Hits & Takes
John Lothian & JLN Staff
I am a bit confused by the whole silver squeeze thing. And it has brought out futures market experts like Cameron Winklevoss.
Winklevoss, co-founder of the cryptocurrency firm Gemini, said on Twitter that, “The ramifications of a #silversqueeze cannot be underestimated. If it’s exposed that there are more paper claims on silver than actual silver, not only would payoff be enormous, but gold would be next. #Bitcoin fixes this.”
He is right about the ramifications. There could be plenty of them, but probably not the ones he is thinking about. It has been “exposed” by the silver and gold proponents for many years that there are or have been more paper claims on silver than actual silver. Exposure is not enough. And the silver market is not some out of favor retailer stock expected to go bankrupt by a bunch of hedge funds who can’t do a head count.
We have seen retail traders flood the metal markets before to the point they caused systemic failure. Back in late 1999, a bunch of Y2K end of the world types were following a Y2K market guru and they were all told to buy $1000 strike price gold calls. Gold was rallying in November and I remember a radio announcer saying as I drove into Chicago one morning that if the rally continued, the gold market could reach $1000 by the end of the year. It took something like 23 seconds for the gold market that morning to hit the $1000 level.
The retail traders flooded the market with orders to capture their profits, either through selling their options or selling futures against them. However, in New York, the TOPS printers went down at the Comex and orders had to be routed to the NYBOT and run down the street. The result was absolute chaos that saw market orders come back unable. It took days to find out what we should have known on day one and before the open of day two.
There was never a better example of why electronic trading was needed. The markets could not handle the growth the industry had seen and process the amount of customer paper that was being injected into the trading pits. In 2004 the Chicago Board of Trade would launch their electronic metals contracts to finally push those markets to a more efficient platform.
The epic battle between the Comex and open outcry and the CBOT and electronic trading popularly chronicled here would be cut short by the CME’s buying of the CBOT and then selling the metals complex to NYSE Euronext. Today, they are part of ICE. And COMEX is all electronic.
The silver spike even caused the acting chairman of the CFTC, Rostin Behnam, to comment on the trading in the silver markets.
Speaking of COMEX, a group of former COMEX and NYMEX floor brokers and traders who had been meeting in Boca Raton for lunch every year during the FIA Boca Conference has decided not to meet in person this year. In 2019, they had 55 people at the lunch, including me. In 2020, they had 44. And this year the late George Gero will not be there to join this gathering of open outcry brothers.
Nasdaq has agreed to sell its U.S. fixed income business to Tradeweb Markets. So long Espeed.
Here are some highlights from the CME Group’s January volume report. Equity index average daily volume (“ADV”) grew 31% from January 2020 and the CME saw record ADV of 189,000 in Micro E-mini Russell 2000 futures. Overall, Micro E-mini equity index futures ADV was 2.3M. The micro E-mini futures and options represented 41% of overall equity index ADV during January 2020. Over on the agricultural side, ag futures and options ADV rose 36% from January 2020, including 89% agricultural options ADV growth. The corn options ADV grew 159% from January 2020 and soybean options ADV grew 147% from January 2020.
If you are looking for even more news, check out my Twitter feed.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
In a world where the retail trader is in the driver’s seat, it stands to reason that exchanges including Cboe Global Markets, Inc. and CME Group, Inc. would expand their mini and micro contract offerings. On Monday, Cboe announced plans to launch Mini-Russell 2000 Index options on March 1, pending regulatory approval. This will be its third mini contract; the other two are Mini VIX futures and Mini S&P 500 Index Options. A Cboe spokeswoman said the exchange aims to appeal to “sophisticated” retail traders, not amateurs. Mini-Russell Index options are one-tenth the size of standard Russell 2000 Index options contracts and provide exposure to the U.S. small-cap equity sector. More details here.~SC
Quantitative Brokers Announces Global Expansion Plans and the Next Evolution of Algorithmic Trading — Quantitative Brokers
Quantitative Brokers (QB), a global provider of advanced execution algorithms and data-driven analytics for global futures and interest rate markets plans to hire 20 total new full-time employees in 2021. Employees will be based around the globe with particular focus on data analytics and product engineering which will further enhance execution performance and analysis.
*****Nice to have those Deutsche Boerse bucks behind you.~JJL
Episode 7: Brexit: Moving to Strategic Rivalry
What has the end of the Brexit transition period meant for derivatives markets, and how will the priorities of EU and UK regulators shift now that Brexit is finally done? Are the EU and UK entering into a new era of strategic rivalry in financial services? Donald Ricketts, head of financial services at FleishmanHillard, gives his thoughts.
