‘Volmageddon’ Is History as SEC Greenlights Leveraged VIX ETFs

Oct 6, 2021

First Read

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Hits & Takes
John Lothian & JLN Staff

The FINRA Foundation awarded the 2021 Ketchum Prize, the highest honor from FINRA, to Shawn Spruce, a champion of financial and investor education in native communities. — FINRA

The Cboe is going with its version of “Bo Knows,” hiring Bo Chung as senior vice president of global sales and index licensing. Also, Michael Hollingsworth was promoted to vice president, global head of data and analytics, and Geralyn Endo was promoted to vice president, global data and access solutions client engagement. — Cboe

“Bo Knows” was an advertising campaign for Nike cross-training shoes that ran in 1989 and 1990 and featured professional baseball and American football player Bo Jackson. Jackson was the first athlete in the modern era to play professional baseball and football in the same year. (Wikipedia)

Thomas Scanlan has been hired as a director of Dealerweb Chicago at Tradeweb. Scanlan was a longtime EBS BrokerTec employee and then worked at NEX and CME Group.

FairX set a new daily volume record of about 8,800 contracts. — LinkedIn

Trading Technologies made its match with a donation made by Nils-Robert Persson 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


Four episodes of the FIA Speaks podcast are now available to watch. Episode 19 features economists Jeff Harris, Jim Overdahl and Erik Sirri, and covers topics such as the retail trading phenomenon, crypto assets, the role of ESG products and pricing carbon, and the state of market structure in equities and futures. Episode 20 features Leo Melamed, former CME chairman. Episode 21 features Greenwood Project founders Elois and Bevon Joseph, and Episode 22 features Linda Coffman, the CEO of the SmartStream Reference Data Utility, who shares her insights on how technology and regulation are changing the data landscape. You can listen to all episodes of FIA Speaks via Apple Podcasts or Google Podcasts.~SR

The three-day STA 2021 conference kicked off this morning in Washington, D.C., offered in-person and virtually in a hybrid format. Today’s agenda includes a panel on the “Competitive Landscape Between Brokers & Exchanges” at 10 a.m. ET, a one-on-one interview with SEC Commissioner Allison Lee at 1 p.m. ET, a panel on listed options market structure at 2:15 p.m. ET, and an interview with former SEC Commissioner Dan Gallagher, now chief legal officer for Robinhood, at 3:30 p.m. ET. Registration is required; you can view sessions here. ~SC


Traders phone up gambling helplines as game-like broker apps spread; US securities regulator examines whether ‘digital engagement practices’ help or harm investors
Madison Darbyshire – FT
Helplines of gambling addiction recovery groups have been ringing with a new kind of caller: day traders. The rise of mobile brokerage applications outfitted with prompts, animations, rewards and digital flourishes have brought the feel of investing platforms closer to online sports betting and gambling.

*****There are lots of places to get help, but you must ask for it. ~JJL


The Fed’s trading scandal undermines public trust; Powell must ensure an overhaul of the central bank’s code of ethics
The editorial board – FT
Rules that limit employees’ trading exist, in part, to protect institutions from allegations of conflicts of interest. It is common for banks, law firms and news organisations including the Financial Times to have such policies. Perhaps the most surprising aspect of the scandal embroiling the Federal Reserve is that its policies did not prevent officials from dealing in individual stocks. This is despite it being the repository of some of the most market-moving information on the planet, at a time when its actions have an outsize effect on the price of almost any asset. In failing to protect the Fed from allegations that its senior officials made questionable trades, its code has been proven unfit for purpose.

***** The FT editorial board nails it. We expect and need better ethics from leaders at the Fed.~JJL


Wine Deal Making Surges as Investors Look Past Covid-19 Woes; Vineyard valuations rise with wave of private capital, M&A
Anna Hirtenstein – WSJ
Deal makers have targeted the wine industry, as investors bet on rising prices for winery acreage despite a Covid-19 hit to demand for the beverage. Deals by private-equity funds to invest in wineries, vineyards and distributors have risen 75% in 2021 so far, compared with last year, according to Refinitiv. There has also been a jump in mergers and acquisitions, with companies spending $8.1 billion this year to snap up wine-related firms, compared with $1.8 billion last year, Pitchbook data showed.

*****Patrick Thornton-Smith, what is the best deal for wine you have to offer me?~JJL


Tuesday’s Top Three
Our top story Tuesday was the YouTube video of Ken Griffin’s talk at the Economic Club of Chicago in which he shared his opinions on a number of topics, including payment for order flow, cryptocurrency mania, and what’s wrong with Chicago. Second was Hedge fund billionaire Ken Griffin tells Economic Club of Chicago that Citadel may move its corporate headquarters unless the city changes course, from the Chicago Tribune. Third was the Wall Street Journal’s Is the Stock Market Open at 3 a.m.? This Startup Says It Should Be, about 24 Exchange, which is seeking SEC approval to offer round-the-clock stock trading 365 days a year.


