The Fed Is Paying 0.00%. Such a Deal! Depositors Are Flocking

Jun 9, 2021

First Read

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Meet El Salvador, Newest Bitcoin Paradise
Thom Thompson – John Lothian News

On Saturday, June 5, President Nayib Bukele of El Salvador announced that he would ask his country’s legislature to declare bitcoin “legal tender” in the country. This statement was part of a pre-recorded presentation to Miami, Florida’s Bitcoin 2021 conference.

The announcement was, unsurprisingly, very well received in Miami. Later, the bitcoin press was almost breathless in its excitement about it – first country EVER to declare bitcoin legal tender – although just about all of the writers admitted that they had no idea what something being declared legal tender entails. The president provided no explanatory details.

On Monday, though, the (inevitable) Great Rollback of Expectations began. “The [U.S.] dollar will continue to be the legal tender in El Salvador. Operations can be done with bitcoin – obviously related to its value in dollars,” said Miguel Kattán, Secretary of Commerce and Investment, in remarks reported by local press.

Kattán went on to explain that the new legislation would make bitcoin an opt-in currency, without necessarily disturbing the role of the U.S. dollar, the more popular of the current two legal tenders available to Salvadorans since 2001. The other currency is the “colon.”

To read the rest of this commentary, go HERE.


Hits & Takes
John Lothian & JLN Staff

It appears that JLN’s Thom Thompson has fully recovered his sense of snark as judged by his latest column on El Salvador adopting bitcoin as “legal tender.” Thom also has the first of a new podcast series today, JLN European Markets Podcast. This podcast features an interview with Randolf Roth of Eurex. The podcast will be monthly and we welcome suggestions for interview subjects.

What does it mean that the FBI was able to hack a “hot” bitcoin wallet? How many other wallets connected to the internet could they hack, where there is crime involved? What will it mean for criminals as they take their wallets offline to avoid this type of intrusion? Just inquiring minds asking questions.

Sayee Srinivasan has been named chief economist and head of research for the American Bankers Association. Previously, he was with the U.S. Commodity Futures Trading Commission, where he served as deputy director of risk surveillance for the CFTC’s Division of Clearing and Risk.– ABA

Eurex reported 13% growth in total traded derivatives during May 2021 in its latest volume report. Volume grew from 121.8 million to 137.4 million contracts, which included strong growth in European interest rate derivatives and European equity derivatives – up 37 percent and 41 percent, respectively – and a modest fall of 8 percent in the number of European equity index derivatives contracts traded. — Eurex

If you want to follow real-time prices from Xetra and the Frankfurt Stock Exchange, get the new “Börse Frankfurt” app. The app includes price alerts so you can respond in real time to the price action. — Deutsche Börse Group

Brian Mehta, the former chief marketing officer of Trading Technologies, is still a prolific writer. He has an interview on LinkedIn with Lindsey Smith, head of culture at TT, titled “5 Questions with Lindsey Smith, Head of Culture.” Check it out HERE.

The FIA EPTG turned 10 years old this week. Congratulations as they celebrate the 10th anniversary of their creation. — LinkedIn

Cboe Global Markets is looking for a media relations manager in New York. Check out the job HERE.

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


Chuck Mackie, still doing his “Chuck Mackie thing,” has published a blog post, “Three takeaways from Tabb Forum’s crypto conference: Crypto Connection 2021 – Day One.” You can read it here.~SR


Sheldon Cohen – Open Outcry Traders History Project – Part Two

In the second of a two-part interview with John Lothian for the Open Outcry Traders History Project, Chicago attorney Sheldon Cohen reminisced about his long tenure on the trading floor and in exchange management, beginning in the 1970s.

Watch the video »


Micro DAX, SMI, EuroSTOXX 50: No Small Thing For Eurex

Eurex launched small versions of its most popular broad based stock indexes. We spoke about them with Executive Board Member Randolf Roth, who is head of equity derivatives at the popular exchange.

Listen to the podcast »


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Global Commodities Applied Research Digest
Via LinkedIn
We are delighted to announce that Mark Shore, an expert on alternative investments with over 30 years of experience in the capital markets, has joined the GCARD ( Editorial Advisory Board: Mark is currently the Chief Research Officer of Shore Capital Research (@shorecap on Twitter) and Adjunct Professor at DePaul University in Chicago. In addition, he is a board member for various organizations including the Arditti Center for Risk Management at DePaul University; Coinifide (a blockchain educational firm); and NIBA (the National Introducing Brokers Association, an association for derivatives professionals).

****** Congratulations to Mark Shore. ~JJL


Crypto Startup Solana Raises $314 Million to Develop Faster Blockchain; Solana’s technology used in fast-growing area of decentralized finance, or DeFi
Alexander Osipovich – WSJ
This article is in your queue.Open Queue
Blockchain startup Solana Labs Inc. says it has raised $314 million of new funding to develop technology used in the fast-growing area of the cryptocurrency markets known as decentralized finance, or DeFi.

*****Keep an eye on faster blockchain. The faster blockchain gets, the more it really becomes a player in traditional financial transactions. ~JJL


Tuesday’s Top Three
Our top story Tuesday was Propublica’s The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax, showing how billionaires like Jeff Bezos, Elon Musk and Warren Buffett pay little to nothing in federal income tax. Second was SEC plans to go after market manipulation on social media, executive insider trading, Gensler says, from MarketWatch, in which Gary Gensler says that regulations called 10b5-1 plans have led to “real cracks in our insider trading regime.” And third was, once again in the top three, A former head of macro strategy at legendary investment firm Citadel lays out the 5 key qualities he believes makes a great trader — and provides a rare outlook on the future of hedge funds, from Business Insider. (And by the way, since the headline keeps popping up here, that should be “the 5 key qualities he believes MAKE a great trader.”)


