U.S. SEC opens inquiry into Wall Street banks’ staff communications

Oct 14, 2021

First Read

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$53,806/$300,000 (17.9%)

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Hits & Takes
John Lothian & JLN Staff

FTX announced a global partnership with the International Cricket Council. That leaves the International Turtle Racing League as the only sport with whom they have not done a sponsorship deal. — ICC

IMC is looking for a Graduate Quant Trader for a full time position in Chicago. — IMC

There was good news about travel yesterday. The City of London will resume all-hours metro rides in late November, meaning night Tube service will resume on the Central and Victoria lines on Nov. 27. Pubs and clubs will be happy. Also, the U.S. will reopen its borders for non-essential travel next month to fully vaccinated people.

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

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

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Women In Listed Derivatives (WILD) is currently accepting applications from members for the WILD Board of Directors. The application process will close on November 8th. The group is looking for board member candidates who believe in its mission to highlight and learn from industry role models, encourage career development and support the advancement of women in listed and over the counter derivatives and are willing to be active in governance roles. You can email Penny Copleston at board@womeninlistedderivatives.org to request a Board of Directors application form. ~SR

The Small Exchange says volume in its cryptocurrency stock index futures, which launched October 4, is now averaging about 630 contracts per day, with notional traded averaging about $2.4 Million. Open interest in SCCX futures was just over 300 contracts as of October 12, a spokeswoman for the exchange says, and the number of accounts that have traded the product is up from 100 at launch to more than 1,000. The contract is based on the Small Cryptocurrency Equity Index, which measures the performance of an index of 17 securities with high correlations to crypto assets like bitcoin and ethereum.~SC

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Ross Lancaster joins Acuiti as Head of Research
Acuiti.io
Former Global Capital derivatives editor Ross Lancaster has joined Acuiti in the role of Head of Research. Ross joins from Refinitiv title IFR, where he covered structured finance. Ross is the second hire in as many months for Acuiti following the appointment of Alice Kristiansen as Network Manager.
/bit.ly/3lAjUT9

*****Acuiti continues to impress.~JJL

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Bitcoin Fans Flock to the Futures Market; Premium on bitcoin futures has doubled this month as investors wager that the SEC will approve the first futures-based bitcoin ETF
Michael Wursthorn and Caitlin Ostroff – WSJ
Investors are betting the first U.S.-listed bitcoin exchange-traded fund is about to get the go-ahead. Securities regulators could rule as early as next week on as many as four applications for ETFs that will buy bitcoin futures contracts rather than the cryptocurrency itself. Over the next two weeks, the Securities and Exchange Commission may either approve, reject or delay the proposals ProShares, Valkyrie Investments, Invesco and VanEck submitted in August.
/on.wsj.com/3p69Gw3

***** Futures rule!~JJL

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A Winter of Giant Gas Bills Is Coming. Are You Ready? U.S. households are projected to spend more on heating than they have in several years
J.J. McCorvey – WSJ
Americans got a stark warning from the government this week: Expect higher heating bills this winter. According to the Energy Information Administration, nearly half of U.S. households that warm their homes with mainly natural gas can expect to spend an average of 30% more on their bills compared with last year. The agency added that bills would be 50% higher if the winter is 10% colder than average and 22% higher if the winter is 10% warmer than average.
/on.wsj.com/3DAlJWq

****** Winter is coming. Where have I heard that before?~JJL

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Wednesday’s Top Three
Our top story Wednesday was JLN’s Analysis: What Can We Learn From The DOJ’s Latest Spoofing Conviction?, a guest column by Renato Mariotti and Holly Campbell of Thompson Coburn White Collar Defense and Investigations group. Second was John Lothian’s commentary in JLN, SGX Looks To Expand A50, Grow China-centric Risk Management Business. Third was Everything you need to know about DeFi, from Quartz, which was No. 2 on Tuesday.

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MarketsWiki Stats
26,635 pages; 236,025 edits
MarketsWiki Statistics

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Lead Stories

U.S. SEC opens inquiry into Wall Street banks’ staff communications
Chris Prentice and Jody Godoy – Reuters
The U.S. Securities and Exchange Commission (SEC) has opened a broad inquiry into how Wall Street banks are keeping track of employees’ digital communications, three people familiar with the matter told Reuters. SEC enforcement staff contacted multiple banks in recent weeks to check whether they have been adequately documenting employees’ work-related communications, such as text messages and emails, with a focus on their personal devices, said the people, who spoke on the condition of anonymity.
/reut.rs/3lDDHkU

London Metals Trading Floor Is Fighting to Survive
Jack Farchy and Mark Burton – Bloomberg News
The London Metal Exchange’s black tie dinner returned Tuesday in a step toward normality for the nearly 1,000 people who dusted off tuxes and dresses. Fewer tables meant the party was less raucous than usual — with one exception: exchange boss Matt Chamberlain couldn’t get through his speech without heckling over the LME’s recent handling of its iconic trading floor. It’s been five weeks since the 144-year-old exchange caved to pressure and reopened “the Ring” after an 18-month hiatus. But it’s still not clear whether the floor, one of the last bastions of open-outcry trading, will survive until next year’s dinner.
/bit.ly/3lN5jUR

Energy vol puts spotlight on Ice’s TTF futures margin; Clearing firms say exchange was slow to react as natural gas prices spiked
Costas Mourselas – Risk.net
Clearing brokers are scrutinising margin levels on a crucial natural futures contract after last week’s extraordinary price moves led to a handful of energy suppliers defaulting. The Dutch TTF gas futures contract listed on Ice Endex in the Netherlands was undermargined, according to two risk sources at large clearing banks, who say the exchange ignored their calls to hike levels ahead of the moves.
/bit.ly/3AGhAOZ