*****This is Don Ricketts, not Don Rickles. Rickles would have been funnier.~JJL
Mahomes-Brady Shootout Could Signal Roaring Returns for S&P 500
Bailey Lipschultz – Bloomberg
Super Bowl features high scoring offenses led by former MVPs; Market has outperformed when at least 46 points are scored
Sunday’s Super Bowl between the Kansas City Chiefs and the Tampa Bay Buccaneers is expected to feature fireworks from two of the NFL’s top offenses — and, as long as it does, history says that bodes well for U.S. stock investors. And if you’re long stocks, vote for a shootout.
***** I love predictions based on quality historical research.~JJL
Florida could see a sea turtle baby boom—thanks to pandemic
Jesse Scott – National Geographic
During Florida’s nesting season, which runs from March through October, the sands are normally awash with humans. This year the coronavirus pandemic severely curtailed travel and required some state jurisdictions to close their beaches for weeks. While this was a bust for sun worshippers, it may have been a boon to sea turtles. But 2020 has also been unprecedented in terms of the number of hurricanes battering the southeastern U.S. As this nesting season comes to a close, researchers share some initial findings and tips for how travelers—even grounded ones—can help protect sea turtles.
******The natural predator of sea turtles is the sun worshipper.~JJL
Covid: ‘Insane’ success of goat Zooms nets Rossendale farm £50k
A farmer who was half kidding when she suggested hiring out her goats for Zoom meetings during lockdown has said making £50,000 shows it was no joke. Dot McCarthy, from Rossendale in Lancashire, said the number of people paying for “show goat” Lola and others to butt in on calls had been “insane”.
*****Kids in a Zoom meeting video is not unusual, except when they are goats.~JJL
Monday’s Top Three
Our top story Monday was Why the GameStop stock frenzy is likely to end in financial crisis, an opinion piece from the South China Morning Post. Second was Bloomberg’s What’s the DTCC and How Did It Stop GameStop Mania? Third was Citadel’s Griffin now at center of Reddit-fueled conspiracy theories, from Crain’s Chicago Business.
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Wall Street Mania Poised to Spur SEC Focus on Apps, Shorts, T+2
Benjamin Bain, Claire Ballentine, Yalman Onaran, and Sarah Ponczek – Bloomberg
Analysts, ex-regulators offer remedies to fix troubled market; Hedge funds, Reddit and Robinhood all likely to get scrutiny
Smartphone apps, short-selling rules and steps to ensure broker solvency are all sure to get a closer look from Washington policy makers once the dust settles on the market turmoil that has buffeted GameStop Corp. and silver since the start of the year. Social media is also poised to be scrutinized, with a focus on how Reddit and Twitter have been used to mobilize herds of investors to all make the same trades. Investigations into manipulation will keep the Securities and Exchange Commission busy for the foreseeable future. The House Financial Services Committee has scheduled a hearing for Feb. 18, likely putting government watchdogs and firms such as Robinhood Markets on the hotseat.
Nasdaq agrees to sell US Treasuries trading business to Tradeweb for $190m; US exchange bought eSpeed in 2013 for an initial $750m
Philip Stafford – FT
Nasdaq, the US exchange, has agreed to sell its US Treasuries trading business to Tradeweb for $190m, creating a big loss on the disposal. Nasdaq bought the business, known as eSpeed, in 2013 from BGC Partners for an initial $750m, to push into electronic trading in one of the world’s biggest and most important markets.
OCC January 2021 Total Volume Up 61.7 Percent from a Year Ago; Highest volume month on record for U.S. equity options industry
OCC, the world’s largest equity derivatives clearing organization, announced today that January 2021 total cleared contract volume was 843,542,290 contracts, the highest month on record and up 61.7 percent from January 2020. Year-to-date average daily cleared contract volume through January was 44,396,963 contracts, up 78.7 percent from January 2020.
There’s a Plan to Bring Sports Gambling to the Futures Market; Proponents of a new proposal before the CFTC say they’ve found a way for legal sportsbooks to manage their risk.
Robert Schmidt, Benjamin Bain – Bloomberg
The futures market is often referred to as Wall Street’s casino. Now, in a twist, there’s a proposal to let casinos start trading futures. The marriage of the gambling industry and high finance is being pushed by a cryptocurrency exchange and a Washington lawyer. Hoping to grab a piece of the billions of dollars flowing into the U.S. sports betting industry, they’ve designed futures contracts based on National Football League games and are petitioning regulators to bless them.
ICE Benchmark Administration Launches new U.S. Dollar Reference Rates webpage to assist the market with U.S. Dollar LIBOR® Transition
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of mortgage technology, data and listings services, announces that ICE Benchmark Administration Limited (IBA) has launched a new webpage to provide a comprehensive overview of all of IBA’s solutions designed to help stakeholders prepare for the transition to new U.S. Dollar interest rate benchmarks.
Trading of Swiss shares in London expected to resume within days; UK exchanges hope new pact will help offset loss of EU business caused by Brexit
Philip Stafford – FT
Exchanges and traders in London are gearing up for the return of trading in shares in Swiss companies as the UK begins charting a post-Brexit future for its sprawling financial services industry.
