Trading Titan Don Wilson Has Advice for Yellen on Market Fixes

Feb 8, 2021

First Read

$28,051/$300,000 (9.4%)



Hits & Takes
John Lothian & JLN Staff

MarketsWiki was successfully migrated to a new hosting provider over the weekend and is noticeably faster to load. Thank you to Jeff Bergstrom, JLN’s CIO, for his hard work this weekend to make this happen. Note, right now is down. It should be back up in a couple of hours.

The CME Group has launched Ether futures, expanding its crypto derivatives offerings in this emerging asset class. Tim McCourt, CME Group’s global head of equity index and alternative investment products, said in a press release, “The addition of Ether, along with our liquid Bitcoin futures and options, will create new opportunities for a broad array of clients, whether they are looking to hedge ether positions in the spot market or gain exposure to this cryptocurrency on a regulated derivatives marketplace.”

Katten has been named a “Best Place to Work for LGBTQ Equality by the Human Rights Campaign.”

Japan’s Topix stock index has closed at its highest level since 1991.

Jeff Carter has a blog post on this Points and Figures site titled “I Thought I Was Going To Die.” He was diagnosed with IPF and you have to read his story to find the happy ending.

If all my aches and pains aren’t enough to tell me I am old, I learned it again yesterday during the halftime show when I had to ask, “Who is The Weekend?”

Did you know the USS New York (LPD-21) was built from 24 tons of steel from the fallen towers of 9/11? One of the most state-of-the-art amphibious warships in the Navy’s fleet, she is manned by a crew of 360 sailors and three permanently assigned Marines. Her motto is “Strength Forged Through Sacrifice – Never Forget.” This factoid was posted to LinkedIn by John Venturo.

Thank you to IEX for the gift of some Lit Hot Sauce. It might be one of those gifts that keeps on giving.

There were no new donations to the JLN MarketsWiki Education GoFundMe campaign over the weekend. Support our efforts to preserve industry history by giving to our GoFundMe campaign.

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


The Security Traders Association (STA) has a new Trading Views podcast out, Episode 7, in which they speak with former SEC Commissioner Michael Piwowar, Executive Director of the Milken Institute Center for Financial Markets. The conversation covers the mission statement of the Milken Institute and Dr. Piwowar’s role, as well as GameStop and the recent market volatility, insights into the SEC’s response, market infrastructure, T+2 settlement and Super Bowl LV. You can listen to it here.~SR


The Spread: Meme Wars

I can honestly say that I didn’t expect the hysteria around options traders on Reddit to go away in a week, but I am surprised at just how intensely the furor has persisted. Some are framing this as a “David and Goliath” moment, a point in history when amateur traders – many of them presumably unemployed because of the pandemic and jaded by the current economic system – struck out against wealthy hedge funds using Robinhood, a trading platform that prides itself on bringing financial inclusivity to Average Joe investors. The appropriateness of that analogy is debatable, but it has gained traction nonetheless.

Watch the video »


Sponsored Content


Derivatives Forum Frankfurt 2021. Registration is open!Eurex invites you to join the virtual edition of the Derivatives Forum Frankfurt 2021! It will take place on 23-24 March 2021 covering European and the US time zones.

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ETFS Capital acquires from Cboe Global Markets
Cboe Global Markets
ETFS Capital, a strategic investment company, today announced it has acquired the business of, one of the world’s leading authorities on ETF news, analysis and education, from Cboe Global Markets (Cboe), a market operator and global trading solutions provider.

*****Cboe selling things is interesting, but I am not sure why.~JJL


Out of Grief, MIT’s Andrew Lo Invented a Better Way to Finance Biomedical Innovation; A company he inspired, BridgeBio Pharma, is worth $9 billion and is creating cures for orphan diseases
Peter Coy – Bloomberg
Andrew Lo of Massachusetts Institute of Technology lost six people he was close to, including his mother, to cancer in the span of four years about a decade ago. When he investigated what could have been done to save them he discovered that the development of cures was being held back by bottlenecks in his own specialty, finance. His effort to make things better has begun to produce results—including a $9 billion company he co-founded that is developing cures for orphan diseases.

*****This Melamed-Arditti Award winner is one of my favorite economists and authors.


Friday’s Top Three
Our top story Friday was CME Group’s CME Group Inc. Names Slate of Director Nominees. Second was Bloomberg’s When Will Life Return to Normal? In 7 Years at Today’s Vaccine Rates. Third was JLN’s video interview John Van Der Bleek – The Path To Electronic Trading.


MarketsWiki Stats
199,821,416 pages viewed; 25,336 pages; 230,018 edits
MarketsWiki Statistics


Lead Stories

Trading Titan Don Wilson Has Advice for Yellen on Market Fixes
Nick Baker – Bloomberg
DRW founder details how he boosted trading during March chaos; Rise of firms like DRW has officials mulling fresh regulations
As Janet Yellen takes over the Treasury and mulls whether to overhaul rules governing financial markets, one of the world’s biggest traders wants her to know that doing so could make it harder for his firm to step up during times of crisis — as he says it did last year. Don Wilson’s Chicago-based DRW, which emerged from the city’s trading pits three decades ago, counts among the largest players in key derivatives markets like interest rates and equities. Because of its ultra-fast communications infrastructure, some lump it in — unfairly, Wilson says — with high-frequency traders, firms whose automated systems can flit in and out of positions in tiny fractions of a second. The knock against these companies has long been that their liquidity purportedly doesn’t stick around when things get hairy.

ICE to shift EU carbon trading from London to Amsterdam; EUR1bn-a-day market is latest to move away from UK in wake of Brexit
Philip Stafford – FT
EU carbon trading is set to move from London to Amsterdam in the latest knock-on effect of Brexit on the UK’s financial services industry. US-based Intercontinental Exchange will move the carbon contracts, a central part of the EU’s flagship policy on climate change, to its ICE Endex exchange in coming months, according to a notice to its customers on Monday. It is the world’s biggest carbon trading market, handling more than EUR1bn of contracts a day.

Is a new era of retail trading emerging after GameStop saga? Long-term decline in individual investing might now be turning
Robin Wigglesworth – FT
Three centuries ago, the Sephardi merchant Joseph de la Vega wrote the first-ever book on a mysterious, disruptive new invention that was taking off in Amsterdam at the time. His evocative description of the stock market still resonates.

Robinhood’s Collateral-Crunch Explanation Puzzles Wall Street
Annie Massa, Yalman Onaran, and Matthew Leising – Bloomberg
Veterans say estimating DTCC requests is just part of business; Yet ‘they obviously fell very, very short’ of the money needed
A week after Robinhood Markets tried to clear the air by explaining why it slapped controversial limits on trading hot stocks, Wall Street’s risk professionals are still perplexed: How was the firm so ill-prepared for an obvious surge in collateral calls? To the financial industry, anticipating collateral demands from hubs such as the Depository Trust & Clearing Corp. is Brokerage 101. Major firms assign teams to study the DTCC’s methodology, estimate its requests and make sure ample cash is available. Everyone grumbles, sure, but they also know what happens when firms fall short: They scramble for a lifeline or shut down. Robinhood gathered billions from backers to keep it going.

Robinhood’s GameStop Debacle Spurs Calls to Modernize Stock Clearing; Nearly $1.7 trillion of securities trades are processed each day by Depository Trust & Clearing Corp.
Alexander Osipovich – WSJ
When Robinhood Markets Inc. and other brokers abruptly restricted trading in GameStop Corp. GME 19.20% , it cast a spotlight on a normally obscure corner of the financial markets: the clearinghouse that processes U.S. stock trades. Robinhood’s move infuriated its customers, prompted dozens of lawsuits against the Menlo Park, Calif.-based startup and will be scrutinized in a hearing on Capitol Hill next week. Initially, many investors assumed the firm’s decision to limit buying GameStop shares was directed by hedge funds that had bet against the stock or by high-frequency trading firms. In fact, the move was prompted by something more mundane—a $3 billion margin call from the Depository Trust & Clearing Corp.