EXCLUSIVE Banks prepare to scrap LME gold and silver contracts, sources say
Peter Hobson and Pratima Desai – Reuters
A group of banks that partnered with the London Metal Exchange (LME) to launch gold and silver futures in 2017 is preparing to abandon the project after hoped-for volumes did not materialise, three sources with direct knowledge of the matter said.
/reut.rs/3vcisJR

The perils of democratising private markets; Retail investors face outsized risks without safeguards from regulators
Elif Aktug – FT
At a time of lofty stock market valuations and low interest rates, investors are seeking — and increasingly finding — ways to gain greater exposure to so-called “alternative” investments, private equity in particular. This democratisation of private markets has merits. After all, why should professional investors have monopoly rights to what has been a strongly performing and diversifying asset class?
/on.ft.com/3j1Mv2a

Largest index providers’ ‘stranglehold’ is limiting fee cuts; FTSE Russell, MSCI and S&P indices account for more than 80% of passive European equity assets
Ed Moisson – FT
The largest index providers have a “stranglehold” on the market, which is keeping licensing costs higher for asset managers and limiting further passive fund fee cuts, according to experts. Index providers’ influence in exchange traded funds’ fee levels came to the fore last week when Amundi launched its Prime Emerging Markets Ucits ETF with a market-leading price tag of 10 basis points.
/on.ft.com/3mQfXt7

Putin denies Russia is restricting gas supplies to Europe; President says country will aim for carbon neutrality by 2060
Max Seddon and David Sheppard – FT
Vladimir Putin has vehemently denied Russia is limiting gas supplies to Europe to drive up prices but offered no indication that there would be swift action to relieve tension in volatile energy markets. The Russian president told a conference in Moscow on Wednesday that accusations of state-owned Gazprom using energy as a “weapon” to speed up approval of the recently built Nord Stream 2 pipeline to Germany were “politically motivated blather”.
/on.ft.com/3mUunIx

Vladimir Putin Says He Accepts Crypto’s Role in Making Payments
Jake Rudnitsky – Bloomberg
Crypto ‘has the right to exist,’ Putin says in CNBC interview; U.S. considering new regulations after Chinese crackdown
Russian President Vladimir Putin signaled tolerance of cryptocurrencies, which are drawing increasing scrutiny from regulators around the world amid fears they can be used for money laundering and criminal activity.
/bloom.bg/3aEdht0

U.S. SPAC Frenzy Inspires a Reboot in Asia; Financial hubs Singapore and Hong Kong push forward with ‘SPAC 2.0’ frameworks for blank-check companies
Jing Yang – WSJ
SPACs have lost some luster in America, but stock exchanges in Singapore and Hong Kong are betting the vehicles will boost their allure to global investors and startups in the region. The two Asian financial hubs have been pushing forward with competing plans to enable listings of special-purpose acquisition companies, which raise money and go public before finding businesses to merge with. Singapore launched its SPAC rules in September, while Hong Kong is seeking public comment on its proposed regulations until the end of this month.
/on.wsj.com/3mTj03J

EU in Talks to Delay Reforms for $61 Trillion Securities Market
Libby Cherry, William Shaw and Lyubov Pronina – Bloomberg
Officials from European Union member states will meet on Wednesday to discuss calls to delay sweeping reforms that threaten to drive up costs in Europe’s settled-securities market. Brussels is facing pressure from lobby groups to postpone the February start date of changes designed to help make settling securities safer and more efficient in the bloc. Under the proposals, if one party fails to deliver a security as planned, the other side will be able to buy it independently then pass the cost back to the original counterparty, according to Ashley Rowlands, managing associate at Linklaters LLP.
/yhoo.it/3FHbHVt

Turkey’s Erdogan Fires Central Bank Officials, Fueling Economic Uncertainty; Lira falls to record lows after Turkish president’s latest intervention at the bank
Jared Malsin and Anna Hirtenstein – NY Times
Turkey’s economy slid further into turmoil on Thursday after President Recep Tayyip Erdogan fired three top officials at the country’s central bank in a midnight decree that drove the country’s currency to record lows. The firings are Mr. Erdogan’s latest intervention at the bank after he fired three of its governors within two years, most recently installing a chief in March who agrees with his desire for lower interest rates.
/on.wsj.com/3DGJv3i

Turkish Exchange Coinzo Shuts Down Following President’s Crackdown
David Thomas – BeInCrypto
Following Turkish president Recep Tayyip Erdogan’s declaration of “war” against crypto, one of the biggest exchanges in Turkey, Coinzo will soon be closing its doors. Coinzo, one of the largest crypto exchanges in Turkey by daily trading volume, follows Thodex and Vebitcoin, announcing its shutdown on Monday, 11 Oct 2021. There was no reason provided. Users will be allowed to log in on Coinzo’s website for the next six months to withdraw Turkish Lira and cryptocurrencies. Withdrawals in Turkish Lira can only be made to a bank account with the name as the Coinzo account from which it is being transferred.
/yhoo.it/2XaJ815

G7 finance officials endorse principles for central bank digital currencies
Andrea Shalal and David Lawder – Reuters
G7 finance officials on Wednesday endorsed 13 public policy principles for retail central bank digital currencies, saying they should be grounded in transparency, the rule of law and sound economic governance, the Treasury Department said.
/yhoo.it/3BIt6L2

