fell more than 12 per cent in after-hours trading after it missed revenue targets in the final quarter of 2021, as the retail trading fervour in meme stocks and cryptocurrencies lost steam.
/jlne.ws/3KPSmUC

GameStop Saga one year on: a stark difference between the US and European financial market infrastructures but…
The Trade
Today marks the one-year anniversary of the GameStop saga – when retail brokers halted the buying of the stock citing the inability to post sufficient collateral at clearing houses to execute their clients’ orders. As explained by analysts, this event was driven by the Reddit bloggers WallStreetBets pumping up the price of GameStop which put a short squeeze on hedge fund Melvin Capital as a result.
/jlne.ws/3HdMHW0

Coronavirus

U.K. Set to Start Giving Pfizer Covid Pill to Vulnerable People
James Paton – Bloomberg
The U.K. will start giving Pfizer Inc.’s Covid-19 pill to the most vulnerable people next month, rolling out a treatment that could potentially save thousands of lives and help ease pressure on hospitals, the government said Friday.
/jlne.ws/34giSWa

Return-to-Office Decrees Should Wait a Few More Weeks; Covid-19 has not yet receded, and employees have individual reasons for needed to avoid infection.
Sarah Green Carmichael – Bloomberg
Last summer’s back-to-the-office push ran into a delta-shaped speed bump. Then omicron threw up a concrete wall. With daily Covid-19 infection rates again falling, some companies are reissuing RTO deadlines. Employees of Citigroup, Credit Suisse, BNP Paribas, Goldman Sachs and JPMorgan Chase are among those who’ve been asked to return in early February, at least in New York City. There’s a case to be made that these sweeping decrees are premature.
/jlne.ws/3r72f8q

Contact Tracing Didn’t Defeat Covid. Here’s How It Could.; Appealing to self-interest instead of relying on social obligation would provide incentives to cooperate that were missing early in the pandemic. There’s an app for that.
Po-Shen Loh and Ariel Procaccia – Bloomberg
Remember contact tracing? Early in the Covid-19 pandemic, it was seen as the first line of defense against the virus. The idea was that public health workers could be mobilized to contact everyone who’d been infected or exposed, and then would warn friends, family, neighbors and colleagues to lie low.
/jlne.ws/3ADlkCu

Exchanges, OTC and Clearing

Equity index derivatives: Introduction of Eurex Daily Futures on KOSPI 200 Weekly Options
Eurex
Introduction of Eurex Daily Futures on KOSPI 200 Weekly Options (OKW1/3/4/5),
Introduction of a new Product Specific Supplement for Eurex Daily Futures on KOSPI 200 Weekly Options,
Further editorial changes to the Contract Specifications for Futures Contracts and Options Contracts at Eurex Deutschland (Contract Specifications).
/jlne.ws/3HcGgCz

SGX welcomes Alpina Holdings Limited to Catalist
SGX
Singapore Exchange (SGX) today welcomed Alpina Holdings Limited to its Catalist under the stock code “ZXY”. Alpina Holdings Limited is an established Singapore-based contractor specialising in providing integrated building services, mechanical and electrical engineering services, as well as alteration and addition works. The company is engaged in both public and private sector projects including projects by the Singapore government ministries and statutory boards, and public universities and institutions.
/jlne.ws/33XRTPy

MARF registers a new 25 million euro Green Commercial Paper Programme from EiDF
BME-X
BME’s Fixed Income Market, MARF, today admitted EiDF -Energía, Innovación y Desarrollo Fotovoltaico’s first Green Commercial Paper (CP) Programme to trading for 25 million euros. This continuous issuance programme will allow the company to access qualified investors flexibly over the next twelve months and diversify its funding sources through the placement of CP issues.
/jlne.ws/3g7vTUJ

CME-RSRH-21-6421-THIRD-COAST-OPTIONS-LLC
Performance Bond Requirements: Energy, Agriculture, Metals, FX – Effective January 28, 2022
Administrative Amendments to Five (5) Foreign Exchange (FX) Options Contracts to Clarify the Underlying Futures Contract
Performance Bond Requirements: Interest Rate Margins – Effective January 28, 2022
Administrative Amendments to the Iron Ore 62% Fe, CFR China (TSI) Futures and Iron Ore 62% Fe, CFR China (TSI) Average Price Option Contracts
Emission Offset Unit Vintages that are Deliverable Under the CBL Nature-Based Global Emissions Offset Futures Contract
EBS Market Integration Notice: New Content and Updates
CME Globex Notices: January 24, 2022
CME STP Notices: January 27, 2022