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Lead Stories

The Fed Is Paying 0.00%. Such a Deal! Depositors Are Flocking; The Fed’s none-too-generous interest rate attracted $497 billion in funds on June 8
Peter Coy – Bloomberg
You would think the Federal Reserve would have a hard time attracting funds by offering an interest rate of 0.00%, and for a long time that was true. After all, why earn nothing on your money when there’s Bitcoin and AMC Entertainment Holdings Inc. and lumber and houses in Boise? Many days last year and early this year there were no takers.

BlackRock Won’t Save You From Blackstone; It’s time for big passive investors to use their heft and protect corporate governance standards. The story of one hotel chain says it all.
Anjani Trivedi – Bloomberg
It’s time for big, passive investors like FMR LLC (Fidelity), Vanguard Group and BlackRock Inc., sitting on trillions of dollars of assets, to use their heft as shareholders and protect corporate governance standards. It’s no longer enough to simply shovel money into index funds and ETFs.

Markets Are Ignoring the Main Driver of Today’s Inflation; In a rollercoaster economic cycle, inflation is the temporary cost of Covid uncertainty.
Lena Komileva – Bloomberg
The pandemic has prompted the fastest and most volatile economic cycle in modern times. A year ago, financial markets were in a state of panic; today there’s concern over excessive speculation. Fears of depression in 2020 have given way to alarm about hyper-inflation in 2021. Such an extraordinary macroeconomic rollercoaster defies historical comparison.

Technology Bankers in Demand as Deals Pile Up in Busy M&A Year
Liana Baker and Gillian Tan – Bloomberg
Boutiques are luring talent from UBS, Credit Suisse, BofA; Transaction velocity driving unprecedented hiring: recruiter
Bankers have been on the move more than ever this year as dealmaking booms and smaller advisory firms build their benches to win market share. Many of the defectors have one thing in common: they’re technology specialists who’ve seen demand for their skills soar as companies across industries hunt for tech deals.

Why Europe’s banks want to end US dominance in payments; Lenders say plan to rival groups such as Visa and Mastercard will safeguard sovereignty
David Keohane and Olaf Storbeck – FT
The last time Europe’s banks tried to build a payments group capable of taking on the US giants that dominate the sector, they failed miserably. But when Project Monnet collapsed in 2011, nobody was talking about the commercial threat from US tech companies; and the EU’s politicians had not just lived through the Trump presidency.

Shell Vows to Speed Up Emissions Cuts in Wake of Court Ruling; Oil major’s CEO says company will still appeal order to cut emissions but will also take action
Sarah McFarlane – WSJ
Royal Dutch Shell RDS.A 0.15% PLC said it would accelerate its efforts to cut its carbon emissions in the wake of a Dutch court ruling last month ordering the oil giant to take more drastic action. In a post on LinkedIn on Wednesday, Chief Executive Ben van Beurden said Shell disagreed with the ruling and still expected to appeal the court’s order to curb emissions by 45% by 2030, but would nonetheless rise to the challenge of doing more.

Banks to Companies: No More Deposits, Please; Some banks, awash in deposits, are encouraging corporate clients to spend the cash on their businesses or move it elsewhere
Nina Trentmann and David Benoit – WSJ
U.S. companies are holding on to billions of dollars in cash. Their banks aren’t sure what to do with it. When the coronavirus pandemic hit last year, corporate executives rushed to raise money. Banks have been holding that cash ever since, and because companies are reluctant to borrow from them, they can’t turn it into income-generating loans. That has weighed on banks’ profit margins, and some have started pushing corporate customers to spend the cash on their businesses or move it elsewhere.

Global Wealth Gap Likely to Widen as Major Economies Power Recovery, World Bank Says; Bank projects fastest economic rebound in 80 years, but uneven vaccine distribution is hurting low-income countries
Yuka Hayashi – WSJ
Global inequality is likely to widen this year as a small number of major economies power the fastest recovery in 80 years while many poorer countries struggle to return to pre-pandemic income levels, the World Bank said.

ABA Names New Chief Economist and Head of Research
Sayee Srinivasan has been named chief economist and head of research for the American Bankers Association, the voice of the nation’s $22.5 trillion banking industry and its more than two million employees. Srinivasan, who joins the association today, will manage a professional staff of economists, data scientists and analysts while building and maintaining preeminent research and data capabilities that allow ABA to serve as the industry’s trusted source for data and analytics. Srinivasan will also provide strategic direction for industry surveys and benchmarking studies on critical issues and coordinate with banker committees and ABA policy experts to identify and respond to the association’s research and data needs.

Haldane Says U.K. Housing Market ‘On Fire’ and Feeds Inequality
Lizzy Burden – Bloomberg
BOE Chief Economist says structural issues driving price rise; Covid-19 crisis has widened wealth gap in many nations
Bank of England Chief Economist Andy Haldane said the U.K. housing market is “on fire” and contributing to a growing wealth gap — but there’s little that the central bank can do to fix structural issues.