GameStop Frenzy Is Tough Call for Regulators Focused on Transparency; Little imperative to act if no market manipulation—and little political will to rein in small investors
By Paul Kiernan and Dave Michaels – WSJ
Washington was quick to react to the wild ride of GameStop Corp. GME 11.37% stock and the social-media-fueled trading frenzy that by some accounts pitted everyday people against Wall Street. Oversight committees in the Senate and House announced hearings, the Securities and Exchange Commission vowed to root out any wrongdoing and the Treasury Department convened a meeting of top financial regulators to discuss the volatility.

Cost of liability insurance for company directors soars; Executives raise fears with ministers as premiums to cover serving on boards double and may climb further
Daniel Thomas – FT
Ministers and business leaders have raised concerns over the soaring cost of insuring British directors after prices more than doubled in the past year on concerns about corporate governance and pandemic-related claims.

Hong Kong Stocks Are About to Lose Biggest Source of Funds
Bloomberg News
Hong Kong’s stock connect trading link shut Feb. 9 to 17; $48 billion worth of Hong Kong stocks bought in 2021 via links
Hong Kong’s stock traders are about to find out whether the $7.3 trillion market can hold its own without its biggest source of flows. Starting Tuesday, trading links via Hong Kong’s exchange operator allowing mainland traders to buy domestic stocks will halt through Feb. 17 due to the Lunar New Year holiday. The stock connect closure will slam the brakes on record levels of inflows that helped propel Hong Kong’s equities market to its best start to a year since 1985.

Longest-Reigning Major EU Bank CEO Has One of Its Worst Records
Alexandre Rajbhandari – Bloomberg
SocGen shares have slid 75% over Oudea’s almost 13-year reign; Benevolent board has kept the CEO in the post, observers say
On a cold day in January last year, Societe Generale’s board met at the headquarters of its Russian unit Rosbank, a modern building in central Moscow angled around a cylindrical glass structure. The annual gathering was being held there to honor the unit’s strong performance in 2019, but things quickly turned sour: Chief Executive Officer Frederic Oudea had an off-agenda item to discuss.

Banker Merry-Go-Round Is Same Tired Old Faces; Of the nine European banks that replaced their bosses in the past year, seven turned to either a male insider or a male banker from a local rival.
Elisa Martinuzzi – Bloomberg
Some time last year I had a revealing conversation with a director of a European bank about succession planning for the chief executive officer job. The board member let slip that the real reason a woman might be on the candidate list was because the company simply had to be seen ticking that box. The director quickly tried to correct himself: He didn’t really mean it that way; there was of course a genuine effort to look outside the usual clique of banking executives. Sadly, the retraction wasn’t entirely convincing because the admission was hardly shocking.

The Future Will Be Decentralized; Who will control the next big thing online? Everyone and no one.
Tyler Cowen – Bloomberg
On the internet, as a friend recently reminded me, everything looks permanent until it isn’t. As technology evolves, the most profound and destabilizing change is likely to be the transition from centralized internet services to decentralized ones. Centralized services typically are run by companies or institutions, such as Facebook, Twitter or Amazon. There is a command structure and a boss, and changes can be made by deliberate decision. In this parlance, even Wikipedia counts as centralized, though the editors and contributors are scattered around the world.

Melvin Capital, GameStop and the road to disaster;l Hedge fund faces questions over risk management after losing half its money in a Reddit trading frenzy
Ortenca Aliaj and Michael Mackenzie and Laurence Fletcher – FT
It was a routine regulatory filing, the kind hedge funds must make every three months, where Melvin Capital first showed its hand. The “Form 13F” filing that landed on August 14 last year listed 91 positions it held at the end of the second quarter, including shareholdings in household names from Microsoft and Amazon to Crocs and Domino’s Pizza. Halfway down the list: an apparently innocuous bet against GameStop, a struggling video game retailer.

BNP Paribas to roll out new prime division this year following Deutsche Bank integration; Expanded prime services business more closely linked with Exane at BNP Paribas will launch after the integration of Deutsche Bank’s hedge fund clients is completed.
Hayley McDowell – The Trade
BNP Paribas has confirmed plans to launch an expanded prime services division once it completes the integration of Deutsche Bank’s prime brokerage and electronic execution business later this year.

Trading in dark pools and periodic auctions lowers execution costs, FCA paper concludes; Analysis from the UK’s regulator has said that dark trading, which the EU has restricted under MiFID II rules, can reduce costs for investors.
Hayley McDowell – The Trade
Investors can save on execution costs by trading in venues that the EU has tried to restrict or ban, a paper from the UK’s financial watchdog had concluded. Trading in dark pools and periodic auctions can reduce transaction costs while more transparent venues incur higher costs and implementation shortfall, the research from the Financial Conduct Authority (FCA) said.

Short-Sellers Fear for the Future; The often reviled investors have been “beaten up and left for dead.”
Andrew Ross Sorkin, Jason Karaian, Michael J. de la Merced, Lauren Hirsch and Ephrat Livni – NY TOI,es
Short-sellers have long been some of Wall Street’s most reviled villains. But the recent “meme stock” frenzy — in part, a concerted effort to squeeze such investors — has left many fearing for their livelihoods, The Times’s Kate Kelly and Matt Goldstein report.

GameStop Mania Was the Wrong Way to ‘Democratize’ Finance; Making financial markets accessible is about ensuring low costs for savers. Allowing anyone to trade complex products could undermine that goal.
Jon Sindreu and Rochelle Toplensky – WSJ
Was the Reddit mania a win for “democratizing” investment? Or was it a demonstration that too much people power in financial markets stokes dangerous bubbles? As with all democracy, it will depend on the outcome for those less powerful.

Reddit CEO Backs WallStreetBets Amid Calls for Stiffer Moderation; Chief of the social network whose users sparked GameStop stock-trading frenzy expresses confidence in its user-reliant model for policing speech
Sarah E. Needleman – WSJ
Reddit Inc.’s role in the recent stock-trading frenzy has brought millions of new users to the social-media platform, its chief executive says, as well as scrutiny to the power of large communities online.

Where Do Vaccine Doses Go, and Who Gets Them? The Algorithms Decide; Health agencies and hospitals are using different formulas to allocate the coronavirus shots, exacerbating disparities in vaccine access.
Natasha Singer – NY Times
Faced with the daunting task of parceling out a limited supply of coronavirus vaccines, Trump administration officials came up with a seemingly simple formula last year to streamline distribution of the shots.


Lots of NYC Vaccines Go to Younger, White Out-of-Towners; Nonresidents account for more than a quarter of those immunized in the city.
Jeff Green and Henry Goldman – Bloomberg
Track the forces driving change. Sign up for the Bloomberg Equality newsletter here. More than a quarter of those getting the Covid-19 vaccine in New York City are nonresidents, and they tend to be younger and are more likely to be White than those living in the city.

Putin’s Once-Scorned Vaccine Now Favorite in Pandemic Fight
Henry Meyer – Bloomberg
Sputnik V’s 92% efficacy in peer review rivals U.S., EU shots; Production capacity now main brake on Russian ambitions
Sign up here for our daily coronavirus newsletter on what you need to know, and subscribe to our Covid-19 podcast for the latest news and analysis. President Vladimir Putin’s announcement in August that Russia had cleared the world’s first Covid-19 vaccine for use before it even completed safety trials sparked skepticism worldwide. Now he may reap diplomatic dividends as Russia basks in arguably its biggest scientific breakthrough since the Soviet era.