Fintech

Instinet set to be first executing broker for Appital platform ahead of launch; The pair will create a new channel for execution flow for the buy-side in hard to trade blocks in European stocks.
Annabel Smith – The Trade
Instinet is set to be the first executing broker on the equity capital marketplace and bookbuilding platform Appital ahead of its launch into Europe later this year. Through the collaboration, any flow formed and negotiated on the Appital platform by asset managers can be executed via Instinet.
/jlne.ws/3g7apre

Cybersecurity

Why Cybersecurity Should Be Top of Mind in 2022
U.S. Legal Support – JDSupra
2021 was a challenging year for many reasons (year two of a global pandemic, for starters), but it was an especially demanding year in cybersecurity. Cybersecurity threats are not only growing more prevalent but also more expensive.
/jlne.ws/3HdTqzw

Can We Predict A Cybersecurity Incident?
Tirthankar Dutta – Forbes
Amazon, Google and Tesla. If you think about these three companies, the first two words that come to most minds are innovation and disruption. They disrupted their respective industries by predicting the future correctly. In a similar manner, I’ve always wondered if we could predict the type of security incidents one can expect to encounter in their company. If the answer is yes, we can save a lot of time and resources on building a threat detection framework. But as we all know, in real-world tracking, spotting an actual incident is like finding a needle in a haystack.
/jlne.ws/3G8Z9oI

Learning from Cybersecurity Stats: What’s the Best Way to Limit Your Data Exposure?
Ipro Tech – JDSupra
Earlier this month, I presented a webinar for ACEDS titled Ten Recent Cybersecurity and Data Breach Trends You Need to Know with Debbie Reynolds, who is known as the “Data Diva”. It was a fun and informative webinar where we introduced 10 eye-popping statistics related to cybersecurity and data breaches and then discussed how individuals and organizations can avoid becoming a statistic themselves.
/jlne.ws/3r8pnDx

How to Use NIST Cybersecurity Framework (CSF) to Map Risk to Cyber Threats and Enable Zero Trust – Zen Chan – Medium
You should have seen the NIST’s Cybersecurity Framework (CSF) if you work in cybersecurity. Although it is not new, it is the one that has been getting grown attention recently. When I talk to customers using the CSF, some of them would ask, “What’s in it for me?”
To make the CSF drive an actual impact, providing some guidance and tips would be helpful. As a security architect, I want more people to notice that NIST’s CSF can be a valuable tool for organizations to improve their security maturity. Hopefully, looking to lower organizational risk and shield critical infrastructure.
/jlne.ws/3GglnW8

Cryptocurrencies

Genesis Q4 Report Highlights Key Trends from 2021 in Crypto Lending, Trading and Custody
Genesis
Leading crypto prime broker capped record levels of activity in 2021 with strongest quarter to date in Q4; During 2021, Genesis completed over $300 billion in global crypto transactions; trong activity underscores expanding global institutional interest across digital assets
Genesis, a digital asset industry pioneer and digital currency prime brokerage, today released its Q4 2021 Market Observations Report, which provides detail on the company’s growth over the past quarter and the whole year. This growth highlights major trends across institutional digital asset markets, including the continued diversification of digital asset investments, the deepening sophistication of institutional investors entering the crypto market, new types of institutions participating in the market, increasing allocations from managers of diversified portfolios and the growing need for multi-service institutional prime brokerages.
/jlne.ws/3KTBCeW

Fidelity Files to Start ETFs Tied to Metaverse, Crypto Industry
Miles Weiss – Bloomberg
Fidelity Investments filed with the U.S. Securities and Exchange Commission to create a pair of exchange-traded funds that will track companies engaged in the metaverse and cryptocurrency industries.
/jlne.ws/33Zuzku

SEC Dashes Spot Bitcoin ETF Hopes With Fidelity Rejection
Allyson Versprille – Bloomberg
A U.S. regulator rejected yet another proposal for an ETF that would directly hold Bitcoin, adding to the fast-growing pile of denials and dimming hopes of the sought-after product getting cleared anytime soon.
/jlne.ws/33RxQ5r

Wild Crypto Leverage Is On Offer for Pros in 20-Times Bitcoin Bet
Sam Potter – Bloomberg
Institutional pros have a fresh way to navigate the crypto boom and bust via a new hedging tool offering 20-times the daily performance of Bitcoin — landing in the midst of the global meltdown in digital money.
/jlne.ws/3r7uqUI

