Wall Street Brokers Are Coming for the Hot Retail-Options Trade

Feb 21, 2024

First Read

Hits & Takes
John Lothian & JLN Staff

The CFTC was busy yesterday approving proposed rules and conducting other commission business. The proposed rules it approved included “Regulations to Address Margin Adequacy and to Account for the Treatment of Separate Accounts by Futures Commission Merchants,” “Foreign Boards of Trade,” and “Requirements for Designated Contract Markets and Swap Execution Facilities Regarding Governance and the Mitigation of Conflicts of Interest Impacting Market Regulation Functions.” The other business included an “Application of Taiwan Futures Exchange Corporation for an Exemption from Registration as a DCO” and “ICE NGX Petition for Amended DCO Registration Order.”

The proposed rules mentioned above are downloads on the page referenced rather than individual links. There are also several statements from several commissioners, including Chairman Behnam, about the approved proposed rules.

Cboe is calling all risk takers to its 2024 Risk Management Conference hosted by the Options Institute to be held in Snowbird, Utah on October 15 to 18, 2024. Registration is open on the new RMC website and you can even take a look back at the RMC held in Austin in 2023 on the site. Space is limited.

Are you a regular poster on Reddit? Well, you might be in line for the opportunity to participate in its IPO. According to the Wall Street Journal, Reddit plans to sell stock to loyal users in an unusual IPO wager. The story says the social media company intends to offer shares in the offering to 75,000 of its biggest users.

In case you missed it, yesterday Intercontinental Exchange announced that on February 15, 2024, it reached a record open interest of over 90 million contracts across its futures and options markets. Specifically, on February 16, commodities futures and options hit 61.8 million contracts, energy futures and options reached 57 million, and global natural gas futures and options achieved 38.5 million contracts, marking significant records in ICE’s trading volumes.

Amazon.com Inc. will be added to the Dow Jones Industrial Average, replacing Walgreens Boots Alliance Inc. This adjustment in the 30-stock gauge, announced by S&P Dow Jones Indices, will take effect before trading opens on Monday, Feb. 26, Bloomberg reported.

I stopped in Ceres Cafe in the CBOT Building a couple of weeks ago for a cobb salad and I was shocked by the cost of the salad when I received the bill. I had just ordered it without looking at the menu because I knew what I wanted. Of course Ceres is not alone in having higher food prices and The Wall Street Journal tells us in a story by Jacob Bunge that “It’s Been 30 Years Since Food Ate Up This Much of Your Income.” The subheadline of the story is “Ongoing high costs lead food manufacturers and restaurants to keep prices elevated.”

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


S&P Global is presenting Hydrogen Markets 2024, May 6-8, 2024 at the Hotel del Coronado, San Diego, USA. Sessions will explore the economics of hydrogen – cost of production, price levels, competitiveness, comparisons with other energy sources and current and potential markets in industries including power generation, transportation, chemicals, among others. Learn more here.~SAED

Our most read stories from our previous edition of JLN Options were:
The FCA gives up on Globo prosecutions from the Financial Times.
Options Discovery Episode 30: Risk Management For Options Portfolios from John Lothian News.
An Executive Bought a Rival’s Stock. The SEC Says That’s Insider Trading. from The Wall Street Journal. ~JB

Subscribe to the JLN Options Newsletter HERE (it’s free).


Options Discovery Episode 30: Risk Management For Options Portfolios; Hilary Till, Principal At Premia Capital Management, Discusses This And More With JLN’s Asma Awass.

In this episode of Options Discovery, Asma Awass discusses the benefits and risks of options portfolios. This episode includes a breakdown of why a trader might want to create an options portfolio as well as how beta affects the risk of a portfolio. Asma then sits down with Hilary Till, principal of Chicago-based Premia Capital Management, LLC and a consultant with Premia Research LLC, who shares more insight on risk management for portfolios. You can check out Premia Research LLC here: https://www.premiaresearch.com/

Watch the video »


Morgan Stanley accused of ‘snobbery’ by Mike Ashley’s Frasers over $1bn margin call; UK retailer is suing Wall Street bank for 50mn euro over Hugo Boss position
Alistair Gray and Laura Onita – Financial Times
Mike Ashley’s Frasers Group has accused Morgan Stanley of “snobbery” over its decision to impose a $1bn margin call, claiming the bank’s move was driven partly by the entrepreneur’s humble beginnings. On the opening day of 50mn euro proceedings at the High Court in London on Wednesday, Frasers claimed senior insiders at the Wall Street bank had a “personal dislike” of Ashley, whom they regarded as an “upstart”. Frasers alleges Morgan Stanley made a “capricious” attempt to force the UK company out of a derivative position it held in Hugo Boss, the luxury German brand.

****** Tom Price tells a great story about being given a margin call for his cattle stockyard customer accounts for no good reason other than a power play and meeting the $1 million call. The FCM executive was put in his place. These things happen.~JJL


Tuesday’s Top Three
Our top read story Tuesday was the Financial Times’ London Capital & Finance ran ‘Ponzi’ scheme, court told. Second was Risk Management For Options Portfolios: Hilary Till, Principal At Premia Capital Management, Discusses Risk Management Strategies In This Options Discovery Full Interview, our latest Options Discovery video interview by Asma Awass. Third was The FCA gives up on Globo prosecutions, from the Financial Times.



Lead Stories

Wall Street Brokers Are Coming for the Hot Retail-Options Trade; Firms tap into day traders’ demand for zero-day derivatives; Fed survey adds questions about dealers’ 0DTE risk management
Lu Wang – Bloomberg
It’s been blamed for fueling stock volatility and dismissed as the latest case of market speculation gone too far. Yet regardless of the threat – real or imagined – posed by the relentless boom in equity options that have zero days to expire, or 0DTE, a band of Wall Street brokers is unleashing new strategies to grab a piece of the action. Among them is Options AI, where trading volumes have doubled since the December launch of options tied to the S&P 500. Another player, Moomoo Technologies Inc., is waiving exchange fees for the newly introduced index contracts. At Webull Financial LLC, clients are allowed for the first time to sell derivatives without owning the underlying asset.