MarketsWiki Stats
26,625 pages; 235,955 edits
MarketsWiki Statistics


Lead Stories

‘Volmageddon’ Is History as SEC Greenlights Leveraged VIX ETFs
Sam Potter – Bloomberg
Two infamous stock volatility strategies on Wall Street look set for a comeback — with protective buffers this time round. The U.S. Securities and Exchange Commission has approved rule changes that pave the way for a pair of ETFs from Volatility Shares LLC to list and trade. The two products will offer leveraged bets on the Cboe Volatility Index, or VIX.

US regulator warns leveraged ETPs pose systemic risk to markets; SEC seeks crackdown on complex vehicles after retail investors hit by stinging losses
Chris Flood – FT
A top US regulator has warned that leveraged exchange traded products present a risk to the stability of financial markets and called for tighter rules to be applied to these complex vehicles. Gary Gensler, chair of the Securities and Exchange Commission, said on Monday that he supported the introduction of new rules. The statement followed warnings by US regulators stretching back more than a decade about the risks to individual investors posed by leveraged ETPs.

Global watchdogs set out guidance on regulating stablecoins; The digital tokens should be viewed as financial market infrastructure, report proposes
Siddharth Venkataramakrishnan and Eva Szalay – FT
International regulators are taking their first steps towards supervising stablecoins as the digital assets exert a growing influence on the financial system. Authorities said in a report on Wednesday that operators of stablecoins, which act as a bridge between national currencies and the cryptocurrency market, should be regulated as financial market infrastructure alongside payment systems and clearing houses. The rules would apply to stablecoins that regulators have decided are systemically-important and had the potential to disrupt payments.

Power crunch in China and India stokes global growth anxiety; Two big Asian economies drive worldwide GDP expansion but coal shortages are hammering output
James Kynge and Amy Kazmin – FT
Acute power shortages in China and India, the two biggest drivers of global growth, are casting a pall over Asia’s economic prospects and raising the risk that inflationary pressures may ripple through the region.

European Gas Surges 60% in Two Days as EU Sounds Alarm
Elena Mazneva and Todd Gillespie – Bloomberg
Dutch futures soar above 160 euros, U.K. price tops 400 pence; France and Spain among EU members calling for urgent measures
European gas prices surged again, bringing their gains over just two days to 60%, as the impact of soaring energy costs rippled through equity and bond markets and the European Union sounded the alarm.

European Industry Buckles Under a Worsening Energy Squeeze
Vanessa Dezem and William Wilkes – Bloomberg
Power prices are hitting fresh records as winter approaches; Crisis is already forcing some businesses to reduce production
European industry is being pushed closer to breaking point as the region’s energy crisis worsens by the day. Power and gas prices are hitting fresh records almost daily, and some energy-intensive companies have temporarily shut operations because they’re becoming too expensive to run. As winter approaches and Europeans start to turn on their heaters, the squeeze will intensify, pushing more executives into tough decisions about keeping plants open.

Hong Kong Studies Boosting Yuan-Denominated Stocks on Bourse
Kiuyan Wong – Bloomberg
City looks at yuan trades via southbound stock connect link; Hong Kong is pushing to become bigger offshore yuan center
Hong Kong is studying an expansion of trading in stocks denominated in the yuan as China pushes to gain broader international acceptance of its currency. In her annual policy address, Chief Executive Carrie Lam, said the city was looking at expanding channels for yuan flows from mainland China, including allowing trading of yuan-denominated stocks via an established link to markets in Shenzhen and Shanghai.

Goodbye to All That: The End of LIBOR; Vice Chair for Supervision Randal K. Quarles at The Structured Finance Association Conference, Las Vegas, Nevada
Board of Governors of the Federal Reserve System
Now that business travel has started to pick back up as we emerge from the COVID event, a prosaic but insistent problem has reappeared: what to read on a long plane flight. Like most of you, I try to get some work done—but, also like most of you, out of an amalgam of security concerns and indolence, I often don’t succeed. Something must improve the hours, but Kant is a little heavy, P.G. Wodehouse a little light, and T.S. Eliot looks like you’re just showing off. So, over the last few weeks, I’ve been re-reading Joan Didion while making my way from point A to point B: Slouching Toward Bethlehem, The White Album, and Where I Was From. As it turns out, Joan Didion is a particularly apt author to be reading on the way to this conference—not because the conference is being held in Las Vegas, although her four-page summation of this “most extreme and allegorical of American settlements” is a classic. But rather, because a nearly constant theme of her writing is change: how hard it is to recognize that things have changed; how hard it is to come to terms with it once recognized; how insistent people can be that surely, they will be OK.

Wall Street mourns one of stock market’s ‘brightest minds, biggest hearts’ hit by car
Mark DeCambre – MarketWatch
Wall Street mourns one of stock market’s ‘brightest minds, biggest hearts’ hit by car
Tobias Levkovich, a prominent analyst, died on Friday at 60, and tributes to the Citigroup equity strategist continue to roll in.

