The Soaring Stock Index You’ve Never Heard Of; Derivatives Regulator Uses Dodd-Frank Rule to Target Foreign Bribery

Dec 22, 2020

First Read

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Your Opportunity to Expand Vaccine Development and Tame the Pandemic
John Lothian – JLN

Some vaccines for COVID-19 have been developed and approved and are beginning to be delivered and administered. This is just the beginning chapter for novel coronavirus vaccines. And chapter one is not even complete.

There are more pages to be written in this thriller. There are more COVID-19 vaccines that need to be developed. There are more people for whom specific vaccines need to be created: the young, pregnant and vulnerable.

What we need to finish this chapter and write the happy ending for this book is more research and development of new vaccines. We need more people and we need more facilities.

To read the rest of the commentary, go here.


Hits & Takes
John Lothian & JLN Staff

The CFTC included a picture of the CFTC leadership smiling and standing on the balcony of the New York Stock Exchange overlooking the trading floor in the tweet about their decision to grant OneChicago LLC its request to vacate their DCM designation. This is either very wrong or entirely tone-deaf. Appearing to celebrate an entrenched player in stock trading while announcing the demise of a challenger just seems wrong to me. Maybe use another picture next time?

Speaking of the CFTC, the latest to leave the Commission is Market Participants Division Director Joshua B. Sterling who will depart in January. Thank you to Mr. Sterling for his service.

The MaterialsXchange displayed a banner in the middle of LaSalle Street a couple of days ago. The MaterialsXchange employees are holding up the banner while standing in the middle of this abandoned financial district street. The last time I saw the street this empty was after the White Sox World Series parade when the street was still closed.

Many years ago, when Euronext bought LIFFE, I criticized Euronext for having not taken advantage of the domain by redirecting it to the site or the LIFFE products at When Eurex recently changed their URL from to, they did it right. redirects to Getting it right should be celebrated just as much as getting it wrong should be pointed out. Congratulations to my friends at

We had no new donations to our JLN MarketsWiki Education GoFundMe campaign yesterday. Help support our efforts to preserve industry history with contributing 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

***** reported Monday that 2020’s year-to-date exchange-traded fund inflows climbed to a steep $509.4 billion last week, surpassing 2017’s record total of $476.1 billion, helped by late-year equity interest. By comparison, year-to-date ETF inflows stood at $342.2 billion in the same period last year. Year-end totals are, of course, still pending.~SC


Kelly Loeffler, a Wall Street Senator With a Hardscrabble Pitch; The hard right turn of Ms. Loeffler, one of two Republican candidates in Georgia’s pivotal Senate runoff elections, reflects the ideological gymnastics embraced by her party in the Trump era.
Danny Hakim, Jo Becker and Astead W. Herndon – NY Times
In the year since Kelly Loeffler was appointed to the Senate, the largely unknown financial executive has crafted a narrative of her life and built a campaign around it. It goes like this: She is a humble farm girl who lived “paycheck to paycheck” as she worked her way through college. She is a staunch opponent of abortion, evidenced by a raft of legislation she has introduced in Washington.

*****In-depth profile of Sen. Kelly Loeffler by the New York Times. It is almost Bloomberg-esque in its depth and length.~JJL


CFTC Grants OneChicago LLC Request to Vacate DCM Designation
The Commodity Futures Trading Commission today issued an order vacating the designation of OneChicago LLC as a designated contract market (DCM). The order was issued at the request of OneChicago. The CFTC granted OneChicago its designation as a contract market on June 11, 2002.

*****Since OneChicago was created, all of the entities that started it have taken Chicago out of their names. The Chicago Board of Trade became part of the CME Group. The Chicago Mercantile Exchange became the CME Group and the Chicago Board Options Exchange became Cboe Global Markets. The world has changed a lot since that bright shiny day when OneChicago was announced.~JJL


There’s No Trade-Off Between Lives and the Economy; Some countries saved both this year—while others saved neither
Peter Coy – Bloomberg
As the plague year of 2020 lurches to a close it’s worthwhile revisiting one of the biggest policy mistakes of the pandemic—the attempt to preserve economic growth by minimizing restrictions that might hurt the economy. I wrote about that in May in a Bloomberg Businessweek cover story focusing on President Trump. “Will some people be affected? Yes. Will some people be affected badly? Yes,” Trump told reporters during a factory visit on May 5. “But we have to get our country open, and we have to get it open soon.”

*****Worth the read.~JJL


Monday’s Top Three
The top story on Monday was a Bloomberg piece A Speculative Frenzy Is Sweeping Wall Street and World Markets. The second story was an obit for longtime industry leader Mark Powers provided by the Powers family. Finally, No. 3 was a COVID-19 story with a twist from the NBC Bay Area, Why Dippin’ Dots Might Have a Place in the COVID-19 Vaccine Distribution Plan


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Lead Stories

The Soaring Stock Index You’ve Never Heard Of; The S&P Completion Index was up 31% this year, doubling the gain of the S&P, thanks to Tesla
Michael Wursthorn – WSJ
A lesser-known stock index lost its biggest driver after Tesla Inc. joined the S&P 500, potentially undercutting the performance of the highflying benchmark and several exchange-traded funds that track it. The S&P Completion Index tracks all U.S. stocks except those in the S&P 500. The index is typically associated with mid, small and microcap stocks that fail to meet certain criteria for inclusion in the S&P 500. The presence of Tesla, the biggest stock in the completion index and the sixth-largest publicly traded company in the U.S., was something of an anomaly.

