The First Microservices-based Clearing System with AI-Capabilities; GameStop Mania Drives Scrutiny of Payments to Online Brokers

Feb 4, 2021

First Read

$27,651/$300,000 (9.2%)


John Lothian: A Futures Trader’s Confession; All the Ways I Have Traded Futures Over the Years
John Lothian – Publisher – JLN

I was brought up as a futures trader and the people I knew were futures traders. The people at my first industry-related job that I listened to on long car rides or on the radio talked about futures. The people I worked for after college graduation wrote about or traded, or brokered, or cleared futures. The people who poured my beer at Chuck’s tavern in Fontana, Wisconsin later traded futures.

I have traded futures for discount futures clients and for a house account. I have traded futures for my own account and for a proprietary trading group. I have traded futures as a full-service broker and as a Commodity Trading Advisor.

I have traded futures on the 8th floor of the CBOT Building, and the 12th, the 13th and the 30th. I have traded futures in the CME Building and down at 216 West Jackson and on Exchange Place from the Brokers Building that smelled of fried fish on Fridays.

To read the rest of this commentary, click HERE.


Nasdaq Weathered a “Perfect Storm” in 2020, Led Exchanges in Single Stock Options Volume
Matt Raebel – John Lothian News

While major world events can cause ripple effects in the markets, the effects of the ongoing pandemic have felt more like a series of earthquakes. The year 2020 was an historic one for many reasons; in Nasdaq’s case, it was also the first year that it led all exchanges in total volume traded for equity options.

Options traders had already anticipated that 2020 would be a rocky year even before the pandemic kicked into high gear. The U.S. presidential election was expected to cause significant volatility in the markets between October and December. Nasdaq’s options markets processed 365 million trades consisting of 2.58 billion contracts. A lot of that came from brokers and hedge fund managers scrambling to adapt to fluctuations in the market caused by a myriad of factors, including increased retail trading activity, by hedging their downside risk – and there were a lot of downsides in 2020.

To read the rest of this story, go here.


Hits & Takes
John Lothian & JLN Staff

Late yesterday, Citadel filed a lawsuit in which it claims that the SEC did not properly approve the D-Limit order type from IEX.

Here’s is their statement concerning Citadel’s recent filing from Ronan Ryan, president and co-founder of IEX Group:

“Despite the current environment, Citadel has followed through on their attempt to reverse the SEC’s approval of an innovation that is designed to protect all investors from predatory trading strategies. Since IEX launched D-Limit in October, public trading data has shown that it delivers better execution quality and price improvement to investors in volatile markets. We look forward to responding to their submission and protecting our right to offer innovations that help improve the trading experience for all investors.”

Matt Leising had a story from Feb. 1 that I missed titled “Darknet Market Had a Record 2020, Led by Russian Bazaar Hydra.” The subheadline said “Hydra accounts for more than 75% of all darknet sales: report.” Whoever came up with the name “Hydra” for the platform, which only serves Russian-speaking countries, has a great sense of humor. But for some reason, I am not laughing. Hydra of course is the name of the enemy in the Captain America movies from Marvel.

After publishing the article above, I had a conversation with Tom Sosnoff of Tastytrade about participating in our Open Outcry Traders HIstory Project and the Path to Electronic Trading video series. After mentioning the column, I confessed to him the ending, that I had only traded my first single name equity on Monday. It was embarrassing. It was kind of like confessing to the Pope that you only just prayed for the first time.

In the column published above about all the ways I have traded futures, there is also an audio version of me reading this commentary. I am sure I left some ways out, in fact my very first trade was a paper trade while I was a runner for Shearson American Express during the summer of 1981.

Fortune Magazine named U.S. Bank one of the 2021 world’s most admired companies. It is my business and personal bank, one of them, and I admired them enough to buy stock in them.

DePaul professor of finance Lamont Black went onto WGN 720 AM radio in Chicago and explained the GameStop stock craze.

As the OCC begins Black History Month, they announced their newest employee network group, the Black Organization for Leadership and Development (BOLD).

The TRADE’s print publication has gone green with a new eco-friendly magazine printing process.

We have now gone eight days without a donation to the JLN MarketsWiki Education GoFundMe campaign. Support our efforts to preserve industry history by donating to our GoFundMe campaign.

Today we are going to publish our video with John Van Der Bleek for the Path to Electronic Trading series. Look for it on

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


SBI VC Trade, a subsidiary of SBI Holdings, is reportedly adding XRP to its cryptocurrency lending business…surprising, given that many cryptocurrency trading platforms, including Coinbase and, have been suspending trading or even de-listing XRP from their platforms in the wake of the SEC’s current lawsuit against Ripple, the company that created the digital asset.~MR


Ed Tilly – The Path To Electronic Trading

In a recent Zoom interview with John Lothian News for the JLN MarketsWiki Education Path to Electronic Trading series, Cboe Global Markets Chairman. President and CEO Ed Tilly shared the story of his start in the options industry and how that led him on a path towards electronic trading.
Tilly started at the Cboe in 1987 as a clerk working for legendary futures and options trader Steve Fossett. He spent time learning the business from Fossett and his team and finally became a trader for Fossett.

Watch the video »



The Robinhood drama teaches us to look beneath the surface; ‘The piece of the financial markets that ordinary investors see is just the tip of an iceberg’
Gillian Tett – FT
Last week, amid the Robinhood market drama in which the trading app’s users produced wild swings in several stocks, I stumbled on one of my favourite small books, Networks of New York: An Illustrated Field Guide to Urban Internet Infrastructure. At first glance, that title might seem distinctly dull — and not obviously connected to the current Wall Street fireworks. The book was penned almost five years ago by Ingrid Burrington, a Brooklyn-based artist turned social commentator, because she was frustrated by so few people truly understanding how the internet works.

*****Gillian Tett makes a strong case for why traders of all stripes should be readers of the John Lothian Newsletter, without saying as much.~JJL


Stonks Are Bonkers, and Other Lessons From the Reddit Rebellion; A tendies-fueled fever upended finance, albeit briefly, and left normies hugging index funds. The serious money is still going long.
Pat Regnier – Bloomberg
There’s been a rebellion in the stock market, in case you hadn’t noticed. The Battle of GameStop, the stampede of the meme stocks, and the rage against Robinhood were as transfixing as the bursting of the dot-com bubble—only this time the action was focused on a handful of companies associated with 1990s culture, and this time everything was going up. Thanks to traders talking it up on social media, the stock of GameStop Corp., the unprofitable mall retailer of video games, climbed as much as 1,745% from the start of the year. The AMC movie theater chain peaked at a gain of 839%; BlackBerry and Nokia, which once made very popular phones people strapped to their belts, spiked 279% and 68%, respectively; and Koss (headphone maker), Build-a-Bear Workshop (chain of stores that … you know what they do), Tootsie Roll Industries (yes, that Tootsie Roll), and, for some reason, silver all shot up.

*****Stonk might be the word of the year so far.~JJL


Bored Lockdown Traders Are a Danger to Themselves; Churning your investment portfolio can erode your returns.
Mark Gilbert – Bloomberg
The Reddit-inspired trading frenzy that lured retail investors to invest in GameStop Corp., AMC Entertainment Holdings Inc. and even precious metals in recent days seems to be abating. But bored, housebound punters are likely to continue to click away their lockdown blues by trading securities. The danger is that they’ll erode the value of their investment portfolios by overtrading.

*****I am not bored. Look, something to trade!~JJL


How to save the world from long Covid; ‘We need to spend whatever it takes on wartime-style mobilisation to make, distribute and inject vaccines’
Simon Kuper – FT
When I listen to scientists talk about where we might be a year from now, two main scenarios emerge. The first one is good: Covid-19 keeps circulating but loses its sting. Most people in rich countries, and the most vulnerable in developing countries, get vaccinated in 2021. The vaccines prevent disease caused by all strains. Covid-19 weakens: once it finds potential victims protected either by vaccination or past infection, it becomes at worst a nasty cold. “The most likely thing is that it will mutate into a more benevolent form. That may solve the problem,” says Anthony Costello, a former director at the World Health Organization.