JPMorgan, UniCredit Gave Germany Wirecard Tips That Went Nowhere
Birgit Jennen – Bloomberg
Lenders flagged suspicious transactions but not followed up; Wirecard seen as biggest financial scandal in recent history
UniCredit SpA, JPMorgan Chase & Co., and Commerzbank AG were among banks which flagged suspicious transactions related to collapsed payments firm Wirecard AG but received little attention from prosecutors before the demise of the firm last year, according to evidence given to a German parliamentary investigation.


Pfizer to test COVID-19 vaccine in larger group of children below 12
Michael Erman, Ankur Banerjee – Reuters
Pfizer Inc (PFE.N) said on Tuesday it will begin testing its COVID-19 vaccine in a bigger group of children under age 12 after selecting a lower dose of the shot in an earlier stage of the trial.

Pfizer To Launch Final Study of Covid Shot in Kids Under 12
Riley Griffin – Bloomberg
Study to include 4,500 participants across more than 90 sites; Lower doses of the vaccine formulated for younger children
Pfizer Inc. and BioNTech SE’s vaccine will be tested in children less than 12 years old in a late-stage study seeking to extend Covid-19 protection across the entire range of ages.

White House urges states to seek to lengthen shelf life for J&J COVID-19 shots
A top White House official on Tuesday urged state governors to work with the U.S. Food and Drug Administration to extend the shelf life of Johnson & Johnson’s (JNJ.N) COVID-19 shot as millions of doses nationwide sit unused and approach expiration.

Fauci warns of COVID-19 Delta variant now spreading rapidly in U.K.: ‘We cannot let that happen in the United States’
Alexander Nazaryan – Yahoo News
Just three weeks ago, Great Britain celebrated the success of its vaccination campaign by lifting many coronavirus-related restrictions. “Goodbye, lockdown,” one headline said. But since then, a more transmissible new strain of the coronavirus has taken hold, imperiling plans to fully reopen the country on June 21.

Problems at Biggest Vaccine Maker Leave World Short on Covid Shots
Chris Kay and P R Sanjai – Bloomberg
Emerging nations scramble for vaccines amid Serum’s struggles; Serum has cited external problems such as India export curbs
Around the world, from Bangladesh to Nepal to Rwanda, vulnerable hotspots have been grappling with stalled Covid-19 vaccination programs as they run out of doses. Many of those shortages can be traced back to a single company: The Serum Institute of India.

Tesla, Gold Bars Added to Hong Kong’s $15 Million Vaccine Incentive Prizes
Felix Tam – Bloomberg
Vaccination bookings pick up in June after incentives roll out; Businesses in Hong Kong look for ways to entice citizens
Getting vaccinated for Covid-19 in Hong Kong could mean winning a Tesla or even a pile of gold as as the city’s tycoons and their companies look to incentivize the shots and help boost a sluggish inoculation rate.

Russian Covid Cases Surge Over 10,000 for First Time Since March
Jake Rudnitsky – Bloomberg
New coronavirus cases in Moscow reach highest since January; Only 12% Russians are vaccinated despite universal access
New cases of Covid-19 in Russia surged over 10,000 on Wednesday to the highest in more than three months as widespread skepticism toward domestically-developed vaccines undermines attempts to corral the pandemic. The growing number of cases in Russia is unusual among countries that offer adults universal access to a vaccine, and belie official statements that the situation is nothing to worry about.

Japan’s Suga Wants to Complete Covid Vaccinations by November
Lily Nonomiya and Sophie Jackman – Bloomberg
Country nears 1 million doses per day goal as election looms; Prime minister demurs when asked on timing of lower house race
Japanese Prime Minister Yoshihide Suga said he wants to finish inoculating everyone in the country who’s willing to get a Covid-19 vaccine by October or November, citing progress made in the vaccination drive so far.

US takes first step towards relaxing Covid travel bans; Washington investigates allowing entry for non-citizens from UK, EU, Canada and Mexico
Kiran Stacey – FT
The Biden administration has taken the first step towards relaxing coronavirus-related international travel bans, setting up working groups to advise on how to loosen restrictions on arrivals from the UK, EU, Mexico and Canada.

Covid outbreak in China sparks fears of trade disruption; Price of exports will rise as slowdown at Shenzhen container terminal bites, warn economists
Thomas Hale and Primrose Riordan and Harry Dempsey – FT
A Covid-19 outbreak in southern China is curbing activity at some of the country’s biggest ports, stoking fears that further disruption to international trade risks pushing up the price of its exports. More than 100 new cases have been reported since late May in Guangdong province, one of China’s most important manufacturing hubs, leading to strict counter-measures from the government.

How serious is Delta Covid variant for UK and do vaccines stop it? Greater Manchester and Lancashire to get ‘strengthened’ support to combat spread of virus strain
Oliver Barnes and John Burn-Murdoch and Andy Bounds – FT
Greater Manchester and Lancashire will have access to military back-up and surge testing as part of a “strengthened package of support” to combat the spread of the Delta variant of coronavirus, the government announced on Tuesday.

Poorest countries are being ‘left behind’ in pandemic recovery; Efforts to support low-income economies with debt relief and vaccines must be accelerated, warns World Bank
Jonathan Wheatley – FT
Developing countries are being left behind in the pandemic recovery and face the risk of a renewed economic downturn if vaccine supplies fail to materialise and global inflation rises, the World Bank warned on Tuesday.

China May Not Know How the Pandemic Started; Yes, the government has impeded research into the Wuhan “lab leak” theory. But that isn’t at all unusual in China.
Adam Minter – Bloomberg
In recent weeks, interest in the “lab-leak” hypothesis — the idea that the Covid-19 virus might’ve originated at a Chinese research institute — has been surging across the globe.