Derivatives Regulator Uses Dodd-Frank Rule to Target Foreign Bribery; A first-ever enforcement action by the CFTC targeting foreign corruption lays the groundwork for cases involving other commodities traders
Dylan Tokar – WSJ
When a top official at a U.S. derivatives watchdog last year said the agency would start policing bribery by multinational corporations, defense lawyers greeted the news with disbelief. But any doubts about the Commodity Futures Trading Commission’s ability to make good on its declaration were dispelled this month, when the agency reached a $95 million settlement with Swiss energy firm Vitol for alleged misconduct stemming from bribes paid to state-controlled oil companies in Brazil, Ecuador and Mexico.

Congress Passes Huge Coronavirus Relief Bill; Lawmakers approved a $900 billion pandemic aid bill that provides a $600 payment for most Americans.
Emily Cochrane – NY Times
Congress on Monday night overwhelmingly approved a $900 billion stimulus package that would send billions of dollars to American households and businesses grappling with the economic and health toll of the pandemic.

SIFMA Issues Checklist in the Event US Interest Rates Turn Negative
SIFMA today issued a white paper titled “U.S. Negative Interest Rates Policy Checklist.” The checklist, which was co-authored by SIFMA and Ernst & Young LLP (EY), was developed to assist SIFMA and other market participants with planning for the potential of a negative interest rate policy in the U.S., accelerate readiness, and mitigate the risk of disruption to business activities and investors.

Treasury Department’s Senior Leaders Were Targeted by Hacking; The disclosure was the first acknowledgment of a specific intrusion in the vast cyberattack. At the White House, national security leaders met to assess how to deal with the situation.
David E. Sanger and Alan Rappeport – NY Times
The Russian hackers who penetrated United States government agencies broke into the email system used by the Treasury Department’s most senior leadership, a Democratic member of the Senate Finance Committee said on Monday, the first detail of how deeply Moscow burrowed into the Trump administration’s networks.

Ripple to Face SEC Suit Over XRP Cryptocurrency; Agency, whose chairman is leaving soon, claims the company violated investor-protection laws when it sold the bitcoin-like digital asset
Paul Vigna and Dave Michaels – WSJ
Ripple Inc. said it will defend itself against a lawsuit from the Securities and Exchange Commission that claims the company violated investor-protection laws when it sold a bitcoin-like digital asset called XRP.

*****See also: Ripple Says it Faces SEC Lawsuit as Cryptocurrency XRP Drops by Eric Lam, Bloomberg; and Ripple CEO Warns SEC May Sue Company Over XRP Sales by Nikhilesh De, Coindesk.~MR

Bitcoin Controlled By China, Ripple Tells SEC In Face Of Imminent Lawsuit
Shivdeep Dhaliwal – Benzinga
Ripple Labs Inc claimed — if the U.S. Securities and Exchange Commission deems its token to be an investment contract — the regulator would cede innovation in cryptocurrency to China, which controls Bitcoin (BTC) and Ethereum (ETH).

Risky business: the changing face of risk during the pandemic; Following a collapse in risk pricing and models during the market disconnect in 2020, Annabel Smith explores the ripple effect in the cash and futures markets.
Annabel Smith – The Trade
The COVID-19 pandemic threw firms into disarray as we tumbled into a bear market in the first three weeks of March. With this development, a second pandemic of doubt and fear was taking place under the surface.

US Treasury department officials subject to hacking campaign; Department confirms breach as attorney-general says Russia likely culprit behind attack
Hannah Murphy – FT
Hackers running a massive cyber-espionage campaign spied on dozens of US Treasury email accounts and accessed the systems used by some of its highest ranking officials, a senior senator said on Monday.


BioNTech CEO Confident Vaccine Will Work on U.K. Covid-19 Variant
Frank Jordans – AP
German pharmaceutical company BioNTech is confident that its coronavirus vaccine works against the new UK variant, but further studies are needed to be completely sure, its chief executive said Tuesday.

US companies warned against mandatory vaccine for staff; Corporate America’s desire for mandate conflicts with deep suspicion among workers
Andrew Edgecliffe-Johnson – FT
US companies risk a backlash if they insist that staff be vaccinated against Covid-19 before returning to the workplace, according to corporate advisers who warn that employers’ desire to mandate vaccination will clash with deep concerns among many employees.

BioNTech says it can produce new vaccine for Covid variant in 6 weeks; Chief Ugur Sahin expects existing shot to be effective but it can be tweaked if needed
Anna Gross – FT
Germany’s BioNTech said it could use existing technology to produce a new vaccine against mutations of the coronavirus within six weeks, as concerns mounted over the new Covid-19 strain spreading across the UK.

Covid testing capacity expected to fall short as UK cases surge; Government document warns of scarcity in kits when schools and universities return in January
Anna Gross – FT
The UK may not have enough coronavirus tests to meet surging demand in the coming weeks, according to an internal government document, as the new strain of Covid-19 sends cases soaring.

More areas of England set to enter tier 4 in race to curb new strain; Government’s chief scientific adviser says it is ‘likely’ tighter measures will be needed
George Parker – FT
More areas of England are likely to enter the highest level of tier 4 restrictions in the new year as the country braces for the spread of the new strain of coronavirus, the government’s chief scientific adviser has warned.