Where Did Covid Come From? Investigator Foreshadows Fresh Clues
Jason Gale – Bloomberg
WHO inquiry may yield new data from weekslong probe in China; Understanding origins may help mitigate risk of more pandemics
Scientists probing the origins of the coronavirus are wrapping up a lengthy investigation in China and have found “important clues” about a Wuhan seafood market’s role in the outbreak.

South Africa to Speed Up Plans to Use J&J Covid Shot
Prinesha Naidoo and Pauline Bax – Bloomberg
J&J vaccines shows more efficacy against South African strain; Astra shot doesn’t prevent mild disease from strain: study
South Africa will temporarily halt the rollout of AstraZeneca Plc’s vaccine and accelerate its supply of shots from Johnson & Johnson and Pfizer Inc. after a trial showed the shot had limited efficacy against a new variant of the virus first identified in the country late last year.

South Africa has already secured some J&J, Pfizer vaccines; Local companies offer government 23 million Sputnik V doses
Paul Vecchiatto, Antony Sguazzin, and Janice Kew – Bloomberg
South Africa is in talks with Johnson & Johnson to buy an additional 20 million doses of the company’s Covid-19 vaccine and has been offered supplies of Russia’s Sputnik V shot, according to a presentation the health ministry made to the cabinet.

Facing Resistance, China Pushes Back 50 Million Vaccine Target
Bloomberg News
Originally planned to reach milestone by Lunar New Year; China’s vaccine rollout is lagging behind the U.S., Europe
China has pushed back a target to inoculate 50 million people against Covid-19 by almost two months amid concerns over supply and hesitancy among the population around vaccines, according to people familiar with the matter. The new plan, which was recently communicated to health officials, shifted the timeline for reaching 50 million shots to the end of March, said the people, who requested anonymity as they’re not authorized to speak publicly. Bloomberg and other media reported in December that China intended to reach that target by the Lunar New Year holiday, which starts this Thursday.

South Africa halts rollout of AstraZeneca vaccine; Preliminary data find no effect on mild or moderate disease caused by local variant
Joseph Cotterill and Donato Paolo Mancini – FT
South Africa has moved to halt its rollout of the Oxford/AstraZeneca vaccine after preliminary and limited evidence showed it failed to protect against mild and moderate forms of disease caused by a coronavirus variant first detected in the country.

We Know Very Little About America’s Vaccine Debacle; It’s hard to solve a problem when you barely know what’s going on.
The Editorial Board – NY Times
A few weeks into her part-time job vaccinating nursing home staff members and residents against the coronavirus, Katherine, a pharmacist, noticed a problem: Roughly 15 to 20 vaccines were being thrown away at the end of each vaccination session. That’s because the number of doses that she and her co-workers had prepared — per the protocol established by Katherine’s manager at CVS, the pharmacy she works for — exceeded the number of people who showed up to be inoculated, often significantly.

60 Black Health Experts Urge Black Americans to Get Vaccinated; Disinformation has pervaded social media and is an assault on our people.
Thomas A. LaVeist and Georges C. Benjamin – NY Times
Our country is facing a public health crisis on a level not experienced for more than 100 years. It should be reasonable to expect that all citizens can rely on their government and health institutions to protect them. But for many Black Americans, trust in the government does not come easily.

Biden says challenging for U.S. to reach herd immunity by summer’s end
Reuters Staff
President Joe Biden said that it will be difficult for the United States to reach herd immunity, at least 75% of the population inoculated against the coronavirus, by the end of this summer.

U.K. Has Passed Peak of Covid Surge, With 10 Million Vaccinated
By Joe Mayes and Tim Ross – Bloomberg
Johnson on track to meet target of 15 million shots by Feb. 15; Premier warns that infections are still ‘alarmingly high’
The U.K. has passed the peak of its latest wave of the coronavirus pandemic, officials said, as the country reached the milestone of vaccinating 10 million people, about 15% of the population. “We are on a downward slope of cases, hospitalizations and deaths,” Chief Medical Officer Chris Whitty said at a televised press conference Wednesday. “This peak, at least, we are past.”

Exchanges, OTC and Clearing

ICE to transition European Union Emission Allowance Contracts to ICE Endex in the Netherlands during the Second Quarter of 2021
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of mortgage technology, data and listings services, announced today that it plans to transition ICE EUA Futures and Options and ICE EUA Daily Futures (collectively, “ICE EUAs”) and ICE EUAA Futures (“ICE EUAAs”) from ICE Futures Europe, ICE’s London-based exchange, to ICE Endex, ICE’s exchange in the Netherlands, during the second quarter of 2021, subject to the completion of regulatory processes. A more specific date for the transition will be announced in due course.

CME Group Announces Launch of Ether Futures
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today launched Ether futures, further expanding its crypto derivatives offerings in this emerging asset class. “As institutional demand for transparent, exchange-listed crypto derivatives continues to increase, we are pleased to launch our new Ether futures contract,” said Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products. “The addition of Ether, along with our liquid Bitcoin futures and options, will create new opportunities for a broad array of clients, whether they are looking to hedge ether positions in the spot market or gain exposure to this cryptocurrency on a regulated derivatives marketplace.”

Abu Dhabi Securities Exchange to Cut Trading Transaction Fees
Jacqueline Mackenzie – Bloomberg
The Abu Dhabi Securities Exchange will reduce trading-activity fees on all exchange transactions as part of its ADX One strategy to double the market capitalization of companies listed on the exchange in the next three years. Fees on all transactions that occur on ADX will be reduced by more than a fifth to 0.175% from 0.225%, effective Feb. 14, the exchange said in a statement Saturday.

Hong Kong bourse to take 7% stake in Guangzhou Futures Exchange
The Hong Kong stock exchange operator will invest 210 million yuan ($32.5 million) in the Guangzhou Futures Exchange (GFE), saying on Friday it was the first equity investment in a Chinese futures exchange by a non-mainland Chinese investor. Hong Kong Exchanges and Clearing (HKEX) has in recent years looked to diversify away from cash equities into other products including derivatives, with mainland China linked products one focus. HKEX said in a statement it will have a 7% stake in GFE.

Cboe plans crypto comeback as chief says exchange entered space too early; Ed Tilly said Cboe will re-enter the crypto space more measured and cautious after pulling the plug on its Bitcoin futures in 2019.
Hayley McDowell – The Trade
Cboe Global Markets is set to re-enter the crypto space, its chief executive has confirmed, after the exchange pulled out of the business due to a lack of interest from institutions in 2019. Ed Tilly, CEO, president and chairman at Cboe, stated on the fourth quarter 2020 earnings call that the markets operator is planning its return to crypto after seeing growing interest from the institutional trading community.

Updated Live Date: File Format Change – CST550IM New Column – Effective February 08, 2021
CME Group
Starting at Intraday (ITD) on February 08, 2021 (previously planned for December 14, 2020), a new column will be added immediately following the ‘AssetPBAmountApplied’ column.

New Product Summary: Initial Listing of the Physically-Delivered CBL Global Emissions Offset Futures Contract – Effective March 01, 2021
CME Group
Initial Listing of the Physically-Delivered CBL Global Emissions Offset Futures Contract.