Gensler: SEC Can Give Crypto More Investor Protection With Help From Other Regulators
Ted Knutson – Forbes
Securities and Exchange Commission Chair Gary Gensler told the House Financial Services Committee today the SEC can give crypto assets greater investor protection and more robust oversight with the help of the Commodity Futures Trading Commission and other financial regulators.

The richest Americans became 40% richer during the pandemic
Dominic Rushe – The Guardian
The 400 richest Americans added $4.5tn to their wealth last year, a 40% rise, even as the pandemic shuttered large parts of the US, according to Forbes magazine’s latest tally of the country’s richest people. The Amazon founder, Jeff Bezos, retained top spot for a fourth consecutive year with a net worth of $201bn, followed by Elon Musk of Tesla and Mark Zuckerberg of Facebook, with net worths of $190.5bn and $134.5bn respectively.

Why Wall Street Cheers China, Despite Growing Business Unease; Beijing is opening its financial system to foreign banks — and they have maintained their traditional openness to the Communist Party’s rule.
Li Yuan – NY. TImes
This year has been unsettling for Chinese business. The ruling Communist Party has gone after the private sector industry by industry. The stock markets have taken a huge hit. The country’s biggest property developer is on the verge of collapse.

Landmark Change in Interest Rate Derivatives Market as New Definitions Take Effect
ISDA has today announced the implementation of its new standard definitional booklet for interest rate derivatives, designed to ensure ISDA’s documentation keeps pace with changes in market practice, regulation and technology.

The next financial crisis is fast approaching
Willem H. Buiter – Yahoo Finance
Central banks need to prepare because global stock markets and real estate are overvalued, while leverage is near record levels for households, corporations, banks and governments.

U.S. Bancorp launches cryptocurrency custody service for investment managers
U.S. Bancorp said on Tuesday it had launched a cryptocurrency custody service for institutional investment managers who have private funds in the United States and Cayman Islands.

SEC Chair Gensler to talk payment for order flow, crypto during House hearing
Chris Matthews – MarketWatch
SEC Chair Gensler to talk payment for order flow, crypto during House hearing
Securities and Exchange Commission Chairman Gary Gensler will face questions from members of the House Financial Services Committee on a range of topics from market structure to cryptocurrency regulation during a hearing to begin at noon Eastern on Tuesday.

IMF chief says Europe can avoid debt crisis, hard to think of Bitcoin as money
Medium-term fiscal consolidation and growth will put Europe on a sound footing to avoid another sovereign debt crisis despite rising debt levels caused by the COVID-19 pandemic, the head of the International Monetary Fund said on Tuesday.

Wellness Exchange

‘It’s Like There’s No Covid’: Booster Shots Bring Tel Aviv Back to Life; Mayor Ron Huldai says his city has returned to normal faster, helped by Covid booster shots. He’s now focused on tourists, traffic and housing.
David Wainer – Bloomberg
Tel Aviv’s mayor has a message for cities struggling to reopen: Covid booster shots are allowing his city to roar back to life.

UK managers plan slow return to office as Covid concerns remain; Just 56% of staff expected back by end of year as companies shift to flexible model
Daniel Thomas – FT
Almost half of UK staff have returned to the office at least on a part-time basis but new data show that managers expect numbers to plateau given continued worries over the spread of Covid-19 and the shift to flexible working practices.

Johnson & Johnson Asks FDA to Authorize Covid-19 Booster; The extra dose increased protection to 94% against moderate to severe Covid-19 in a late-stage trial in the U.S., the company said
Peter Loftus – WSJ
Johnson & Johnson JNJ 0.23% has asked U.S. health regulators to authorize a booster dose for its Covid-19 vaccine, citing studies showing it improved protection among adults who previously received a single shot.

Exchanges, OTC and Clearing

ICE Benchmark Administration Launches ‘Beta’ USD SOFR ICE Swap Rate® and USD SOFR Spread-Adjusted ICE Swap Rate® to Assist Non-Linear Market in its Transition to SOFR
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today announced that ICE Benchmark Administration Limited (IBA) has launched an indicative, ‘Beta’, version of its U.S. Dollar (USD) ICE Swap Rate® for SOFR interest rate swaps and a ‘Beta’ USD SOFR Spread-Adjusted ICE Swap Rate® to assist the non-linear market in its transition to SOFR.

Cboe Global Markets Reports September 2021 Trading Volume
Cboe – PRNewswire
Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today reported September monthly trading volume statistics and projected rate per contract/net revenue capture for the third quarter of 2021 across its global business lines.
The data sheet “Cboe Global Markets Monthly Volume & RPC/Net Revenue Capture Report” contains an overview of certain September trading statistics and market share by business segment, volume in select index products, and full quarter RPC/net capture across business lines.

Cboe expands data and access solutions team with senior appointments; New hires include an industry expert from S&P Dow Jones Indices as well as internal promotions.
Wesley Bray – The Trade
Cboe has expanded its data and access solutions leadership team as it looks to continue its global growth with internal promotions and external hires. Financial services industry expert Bo Chung joins Cboe as senior vice president, global sales and index licensing. In this new role, Chung will oversee the strategic growth and adoption of Cboe’s holistic data access solutions offering.