The biggest corporate holder of bitcoin is not Square or Tesla
Nicolás Rivero – Quartz
While at least 26 publicly traded companies hold bitcoin, just one owns more than half of all cryptocurrency on corporate balance sheets. It’s not Tesla, the electric car manufacturer that accepts bitcoin as payment and is run by a CEO who promotes cryptocurrencies so aggressively his tweets are under SEC investigation. Nor is it Square, the financial services company led by ex-Twitter CEO Jack Dorsey, who famously lists only “#bitcoin” in his Twitter bio.
/jlne.ws/3s5ewd4

Goldman Says Crypto Mainstream Acceptance May Not Boost Prices
Joanna Ossinger – Bloomberg
Investors should be skeptical of the narrative that rising adoption of cryptocurrencies must translate into higher prices, according to Goldman Sachs Group Inc.
/jlne.ws/3H99imL

OpenSea Reimburses Users $1.8 Million After NFT Listings Error
Misyrlena Egkolfopoulou – Bloomberg
Some items sold at discounts due to confusing feature; One user said he bought a new NFT with the reimbursement
Non-fungible token marketplace OpenSea has reimbursed about $1.8 million to users who suffered losses after confusion about a feature on the platform caused them to unwittingly sell valuable NFTs far below market prices.
/jlne.ws/3rURJk1

How Crypto Became the New Subprime
Paul Krugman – NY Times
If the stock market isn’t the economy — which it isn’t — then cryptocurrencies like Bitcoin really, really aren’t the economy. Still, crypto has become a pretty big asset class (and yielded huge capital gains to many buyers); by last fall the combined market value of cryptocurrencies had reached almost $3 trillion.
/jlne.ws/3AE6J9V

SEC Reopens Comment Period for Pay Versus Performance
SEC
The Securities and Exchange Commission today reopened the comment period on proposed rules under the Dodd-Frank Act requiring disclosure of information reflecting the relationship between executive compensation actually paid by a company and the company’s financial performance.
/jlne.ws/34dBTZt

LizAnn Eisen Joins Division of Corporation Finance as Deputy Director, Disclosure Program
SEC
The Securities and Exchange Commission today announced that LizAnn Eisen has been named Deputy Director, Disclosure Program, for the Division of Corporation Finance. In this role, she will ensure the effectiveness of the division’s review of company filings, monitor market trends, and assess emerging risks.
/jlne.ws/3g77Xko

Kristin Snyder, Deputy Director of Division of Examinations, to Leave SEC
SEC
The Securities and Exchange Commission today announced that Kristin Snyder, Deputy Director of the Division of Examinations (EXAMS), is leaving the agency at the end of this month after more than 18 years of service. Joy Thompson has been named Acting Deputy Director and Acting Associate Director of the Private Funds Unit, and Natasha Vij Greiner has been named Acting Co-National Associate Director of the Investment Adviser/Investment Company (IA/IC) Examination Program.
/jlne.ws/3G8ActM

Dissenting Statement on Reopening of Comment Period for Pay Versus Performance
Commissioner Hester Peirce – SEC
While I agree that we should move forward on this nearly twelve-year-old Dodd-Frank rulemaking mandate, I do not agree with the approach taken in this release. Instead of fixing critical shortcomings of the 2015 Proposing Release, the re-opening release doubles down on a flawed proposal and raises the prospect of additional disclosure requirements. These supplemental requirements would increase the burdens of public company reporting, but seem likely to be of dubious use to investors.
/jlne.ws/34geQ06

Measuring Pay Against Performance: Are Shareholders Getting Their Money’s Worth?
Commissioner Allison Lee – SEC
Financial incentives drive how executives perform in their role as fiduciaries to companies and their shareholders. Understanding what those incentives are and whether they are actually working – that is, if and how they link to company performance – is critical for investors in evaluating a company’s compensation practices.
/jlne.ws/34lJIMY

Statement on the Reopening of Pay vs. Performance
Commission Caroline A. Crenshaw – SEC
In 2010, with the passage of the Dodd-Frank Act, Congress recognized the importance of increasing transparency and accountability in executive pay practices.[1] As part of that executive compensation disclosure mandate, the Commission proposed a rulemaking in 2015 that would provide insight into the links between executive pay and company performance. Unfortunately, the Commission let that rule, like other Dodd-Frank rules, languish.
/jlne.ws/3Hq0eKx