Application for Increase in Soybean Oil Regularity
From Registrar’s Office
CME Group
Pursuant to Regulation 703.A, notice hereby is given that Zeeland Farm Services, Inc. has applied to the Exchange for an increase in regularity in Soybean Oil at their facility below. The following chart provides the facility, current storage capacity, current maximum allowable receipts, requested storage capacity, and requested maximum allowable receipts as follows:

Clearing on CME ClearPort
CME Group
Reduction of the Minimum Price Increment for Selected FX Futures Submitted for Clearing on CME ClearPort

Block Trades
CME Group
Effective on trade date Monday, February 22, 2021, and pending all relevant CFTC regulatory review periods, this Market Regulation Advisory Notice will supersede CME Group Market Regulation Advisory Notice RA2013-5 from September 4, 2020. It is being issued to amend Section 7. of this Advisory Notice to increase the block trade reporting window for all FX futures contracts during RTH from five (5) minutes to fifteen (15) minutes. Therefore, effective on trade date February 22, 2021, the reporting window for all FX futures and options block transactions submitted for clearing via CME ClearPort will be fifteen (15) minutes during all hours (RTH, ATH, and ETH).

SGX, Trumid and Hillhouse Capital form joint venture to launch new Asian bond trading platform
To be launched in 2021, the Trumid XT platform will bring connectivity and efficiency to global bond markets
Singapore Exchange (SGX), Trumid and Hillhouse Capital have formed a joint venture, XinTru, to enhance liquidity and execution in the Asian bond market for global clients.

SGX welcomes Livingstone Health Holdings Limited to Catalist
Singapore Exchange (SGX) today welcomed Livingstone Health Holdings Limited to its Catalist under the stock code “PRH”.

JPX Monthly Headlines – January 2021
JPX group companies undertake various initiatives and disseminate information with the aim of providing the most attractive markets to all users. Every month, we showcase the highlights of these efforts in short and concise summaries just for you.

Publication of English translation of Report from the System Failure Investigation Committee
JPX has today published an English translation of the investigation report from the Investigation Committee of Independent Outside Directors in Relation to the System Failure, originally published in Japanese on November 30, 2020.

Closure Of Bursa Malaysia In Conjunction With Chinese New Year 2021
In conjunction with Chinese New Year, Bursa Malaysia Berhad (“Bursa Malaysia” or the “Exchange”) will operate as follows:

GameStop Frenzy Halts FTSE Mondo Visione Exchanges Index Surge – Index Up 0.8.% In January, After Blistering Start To Year
Shares in the world’s largest exchange operating groups rose by 0.8% in January, with only 12 of the 32 constituents of the FTSE Mondo Visione Exchanges Index being in positive territory. The Index closed at 73,114.7 points, up from the December close of 72,499.8. The index set a new closing all-time high of 76,043.31 on 25 January 2021, before the exchanges sector was hit by the contagion effect from the volatility triggered by retail investors driving up stocks such as GameStop and AMC Entertainment through online forums on websites such as Reddit.


Wirecard Red Flags Should Have Prompted Earlier Response, Former Executive Says; Upon joining Wirecard, James Freis discovered that the fintech company’s problems were larger than even its harshest outside critics might have imagined
Dylan Tokar and Paul J. Davies – WSJ
When James Freis agreed to oversee Wirecard AG’s legal and compliance functions, he saw it as an opportunity to help bring managerial order to a fast-growing fintech startup. Instead, he found himself thrust into a much different predicament. Mr. Freis was due to join the German payments company’s management board on July 1, but he was called in early, on June 18, when Wirecard said it couldn’t verify $2 billion in assets. With Wirecard’s auditors refusing to sign off on the company’s financials, Mr. Freis was asked to assess the situation.

Ant Group takes Chinese boot amid regulatory overhaul
Victor Chatenay – Business Insider
The China-based fintech giant has agreed to combine all its business segments into a financial holding company, including payments, lending, insurance, and its tech services like food delivery, per FT. As a financial holding company, Ant will be subject to similar capital requirements as banks. The agreement comes after regulators halted its $37 billion IPO last November due to undisclosed regulatory changes causing the fintech to be noncompliant.

Why the Fintech Payoneer Is Going Public With a SPAC
Luisa Beltran – Barron’s
For Payoneer, it was the ability to get the price it wanted and pick its merger partner that prompted the fintech to combine with Betsy Cohen’s latest blank-check company. The deal will value Payoneer at $3.3 billion once it closes.
Payoneer this week became the latest company to agree to merge with a special- purpose acquisition vehicle. Payoneer’s management, which is staying, will own about 70% of the combined company once the sale to FTAC Olympus Acquisition Corp (ticker: FTOC) closes at midyear.

Monzo: UK challenger banking fintech bringing in new US investor
Callum Burroughs – Business Insider
London-based challenger bank Monzo is in the final stages of closing an extension to its newest late-stage funding round.
The fintech startup, founded in 2015, is set to bring in an additional £50 million ($68 million) in a Series G funding top up which will likely close this week.
Sky’s Mark Kleinman first reported news of the funding extension.

How Fintech Can Help Streamline Your Company’s Financial Operations
Harvard Business Review
“Huge.” “Surging.” “Very hot.” Those were just a couple of the terms financial news outlets used to describe the fintech market in 2020. They weren’t just buzzwords. Fintech has seen double-digit growth in transaction numbers and volumes during the pandemic, according to a study that included the World Bank. And digital banking surged during Covid-19, reported American Banker, with 35% of consumers using online banking services more.

Eric Schmidt: US’s flawed approach to 5G threatens its digital future; Former Google chief warns that recent $81bn spectrum auction could hobble American innovation
Eric Schmidt – FT
In a world where computing technology is key to innovation and competitiveness, strong digital infrastructure is paramount to economic vitality and national security. Investing in 5G mobile telecommunications networks should be an urgent priority of the US and its allies — particularly as the main geostrategic rival, China, is already far ahead.


Tesla invests $1.5bn in bitcoin; The car company expects to start accepting payments in the digital currency
Eva Szalay – FT
Bitcoin jumped to a new all-time high on Monday after Tesla said that it had bought $1.5bn worth of the cryptocurrency in January. In a regulatory filing, the carmaker said it changed its investment policy last month to allow it more flexibility to “diversify and maximise” returns on its cash, after which it made its chunky investment in the digital currency. “We invested an aggregate $1.5bn in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term,” the filing said. The announcement has spurred bitcoin to run to a new record high of $44,100. Bitcoin has been on an strong run since last year, despite fears of a growing bubble in the cryptocurrency, with its value increasing nine times since its collapse in March last year. Tesla also said it expects to accept bitcoin as a form of payment for its products soon.

Central Banks Edge Toward Money’s Next Frontier in Digital World
Carolynn Look, Joanna Ossinger, and Christopher Condon – Bloomberg
China is ahead in digital central bank currency development; Profound privacy, access, financial-stability problems remain
With modern technology and even the coronavirus facilitating a global shift toward cashless economies, and alternative concepts such as Bitcoin taking hold, monetary policy makers are acting to ensure they don’t fall behind.

Dogecoin Soars to New Record as Musk Fires off New Tweet
Yueqi Yang – Bloomberg
Musk tweets ‘Who let the Doge out’ amid Sunday rally; Dogecoin, with $10 billion market cap, now 8th biggest crypto
Dogecoin rose to all-time high Sunday, as Elon Musk tweets “Who let the Doge out” amid the rally. The Shiba Inu-themed digital coin surpassed 8 cents for the first time, just a week after crashing to 2.5 cents and sparking an outcry on Reddit. It rose 53% in the last 24 hours to 8.2 cents as of 5:45 p.m. in New York on Sunday, according to CoinMarketCap data, breezing through its recent record of 7.8 cents posted in late January.