Cboe Appoints Bo Chung to Senior Vice President, Global Sales and Index Licensing, Expanding Data and Access Solutions Leadership Team
Bo Chung joins Cboe as Senior Vice President, Global Sales and Index Licensing
Michael Hollingsworth promoted to Vice President, Global Head of Data and Analytics
Geralyn Endo promoted to Vice President, Global Data and Access Solutions Client Engagement
Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today announced that it has expanded its Data and Access Solutions leadership team to successfully position the business for further global growth.

Deutsche Börse rolls out major technology overhaul with launch of digital post-trade platform; Fully digital post-trade platform set to bring same-day-issuance and paperless, automated straight-through processing for the entire value chain of issuance, custody, settlement, and asset servicing for digital securities.
Jonathan Watkins – The Trade
Deutsche Börse has unveiled its plans to launch a fully digital post-trade platform enabling end-to-end digital securities processing. Cloud-backed and DLT-ready, the new D7 platform will enable the digitisation of financial products with continuing access to both existing central and distributed infrastructures and markets.

MEMX, the Fastest-Growing U.S. Exchange, to Deliver Real-Time Market Data to the Pyth Network
MEMX – Business Wire
MEMX, a market operator founded by a diverse group of participants to benefit all investors, today announced that it will deliver real-time equities pricing data from its exchange to the Pyth network, a decentralized financial market data distribution platform designed to bring real-world data on-chain on a sub-second timescale. As the fastest-growing U.S. equities exchange with 4% market share, MEMX will help the Pyth network scale by providing robust, trusted, and verifiable equities market data on-chain.

AxeTrading integrates ICE pricing and analytics tools; Users of the AxeTrading quoting and execution management system (QEMS) can now access ICE’s evaluated pricing, continuous fixed income evaluated pricing, best execution services and liquidity indicators.
Annabel Smith – The Trade
AxeTrading has integrated pricing data and analytics tools from the Intercontinental Exchange (ICE) in a bid to help traders make more informed investment decisions. The tools, including ICE’s evaluated pricing, continuous fixed income evaluated pricing, best execution services and liquidity indicators, will be available via AxeTrading’s quoting and execution management system (QEMS).

NYSE Pillar Options Migration: October 16th Testing Opportunity, Updates to System Specifications
On Saturday, October 16th, NYSE Arca Options will offer its second end-to-end Production testing opportunity in preparation for the migration to NYSE Pillar. To secure connectivity, Exchange Participants that do not have NYSE Pillar sessions in Production must complete certification with TMS (tms@nyse.com) and register with Connectivity (connectivity@nyse.com) by Wednesday, October 13th. A copy of the test script will be provided upon registration and can also be found here. Please note that CAT submission will no longer be included as part of this test.

NZX-listed shares underpin record growth in Kiwis’ retirement savings
NZX press release
Shares in NZX-listed companies shine through as the asset class of choice for managed funds, KiwiSaver and other superannuation schemes, with the Reserve Bank’s latest QMF Survey showing a total of nearly $250 billion under management at 30 June 2021.
NZX Chief Executive, Mark Peterson, says it is a tremendous point of pride for the team at New Zealand’s Exchange to see holdings of listed shares increase 7% to a record high of $119.3 billion, with significant investment in local companies.
NZX-listed and international shares now account for more than 41% of total funds under management, compared with about 35% at the start of 2020 before the COVID-19 pandemic hit.

OK Mobility Group registers its first Commercial Paper Programme with MARF for 80 million euros
BME’s Fixed Income Market, MARF, today admitted the first Commercial Paper (CP) Programme to trading from OK Mobility Group. This Commercial Paper Programme will allow the new issuer on MARF to access qualified investors flexibly to diversify its funding sources and place CPs up to an outstanding balance of 80 million euros, with maturities ranging from 3 days to 2 years.

Sell-off in German national emissions trading scheme successfully launched
The European Energy Exchange AG (EEX) successfully launched the sell-off of national emission certificates (“nEHS certificates”, identified on EEX by the abbreviation “nEZ”) in the German national emissions trading scheme (nEHS) today.


Roboadvisers Target the New Universe of Retail Traders
Suzanne Woolley – Bloomberg
Robo advisers are becoming less robotic. The services that manage hundreds of billions of dollars for Americans are moving well beyond their original algorithm-driven portfolios and plain-vanilla exchange-traded funds. They’re targeting a new wave of investors, competing with Robinhood and WeBull as more people become comfortable with trading and making bets.

Brazil’s Central Bank Built a Mobile Payment System With 110 Million Users; One year ago the Pix platform didn’t exist. Now half the population uses it, showing just how quickly adoption of digital payments can spread.
Maria Eloisa Capurro, Shannon Sims – Bloomberg
On a Sunday afternoon at a busy intersection in central Brasília, a woman asks passing motorists for money. Her cardboard sign, written in marker in Portuguese, reads: “Need help. Hungry. I accept Pix.” Pix, a system which allows fast money transfers over smartphones, has become ubiquitous in the 11 months since it was launched by Brazil’s central bank. All that’s needed to send cash to someone is a simple key they’ve set up, such as an email address or phone number. Similar to the privately owned Zelle in the U.S., Pix works through multiple apps from banks and other digital wallet services. It’s already been used at least once by 110 million Brazilians and about $89 billion has moved through the network. Brazil now registers more instant transfers than the U.S.