Covid Spurs Families to Shun Nursing Homes, a Shift That Appears Long Lasting; Fearing infection and isolation, relatives are turning to home care as new services make that option more possible for many
Anna Wilde Mathews and Tom McGinty – WSJ
The pandemic is reshaping the way Americans care for their elderly, prompting family decisions to avoid nursing homes and keep loved ones in their own homes for rehabilitation and other care.

Mexico’s Excess Deaths Pass 250,000 Amid Covid Outbreak
Dale Quinn – WSJ
Mexico has recorded 40% more deaths than expected this year, according to a report on excess mortality in the country. The country has recorded 254,625 more deaths — from all causes — than expected through late November, the report said. The amount is more than double the 118,598 confirmed Covid-19 deaths in the country.

World’s Longest Virus-Free Streak Ends With New Taiwan Case
Samson Ellis, Debby Wu, and Cindy Wang – Bloomberg
Latest case had contact with pilot who had tested positive; Taiwan had not reported a domestic Covid infection since April
The first locally transmitted case of Covid-19 in more than eight months was reported in Taiwan, ending what was the world’s longest stretch without a domestic infection and providing a reminder of the virus’s ability to outfox even the most successful efforts to contain it.

Covid Is Killing in Rural U.S. Faster Than in Big Cities
Nic Querolo – WSJ
Nine months after arriving in the most densely populated parts of the U.S., the fatal effects of the coronavirus are spreading more in its remote corners. Covid-19 is now killing in rural areas at a faster clip than anywhere else. As of last week, there were 109 cumulative deaths per 100,000 residents in “non-core” counties, the least-populated classification, according to data from the U.S. Centers for Disease Control and Prevention.

Exchanges, OTC and Clearing

CME’s TriOptima completes first Japanese Yen compression; First, triReduce enhanced compression on Japanese yen cycle has been conducted by TriOptima.
Kiays Khalil – The Trade
CME Group’s TriOptima has completed its first triReduce enhanced compression at the Japan Securities Clearing Corporation (JSCC).

ICE hires top US regulator as new chief regulatory officer for NYSE; Industry veteran and former US CFTC COO has been hired as the chief regulatory officer for NYSE.
Kiays Khalil – The Trade
Intercontinental Exchange (ICE) has hired a former top US regulator as the new chief regulatory officer for the New York Stock Exchange (NYSE). Industry veteran Jaime L. Klima will join NYSE in January 2021, where she will be responsible for overseeing its independent regulatory unit, NYSE regulation. Leading and will be in charge of a team of 100 attorneys and industry professionals, NYSE Regulation will monitor and enforce issuers’ compliance with listing standards, members’ compliance with relevant exchange rules and federal securities laws, and exchanges’ compliance with their self-regulatory organisation obligations.

Interview: It’s about time to access the benefits of listed FX;Barclays and DZ PRIVATBANK S.A. to provide Union Investment access to Eurex FX
Listed FX volumes and open interest are continuing to grow at Eurex. With a strong December roll, the exchange traded more than 600,000 futures contracts in 2020 despite the COVID-19 crisis. Progress is also visible in market access. Most recently, Barclays and DZ PRIVATBANK S.A. provided Union Investment access to Eurex FX.

Equity derivatives: Amendment of liquidity classes and quotation requirements
Eurex Circular 102/20 Equity derivatives: Amendment of liquidity classes and quotation requirements

Member Section 2.0: New URL/link, 2-factor authentication, user-friendly navigation structure and user permissions
Eurex Circular 101/20 Member Section 2.0: New URL/link, 2-factor authentication, user-friendly navigation structure and user permissions

TriOptima Completes First Benchmark Conversion Risk Replacement Trades at Japan Securities Clearing Corporation
CME Group
TriOptima, a leading infrastructure service that helps to lower costs and mitigate risk in OTC derivatives markets, has announced the completion of the first triReduce enhanced compression Japanese yen cycle, which includes Tokyo Overnight Alternative Rate (TONA) risk replacement trades. The cycle took place on December 4, 2020 at the Japan Securities Clearing Corporation (JSCC).

Performance Bond Requirements – Energy Margin – Effective December 22, 2020
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.

Performance Bond Requirements – Energy Margin – Effective December 22, 2020
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.

January 2021 Delivery Date Memo
CME Group
Important dates and events through the month relevant to delivery and clearing procedures.

SGX to report 1H FY2021 results on 22 January 2021
Singapore Exchange (SGX) is reporting its half year (1H) results for Financial Year 2021 (FY2021) after the market closes on 22 January 2021.

Scheduled Go-Live Date of J-GATE3.0
Osaka Exchange, Inc. and Tokyo Commodity Exchange, Inc. have been developing the next-generation derivatives trading system (J-GATE3.0) to expand market liquidity and further improve reliability and convenience for investors, trading participants, and other market users. Based on the progress of our preparations, we hereby announce that the scheduled go-live date is September 21, 2021.


India’s State-Led Payment Network Is Growing. Now Nation Wants to Export It
Jaspreet Kalra – Coindesk
A surge in e-commerce and declining cash usage during the COVID-19 pandemic have boosted India’s state-led shared payments infrastructure. According to the National Payments Corporation of India (NPCI), the nation will have processed over $425 billion in commerce by the end of this year. Emboldened by growth and eyeing expansion, the United Payments Interface’s (UPI) umbrella organization is thinking about exporting the model to other countries. Developed under state guidance and regulated by the country’s central bank, the Reserve Bank of India, the payments interface began as part of the larger India Stack project, which pooled application programming interfaces (APIs) that could be used by public and private actors to build digital infrastructure.