Why Elon Musk’s Dogecoin Tweets Have Hit a Bitcoin Nerve; When will the penny drop for cryptocurrency speculators that maybe the joke’s on them?
Lionel Laurent – Bloomberg
Imagine a team of smartly dressed bankers pitching an investment to Wall Street financiers only to be left raging when a weirdo in a dog costume walks in and gets the money. That’s how some corners of the cryptocurrency market are reacting to celebrities led by Elon Musk tweeting about Dogecoin, a tongue-in-cheek, meme-ified version of Bitcoin launched in 2013 with a Shiba Inu as its mascot.

Bill Miller to Allow Opportunity Fund to Buy Into Bitcoin Trust
Joanna Ossinger – Bloomberg
Famed fund manager Bill Miller extended his endorsement of Bitcoin by reserving the right for one of his portfolios to indirectly invest in the largest cryptocurrency. The Miller Opportunity Trust may invest in the Grayscale Bitcoin Trust, a vehicle institutions use for Bitcoin exposure, a filing with the U.S. Securities and Exchange Commission shows. Miller’s fund would be prohibited from additional investing in the Grayscale trust if its aggregate Bitcoin exposure tops 15%.

Mike Novogratz’s Vision for Rebuilding Finance with Crypto
Tracy Alloway and Joe Weisenthal – Bloomberg
Bitcoin, and crypto more broadly, have been on a huge tear lately. Then, with the chaos surrounding GameStop, there’s been more discussion about whether financial markets could be rebuilt in a fairer way, perhaps involving crypto or decentralized finance. Probably one of the best positioned to take advantage of such a shift is Mike Novogratz, the CEO of Galaxy Digital, which might best be described as a crypto investment bank. Prior to his current endeavors, Novogratz was a global macro fund manager at Fortress Investment Group, and prior to that he was at Goldman Sachs, meaning he’s seen the traditional finance world, and this new world. He talks to us about why he’s so bullish on crypto, and how it can be used to create a fairer and better financial system.

Crypto exchange FTX to donate 1% of fee revenue to charities
Yogita Khatri – The Block
Crypto exchange FTX announced Monday that it will donate 1% of net fee revenue to charities via the newly created The FTX Foundation. Last year, FTX made $85 million in fee revenue, CEO Sam Bankman-Fried told The Block, adding that for 2021, the exchange expects to make $400 million. The projections are made based on FTX’s December fee revenue of $200 million, said Bankman-Fried. Within hours of the announcement, the total amount earmarked for charity has reached over $2,500.

Binance Suspends Deposits in Nigeria Following Central Bank Directive; Nigeria’s central bank told financial institutions they couldn’t provide crypto companies or users with services on Friday.
Sandali Handagama – Coindesk
Binance has temporarily suspended deposits in Nigerian naira – the country’s local fiat currency – in response to a Friday letter from Nigeria’s central bank (CBN) instructing local banks to identify and close all accounts tied to cryptocurrency platforms or operations. The CBN letter told local banking institutions that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited under a 2017 circular stating bitcoin (BTC) and other cryptocurrencies are not legal tender in the country. While the move might impact fiat on- and off-ramps, most of the nation’s crypto trading occurs on peer-to-peer platforms and remains unaffected, according to sources in Nigeria.

With Beijing onboard, China has so far issued $17 million in digital yuan tests
Wolfie Zhao – The Block
With Beijing being the next city joining the digital yuan test, China has now issued a total of 110 million (worth $17 million) of its central bank digital currency, also known as DC/EP. The Chinese capital city of Beijing announced on Sunday that it is distributing 10 million digital yuan – worth about $1.5 million – to 50,000 local residents via a lottery as part of a wider test that will eventually see digital yuan being used in the 2022 Beijing Winter Olympics. Similar to previous tests, lottery-winners in the Beijing trial will be able to spend the free digital yuan in offline and online merchants that support the DC/EP payment method.

German police can’t access $68 million worth of seized bitcoin
Yogita Khatri – The Block
German police have seized 1,700 bitcoin (currently worth about $68 million) from a hacker, but they cannot access the cryptocurrency because the fraudster won’t share the “password” (presumably the associated private keys). “We asked him but he didn’t say,” prosecutor Sebastian Murer told Reuters on Friday. “Perhaps he doesn’t know.” The man was sentenced to jail for more than two years. He was arrested for hacking other people’s computers and using them to mine bitcoin.

Bitcoin Price Hits Record After Tesla Buys
Michael J. de la Merced – NY Times
Tesla’s chief executive, Elon Musk, is known for promoting cryptocurrencies.Credit…Hannibal Hanschke/Reuters
The electric-car maker Tesla is known for bucking convention. That apparently extends to using its own corporate cash to buy Bitcoin. The company disclosed in its annual report on Monday that it had purchased $1.5 billion worth of the cryptocurrency, as part of an initiative begun last month to invest in alternative assets like digital currencies and gold bullion. It added that it expected to begin accepting Bitcoin as a form of payment “in the near future.”

Nigeria Central Bank Says Cryptocurrencies Were a Threat
Anthony Osae-Brown – Bloomberg
Nigeria’s central bank said it ordered deposit-taking banks and other financial institutions to close accounts dealing in cryptocurrencies because it was threatening the country’s financial system. “The recent regulatory directive became necessary to protect the financial system and the generality of Nigerians from the risks inherent in crypto assets transactions,” the central bank said in a statement Sunday.

Flash Loans Are Providing Instant Cash to Crypto Speculators
Olga Kharif – Bloomberg
Aave processed $2 billion of flash loans last year, CEO says; Instant loans seen raising risk of coin price manipulation
Money for nothing. That’s what a fast growing array of financial products dubbed flash loans are promising the crypto faithful. The practice is the latest attempt by the digital-asset crowd to rewrite the rules of financial transactions, removing many of the current gatekeepers from the picture in the search to achieve what they call decentralized finance, or DeFi. As with most things crypto, the promise is great, with the perils often equally so.


The US Senate must convict Donald Trump; His trial for inciting insurrection is divisive but necessary
The editorial board – FT
The US has savoured an intoxicating sensation of late. Political normality. The violence at the capitol on January 6 has not recurred. Its agent, former president Donald Trump, has repaired to Florida. As for his successor, some of Joe Biden’s ventures (such as his fiscal relief plan) are wiser than others (such as his protectionism). But none are incendiary.

New York Lawmakers Float Crackdown on Hedge Funds’ Sovereign-Debt Tactics; The proposed legislation would leverage New York’s financial might to crack down on investment firms that resist sovereign-debt restructurings
Alexander Gladstone – WSJ
Some New York lawmakers are planning legislation designed to blunt hedge funds’ ability to resist sovereign-debt restructurings, while easing financial settlements for government borrowers in distress.

Fighting Covid Is Like Fighting a War; Why Biden needs to go big and ignore the worriers.
Paul Krugman – NY Times
There has been some pushback from progressive pundits — most notably Larry Summers, but he’s not alone — against President Biden’s proposal for a very large Covid relief package. Before I get into the reasons I believe this pushback is misguided, let me say that it’s refreshing to discuss good-faith criticism coming from people who actually have some idea what they’re talking about, as opposed to the cynical, know-nothing obstructionism that has become the Republican norm.

U.S. senators propose limiting liability shield for social media platforms
Nandita Bose, Chris Sanders – Reuters
Three Democratic U.S. senators introduced a bill that would limit Section 230, a law that shields online companies from liability over content posted by users, and make the companies more accountable when posts result in harm.