‘Thousands’ of New ETFs Seen in $8 Trillion Market’s Next Leap; Miami gathering showed fund pros moving on from Bitcoin frenzy; Speculation over use of tax-friendly structure dominated event
Katie Greifeld and Emily Graffeo – Bloomberg
Outside the Fontainebleau Hotel in Miami, Florida last week, dozens of drones moved slowly through the night sky, projecting the Bitcoin symbol far and wide above one of the largest ETF gatherings of the year. But inside the annual Exchange conference, industry insiders were obsessing over an event that could prove a far bigger deal for the $8.4 trillion business than the long-awaited launch of spot Bitcoin ETFs: Regulatory approval of new share-class structures.

Lessons From a Three-Decade-Long Stock Market Disaster; The real reason to celebrate as Japan’s Nikkei index finally overcomes its 1989 high will be psychological
James Mackintosh – The Wall Street Journal
Japan’s Nikkei 225 index is within a hair’s breadth of passing its 1989 high and ending a 34-year dry spell for the country’s shareholders. This is both a cause for celebration and a deeply flawed way to understand stock investing-both in Japan and in the U.S. The celebration is obvious as Japan’s stocks have soared-with the Nikkei almost exactly matching the S&P 500 in dollar terms since the start of last year, despite its relatively small exposure to the artificial-intelligence boom driving U.S. markets.

Two Entrepreneurs Are Set To Launch The First Black-Owned Stock Exchange
Two entrepreneurs are working together to launch the first Black-owned stock exchange. Joe Cecala and Dwain J. Kyles built The Dream Exchange to make the stock market more accessible to people of all backgrounds. The duo’s venture, which will launch later this year, will operate similar to the New York Stock Exchange, allowing Americans to buy stock in public companies. However, The Dream Exchange will feature smaller, emerging companies. “Our approach is to really look at those small companies that have been left behind,” Kyles told Scripps News. Cecala and Kyles hope to see the growth of those smaller companies as they aim to close the wealth gap in America with their new venture. “Hopefully, 10 years from now, when a small company is growing and it’s doing well and they want to go to their next phase, their first thought is, ‘Oh, well, we can go to the Dream Exchange and get capital,'” Cecala told Scripps News. For many Black-owned companies, it’s challenging to acquire capital. As a result, a majority of these companies are not featured on a stock exchange. The U.S. Treasury Department Task Force revealed that minority-owned companies only make up 0.2% of the listings featured on the New York Stock Exchange, per Scripps News.

Quant Hedge Funds Face China Clampdown After Rare Account Freeze
China’s two main stock exchanges vowed to tighten supervision of quantitative trading after freezing the accounts of a major fund for three days in an unusually harsh punishment. The Shanghai and Shenzhen bourses will enhance monitoring of quant trading, especially leveraged products, according to statements late Tuesday. They will expand the scope of required reporting of such trades to offshore investors via the northbound mainland-to-Hong Kong stock connect and treat foreign and domestic funds the same.

‘Deeply sorry’: China hedge fund apologises after trading ban for ‘market disruption’ in first punishment since Beijing’s vow to stem stock rout
South China Morning Post
An award-winning Chinese quant hedge fund has apologised to markt authorities and investors, after being punished with a trading ban for dumping stocks on local bourses, the first known case since the nation’s market regulator took aim at trading activities that have perpetuated a three-year market out.

Chinese authorities toughen quant trading rules in bid to prop up stock market; New regime comes after regulators punish major trading house for automated dumping of shares
Hudson Lockett and Cheng Leng – Financial Times
Beijing is overhauling how China’s fast-growing quant trading industry is regulated after one of the sector’s largest operators was hit with a trading ban this week for dumping shares. Stock exchanges in Shanghai and Shenzhen announced late on Tuesday that all market activity by computer-driven quant funds, which rely on complex automated trading strategies, would be closely scrutinised under a new monitoring scheme jointly run by both bourses and the China Securities Regulatory Commission.

China Tightens Grip on Stocks With Net Sale Ban at Open, Close
China has banned major institutional investors from reducing equity holdings at the open and close of each trading day, part of the government’s most forceful attempt yet to prop up the nation’s $8.6 trillion stock market. The order from China’s securities watchdog was recently delivered to major asset managers and the proprietary trading desks of brokerages, according to people familiar with the matter, who asked not to be named because they weren’t authorized to speak publicly. The China Securities Regulatory Commission, led by newly appointed Chairman Wu Qing, has also created a task force with the nation’s stock exchanges to monitor short selling and issue warnings to firms that profit from the wagers, the people said.

Foreign Investors Flee Chinese Shares, Long-Delayed Data Shows
The amount of Chinese shares owned by foreign investors fell in 2023 for a second straight year as the market slump cut the value of shareholdings and investors left for higher returns elsewhere. Foreign entities owned 2.8 trillion yuan ($390 billion) of onshore Chinese equities at the end of last year, according to data released Wednesday by the People’s Bank of China. That was down 13% from 12 months earlier, and marked a drop of almost 30% from the peak at the end of 2021. The value of bonds held by overseas entities rose almost 8% last year, the data showed.

Korea to Let Investors Access Won Quotes From More Banks
Hooyeon Kim – Bloomberg
South Korea will allow foreign investors to tap a wider pool of banks for the best won quotes to be used in their stocks and bond transactions to lure inflows. It will permit temporary won overdrafts for global investors to settle stock and bond trades, reducing the burden of potential settlement failure resulting from delayed foreign exchange procedures, according to a finance ministry statement Wednesday.

Record $8 Billion of Foreign Funds Flock to Korea on Reform Bets
Youkyung Lee – Bloomberg
Global investors are piling into South Korean stocks like never before, wagering that the long-time corporate governance laggard is finally springing into action. Foreign funds scooped up 10.2 trillion won ($7.7 billion) of Kospi shares so far this year, the most for the corresponding period since exchange data going back to 1999, according to Bloomberg calculations. The benchmark, which started the year on the backfoot, saw its fortunes reverse as the government touted Japan-like reforms to boost equity valuations.

Japanese brokers highlight ‘Trump trades’ for stocks; More US-China decoupling in focus for investors as Tokyo market closes in on all-time high
Leo Lewis – Financial Times
Japanese brokers are focusing on stocks primed to benefit if Donald Trump returns to the White House and the US-China relationship deteriorates even further, as global interest mounts in Japan’s rising equity markets. Nomura, Japan’s biggest brokerage, released a strategy note this week listing more than 50 companies that analysts believe could prosper if decoupling accelerates, Trump offers generous tax breaks in the US and Chinese companies remain reluctant to invest.