Crypto regulation is ‘matter of urgency’, says Bank of England
Teuta Franjkovic – Coin Rivet
After the Bank of England (BoE) Deputy Governor Sam Woods warned tougher new rules for preventing British banks from building up extensive exposure to crypto assets were needed, senior BoE official Jon Cunliffe has now called for rapid regulation of cryptocurrencies.
/yhoo.it/3vdoPgj

Nearly 30% of traders are back in the office full-time, says Deutsche Bank; Survey reveals traders are now most likely to be back to a full week from the office
Paul Clarke – Financial News
Nearly 30% of sales and trading staff are now working from the office full-time — a 12 percentage point jump from last month as Wall Street and the City’s banks have unwound their pandemic home-working arrangements.
/bit.ly/3FJylMJ

ISDA Launches Future Leaders in Derivatives Program
ISDA
The International Swaps and Derivatives Association, Inc. (ISDA) has launched a new professional development program for emerging leaders in the derivatives market to help support their career progression and enable them to gain experience of working alongside other practitioners from all parts of the derivatives industry.
/bit.ly/3BLUyHK

Episode 14: The EC’s Regulatory Agenda
ISDA
The European Commission has a busy end to 2021 in store, with publication of new capital measures due in October, continuing work to enable the transition to a climate-neutral economy by 2050 and an ongoing initiative to review its flagship markets legislation. The EC’s Sean Berrigan discusses the EU’s regulatory priorities.
/bit.ly/3vamceR

ISDA-Clarus RFR Adoption Indicator: September 2021
ISDA
The ISDA-Clarus RFR Adoption Indicator increased to an all-time high of 20.3% in September compared to 17.5% the prior month. The indicator tracks how much global trading activity (as measured by DV01) is conducted in cleared over-the-counter and exchange-traded interest rate derivatives (IRD) that reference the identified risk-free rates (RFRs) in six major currencies. On a traded notional basis, the percentage of RFR-linked IRD comprised 15.9% of total IRD in September compared to 13.3% the prior month.
/bit.ly/3AHCJbi

A crypto collapse is ‘plausible’ and regulation of the market is urgently needed, Bank of England’s deputy governor says
Isabelle Lee – Business Insider
A crash in the cryptocurrency market is “plausible” and regulatory clarity is urgently needed, Bank of England Deputy Governor Jon Cunliffe said on Wednesday. “Such a collapse is certainly a plausible scenario, given the lack of intrinsic value and consequent price volatility, the probability of contagion between cryptoassets, the cyber and operational vulnerabilities, and of course, the power of herd behavior,” he said during a speech at the SIBOS conference.
/yhoo.it/3p1csCO

The Nobel Prize Winner Who Created a Better Auction: A Conversation With Paul Milgrom; Economist helped the FCC raise billions auctioning wireless licenses
Thomas Gryta – WSJ
Stanford University economics professor Paul Milgrom has been at the forefront of auction theory for nearly three decades, studying auction design and bidder behavior. When the U.S. government in 1993 approved the first auction of radio spectrum to wireless carriers, it faced the complex task of distributing the licenses to a nascent industry.
/on.wsj.com/3p1IIpj

Wellness Exchange

Covid-19 Infections ‘High and Rising’ Among Children in England
Emily Ashton – Bloomberg
Data comes amid concern over slow vaccine rollout in schools; Ministers renew calls for young people to get their shots
Coronavirus infections among school-aged children in England are “high and rising,” according to a major study that is likely to exacerbate concerns about the pace of the vaccine rollout. Prevalence of Covid-19 is growing among those aged 17 and younger, the React-1 study led by Imperial College London found. The reproduction rate in that age group was 1.18, meaning that on average every 10 young people infected is passing it on to about 12 others. That has driven up the national infection rate, even though prevalence is falling in the 18-54 age group.
/bloom.bg/3lFey9r

So Was Sweden a Covid Success or Failure? Either way, it hasn’t really earned its place as a lightning rod in the debate over pandemic policy.
Justin Fox – Bloomberg
Sweden has been a lightning rod since early in the Covid-19 pandemic. Opponents of lockdowns and mask mandates in the U.S. and U.K. pointed to its more-relaxed approach and relatively modest death toll as evidence that drastic measures were not only overkill, but counterproductive.
/bloom.bg/3lFSP0V

Latvian President Tests Positive for Covid After Trip to Sweden
Aaron Eglitis – Bloomberg
Latvian President Egils Levits tested positive for coronavirus after returning from a trip to Sweden, his spokeswoman said in a statement.
/bloom.bg/3FO4t23

Would You Let a Scientist Infect You With Covid?
Kate Murphy – NY Times
In an age of masking, compulsive hand sanitizing and plexiglass dividers, it seems inconceivable that for more than 40 years people enthusiastically signed up — and were often put on a waiting list — to have respiratory viruses, including coronaviruses, dripped into their noses.
/nyti.ms/3DKfiAn

FDA Advisors to Consider Moderna Covid-19 Booster Shot; Vaccine experts are scheduled to meet Thursday to review evidence for a third dose of the Moderna shot and make a recommendation to the FDA
Felicia Schwartz – WSJ
Vaccine experts advising the Food and Drug Administration are scheduled to vote on Thursday whether the agency should authorize an extra dose of Moderna Inc.’s MRNA 3.33% Covid-19 shot, a key step in making booster doses available to millions more people.
/on.wsj.com/3FMwXsP

Exchanges, OTC and Clearing

Tradeweb adds Trade at Close functionality to portfolio trading offering; Clients in the US and Europe can now electronically execute portfolio trades at end-of-day prices, allowing them to better manage large and critical credit trades.
Annabel Smith – The Trade
Tradeweb has sought to meet rising demand for passive investment strategies at the Close with the expansion of its portfolio trading offering to include a Trade at Close functionality. Tradeweb said the expanded remit was in response to the growing passive investment and bond exchange traded funds (ETFs) market alongside rapidly increasing volumes taking place at the Close.
/bit.ly/2XbgJbg