Lack of Engineers Keeping Some Firms Out of the Cloud; Companies are having a hard time hiring and retaining experienced talent as Covid-19 has inflated internet use
Aaron Tilley – WSJ
The competition for top talent in cloud computing is heating up as giants of the platform like Amazon.com Inc. and Microsoft Corp. battle with each other and the thousands of other businesses rushing to expand their use of the technology.


Cybersecurity Strategy: From Hypothetical To Empirical
Avihai Ben-Yossef – Forbes
Something is broken in the security industry strategy. Business enterprises, government organizations and even non-profits invest millions of dollars in cybersecurity, yet they have no idea how operationally effective and synchronized their security technologies, people and processes actually are.

IT security and cybersecurity: What’s the difference?
Nate Delesline III – ZDNet
Information technology and cybersecurity share common goals of protecting people, devices, and data — but focus on different issues and take a very different approach.
Information technology (IT) uses computer networks, hardware, and software to store and share digital information. Cybersecurity focuses more narrowly on protecting computer systems, digital devices, and data from unauthorized access.

How Real-World Incident Response Can Guide Cybersecurity Strategy
John Griffin Jr. – Forbes
Most businesses lock up for the night or otherwise secure their cash and physical location for the time when they’re most vulnerable. Yet many do not have a discrete firewall or restoration plan to protect their cyber assets. Amid a deluge of ransomware and cyber theft, owners convince themselves they’re too small a target. In fact, their lack of defense makes them easy prey. Too many businesses remain insufficiently protected against cyberattacks.

Supply chain risk matters when it comes to cybersecurity for next-gen 911
David G. Simpson – The Hill
The 911 system is important to all Americans, and a bill before the Senate on next generation 911 infrastructure, or NG911, will provide states and territories the resources to close many 911 capability gaps — but it is missing critical provisions regarding the cyber supply chain.
Importantly, the bill includes funds and policies to address cybersecurity as part of modernizing public safety communications. 911 is vulnerable to cyber attacks, and municipalities and organizations have been compromised by low-end ransomware, denial of service attacks and other vectors. Senate Bill 2754 provides $10 billion to help facilitate the transition from legacy public safety networks to the NG911 standard by distributing grants to local agencies responsible for 911.

What, exactly, is cybersecurity? And why does it matter?
Nate Delesline III and Genevieve Carlton – ZDNet
Cybersecurity focuses on protecting electronic information on websites, networks, or devices from hackers. Through advanced technology and sophisticated processes, cybersecurity professionals help keep data safe and accessible.
Individuals and businesses alike face cybersecurity threats. In addition, businesses need protection from unauthorized data access — both from inside and outside the organization. Strong cybersecurity reduces the chances that a cyber attack will affect business operations.


Bitcoin Miner Northern Data Rejects Manipulation Allegations
Eyk Henning – Bloomberg
Shares tumbled in the wake of German regulatory complaint; Northern Data says it will fully cooperate with authorities
Northern Data AG dismissed allegations of market manipulation after the Bitcoin miner’s share price tumbled over a complaint to prosecutors by Germany’s financial watchdog.

India’s Biggest Crypto Exchange Valued at $1.9 Billion in Latest Deal
Saritha Rai – Bloomberg
CoinSwitch Kuber raises $260 million at $1.9 billion valuation; India crypto trading rising despite regulatory uncertainties
India’s largest crypto exchange reached unicorn status in a funding round led by Andreessen Horowitz and Coinbase Ventures, with investors betting on rising demand even as the industry faces regulatory uncertainties.

Bond Investors Aren’t Buying Crypto Craze; Debt issued by Coinbase, El Salvador performed poorly in recent weeks, showing bond investors’ wariness of cryptocurrency’s volatility
Matt Wirz – WSJ
Bond markets held two informal referendums on cryptocurrencies recently. The results weren’t pretty. El Salvador’s government bonds nosedived in mid-September after the Central American nation became the first country to adopt bitcoin as a national currency. A few days later, cryptocurrency trading platform Coinbase COIN 4.70% issued $2 billion of corporate bonds, some of which have since lost about 4.5%.


Grassley Pushes CFTC Nominees To Support Whistleblower Program
Sen. Chuck Grassley (R-Iowa) is pushing nominees to lead the Commodity Futures Trading Commission (CFTC) to commit to supporting a highly successful whistleblower program at risk of collapsing under the weight of its own successes.