*****We need to do this, we just need the leadership and the will.~JJL


Deutsche Börse Photography Foundation and Deutsche Gesellschaft für Photographie (DGPh) have awarded prizes for photography publications
Deutsche Börse
Deutsche Börse Photography Foundation and Deutsche Gesellschaft für Photographie (DGPh) have awarded prizes for photography publications; Dr. Carolin Görgen receives research award “Thinking Photography”
“Writing Photography” awarded to Stefan Vanthuyne
For the first time, the Deutsche Börse Photography Foundation and the German Society for Photography (DGPh) jointly awarded their newly launched prizes for research and journalism in the field of photography. Both awards recognize contributions that enrich and promote the scientific exchange on the medium of photography in a special way.

******This is so cool.~JJL


Wednesday’s Top Three
Our top story on Wednesday was Bloomberg Businessweek’s Clearinghouses Are Intended to Reduce Risk. They Can Amplify It, about the DTCC (which was also our MarketsWiki Page of the Day.) Second was the YouTube video from LegalEagle, Illegal Trading on GameStop? or WallStreetBets: The Stonkening. Third was The New York Times’ Robinhood’s C.E.O. Is in the Hot Seat.


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Lead Stories

The First Microservices-based Clearing System with AI-Capabilities
Today, Vermiculus announces the launch of its elastically scalable, AI-powered, real-time clearing system as part of a portfolio of products for the entire transaction chain. The system is the first to bring together state-of-the-art advances in dynamic microservices architecture with vast experience in clearing house business requirements. The result is an unprecedented real-time clearing system with ultra-scalable performance, capacity, and business functionality – a system that can intelligently grow with increasing industry demands.

GameStop Mania Drives Scrutiny of Payments to Online Brokers; Payment for order flow enabled zero-commission trades but has long been controversial
Alexander Osipovich – WSJ
The Reddit-fueled frenzy in stocks such as GameStop Corp. and AMC Entertainment Holdings Inc. is prompting calls for regulators to reconsider a decades-old practice in the U.S. stock market: payment for order flow. The practice, in which high-speed trading firms pay brokerages for the right to execute orders submitted by mom-and-pop investors, has long been controversial. Some say it warps the incentives of brokers and encourages them to maximize their revenue at the expense of customers. Supporters, including many brokers and trading firms, say it is misunderstood and helps ensure that investors get seamless executions and good prices on their trades.

Yellen’s Step Into Market Mania Tests Consumer-Protection Stance
Christopher Condon – Bloomberg
Treasury secretary calling an ad-hoc meeting of regulators; Market turmoil has spurred moves toward political oversight
Treasury Secretary Janet Yellen’s plan to oversee a snap meeting of top regulators to discuss recent market volatility signaled the new administration’s focus on consumer financial protection after years of emphasis on deregulation. The gathering on Thursday puts the newly installed Treasury chief in the spotlight after populist politicians from both sides of the aisle called for investigation of recent events. While the Securities and Exchange Commission is investigating for signs of fraud behind sudden surges in stocks including GameStop Corp., others have drawn attention to trading curbs that some platforms imposed for smaller, retail investors.

Robinhood Crisis Reveals Hidden Costs in Zero-Fee Trading Model; For all its benefits, the “democratization” of the stock market can quickly devolve into recklessness.
Misyrlena Egkolfopoulou and Sarah Ponczek – Bloomberg
Turns out, no-fee stock trades can exact a very high price after all. Not only for the retail traders sitting on deep losses speculating on meme stocks, or for Robinhood, which faces recriminations for “gamifying” the frenzy that spun out of control and was forced to scramble for billions in fresh cash, but also for the stock market itself, which must reckon with the wild swings that have little bearing on fundamental value.

GameStop Taught the Robinhood CEO a Lesson in PR; It took him way too long to explain why he didn’t put his customers first.
Timothy L. O’Brien – Bloomberg
Sending ill-prepared or untested chief executives into the media wilderness can be disastrous — and sometimes comical. A case in point is Vlad Tenev, the CEO and cofounder of Robinhood Financial LLC, the little company that has a trading app beloved by the small-fry investors who took down hedge fund giants in the GameStop saga. Tenev appears to be a well-meaning young guy. And he’s checked off a number of boxes on his way to the spotlight. In 2016, Forbes put him on its “30 Under 30” list, and last year Fortune added him to its “40 Under 40” version. Robinhood’s success has made him wealthy, and he’s been invited to share his wisdom to high school and college audiences. But amid the GameStop frenzy he embarked on a series of opaque — and sometimes unintentionally hilarious — interviews that failed to dampen the outrage at his decision to block Robinhood’s customers from buying GameStop shares.

Tom Hayes Says Libor Should Stay, Convicts Are Crazy for Crypto
Harry Wilson and Ellen Milligan – Bloomberg
Benchmark rate is ‘really robust’ now, ex-UBS banker says; Hayes says fellow inmates were ‘bonkers’ for Bitcoin
Tom Hayes, the former trader convicted in the Libor-rigging scandal, said efforts to replace the benchmark were pointless and that the rate was far safer now. Speaking days after he was freed from prison after serving half of his 11-year sentence, Hayes said there is no need for the cost and hassle of replacing London interbank offered rate, a move that was prompted by the international investigations that led to his conviction.

Fresh From Prison, Tom Hayes Stirs Up Debate About Libor’s Adequacy
William Shaw, Harry Wilson, and Ellen Milligan – Bloomberg
Benchmark remains troubled by shortage of genuine trading data; There are few good reasons to keep rate: Commerzbank’s Rieger
He’s certainly an expert on Libor, but Tom Hayes’ assertion that the benchmark he rigged is now cleaned up and fit to stay is coming under fire. Claims by the ex-UBS Group AG and Citigroup Inc. trader — who was convicted for manipulating the London interbank offered rate in 2015 — ignore the shortage of genuine trading data available to underpin it, bankers and analysts say.

German Fund Giant Captures the Investing Zeitgeist; DWS is well placed as the fund management industry pivots to passive products and environmentally friendly investing.
Mark Gilbert – Bloomberg
It’s been almost three years since DWS Group GmbH made its stock market debut when Deutsche Bank AG sold about a fifth of its stake in the company. After a shaky start, with missed self-imposed asset growth targets and costs heading in the wrong direction, Germany’s biggest fund manager is reaping the benefits of being at the forefront of two big industry trends.

China’s struggle to control stock bubble offers lessons in investor mania; There are echoes of the 2015 boom and bust in Chinese shares in current flare-ups in western markets
Josh Noble – FT
What happens when millions of individuals suddenly decide to dabble in a frothy stock market? It is not a new question, but a timely one, as US regulators weigh the implications of a sudden burst of retail trading that has caused stock prices to pop like solar flares. Is it something to worry about, should something be done? And if so, what?

Market insouciance means the Reddit rebellion will be back; As with many popular uprisings, the authorities have reasserted themselves but have not dealt with its causes
Mohamed El-Erian – FT
The retail investor “Reddit rebellion” has painfully been exposed to one of the big lessons of popular political uprisings — although that does not mean it will not return.

We are entering the era of e-globalisation; UiPath shows how Silicon Valley is no longer the must-be place for software companies
John Thornhill – FT
Romania was once a benighted corner of communism, a country of power cuts, queues and near-empty shops stocked only with “jars of pickled indescribables”, to quote a colleague who was there at the time.

It’s Memes vs. Regulators; Officials are looking for signs of manipulation behind the recent market frenzy.
Andrew Ross Sorkin, Jason Karaian, Michael J. de la Merced, Lauren Hirsch and Ephrat Livni – NY Times Dealbook
Keith Gill’s cheerleading of GameStop stock made him an icon among Reddit-based traders during the recent meme-stock rally, and may have minted him a fortune — on paper at least. But Massachusetts authorities are now looking at whether he broke securities rules, The Times’s Matthew Goldstein reports, as regulators there and at the federal level investigate possible market manipulation in the trading frenzy.

Reddit’s WallStreetBets Founder Sells Life Story to Movie Producer RatPac Entertainment; A film will come out first; ‘Maybe I’ll get to go on the red carpet,’ says Jaime Rogozinski
Erich Schwartzel and Akane Otani – WSJ
An internet misanthrope launches a message board for amateur stock pickers, gets kicked off and then watches from afar as this rogue community brings Wall Street to its knees. That is the hot pitch that turned Jaime Rogozinski into the man every producer in Hollywood wanted to do business with. Earlier this week, the founder of Reddit’s WallStreetBets sold the rights to his life story to RatPac Entertainment, a production company known for backing hits like “Wonder Woman.”