CME Group’s international average daily volume up by 13% year on year; Increased ADV resulted from the global growth in interest rate and energy products, which were up 54% and 31% respectively.
Wesley Bray – The Trade
US derivatives exchange CME Group’s international average daily volume (ADV) hit 5 million contracts in the third quarter of this year, up 13% year on year. The ADV figure represents all trading done outside of the US.
/bit.ly/3vdk8mH

LSEG Announces Further Investments in Global FX Business; Sally Francis-Cole joins as Head of FX Sales, Stephen Best joins as Head of FX Product, and Jill Sigelbaum is taking on a new role as Head of Strategic Development & Partnerships, bringing demonstrated experience in driving growth and product strategy to the FX market.
London Stock Exchange Group
London Stock Exchange Group (LSEG) has announced that Sally Francis-Cole and Stephen Best have joined the leadership of the company’s global FX business, with Jill Sigelbaum taking on a new role on the FX leadership team.
/lseg.group/3BGoGnO

JPX to Establish “Sustainable Finance Platform Development Working Group”
JPX
As part of its Priorities for July 2021-June 2022, as published on August 31, the Japanese Financial Services Agency (FSA) noted the urgency of developing platforms to underpin the promotion of sustainable finance and announced its intention to progress further with this in collaboration with market players. The FSA’s Sustainable Finance Expert Panel has also discussed the possibilities of an information platform and certification framework for green bonds and similar products.
/bit.ly/2X9NO7o

Intercontinental Exchange Invests in LevelTen Energy, the World’s Largest Platform for Renewable Energy Transactions
LevelTen Energy,
LevelTen Energy, the leading provider of renewable transaction infrastructure, announced that Intercontinental Exchange (NYSE: ICE), a leading global provider of data, technology, and market infrastructure has joined in a second close of LevelTen’s Series C funding. On August 25, LevelTen announced its first Series C close led by NGP ETP, with participation from leading global technology, energy, and venture capital firms. LevelTen raised $35 million in this latest round, bringing the company’s aggregate funding to $62.3 million.
/bit.ly/2YJjG3g

— CME STP Notices: October 14, 2021 — CME
— CME Globex Notices: October 11, 2021 — CME

Fintech

A Smart Solution to Advance Consumer-Centric Payments Innovation in America
Nick Catino, Jonah Crane, Daniele Gorfine – Morning Consult
In recent years, there have been several debates over how best to regulate and facilitate financial technology innovation in the United States. These debates frequently pit federal regulations against state-based regulation, and banks against nonbanks, in unfortunate zero-sum contests, resulting in legal challenges and increasingly tense congressional hearings that risk losing the forest for the trees in terms of what’s best for the country. At the same time, the Federal Reserve is considering whether certain kinds of banks — but only banks — can directly access federal payment systems.
/bit.ly/3ayQ5wg

Europe’s Data Centers Will Gobble Up a Lot More Electricity
Jesper Starn – Bloomberg
Power use at the sites to jump about 80% by 2030: BloombergNEF; Data centers may make up quarter of Irish power demand by then
Europe’s data center industry will use much more electricity by the end of this decade, accounting for about a quarter of total power consumption in Ireland alone, according to BloombergNEF.
/bloom.bg/3DCVYow

FactSet acquires Boston-headquartered Cobalt Software; As part of the acquisition FactSet will enhance its data and workflow solutions.
Wesley Bray – The Trade
Integrated financial information provider FactSet has acquired Boston-headquartered portfolio monitoring solutions provider Cobalt Software. The transaction falls in line with FactSet’s strategy to scale its data and workflow solutions through targeted investments as part of its multi-year investment plan.
/bit.ly/3BNZM60

Plato Partnership implores regulators to implement real-time single post-trade consolidated tape for equities; In an open letter, the partnership highlighted the benefits of a tape across transparency, liquidity and risk management, and post-trade analysis.
Annabel Smith – The Trade
The Plato Partnership has written an open letter to European policymakers imploring them to establish regulations that will ensure the creation of a consolidated tape for equities.
/bit.ly/3AELW4j

Cybersecurity

North America Is Biggest Ransomware Target, Chainalysis Says
Joanna Ossinger – Bloomberg
Associates of Russia-linked groups take a toll: report; U.S. aims to ramp up its fight against ransomware operations
North America has been extorted for the most money by ransomware attackers of any region — and the groups targeting it tend to be associated with Russia-based cybercriminal groups, according to a new report.
/bloom.bg/3iXHE1N

Banks, government perform triage as software vulnerabilities multiply
David Heun – American Banker
The flood of security vulnerability alerts banks receive — those warnings that a website or piece of code contains a small flaw that a hacker could exploit to break into a network — may soon become a tsunami.
President Biden’s cybersecurity executive order in May emphasized improving vulnerability detection on all federal government networks — which would equate to even more vulnerability alerts going out to information technology teams at financial institutions or businesses that work with the government.
/bit.ly/2YQ2h9f

Evolution Equity Partners closes on $400M for new cybersecurity fund
Christine Hall – TechCrunch
Evolution Equity Partners is targeting cybersecurity and enterprise software companies for its new Evolution Technology Fund II LP for which it announced Thursday a final closing totaling $400 million.
The fund was oversubscribed and included new and returning institutional investors, corporates and family offices from the United States, Europe, Middle East and Asia.
/tcrn.ch/2Xco3mZ