Lawsuits Take the Lead in Fight Against Disinformation
Michael M. Grynbaum – NY Times
In just a few weeks, lawsuits and legal threats from a pair of obscure election technology companies have achieved what years of advertising boycotts, public pressure campaigns and liberal outrage could not: curbing the flow of misinformation in right-wing media.


Banks set for clash with UK regulator over ringfencing rules; Industry wants an easing of the post-crisis restrictions that keep retail and investment operations apart
Stephen Morris and Nick Megaw and Laura Noonan – FT
Bankers are gearing up for a face off with the Bank of England over the future of the UK’s ringfencing law, with parts of the industry lobbying to ease the restrictions while regulators insist they be maintained.

Transcript of the January 29, 2021, SBCFAC Meeting

Kelly L. Gibson Named Acting Deputy Director of Division of Enforcement
The Securities and Exchange Commission today announced that Kelly L. Gibson, currently the Director of the Philadelphia Regional Office, has been named the Acting Deputy Director of the Division of Enforcement. “Kelly is a proven leader and a talented lawyer,” said SEC Acting Chair Allison Herren Lee. “As Associate Regional Director and then as Head of the Philadelphia office, she has built an impressive record of success on behalf of investors and the agency. She is a perfect fit to help lead the division.”

Katherine K. Martin, Associate Director in the Office of International Affairs, to leave SEC
The Securities and Exchange Commission today announced that Katherine K. Martin, Associate Director in the Office of International Affairs, will leave the agency in February after 15 years of public service. For the last five years, Ms. Martin oversaw the Commission’s multilateral and bilateral engagement on a wide range of cross-border policy and supervisory cooperation issues.

Remarks at the Meeting of the Small Business Capital Formation Advisory Committee
Commission Caroline A. Crenshaw – SEC
Thank you Carla [Garrett] and thank you to all of the members of the Committee for being here today. I am grateful for your time and for your willingness to think about how the Commission can support small businesses, entrepreneurs, and their investors. This is my first time attending a meeting of the Small Business Capital Formation Advisory Committee as a Commissioner. It is wonderful to be here. While I know some of you already, I look forward to engaging with each of you – virtually for now and hopefully in person one day.

Investing and Trading

Frothy Markets Spark Worries of Bubbles in European Assets
Tasos Vossos and Michael Msika – Bloomberg
Investors, analysts highlight pricing excesses across assets; Stretched valuations follow central bank-fuelled rally
The almost uninterrupted rally in European stocks and corporate bonds over the past year has sent valuation metrics to frothy levels, setting the stage for potential pull-backs as Europe struggles with its vaccine rollout which could imperil the region’s economic recovery.

Robinhood Traders Have a Troubled Track Record of Stock Picking
Justina Lee and Brandon Kochkodin – Bloomberg
Academics say buying on platform shows little outperformance; App users’ activity has tended to lag other retail investors
Back in May, a Reddit poster hit WallStreetBets with a sure-thing tip on Scorpio Tankers Inc. The oil shipper, trading at one-fifth the value of its assets, was a screaming buy with storage rates soaring, insiders leveraging up and oil vaulting back after briefly going negative. There’s an opportunity to see “100% returns within the next year,” the user said.

Reddit Mania Overshadows Outstanding Earnings Season for Tech
Jeran Wittenstein and Elena Popina – Bloomberg
More than 95% of S&P 500 tech stocks beat earnings estimates; Tech stocks are leading the market since earnings season began
Anyone distracted by the Reddit-fueled circus in stocks this month may have missed an important fundamental story: A stellar earnings season for technology companies that helped the group’s shares outperform the market once again. With more than half of S&P 500 earnings reports in the books, tech companies like Skyworks Solutions Inc. and Paypal Holdings Inc. are leading all of the other main sectors in the benchmark index with more than 95% beating profit estimates, according to data compiled by Bloomberg. As for revenue, 88% have topped estimates.

Bond Guru Dan Fuss’s Inflation Alert Points to Market Challenges
Gregor Stuart Hunter – Bloomberg
Ultra-low rates and fiscal spending risk more price pressures; Fuss says there’s no outstanding value in fixed-income markets
Famed bond investor Dan Fuss recollects how spiking inflation in the 1940s and 1950s led to a sevenfold jump in the value of his family home. For him, a key trigger of that bout of price pressure is evident now. The precedent is the way the Federal Reserve and Department of the Treasury are prioritizing cheap debt-financing costs to fund huge spending, the difference being the money is paying for once-in-a-generation pandemic relief rather than a war effort.

The biggest lesson of GameStop; An economy based on asset inflation is not a stable one
Rana Foroohar – FT
Much has been written about whether the GameStop trading fiasco is the result of illegal flash mobs or righteous retail investors storming a rigged financial system. Robinhood’s decision to block its retail customers from purchasing the stock while hedge funds continued trading elsewhere has turned the event into a David and Goliath story.

A New Commodities Boom Beckons When Pent-Up Demand Unleashed
Sybilla Gross – Bloomberg
Fund sees consumption spike when coronavirus finally fades; China seeking adequate stockpiles to guard against inflation
The eventual end of the coronavirus pandemic is likely to herald a consumption boom, piling pressure on precarious supply chains and boosting raw material prices, according to the Merchant Commodity Fund.

Environmental, Social and Corporate Governance

Elon Musk’s $100 Million Prize Is for Removing Carbon Dioxide From the Air; The competition will be managed by Xprize, with three winners named in 2025 to share the prize money
Akshat Rathi – Bloomberg
Elon Musk became the richest person in the world by dramatically improving electric vehicles, pushing forward a technology that reduces carbon-dioxide emissions and slows global warming. Now he’s putting $100 million of that fortune into prizes for technologies to remove carbon dioxide from the atmosphere itself.

Big Oil Takes Over Next Generation of U.K. Offshore Wind
Will Mathis and Laura Hurst – Bloomberg
U.K. Crown Estate awarded seabed rights to 8GW of projects; Offshore wind is at the center of the U.K.’s climate goals
Oil majors agreed to pay a hefty premium to develop the next generation of major British offshore wind farms after BP Plc and Total SE won contracts in an auction ahead of many of the utilities that have dominated the space until now.

The World Is Moving Toward Net Zero Because of a Single Sentence; Like most of the Intergovernmental Panel on Climate Change’s 2018 report, it’s clunky and full of jargon, but it’s also one of the most influential ever written.
Eric Roston – Bloomberg
The District of Columbia city council held a public hearing on Oct. 9, 2018, to discuss legislation that would halve the U.S. capital’s greenhouse-gas pollution by 2032.

Pension Fund That Mimicks World’s Largest Boosts ESG Stocks
Chikafumi Hodo – Bloomberg
Japan’s Chikyoren public fund adopts two ESG indexes; Fund’s allocation near GPIF’s target; boosts alternatives
A Japanese public pension fund that manages its portfolio in line with the world’s largest pension manager has boosted investments in ESG-related stocks by more than sixfold in its $62 billion domestic equity portfolio.

Big Oil’s huge losses raise prospect of mega mergers; Rise of clean energy and doubts about long-term demand force existential reckoning
Derek Brower, Justin Jacobs and Anjli Raval – FT
When Exxon struck the biggest deal of a $300bn wave of oil mergers during the brutal late-1990s crude price collapse, Mobil chief executive Lou Noto gave a warning to the industry. “We need to face some facts,” he said as he announced his company’s takeover. “The world has changed, the easy things are behind us. The easy oil, the easy cost savings, they’re done. So all of us are now looking for some way to make a jump.”