Fintech startups are increasingly focusing on profitability
Romain Dillet – TechCrunch
Fintech startups have been massively successful over the past few years. The biggest consumer startups managed to attract millions — sometimes even tens of millions — of users and have raised some of the biggest funding rounds in late-stage venture capital. That’s why they’ve also reached incredible valuations.

The founders of fast-growing fintech startup Pipe moved their company from California to Miami during the pandemic. They explain why they’re never going back.
Berber Jin – Business Insider
Pipe CEO Harry Hurst and Chief Operating Officer Michal Cieplinski moved from California to Miami in September because they wanted a more convenient time zone for their clients in Europe and the Middle East. Then they fell in love with the city because of its burgeoning tech ecosystem, safety, cosmopolitanism, and pro-business mayor, Francis Suarez. They described to Business Insider their relationship with Suarez, who has been handing out his cellphone number to founders and investors who relocate to Miami. Hurst and Cieplinski opened a Pipe office in the city in October, closed their San Francisco and Los Angeles offices, and said they’d received hundreds of messages from other founders who were considering moving.

How Fintech Is Helping Entrepreneurs
Roland Marconi – The Street
Fintech originally grew from electronic banking and bill paying but the rapid expansion of the financial technology field has given rise to cryptocurrencies and a host of apps and services adopted by consumers as the most convenient way to conduct all types of personal and commercial transactions. One area that is being driven by Fintech is the independent online seller community. Websites like eBay and Etsy depend on Fintech services like PayPal, Apple Pay, and Google Pay for ease of transactions between buyers and sellers.


Scaramucci’s SkyBridge Launching a Bitcoin Fund
Danny Nelson – Coindesk
Anthony Scaramucci’s hedge fund SkyBridge Capital filed documents with the U.S. Securities and Exchange Commission Monday for what appears to be its first bitcoin fund.

(Video) Why Investors Are Piling Into Bitcoin Despite the Risks
Jacob Reynolds – WSJ
The price of bitcoin is skyrocketing, driving a rally of momentum trading that’s pushed its value higher than it’s ever been before. WSJ explains how bitcoin trading works, and why the volatile digital currency is reaching all-time highs.

Crypto card issuer Wirex becomes a principal member of Visa in Europe
Yogita Khatri – The Block
Wirex, the London-based cryptocurrency card issuer, has been made a Visa principal member in Europe. According to an announcement shared with The Block on Tuesday, the membership allows Wirex to issue Visa cards itself, offer new products, and apply for additional licenses. Visa principal members, in general, are authorized to act as issuing banks, meaning they can issue cards and provide transaction processing services. Currently, Wirex’s debit cards are issued by Visa. They are available in Europe and Asia and allow users to buy and convert crypto into fiat for spending it. Wirex claims it has more than 3 million customers.

FTX lists Coinbase pre-IPO futures contracts
Yogita Khatri – The Block
Crypto exchange FTX has listed futures contracts of Coinbase ahead of its initial public offering (IPO). The CBSE pre-IPO contracts allow traders to speculate on at what price Coinbase will list on a stock exchange. In other words, the contracts track the market capitalization of Coinbase. At the time of writing, the contracts imply the market capitalization of Coinbase at about $58 billion (the current contract price of around $233 multiplied by the maximum market capitalization of the contracts, i.e., $250 million).

Elon Musk trolls Bitcoin, causes novelty Dogecoin to soar
Jeff John Roberts
Tesla CEO Elon Musk sent the cryptocurrency world into a tizzy this weekend with a series of tweets about Bitcoin and a lesser-known currency called Dogecoin. His remarks caused the price of the latter, which is based on a meme about Shiba Inu dogs, to soar. The episode began in the wee hours of Sunday night when Musk replied to a racy tweet showing a woman wearing Tesla-branded shorts—an article of clothing that the company created earlier this year to mock those who had shorted its stock price. In response to the tweet, Musk billionaire replied “Bitcoin is my safe word.”

Indian crypto exchange CoinDCX raises $13.9 million in Series B funding
Yogita Khatri – The Block
Indian cryptocurrency exchange CoinDCX has raised $13.9 million in Series B funding. The round was led by, with participation from Temasek, Coinbase Ventures, Jump Capital, Uncorrelated Ventures, Polychain Capital, Mehta Ventures, and Alex Pack. (Pack is a former managing partner of Dragonfly Capital who joined Huobi’s investment unit last month). With fresh capital at hand, CoinDCX plans to scale its product and technology functions, grow its team, and beef up compliance and security parts of its platform, co-founder and CEO Sumit Gupta told The Block.

Huobi Crypto Exchange Returning to US After Winning Nevada Trust License
David Pan – Coindesk
Global crypto exchange Huobi Group is making its U.S. comeback after an abrupt departure over a year ago. Huobi Tech – a Hong Kong-based publicly traded company acquired by Huobi Group founder and CEO Leon Li via a reverse takeover in 2018 – said a trust license has been approved by the Nevada Financial Institutions Division for its wholly owned subsidiary Huobi Trust Company’s, according to its Tuesday filing with the Hong Kong Stock Exchange.