1H 2021 Cybersecurity Market Sees Record Investment Activity; Cybersecurity Stocks Outperform NASDAQ and S&P
Scott Ikeda – CPO Magazine
A new report from Momentum Cyber finds that the first half of 2021 was the busiest on record for the cybersecurity market in terms of investment and strategic activity. The torrid pace of strategic deals and venture capital (VC) investment activity has been indirectly driven by the massive spike in ransomware attacks as the pandemic pushed companies to quickly develop and deploy hybrid work-from-home models.
/bit.ly/2XfdLTe

Why enterprises are massively subcontracting cybersecurity work
Corinna Makris – VentureBeat
NewtonX market research revealed this week that 56% of organizations surveyed subcontract as much as 25% of their cybersecurity work. In the study, more than 100 chief information security officers, CTOs, and other senior decision-makers indicated a trend toward subcontracting one of the most critical roles continually facing enterprise professionals.
/bit.ly/3AJhm9L

Lawmakers, security experts call for beefing up cybersecurity
IV Hendrix – TheHill
Lawmakers and national security experts said Tuesday that the U.S. needs to take bigger steps at the government level and in the private sector to guard against ransomware attacks.
Rep. Yvette Clarke (D-N.Y.), speaking at The Hill’s Cybersecurity Summit, said the attacks are “happening each and every day.”
/bit.ly/2XfdUpK

Johns Hopkins to launch degree program in cybersecurity and policy
Laura Kelly – TheHill
The Johns Hopkins University School of Advanced International Studies on Wednesday announced plans to launch an advanced academic program focused on the intersection of cybersecurity, technology, intelligence and international affairs.
The program, called the Alperovitch Institute for Cybersecurity Studies, is named after the former Chief Technology Officer and co-founder of the cybersecurity firm Crowdstrike, Dmitri Alperovitch.
/bit.ly/2YJh3yq

Cryptocurrencies

FTX announces global partnership with the International Cricket Council
FTX
FTX Trading Limited (“FTX” or “The Company”), a leading global cryptocurrency exchange, today announced a global partnership with the International Cricket Council (ICC), the governing body of cricket, where FTX will be the official cryptocurrency exchange partner for ICC events.
/bit.ly/3FNJ2OA

Binance to halt peer-to-peer trading service in China, severing final link with market amid Beijing’s cryptocurrency crackdown
Georgina Lee – South China Morning Post
Binance, the world’s largest cryptocurrency exchange that has attracted multiple warnings from regulators, said it would stop offering its peer-to-peer trading service in China by the end of 2021 in a move that would represent a clean break from a market it largely withdrew from in 2017.
/yhoo.it/3v6r3xT

SEC Commissioner Peirce Calls For Digital Assets Regulatory Harmony
Anna Lyudvig – Traders Magazine
A fundamental area of conflict between the SEC and the public is how much legal clarity there is around digital assets, according to Commissioner Hester M. Peirce.
In her remarks before the Texas Blockchain Summit, Commissioner Peirce said that most of the SEC’s crypto enforcement actions have not been litigated actions, rather they have ended in settlements, which are not good vehicles for careful legal analysis.
“When a party settles an SEC enforcement action, it often is trying to get the case wrapped up so it can move on. It has no incentive to force the SEC, as a condition of the settlement, to lay out a clear legal analysis.”
/bit.ly/3ALaOY1

East Asia Crypto Transactions Plunged Amid China Crackdown
Joanna Ossinger – Bloomberg
East Asia’s share of global cryptocurrency transaction volumes halved amid China’s crackdown on the industry, according to a study from Chainalysis.
/bloom.bg/2YRJjiN

Coinbase’s NFT Waitlist Tops 1 Million Signups on First Day
Katherine Greifeld – Bloomberg
Crypto exchange announced NFT marketplace plans this week; NFT trading could be lucrative business for Coinbase: BI
Coinbase Global Inc.’s not-yet-launched marketplace for nonfungible tokens is already a hot spot. There were more than one million signups on the crypto exchange’s NFT waitlist on the first day it opened, a person familiar with the situation said late Wednesday. It wasn’t clear whether some of the signups were duplicates or spam, the person said. Coinbase unveiled plans to launch its marketplace on Tuesday, seeking to tap into one of the biggest trends in digital assets this year.
/bloom.bg/3iZxi1w

NFTs turn Japan’s manga and anime into genuine art; Original illustrations from One Piece reborn as high-end collectors’ items
Eri Sugiura – FT
Blockchain technology is lending new commercial value to Japanese manga and anime culture, turning illustrations into genuine artworks, raising money for artists and fostering the growth of the market and related businesses.
/on.ft.com/3iZAcmW

SEC Modernizes Filing Fee Disclosure and Payment Methods; Amendments Will Help Automate Filing Fee Calculation and Validation, Update Fee Payment Options
SEC
The Securities and Exchange Commission today adopted amendments to modernize filing fee disclosure and payment methods. Operating companies and investment companies (funds) pay filing fees when engaging in certain transactions, including registered securities offerings, tender offers, and mergers and acquisitions.
/bit.ly/3aCtK0H

Binance Launches ‘Biggest Growth Fund in Crypto History’ — How Could It Impact Blockchain Industry?
Ya?l Bizouati-Kennedy – GoBankingRates
Crypto exchange Binance has announced the launch of a $1 billion fund to push the adoption of not only the Binance Smart Chain (BSC) ecosystem, but the whole blockchain industry.
/yhoo.it/3aFEICF