Goldman’s O’Connor Joins ETF Provider Global X as CEO
Emily Graffeo – Bloomberg
Goldman Sachs’ Ryan O’Connor is joining New York-based exchange-traded fund provider Global X ETFs as chief executive officer, the company announced Tuesday. O’Connor was most recently global head of ETF product at Goldman Sachs Asset Management, according to a press release. He also spent more than a decade at State Street Global Advisors.

Investors plough record amounts into US farmland; Value of agricultural acreage more than doubles in bet that prices will soar in world suffering scarcity of resources
Susannah Savage – Financial Times
Investors are pouring record amounts of money into US farmland as they snap up an asset expected to outperform as the world’s population grows sharply while natural resources become scarcer. The value of farmland held by investment groups has more than doubled over the past three years, according to the National Council of Real Estate Investment Fiduciaries (NCREIF).

Private equity turns to new fundraising tactics in tough market; Firms are hoping to attract investors to single deal offerings with cheaper fees
Will Louch – Financial Times
Private equity firms are increasingly raising money to buy individual companies on a deal-by-deal basis, as they struggle with a downturn in the market and investors look for ways to cut management fees. A record $31bn was deployed by “deal-by-deal” investors last year, according to data provided by private equity advisory firm Triago, defying a broader dealmaking and fundraising slump in the industry.

Ukraine Invasion

War in Ukraine Is Turning in Putin’s Favor After Months of Stalemate
Patrick Donahue and Daryna Krasnolutska – Bloomberg
As Russia’s war in Ukraine enters a third year, President Vladimir Putin’s forces have shifted to the offensive and captured the eastern city of Avdiivka after months of fighting. In a conflict where momentum has ebbed and flowed, the mood is now noticeably darker in Kyiv.President Volodymyr Zelenskiy changed his military leadership amid disputes over conscription of new soldiers and battlefield strategy. His troops are running low on ammunition and weapons, with political infighting in Western capitals holding up deliveries and aid.

‘Putin will spark a third world war if Russia claims victory in Ukraine’
Szu Ping Chan – The Telegraph
Vladimir Putin will spark a third world war if the Russian president is allowed to declare victory in Ukraine, according to the boss of the country’s biggest private employer. Yuriy Ryzhenkov, chief executive of Metinvest, which ran the sprawling Azovstal steelworks that became the site of a relentless Russian assault at the start of the 2022 invasion, warned of the consequences of a Kremlin victory.

Getting More Weapons to Ukraine Will Take Time, BAE Cautions; UK firm working as fast as possible to add capacity: CEO; Pressure grows on countries to beef up arms shipments
Kate Duffy – Bloomberg
BAE Systems Plc cautioned that it will take time to gear up weapons shipments to Ukraine, amid pressure to bolster supplies as Russia makes gains on the battlefield. Having weapons readily available for Ukraine and in other war zones such as the Middle East will be “difficult,” Charles Woodburn, chief executive officer of the UK defense firm, said Wednesday on a call after reporting record order backlogs at the end of 2023.

Russia foils western sanctions on natural gas project as shipments near; Arctic LNG 2 plant completed with Chinese help as Beijing becomes biggest importer of the Russian gas
Shotaro Tani and Anastasia Stognei – Financial Times
A Russian liquefied natural gas project subject to US sanctions is close to exporting its first cargo after Chinese expertise filled the technical and logistical void left by western companies. The shipment shows how Russia has been able to bolster its energy industry with Beijing’s help, despite western attempts to kill the project and cripple Russia’s LNG ambitions.

Israel/Palestine Conflict

The Total De-Hamasification of Gaza Would Be a Bad Idea; Any transitional administration will need a free hand to retain many of the tens of thousands of Palestinians who worked for the Hamas government.
Bobby Ghosh – Bloomberg
When the outlook for the days ahead seems so dire, it can be hard to focus on a “day-after plan.” Nonetheless, the Biden administration is working with Egypt, Jordan, Qatar, Saudi Arabia, and the United Arab Emirates to develop a long-term Israeli-Palestinian peace plan. Some Palestinian representatives are also reported to be involved in the discussions.

Iran Says Israel Behind Attack on Gas Pipeline Network
Arsalan Shahla – Bloomberg
Tehran “quickly neutralized” the issue, Iranian Oil Minister Javad Owji said in televised remarks, calling it a “conspiracy” by Israel. Israel has not claimed responsibility for the attack and the Jewish state almost never comments on suspected Israeli strikes inside Iran.

Israel grapples with ‘Eichmann’ dilemma over Hamas attack trials; Proposal for dealing with October 7 suspects prompts comparisons with proceedings against Nazi war criminal
Polina Ivanova – Financial Times
The trial of Nazi war criminal Adolf Eichmann in 1961 became a historic courtroom saga, broadcast to the world, but only once a foreign lawyer was hired to represent him: no Israeli lawyer was willing to defend such a figure. More than 60 years later the Israeli justice system faces a similar conundrum, but this time with potentially hundreds facing trial.

Exchanges, OTC and Clearing

Euroclear expands its offering with Eurex Clearing; With the expansion, Euroclear Bank will be able to boost operational efficiencies for market users and streamline collateral management.
Sophia Thomson – The Trade
Euroclear Bank has expanded its services with Eurex Clearing, now becoming an eligible securities collateral location of the main global clearing organisation. Clients of both the Brussels-based Euroclear Bank and Eurex Clearing will now be able to post collateral directly to Eurex Clearing, with the ability to further optimise the pool of collateral held in Euroclear’s International Central Securities Depository (ICSD).

Cboe Global Markets and MSCI Collaborate to Offer New Index Options and Volatility Indices
Cboe Global Markets
Latest initiative represents Cboe and MSCI’s growing relationship and will expand Cboe’s current product suite; Cboe plans to offer three new options tied to MSCI’s international, developed, emerging and U.S. markets benchmark indices, set to launch on March 18, pending regulatory approval; Cboe also introduces two new volatility indices based on existing MSCI Index options and the proprietary VIX Index Methodology. Cboe Global Markets, Inc. (Cboe: CBOE), the world’s leading derivatives and securities exchange network, today announced a new strategic initiative in collaboration with MSCI Inc. (MSCI), a leading provider of critical decision support tools and services for the global investment community, to expand its suite of Cboe-MSCI Index options and volatility indices. The initiative underscores Cboe and MSCI’s deepening relationship and continues to leverage the companies’ combined expertise to develop innovative solutions for investors worldwide.