Ikea foundation bets $250m on green investment fund; London-based boutique Osmosis expands amid record demand for sustainable strategies
Chris Flood – FT
A foundation backed by Ikea, the Swedish furniture retail giant, has committed $250m to seed a sustainable equity fund designed by Osmosis, a specialist investment boutique. The allocation by Imas, an EUR11bn foundation that invests on behalf of the charitable arm of Ikea, is the second large contract it has awarded to Osmosis.

Sovereign wealth funds sidestep climate change threat; SWFs urged to be ‘more ambitious’ in the fight against global warming
Chris Flood – FT
Most sovereign wealth funds are failing to address the risks posed by climate change at a time when other big institutional investors are ramping up investment strategies to combat global warming.

BlackRock urged to take tough line with HSBC over climate change
Attracta Mooney – FT
BlackRock is facing calls to use its might as the world’s biggest asset manager to put pressure on HSBC to rein in its financing of the fossil fuel industry, just weeks after fund boss Larry Fink warned that climate change was an investment risk.

ESG Metrics Help CFOs Attract New Investors, Reduce Costs; More finance chiefs talk about sustainability on earnings calls, provide disclosures
Maitane Sardon – WSJ
Chief financial officers are embracing sustainability measures as a way to attract new investors, lower their companies’ borrowing costs and cut operating expenses.


Fund Manager ‘Unworthy of Belief’ Is Ordered to Pay $7 Million
Erik Larson – Bloomberg
A private-equity fund manager whose testimony a New York judge deemed “unworthy of belief” was found liable for misappropriating millions of dollars from unsuspecting investors. Laurence G. Allen, the chief executive officer of Nyppex Holdings LLC in Rye Brook, New York, and various corporate entities he controls were ordered Thursday by State Supreme Court Justice Barry Ostrager in Manhattan to pay almost $7 million in relief and work with a receiver to liquidate assets.

Cathie Wood Amasses $50 Billion and a New Nickname: ‘Money Tree’
Claire Ballentine – Bloomberg
Ark Investment Management takes in almost $11 billion in 2021; Much-followed firm now sells branded hats, T-shirts, onesies
In South Korea, retail investors have given Cathie Wood a nickname: “Money Tree.” Looking at the pile of cash now managed by Ark Investment Management, it’s easy to see why. Ark’s exchange-traded fund assets under management crossed $50 billion this week, up from only $3.6 billion at this time last year, according to data compiled by Bloomberg. In 2021 alone, investors have funneled almost $11 billion in Wood’s family of funds.

Goldman Commodities Strategist Says Silver Is the Populist Metal
Tracy Alloway and Joe Weisenthal – Bloomberg
Jeff Currie explains why the metal attracts strangeness; Silver myths include the idea that it’s heavily shorted
Over the last week or so, we saw GameStop-inspired flash mobs turn their attention to silver, where they attempted to engineer a squeeze. It didn’t really work out. But silver prices did briefly surge, and for a few days, retail silver coin sites were totally sold out. So why did this happen, and why does silver tend to attract phenomenons like this? This was one topic we spoke about on a recent “Odd Lots” podcast with Jeff Currie, the top commodities strategist at Goldman Sachs Group Inc.

BofA Divided as Bankers Cry Foul Over Special Bonus Treatment
Erik Schatzker and Sridhar Natarajan – Bloomberg
Traders, dealmakers got exempted from new policy after balking; Corporate, commercial bank executives still face restrictions
Anger is building in the senior ranks at Bank of America Corp. after the company waived an unpopular new bonus policy for top traders and dealmakers while keeping the plan in place for other employees. At issue is a grant of company stock that high earners — generally those making $1 million or more — received for the first time as part of their 2020 compensation. Instead of vesting in equal parts over a set period, as such awards typically do, these bonuses have a “cliff vest” provision making the shares eligible for sale only at the end of four years.

Death Threats and Hate Force Hedge Funds to Step Up Security
Anders Melin and Hema Parmar – Bloomberg
Steve Cohen, Gabe Plotkin incur the wrath of Reddit hordes; Consultant draws parallels with mob that stormed U.S. Capitol
Hacking into an investment portfolio. Breaking into a Caribbean villa. Even — it has happened — kidnapping. To the list of personal-security concerns for hedge fund magnates, add one more: short positions.

Renaissance Clients Pull Out After Firm’s Rotten Run of Results
Hema Parmar – Bloomberg
Quant pioneer has seen $5 billion in redemptions since Dec. 1; Firm’s public funds had their worst-ever performance in 2020
For years, Renaissance Technologies was among the most exalted names in high finance, as close to a sure-thing as Wall Street had. But recent months have battered its reputation, and investors are now streaming to the exits. Renaissance has seen at least $5 billion in redemptions since Dec. 1 — a once-unthinkable rebuke from clients after unprecedented losses from the East Setauket, New York-based firm.

Reddit-led market turmoil hits big quant hedge funds; Short squeeze that sent price of GameStop rocketing has hurt some carefully placed bets
Laurence Fletcher and Ortenca Aliaj – FT
Two Sigma Investments and DE Shaw, two of the biggest names in the hedge fund industry, have posted losses after an army of retail investors on Reddit upended markets.

Robinhood not out of the woods after GameStop ructions; Trading platform to face further scrutiny amid the retail trading boom
Michael Mackenzie – FT
Moving fast and breaking things is a hallmark of disruptive companies and one revered by investors during the current bull market. For Robinhood, the Silicon Valley online trading platform with its super accessible and seductive app, disruption has collided head on with the guardrails that protect the financial system.

Hedge funds resume role as Wall Street’s villains; Industry reels from GameStop backlash but has plenty of experience in fending off attacks
Laurence Fletcher – FT
Hedge funds have once again found themselves in their customary role as Wall Street’s biggest villains. In a frenzied few weeks of trading, investors co-ordinating their actions on social media platform Reddit succeeded spectacularly in their aim of damaging the hedge fund of one of Wall Street’s most respected traders, Melvin’s Gabe Plotkin, a protégé of billionaire Steve Cohen. The fund lost billions of dollars on its GameStop short position and was forced to seek a bailout.

GameStop case puts the focus on market plumbing; Wall Street and trading platforms were among the biggest winners
The editorial board – FT
There’s an adage in financial markets that in a gold rush one should simply sell pickaxes. The wisdom behind the aphorism — it is more reliable to make money from other people’s optimism than to get swept up in it yourself — was on display this week as market makers enjoyed the effects of a retail trading frenzy prompted by Reddit.

Social media sentiment ETF to launch in wake of Reddit rebellion; VanEck’s decision to license the Buzz index breathes new life into an old idea that failed
Steve Johnson – FT
The Reddit rebellion might have died down for the moment, but New York asset manager VanEck is betting that there is long term value in listening to social media chat and is launching a social sentiment exchange traded fund.

Elliott Management Explores Raising a SPAC; The hedge fund is looking to raise more than $1 billion for the vehicle
Cara Lombardo – WSJ
Elliott Management Corp., the hedge fund best known for its high-profile shareholder-activist campaigns, is looking to join the sizzling SPAC craze. The firm, founded by billionaire Paul Singer, has been meeting with bankers about raising more than $1 billion for a special purpose-acquisition company, according to people familiar with the matter. They cautioned the process is at an early stage and plans could change.


Japan’s Topix stock index closes at highest level since 1991; Country’s main stock gauge surpasses key level on weaker yen and global economic optimism
Leo Lewis – FT
Japan’s benchmark stock barometer has closed at its highest level in 30 years, boosted by a softer yen, US stimulus hopes and a “short squeeze” sparked by investors trimming their bets against the market.