Regulators Meeting on GameStop Frenzy Are Unlikely to Find Systemic Risk; Analysts view gathering called by Treasury secretary more as a signal that agencies are keeping tabs
Kate Davidson – WSJ
Top financial regulators set to meet Thursday to discuss the market tumult related to GameStop Corp. GME 2.68% and other stocks are unlikely to reach any conclusions on whether the activity points to risks to financial stability or the need for regulatory changes, former officials and analysts said.

SEC Hunts for Fraud in Social-Media Posts Hyping GameStop
Benjamin Bain and Daniel Avis – Bloomberg
Agency’s scrutiny is part of broader look into market tumult; Regulator specifically seeking signs of market manipulation
U.S. Securities and Exchange Commission investigators are combing social media and message board posts for signs that fraud played a role in dizzying stock swings for GameStop Corp., AMC Entertainment Holdings Inc. and other companies, according to people familiar with the matter.

World Food Bills Set to Keep Rising on China’s Crop-Buying Binge
Megan Durisin and Agnieszka de Sousa – Bloomberg
UN’s food price index extends surge to fresh six-year high; FAO doubles China corn-import outlook after massive purchases
China’s ravenous appetite for crops is further tightening global grain supplies and setting the stage for a prolonged rally in food costs. A United Nations index of food prices jumped again last month to a fresh six-year high, with grains near the forefront of the advance as China buys huge amounts to feed its hog herds. The stronger-than-expected demand prompted the UN to double its outlook for Chinese corn imports and make a “massive” downgrade to its reserves, revising supply estimates for the past several seasons.

Exclusive: U.S. mulls using law designed to prosecute Mafia against Capitol rioters
Mark Hosenball, Sarah N. Lynch – Reuters
The U.S. Justice Department is considering whether to charge members of far-right groups involved in the deadly Jan. 6 storming of the Capitol under a federal law usually used against organized crime, according to two law enforcement sources.

This Hedge Fund Made $700 Million on GameStop; Individual investors weren’t the only ones to make a lot of money on GameStop’s rally
Juliet Chung – WSJ
Richard Mashaal and Brian Gonick started buying GameStop Corp. GME -1.27% shares in September. They aren’t Reddit day traders or Discord users. They are hedge-fund managers in New York. And when the stock surged from less than $10 a share to above $400 and the dust had settled, they were sitting on a profit of nearly $700 million, one of the great fortunes of the January market mania.


Swiss Delay Approval of Astra’s Covid Shot to Seek More Data
Claudia Maedler and Corinne Gretler – Bloomberg
Swiss stand out in Europe in cautious stance on Astra vaccine; Regulator says current data don’t point to positive decision
Switzerland wants AstraZeneca Plc to provide more data on its Covid-19 vaccine before deciding whether to authorize the shot, taking a more cautious stance than its neighbors. “The data currently available do not point to a positive decision regarding benefits and risks,” the country’s regulator, Swissmedic, said in a statement Wednesday.

Covid Testing Experiment in Schools Hits Logistical Snarls
Emma Court – Bloomberg
Federal effort sent 140,000 Abbott rapid tests to six areas; Administrative hurdles set back testing efforts, report finds
A pilot project in which rapid Covid-19 tests were used in an effort to safely reopen some U.S. schools has encountered administrative and logistical hurdles, according to a report released Thursday. Through a collaboration between the U.S. Department of Health and Human Services and the Rockefeller Foundation, the project received about 140,000 quick-turnaround Covid tests from Abbott Laboratories.

Super-Rich and Punctual Switzerland Is Also Behind on Vaccines; The country of clockwork is also suffering from having agreed deals that were too little and too late.
Catherine Bosley – Bloomberg
Being famously wealthy, a model for efficiency and punctuality and having a big pharmaceuticals industry is no guarantee of success when it comes to the coronavirus vaccination drive. The European Union’s procurement saga has dominated headlines, but neighboring Switzerland is facing a similar predicament. With shops, theaters and restaurants closed and a public desperate for respite, authorities in the capital of Bern weren’t offering Covid-19 immunization appointments at the weekend. There simply wasn’t enough vaccine.

Big Pharma Is Racing to Bolster Its Vaccines Against Variants; Booster shots that can handle virus mutations could become a sustained revenue stream for drugmakers.
Robert Langreth – Bloomberg
Just two months ago, the prospects for beating the novel coronavirus with highly effective vaccines couldn’t have seemed better. Shots from Moderna and the Pfizer-BioNTech partnership proved more than 90% effective in preventing Covid-19 symptoms in massive trials, surpassing the most optimistic forecasts. An end to the pandemic appeared imminent.

Why Israel Can’t Celebrate Its Vaccine Success Yet; A combination of the new variant and poor compliance with restrictions has led to continued high levels of infection.
Zev Chafets – Bloomberg
Israel should be celebrating. More than 20% of its population has been fully vaccinated. Another 15% have been given the first of two jabs and will be protected by mid-February. The government plans to have vaccinated 5 million citizens — well over half the adult population — by mid-March, just before Israel’s next election take places on March 23rd.

Singapore Can Curb Covid and Crime With Your Data; A new law allowing police to use the government’s contact-tracing app has troubled some, but that’s the trade-off for health and safety.
Daniel Moss – Bloomberg
How much personal information are you prepared to surrender to stay safe and healthy? Probably more than you realized after downloading that contact-tracing app last year, judging by a new law in Singapore. That might wind up being an acceptable trade-off.

Medical Drone Startup to Begin Covid Vaccine Delivery in April; Zipline’s CEO says the company can help address the challenges of vaccine distribution through instant delivery.
Ira Boudway – Bloomberg
Zipline Inc., a drone delivery service that specializes in medical supplies, announced Thursday that it plans to begin transporting COVID-19 vaccines in April. The South San Francisco-based startup said in a release that it is partnering with “a leading manufacturer of COVID-19 vaccines” in all of the markets where its drones currently operate. Zipline has been delivering medicine and supplies to rural clinics in Rwanda and Ghana since 2016 and, last year, began delivering personal protective equipment to hospitals and clinics in North Carolina. It plans to add operations in Nigeria later this year.

Swiss medical regulator rejects Oxford/AstraZeneca Covid vaccine; SwissMedic says available trial data ‘not yet sufficient’ to authorise its use
Sam Jones and Donato Paolo Mancini – FT
Switzerland’s medical regulator has said it cannot authorise use of the Oxford/AstraZeneca Covid-19 vaccine based on the available trial data, a further setback for the rollout of the Anglo-Swedish jab.

Vaccine milestone as global Covid jabs pass number of confirmed cases; FT tracker shows rapid growth in doses administered around world — but warnings come of long road ahead
Clive Cookson and Alan Smith – FT
The number of Covid-19 vaccinations globally has surpassed the total number of confirmed cases, a landmark moment that underscores progress made in taming the pandemic despite mounting concern about the threat of new variants.

Scientists Test a New Covid-19 Vaccine Question: Mixing Different Doses; Researchers begin tests to study effects of following an initial dose with a booster from another manufacturer
Jason Douglas – WSJ
As the world keeps adding to its armory of effective vaccines against Covid-19, scientists are starting to ask a new question: What happens if you mix and match? Researchers are beginning human trials in which volunteers will receive an initial dose of one vaccine and a booster shot from another made by a different manufacturer. The goal is to see if such a strategy—known as heterologous prime-boost vaccination—could produce a more effective immune response against the virus that causes Covid-19 than using two shots of a single vaccine.

As U.S. Vaccinations Speed Up, Cautious Optimism Grows
NY Times
More than 27 million Americans have received a first shot, and more than six million are fully inoculated. But as wealthy nations accelerate campaigns, there is concern that poorer countries are being left behind.