Robinhood raises $2.4bn in second cash injection in four days; Capital infusion comes as day trading surge sharply boosts broker’s clearing requirements
Miles Kruppa and Henry Sanderson, Philip Stafford and Madison Darbyshire – FT
Robinhood, the online broker at the centre of the boom in day trading, has raised $2.4bn in its second capital infusion in a week to shore up finances strained by turbulent trading. The brokerage was hit by a surge in trading last week as retail investors bet against short sellers, driving up the price of previously little-loved companies such as GameStop and AMC, the struggling cinema chain.
No long-term silver lining for markets; History shows its limited value as a shelter in catastrophic financial collapse
Brendan Greeley – FT
In August 1963 a group of East German farmers pulled some 17th-century silver taler coins out of a potato field in the village of Glave. By the next harvest, historians had found several hundred more and come up with a fun thesis: the great Albrecht von Wallenstein, a Bohemian general in the Thirty Years’ War, had buried a cache of taler in a jar on his way out of town in the late 1620s. A trader today would say that the general had been long physical silver.
Silver price hits 8-year high as retail traders take aim; Precious metal rallies more than a tenth in its biggest gain since 2008
Henry Sanderson – FT
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Silver prices raced to the highest level since 2013 after retail traders targeted the market for the precious metal following last week’s successful attack against funds betting against retailer GameStop.
Two Small-Time Investors Were Buying GameStop Stock Before It Was Cool; GameStop’s rally has been credited to Chewy co-founder Ryan Cohen, but two relatively unknown investors were pushing for big changes more than a year prior
David Benoit – Bloomberg
Last spring, when GameStop Corp. GME -30.77% was just a struggling videogame retailer and before Reddit took it to the moon, two small money managers teamed up in an audacious bid to shake up its board of directors. They thought the stock was worth a few more dollars.
Snowstorm Hits Mid-Atlantic With Up to 2 Feet; Weather forces vaccination cancellations as New York and New Jersey declare states of emergency
Jon Kamp – WSJ
A major winter storm blanketed parts of the mid-Atlantic in up to 2 feet of snow Monday as it churned up the Northeast coast, delaying Covid-19 vaccinations and testing across the region. The slow-moving storm, which caused widespread flight cancellations and closed schools, was forecast to continue dumping snow into Wednesday, the National Weather Service said. The deepest snowfall was expected in the area stretching roughly from the Pocono Mountains in eastern Pennsylvania up into Connecticut and Massachusetts, said Rich Otto, a meteorologist with the weather service.
Virus Variants Continue to Evolve, Sometimes in Dangerous Ways
A mutation found in Britain may be more resistant to vaccines, health experts there said. Portugal, with the highest death rate in Europe and new infections driven by mutated virus, is running out of hospital beds.
Why Are There So Few Black Economists at the Fed? Monroe Gamble became the San Francisco Fed’s first Black research assistant in 2018. His path shows why fixing a striking diversity shortfall will take commitment.
Jeanna Smialek – NY Times
J. Monroe Gamble IV was the first Black research assistant to work at the Federal Reserve Bank of San Francisco. He started in 2018. That one data point speaks to a broader reality: Even as America’s central bank dedicates research and attention to racial economic outcomes and publicly champions inclusion, it has had a poor record of building a work force that looks like the population it is meant to serve.
Suing Elon Musk for Exaggerating Isn’t a Winning Legal Strategy; A case brought in 2017 ended with a court deciding damages were not warranted despite overly optimistic production estimates.
Joe Nocera – Bloomberg
In 2017, Gregory Wochos, a clinical neuropsychologist in Wisconsin, owned a very pricey stock: Tesla. The company was losing hundreds of millions of dollars every quarter, but Wochos and other investors believed fervently that Chief Executive Officer Elon Musk was on the verge of producing an electric car for the masses. Indeed, the Model 3 was already in production. Musk—and Tesla—promised the world that the company would soon churn out 5,000 a week. No wonder the stock was up 84% in the first nine months of 2017!
Goldman Tightens Golden Handcuffs for a Booming Trading Desk
Sridhar Natarajan and Lananh Nguyen – Bloomberg
Portfolio trading staff are told to sign longer non-competes; The unit has been a driver of growing profits in recent years
Some of Goldman Sachs Group Inc.’s most in-demand traders were confronted with a surprising rider before collecting their rewards for 2020. The firm asked staff in its portfolio-trading group to sign a six-month non-compete clause to get bonuses for the breakout year, making it harder for them to defect to rivals, according to people with knowledge of the matter. While a non-compete of that length is normal for more senior ranks, it’s often half that or less for more junior levels.