Exchanges, OTC and Clearing

CME Group to Launch Micro Treasury Yield Futures
Micro 2-Year, 5-Year, 10-Year and 30-Year Yield futures will be cash-settled to BrokerTec U.S. Treasury benchmarks
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it will expand its suite of deeply liquid U.S. Treasury futures and options with the introduction of four new Micro Treasury Yield futures contracts on August 16, pending regulatory review.

Euronext announces June 2021 quarterly review results of the AEX® Family
Euronext today announced the results of the quarterly review for the AEX®, AMX® and AScX®, which will take place after markets close on Friday 18 June 2021 and be effective from Monday 21 June 2021.

LME to reopen iconic trading floor, but says electronic trading is future
Pratima Desai, Eric Onstad – Reuters
The London Metal Exchange has abandoned proposals to close its open outcry trading floor, the last such venue in Europe, it said on Tuesday, but added it believes electronic trading is the future.

MGEX Reports a Pair of Top-25 Records
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), reports that Monday, June 7th broke into the top 25 record book as the 17th best total volume day in history with a total of 25,925 contracts traded. Additionally, yesterday was also the 10th best electronic volume day in MGEX history with a total of 24,945 contracts. At the close of market, open interest was recorded at 98,432 which is 25% higher compared to this time last year.

Expansion of ICE ESG Reference Data Shows Broad Differences in ESG Reporting Between Europe and the U.S.
Intercontinental Exchange, Inc.
European companies 1.5x more likely to report Scope 1 and Scope 2 emissions than in the U.S.; European companies provide clearer goals for meeting gender equality and climate objectives; ESG infrastructure and regulations have existed longer in Europe than in the U.S.
Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of data, technology and market infrastructure, today announced that its environmental, social and governance (ESG) reference data platform now includes coverage of major public European companies, allowing users to make actionable comparisons across companies, sectors and geographies. Key findings from the database showed significant differences in ESG reporting between the largest companies in Europe and the United States.

Multi-dealer platforms increasingly costly, FICC traders agree; Coalition Greenwich report found that buy- and sell-side FICC traders view bilateral trading as a solution to the rising costs of multi-dealer platforms.
Annabel Smith – The Trade
Traders in the fixed income, currencies and commodities (FICC) market are increasingly turning to bilateral trading to avoid the rising costs of executing on multi-dealer platforms, Coalition Greenwich research has found. The report, which surveyed FICC market participants across the buy- and sell-side in Europe Asia and North America, found that market structure trends were increasing the costs of executing FICC products on multi-dealer platforms.

Eurex Exchange Readiness Newsflash | Clarification regarding Order Routing System (ORS)
With this newsflash, we would like to inform you about an envisaged clarification for the use of the Order Routing System (ORS) as defined in § 60 of Exchange Rules of Eurex Deutschland, which would require Exchange Participants to provide an identification of an admitted trader acting as an ORS user in the T7 system of Eurex.

May 2021 monthly figures at Eurex; Volume of traded derivatives contracts grows in May
Total traded derivatives contracts grew 13 percent in May compared to the same month last year – from 121.8 million to 137.4 million. This figure included strong growth in European interest rate derivatives and European equity derivatives – up 37 percent and 41 percent, respectively – and a modest fall of 8 percent in the number of European equity index derivatives contracts traded. This growth in May comes after a mixed few months in 2021 due to comparisons with the unprecedented volatility in early 2020.

New “Börse Frankfurt” app with Xetra real-time prices and price alarm
Deutsche Börse Group
A new version of the “Börse Frankfurt” app is now available for Apple and Android devices. In addition to new functions such as price alerts, investors can view real-time prices from the Xetra and Frankfurt Stock Exchange.

Performance Bond Requirements: Energy, Agriculture – Effective June 9, 2021
CME Group
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below.

Revised Price Limit Offset Levels for Nikkei Stock Average Futures and TOPIX Index Futures – Effective Trade Date June 1, 2021
CME Group

Change of Central Contract Month for TOPIX Futures Trading
Concerning TOPIX Futures, since the trading volume of the September 2021 contract (second contract month) surpassed that of the June 2021 contract (nearest contract month) in today’s auction market, the central contract month pertaining to temporary trading halt (Circuit Breaker rule) is as follows from June 10, 2021 (trading day).

Shenzhen Stock Exchange Strengthens Ex Post Regulation Of Annual Reports In The Bond Market With A Focus On Enhancing The Fundamental Goal And Guarding Against Risks
In 2020 when the new Securities Law was enforced, the registration-based corporate bond issuance system reform was officially launched and steadily advanced. It’s an important milestone in the reform and development course of the exchange-traded bond market. SZSE has conscientiously put in place the requirements of higher-level laws, optimized the basic systems of the bond market, and enriched and innovated in product series.


Payments Processor Marqeta Raises $1.23 Billion in IPO
Crystal Tse and Katie Roof – Bloomberg
Marqeta Inc., an online card and payment processing company, raised $1.23 billion after pricing its initial public offering above a marketed range. The Oakland, California-based company sold 45.5 million shares for $27 apiece on Tuesday, according to data compiled by Bloomberg. Marqeta had marketed the shares for $20 to $24 each.

Explaining Content Delivery Networks and Why Big Websites Crash Together
Nate Lanxon – Bloomberg
You don’t hear much about content-delivery networks, or CDNs, until they stop delivering. A global outage of major websites on June 8 that lasted about an hour was caused by problems at the San Francisco-based Fastly Inc. It took down websites including the New York Times, Bloomberg News, Reddit Inc. and even the U.K. government.