Grayscale Temporarily Stops Accepting New Clients in Six Crypto Trusts
Danny Nelson – Coindesk
Grayscale Investments LLC has temporarily stopped accepting new investors in six funds, including its Ethereum Trust and Bitcoin Trust funds, both gateways for institutional crypto bets. The crypto asset manager’s website said Monday that its Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin and Digital Large Cap Fund Trusts are “currently unavailable” for new investors.

Bank of Russia Chair: Digital Ruble Is No Threat to Banks
Anna Baydakova – Coindesk
The Bank of Russia doesn’t believe a digital ruble will hurt its banks. Earlier this month, Russian banks warned the Bank of Russia that the digital ruble under discussion might weaken them if people pull their funds to rush into the new system. Introducing the digital ruble into Russia’s financial system might cost the country’s banks up to 25 billion rubles (~$34 million), according to Sber, Russia’s largest retail bank and the most vocal critic of the current approach to the central bank digital currency (CBDC).


Georgia Senate race: Why Kelly Loeffler has veered so hard to the right
Andrew Naughtie – The Independent
In one of the strangest political ads of 2020, a helmeted, grubby-faced Atilla the Hun sits astride a throne in his yurt, grunting orders at an underling with a quill. “Fight China!” he commands. “Attack big government!” “Eliminate the liberal scribes!” This agenda is apparently too timid for Kelly Loeffler, Georgia’s Republican junior senator, who ran the ad earlier this year to shore herself up against a hardline rival from her own party – and who is now pulling hard to the right as she fights a final round against a Democrat in a state Donald Trump lost.

Massive Package of Virus Relief, Federal Funding Passes Congress
Erik Wasson, Laura Litvan, and Billy House – Bloomberg
Trump expected to sign bill totaling more than $2.3 trillion; Economists say aid plan may stave off another recession
Congress passed the second-biggest economic rescue package in U.S. history as part of a massive year-end spending bill, concluding months of discord between Democrats and Republicans over how to address the pandemic that continues to surge across the country.

New PPP money in $900B COVID relief bill headed for Congress
Andrew Taylor – AP
After months of Washington gridlock, Congress is set to vote on a $900 billion pandemic relief package, finally delivering long-sought cash to businesses and individuals as well as resources to vaccinate a nation confronting a frightening surge in COVID-19 cases and deaths.


Market Participants Division Director Joshua B. Sterling to Depart CFTC in January
The Commodity Futures Trading Commission today announced that Market Participants Division (MPD) Director Joshua B. Sterling will depart the agency by the end of January 2021. Mr. Sterling has led MPD since joining the agency from private practice in August 2019.

CFTC Staff Extends No-Action Relief for Shanghai Clearing House
The Commodity Futures Trading Commission’s Division of Clearing and Risk (DCR) today issued a no-action letter extending the relief originally provided to Shanghai Clearing House (SHCH) in CFTC Letter No. 16-56, which — pursuant to CFTC Letter No. 18-18 — will expire on July 31, 2021. The extension ends the earlier of July 31, 2022 or the date on which the CFTC exempts SHCH from registration as a derivatives clearing organization (DCO).

Regulators Continue Reviews Of Market Data Pricing, Little Action
Tom Groenfeldt – Forbes
Regulators in the U.S., UK and Europe are looking at market data prices and practices after receiving complaints about costs from investment firms, traders and hedge funds.
Christopher Woolard, executive director of strategy and competition at the FCA in London asked the financial service industry for input on market data. The FCA wants to further understand how innovations in data are generated and used, the value offered to market participants and whether data are being competitively sold and priced, the agency said.

Connaught investors accuse regulator of ‘lying’ over compensation; UK’s FCA deliberately understated amount owed in attempt to draw line under scandal, group says
Matthew Vincent – FT
Investors in the collapsed Connaught Income Fund have accused the UK financial regulator of “lying” about the £104m loss they suffered in an attempt to avoid paying them any more compensation.

The TRADE’s Crystal Ball 2021: Regulation; Gaze into The TRADE’s crystal ball for insights from market participants on their regulation and market structure predictions for the year ahead.
Hayley McDowell – The Trade
As we move into the post-Brexit era, London is poised to lose its status as the home of MTFs, with the bulk of trading in EU shares set to move to the continent. However, in the months ahead, we could see the UK take the opportunity to rewrite trading rules and craft a more liberal approach to market structure that diverges from the EU’s fixation on increasing lit trading.

Former Sydney financial adviser pleads guilty to theft and director duties offences
Keith James Flowers, formerly known as Nigel Flowers, of Bathurst, New South Wales, has appeared before Downing Street District Court Sydney and pleaded guilty to one charge of acting dishonestly as a company director and one charge of theft.

2020 update on APRA-ASIC engagement
The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have today released a joint statement on their annual engagement activities.

ESMA Newsletter – Nº19
Welcome to the 19th edition of ESMA’s newsletter.
Before the Christmas holidays, or even during them, you may want to check out our key publications related to Brexit and ESG including the recognition of EUI as third-country CSD, the Derivatives Trading Obligation (DTO) and the ESEF XBRL Taxonomy files. We have also launched a call for expression of interest for our Financial Innovation Standing Committee’s CWG and our Chair, Steven Maijoor, delivered an important keynote speech on sustainability reporting at the French Ministry of the Economy, Finance and Recovery .