A Parallel Pandemic Hits Health Care Workers: Trauma and Exhaustion; Vaccines may be on the way, but many on the front-lines are burned out. Has the government done enough to help alleviate their stress?
Andrew Jacobs – NY Times
Dr. Sheetal Khedkar Rao, 42, an internist in suburban Chicago, can’t pinpoint the exact moment when she decided to hang up her stethoscope for the last time. There were the chaos and confusion of the spring, when a nationwide shortage of N95 masks forced her to examine patients with a surgical mask, the fears she might take the coronavirus home to her family and the exasperating public disregard for mask-wearing and social distancing that was amplified by the White House.

World faces around 4,000 COVID-19 variants as Britain explores mixed vaccine shots
Guy Faulconbridge, Alistair Smout – Reuters
The world faces around 4,000 variants of the virus that causes COVID-19, prompting a race to improve vaccines, Britain said on Thursday, as researchers began to explore mixing doses of the Pfizer and AstraZeneca shots in a world first.

Covid-19 Vaccine Hesitancy Presents Challenge for Herd-Immunity Push; Nearly a quarter of unvaccinated adults indicate they won’t get the shots, Census survey finds, some fearing side effects, others distrusting government
Julie Wernau and Paul Overberg – WSJ
If everyone in the U.S. who says they definitely plan to get vaccinated gets the shot, it won’t be enough to end the pandemic. That’s because vast numbers of Americans are either unsure about getting the Covid-19 vaccine or say they will never get it, according to new data from the U.S. Census Bureau.

Exchanges, OTC and Clearing

2021 starts with a highlight: we are Clearing House of the Year
What a way to start a new year: has, for the first time, named us “Clearing House of the Year” at the 2021 Risk Awards. We are all the more pleased about this as the jury especially recognized the stability and predictability of our margin methodology at a critically important time for the futures industry. And, as the only large futures exchange to employ a value-at-risk based methodology, clients praised the replicability of our Prisma model and its ability to adapt automatically with the fluctuating market regimes witnessed in 2020.

Fees Reductions in MSCI EM, EAFE and key Asian Country futures; Eurex will be changing its fees structure for the MSCI futures effective February 1, 2021
MSCI EM and EAFE will be ca. 85% cheaper on Eurex than competitor exchanges

Eurex Exchange Readiness Newsflash | T7 Release 9.1 – Preliminary Release Notes are now available
On 29 January 2021, Eurex Exchange published the T7 Release 9.1 – Preliminary Release Notes:
Simulation start is planned for 3 May 2021
Cloud Simulation start is planned for 1 April 2021
Production launch is scheduled for 28 June 2021
The T7 Release 9.1 – Preliminary Release Notes and all information about the Release are available on the Eurex website under the following path

Chief Legal Officer Dr. Michael Lappe is leaving Deutsche Börse AG / Bettina Kramer-Braun will be the successor
Deutsche Börse AG
Dr. Michael Lappe (63), Chief Legal Counsel of Deutsche Börse AG since March 1, 2018, is leaving the company on June 30 at his own request and by mutual agreement. However, he will continue to be available to Deutsche Börse as part of his future independent consultancy work. His successor is Bettina Kramer-Braun (47), a lawyer and solicitor.

First IPO of the year in Frankfurt: AUTO1 Group SE new in the Prime Standard of the Frankfurt Stock Exchange
Deutsche Börse AG
AUTO1 Group SE (ISIN: DE000A2LQ884 ) has been listed in the Prime Standard segment of the Frankfurt Stock Exchange since today . At the start of trading, the shares were quoted at 55.00 euros. The issue price was 38.00 euros.

CME Group Declares Quarterly Dividend
PR Newswire
CME Group Inc., the world’s leading and most diverse derivatives marketplace, today declared a first-quarter dividend of $0.90 per share, a 6% increase from the prior level of $0.85 per share. The dividend is payable March 25, 2021, to shareholders of record as of March 10, 2021.

ASX Group Monthly Activity Report – January 2021

TMX Group Consolidated Trading Statistics – January 2021
TMX Group Limited today announced January 2021 trading statistics for its marketplaces – Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and Montréal Exchange.

Toronto Stock Exchange Welcomes TELUS International; TSX celebrates largest technology IPO in Canadian history with virtual market open
Toronto Stock Exchange (TSX) announced today that TELUS International (Cda) Inc. (TELUS International), a subsidiary of Vancouver-based TELUS Corporation (TSX:T), began trading earlier today under the symbol TSX:TIXT.

Intercontinental Exchange Announces 10% Increase to its Quarterly Dividend
Intercontinental Exchange
Intercontinental Exchange (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of mortgage technology, data and listings services, announced board authorization of its first quarter 2021 dividend of $0.33 per share, up 10% from its previous $0.30 per share quarterly dividend in 2020.

Intercontinental Exchange Reports Fourth Quarter & Full Year 2020
Intercontinental Exchange
Intercontinental Exchange (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of mortgage technology, data and listing services, today reported financial results for the fourth quarter and full year of 2020. For the quarter ended December 31, 2020, consolidated net income attributable to ICE was $526 million on $1.7 billion of consolidated revenues less transaction-based expenses. Fourth quarter GAAP diluted earnings per share (EPS) were $0.93. Adjusted net income attributable to ICE was $639 million in the fourth quarter and adjusted diluted EPS were $1.13.

Cboe Global Markets Reports January 2021 Trading Volume
Cboe Global Markets, Inc.
Options ADV up 48 percent, U.S. Equities – Exchange ADV up 85 percent and Global FX ADNV up 5 percent over January 2020; Cboe’s four options exchanges combined set a new single-day volume record with 18.5 million contracts traded; Cboe EDGX Equities Exchange set new monthly total volume record with nearly 23 billion shares traded
Cboe Global Markets, Inc. (Cboe: CBOE), a market operator and global trading solutions provider, today reported January monthly trading volume.

Nasdaq’s European Debt Market Showed Continued Growth in 2020
Nasdaq (Nasdaq: NDAQ) saw its European Debt Market grow by 8 percent in 2020. Continued interest to list Euro Medium Term Note (EMTN) programs and strong demand for ESG investment opportunities have fueled the expansion. Issuers have also tapped the debt capital markets to raise funds to support Covid-19 pandemic mitigation efforts.

CME Globex Notices: February 1, 2021
CME Group
Critical System Updates
iLink 2 on MSGW Decommission – Migrate to iLink 3 Now
Update on Order Routing and Front-End Audit Trail Requirements for iLink 3
iLink 3 SBE Schema Update – March 7
CME FX Link Enhancements – March 28
CME FX Link Enhancements: Drop Copy Impact – March 28

CME STP Notices: February 4, 2021
CME Group
New Aggressor Indicator Flag on CME STP – February 21
Enhancements for Exercise and Assignment Trades on CME STP – February 22
CME STP FIXML API Connectivity Documentation

OTC IRS and FX New Release – Emerging Markets Discounting and Price Alignment Transition: Phase 1 Testing
CME Group
CME will begin New Release testing of the Emerging Markets Discounting and Price Alignment Transition on February 10, 2021.

SET Launches Practices Of How 149 Thai Listed Firms Weather Through Crisis Toward Sustainable Growth
The Stock Exchange of Thailand (SET) revealed “Sustainable Development Showcase 2020” which has incorporated practices of how 149 listed companies managed the COVID-19-induced crisis. The report gathered these companies’ information in aspects of emergency response, crisis management, impact mitigation and business recovery, aiming to benefit business owners and interested public in adapting the lessons learned.

Aquis Exchange Recommences Trading In Swiss Shares
Aquis Exchange PLC (AQX.L), the exchange services group, is pleased to announce the resumption of trading in Swiss shares on its pan-European exchange facility, Aquis Exchange.


Futures trading algos ripe for disruptive new entrants; Algorithm development specialist BestEx Research is making a play to address inefficiencies in futures trading algorithms.
Max Bowie Waters Technology
Automated trading algorithms are commonly used and well understood in equities markets, but their application in other asset classes, such as futures, has sometimes proved problematic. Though the use of trading algorithms in futures markets has grown over the past decade, those algorithms have not always properly addressed futures’ market microstructure, and with firms now looking for more precise execution and analysis capabilities, a new breed of futures-specific algorithms is emerging.