CME Group Launches Clearing Service for Mexican F-TIIE Overnight Index Swaps
CME Group
CME Group, the world’s leading derivatives marketplace, today announced that nine market participants have cleared over-the-counter (OTC) Mexican Overnight Funding Rate (F-TIIE) index swaps since the company launched its clearing service on February 5. The cleared F-TIIE overnight index swaps (OIS) represent more than 4.3 billion pesos (the equivalent of $250 million) in notional value and support Banco de México’s transition from its benchmark Interbank Equilibrium Interest Rate (TIIE) to the F-TIIE rate.

FTSE UK Index Series – Indicative Quarterly Review Changes March 2024
London Stock Exchange Group
FTSE Russell, the global index provider, advises of the following indicative changes to the FTSE 100 and FTSE 250, based on data as of Friday 16th February 2024.PLEASE NOTE: The actual review of the FTSE UK Index Series will be conducted using data as at market close on Tuesday 27th February 2024. Confirmed rebalance changes will be announced after market close on Wednesday 28th February 2024.

Mining Sector Surges and Technology Issuers Bounce Back in TSX Venture Exchange’s 2024 Venture 50 Ranking; Annual flagship program highlights the role that Canada’s premier venture exchange plays in supporting national economic growth
TMX Group
TSX Venture Exchange (“TSXV”) today released its 2024 Venture 50 ranking, shining a light on the top-performing companies that are driving growth across their respective sectors. The Venture 50 showcases TSXV issuers across five sectors: Energy, Mining, Clean Technology and Life Sciences, Diversified Industries, and Technology. The ranking is an equal weighting of each firm’s performance during 2023 across three key indicators: market capitalization growth, share price appreciation, and trading value.


Barchart Launches Options Flow, Providing Powerful Market Intelligence into Options Trading Activity
Barchart, a leading provider of market data and trading technology to active traders and investors, has announced the launch of Options Flow, a powerful market intelligence tool for market sentiment analysis, as well as stock and options trading. Options Flow empowers traders and investors to find an edge in the market by tracking the largest options trades on the day, and analyzing corresponding data to obtain a view on market sentiment and potential volatility.

Fintech platform Xalts to build “Plaid for trade” as it acquires Contour Network from consortium of global banks
Accel and Citi Ventures-backed fintech Xalts, which is used by financial institutions and businesses to build and manage digital finance applications, has today announced its acquisition of Contour Network, owned by a consortium of global banks, to accelerate digitisation in trade and supply chain finance. Contour started in 2017 as a pilot by eight global banks including HSBC, Standard Chartered and BNP with a focus to digitize trade. Currently, over 22 banks and 100+ global businesses like Tata Group and Rio Tinto use Contour for digital trade finance solutions.

Germany to Ease Fintech Growth Caps After Clampdown in Wirecard’s Wake; Watchdog has been clamping down on neobanks, payment firms; External monitors will likely remain in place, Rodolphe Says
Nicholas Comfort – Bloomberg
The years-long crackdown by Germany’s financial regulator on fintechs is set to relax as several affected companies have improved their controls. “We are seeing progress at individual firms, but not all,” BaFin Executive Director Birgit Rodolphe said in an interview from her Frankfurt office on Tuesday. “There will definitely be cases where we loosen restrictions this year.”

AI Model Backed by Asia’s Richest Person to Launch in March; BharatGPT plans to roll out Hanooman service next month; The service marks a big step for India’s AI ambitions
Saritha Rai – Bloomberg
A consortium backed by Mukesh Ambani’s Reliance Industries Ltd. and India’s top engineering schools aim to launch its first ChatGPT-style service next month, a big step in the country’s ambitions to become a player in the field of artificial intelligence. The BharatGPT group, encompassing an arm of India’s most valuable company and eight affiliated universities, offered a sneak peek of the large language model Tuesday during a technology conference in Mumbai. In a video played before delegates, a motorcycle mechanic in southern India queried an AI bot in his native Tamil, a banker conversed with the tool in Hindi, and a developer in Hyderabad used it to write computer code.

Google Delves Deeper Into Open Source with Launch of Gemma AI Model; Gemma built on the same artificial intelligence technology as the company’s flagship Gemini product
Davey Alba – Bloomberg
Alphabet Inc.’s Google is introducing new open large language models that it’s calling Gemma, reversing its general strategy of keeping the company’s proprietary artificial intelligence technology out of public view. Gemma, which will handle text only, has been built from the same research and technology used to create the company’s flagship AI model, Gemini, Google said Wednesday in a blog post. It will be released in two sizes, one targeted at customers who plan to develop artificial intelligence software using high-capacity AI chips and data centers, and a smaller model for more cost-efficient app building.

Deepfake Audio Boom Exploits One Billion-Dollar Startup’s AI; ElevenLabs’ technology is already being used to spoof political candidates and promote scammy products.
Margi Murphy – Bloomberg

JonesTrading deploys FlexTrade Systems’ FlexOMS to power its sell-side trading desks; FlexOMS has been deployed across JonesTrading’s equities and electronic trading business units, alongside being the full-service technology platform for its outsourced trading offering.
Wesley Bray – The Trade
JonesTrading has deployed FlexTrade Systems’ FlexOMS as the new sell-side trading platform for its equities and electronic trading businesses. The FlexOMS solution will also serve as the full-service technology platform for JonesTrading’s outsourced trading offering.


Leading crypto wallet MetaMask rolls out real-time security alerts after ‘really encouraging’ trial
Niamh Rowe – Fortune
The popular self-custodial crypto wallet, MetaMask, announced on Monday it is launching by-default security features for mobile app and extension users, who will receive alerts for potentially malicious transactions. The features come as hacking remains endemic in crypto, with users losing $1.7 billion to theft last year alone, according to Chainanalysis. Meanwhile, retail crypto adoption is growing. While it isn’t clear precisely how many are new versus returning users, MetaMask’s monthly active users grew by nearly 60% from September 2023 to January 2024, from 19 million to over 30 million, almost matching the all-time highs seen during the 2022 bull market.