Politics

How a Fox News Interview Threw the Antiwork Subreddit Into Chaos; The popular Reddit forum removed a longtime moderator after an appearance on the conservative news outlet.
Claire Ballentine – Bloomberg
At least that’s the consensus emerging from the fallout over a Fox News appearance by one of the moderators of the popular r/antiwork subreddit forum. The Reddit group — which drew more than 1.7 million members as an outlet for angst over employee rights, compensation and working hours — is up and running again after briefly going private on Wednesday following criticism from users. But one of its most-public faces, moderator Doreen Ford, is being removed from her duties, while the new r/workreform has attracted almost 400,000 members in a single day.
/jlne.ws/34lAVKY

Congress’s Big Tech Stock Stakes Make Regulation Awkward; A proposed antitrust bill has cast a spotlight on the immense portfolios of dozens of lawmakers.
Joshua Green – Bloomberg
At a December press conference, House Speaker Nancy Pelosi was asked her opinion of proposed restrictions on stock trading by members of Congress. Her response was quick and clear: She hated the idea. “We are a free-market economy,” Pelosi, whose family’s shareholdings exceed $100 million, shot back. “They should be able to participate in that.”
/jlne.ws/33RToio

Regulation

CFTC Orders Two Florida Men to Pay $280,000 for Registration and Reporting Violations
CFTC
The Commodity Futures Trading Commission today issued an order filing and simultaneously settling charges against Dennis K. Thomas and John J. Bartoletta, both Florida residents, for registration and reporting violations under the Commodity Exchange Act (CEA) and CFTC regulations. Specifically, the order finds that Thomas acted as an unregistered associated person (AP) of a commodity pool operator (CPO) and failed to comply with requirements related to CPO reporting and recordkeeping, and Bartoletta acted as an unregistered AP of a CPO and as an unregistered commodity trading advisor (CTA). The order requires Thomas and Bartoletta to pay, jointly and severally, a $280,000 civil monetary penalty and to cease and desist from further violations of the CEA and CFTC regulations, as charged.
/jlne.ws/3u6IFLl

CFTC Grants Inet’s Request to Vacate DCM Designation
CFTC
The Commodity Futures Trading Commission announced today that it issued an order vacating the designated contract market (DCM) designation of Inet Futures Exchange, LLC. The order was issued at the request of Inet Futures Exchange.
/jlne.ws/3IJ3n8h

Keynote Address of Chairman Rostin Behnam at the ABA Business Law Section Derivatives & Futures Law Committee Virtual Winter Meeting
CFTC
Good afternoon. I am delighted to join you virtually today for my first keynote as CFTC Chairman. I want to thank Katie Trkla and the Vice-Chairs and Conference Chairs for holding this important event and for including me and so many of our key CFTC leaders.
/jlne.ws/3HcyHf8

Citigroup Fined for Misconduct in Asian Stock Trading; Hong Kong regulator’s investigation says it found ‘pervasive dishonest behavior’ among bank’s equities traders
Quentin Webb – WSJ
Hong Kong’s financial-markets regulator fined a unit of Citigroup Inc. and warned it would pursue action against some former staffers, after finding that some of the U.S. bank’s stock traders misled investors over more than a decade. The city’s Securities and Futures Commission said Friday it had fined Citigroup Global Markets Asia Ltd. HK$348.25 million, or the equivalent of about $44.7 million, for misconduct on some of the bank’s equities-trading desks between 2008 and 2018.
/jlne.ws/34gbSIU

New Q&As available
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today updated the following Questions and Answers:
Benchmarks Regulation (BMR)
European crowdfunding service providers for business Regulation
MiFID II and MiFIR transparency topics
SFTR data reporting
/jlne.ws/3u7TXPv

ESMA consults on trading venue perimeter
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today launches a consultation paper (CP) on what constitutes a multilateral system.
/jlne.ws/3HbCeKU

ESMA Consults On Scope Of The Cra Regulation For Private Credit Ratings
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today launches a public consultation on a targeted revision to its Guidelines and Recommendations on the Scope of the CRA Regulation.
/jlne.ws/3r8HhGd