ISDA Selects Kinetix and Linklaters to Develop Documentation User Platform
The International Swaps and Derivatives Association, Inc. (ISDA) has today announced that Kinetix Trading Solutions and Linklaters have been selected to develop a user platform that will allow market participants to access ISDA documentation in electronic form with enhanced navigation and other features.
Kinetix, a financial technology company specializing in artificial-intelligence-driven trade management and compliance software, and Linklaters >Nakhoda were selected following a request for quotation issued in June 2020 for the development of a user-friendly, state-of-the-art platform that will enable industry participants to more easily navigate and use ISDA’s documentation.

BestEx Research Announces Launch of Futures Algorithms; Measurement-Driven Algo Provider Focused on Maximizing Returns Expands to Futures Trading
BestEx Research Group, LLC
BestEx Research Group, LLC, a provider of high-performance algorithmic execution and measurement solutions for equities, futures, and foreign exchange trading, is proud to announce the launch of their suite of algorithms for futures trading. The new offering includes the rollout of BestEx Research’s state-of-the art trading tools such as simulation, including back-testing capability and live simulation, and the dashboard currently available for equities. BestEx Research will offer its cloud-based algo,rithmic execution platform as Software as a Service (SaaS) to brokers and Futures Commission Merchants (FCMs) and as an introducing broker to buy-side institutions via its wholly owned subsidiary introducing broker, BestEx Research Securities. BestEx Research Securities’ introducing broker license was approved by the National Futures Association (NFA) in January this year.

PayPal’s Revenue Surges in Strong Finish to Blockbuster Year
Jennifer Surane – Bloomberg
PayPal Holdings Inc. said consumers flocked to its service in the final months of the year as they hurried to finish their holiday shopping and started using the company’s wallets to buy and sell cryptocurrency. The firm added a record 72.7 million active accounts in 2020, more than it forecast just three months ago, with the addition of 16 million accounts in the fourth quarter alone. That helped overall revenue climb 23% to $6.12 billion during the quarter, topping analysts’ estimates. “PayPal has never been more relevant and needed than we are right now,” Chief Executive Officer Dan Schulman said in an interview. “Clearly, the world has leapfrogged by three to five years into the next digital era, and there is no going back from here.”

Charles River integrates IMS with multi-dealer RFQ Platform OTCX; Charles River clients can request prices and negotiate fix-float interest rate swaps, overnight index swaps, and inflation swaps through OTCX.
Annabel Smith – The Trade
State Street’s Charles River has integrated its investment management system (IMS) with the request-for-quote (RFQ) off-venue interest rate derivatives platform, OTCX.

BestEx Research launches algorithms suite for futures trading; The new futures algorithms suite follows a series A funding round for BestEx Research that took place in December to raise funds for product development.
Annabel Smith – The Trade
Algorithmic trading platform provider BestEx Research has launched a suite of algorithms for futures trading following its series A funding round in December last year.


Bitcoin Proselytizer Saylor Says Over 1,000 Firms Join Webinar
Olivia Raimonde – Bloomberg
‘Avalanche’ of companies to add coins to balance sheet: Saylor; Virtual summit sees participants from at least 16 countries
Michael Saylor says he sees an “avalanche” of companies moving their cash into Bitcoin over the next 12 months. The chief executive officer of MicroStrategy Inc. and Bitcoin proselytizer made the projection at his company’s World Now global conference that featured breakout sessions on the future of Bitcoin and how corporations can best position themselves to capitalize on the digital token. According to Saylor, 1,400 firms signed up for the session on Bitcoin legal considerations.

tZERO Signs Agreement With Transfer Agent and Issuance Platform, Vertalo; Vertalo’s Tokenized Securities Will Be Compatible With tZERO’s Technology
tZERO, a leader in blockchain innovation and liquidity for digital securities, announced today it signed a technology integration agreement with Vertalo, a digital transfer agent that enables the issuance and management of compliant digital securities and connects broker-dealers, issuers, custodians, and exchanges through its B2B SaaS platform. Following the integration, Vertalo’s technology will be interoperable with tZERO’s technology stack, which powers the alternative trading system (ATS) that is operated by tZERO ATS, a FINRA member broker-dealer.

Bitfinex Terminal Launches Historical Funding Statistical Data
Bitfinex, a state-of-the-art digital token trading platform, has launched historical funding statistical data on Bitfinex Terminal, a real-time market data feed. Bitfinex customers can obtain free access to key metrics of the funding market, such as the Flash Return Rate (FRR), total amount provided, average period, and total amount used. Bitfinex users can leverage this funding statistical data, along with existing public trade data, to enhance the backtesting of trading ideas and power algorithmic trading strategies.

OKEx to integrate the Bitcoin Lightning Network, enabling cheaper and faster transactions for users
OKEx (, a world-leading cryptocurrency spot and derivatives exchange, is thrilled to announce the integration of the Bitcoin Lightning Network, a second-layer scaling solution based on the Bitcoin blockchain, in the coming quarter. This major development will dramatically decrease transaction fees and times, improving user experience on the exchange. Lightning integration also highlights OKEx’s deep commitment to deep commitment to bringing the most advanced Bitcoin technology to the world — and furthering the development of the Bitcoin ecosystem.

Goldman Sachs’s Rahmani Strikes Warning Over Bitcoin Value
Devon Pendleton – Bloomberg
Price swings make Bitcoin ‘not a real unit of value,’ she says; Investment strategy head says blockchain ‘is here to stay’
The wild swings in the price of Bitcoin prove it’s not a real unit of value, though blockchain technology “is here to stay,” according to Goldman Sachs Group Inc.’s Sharmin Mossavar-Rahmani. “Something with a long-term volatility of 80% can’t be considered a medium of exchange,” said Rahmani, head of the investment-strategy group for the bank’s consumer and investment-management division.

Traders Piling Into Overvalued Crypto Funds Risk a Painful Exit; One of the simplest ways to buy Bitcoin also has a quirk that could lead to bigger losses.
Katherine Greifeld – Bloomberg
Many investors racing to get in on Bitcoin’s big rally have bet on the cryptocurrency through investment trusts rather than buying the coins themselves. These fund-like trusts have some advantages: Their shares can be bought and sold through ordinary brokerages, without the need to set up digital wallets or move money to a crypto exchange. And some institutional investors, barred by the rules of their funds from holding Bitcoin directly, have also turned to trusts. Cathie Wood, for example, has made the Grayscale Bitcoin Trust the fourth-largest holding in her Ark Next Generation Internet ETF.

Morgan Stanley’s head of digital assets details how the bank’s crypto footprint has evolved
Frank Chaparro – The Block
A bitcoin rally has been in full swing since the last quarter of 2020, but unlike previous cycles, large financial institutions are paying closer attention. Morgan Stanley is no exception. In a recent interview with David Nage, principle at crypto investment firm Arca, Morgan Stanley digital asset markets head Andrew Peel outlined the bank’s crypto journey. Peel, who joined the firm in 2018, said Morgan Stanley — best-known for its financial advisory and investment banking businesses — explored how it could offer clients a swap product based on bitcoin futures. Indeed, Bloomberg reported in September 2018 that the firm would offer trading in derivatives tied to crypto.

Bitcoin boom backstopped by central banks’ easy-money policies; Cryptocurrency has so far dodged a repeat of its 2017 collapse as more investors take notice
Eva Szalay – FT
A flood of central bank stimulus and widening interest among retail and institutional investors has sustained the rally in cryptocurrencies, analysts say, even as sceptics warn that the market is in the midst of a bubble.

Elon Musk Returns to Twitter to Endorse Meme Crypto Dogecoin
Lynn Thomasson – Bloomberg
Tesla Inc. co-founder Elon Musk returned from his self-imposed Twitter break to send a series of tweets about joke cryptocurrency Dogecoin. “No highs, no lows, only Doge,” Musk wrote. He also posted a meme from the Disney movie The Lion King, showing the monkey shaman Rafiki holding up the cub Simba that’s photoshopped to be the billionaire with the Dogecoin logo of a Shiba Inu in his hands. The digital asset, which was started as a joke in 2013, has risen to about 5 cents in the past 24 hours from 3 cents, according to data from CoinMarketCap. It’s the highest level since last week, when prices briefly spiked after Musk tweeted a picture of “Dogue” — a satire on fashion’s Vogue magazine — featuring a whippet in a red sweater.