Biden Plans to Harden Protection Against Cybersecurity Threats to Ports
Katie Rogers – The New York Times
An executive order on the president’s desk would give expanded powers to the Department of Homeland Security amid increased fears of a conflict with China. President Biden is expected to sign an executive order on Wednesday that will strengthen the government’s ability to respond to maritime cybersecurity threats, amid heightened concerns that China could seek to hobble crucial infrastructure systems within the United States.


Bitcoin Trails Ether as ETF Hype Shifts to Second-Largest Token
Sidhartha Shukla, Suvashree Ghosh and Akshay Chinchalkar – Bloomberg
The Ether token is outshining Bitcoin partly on speculation that the next wave of spot US crypto exchange-traded funds will focus on the second-largest digital asset, heralding increased investor demand. So far this year Ether has climbed 28% versus Bitcoin’s 21% advance, a reverse from 2023 when the biggest digital token set the pace. Ether scaled $3,000 over the past 24 hours for the first time since April 2022, before dipping back to $2,920 as of 11:00 a.m. Wednesday in London amid a selloff in crypto markets.


The Rise of Starlink as a Geopolitical Force; This week on Elon, Inc., we talk about the power of the SpaceX satellite technology and how Musk’s right-wing politics may be influencing it.
David Papadopoulos – Bloomberg
Over the past year or so, Elon Musk’s Starlink satellite system has become increasingly important-and valuable. It’s been in the news lately because Ukrainian officials said the Kremlin was using it to help its war effort in parts of occupied Ukraine-something Musk has denied. At the same time, Musk has repeatedly said the US should stop aiding Ukraine in its defense against Russia’s two-year invasion, an opinion shared by many right-wing Republican politicians. Starlink has also been approved to work in another conflict zone, as Israel gave permission for a Starlink terminal to be parked in a field hospital in Gaza.

Siemens boss demands EU action to fend off ‘cheap’ Chinese wind power imports
South China Morning Post
Europe’s wind power sector will suffer the same fate as its devastated solar industry if authorities do not cut market access for “cheap” Chinese wind power equipment, according to the head of one of its top energy firms. Siemens Energy CEO Christian Bruch said the company would back “a combination of either a quota or qualitative criteria” to boost the European Union wind sector and make it more difficult for Chinese competition to gain a foothold in Europe.

Russia Bans UK Ships From Fishing in Its Waters
Bloomberg News
The Russian State Duma has banned British ships from fishing, including cod, in Russia’s Arctic waters and along the coast of the Kola Peninsula. Russia is terminating a 1956 agreement with the UK on fishing rights because of the sanctions imposed on Russia, said Vyacheslav Volodin, speaker of the lower house of the Russian parliament, during the session on Wednesday.

China’s biggest banks are finally getting scared by the West’s sanctions against Russia
Huileng Tan – Business Insider
Three out of China’s Big Four state banks have halted payments from sanctioned Russian financial institutions, Russia’s Izvestia news outlet reported on Wednesday. The Industrial and Commercial Bank of China, China Construction Bank, and Bank of China have stopped the transactions since the start of 2024, Alexey Poroshin, the general director of investment and consulting firm First Group, told Izvestia.


Statement of Chairman Rostin Behnam in Support of Proposed Amendments to CFTC Regulations for Foreign Boards of Trade
I support the proposed amendments to CFTC rules for foreign boards of trade (FBOTs) that would permit a registered FBOT to provide direct access to its electronic trading and order matching system to a registered introducing broker (IB) located in the United States for submission of customer orders to the FBOT’s trading system for execution. Based upon more than ten years of Commission experience with the existing rules for FBOTs, the Commission is also proposing certain enhancements and modernization of the existing ruleset.

Statement of Chairman Rostin Behnam in Support of the Proposed Requirements for Designated Contract Markets and Swap Execution Facilities Regarding Governance and the Mitigation of Conflicts of Interest Impacting Market Regulation
I support the proposed rules for designated contract markets (DCMs) and swap execution facilities (SEFs) that would establish governance and fitness requirements with respect to market regulation functions and related conflict of interest standards. Today’s action continues my commitment to ensure that conflicts of interest are appropriately mitigated, and that SEF and DCM governing bodies adequately incorporate an independent perspective. Advancements in technology, coupled with demand for ever greater efficiency and speed, are pushing markets and market structure in new directions. This new disruption raises new and novel policy issues in all aspects of markets, including conflicts of interest. Today is just one step towards addressing potential and existing conflicts of interest in CFTC markets, to ensure markets remain strong, resilient, and transparent.

Statement of Commissioner Kristin N. Johnson Regarding Regulations to Establish Margin Adequacy Requirements and Addressing Separate Account Treatment
The Commodity Futures Trading Commission (Commission or CFTC) has adopted several key regulations that establish guardrails to protect against the misuse or misapplication of customer funds. The Commodity Exchange Act (CEA) and Commission regulations establish critical protections for customers to help prevent them from losing money as a result of losses caused by their futures commission merchant (FCM) or their fellow customers at the FCM. These include Sections 4 and 4d of the CEA and Parts 1, 22, and 30 of the Commission regulations, which require an FCM to segregate its own funds from those of its customers and prohibit an FCM from using one customer’s funds to cover the losses of another.

Statement of Commissioner Kristin N. Johnson: Ensuring the Integrity of Customer Protections for Customers of U.S. Introducing Brokers With Direct Access to Foreign Boards of Trade
The Commodity Futures Trading Commission’s (Commission or CFTC) governing statute, the Commodity Exchange Act (CEA), enumerates several key aims. Protecting customers from the misuse of customer assets is one of the central goals of derivatives market regulations. Protecting customers begins with carefully evaluating, reviewing, monitoring, and enforcing the regulations that govern intermediaries in our markets.