ESMA announces 10-Year Anniversary Conference
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, will turn 10 on 1 January 2021 and, as part of our anniversary celebrations, we will host an online conference on 23 March to reflect on the progress the Authority has made as a financial regulator and look to its future.

ESMA issues 2020 report on accepted market practices under MAR
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today published its annual report on the application of accepted market practices (AMPs) in accordance with the Market Abuse Regulation (MAR).

ESMA updates Q&A on costs and charges
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today updated its Questions and Answers on the implementation of investor protection topics under the Market in Financial Instruments Directive and Regulation (MiFID II/ MiFIR).

FINRA Sanctions Transamerica Financial Advisors, Inc. $8.8 Million for Supervisory Violations Related to Variable Annuities, Mutual Funds and 529 Plans; Firm Ordered to Pay $4.4 Million in Restitution to Approximately 2,400 Affected Customers
FINRA announced today that Transamerica Financial Advisors, Inc. (TFA) has agreed to pay approximately $4.4 million in restitution to approximately 2,400 customers for failing to supervise its registered representatives’ recommendations of three different products – variable annuities, mutual funds, and 529 plans. FINRA also fined TFA $4.4 million.

FINRA Updates the OTCBB/OTC Equities High Price Dissemination List
FINRA is publishing its quarterly OTCBB/OTC Equities High Price Dissemination List for the third quarter of 2020. This updated list of OTC equity securities eligible for trade report dissemination for trades of fewer than 100 shares is effective as of December 21, 2020. To view changes, visit the Daily List: Security Attribute Changes page, select the “Unit of Trades” filter and enter December 18, 2020 as the “Start” date and December 21, 2020 as the “End” date.

SEC Charges Company and CEO for $119 Million Securities Fraud Targeting Members of the South Asian American Community
The Securities and Exchange Commission today announced that it filed an emergency action against California-based real estate development company SiliconSage Builders LLC, aka Silicon Sage Builders, and its sole owner, Sanjeev Acharya, in connection with an alleged $119 million fraudulent offering.

MoneyThing Capital Limited enters administration
On 21 December 2020, the Directors of MoneyThing Capital Limited, a regulated Peer-to Peer (P2P) firm, placed the firm into administration and appointed Tom Straw and Milan Vuceljic of Moorfields Advisory Ltd as Joint Administrators.

SEC Names John Moses as Deputy Director of Office of Investor Education and Advocacy; Will Lead Efforts to Promote Agency’s Increased Focus on Financial Inclusion and Outreach to Underserved Communities
The Securities and Exchange Commission today named John Moses as Deputy Director of the SEC’s Office of Investor Education and Advocacy (OIEA).

Investing and Trading

Rich Americans Who Fear Higher Taxes Hurry to Move Money Now
Ben Steverman and Oshrat Carmiel – Bloomberg
Advisers say they’re swamped with clients seeking advice; Rich are looking to protect against possible Biden tax changes
Rich Americans are rushing to make large transactions before the end of the month, trying to get ahead of any moves next year by President-elect Joe Biden and Democrats in Congress to raise taxes or close loopholes.

Fed backstop masks rising risks in America’s corporate debt market; Record $2.5tn borrowing binge has caused debts to balloon faster than profits can keep up
Joe Rennison – FT
Investors and analysts surveying the damage wrought by the pandemic have warned that it has exacerbated some of the most worrying trends in corporate debt markets and left balance sheets in a far riskier state.

The case for the 60/40 portfolio in equities and bonds; Strategy proves resilient in 2020 despite questioning by some investors as obsolete
Erin Browne – FT
Is a traditional portfolio of 60 per cent in equities and 40 per cent in bonds obsolete? Many investors thought so this year. However, the strategy has so far defied forecasts of its demise.

Follow $100 through the 2020 market rollercoaster
Katie Martin, Brooke Fox and Fan Fei – FT
Relive the year when a pandemic pushed global markets to the brink. Good news reader! It is the first day of 2020 and the FT has gifted you $100 to track the US stock market. If you had used that money to follow the S&P 500 index in the past, the average gain would have been about $10.50 a year in the last five years. Let’s see how 2020 shapes up.

Investors Turn to Far-Flung Bonds for Juicy Returns; Appetite for emerging markets has returned with gusto, enabling Uzbekistan to issue local currency bonds to international investors for the first time
Paul J. Davies – WSJ
In a world of ultralow interest rates, bond investors go down less traveled paths. One example: the central Asian republic of Uzbekistan sold bonds to international investors in its own currency, the som, for the first time.

Environmental, Social and Corporate Governance

The Environmental, Social, and Governance (ESG) Movement Is Facing a Backlash
Peter Coy – Bloomberg
The legal principle that corporate boards must focus exclusively on maximizing value for shareholders wasn’t always taken for granted. It was enshrined in a 1919 court decision involving Henry Ford and two of his car company’s shareholders, the Dodge brothers. As chairman and majority owner of Ford Motor Co., he had repeatedly raised his workers’ pay, cut the price of the Model T, and reinvested profits in expansion. If Ford were around today his stance might be applauded by the environmental, social, and governance (ESG) movement on Wall Street. “My ambition is to employ still more men, to spread the benefits of this industrial system to the greatest possible number, to help them build up their lives and their homes,” he said in a speech introduced at trial.