‘Spill the beans man:’ Tesla’s Elon Musk grills Robinhood CEO on GameStop/Reddit trading saga
Julia La Roche Yahoo Finance
Tesla’s (TSLA) CEO Elon Musk spontaneously interviewed Robinhood CEO Vlad Tenev for 14 minutes late Sunday evening, injecting himself into the fray of the retail investing frenzy that’s sent markets into a tailspin, and put the trading app on the d
Nomura Trader Gamed Interest-Rate Swap Spreads, CFTC Claims
Bob Van Voris – Bloomberg
John Gorman allegedly manipulated spreads to benefit the bank; Regulator says he destroyed relevant WhatsApp communications
Nomura’s former head of non-yen rate trading was sued by the U.S. Commodity Futures Trading Commission for allegedly manipulating the price of U.S. dollar interest-rate swap spreads. John Patrick Gorman III “engaged in this scheme in order to benefit the bank” in a transaction with a bond issuer, according to a lawsuit filed in U.S. District Court in Manhattan on Monday. The suit didn’t identify the bank or issuer by name. Gorman is employed by Nomura but is no longer trading, according to a person with knowledge of the matter, who asked not to be identified.
Von Der Leyen Blames EU Trade Chief for Vaccine Export Gaffe
Viktoria Dendrinou – Bloomberg
Controversial clause in EU proposal shelved after Irish uproar; EU Commission spokesman says Dombrovskis was responsible
European Commission President Ursula von der Leyen sought to deflect the blame for a humiliating U-turn over vaccine export controls, saying that one of her deputies had been responsible for the controversial regulation. The commission sparked outrage in the U.K. and Ireland on Friday when it released proposals for controls on shipments of vaccines from the EU into Northern Ireland, undermining its own commitment during Brexit negotiations to keeping the Irish border open. The plan was abruptly dropped hours later.
U.S. Hits Pandemic Milestone With More Vaccinated Than Cases
Michelle Fay Cortez and Emma Court – Bloomberg
26.5 million people have gotten vaccine in U.S., data show; About 1.34 million people a day being vaccinated on average
More Americans have received at least one dose of a Covid-19 vaccine than have tested positive for the virus, an early but hopeful milestone in the race to end the pandemic. As of Monday afternoon, 26.5 million Americans had received one or both doses of the current vaccines, according to data compiled by the Bloomberg Vaccine Tracker. Since the first U.S. patient tested positive outside of Seattle a year ago, 26.3 million people in the country have tested positive for the disease, and 443,000 have died, according to data from Johns Hopkins University.
France Says Europe Vaccine Strategy Safer Than U.K.’s
Ania Nussbaum – Bloomberg
EU Minister Clement Beaune points to risks in U.K. program; France insists on safety, following medical recommendations
France is taking the lead in defending Europe’s faltering vaccine program, and a jab at the U.K. in the process. “The Brits are in an extremely difficult health situation,” France’s junior minister for European Union affairs, Clement Beaune, said on France Inter radio. “Understandably, they are taking many risks in this vaccination campaign.”
Pfizer Forecasts $15 Billion in Covid Vaccine Sales for 2021
Riley Griffin – Bloomberg
Pfizer Inc. said it expects $15 billion in revenue this year from the Covid-19 vaccine it developed with BioNTech SE, a sign of returns to come from the industry’s pandemic response efforts.
Stop Whining About Vaccines. It’s Only February; Some time this year, most Europeans who want shots will get them. How about being grateful for that?
Andreas Kluth – Bloomberg
It’s “chaos.” A “fiasco.” A “disaster.” Skimming the headlines, you’d be forgiven for the impression that the European Union has already failed in the most important counterattack against SARS-CoV-2: getting people vaccinated. Surely somebody, somewhere — Brussels? Berlin? Paris? — should resign.
Covid Shows That Europe’s Fiscal Rules Are Outdated; Without a new fiscal regime, the bloc’s economic wounds may take far longer to heal.
Elga Bartsch – Bloomberg
One upshot of Covid-19 has been closer coordination between monetary and fiscal powers. This has led to a revolution in macroeconomic policy — one that countries should continue building upon. Just as central banks have been rethinking their frameworks, there is a strong case for governments to similarly reconsider their approach to fiscal policy.
Nestle Plans to Help Distributing Vaccines in Covid-19 Fight
Corinne Gretler – Bloomberg
CEO offers to help with logistics or financing distribution; Consumer giant has network to sell products in 187 countries
Nestle SA, the world’s largest food company, plans to help distribute Covid-19 vaccines to communities, especially in developing countries, once shots become more readily available. The maker of KitKat chocolate and Nespresso coffee could help with the financing or logistics of the rollout, Chief Executive Officer Mark Schneider said.
J&J Raises EU Concern With Plan to Package Vaccines in U.S.