Founder of Crypto Scam Promoted by Actor Steven Seagal Charged — Key Member Arrested in US
Kevin Helms –
Three people have been charged in the U.S. over two cryptocurrency scams, one of which was promoted by famous Hollywood actor Steven Seagal. The main promoter of the schemes has already been arrested and is facing criminal charges. Seagal previously settled the charges against him relating to the scheme. The U.S. Securities and Exchange Commission (SEC) charged three people on Monday with defrauding retail investors “through two fraudulent and unregistered digital asset securities offerings” that occurred between approximately December 2017 and May 2018. The three are Kristijan Krstic, John DeMarr, and Robin Enos. DeMarr has been arrested and is facing criminal charges by the U.S. Department of Justice (DOJ).


Trump Banker’s Deutsche Bank Exit Prompted by Property Deal
Sophie Alexander and Sonali Basak -Bloomberg
Rosemary Vrablic was ‘permitted to resign,’ bank tells Finra; Banker was involved in real estate deal with Jared Kushner
Rosemary Vrablic, the longtime banker for Donald Trump, left Deutsche Bank AG in December after an internal investigation found she engaged in “undisclosed activities” related to a real estate deal. Vrablic was “permitted to resign” as a result of the probe, according to a disclosure by the bank on the Financial Industry Regulatory Authority’s BrokerCheck service. The activities included “the purchase of the property from a client-managed entity, and the formation of an unapproved outside entity to hold the investment,” the bank said in the disclosure.

GameStop Mania Stirs New Ire for Social-Media Shield Trump Hates
Joe Light and Ben Brody – Bloomberg
Section 230 protects Reddit from liability for users’ posts; Lawmakers consider how stock furor fits into proposed reform
Market turbulence fueled by a horde of retail investors targeting stocks like GameStop Corp. has some fingers pointing at an unexpected culprit: the social-media liability protections vilified by former President Donald Trump. The investors who sent shares of GameStop and several other companies to previously unfathomable heights relied on a Reddit-based forum as a central gathering point to discuss trading strategies, egg each other on and move in unison to squeeze hedge funds that had shorted stocks. Regulators are examining whether any of their activity was illegal.

Experts Tell Biden: Your Climate Goals Require a Carbon Price; The National Academies published a comprehensive list of policies the U.S. can enact to transform the energy system and right historical inequality.
Eric Roston and Leslie Kaufman – Bloomberg
Meeting the climate goals of President Joe Biden will require setting a national cost for carbon pollution and spending heavily on social programs to assist Americans hurt by the clean-energy transition. Those are the findings in a new report from the National Academies of Sciences, Engineering, and Medicine, the latest group to lay out a detailed strategy for making the U.S. economy carbon-neutral by 2050.

Germany’s grand coalition under stress as vaccine tensions grow; Social Democrats chart risky path in seeking to distance themselves from Merkel’s CDU over pandemic
Erika Solomon – FT
Entering a critical election year, and amid growing anger at European vaccine shortages, Germany’s Social Democrats are making a risky political play: they are turning against their own partner in government.

Klobuchar to Introduce Antitrust Bill Raising Bar for Technology Deals; Incoming head of Senate panel will propose broad changes as Democrats press issue of perceived monopoly power
Ryan Tracy – WSJ
Sen. Amy Klobuchar (D., Minn.), the incoming head of the Senate antitrust subcommittee, will propose broad changes to U.S. antitrust laws Thursday as the newly Democratic-led Congress begins to press the issue of perceived monopoly power in technology and other industries.

Parler CEO Says He Was Fired as Platform Neared Restoring Service; Moderation-light social media platform was forced offline by tech giants last month in wake of Capitol riot by Trump supporters
Jeff Horwitz and Keach Hagey – WSJ
Parler, a moderation-light social-media network that was forced offline last month by tech giants over how it policed its content, has fired its chief executive amid a dispute over the platform’s future. John Matze, the former CEO, said he was fired on Friday by the company’s board as the platform was within days of restoring service to its roughly 15 million users. He said the board is currently controlled by conservative political donor Rebekah Mercer.

Citadel, Robinhood on Waters’s ‘Wish List’ for GameStop Hearing
Daniel Flatley – Bloomberg
Robinhood Markets, GameStop Corp. and hedge funds are all on the wish list that House Financial Services Committee Chair Maxine Waters is assembling for a hearing that will dig into the Reddit-fueled stock trading that has shocked Wall Street and lawmakers.


Yellen Summons Regulators to Discuss Financial Market Volatility
Saleha Mohsin and Christopher Condon – Bloomberg
Secretary in first public effort to discuss GameStop tumult; Yellen asks if activity is consistent with ‘fair’ markets
Treasury Secretary Janet Yellen has summoned U.S. financial regulators to discuss recent volatility in financial markets, in her first public effort to address the tumult involving GameStop Corp. shares and broker-dealer Robinhood Markets In

SteelEye Named Best Regulatory Reporting Product of the Year by Risk
SteelEye, the compliance technology and data analytics firm, has been recognised as the Best Regulatory Reporting Product in the Risk Markets Technology Awards 2021. The award reflects SteelEye’s data-centric approach to compliance, which ensures automated, optimised, and accurate EMIR and MiFIR reporting, “Over the past 12 months, we have invested in a wealth of automation across regulatory reporting workflows, meaning that our clients’ transaction reporting processes can be completely seamless from beginning to end,” said Matt Smith, CEO of SteelEye.

Former mortgage brokerage company director pleads guilty to making a false statement to ASIC
Mr Ding Yang, director of Advanced Choice Finance Pty Ltd (ACF), a former Melbourne-based mortgage brokerage company, has pleaded guilty to aiding and abetting ACF in knowingly making a false statement in a credit licence annual compliance certificate lodged with ASIC.

The three European Supervisory Authorities publish Final Report and draft RTS on disclosures under SFDR
The Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) delivered today to the European Commission (EC) the Final Report, including the draft Regulatory Technical Standards (RTS), on the content, methodologies and presentation of disclosures under the EU Regulation on sustainability-related disclosures in the financial services sector (SFDR).

Exercise Cut-Off Time for Expiring Options
FINRA reminds members that option holders who hold expiring options have until 5:30 p.m. Eastern Time (ET) on the day of expiration to make a final exercise decision to exercise or not exercise the option.1 Members may establish an earlier time to accept exercise instructions for customer or non-customer accounts but may not accept instructions after 5:30 p.m. ET.2 Members should ensure customers are aware of the cut-off time to exercise expiring options.

Investing and Trading

As GameStop stock crumbles, newbie traders reckon with heavy losses; The Reddit forum that helped kick off the frenzy has given way to anxiety, financial bloodshed and infighting
Drew Harwell – Washington Post
As GameStop’s stock plunged 60 percent Tuesday, the online horde that had raced to invest in the “meme stock” scrambled to reckon with the financial bloodshed, wavering between a desire to sell and settle for heavy losses or stick with their online peers who had admonished them to “hold the line.”

Riskiest Borrowers Are Racing to Markets
Laura Benitez – Bloomberg
January was busiest month since July for triple C-rated deals; Investors are taking bigger risks in search of greater yield
Borrowers from the low end of the junk spectrum have launched a flurry of bond deals to tap demand from investors keen to lock in higher yields. About 2 billion euros ($2.41 billion) of triple C-rated debt has launched so far this year, accounting for around a fifth of total high-yield issuance, according to data compiled by Bloomberg. That makes January the busiest period for the rating category since July.

GameStop Is the Only Game in Town; The markets know it. AOC, Janet Yellen, the SEC and everyone else knows it. Matt Levine and John Authers know it, too.
Brooke Sample – Bloomberg
Every day, news is made around the world in, say, politics (new presidents), human health (we’re still in a pandemic, didn’t you know), sports (ugh, Tom Brady in another Super Bowl?) and in plenty of other ways. Sure, things happen, but as Matt Levine says: Do they, though? Here’s what Matt and John Authers had to say about it last week.