Socially Responsible, ESG ETFs Are Turning Heads
Max Chen – ETF Trends
Investors are taking a shine to exchange traded funds that track socially responsible investments, like those based on environmental, social, and governance principles.
According to FactSet data, investors have funneled a record $27.4 billion into ESG-related ETFs so far in 2020, doubling the size of the asset category, the Wall Street Journal reports.

Korea’s Top Arranger Says ESG Demand to Spark Deal Rebound
Kyungji Cho – Bloomberg
South Korea’s corporate bond sales may rebound next year, fueled by a boom in socially-responsible debt, according to the brokerage that’s been the No. 1 local-note arranger for 10 years in a row.
Issuance of won-denominated company debt may rise by 5 to 10% in 2021 to reach at least 56 trillion won ($51 billion), around record levels, said Kim Sung-hyun, president and chief executive officer at KB Securities Co.


Deutsche Bank Weighs Raising Traders’ Bonuses by About 10%
Steven Arons – Bloomberg
Debt traders have kept CEO Sewing’s turnaround plan on track; Retail, corporate bankers are set to see lower bonuses
Deutsche Bank AG is considering raising bonuses for its fixed-income traders by roughly 10% to reward them for a bumper year that left Chief Executive Officer Christian Sewing more reliant than ever on their performance.

Once Labeled the ‘Wrong Color,’ a JPMorgan M&A Co-Chief Rakes in Billions for the Bank; Anu Aiyengar, the only woman or person of color heading a global mergers shop on Wall Street, says the lines between industries are blurring.
Nabila Ahmed – Bloomberg
As JPMorgan Chase & Co. searches for its first major acquisition in more than a decade, Anu Aiyengar will have a hand in shaping the giant bank’s future. She’s the co-head of its global mergers and acquisitions business, and the only person of color and only woman to hold that position on Wall Street. It’s been a remarkable trajectory for an Indian immigrant who moved to the U.S. as a teenager to study at Smith College, shivering through the bitter Massachusetts winter in a $5 coat.

Mutual fund conversions to ETFs pose challenge; Complex transitions mean managers have to think every single detail through
David Isenberg -FT
Compliance and operations teams in fund houses that are planning to convert mutual funds to ETFs have lots to do to ensure their compliance and operations teams are ready, lawyers say.

SoftBank launches Spac and may buy one of its own investments
Masayoshi Son’s conglomerate to raise up to $604m for blank-cheque vehicle
Ortenca Aliaj, Arash Massoudi – FT
SoftBank has filed to raise up to $604m for a special purpose acquisition company, saying the vehicle could acquire a business the Japanese conglomerate has previously invested in via its $100bn Vision Fund.

Goldman Unit Makes New Push Into Real Estate With Stake in Sale-Leaseback Firm; Oak Street Real Estate Capital is considering expanding its reach now that it has the lender’s backing
Peter Grant – WSJ
A Goldman Sachs Group Inc. unit that buys stakes in alternative investment managers has made its latest push into the real-estate industry by investing in a firm that acquires stores, warehouses and other properties from big companies and then leases them back.

Calpers Seeking an Investment Chief With Staying Power; Nation’s largest public pension fund has had six chief investment officers over the past two decades
Heather Gillers – WSJ
The nation’s largest public pension fund has a retention problem, an especially pressing issue given the deep hole it and other retirement plans are in. The California Public Employees’ Retirement System has burned through six chief investment officers over the past two decades. Its most recent investment chief, Ben Meng, lasted just 19 months. His tenure ended this summer in the midst of questions about whether his personal investments created a conflict of interest.


Default Story Far From Over for Virus-Hit Emerging Economies
Marton Eder and Farah Elbahrawy – Bloomberg
The drop in the amount of distressed debt across emerging markets has been a barely anticipated bonus for many countries this year.
But it’s scant comfort for those nations still struggling with mounting obligations.
The number of emerging- and frontier-market nations with debt trading at distressed levels — yields more than 10 percentage points above those on U.S. Treasuries — has tumbled from as many as 19 at the height of the coronavirus selloff in March to about a half-dozen now. A Group-of-20 initiative to suspend official loan payments for the 73 poorest nations has helped many low-income countries avoid default and free up cash for their coronavirus responses by delaying about $5 billion in payments.

Latin American assets hit by new coronavirus strain caution
Medha Singh – Reuters
Latin American assets were hit on Monday as investors preferred the safety of the dollar after the UK imposed tough restrictions to fight a highly infectious new coronavirus strain. The Brazilian real dropped about 0.3%. The Mexican and Colombian pesos eased in tandem with oil prices, while weakness in the copper market undercut the Chilean peso.

Investors Turn to Far-Flung Bonds for Juicy Returns
Paul J. Davies – WSJ
In a world of ultralow interest rates, bond investors go down less traveled paths. One example: the central Asian republic of Uzbekistan sold bonds to international investors in its own currency, the som, for the first time.
The junk-rated country sold 2 trillion Uzbek som worth of three-year bonds, just less than $200 million, at a yield of 14.5% at the start of December. It sold them alongside $555 million of 10-year bonds in dollars at a yield of 3.7%. That highlights the difference in reward investors demand for the risk of owning an obscure currency.


U.K. Warned That No-Deal Brexit Would Exacerbate Port Crisis
Richard Weiss and Christopher Jasper – Bloomberg
Hapag-Lloyd CEO fears months of administrative troubles; Ports association head says he’s hopeful Dover will reopen
U.K. port snarl-ups would be exacerbated in a no-deal Brexit, shipping giant Hapag-Lloyd AG warned as vital ferry links to France remained closed for a second day amid concern about a new coronavirus strain.