Alberto Nardelli, Suzi Ring, and Riley Griffin – Bloomberg
Details on manufacturing plan disclosed in EU diplomatic note; Some countries concerned it could lead to more vaccine delays
Johnson & Johnson will ship some Covid-19 vaccines ordered by the European Union to the U.S. for the last stage of production, raising concern among some member states that the bloc’s inoculation program could be hampered by further delays, according to a diplomatic note seen by Bloomberg.
Alcohol Deaths in England and Wales Hit a Record Under Lockdown
Andrew Atkinson – Bloomberg
Experts fear Britons are turning to drink to cope with stress; Liver disease accounts for most of 5,460 deaths in 9 months
The number of alcohol-related deaths in England and Wales jumped to a record in the first nine months of last year, raising fresh concerns about the toll being taken by the pandemic. Health experts fear that many Britons are hitting the bottle to cope with the stress and isolation caused by lockdowns, leading to an increase in liver disease and mental health problems.
Vaccine concerns rise as variant fuelling UK infections mutates; Researchers find mutation in UK that is also present in variants behind surges in Brazil and South Africa
Clive Cookson – FT
The more infectious B.1.1.7 variant that has come to dominate coronavirus infection in the UK is evolving further mutations, which scientists say will make existing vaccines less effective at preventing infection. Public Health England said in a technical paper that researchers have detected 11 UK cases of B.1.1.7 acquiring a mutation called E484K, which is present in the variants fuelling Covid-19 surges in South Africa and Brazil.
Russia’s Sputnik vaccine shows 91.6% efficacy in clinical trials; Lancet peer review confirms performance of country’s flagship two-shot jab
Donato Paolo Mancini and Max Seddon – FT
Russia’s flagship two-shot vaccine Sputnik V has shown 91.6 per cent efficacy against symptomatic Covid-19 in clinical trials, a Lancet peer review has confirmed, bringing the global total of vaccines whose efficacy is confirmed to be higher than 90 per cent to three.
Two-thirds of one London Orthodox Jewish community has had Covid; Research finds prevalence of past infection was nine times higher than national average
Anna Gross – FT
An Orthodox Jewish community in London has one of the world’s highest rates of Covid-19 past infection, according to a study that points to crowded housing and socio-economic deprivation as possible reasons for the increased prevalence.
DHL boss lambasts lack of ‘foresight’ in vaccines rollout; Frank Appel accuses governments of failing to plan for delivery of jabs
Joe Miller – FT
The head of DHL has accused governments of failing to prepare adequately for the rollout of Covid-19 vaccines, blaming distribution delays on a lack of local storage and delivery solutions.
Russian Covid-19 Vaccine Was Highly Effective in Trial, Study Finds, Boosting Moscow’s Rollout Ambitions; Sputnik V shot achieved 91.6% efficacy against coronavirus symptoms, says paper in U.K.’s Lancet
Georgi Kantchev – WSJ
Russia’s homegrown Sputnik V vaccine showed high levels of efficacy and safety in a peer-reviewed study released Tuesday, a potential boost for the Kremlin’s aim to promote the Covid-19 shot abroad and curb the pandemic at home.
Even in Poorer Neighborhoods, the Wealthy Are Lining Up for Vaccines; Officials acknowledge that the coveted shots are disproportionately going to white people and that planners’ efforts to course-correct are having limited effect.
Abby Goodnough and Jan Hoffman – NY Times
As soon as this city began offering Covid vaccines to residents 65 and older, George Jones, whose nonprofit agency runs a medical clinic, noticed something striking.
The Brazil Variant Is Exposing the World’s Vulnerability; Somehow the coronavirus is rampaging through a city that was supposedly immune.
James Hamblin – The Atlantic
Even in a year of horrendous suffering, what is unfolding in Brazil stands out. In the rainforest city of Manaus, home to 2 million people, bodies are reportedly being dropped into mass graves as quickly as they can be dug. Hospitals have run out of oxygen, and people with potentially treatable cases of COVID-19 are dying of asphyxia. This nature and scale of mortality have not been seen since the first months of the pandemic.
New diabetes cases linked to covid-19
Erin Blakemore – Washington Post
Mihail Zilbermint is used to treating diabetes — he heads a special team that cares for patients with the metabolic disorder at Suburban Hospital in Bethesda, Md. But as the hospital admitted increasing numbers of patients with covid-19, his caseload ballooned.
Will Population (Herd) Immunity To Covid-19 Be Permanent Or Seasonal?
William A. Haseltine – Forbes
In just three weeks, the number of Covid-19 cases in the United States has plummeted by 35 percent. Death rates have yet to follow suit, but they have leveled out, with hospitalization rates on the decline, too. Given that the vaccine rollout is still proceeding slowly, the ebb is the glimmer of hope we need as we start to emerge from a long, dark winter. But is this really the light at the end of the tunnel, or just a period of calm before yet another storm?