Statement of Commissioner Christy Goldsmith Romero on Proposed Rule Changing Post-Dodd Frank Act Reforms to Allow Direct Access of U.S. Customers to Foreign Boards of Trade Through Introducing Brokers
The CFTC is proposing to change a post-Dodd Frank Act reform to issue a rule that permits CFTC-registered foreign boards of trade to have direct access to U.S. customers through introducing brokers.[1] The Dodd-Frank Act defines direct access to mean an explicit grant of authority by a foreign board of trade to identified members or other participants located in the United States to enter trades directly into the trade matching engine of the foreign board of trade. As described in the open Commission meeting on the final rule, “By adopting uniform application procedures and registration requirements and conditions, the process by which foreign boards of trade are permitted to provide direct access to their trading systems will become more standardized, more transparent to both registration applicants and the general public, and will promote fair and consistent treatment of all applicants.”[2]

Statement of Commissioner Christy Goldsmith Romero on the Importance of Strong Rules for Conflicts of Interest at Exchanges and Swap Execution Facilities
Conflicts of interest at exchanges and swap execution facilities (SEFs) present serious risk to market fairness, integrity, and financial stability. The CFTC plays a critical role in implementing strong rules to prevent conflicts from hurting customers, markets, market participants, and end users. As designated self-regulatory organizations, exchanges serve as the front line for market integrity.[1] And given the contribution to the financial crisis of opaque caveat emptor swaps markets,[2] the Dodd-Frank Act created SEFs and gave them important regulatory responsibilities to ensure transparency in the swaps markets.[3] In order for markets to function well and fairly, these important regulatory responsibilities must be performed free of conflicts of interest.

Statement of Commissioner Caroline D. Pham in Support of the Treatment of Separate Accounts Proposal
I support the Notice of Proposed Rulemaking on the Regulations to Address Margin Adequacy and to Account for the Treatment of Separate Accounts by Futures Commission Merchants (FCMs) (Treatment of Separate Accounts Proposal or NPRM), as well as the Commission’s withdrawal of the first proposal on this issue (2023 Proposal).[1] Today’s Treatment of Separate Accounts Proposal gets the Commission closer to the pragmatic approach it was striving for in the 2023 Proposal. To help ensure the Commission truly gets there in the final rule, I highlight specific areas for public comment below.

CFTC Extends Comment Period for Proposed Rule on Operational Resilience Framework
The Commodity Futures Trading Commission today announced it is extending the public comment period for a proposed rule requiring an Operational Resilience Framework for Futures Commission Merchants, Swap Dealers, and Major Swap Participants. The deadline is extended to April 1, 2024.

CFTC Approves Proposed Rules and Other Commission Business
The Commodity Futures Trading Commission announced today it approved the following matters: Proposed Rule: Regulations to Address Margin Adequacy and to Account for the Treatment of Separate Accounts by Futures Commission Merchants; Proposed Rule: Foreign Boards of Trade; Proposed Rule: Requirements for Designated Contract Markets and Swap Execution Facilities Regarding Governance and the Mitigation of Conflicts of Interest Impacting Market Regulation Functions; Application of Taiwan Futures Exchange Corporation for an Exemption from Registration as a DCO; ICE NGX Petition for Amended DCO Registration Order

Open regulators and open markets
Ashley Alder – FCA
It’s hard to overstate the turmoil we are all attempting to navigate. Conflicts in Europe and the Middle East. The climate crisis as the defining challenge for generations to come. And the lasting economic drag of COVID with higher living costs for many across the world. The IMF has pointed out that these challenges have resulted in an increased threat of fragmentation and decoupling of trade, resulting in a significant impact on global GDP.

Investing and Trading

US Risks Fiscal Crisis After Soaring Borrowing, Blanchard Warns
Tom Rees – Bloomberg
The US is in danger of a fiscal crisis erupting after a ballooning in deficits in recent years, according to Olivier Blanchard, a senior fellow at the Peterson Institute for International Economics. Blanchard, a former International Monetary Fund chief economist who typically has a more relaxed fiscal stance, said he is concerned about the attitude in Washington to eye-watering US government deficits.

Junk-Bond Market Gets Riskier With Erosion in Credit Quality
Olivia Raimonde and Alicia Clanton – Bloomberg
The $1.4 trillion US junk-bond market is getting junkier, as more debt gets either downgraded or elevated out of the high-yield universe altogether, leaving greater potential risks for investors. Credit quality is starting to erode as pandemic-fueled “seismic changes” that altered the mix of the high-yield market are now reversing, according to Barclays Plc strategists.

Goldman’s Trading Desk Calls Nvidia ‘Most Important Stock’ on Earth
Thyagaraju Adinarayan and Michael Msika – Bloomberg
Nvidia Corp.’s earnings due Wednesday is such a big event in markets that Goldman Sachs Group Inc.’s trading desk has called it “the most important stock on planet earth.” With options positioning implying about a 11% move in either direction, AI poster-child Nvidia could shake up financial markets given its influential weighting on indexes and crowded long positions in the stock. Just Nvidia alone has been responsible for one-third of the Nasdaq 100 Index’s gains this year.

‘The AI party is just getting started’: Here’s what Wall Street expects from Nvidia’s 4th-quarter earnings
Matthew Fox – Business Insider
All eyes are on Nvidia as it is scheduled to report its fourth-quarter earnings results on Wednesday after the market close. Nvidia has spearheaded the excitement seen in artificial intelligence technologies, and investors will look to the company’s results to see if the hype can continue.

Glencore Posts Steep Profit Fall as Energy Crisis Fades
Thomas Biesheuvel – Bloomberg
Glencore Plc reported a steep drop in annual profit and lowered its dividend, after markets retreated from the price spikes and wild swings that drove blockbuster earnings in the aftermath of Russia’s invasion of Ukraine. Glencore reported core earnings of $17.1 billion, half the record number it posted a year ago, though still one of its best-ever performances. The commodity trader and miner saw profits soar in 2022 as Russia’s invasion of Ukraine sent energy prices to records and dislocated global trade flows, but many of those pressures have now eased. Glencore fell 5.2% in London trading by 8:42 a.m.