Reminder – Participant Data Management System
FINRA
Beginning January 31, 2022, FINRA member firms will access the Participant Data Management System to perform the following functions for the TRACE, ORF and ADF facilities:
Submit, view, and amend the FINRA Participation Agreement;
View and modify access to the FINRA trade reporting facilities including, TRACE, ORF and ADF;
View, add, modify, and delete various agreements including the Uniform Reporting Agreement (USA) and Transaction Fee Transfer Agreement;
Manage MPIDs and communicate information regarding MPID changes to FINRA;
Manage TRAQS login ids
/jlne.ws/3r4FnGF

Press Conference by SUZUKI Shunichi, Minister of Finance and Minister of State for Financial Services
(Excerpt) (Friday, January 14, 2022, 12:06 pm to 12:17 pm)
Japan FSA
/jlne.ws/3g625bc

Press Conference by SUZUKI Shunichi, Minister of Finance and Minister of State for Financial Services
(Excerpt) (Friday, January 11, 2022, 10:31 am to 10:35 am)
Japan FSA
/jlne.ws/3o3wRpG

Investing and Trading

U.S. Natural Gas Abruptly Surges in Record Short Squeeze
Naureen S. Malik, Gerson Freitas Jr. and Sergio Chapa – Bloomberg
U.S. natural gas futures suddenly spiked the most on record Thursday afternoon, a dramatic move that signaled bearish wagers being squeezed out of the market.
/jlne.ws/3u5yBT5

SPAC Wipeout Spurs Top Sponsors to Pull IPOs at Record Clip
Bailey Lipschultz – Bloomberg
Some of the blank-check world’s shrewdest sponsors are pulling new offerings amid miserable returns for the sector and mounting signs of investor exhaustion. Dealmakers aborted at least 14 planned listings this month alone for so-called special-purpose acquisition companies that were looking to raise a combined $4 billion, according to data compiled by Bloomberg. Both figures are records for the once red-hot asset class.
/jlne.ws/3Hfa69F

Oil Market Sizzles With WTI Set for Sixth Straight Weekly Gain
Jake Lloyd-Smith and Alex Longley – Bloomberg
Crude near highest since 2014 on rising demand, Ukraine fears; OPEC+ alliance due to meet Feb. 2 to decide on supply policy
Oil is headed for a sixth straight weekly gain, with prices trading near a seven-year high as crude makes a roaring start to 2022. West Texas Intermediate rose above $88 a barrel, taking its advance this week to more than 3%, while the global Brent benchmark approached $91 as robust demand tightened global markets. Heightened geopolitical risks driven by fears that Russia may invade Ukraine have also contributed to crude’s climb.
/jlne.ws/3ACd4Tf

A Perfect Storm for Diesel Prices Around the World
Jack Wittels – Bloomberg
Diesel market prices are soaring all over the world amid low stockpiles and supply pressures. The cost of diesel relative to crude oil is at its highest in more than two years in Singapore and the U.S., while in northwest Europe, it’s at the most in 21 months. Supplies from oil refineries are being hampered by outages and market conditions and with relatively low stockpiles around the world, there’s only a limited cushion to absorb market shocks.
/jlne.ws/3Gmrl7X

BofA Sees ‘Zero Capitulation’ as Stock Funds Take In $17 Billion
Michael Msika – Bloomberg
It’s been a ‘sell hubris, buy humiliation’ market, BofA says; Bond funds are seeing outflows because of hawkish Fed policy
The brutal selloff this week isn’t scaring investors from putting their money in the stock market. In the week that pushed the S&P 500 Index to the verge of a correction, stock funds absorbed billions of cash.
/jlne.ws/3H9AEsJ

Will young investors hang on for the ride? Markets take a turn for the worse as inflationary pressures weigh on our personal finances
Claer Barrett – FT
We’ve picked up plenty of habits during the pandemic — streaming endless box sets, working from home in leisure wear, and emailing colleagues asking if it’s OK to ring them (the shattering intrusion of a phone call being more than some people can bear). As restrictions end, change is definitely in the air.
/jlne.ws/3IMnWRa

Where Six Meme Stock Investors Are Now; A massive influx of small-time traders caused shares of some companies to go haywire last year. We checked back in with some who were riding the meme-stock wave in 2021 to see where they—and their portfolios—stand amid a new bout of market turbulence.
WSJ Staff
Some regret their exuberance. Others value the lessons they learned. Still others are convinced big profits lie ahead. Months after interviewing them in 2021, we checked back in with some of the investors who went all-in on so-called meme stocks during the pandemic—or bet against them—to see how they are adjusting as the market deals with a new round of turbulence. One thing’s for sure: 2022’s volatile stock market isn’t the same rising tide that pulled in millions of amateur investors over the past two years.
/jlne.ws/3G9r6g4