Exchanges, OTC and Clearing
Cboe Options Exchange to List Mini-Russell 2000 Index Options (MRUT) Beginning March 1; Smaller contract at one-tenth the size of standard Russell 2000 Index options; Designed to provide greater flexibility and precision for U.S. small-cap equity trading strategies; An alternative to comparable ETF options providing exposure to U.S. small-cap equities; Cash-settled (no unwanted delivery of physical shares) and European-style (no early exercise); MRUT Weeklys include Monday, Wednesday and Friday expiries
Cboe Global Markets, Inc.
Cboe Global Markets, Inc. (Cboe: CBOE), a market operator and global trading solutions provider, today announced plans to launch trading in Mini-Russell 2000® Index options on Cboe Options Exchange beginning Monday, March 1, pending regulatory approval.
Nasdaq Agrees to Sell U.S. Fixed Income Business to Tradeweb Markets
Nasdaq, Inc. (Nasdaq: NDAQ) announced today that it has entered into a definitive agreement to sell its U.S. fixed income business, Nasdaq Fixed Income (NFI), to an affiliate of Tradeweb Markets Inc. (Nasdaq: TW), a leading global operator of electronic marketplaces for rates, credit, equities and money markets.
Tradeweb to acquire Nasdaq US fixed income electronic trading platform for $190 million; Nasdaq’s central limit order book (CLOB) for electronic trading in on-the-run (OTR) US treasuries will serve Tradeweb’s wholesale sector via Dealerweb.
Annabel Smith – The Trade
Fixed income trading platform provider Tradeweb has entered into a definitive agreement to acquire the US fixed income electronic trading platform from US exchange Nasdaq. The $190 million cash transaction is expected to close later this year and remains subject to customary closing conditions and regulatory approvals.
Cboe to launch Mini-Russell 2000 index options; The mini options share the same contract terms as standard Russell 2000 Index options but are one-tenth the size, offering clients more manageable access to the index.
Annabel Smith – The Trade
US derivatives exchange Cboe Global Markets is expected to launch a set of Mini-Russell 2000 Index options on 1 March, subject to regulatory approval. The mini options share the same contract terms as standard Russell 2000 Index options but are one-tenth the size, offering clients direct access to the index in a more manageable and cost-effective contract.
Cash market sales statistics for January
A trading volume of EUR 181.9 billion was achieved on Deutsche Börse’s cash markets in January (previous year: EUR 145.3 billion). Of this, Xetra accounted for 137.9 billion euros (previous year: 123.2 billion euros), which means that the average daily Xetra turnover was 6.9 billion euros. Turnover on the Frankfurt Stock Exchange was 6.7 billion euros (previous year: 4.1 billion euros) and on the Tradegate Exchange 37.3 billion euros (previous year: 18 billion euros).
CDS and Euroclear Aim to Develop Collateral Management Service for Canada
CDS Clearing and Depository Services Inc. (CDS), Canada’s equities and fixed income clearing house, and the Canadian Derivatives Clearing Corporation (CDCC), each wholly-owned subsidiaries of TMX Group Limited, today announced a joint initiative with Euroclear to develop a new collateral management service for Canada’s capital markets.
Delisting of Securities of Superconductor Technologies Inc.; Gulfport Energy Corporation; Apex Global Brands Inc.; Pareteum Corporation; and Youngevity International, Inc. from The Nasdaq Stock Market
The Nasdaq Stock Market announced today that it will delist the common stock, of Superconductor Technologies Inc. Superconductor Technologies Inc.’s common stock was suspended on September 30, 2020 and has not traded on Nasdaq since that time.
CME Group Reports January 2021 Monthly Market Statistics
CME Group, the world’s leading and most diverse derivatives marketplace, today reported January 2021 market statistics, including average daily volume (ADV) of 19.2 million contracts during the month. Market statistics are available in greater detail at https://cmegroupinc.gcs-web.com/monthly-volume.
Performance Bond Requirements: Agriculture, Energy, Equity and Metal Margins – Effective February 02, 2021
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below.
Performance Bond Requirements – Energy and Metal Margins – Effective February 2, 2021
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below.
February 2021 Stock, ETF, and Corporate Bond Update- Effective February 01, 2021
February 2021 Stock, ETF, and Corporate Bond Update is available via CME DataMine.
Reduction of the Minimum Price Increment for Selected FX Futures Submitted for Clearing on CME ClearPort
Effective Sunday, February 21, 2021 for trade date Monday, February 22, 2021, and pending all relevant Commodity Futures Trading Commission (“CFTC”) regulatory review periods, Chicago Mercantile Exchange Inc. (“CME” or “Exchange”) will amend the Price Increments rule of selected FX Futures (the “Contracts”) to reduce the minimum price increment (MPI) for privately negotiated trades (blocks and EFPs) submitted for clearing on CME ClearPort of the Contracts (collectively, the “Rule Amendments”) as noted in the table below.