Central banks’ digital currencies must not harm their monetary mission – and must complement cash, G7 finance leaders say
Shalini Nagarajan – Business Insider
Central bank digital currencies mus support and “do no harm” to a bank’s ability to implement their mission for monetary and financial stability, and would complement cash if issued, Group of Seven financial leaders said Wednesday. “If issued, a CBDC would complement cash and could act as a liquid, safe settlement asset and as an anchor for the payments system,” they said in a statement on guidance issued after a meeting in Washington.
/yhoo.it/3BGH2Fb

DAR Announces October 2021 Crypto Exchange and Asset Vetting Results; DAR’s vetting processes bring institutional-level diligence to crypto markets and the latest vetting process results in 21 Vetted Exchanges, 14 Watchlist Exchanges, and 43 Benchmark Assets
DAR
Digital Asset Research (DAR), a leading provider of crypto asset data and research, today announced the release of its October 2021 Crypto Exchange Vetting and Asset Vetting results. In an environment where cryptocurrencies trade across hundreds of lightly regulated or unregulated exchanges, DAR’s vetting processes meet an industry-wide need for reliable crypto data by applying institutional-level diligence to digital asset markets.
/yhoo.it/2YHCXlD

Politics

Biden’s Bank Regulation Nominee Is Facing A ‘Red Scare McCarthyism’ Campaign
Paul Blumenthal – HuffPost
Republicans and bank lobbyists are trying to derail the nomination of Saule Omarova, a financial law expert at Cornell University, to head the Office of the Comptroller of the Currency, which oversees banking regulation. Their main line of attack is not about her qualifications but about her place of birth: the former Soviet Union.
/yhoo.it/3oVNwN7

Biden pick for bank regulator says critics ‘demonise’ her identity; US comptroller of the currency nominee Omarova has faced attacks over Soviet upbringing
Kiran Stacey and Stefania Palma – FT
Joe Biden’s pick to head up a major US bank regulator has hit back at her critics in Congress and Wall Street, accusing some of them of singling her out for being a woman and a minority candidate.
/on.ft.com/2YNZgXo

Kyle Bass’s Disastrous Hong Kong Short Got Bannon-Linked Cash
Tom Schoenberg, Matt Robinson, and Joshua Green – Bloomberg
Hayman Capital manages unnamed hedge fund in recent SEC case; Fund lost money that the regulator says was raised illegally
A recent U.S. Securities and Exchange Commission case reveals how Kyle Bass’s bet against the Hong Kong dollar has fizzled: He’s lost big, ensnaring some investors who funded his short through what the regulator says was an illicit stock offering. The details were laid out in a September SEC enforcement action that describes illegal financing of an ambitious startup that sought to expose corruption involving Chinese government officials. The startup — GTV Media Group, with ties to self-professed billionaire Guo Wengui and ex-Donald Trump adviser Steve Bannon — raised $339 million through an unregistered share sale last year, according to the SEC.
/bloom.bg/3voRfnH

ESG investing Added; Biden paves way for ESG retirement funds in reversal from Trump
Proposal could ease concerns of US plan managers who consider factors such as climate risk
Patrick Temple-West – FT
The Biden administration has proposed a rule that would pave the way for funds pursuing environmental, social and governance standards to be featured in US workers’ retirement savings plans, reversing a Trump-era policy.
/on.ft.com/3mThZbV

Celsius investment shows ‘conviction’ in blockchain, says CDPQ; Canadian pension fund ‘absolutely not’ considering investing directly in bitcoin
Joshua Oliver and Kadhim Shubber – FT
Canada’s second-largest pension fund has said its inaugural investment in the digital asset sector reflects a belief that blockchain technology will shake up the financial industry, even as cryptocurrencies attract mounting regulatory scrutiny.
/on.ft.com/3FFSO5j

Regulation

FMA censures Jarden for derivatives issuer licence breaches by OMF
FMA New Zealand
The Financial Markets Authority (FMA) – Te Mana Tatai Hokohoko – has formally censured Jarden Securities Limited for contraventions by OM Financial Limited (OMF) as a licensed derivatives issuer (DI). OMF co-mingled derivative investor money with its own money, a breach of its DI obligations. OMF amalgamated with Jarden in March 2021, so the amalgamated entity inherited the property, rights and liabilities of OMF and Jarden, including the DI licence. As such, the FMA has censured the amalgamated entity.
/bit.ly/3vdmpht

SEC Chair Gensler’s 49 Proposed Regulations Draw Ire of Hedge Fund Managers, Brokers and More
Ya?l Bizouati-Kennedy – GoBankingRates
Securities and Exchange Commission (SEC) Chair Gary Gensler — nominated in February 2021 by President Joe Biden and sworn in by April — didn’t lose one minute to address a slew of issues and propose sweeping Wall Street regulations.
/yhoo.it/3azXVFO

ASIC further extends temporary financial advice relief measures in COVID-19 instrument
ASIC
ASIC today announced that it will further extend temporary relief measures designed to help the financial advice industry provide consumers with affordable and timely advice during the COVID-19 pandemic.
/bit.ly/2XclP77

Partnerships, priorities and predictions for the future in the pensions market
UK FCA
Speech by Sarah Pritchard, Executive Director, Markets, to the Pensions and Lifetime Savings Association
/bit.ly/2YHAh7z

How does the IRS ‘wash sale’ rule work — and does it apply to cryptocurrency losses?
Bill Bischoff – MarketWatch
How does the IRS ‘wash sale’ rule work — and does it apply to cryptocurrency losses?
As the end of the year approaches, some investors will turn to tax-loss harvesting. Here’s what you need to know first about the ‘wash sale’ rule.
/yhoo.it/3AEOPSH