Environmental, Social and Corporate Governance

Cost of Emitting Carbon Soars in Europe With U.K. Hitting Record
Todd Gillespie and Will Mathis – Bloomberg
High gas prices driving demand for allowances to burn coal; German and French power futures have been rising for nine days
The price of polluting across Europe is rising as traders bet generators will keep burning coal instead of expensive natural gas. European Union benchmark carbon futures are up almost 6% this week, the biggest weekly gain since early January. Even with a slight dip on Friday, it now costs close to $100 for businesses in the region to put a metric ton of carbon dioxide into the atmosphere.
/jlne.ws/3L2iN9M

The Cost to Reach Net Zero By 2050 Is Actually a Bargain; A multi-trillion-dollar global investment seems massive. But the closer you look, the smaller the numbers become.
Gernot Wagner – Bloomberg
A trillion here, a trillion there: The headline figure in the latest analysis of the costs of achieving net-zero emissions, from McKinsey & Co., is a staggering $9.2 trillion a year, every year, between now and 2050. That comes to a grand total of $275 trillion worth of investments in energy assets and land-use systems ranging from agriculture to forestry.
/jlne.ws/34gk7Vk

Wall Street-Dominated Green Club Is Told It Has Rich-World Bias
Adelaide Changole, Bella Genga, and Alastair Marsh – Bloomberg
Biggest African bank says GFANZ caters to ‘Global North’; Net-zero club for finance says it’s still defining approach
It was supposed to be a global alliance of financial firms to fight climate change. Instead, it risks becoming a rich-world club as banks from developing nations stay away. The Glasgow Financial Alliance for Net Zero has been able to attract the titans of Wall Street and the City of London, including BlackRock Inc., Goldman Sachs Group Inc. and HSBC Holdings Plc. But the roughly 40% of global financial assets the group represents mostly excludes the biggest banks in China, India and Africa.
/jlne.ws/3s1rbgL

China’s Property Crisis Has Investors in Green Bonds Seeing Red; Chinese real-estate firms sold close to $10 billion of green bonds in 2021
Frances Yoon – WSJ
Before the Chinese property sector ran into trouble, developers had rushed to issue green bonds, making them among the most prolific corporate issuers in this fast-growing corner of global finance. But the selloff in China’s property-bond market in recent months, and a string of defaults, have hammered prices for many of these dollar-denominated green or sustainable bonds, which finance environmentally friendly or social projects. Creditors have suffered hefty losses. Several of the securities now trade at less than 30 cents on the dollar, indicating deep skepticism among investors that they will get back anything close to the original value.
/jlne.ws/3AFXmqa

Institutions

Robinhood’s Stock Drops 10% After Loss Is Worse Than Analysts Expected; Higher technology and administrative costs hurt the brokerage’s fourth-quarter results Caitlin McCabe – WSJ
Robinhood Markets Inc.’s HOOD -6.45% stock fell more than 10% in postmarket trading after the brokerage reported a loss of $423 million for the fourth quarter. The company had an increase in technology and administrative expenses that ate into its results. The brokerage used by individual investors recorded revenue of $363 million for the October-through-December period, an increase of 14%. For the year, Robinhood recorded an 89% jump in revenue to $1.82 billion, up from $959 million the previous year. The company’s net loss totaled $3.7 billion for the year.
/jlne.ws/34jUpj6

Fidelity Joins Invesco and Schwab in Adding China Warnings to Funds
Miles Weiss – Bloomberg
Fidelity Investments joined a growing list of money managers warning of potential losses tied to some of China’s largest companies, including Alibaba Group Holding Ltd. and JD.com Inc.
/jlne.ws/3r6cb27

Forgotten BlackRock ETF Posts Mystery $3.7 Billion Inflow in Day
Emily Graffeo – Bloomberg
A lifeless BlackRock Inc. ETF with barely any day-to-day inflows over the past 15 years just got a $3.7 billion allocation in one go. Launched in 2007, the iShares MSCI Kokusai exchange-traded fund (ticker TOK) has until now failed to generate much investor interest in its mission to bid up large and mid-cap companies around the globe excluding Japan.
/jlne.ws/3INGalc