MAS and SGX: Beware of Risks Related to Trading Incited by Online Discussions; JOINT STATEMENT BY MONETARY AUTHORITY OF SINGAPORE AND SINGAPORE EXCHANGE REGULATION
he Monetary Authority of Singapore (MAS) and Singapore Exchange Regulation (SGX RegCo) advise the investing public to be on heightened alert to the risks related to trading in securities incited by online discussion forums and social media chat groups. This follows SGX RegCo’s 10 December 2020 warning to the public of “pump and dump” activities exploiting Telegram chats and other social media channels (link here).
SGX issues EUR240 million in maiden convertible bond issuance
Issue of zero-coupon convertible bonds due 2024 has been fully placed with a high-quality book of institutional investors
Singapore Exchange (SGX) today announced that it has, via its wholly-owned subsidiary SGX Treasury I Pte. Ltd., successfully issued EUR240 million of convertible bonds. The payment of the convertible bonds is fully guaranteed by SGX. The offer was more than four times oversubscribed.
CME Group Completes Migration of BrokerTec Trading Platform to CME Globex
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that BrokerTec, a leading provider of electronic trading platforms and technology services in fixed income markets, has migrated its U.S. Treasuries benchmark trading and U.S. Repo platform to CME Globex. This follows the integration of BrokerTec’s EU government bond and repo markets in January. With BrokerTec’s dealer-to-dealer platform now a fully integrated part of CME Globex, clients have an enhanced suite of government bond trading offerings across listed derivatives, cash and repo markets on a common platform allowing greater operational and technological efficiencies when managing risk across cash and futures.
Barchart.com Reports a Record 3.7 million Users for January 2021
Barchart, a leading provider of market data and technology services to the financial, media, and commodity industries, announces that www.barchart.com recorded a record 3.7 million users for the month of January 2021. The financial media arm of Barchart, barchart.com provides investors, traders and other market participants with access to market data, information and premium tools covering stocks, ETFs, indexes, options, futures, commodities and currencies. January marks the first time the financial media platform has exceeded 3 million users in one month.
Demand for Stock Trading Apps Increases 10x During WallStreetBets Saga
Data presented by Trading Platforms indicates that United States Google search interest in the phrase ‘Stock trading apps’ has spiked ten times. The surge was recorded between the week ending January 24 and January 30, 2021. As of January 24, the phrase recorded a popularity score of 9 while a week later, it increased by 1,100% to hit the 100 peak score.
Jack Ma’s Ant Posted $2.3 Billion Profit Before Halt of IPO
Lulu Yilun Chen – Bloomberg
Chinese e-commerce giant Alibaba owns 33% of Ant Group; Ant’s $35 billion IPO was halted in November by regulators
Billionaire Jack Ma’s Ant Group Co. delivered about 14.5 billion yuan ($2.3 billion) in profit in the quarter right before Chinese regulators brought down the hammer on the financial technology giant’s record public offering and ordered it to scale back its sprawling business.
HSBC launches AI pricing chatbot for foreign exchange options; The chatbot uses natural language processing (NLP) to analyse information from numerous sources and distribute it to clients as well as internally within the bank.
Annabel Smith – The Trade
Investment bank HSBC has launched a pricing chatbot that uses artificial intelligence to give clients instant pricing and analytics for foreign exchange (FX) options.
Robinhood made more than $600 million from payment for order flow revenue in 2020
Frank Chaparro – The Block
Robinhood — the brokerage app company that’s been making headlines for last week’s retail stock mania – raked in nearly $700 million in payments from high-speed trading firms during 2020, according to data compiled by The Block. The firm, which offers zero-commission stock trading to more than 10 million users, reported last month that it received $221.4 million in payments for its order flow during the fourth quarter, bringing the total amount of such payments made last year $675.1 million.
Report: Robinhood raises $2.4 billion in additional funds from its investors
Michael McSweeney – The Block
Last week was a turbulent one for the popular brokerage app Robinhood. Amid that turmoil, Robinhood tapped its investors for a reported $1 billion in addition to drawing on existing lines of credit. Now Robinhood has reportedly raised another $2.4 billion from its shareholders, per the Wall Street Journal, citing people familiar with the process. The fundraising efforts come as Robinhood and its leadership team find themselves in the crosshairs of angry users and watchful regulators. A number of influential members of Congress have called for public hearings into last week’s events — which saw the price of the stock of GameStop surge above $400 and apps such as Robinhood temporarily limit access to the stock — a move the firm said was aimed at preserving the integrity of the platform.
Fintech app Cleo defends financial assistant as ‘feminist’ amid sexism row; ‘Feminist’ financial assistants contribute to the #girlboss agenda, but not everyone is on board
Emily Nicolle – Financial News
Cleo, the company behind an eponymous chatbot that helps users save money by using budgeting tools, has launched a defence of its decision to gender its assistant as female by arguing it was done in the name of feminism.