EU Rebuffs Boris Johnson’s Latest Brexit Concession on Fish
Ian Wishart – Bloomberg
Britain had proposed the EU accept a 30% reduction on Monday; Member states will be briefed by Barnier on Tuesday afternoon
The European Union rebuffed Prime Minister Boris Johnson’s latest concessions on fishing rights, dealing a setback to efforts to secure a post-Brexit trade deal.

Scotland’s financial sector ready for Brexit, says trade body; Industry urged to focus on post-pandemic recovery and climate change
Mure Dickie – FT
The Scottish financial services sector is in a “strong place” and well prepared for Brexit, but will have to shift its focus to contribute more to addressing climate change and the post-coronavirus economic recovery, the new head of its trade body has warned.

PM Johnson says on Brexit: still problems, we’ll thrive without a deal
Reuters Staff – Reuters
Prime Minister Boris Johnson said on Monday that there were still problems in Brexit trade talks and that Britain would thrive without a deal. “The position is unchanged: there are problems,” Johnson told reporters when asked if there would be a trade deal. “Its vital that everybody understands that the UK has got to be able to control its own laws completely and also that we’ve got to be able to control our own fisheries.” “WTO terms would be more than satisfactory for the UK. And we can certainly cope with any difficulties that are thrown our way. Not that we don’t want a deal but that WTO terms would be entirely satisfactory,” he said.

U.K. Warned That No-Deal Brexit Would Exacerbate Port Crisis
Richard Weiss and Christopher Jasper – Bloomberg
U.K. port snarl-ups would be exacerbated in a no-deal Brexit, shipping giant Hapag-Lloyd AG warned as vital ferry links to France remained closed for a second day amid concern about a new coronavirus strain. While Prime Minister Boris Johnson’s government is desperately trying to re-open the key truck-ferry route between France and Dover, the No. 1 entryway for sea containers at Felixstowe, east of London, is itself badly congested. That situation will likely worsen without a trade accord with the European Union by a Dec. 31 deadline, according to Hapag-Lloyd.

EU and UK edge towards Brexit compromise on fisheries
George Parker, Sebastian Payne and Peter Foster in London and Jim Brunsden – FT
Britain and the EU edged towards a compromise on fisheries on Monday in an attempt to unblock a Brexit trade deal, as Boris Johnson eyed December 30 for a last-gasp parliamentary vote on an agreement. Raoul Ruparel, a former Europe adviser to ex-prime minister Theresa May who remains well connected in Whitehall, suggested the EU and the UK could find a solution to one outstanding issue holding back a deal: the bloc’s fishing rights in British waters after Brexit. The prime minister’s allies, meanwhile, said any trade deal struck now would probably have to be voted on by MPs and peers between Christmas and new year, with an emergency parliamentary session being planned.

Could Boris Johnson Delay Brexit Again? This Time, It’s Harder
Ian Wishart – Bloomberg
Boris Johnson is facing calls to delay Britain’s final parting from the European Union as his government grapples with a mutant strain of coronavirus while the Brexit negotiations enter their final hours. Scottish First Minister Nicola Sturgeon, London Mayor Sadiq Khan and Tobias Ellwood, one of Johnson’s own members of parliament, all said the prime minister should extend the transition period — which keeps Britain in the bloc’s single market and bound by the EU’s rules until Dec. 31. That would allow talks to continue beyond the year-end.

Brexit deadlock: EU members asked by Brussels to think again on fishing offer
Daniel Boffey – The Guardian
EU member states with the largest fishing fleets are being asked by Ursula von der Leyen’s senior team to rethink their “final offer” after Downing Street made a significant move to break the Brexit deadlock. France and Denmark are understood to be the most cautious about making a counter-proposal, budging from their current demand that their vessels lose only 25% by value of the fish they catch in British waters. The European commission president spoke by telephone to Boris Johnson on Monday night to discuss a way forward, with Von der Leyen said by EU sources to be determined to find a landing zone for a deal.

Brexit: Johnson resists calls to extend transition into 2021
BBC News
Boris Johnson has ruled out extending the deadline for reaching a post-Brexit trade deal into 2021, amid a deadlock in talks and a growing Covid crisis. SNP leader Nicola Sturgeon and London mayor Sadiq Khan want the UK to follow EU trading rules beyond 31 December to allow more time for an agreement. But the prime minister said his stance was “unchanged” and the UK would “cope with any difficulties” encountered. UK-EU talks continue, with nine days left to reach and ratify any agreement.


London Development to Test Demand for 15-Minute Cities After Covid-19; Related Cos. leads $6 billion development to transform 180 acres into a walkable urban neighborhood
Ruth Bloomfield – WSJ
The hot new trend for European development is neighborhoods where everything a resident needs is within a short walk. Now, a prominent U.S. developer is building one of London’s largest versions of this type of megaproject.

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CME to permanently close most trading pits

CME to permanently close most trading pits

First Read $40,626/$300,000 (13.5%) Anonymous ++++ Hits & Takes John Lothian & JLN Staff Without fanfare or amplification from its executives, the CME Group shut the books on most -- but not all -- of its floor trading history Tuesday afternoon with the...

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