Chip shortage shows the pitfalls of ‘just in time’; To avoid future disruptions, companies need to invest in supply chains
The editorial board – FT
A shortage of semiconductors is rippling through supply chains worldwide. Car factories are lying idle because of the struggle in locating semiconductors; consumer electronics makers warn that the shortage is spreading to production of televisions, appliances and smartphones. It is a rare area of economic policy agreement between the EU, US and China that government investment is needed in domestic chipmaking capacity. But the primary responsibility for strengthening supply chains lies with companies themselves.

Citi leads $6 million funding round in BondEvalue to drive bond market electronification; The funding round for the up-and-coming Singapore-based bond exchange, BondEvalue, included contributions from Citi and MassMutual Ventures Southeast Asia.
Annabel Smith – The Trade
Citi has taken part in a $6 million Series A funding round for up-and-coming Singapore-based bond exchange, BondEvalue, as electronification of the bond market continues. The bank was joined by MassMutual Ventures Southeast Asia in the latest funding round that took the exchange’s total funding to $10 million. The new investors are expected to join the board.

Hungarian Exchanges HUDEX And CEEGEX Extend Their Relationship With Trayport – The Primary Network And Platform For European Wholesale Energy Markets To Expand Support For Key Subsidiaries Of HUPX Group.
Trayport Limited (Trayport), a wholly owned subsidiary of TMX Group, and the Hungarian Derivative Energy Exchange Ltd (HUDEX), the youngest member of the HUPX Group and the first Hungarian financial energy exchange, today announced the extension of 3 years period to their agreement for the use of Trayport’s technology, specifically the Exchange Trading System (ETS) across CEEGEX spot gas, HUDEX power and gas futures markets which are all available via the Joule trading screen.


Colonial Pipeline CEO tells Senate cyber defenses were compromised ahead of hack
Stephanie Kelly, Jessica Resnick-ault – Reuters
Colonial Pipeline Chief Executive Joseph Blount told a U.S. Senate committee on Tuesday that the company’s cyber defenses were in place, but were compromised ahead of an attack last month.

Hacker Known as Max Is 55-Year-Old Woman From Russia, U.S. Says
Kartikay Mehrotra – Bloomberg
Alla Witte accused of being part of Trickbot cybercrime group; Midlife career change said to lead to hacking and ransom notes
Alla Witte’s plans for a new career as a computer programmer included helping clients make enough money to see the world, according to YouTube videos and social media posts. She was in her late 40s with a degree in applied mathematics and an itch to do computer programming.

How the FBI’s Trojan Shield operation exposed a criminal underworld; Messaging app honeypot trap yielded hundreds of arrests and marked breakthrough for agency
Hannah Murphy – FT
In May last year, two drug traffickers turned to an encrypted messaging platform called ANOM to plot their latest endeavour: shipping narcotics from Colombia to Hong Kong. One, going by the username Real G, sent a picture of a wooden box stuffed with packages of suspected cocaine, according to court documents. “They cover this with a layer of banana,” Real G wrote, revealing his intended method of hiding the illicit substances to his peer.

Exporting Chinese surveillance: the security risks of ‘smart cities’
James Kynge, Valerie Hopkins, Helen Warrell and Kathrin Hille – FT
Belgrade’s Republic Square is one of the cultural and social hubs of the Serbian capital, a popular meeting point lined with cafés and the site of the National Museum and the National Theatre.
It is also now at the centre of an international debate about the export of Chinese technology, authoritarian surveillance and cyber security.
The square is under constant observation by equipment made in China. A surveillance camera system installed by Huawei, the Chinese technology group, has the capacity to monitor the behaviour of people in the square and elsewhere in the city, recognise their faces, identify their vehicle number plates and make judgments on whether suspicious activities are afoot.


Don’t Call Bitcoin a Bubble. It’s an Epidemic; Investment manias often proceed in waves, rather than bursting never to return. It may be time to update the terminology.
John Authers – Bloomberg
Fads, Bugs, Bubbles and Bitcoin
Robert Shiller, the Yale University economist who shared the 2013 Nobel prize in economics, is famous above all else for his role in spotting the dot-com bubble before it burst in 2000. The title of the book he published the year before, Irrational Exuberance, has passed into the financial lexicon. And yet he dislikes the concept of a “bubble” and would prefer something else.

Colonial Hackers Broke the Fundamental Bitcoin Rule; Ill-gotten crypto gains aren’t as invulnerable from law enforcement as many people think.
Tim Culpan – Bloomberg
When kidnappers ask for a ransom, they’d be wise to have a plan to store the loot securely. Cybercriminals aren’t exempt. Hackers who broke into and encrypted the computer files of the Colonial Pipeline operator last month made a now-common demand: Pay me, or your files stay locked forever. The ransom was to be paid in Bitcoin.

Nobel-Prize-Winning Data Is Focus of Berkeley NFT Contest
Susan Decker – Bloomberg
Alumni from blockchain hub formed group on winning bid; Auction was first of its kind for university research
A group of University of California at Berkeley alumni exploring the use of blockchain technology to promote research were the winning bidders in a first-of-its kind auction of digital data related to Nobel-Prize-winning work on groundbreaking cancer treatments.

Crypto: now powered by bull; Yes, literally.
Jamie Powell – FT
For a long time, FT Alphaville has warned our readers that the majority of the crypto space is full of bull. But little did we know that it would get to the point that literal cow excrement would become a key selling point for miners of the coins.