Why Putin’s Money Eludes Offshore Investigators; The Pandora Papers’ findings suggest that Russian kleptocrats are relying less on the West as a financial haven.
Leonid Bershidsky – Bloomberg
You would expect the biggest leak of offshore data in history to contain lots of damaging information about Russian President Vladimir Putin, or at least his close circle of friends. But the Russia-related portion of the Pandora Papers, an almost-3-terabyte cache of information about offshore companies and their end beneficiaries that took 600 journalists more than a year to research, appears to be disappointing. The findings are dated, relatively insignificant or both.

From Panama to the Pandora papers: what’s changed in offshore tax; The rich and powerful continue to evade and avoid tax despite progress in recent years
Emma Agyemang – FT
The latest data leak detailing the financial affairs of the global elite makes clear how much progress has been achieved since the world began to clamp down in earnest on offshore tax evasion and avoidance in 2008 — and how much still remains to be done.

Jerome Powell’s Future; The Federal Reserve chair’s term expires in February. Though insiders say that he has a good chance of being reappointed, there are growing complications.
Andrew Ross Sorkin, Jason Karaian, Sarah Kessler, Stephen Gandel, Lauren Hirsch, Ephrat Livni and Anna Schaverien – NY Times
Jay Powell, the Fed chair, has been praised for how he used the central bank’s powers to steer the economy through the pandemic. His term as chair expires in February, and insiders say that he has a good chance of being reappointed. But the decision is subject to an unusually high level of uncertainty, with growing complications around his renomination, The Times’s Jeanna Smialek and Jim Tankersley report.

Bank Groups Unite Against Biden’s Pick for Key Regulatory Post; Trade groups that normally compete with one another are in lock step over President Biden’s choice to lead the Office of the Comptroller of the Currency.
Emily Flitter – NY Times
When White House officials began looking for new candidates to lead one of the banking industry’s top regulators this summer, they saw Saule Omarova as a compromise between the competing demands of moderate and progressive Democrats.

Elizabeth Warren Says Powell ‘Failed’ as Leader Over Fed Trading Scandal
Craig Torres and Matthew Boesler – Bloomberg
Senator Elizabeth Warren said revelations about investment transactions last year by Federal Reserve officials call into question Jerome Powell’s leadership of the U.S. central bank.


SEC Charges Hemp Company and Co-Founders With Fraud
The Securities and Exchange Commission today charged CanaFarma Hemp Products Corp. and its co-founders with fraudulently raising approximately $15 million from investors, and misappropriating a significant portion of the investor funds for personal use and other unrelated purposes.
The SEC’s complaint alleges that in 2019 and 2020, CanaFarma, a Canadian startup hemp company with offices in Vancouver and New York City, and its co-founders Vitaly Fargesen and Igor Palatnik raised millions of dollars from investors.

Ex-SEC lawyer, Covington practice head departs for Dentons
Sara Merken – Reuters
Dentons has picked up David Kornblau, a former chief litigation counsel in the U.S. Securities and Exchange Commission’s enforcement division, the firm said on Tuesday. Kornblau most recently practiced for more than a decade at Covington & Burling, where he chaired the securities enforcement practice group. He joins Dentons’ litigation and dispute resolution practice, as well as its white collar and government investigations practice, in New York.

Kansas Man Sentenced to Three Years in Prison for Engaging in $900,000 Foreign Currency Ponzi Scheme
Department of Justice
A Kansas man who executed an elaborate foreign currency Ponzi scheme that took in more than $900,000 from investors was sentenced today to 36 months in prison, Acting U.S. Attorney Rachael Honig announced. Thomas Lanzana, 54, of Wichita, Kansas, previously pleaded guilty before U.S. District Judge John Michael Vazquez to Count One of an indictment charging him with wire fraud. Judge Vazquez imposed the sentence today in Newark federal court.

SEC’s Gensler Signals No Interest in Crypto Ban
Securities and Exchange Commission Chair Gary Gensler has had multiple dust-ups with crypto firms but even he says the U.S. won’t follow China’s lead in banning digital tokens. He spoke before a virtual House hearing.

Cryptocurrency May Soon Be Subject to Wash-Sale Rule
The Street
What’s the wash-sale rule and what would this provision mean for buyers and sellers of cryptocurrency if it becomes the law of the land on Jan. 1, 2022? For more information about wash sales, read IRS Publication 550, Investment Income and Expenses (including capital gains and losses). “The application of the wash-sale rules to cryptocurrency would be one more obstacle to its widespread use as a practical medium of exchange,” said Jean-Luc Bourdon, a wealth adviser with Lucent Wealth Planning.

Sydney labour hire director disqualified from managing corporations for five years
Glen Desmond Champley of Sydney, NSW, has been disqualified from managing companies for five years for his involvement in eight failed companies.

Alert: Suspicious investment ‘opportunity’ from ‘Cash FX Group’
ASIC is alerting investors about a suspicious investment ‘opportunity’ from Cash FX Group with the website: cashfxgroup.com; Cash FX Group encourages current investors to recruit new investors via social media and word of mouth; Do not transfer money (or more money) to Cash FX Group.
Cash FX Group also known as ‘Cash Forex Group’ or ‘CFX’ is not licensed to provide financial services in Australia, meaning that consumers will not have the same protections when dealing with an Australian financial services licensee. Regulators in the United Kingdom, New Zealand, Canada and other countries have issued alerts or warnings about Cash FX Group.