Glencore slashes dividend in bid to shrink debt; Earnings at mining and trading group halve as commodity prices soften
Harry Dempsey – Financial Times

Tumbling US natural gas prices prove unstoppable, hurting producers
Arathy Somasekhar – Reuters

Private Equity Payouts at Major Firms Plummet 49% in Two Years; Distributions to fund investors falling amid deal drought; Fund investors zeroing in on a new metric for PE investments
Layan Odeh, Matthew Griffin, and Gillian Tan – Bloomberg

Environmental, Social and Corporate Governance

Chicago Sues 5 Oil Companies, Accusing Them of Climate Change Destruction, Fraud; The suit says BP, Chevron, ConocoPhillips, Exxon Mobil and Shell have hurt the city by discrediting science even as their products lead to “catastrophic consequences,” including strong storms, flooding, severe heat and shoreline erosion.
Brett Chase – Chicago Sun-Times
Chicago is suing big fossil fuel companies, alleging the impact of flooding and other climate-related events has caused great damage. Chicago is suing five of the world’s largest oil and gas companies, accusing them of lying about their products and the dangers of climate change that contributes to flooding, extreme heat and other destructive forces that continue to hurt the city and its residents.

Say Goodbye to Dirt Cheap Canadian Oil; Don’t cry for U.S. refiners, who will be fine without it-for now
Jinjoo Lee – The Wall Street Journal
For years U.S. drivers have been getting a gift at the expense of their northern neighbor-artificially cheap oil. That could change in the coming months when a major pipeline expansion will allow Canadian oil more access to global markets. How will it impact the main beneficiaries of that yearslong glut, U.S. refiners that pocketed much of the difference?

Record US renewable energy investment not enough to meet climate goals-report
U.S. investment in wind and solar power plants hit record levels last year, but even that dramatic rate of expansion fell short of the level needed to meet the nation’s climate change goals, according to an analysis published on Wednesday. A joint report by researchers from Princeton University, Massachusetts Institute of Technology, Rhodium Group and the non-profit Energy Innovation analyzed U.S. progress in making investments needed to achieve a 40% reduction in greenhouse gas emissions by 2030 – an objective outlined in President Joe Biden’s 2022 landmark climate change law, the Inflation Reduction Act (IRA).

Biden’s EV Dreams Are a Nightmare for Tesla and the US Car Industry; Designed to cut China’s influence over global metals markets, the Inflation Reduction Act has also made life more difficult for US carmakers.
Mark Burton, Jeremy Scott Diamond, Heejin Kim, Craig Trudell and Joe Deaux – Bloomberg
Joe Biden has a dream. And Elon Musk had looked best placed to help make it a reality. The president wants to create a US-centered electric vehicle supply chain and is using his multibillion-dollar Inflation Reduction Act to achieve it. Musk’s Tesla Inc. is already part way there with deep commercial ties to Western suppliers, batteries sourced from a factory in Nevada, and construction of a lithium refinery in Texas underway. In 2023 its vehicles took the first four places in an annual ranking of the most American-made cars.

ESG Roundup: Market Talk; The latest Market Talks covering ESG Impact Investing.
The Wall Street Journal
The Biden Administration is expected to release its updated GREET model-the method that the government assesses the carbon emissions of renewable fuels-on March 1, and analysts are speculating that the update will be supportive for U.S. biofuels production. This is because EPA head Michael Regan will be joining Agriculture Secretary Tom Vilsack at an industry trade show that is scheduled for March 1-the Commodity Classic, which is an annual show held in Houston this year. “[We] doubt that EPA’s Regan would be joining USDA Secretary Vilsack if the GREET model update was to be adverse to U.S. agriculture,” says AgResource in a note. https://bit.ly/4a0riOn

ExxonMobil warns EU that red tape might push it to invest elsewhere; US energy giant says Brussels needs to cut its climate-related regulatory burden to draw private funding
Alice Hancock and Henry Foy – Financial Times

Commission welcomes provisional agreement for cleaner air in the EU
European Commission

Budget 2024: How can the Chancellor unleash a wave of private investment to green the economy?
Sarah George – edie

G20 ministers discuss conflicts, global governance in Brazil
Lisandra Paraguassu and Anthony Boadle – Reuters

China Proposes New ESG Rules to Keep Up With Europe; Beijing hopes the guidelines will help bolster its struggling economy. But these rules come with some unique characteristics.
Sheryl Tian Tong Lee – Bloomberg

Insurers’ LNG Support at Odds With Their Climate Ambition, Report Says; Chubb, American International Group and The Hartford Financial Services Group are among those underwriting US LNG export plants, according to a new report.
Aaron Clark – Bloomberg

China’s Coal Boom Slows as Top Mining Hubs Focus on Renewable Energy; Seven years of rising production have delivered a glut of coal; Inner Mongolia expects clean energy capacity to exceed thermal
Bloomberg News

Verizon Is Raising $1 Billion in Its Sixth Green Bond Since 2019
Caleb Mutua – Bloomberg

One Simple Change to Reduce Your Climate Impact? Swap Out Beef; Replacing beef with a different protein – even for just one meal – can cut the emissions footprint of a person’s diet that day by as much as half.
Zahra Hirji – Bloomberg


Barclays plots £30bn UK lending spree in vote of confidence for Britain
Michael Bow – The Telegraph
Barclays has promised to lend at least £30bn to British families and businesses over the next three years in a vote of confidence in the economy. The bank is ditching self-imposed Brexit and Covid-era lending restrictions to plough more money into UK credit card lending, unsecured loans, mortgages and business loans. Announcing the plans, Barclays chief executive CS Venkatakrishnan, who is known as Venkat, said: “We are very, very bullish on the UK as a place to do business.”

Goldman Sachs AM Launches Private Credit Fund for Europe’s Rich
Silas Brown – Bloomberg
Goldman Sachs Asset Management LP has launched its first European private credit fund for wealthy individuals, joining the race to draw the region’s rich into a rapidly-expanding industry. The direct-lending fund – which has already raised more than EUR550 million ($594 million) from investors – provides senior debt to mid-sized and large European businesses, typically in non-cyclical industries, according to a statement seen by Bloomberg News. The fund, called GSEC, has already invested in 23 companies.

Morgan Stanley’s ‘Visceral Reaction’ to Mike Ashley on Trial Over $1 Billion Margin Call
Upmanyu Trivedi – Bloomberg
An email detailing a senior Morgan Stanley banker’s “visceral reaction” to doing business with billionaire Mike Ashley is among a trove of internal documents set to be pored over during a London trial into the bank’s “unfair” $995 million margin call. The retail tycoon’s Frasers Group Plc sued Morgan Stanley and Danish lender Saxo Bank after the banks issued the massive margin call over Ashley’s derivatives trade positions in Hugo Boss AG. While the claim against Saxo Bank was settled, according to the documents, Frasers has pursued Morgan Stanley ever since.