El Salvador becomes first country to adopt bitcoin as legal tender
Will Feuer – NY Post
El Salvador on Wednesday officially became the first country to adopt bitcoin as legal tender. President Nayib Bukele announced on Twitter just after 2 a.m. ET that the Central American country’s legislative body voted in favor of the so-called Bitcoin Law — making the digital currency the nation’s official legal tender, along with the US Dollar.


Wealthiest Executives Paid Little to Nothing in Federal Income Taxes, Report Says; An analysis by ProPublica based on I.R.S. documents showed billionaires like Jeff Bezos and Elon Musk benefited from tax code loopholes and a focus on taxing income over wealth.
Alan Rappeport – NY Times
The 25 richest Americans, including Jeff Bezos, Michael Bloomberg and Elon Musk, paid relatively little — and sometimes nothing — in federal income taxes between 2014 and 2018, according to an analysis from the news organization ProPublica that was based on a trove of Internal Revenue Service tax data.

Brexit May Spoil Johnson’s G-7 Party
Anthony Halpin – Bloomberg
The Brexit bills are starting to fall due for Boris Johnson just as the U.K. prime minister seeks to cast himself as a global statesman leading the Group of Seven’s fight to defeat Covid-19. Top British and European Union officials meet today to try to defuse a deepening confrontation over trade to Northern Ireland, an issue Johnson claimed to have resolved with his “oven-ready” withdrawal agreement in 2019.

How the G-7 Can Really End the Global Pandemic; The wealthy world can get Covid vaccines to the impoverished one with a cost-sharing formula modeled on UN peacekeeping.
Gordon Brown – Bloomberg
U.K. Prime Minister Boris Johnson has promised to vaccinate the world by the end of next year, saying it “would be the single greatest feat in medical history.” Sadly, a promise is not a plan, and I fear that an initiative that appears to focus on dose-sharing by nations will fall far short of delivering the worldwide herd immunity needed to make all of us safe again.

U.K.’s Sunak Prepared to Accept Delay to End of Covid Lockdown
Alex Morales and Emily Ashton – Bloomberg
Ministers weighing whether to finish unlocking economy June 21; Lloyd Webber urges against delay; vows to fully open theaters
U.K. Chancellor of the Exchequer Rishi Sunak is prepared to accept delaying the end of lockdown measures past June 21, removing one potential hurdle to what would be a politically contentious decision.

IRS Chief Asks Congress for Authority to Get Cryptocurrency Data
Allyson Versprille – Bloomberg
Rettig says IRS has been challenged in trying to collect data; Biden administration proposing broader reporting requirements
The Internal Revenue Service needs more authority from Congress to regulate the cryptocurrency industry and require more reporting on its users, Commissioner Charles Rettig said Tuesday.

US investigates leak of records showing billionaires pay little tax; White House describes disclosure as ‘illegal’ while calling on wealthy to pay ‘fair share’
Andrew Edgecliffe-Johnson – FT
US tax authorities have launched an investigation into a leak of private records of billionaires including Warren Buffett, Jeff Bezos, Mike Bloomberg and Elon Musk that showed many of them have paid little tax even as their wealth ballooned.

Investors Fret as Biden Takes Aim at a 100-Year-Old Tax Loophole; The administration wants to rein in a tax deferral on gains from the sale of real estate. Opponents worry that the move would stifle investment.
Joe Gose – NY Times
As a real estate investor, Michael Clarke has learned how to roll earnings from the sale of one property into the purchase of another to save on his tax bill. Last year, Mr. Clarke sold a residential rental property that he had owned for decades in suburban Washington for $700,000 and used the proceeds to buy a $1.2 million Dollar General building in rural Virginia. Recently, he sold another long-owned rental home for $580,000 and rolled those proceeds into the purchase of a rental worth roughly $800,000.


Gary Gensler Announces Additions to Executive Staff; Amanda Fischer to Serve as Senior Counselor to the Chair
The Securities and Exchange Commission today announced the appointments of Amanda Fischer, Lisa Helvin, Tejal D. Shah, Angelica Annino, Liz Bloom, Basmah Nada, and Jahvonta Mason as members of SEC Chair Gary Gensler’s executive staff. “I had the honor to work closely with Amanda during the Biden-Harris transition, and her counsel during my confirmation process was invaluable. I’m delighted she’s joined the team,” said Chair Gensler.

A defanged US auditing watchdog is an investor disaster; Gary Gensler must reclaim the PCAOB from the grip of the Big Four
Brooke Masters – FT
Take one little known US regulator. Add a technical, highly concentrated industry and a Republican chair bent on deregulation. The result is today’s Public Company Accounting Oversight Board, a defanged watchdog in disarray.

US financial regulator warns against strict cryptocurrency rules; Commissioner says SEC should ‘gamify our communications with investors’
Kiran Stacey – FT
A senior US financial regulator has spoken out against attempts by her colleagues to regulate cryptocurrencies more strictly, warning that doing so runs the risk of discouraging investors.

SEC Investor Advisory Committee to Meet Remotely On June 10
The Securities and Exchange Commission’s Investor Advisory Committee will hold a public meeting on June 10 by remote means. The meeting will begin at 10 a.m. ET, is open to the public via live webcast, and will be archived on the committee’s website for later viewing.