Investing and Trading

Why Online Brokerage TradeZero Merged With Dune SPAC
Bloomberg via Yahoo Finance
Online brokerage TradeZero Holding Corp, has agreed to merge with blank-check firm Dune Acquisition Corp.in a deal with a post-transaction enterprise value of $556 million. TradeZero co-founder and CEO Dan Pipitone discusses the merger and growth plans on “Bloomberg Markets.”
/yhoo.it/3lCerey

The Index Fund Revolutionized Finance — But at What Cost? A new book chronicles the rise of passive investing, the pioneers who made it a dominant force in finance — and its potential downsides
Stephen Foerster via Medium
When the renowned investor Warren Buffett bets a million dollars on an outcome, it’s rarely a good idea to take the other side of it. In 2008, the hedge fund manager Ted Seides decided to try his luck anyway, taking on Buffett’s public wager that an index fund that tracked the U.S. stock market would outperform any group of hedge fund managers over the next decade. Seides selected five funds-of-funds that were invested in over a hundred hedge funds. The race wasn’t even close. By 2018, the Vanguard 500 index fund had returned a cumulative 126 percent compared with the fund-of-funds paltry 36 percent. The eye-opener is that Buffett, celebrated for his value investing stock-picking approach, chose to invest in a “passive” index fund.
/bit.ly/3AxrVNb

FIA SEF Tracker Monthly Overview; High-level view of recent trading activity
FIA
The SEF Tracker Overview provides a high-level visualization of recent trading activity for interest rate derivatives, credit default derivatives and foreign exchange derivatives on swap execution facilities. The Overview also provides tables showing average daily volume and total volume for the most recent month. If you have any questions or need technical assistance, please contact our help desk.
/bit.ly/3BytgVb

Worries Over a U.K. Policy Error Are Showing Up in Bond Markets
Greg Ritchie – Bloomberg
Thirty-year gilt yields fell by the most since March 2020; U.K. yield curves near the flattest in at least a year
The U.K. bond yield curve is the latest reflection of concern that any rapid policy tightening will end up hurting growth. Long-end gilt yields held declines on Thursday, a day after plummeting by the most since March 2020. That has diminished their gap versus two-year rates and five-year equivalents to the narrowest in at least a year, often seen as a sign that the market’s sense of the economy is turning less optimistic.
/bloom.bg/3AAQAQZ

Global Gas Crisis Spilling Over Into Oil Markets, IEA Says
James Herron – Bloomberg
‘Massive switch’ away from gas is boosting oil demand; Unseasonably high demand for oil products seen in some places
Shortages of natural gas in Europe and Asia are boosting demand for oil, deepening what was already a sizable supply deficit in crude markets, the International Energy Agency said.
/bloom.bg/3ARP7pD

IPOs Prove Hardier Than Stake Sales in Europe’s Volatile Market
Swetha Gopinath -Bloomberg
Europe listings overtake stake sales for first time since 2018; Pulled deals and lackluster trading aren’t crimping IPO boom
Initial public offerings in Europe are outpacing stake sales for the first time since 2018, as new listings keep defying the recent market volatility that has deterred large holders from offering stock.
/bloom.bg/2YT3bSG

Why Stagflation Is Back on Some Traders’ Radars
Matthew Boesler and Emily Graffeo – Bloomberg
If 2020 was a year for worrying about pandemic-induced economic collapse and the first half of 2021 was a time for worrying about post-pandemic inflation, for a growing number of traders the new cause of anxiety is a word that hasn’t been heard much since the 1970s: stagflation.
/bloom.bg/3g3nmQw

Gunvor cuts LNG positions amid $1bn of margin calls; Commodity trader moves to reduce gas exposure in face of unprecedented price surge
Neil Hume and David Sheppard – FT
Gunvor, one of the world’s biggest independent energy traders, cut trading positions after the gas price spike triggered margin calls from brokers and exchanges.
/on.ft.com/2YXhAx3

What Wild Natural Gas Prices Mean for Inflation; Tripling of wholesale gas benchmarks in Europe has been more dramatic than its impact on consumer prices, but the link will likely get stronger over time
Rochelle Toplensky -WSJ
Europe’s crazy jump in gas prices is having surprisingly little impact on inflation in the region. In another year, though, the effect could be more dramatic. European wholesale gas prices on spot markets have roughly tripled this year, but the average retail consumer gas price is up only about 9%, according to UBS. Anna Titareva, an economist at the bank, estimates the impact on the region’s inflation at about 0.4 percentage points. By comparison, a more moderate 50% rise in oil prices added 0.6 percentage points to inflation.
/on.wsj.com/30qwvAq

Environmental, Social and Corporate Governance

NAB Closes Its First Australian ESG-linked Derivative
NAB
NAB today announced it has closed its first Australian ESG-linked derivative with an ASX50 listed company. As part of the transaction, the client traded an ESG-linked interest rate swap exclusively with NAB. ESG-linked derivatives are specialist products tied to environmental, social and governance (ESG) targets. They encourage Australian businesses to consider sustainability across their financial risk management.
/nab.co/3BD7f7v

Europe’s Record Bond Program Bumps Up Against Green Concerns
Jill Ward and John Ainger – Bloomberg
Historic program isn’t yet covered by EU’s green bond standard; EU Commission says it applies ‘rigorous’ screening to program
The European Union’s inaugural green bond sale wowed investors this week with its record size and massive order book. But it also raised some awkward questions about how the money will be used.
/bloom.bg/3j3IJFv