Traders No Longer See Negative Rates Even as BOE Readies Them
Greg Ritchie and James Hirai – Bloomberg
Money markets expect U.K. rates to stay above zero into 2022; Bets on cuts have shifted as vaccine rollout lifts sentiment
Markets are discounting the chances of negative interest rates in the U.K., just as the Bank of England is finally about to say whether it might pursue them. That shows traders believe policy makers may wield the threat of negative rates without actually implementing them, hours before the central bank releases a review into how it might implement the policy. They’re betting rates will stay at zero or above through to May 2022, according to sterling overnight index swaps on Thursday.

BOE Tells Banks to Get Ready for Negative Rates If Needed
David Goodman – Bloomberg
U.K. central bank will start work on a rate-tiering system; BOE stresses it is not sending a signal the policy is imminent
The Bank of England told banks to start preparing for negative interest rates, while saying that message shouldn’t be taken as a signal that the policy is imminent. The BOE also said it will start its own work on a tiered rate system that could be used if it cuts below zero.

My $250 investment in GameStop; I made a profit — and learnt about the madness of markets
Andrew Farry – FT
A month ago, GameStop was a name that, for me, sparked exasperating memories: it was a US store that would give you a few dollars for a barely-used video game that you didn’t want. A few days later you would see it on the shelves at five times the price. It was, in other words, a quick and dirty way to learn about capitalism.

Markets Withstood the GameStop Test; Investors should take at least a crumb of comfort that the market has so far avoided a major tumble thanks to GameStop
James Mackintosh – WSJ
The GameStop GME 2.68% saga rattled a lot of people. Hedge funds who shorted the stock were crushed as it soared 10-fold in five days. New buyers who were sucked in late by the prospect of quick profits then lost horribly, with the stock down 80% from its high. Even those who got in early can’t be happy to see so much of their newfound wealth evaporate. Trust in Wall Street, in the clearing system and in popular broker Robinhood have all been damaged, and opportunistic politicians from left and right have leapt on the moves to support their existing policy positions.

Are GameStop’s ‘Degenerates’ Just Getting Started? They may have lost their bet. But they haven’t lost their political power.
Christopher Caldwell – NY Times
The American financial system has just been disrupted by a mass movement of “autists,” “degenerates” and “retards,” to use their own most frequent self-descriptions. There seem to be half a million active investors among them, although the Reddit forum where they congregate, commiserate and swap stock tips has swelled to eight million users, up from a million just a month ago.

How to Win at the Stock Market by Being Lazy; The drama of GameStop is misleading; the surer path to wealth is extremely boring.
Neil Irwin – NY Times
Many parts of the GameStop story — the wild swings over the last couple of weeks in shares of the video-game retailer and a few dozen other out-of-favor stocks — are not exactly new. Long before Reddit, the Yahoo message boards of the late 1990s democratized the expression of strong opinions about stocks (they didn’t call them “stonks” in those days).

Reddit trader behind GameStop rally says he lost $13M in one day
Noah Manska – NY Post
“DeepF—ingValue” went deep in the red. The Reddit user who helped spark the explosive rally in GameStop’s stock price said he lost more than $13 million in a single day as the shares crashed. Keith Gill — the Massachusetts man better known as DeepF—ing Value on Reddit and “Roaring Kitty” on YouTube — revealed the loss on Reddit’s WallStreetBets forum, where he’s been sharing regular updates on his GameStop investment.

Environmental, Social and Corporate Governance

Fighting Climate Change by Shutting Down the Money Pipeline; Environmentalists are targeting banks in their efforts to slow global warming.
Saijel Kishan – Bloomberg
Johan Frijns will tell you that on his best days, he takes to the streets in the morning in jeans and a T-shirt to protest climate change, then in the afternoon dons a suit to visit a bank, where he tells executives they must do more to combat global warming.

EU carbon price soars to record highs; Gains accelerate after rally since November as EU pushes ahead with plans to tackle high emissions
David Sheppard – FT
The price of carbon in Europe has soared above EUR38 a tonne for the first time as traders rush to secure supplies of EU emissions allowances. Prices have risen almost 13 per cent this week, in the sharpest rally since late August, according to Bloomberg data. The gains took place largely on Tuesday and Wednesday after an auction in Poland in which companies paid a premium to the market level.

Climate change’s bogeyman isn’t only big oil; To legislate the past, ignores the reality.
Ashley Nunes – FT
Big oil is in the hot seat. Again. Two weeks ago, the US Supreme Court heard arguments on whether a lawsuit brought by Baltimore city officials against oil companies belongs in state courts, which favours the plaintiffs, or in federal courts, where oil companies stand a better chance of winning. A ruling on the case — expected later this year — could cost (or save) the industry billions.

Shell Posts Loss but Eyes Recovery This Year; Oil giant to raise dividend; sees demand at pre-pandemic levels in 2022
Sarah McFarlane – WSJ
Royal Dutch Shell RDS.A 1.99% PLC reported a fourth-quarter loss as it continued to grapple with the fallout of the pandemic but said it would raise its dividend, forecasting a recovery in demand later this year.

After pledging disclosure, many UK banks still silent on race diversity data
Sinead Cruise, Elizabeth Howcroft – Reuters
For many bankers, rising to seniority cements their status as a company insider. Citi executive Ireti Samuel-Ogbu never felt so out of place.


Marble Ridge Capital Founder Admits to Neiman Fraud
Chris Dolmetsch, Katherine Doherty, and Steven Church – Bloomberg
Dan Kamensky pleads guilty to bankruptcy fraud in N.Y. court; Kamensky pressured rival to drop bid for Neiman Marcus assets
Marble Ridge Capital founder Dan Kamensky pleaded guilty to fraud, five months after he was charged with abusing his position on a Neiman Marcus Group Inc. bankruptcy committee to purchase assets at an artificially low price.

Commerzbank to Post $3.5 Billion 2020 Loss on Restructuring
Steven Arons – Bloomberg
Results hit by previously announced goodwill impairment; Bank also takes restructuring charge tied to cost-cutting plan
Commerzbank AG will post a preliminary loss of almost 2.9 billion euros ($3.5 billion) for 2020 after taking big writedowns tied to the pandemic and booking restructuring charges for a massive cost-cutting program. The lender will also report an operating loss of 233 million euros for last year, which “clearly reflects the burdens of the coronavirus pandemic,” the Frankfurt-based company said in a preliminary earnings statement Wednesday. The loss includes previously announced expenses of more than 800 million euros for cost cuts and a goodwill impairment of roughly 1.5 billion euros.

Deutsche Bank Traders Keep Overhaul Alive After Volatile Year
Steven Arons and Daniel Schaefer – Bloomberg
Trading gains kept CEO Sewing’s strategy on track in 2020; But can he grow the corporate bank at the center of his plan?
Halfway through Deutsche Bank AG’s historic restructuring, Christian Sewing has to thank the investment bank that he had pledged to cut for keeping his plan on track. But with trading set to moderate after last year’s volatility, the real test for the chief executive officer is yet to come: Can he grow the private and corporate banking units at the center of his strategy?

Blackstone Weighs Options for Outsourcing Firm TaskUs
Baiju Kalesh – Bloomberg
The buyout firm is considering a partial stake sale of TaskUs; TaskUs has filed confidentially for a $1 billion U.S. IPO
Blackstone Group Inc. is exploring options for outsourcing firm TaskUs Inc. including a partial stake sale or listing, according to people familiar with the matter. The private equity firm is working with advisers to study strategic alternatives, the people said, asking not to be identified because the information is private. It is considering selling as much as a 25% to 30% stake in TaskUs at a valuation of as much as $3.5 billion, one of the people said, asking not to be identified because the information is private.

Trading boom propels Deutsche Bank to first profit in 6 years; Investment bank division grows as other businesses shrink
Olaf Storbeck – FT
Deutsche Bank has made a net profit for the first time in six years on the back of a global trading boom that has boosted the lender’s fixed-income trading revenue.

GameStop frenzy helps fuel sharp gains for Morgan Stanley fund; US equity mutual fund rushed past peers as games retailer gained 1,600% in January
Joe Rennison – FT
A Morgan Stanley mutual fund that bet on GameStop recorded the best performance of any of its peers in January, showing how some Wall Street firms managed to play the retail trading surge to their benefit. The now $1.5bn Morgan Stanley Institutional Inception fund rose more than 30 per cent in January on a total return basis, boosted by a 1,625 per cent gain on its holdings of GameStop stock. That left it at the top of Morningstar’s ranking table for US equity funds.