ASIC provides relief for companies in external administration
ASIC has today issued regulatory relief to help reduce red tape and provide certainty for companies in external administration. The relief relates to certain financial reporting and annual general meeting (AGM) obligations which continue to apply when a company is in external administration.

FINRA Foundation Awards 2021 Ketchum Prize to Shawn Spruce
Champion of Financial and Investor Education in Native Communities Receives Highest Honor
WASHINGTON—The FINRA Investor Education Foundation (FINRA Foundation) today awarded Shawn Spruce the 2021 Ketchum Prize—its highest honor—in recognition of his outstanding advocacy, teaching and outreach as a champion of investor education and financial capability in Native communities.

SEC Charges Hemp Company and Co-Founders With Fraud
The Securities and Exchange Commission today charged CanaFarma Hemp Products Corp. and its co-founders with fraudulently raising approximately $15 million from investors, and misappropriating a significant portion of the investor funds for personal use and other unrelated purposes.

2021 Ketchum Prize: Expanding Financial Capability in Native Communities
Native communities face unique challenges and opportunities when it comes to their personal finances. Helping them navigate the sometimes-confusing world of finance is Shawn Spruce, the recipient of the 2021 Ketchum Prize. Every year, the FINRA Investor Education Foundation awards the Ketchum Prize, the FINRA Foundation’s highest honor, to recognize outstanding service and research to advance investor protection and financial capability in the United States.

Back to Basics: Fundamentals of FINRA Rule 2210
This session is designed for compliance and marketing professionals who are new to FINRA’s advertising rules or experienced practitioners interested in a refresher. A panel of FINRA Advertising Regulation Department experts provides an overview of FINRA’s Communications With the Public rule, including filing requirements, internal approval and supervision, and content standards. Panelists answer questions about how to apply the rules to financial services communications and marketing materials.

OSC announces new members for Small Business Advisory Committee
Ontario Securities Commission
Tim Babcock, the vice president of the TSX Venture Exchange; Kay Schonberger, an associate at RBC Capital Markets in mergers and acquisitions; and Melanie Cole, a partner at Aird & Berlis LLP, are among the new members of an Ontario Securities Commission (OSC) committee.

Investing and Trading

How to invest in cryptocurrency without buying any
Alana Benson – NerdWallet
Cryptocurrencies are inherently cryptic — it’s right there in the name. And if you follow Warren Buffett’s advice to never invest in businesses you can’t understand, it may be hard to justify investing in a currency made of math instead of gold.

IPOs Go From Winners to Losers in Europe as Stock Rout Deepens
Swetha Gopinath – Bloomberg
Over 40% of Europe’s largest 2021 listings are below IPO price; Dr. Martens, Alphawave, Auto1, InPost among those in the red
Many of this year’s biggest initial public offerings in Europe are now trading in the red, as surging bond yields prompt investors to dump highly valued growth shares.

Stagflation Fear Is Having a British Renaissance; The word that dominated the 1970s is recurring ever more in global financial debate. The concerns are overdone, with the significant exception of Britain.
John Authers – Bloomberg
A British Rebirth?
“The bad dream of EU membership is over,” the U.K.’s Brexit secretary announced to the Conservative party conference on Tuesday. “The British renaissance has begun.”

Single People Make Less Money Than Those With Partners, Research Finds; A Pew analysis finds a spike in the number of Americans living alone, who on average have lower earnings and educational attainment.
Charlie Wells – Bloomberg
Being single has always been taxing. New data show just how hard it can be on an individual’s finances. Nearly 40% of Americans between the ages of 25 and 54 were living without a spouse or partner in 2019, according to a new analysis of census data by the Pew Research Center. That’s a marked increase from 1990, when just 29% of Americans were unpartnered.

The economic threats from China’s real estate bubble; Property’s great investment boom has reached its limit — the economy needs new drivers of demand
Martin Wolf – FT
How serious a threat to the Chinese economy might the difficulties of Evergrande, the world’s most heavily indebted property company, and now Fantasia, become? The answer is not that China will experience a devastating financial crisis. It is rather that the economy’s dependence on demand from investment in real estate must end. That will impose a huge adjustment and create a big headache for the authorities: what can replace property investment in creating demand?

Builders Hunt for Alternatives to Materials in Short Supply; Swapping out materials to minimize delays in a hot housing market can add to costs
Lydia O’Neal – WSJ
Shortages of key construction materials are forcing some builders and contractors to turn to substitutes and hunt for alternative suppliers as they rush to meet high demand for new housing. Construction companies are looking for replacements and new sources for everything from wood paneling to ceiling joists to pipes, saying that potentially higher costs and added complications to design and construction can be preferable to putting a project on hold for months while waiting for planned supplies.