Keynote Address of Commissioner Dan M. Berkovitz Before FIA and SIFMA-AMG, Asset Management Derivatives Forum 2021; Climate Change and Decentralized Finance: New Challenges for the CFTC
Good morning, and thank you for the opportunity to address this joint forum of FIA and SIFMA AMG.[1] Today I will provide an update on several regulatory issues of interest to this group, as well as my views on the role of the CFTC in addressing climate change, and my concerns regarding the rise of decentralized financial markets.

Remarks of Acting Chairman Rostin Behnam at The SOFR Symposium: The Final Year sponsored by the Alternative Reference Rates Committee (ARRC)
Good morning. I want to thank Tom Wipf, the ARRC, and the New York Fed for holding this series of symposia and for inviting me to share my thoughts and moderate an important discussion on our progress in the transition from LIBOR to SOFR specific to the derivatives markets. Before I begin, please allow me to remind you that the views I express today are my own and do not represent the views of the Commodity Futures Trading Commission (CFTC or the Commission) or my fellow

CFTC’s Interest Rate Benchmark Reform Subcommittee Recommends July 26 for Transitioning Interdealer Swap Market Trading Conventions from LIBOR to SOFR
The CFTC’s Market Risk Advisory Committee’s (MRAC) Interest Rate Benchmark Reform Subcommittee voted to recommend a market best practice for switching interdealer trading conventions from LIBOR to the Secured Overnight Financing Rate (SOFR) for U.S. Dollar (USD) linear interest rate swaps. This MRAC Subcommittee initiative, referred to as “SOFR First,” is the third recommendation this Subcommittee has referred to the MRAC for consideration in connection with the transition of USD derivatives and related contracts away from LIBOR. Acting Chairman Rostin Behnam is the sponsor of MRAC.

Investing and Trading

Some on Wall Street try options trade to bet against AMC without getting burned
Matt Scuffham, Saqib Ahmed – Reuters
Some Wall Street traders are betting against another massive rally in AMC Entertainment Holdings Inc (AMC.N) and other “meme” stocks this week through a type of wager in the options market that would limit their losses should retail investors behind the run-up prove them wrong.

Everyone Wants 100% Returns But There’s a Snag; Shareholder activist Cevian is right to highlight insurer Aviva’s cash generation potential. But there are alternatives to paying it all out to shareholders.
Chris Hughes – Bloomberg
Any shareholder activist who targets an insurer needs to dangle something juicy to rouse investors to its cause. In Cevian Capital AB’s crack at Aviva Plc, the carrot is the potential for a 100% gain for shareholders in three years. There’s a convincing path to the U.K. insurer achieving that. But in the process, Aviva risks becoming another low-growth U.K. dividend hostage.

Newest Meme Stocks Extend Gains With No Sign of Craze Fading
Paul Jarvis – Bloomberg
ContextLogic, Clover Health surge in premarket trading; Wendy’s brushes aside Stifel downgrade to post further advance
The newest additions to the meme-stock frenzy surged in premarket trading as retail traders latched on to their latest favorites. ContextLogic Inc. soared 32% and Clover Health Investments Corp. rose 17% as of 6:30 a.m. in New York, both extending huge gains on Tuesday. Fast-food restaurant chain Wendy’s Inc. edged higher, extending Tuesday’s 26% advance and brushing aside a downgrade from Stifel.

Lessons from Peanuts’ Linus for high-yield investors; Current market pricing of risk is evidence of late-cycle behaviour
Ellen Carr – FT
Readers who grew up watching Peanuts will remember the character Linus as an unlikely sage with a beloved security blanket habitually in tow. High-yield bond investors can sympathise with Linus’s fixation. When we get the chance to buy bonds with collateral backing them up, we feel, well, more secure.

GameStop Overhaul Faces Early Test as Investors Meet; Shares of the videogame retailer, which have skyrocketed this year, continue to climb in anticipation of a turnaround led by the activist investor and Chewy co-founder
Sarah E. Needleman – WSJ
E-commerce entrepreneur Ryan Cohen spent seven months pushing to overhaul GameStop Corp. as an activist investor and later a board member.

Bloomberg adds emerging markets to equity index range as market demand rises; New Bloomberg emerging market benchmarks are weighted by free-float market cap and include 26 countries, representing over $14 trillion in market value.
Annabel Smith – The Trade
Bloomberg has expanded its equity index range with the addition of emerging markets and thematic benchmarks as demand for data on the developing regions increases. The new benchmarks are weighted by free-float market cap and cover 27 new countries that represent a market value of $14 trillion.

Environmental, Social and Corporate Governance

The World’s Biggest Investors Get Louder About ESG; It may not be a coincidence that Wall Street giants are increasingly backing shareholder resolutions and telling everyone about it.
Tim Quinson – Bloomberg
Perhaps never before have the world’s biggest fund managers been so vocal about how they plan to vote in annual shareholder meetings. It’s not only Neuberger Berman, which telegraphed its decisions for more than 30 companies during this proxy season. BlackRock Inc. is regularly posting bulletins about its votes. Vanguard Group, in a rare move for the firm, revealed how it voted in the recent landmark overhaul of Exxon Mobil’s board of directors. Even firms like State Street Global Advisors and T. Rowe Price are declaring their positions (albeit when pushed).

Funds That Helped Drive Carbon Costs to a Record Are Now Selling
Will Mathis and Isis Almeida – Bloomberg
BNP Paribas fund with more than $3 billion sold some positions; European carbon prices have plunged 8% since a record in May
Speculators have helped drive the cost of polluting to a record in Europe, the world’s largest emissions market. Now they are taking some money off the table. A BNP Paribas Asset Management fund with more than 3 billion euros ($3.6 billion) under management closed some of its bets on rising carbon prices after a gain of more than 100%, according to its co-manager Edward Lees. Investors slashed their bullish positions on pollution permits by 38% from an all-time high in April, exchange data showed.