ESG Funds Easier for 401(k)s to Buy Under Labor Department Plan; Proposal would reverse Trump administration measure making it harder to offer investments based on environmental, social and governance factors
Anne Tergesen – WSJ
The Labor Department on Wednesday proposed a rule that would make it easier for investors to purchase funds focused on environmental, social and governance measures in their 401(k) plans. These types of funds have become increasingly popular in recent years as individuals seek to invest in ways more consistent with their own values. The proposal has been supported by many Wall Street firms, which are rolling out such offerings to meet demand.
/on.wsj.com/2YSnFLi

‘Adapt or Die,’ U.K. Environment Agency Warns on Climate Change; With more extreme weather events expected to bring floods and droughts, the body urged world leaders to focus on mitigating the effects of global warming.
Isabella Kwai – NY Times
The British Environment Agency on Wednesday delivered a stark warning to world leaders on the need for decisive action to combat climate change, ahead of a U.N. summit in Glasgow this month when delegates from nearly every country will discuss strategies to tackle global warming.
/nyti.ms/3j40AMv

Institutions

Wells Fargo Beats Estimates as Reserve Release Pads Profit
Hannah Levitt – Bloomberg
Loans dropped as consumers and businesses stay on sidelines; Revenue, net income exceeded analysts’ expectations in quarter
Wells Fargo & Co. beat analysts’ expectations for third-quarter profit, another positive sign for Chief Executive Officer Charlie Scharf’s turnaround efforts, but expenses were higher than anticipated and loans fell.
/bloom.bg/2YLMUix

Citi and Morgan Stanley ride dealmaking wave lifting Wall St; M&A boom helped US banks overcome pressure from lower interest rates and weak loan demand
Imani Moise and Joshua Franklin – FT
Citigroup and Morgan Stanley have both benefited from a surge in dealmaking that bolstered revenues in the third quarter and helped offset continued pressure from lower interest rates and weak loan demand.
/on.ft.com/3DFieya

Bank of America registers double-digit revenue growth; US lender boosted by jumps in interest income and fees
Imani Moise – FT
Bank of America reported double-digit revenue growth on Thursday as big jumps in interest income and fees helped it to outperform megabank peers.
/on.ft.com/30fzxqX

Bank of America Quarterly Profit Rises 58% on Higher Interest Income; Profit also boosted by release of cash that bank had set aside to cover loan losses
Ben Eisen – WSJ
Bank of America Corp. third-quarter profit rose 58%, suggesting banks’ lending businesses are starting to improve from a pandemic slump. The second-largest U.S. bank earned $7.69 billion, up from $4.88 billion a year earlier. Per-share earnings of 85 cents topped the 71 cents that analysts polled by FactSet had expected.
/on.wsj.com/3mRLoDd

Regions

China’s power problems expose a strategic weakness
Keith Bradsher – NY Times
A bread company cannot get all the power it needs for its bakeries. A chemicals supplier for some of the world’s biggest paint producers announced production cuts. A port city changed electricity-rationing rules for manufacturers four times in a single day. China’s electricity shortage is rippling across factories and industries, testing the nation’s status as the world’s capital for reliable manufacturing. The shortage prompted authorities to announce Wednesday a national rush to mine and burn more coal, despite previous pledges to curb emissions that cause climate change.
/nyti.ms/3lFyeKr

Chinese Workers Reveal Hours Online as Backlash to ‘996’ Office Culture Grows
Bloomberg News
Employees share data on working hours in online campaign; Effort recalls 2019 campaign against tech startups in China
A group of private sector employees in China have begun an online campaign to gather their working hours in a protest against the excessive work culture in the country. The so-called Worker Lives Matter campaign is asking employees in various industries like technology and finance to share what time they start and end their workday as well as how many days they work per week. As of Thursday, the spreadsheet had more than 4,000 entries, including contributions from within tech giants like Tencent Holdings Ltd., Alibaba Group Holding Ltd. and ByteDance Ltd.
/bloom.bg/3lFTTlr

London’s Night Tube to Return in Boost for Pubs and Restaurants
Foster Wong – Bloomberg
London’s party-goers and night workers were rewarded with news the city will resume all-hours metro rides from late November, more than 18 months after they were suspended due to the Covid-19 pandemic.
/bloom.bg/3lETvUo

UK wholesale gas company to stop delivering to retail suppliers; Glencore-backed CNG adds to pressure on consumer energy market already reeling from failures
Nathalie Thomas in Edinburgh and David Sheppard and Jim Pickard – FT
A UK company backed by Glencore that supplies natural gas to utilities is halting deliveries, raising fears of another string of failures in the crisis-hit British retail energy market.
/on.ft.com/2YRKC1b

The real question about China for investors; Beijing’s policymaking process is the main issue, not political objectives
Logan Wright – FT
China’s crackdowns against the property sector and its technology giants have jolted financial markets, sparking a debate about whether or not China is still “investable”.
/on.ft.com/3j3HJ46

Miscellaneous

Wake up and smell the ‘sustainable’ coffee produced in Finnish lab
Reuters
With climate change threatening traditional coffee farming, Finnish scientists say they have produced coffee from cell cultures with an aroma and taste resembling the real thing.
The VTT Technical Research Centre of Finland may have come up with a more sustainable alternative to growing coffee beans by floating cell cultures in bio-reactors filled with a nutrient medium used to make various animal- and plant-based products.
Heikki Aisala, the VTT researcher in charge of evaluating the process, said cups of cellular coffee probably could not pass standard taste tests just yet, but had lots of potential for a multi-billion-dollar global industry.
/reut.rs/3aDLby0

****They should call it, “I Can’t Believe It’s Not Coffee.” ~JB

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