HSBC’s Profit Sinks on $3 Billion Charge at Chinese Bank
Harry Wilson and Ambereen Choudhury – Bloomberg
HSBC Holdings Plc reported fourth-quarter profit fell 80% after taking unexpected charges on holdings in a Chinese bank and from selling its French retail operations. Shares slid in London. Pretax profit fell to $1 billion in the final three months of last year from $5.05 billion in the year-earlier period, the London-headquartered bank said in a statement. The lender took a $3 billion charge on its holding in Bank of Communications Co. and $2 billion on its French sale.

HSBC Slashes Commercial Property Exposure in US, UK to Limit Losses; US portfolio is less than half the size it was pre-Covid: CEO; Quinn says demand for commercial property ‘a lot lower today’
Harry Wilson – Bloomberg
HSBC Holding Plc slashed its exposure to commercial real estate in both the US and UK last year, the latest sign that lenders are looking to limit their losses as office occupancy rates in major cities continue to plummet. The bank’s US commercial property portfolio is now less than half the size it was before the coronavirus pandemic, Chief Executive Officer Noel Quinn said in an interview with Bloomberg Television. Last year, the bank’s exposure to the US market fell 27% to $3.9 billion, the biggest drop of any geography, filings show.

HSBC profits plummet 80% after charge on Chinese bank stake; Shares slide as lender takes several charges in ‘messy’ final quarter of 2023
Kaye Wiggins and Stephen Morris – Financial times

Boaz Weinstein Returns to London With $1.3 Billion Fund Crusade
Justina Lee – Bloomberg

Capula Partner Nat Dean to Spin Out His $3.5 Billion Hedge Fund
Nishant Kumar – Bloomberg

Hedge fund Rokos makes $1bn from bet on US interest rates; Asset manager run by billionaire trader Chris Rokos has gained 9% so far this year
Costas Mourselas – Financial Times

Work & Management

‘Every person slips at some point’: how businesses are managing the four-day week; Employers report positive effects of shorter hours but say productivity must be maintained
Emma Jacobs – Financial Times
Shortly after digital marketing agency Trio Media made its four-day working week permanent, its chief executive Claire Daniels noticed a dip in “staff effort”. “It highlighted to me we needed to work at [productivity],” said Daniels, whose business was one of 61 that took part in the UK’s four-day week trial in 2022. Gary Conroy, chief executive and founder of 5 Squirrels, a skincare producer that also participated in the trial, came to a similar conclusion. “The discipline always needs to be maintained. Every single person slips at some point and the productivity will slip,” he noted.

Wellness Exchange

Study of Patients With a Chronic Fatigue Condition May Offer Clues to Long Covid; N.I.H. researchers found notable differences between the immune systems and other physiological functions of patients with ME/CFS and those of healthy patients.
Pam Belluck – The New York Times
Jennifer Caldwell was active and energetic, working two jobs and taking care of her daughter and her parents, when she developed a bacterial infection that was followed by intense lightheadedness, fatigue and memory problems. That was nearly a decade ago, and she has since struggled with the condition known as myalgic encephalomyelitis/chronic fatigue syndrome, or ME/CFS. Ms. Caldwell, 56, of Hillsborough, N.C., said she went from being able to ski, dance and work two jobs as a clinical research coordinator and a caterer to needing to stay in bed most of every day. “I haven’t been right since, and I haven’t worked a day

This RSV Shot Keeps Babies Out of the Hospital. But Parents Can’t Find It; A new antibody that protects babies from a deadly virus proved far more popular than drugmaker Sanofi expected
Liz Essley Whyte – The Wall Street Journal
When Samantha Berch first heard about a new shot against the deadly respiratory syncytial virus, she asked her daughter’s pediatrician about it. But the practice didn’t have it. After weeks of waiting on hold with clinics in her area, she gave up. “It was super frustrating,” the Nebraska resident said. Berch’s infant daughter never got the shot and contracted RSV after Christmas. The baby’s oxygen levels dropped, just missing the threshold for hospitalization.


There is ‘real excitement’ among global investors about Saudi capital market, Riyadh forum is told
South China Morning Post
Saudi Arabia’s capital market is very attractive in the eyes of global investors, and the kingdom’s authorities are pushing for more regulation to enhance the market’s accessibility and stability, with the aim of boosting confidence and to attract further international capital inflows, said panellists at the Saudi Capital Market Forum in Riyadh on Tuesday.

Scotland’s Fuel Binge Offers Glimpse of Future Without Refinery
Alex Longley and Jack Wittels – Bloomberg
A boom in Scottish diesel imports offers a glimpse into the country’s future energy security ahead of the potential closure of its only oil refinery. Imports to a key port on the east coast surged to the highest in at least eight years in January, data from analytics firm Vortexa Ltd. show. Usually, much of the nation’s diesel is processed from crude at Petroineos’s Grangemouth plant, which may close as soon as next year after losses over the past decade.

Rio Tinto approves world’s biggest mining project in West Africa; Miner’s chief Jakob Stausholm outlines ambition to produce iron ore from $20bn development as soon as 2025
Tom Wilson – Financial Times
Rio Tinto’s board has approved the world’s biggest mining project in West Africa, chief executive Jakob Stausholm said as he outlined the company’s ambition to produce iron ore from the $20bn development as soon as 2025. London-listed Rio Tinto will invest $6.2bn in the mine, rail and port project in the Republic of Guinea, in a partnership with at least seven other companies, including five from China.


A chatbot that imitates the dead. Is it a good idea? Jason Rohrer’s AI tool can simulate conversations with anyone. He argues users should decide how far to push it
Henry Mance – Financial Times
In summer 2020, Jason Rohrer was fleeing wildfire smoke in California. He and his family drove to Nevada, then Arizona. Away from his desk, Rohrer was unable to continue his work, hand-drawing his latest video game. So he started a “side project”. OpenAI had released GPT2, an early version of its large language model, but blocked people from talking back-and-forth with it. It took Rohrer a month to “trick” the interface so users could chat with the AI. He built some characters for people to talk to. He also allowed users to create their own.

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