Farmer sentiment declines in September, inflation expectations jump
CME Group
The Purdue University/CME Group Ag Economy Barometer declined in September, down 14 points to a reading of 124. With producers feeling less optimistic about both current conditions on their farming operations as well as their expectations for the future, this is the weakest farmer sentiment reading since July 2020 when the index stood at 118. The Index of Current Conditions declined 12 points to a reading of 140 and the Index of Future Expectations fell 16 points to a reading of 116. The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted between September 27-29, 2021.

Environmental, Social and Corporate Governance

The Cheap and Easy Climate Fix That Can Cool the Planet Fast
Hayley Warren and Akshat Rathi – Bloomberg
Let a molecule of carbon dioxide escape into the atmosphere, and it stays for centuries. There’s more than enough up there to smother the planet like a too-warm quilt, trapping heat within and weirding the weather. The damage will be felt for generations.

Finance and Mining Have the Worst Gender Pay Gaps in the U.K.
Neil Callanan – Bloomberg
Women in finance in the U.K. still make significantly less than men. While the gender pay gap at financial firms in the country narrowed slightly last year, overall the industry continues to have the biggest disparity.

Commerzbank Found to Have Biggest CO2 Exposure of European Banks
Nicholas Comfort and Alastair Marsh – Bloomberg
Jefferies study offers unusually deep dive into climate risk; Exposé comes as the world’s focus turns to COP26 climate talks
Investors in European banks are finally getting a sense of which firms are most at risk from the upheaval that climate change is bringing to the financial landscape.

Drive for green schemes fuels investment trust funding boom; Record year for sector as investors hunt for environmentally sound infrastructure schemes
Joshua Oliver – FT
Booming demand for green infrastructure investments has helped power a record run of fundraising for UK investment trusts, with managers smashing the previous annual record for capital raising in the first nine months of 2021.


Deutsche Bank’s DWS Orders Fresh Probe Into Greenwash Claims
Steven Arons and Nicholas Comfort – Bloomberg
Sullivan & Cromwell hired to do assessment of allegations; Whistleblower claims have sent shock waves through industry
Deutsche Bank AG’s asset management unit is starting a fresh review into greenwashing claims by a whistleblower, as regulatory probes in the U.S. and Germany continue.

BGC Partners – BGC Partners’ Third Quarter 2021 Financial Results Announcement To Be Issued Prior To Market Open On Wednesday, November 3, 2021
BGC Partners, Inc.
BGC Partners, Inc. (Nasdaq: BGCP) (“BGC”), a leading global brokerage and financial technology company, today announced the details regarding its third quarter 2021 financial results conference call. This call will take place on Wednesday, November 3, 2021 at 10:00 a.m. ET.


Cambodia wants its religious artifacts returned. Dozens tied to indicted collector remain in the Met, other prominent museums; A Khmer Buddha head displayed at the Metropolitan Museum of Art that was a gift from Douglas Latchford in 1983.
Peter Whoriskey, Malia Politzer, Delphine Reuter and Spencer Woodman – Washington Post
For decades, Douglas Latchford cut a romantic figure: The genial Englishman was an explorer of jungle temples, a scholar and a connoisseur seduced by the exquisite details of ancient sculpture.

Energy Crisis Deepens in India as Power Plants Face Outages
Rajesh Kumar Singh and David Stringer – Bloomberg
The worsening squeeze on India’s coal supply is triggering a power crisis that’s threatening to stall the world’s fastest-expanding major economy.

Peer-to-peer trading is driving Africa’s digital money revolution
Seth Onyango – Quartz
Peer-to-peer trading is driving Africa’s digital money revolution
While cryptocurrencies remain a bet on the “future or money” in many countries, in Africa, peer-to-peer trading is driving a revolution in the use of digital money.

National Grid chief warns of tighter winter electricity supplies; Pettigrew also cautioned there would be little respite from impact of high wholesale gas prices
Nathalie Thomas – FT
National Grid’s chief executive has warned that Britain will face tighter electricity supplies this winter than in previous years, compounding the problems for businesses and households that are already facing a sharp rise in the cost of electricity as gas prices spike to record highs.

Financial cleansing deters investment in China; The markets are dominated by international tensions
John Redwood – FT
Markets are having to get used to intensified rivalry between the great powers, broken supply chains and disruptions to global trade. Joe Biden, US president, has not succeeded in working closely with allies as promised, creating potholes on the roads to a post-Covid recovery and net zero carbon emissions. Given their elevated levels, markets are going to find it more difficult to adjust to these stresses.


The Future of Money by Eswar Prasad — balances of power; This assessment of the way cryptocurrencies will change the financial system argues that the state will always remain in control
Gavin Jackson – FT
In the 13th century, Kublai Khan, grandson of Genghis Khan, created the first fiat currency, money that gets its value from the state declaring it has value. This was not the first paper money — Chinese merchants had been using deposit certificates since the 7th century. It was, however, the first not backed by any kind of commodity, such as gold, but solely the power of the state. Indeed, anyone not accepting the tokens risked being put to death. It was the birth of money as most of us know it today.


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