Carlyle Group Turns Profit as the Market Lifts Its Investments; Private-equity firm reported December-quarter profit of $518.8 million, up from a loss of $8.3 million in the fourth quarter of 2019
Maria Armental – WSJ
Carlyle Group Inc. CG 0.69% swung to a profit in the December quarter, as the value of its investments climbed with a buoyant market. The Washington, D.C., firm reported a fourth-quarter profit of $518.8 million or $1.44 a share, up from a loss of $8.3 million, or 8 cents a share in the fourth quarter of 2019. The firm’s private-equity portfolio appreciated by 11% during the period, compared with an 11.7% gain by the S&P 500.

Deutsche Bank Posts Profit as Investment Banking Unit Booms; German lender ends year with fourth consecutive profitable quarter
Patricia Kowsmann – WSJ
As the coronavirus pandemic took hold in early 2020, Deutsche Bank AG DB 0.86% , long-plagued by problems, braced for another tough year. On Thursday, it reported a bumper annual profit. Driving the bank’s results was booming activity from clients as they adjusted their needs and investment portfolios. The German lender’s investment banking results offset more challenging conditions for its bread-and-butter lending business, which has been hit by negative interest rates.


India Can’t Afford to Go on a Debt Binge; With a spendthrift new budget, Narendra Modi is undermining his greatest strength as an economic manager.
Mihir Sharma – Bloomberg
India’s economy has suffered more than most from the pandemic and so have its people. The country has lost more than a year’s worth of growth and perhaps a decade’s progress in its efforts to reduce poverty. The economic contraction — the first in India since the 1970s — has put pressure on its government like so many others to respond.

South Korea ETF price war intensifies; KB Asset Management slashes management fees on some funds to record low of 0.001%
Robin Yu – FT
South Korea’s KB Asset Management has slashed management fees on a trio of exchange traded funds to just 0.001 per cent, the lowest level in the domestic industry, in a bid to expand the firm’s market share against the country’s largest ETF issuers, Mirae Asset and Samsung Asset Management.

Chinese IPOs underpriced by up to $200bn due to valuation limits; Research underscores struggle for competitive listings in country’s vast equity market
Hudson Lockett and Thomas Hale – FT
Initial public offerings in China have undervalued companies by up to $200bn over the past six years, academic research indicates, reflecting a struggle to price listings in the world’s second-biggest equity market.

Kuwait wealth fund’s diplomatic immunity challenged in UK tribunal; KIO claims documents being sought in employment case are part of ‘protective archive’
Peter Smith – FT
A UK employment tribunal has been told the London-based Kuwait Investment Office cannot rely on state or diplomatic immunity because the sovereign wealth fund is a “separate legal entity” and not part of Kuwait’s diplomatic mission.

Chinese Video IPO Goes Viral With Investors; Kuaishou is latest in a series of hot Hong Kong initial public offerings
Joanne Chiu – WSJ
Shares in Kuaishou Technology surged in gray-market trading ahead of the Chinese video-app operator’s Hong Kong debut, after investors placed about $370 billion of orders for the $5.4 billion deal. Kuaishou competes with ByteDance Ltd., the closely held Chinese firm behind TikTok and its domestic sister app, Douyin. The initial public offering is the world’s largest in more than a year, according to Dealogic, and gives the company a market value of nearly $61 billion.


The City of London Is Now at the Mercy of Brexit’s Tug of War; Britain’s divorce deal barely touches banking and trading, and Europe is eager to develop its own financial center.
Harry Wilson, Neil Callanan – Bloomberg
In the beginning was the Big Bang. It was 1986, and the moribund British economy appeared stuck in an unbreakable cycle of postindustrial decline. Then came the jolt that opened up U.K. financial markets to the world and turned the City of London into the nation’s dynamo. Banks gathered in the Square Mile, and companies flocked to list on the newly deregulated stock exchange. Caricatured gents in bowler hats meeting over tepid ale were displaced by a generation of Gordon Gekko-style traders. More than three decades of near unbroken growth ensued as the Big Bang propelled London to the status of Europe’s preeminent financial center with the vast majority of trading in bonds, euro-denominated foreign exchange, and derivatives.

Brussels pushes back on UK bid to rewrite Northern Ireland protocol; European Commission vice-president Maros Sefcovic says Britain should commit to what it agreed in Brexit treaty
George Parker, Michael Peel and Arthur Beesley – FT
Boris Johnson has been urged by Brussels to focus on the “proper implementation” of post-Brexit trade rules in Northern Ireland, rather than threatening to suspend them.

London Starts to Win Back Swiss Share Trades in Brexit Boost
Viren Vaghela and Albertina Torsoli – Bloomberg
The return of Swiss share trading to London has begun, with initial signs that the city’s exchanges are hosting between a quarter and a third of the volumes seen before a European Union-wide ban. Cboe Europe had a 4.4% market share of trading in stocks like Nestle SA and Novartis AG by midday on Thursday, with about 68.9 million euros ($82.3 million) changing hands. This is down from 17% before Switzerland barred trading in a spat with the EU. Aquis Exchange Plc had about 2% market share on the first full day since the U.K. ended an 18-month hiatus for Swiss equities, down from a 6% share. “We’re encouraged by our market share so far and expect this to grow in the coming days and weeks,” said David Howson, president of Cboe Europe. “We’re excited to be able to bring back competition and choice to this important market.”

UK carmakers after Brexit: a race to attract battery production
Peter Campbell and Kana Inagaki – FT
From Tokyo to Paris to Detroit, the headquarters of the world’s major carmakers let out a collective sigh of relief when Britain signed its last-minute deal with the EU on Christmas Eve. The dreaded prospect of tariffs, which would have crippled the industry and jeopardised Britain’s fragile smattering of auto plants, had been avoided. “From an auto industry point of view it’s the best deal that we could wish for,” says Johan van Zyl, European chief executive of Toyota, the world’s largest carmaker which has two UK plants. “It was a very good Christmas present.”

Brexit leaves a bitter taste and a mountain of clothes
Chris Robinson – BBC News
It is more than a month since the UK’s new trading relationship with the European Union (EU) came into being but the transition has been far from easy for some businesses. From being told to set up operations in Europe, having goods stuck in port and facing increased costs to clear the border, three North East firms reveal the reality of adapting to the new rules. Dave Stone knows his beer and his Newcastle-based Wylam Brewery has proved a hit with drinkers far beyond the North East. With Covid forcing venues to close, half of his business has vanished, but trade has continued online.

Dublin and EU reject call to scrap Northern Ireland Brexit protocol
Lisa O’Carroll – The Guardian
The Brexit agreement’s Northern Ireland protocol will not be scrapped, the Irish government and the EU have said in an escalating row over the new trade barriers down the Irish Sea. The Democratic Unionist party leader, Arlene Foster, has called for the measure designed to keep the Irish land border open to be replaced, but Dublin is focused on easing problems with the post-Brexit trade deal that have caused disruption at Irish ports. The Irish foreign minister, Simon Coveney, told BBC Ulster “there is not going to be very dramatic change”, in the face of calls by the DUP for the protocol to be urgently axed.


What a $92 Million Painting Says About New Art Market Values; A Botticelli portrait illustrates how auction houses can test the price for “the best.”
James Tarmy – Bloomberg
In the lead-up to its auction in New York, Sotheby’s sent a 15th century painting by the early Italian Renaissance artist Sandro Botticelli on a world tour, traveling from New York to Dubai, London, and Los Angeles in an effort to drum up interest.

Vintage Wine Estates to Go Public in SPAC Merger; Merger of Vintage Wine Estates and Bespoke Capital Acquisition Corp. will value the private-equity-backed winemaker at around $690 million
Laura Cooper – WSJ
Vintage Wine Estates Inc. has found its perfect pairing: a blank-check company that will debut the private-equity-backed winemaker on the public market. Bespoke Capital Acquisition Corp., a special-purpose acquisition company, plans to merge with Vintage Wine Estates in a deal that will give the combined company an enterprise value of about $690 million, according to executives from Bespoke and Vintage Wine.

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