Barclays Lost About $100 Million on Collapsed Advent Bid
Stefania Spezzati, Donal Griffin and Ruth David – Bloomberg
The collapse of an $8 billion biotech acquisition and a slump in the Swedish krona left Barclays Plc with a major loss last month. The London-based bank lost about $100 million on currency hedges after the U.S. private equity firm Advent International and Singapore’s sovereign wealth fund GIC withdrew their bid for Swedish Orphan Biovitrum AB in December, people with knowledge of the matter said.
/jlne.ws/3s1N1Rm

Deutsche Bank’s had its biggest year since 2011; Fourth quarter results mark the bank’s sixth consecutive period of profit on the back of a boom in corporate banking, as it steps up its ‘compete to win’ strategy.
Laurie McAughtry – The Trade
Deutsche Bank delivered revenues of EUR25.4 billion in the full year of 2021, an increase of 6% year-on-year. But more importantly, despite expecting a loss, the bank beat all expectations to report net profit of EUR2.5 billion, a more than 400% increase on 2020, marking its highest full year profit since 2011 and its sixth consecutive profitable quarter. This consistent improvement has driven three rating upgrades for the bank in 2021, the latest by S&P in November. But where does it go from here?
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Regions

Wall Street’s Big Bet on Chinese Markets Is Going All Wrong
Sofia Horta e Costa – Bloomberg
The bar for China’s financial markets to do better this year was so low, virtually everyone on Wall Street was saying the country’s stocks and bonds could only go up.
/jlne.ws/3ATq0o1

Drivers on London Underground Night Tube Plan New Strikes; Drivers on two lines will walk out for eight hours on Friday and Saturday evenings, with similar action planned every weekend until June.
Press Association via Bloomberg
Fresh strikes will be held by drivers on London’s Night Tube this weekend as a dispute over rosters remains deadlocked Members of the Rail, Maritime and Transport union (RMT) on the Central and Victoria lines will walk out for eight hours on Friday and Saturday evenings, with similar action planned every weekend until June.
/jlne.ws/3GmpPmh

China Jails Almost 50 Steel Executives for Faking Emissions Data
Bloomberg News
Sentences show Beijing’s environmental crackdown intensifying; Mill staff sentenced to prison terms of six to eighteen months
China will jail forty-seven steel company officials for faking air pollution data, in a sign that Beijing’s crackdown on firms that are flouting environmental rules is intensifying.
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Guardians of Hong Kong Culture Spring Up From California to Singapore; Media, arts and academia are under pressure in Hong Kong. Global universities are stepping in to help preserve the city’s heritage.
Isabella Steger – Bloomberg
As the space for academic freedom and artistic expression shrinks in Hong Kong, universities and diaspora communities around the world are taking up the mantle of protecting and teaching the city’s culture and history.
/jlne.ws/3g348g7

Chinese Coal Plunges After Beijing’s Barrage Against High Prices
Bloomberg News
Chinese coal futures plunged after nationwide stockpiles hit a record level and the government vowed to keep a tight rein on prices. Coal has returned to the top of the policy agenda after President Xi Jinping told senior officials of the Politburo earlier this week that China can’t allow its climate targets to clash with the need to ensure energy security. Xi delivered a similar message during a subsequent visit to the coal hub of Shanxi.
/jlne.ws/3g2IwAw

UniCredit pulls out of potential bid for Russian bank over Ukraine tensions; Milan-based lender abandons plans to buy Otkritie after talks between Italian business chiefs and Vladimir Putin
Silvia Sciorilli Borrelli, William Langley and Sarah Provan – FT
UniCredit has pulled out of a potential bid for Russian lender Otkritie due to escalating tensions over Ukraine, capping a week of mounting scrutiny over European business ties to Moscow and the threat of sanctions.
/jlne.ws/3g5pedP

Citigroup to Sell Taiwan Consumer-Banking Business to DBS; Citigroup has now found buyers for seven of the 10 consumer markets in the Asia-Pacific region it wants to exit
Yongchang Chin – WSJ
Citigroup Inc. C -0.93% agreed to sell its consumer-banking business in Taiwan to Singapore-based DBS Group Holdings Ltd. DBSDY -0.15% , the latest in a series of divestitures as it shrinks its international retail footprint to focus more on serving businesses and affluent clients. The deal, which includes a premium for Citigroup of more than $700 million, means it has now found buyers for seven of the 10 consumer markets in the Asia-Pacific region that it had wanted to exit.
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