Shell to speed up energy transition plan after Dutch court ruling; Oil group pledges to ‘rise to the challenge’ of cutting net carbon emissions 45% by 2030
Anjli Raval – FT
Royal Dutch Shell will accelerate its plan to cut greenhouse gas emissions after an order by a court in the Netherlands, with the oil major saying it would “rise to the challenge”.

Miners’ troubles show need for climate ‘bad banks’; The transition to net zero may need new models to quarantine ‘stranded’ toxic assets and run them down
Helen Thomas – FT
You can’t please all of the people all of the time. Except if you’re Anglo American or other miners with thermal coal assets: then you seemingly can’t please all of the people any of the time.

Developing nations need boost to clean energy funds, says IEA; Wealthy states have ‘moral responsibility’ to help poorer economies cut harmful emissions
Anjli Raval – FT
Annual clean energy investment in developing economies must increase seven-fold by the end of the decade if the world intends to reach net zero emissions by 2050, the International Energy Agency said on Wednesday.

UK launches scaled-back financial sector climate risk stress tests; ‘Absolutely critical’ exercise to encompass only largest counterparties after pushback
Camilla Hodgson – FT
The Bank of England kicked off its inaugural stress test of the climate risks facing banks and insurers on Tuesday, but its scope was scaled back after participants raised concerns that they would be unable to model the exposures of potentially thousands of business partners.

Green Junk Bonds May Not Deliver Green Results; Many of the securities include fine-print warnings that the companies might not fulfill their environmental pledges
Matt Wirz – WSJ
Wall Street is selling a record number of junk bonds meant to finance environmental projects, but many have an important catch: The borrowers don’t guarantee that they will use the money for green purposes.

One Oil Company’s Rocky Path to Renewable Energy; Ørsted spent years transitioning away from oil and gas. Now, it is the world’s largest developer of offshore wind energy. The pivot holds lessons for major oil producers targeting solar and wind power.
Sarah McFarlane – WSJ
For years, Danish Oil and Natural Gas Co. did what many other big oil companies do: pumped hydrocarbons out of the North Sea. Today, it’s the world’s largest developer of offshore wind energy, and exceeds the market value of oil giants Occidental Petroleum Corp. and Eni SpA.

Being The Change We Want To See: A Sustainable Future” – Speech By Mr Ravi Menon, Managing Director, Monetary Authority Of Singapore, At Launch Of Inaugural MAS Sustainability Report Via Video Conference On 9 June 2021


Bill Hwang had been eyeing $100B club before blow up: sources
Lydia Moynihan – NY Post
Before he was known as the guy behind billions in losses on Wall Street, Bill Hwang had been aiming to join the rarified air of Jeff Bezos and Bill Gates by becoming a member of the $100 billion dollar club, sources said. Prior to the collapse of his family office, Archegos Capital, in March, Hwang had increased his personal wealth from around $200 million in 2013 to more than $20 billion. That’s a 4,900 percent increase in less than 8 years.

BNY Mellon appoints new COO for global market infrastructure; New COO, formerly of Bloomberg and Goldman Sachs, will help maximise opportunities for closer collaboration and product integration across BNY Mellon’s GMI businesses.
Wesley Bray – The Trade
BNY Mellon has appointed the former head of professional services at Unqork and industry veteran, Alejandro Perez, as its chief operating officer for global market infrastructure. Alejandro Perez is a market structure veteran who has spent the majority of his 25-year career focused on business strategy at major organisations including Goldman Sachs and Bloomberg.

Nomura Prime Brokerage Cuts to Spare Little in U.S., Europe
Cathy Chan, Gillian Tan and Sridhar Natarajan. – Bloomberg
Firm is said to ask rivals to take over hedge fund financings; Some staff urge clients to establish alternative relationships
Soon after Nomura Holdings Inc. got burned on the collapse of Archegos Capital Management, its executives vowed to revamp its prime brokerage. Insiders and hedge funds are starting to grasp what that means for those operations in the U.S. and Europe: There won’t be much left.


Paris and Berlin lead fight to dilute Brussels’ stricter bank capital rules; Implementing Basel III in EU will be biggest change to regulation of lenders in a decade
Sam Fleming and Martin Arnold – FT
Several EU states are fighting a last-ditch battle to thin down the bloc’s most significant change in banking regulation for a decade, as Brussels prepares to set out long-awaited ­legislation.

Japan, land of the rising investment prospects; It gives you developed market access to China and the Asia growth story
Simon Edelsten – FT
An easy quiz question to start. Put these equity markets in order of how they have performed over the past decade: US, UK, Europe, emerging markets and Japan. No prizes for calling the US top. The S&P 500 index is up nearly 14 per cent a year compound in sterling.


Ohio sues Google, claims tech giant should be regulated as public utility
Jeff Cox – NBC News
The state of Ohio filed suit against Google on Tuesday, claiming the tech giant should be regulated as a public utility due to its “discriminatory and anti-competitive” practices.
The civil action, filed by Ohio Attorney General Dave Yost in Delaware County Common Pleas Court, does not seek monetary damages, but instead asks for Google to be declared a “common carrier” that could come under oversight from a body such as the state’s Public Utilities Commission.

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