Argentina’s largest oil group poised to avert $6.2bn debt default; State-controlled YPF reaches agreement with creditors in fillip for country’s energy sector
Benedict Mander – FT
Argentina’s largest oil company is poised to avoid defaulting on $6.2bn of debt after YPF reached an agreement with its most combative creditors on Sunday, according to two people close to the negotiations, in a last-minute reprieve for the country’s struggling energy sector.

Flood of Cash Pushes Borrowing Costs to Unusual Lows in Europe; Some companies can now borrow at lower rates than those set by the European Central Bank
Paul J. Davies – WSJ
Too much money chasing too few assets is creating some strange phenomena at the heart of European financial markets. One stark example: Some companies and most banks can now borrow at rates that are lower—and further below zero—than the rate set by the European Central Bank.

China issues new anti-monopoly rules targeting its tech giants
Reuters Staff
China’s market regulator released new anti-monopoly guidelines on Sunday that target internet platforms, tightening existing restrictions faced by the country’s tech giants.

China Hedge Funds Add $200 Billion, Trouncing Wall Street
Bloomberg News
Local funds returned average 30% last year vs 12% globally; Outperformance is another impediment to foreign firms in China
China’s army of tiny hedge funds are pulling further ahead of their better-known foreign competitors with outsized gains helping them attract more assets. The nearly 15,000 funds offered by Chinese managers returned 30% on average last year, with the best-performers surging 10-fold, according to Shenzhen PaiPaiWang Investment & Management Co. That dwarfs the average 12% gain for hedge funds globally.


How a ‘Mind-Blowing’ Blunder Created a Dangerous Brexit Standoff
Dara Doyle, Tim Ross, and Joe Mayes – Bloomberg
EU’s vaccine threat has sparked a crisis in Northern Ireland; Unionists are now ramping up campaign to scrap border checks
Thirty years ago, during Northern Ireland’s long-running sectarian conflict, gunmen botched an attempt to assassinate a young academic in Belfast. Adrian Guelke survived, still lives in the city and, last week, watched with astonishment as the European Union stirred up the tensions which almost cost him his life by threatening the part of the Brexit agreement that aims to protect the fragile peace in the region.

Government hits back at claims Brexit is stifling exports to EU
Heather Stewart – The Guardian
The government has sought to defend its record over Brexit after freight industry leaders claimed exports to the EU had nosedived since the transition period ended on 31 December.
When Boris Johnson announced on Christmas Eve that he had secured a last-minute Brexit deal he insisted there would be “no non-tariff barriers” to trade with the EU.

Brexit: Call to cut Welsh ports in a bid to boost trade
Sarah Dickins – BBC
Glenn Carr, general manager at Rosslare Europort in Ireland, said the move would entice hauliers back to Welsh routes crossing the Irish Sea.
A month into new trading rules with the European Union, freight using Fishguard and Holyhead is “dramatically down”.
Rosslare’s January traffic to the UK was down 49% on January 2019.
However, its European freight was up 446% as that route allows them stay in the EU and avoid customs documentation.

The red wall should hear Hammond’s hard truths about Brexit
William Keegan – The Guardian
I sincerely hope that it is only the lunatic fringe of Brexiters who do not accept that, having made the disastrous mistake of leaving the EU, this country should now try to align itself as closely as possible with the trading arrangements we have crassly abandoned.

European touring made Radiohead the band we are. Brexit must not destroy it
Colin Greenwood – The Guardian
My band Radiohead’s first ever club gig in Europe was on 2 June 1993 at Huset (a sort of arts club) in Aarhus, Denmark. We’d loved our pub and club touring the UK and were so grateful for any chance to travel. We went on to play small clubs and early festival slots across Sweden, the Netherlands and France in a crappy old bus that smelled of diesel and had sad grey curtains. There were so many different kinds of milk. It was brilliant fun, as friends working together to get our music across to different cultures.

Exports from UK to EU down 68% since Brexit trade deal, say hauliers
Exports from Britain to the European Union fell by 68% in January as trade was disrupted after the end of a transition period following Britain’s departure from the European Union, according to a trade body representing hauliers. The government did not confirm the data and said disruption at the border had been minimal since Britain completed its journey out of the EU’s orbit at the of 2020 following an agreement on trading arrangements.

Yorkshire lobster exporter says Brexit costs have forced it to close
Rajeev Syal – The Guardian
A lobster exporter who is winding up his 60-year-old family business has blamed the government for failing to be honest about Brexit red tape and hidden costs. Sam Baron, who worked alongside his father to set up Baron Shellfish in Bridlington, east Yorkshire, said that the government has failed to be straight with the fishing industry. Industry experts said that Baron Shellfish, the first lobster-tank business in Europe’s largest shellfish port, appears to be the first big exporter to have announced its closure.


Epstein Accusers Seek to Freeze Estate Assets as Money Runs Low
Patricia Hurtado and Jim Wyss – Bloomberg
Women ask to join effort to ensure cash for victims fund; Value of sex offender’s estate has plummeted since last year
More than two dozen women who say Jeffrey Epstein sexually assaulted them are seeking to join an effort to freeze his estate’s assets, with a victims compensation fund running out of cash. Lawyers for the women, who are anonymous in the victims program, asked a judge Friday to let them join the request by U.S. Virgin Islands Attorney General Denise George. They noted that the value of the late financier’s estate, reckoned at more than $600 million last year, had plummeted.

Fox News Cancels ‘Lou Dobbs Tonight’
Christopher Palmeri – Bloomberg
Longtime financial host was named in $2.7 billion lawsuit; Trump said he’ll be watching for the anchor’s next move
Fox Corp. canceled the nightly show of Lou Dobbs, a fierce ally of former President Donald Trump, swapping the program for a series called “Fox Business Tonight” with rotating hosts.

Substack’s Newsletter Revolution Is Coming to Your Inbox; The debate over the tiny tech startup has reached existential scale in the media industry.
Ellen Huet – Bloomberg
The idea behind Hamish McKenzie’s startup, Substack Inc., seems pretty modest. The company makes tools to help writers publish email newsletters, earning money by taking a 10% cut from those who charge their subscribers.

Portrait of a park: the Tuileries Garden, Paris – a longstanding love affair; Home to Rodin’s ‘Kiss’, this storied, quintessentially Parisian park is now the place for a romantic rendezvous
Simon Kuper – FT
There’s almost nowhere to go and nothing to do in Paris this winter. Curfew starts at 6pm. Some nights I’m asleep before 11pm, because you might as well. But one refuge remains, a park that means more to me now than at any other point in all my years in this city: the Jardin des Tuileries. Strolling here with a takeout coffee in hand, a pretty companion by your side, the winter sky orange over the Place de la Concorde, is about as much sensual pleasure as can be had outdoors in Paris during the pandemic.

WordPress VIP Buying Content Analytics Firm; Deal is parent company Automattic’s largest by cost and revenue; terms not disclosed
Allison Prang – WSJ
WordPress VIP is buying content analytics company in a move aimed at boosting its customers’ access to information on how their content performs on social media. WordPress VIP, which is owned by Automattic Inc., didn’t disclose the terms of the deal, but Automattic Chief Executive Matt Mullenweg said in an interview that the deal is Automattic’s largest by cost and revenue. Automattic is also the parent of media platforms Tumblr and Longreads.

11 Steps to Impress Your Boss and Thrive in Your Job; “Managing up” while you work from home can foster positive relationships with those above you, and give your career a boost.
Julie Weed – NY Times
Managing your relationship with your bosses can be as important as tackling your task list. Tuning in to their preferences, communicating skillfully and earning their trust with stellar work can improve your chances at recognition, raises and promotions

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