Crypto exchange Coinbase has chosen Nasdaq as its direct listing venue
Frank Chaparro – The Block
Exchange operator Coinbase has chosen Nasdaq as the venue for its direct listing, according to two sources familiar with the San Francisco crypto unicorn’s plans. The firm’s plan to tap the public markets in the coming weeks follows a secondary offering on Nasdaq Private Market. On January 25, Nasdaq Private Market launched a secondary market for Coinbase stock, a move that allowed shareholders with vested equity to sell shares. Nasdaq Private Market offers services for companies ahead of an IPO, including “controlled liquidity programs for pre-IPO companies looking to raise secondary capital for shareholders and investors.”
Fine Wines Become First Tokenized Securities Under New Swiss Blockchain Law
Sebastian Sinclair – Coindesk
Sygnum, a digital-asset finance firm with a Swiss banking license, has tokenized its first set of assets under the nation’s new law addressing the use of distributed ledger technology (DLT).
US Man Pleads Guilty to Money Laundering Charges Involving $13M in Bitcoin
Sebastian Sinclair – Coindesk
A California man has entered into a plea agreement with U.S. authorities after being charged with operating an unlicensed company that exchanged millions of dollars in bitcoin for cash.
Bitcoin Accounts Offer 3% Rates in a Low-Interest World
Edward Robinson – Bloomberg
The era of earning decent interest rates on savings may not be returning anytime soon, as the global economy struggles to recover from the Covid-19 pandemic. Yet a new crop of financial products has emerged offering eye-popping annual rates of 3% to 12%. The catch? The deposits have to be in Bitcoin and other cryptocurrencies.
IBM Blockchain Is a Shell of Its Former Self After Revenue Misses, Job Cuts: Sources
Ian Allison – Coindesk
IBM has cut its blockchain team down to almost nothing, according to four people familiar with the situation. Job losses at IBM (NYSE: IBM) escalated as the company failed to meet its revenue targets for the once-fêted technology by 90% this year, according to one of the sources. “IBM is doing a major reorganization,” said a source at a startup that has been interviewing former IBM blockchain staffers. “There is not really going to be a blockchain team any longer. Most of the blockchain people at IBM have left.”
Crypto exchange OKEx to add support for Bitcoin’s Lightning Network
Yogita Khatri – The Block
Cryptocurrency exchange OKEx is adding support for Bitcoin’s Lightning Network in the coming weeks. Revealing the news exclusively to The Block on Tuesday, OKEx said the move is aimed at enabling cheaper and faster transactions for users. Specifically, bitcoin deposits and withdrawals will get cheaper, said the exchange. The current average cost of one bitcoin transaction is about $11, and its average confirmation time is between 10-30 minutes. “This is impractical as more users join the network,” OKEx CEO Jay Hao told The Block.
Decentralized Exchange Volumes Hit Record Above $50B in January
Zack Voell – Coindesk
January trading volume on decentralized exchanges soared to set an all-time high above $50 billion, eclipsing the previous record of $26 billion from September 2020 by a wide margin, according to data from Dune Analytics. Aggregate volumes reached $55.8 billion last month, up from $23.5 billion in December 2020.
After $1 billion year, GSR looks to expand footprint in bespoke crypto options
Frank Chaparro – The Block
After a landmark year for the digital asset derivatives space, one market-making firm is expanding its suite of bespoke options. GSR Trading—one of the longest operating liquidity providers in the space—told The Block that it is now offering bespoke options in Filecoin, Polkadot, and Algorand. Unlike vanilla options that trade on an exchange like Deribit’s order-book, GSR’s bespoke options are custom-made for larger investors in the market, with GSR acting as the counter-party.
Grayscale Reopens Its Ethereum Trust to Investors
Tanzeel Akhtar – Coindesk
Digital asset manager Grayscale Investments said Monday that its Ethereum Trust (OTCQX: ETHE) is again open to accredited investors. The company said the private placement of its shares in the trust is periodically offered throughout the year. The Ethereum Trust last closed its doors in late December, along with five other trusts.
Gemini launches ‘Earn’ — an interest-earning program that offers up to 7.4% yield
Yogita Khatri – The Block
Crypto exchange Gemini has launched a new interest-earning program called Earn, which offers up to 7.4% yield. The program, initially available for select Gemini customers, will be rolled out to all later this month, the exchange announced Tuesday. The program will be available in all 50 U.S. states, including New York. Gemini Earn supports all 26 crypto assets the exchange supports on its trading platform, including decentralized finance (DeFi) coins, such as Uniswap and Aave.
21Shares Launching First Polkadot ETP on SIX Exchange
Tanzeel Akhtar – Coindesk
Switzerland-based investment product provider 21Shares is launching the world’s first exchange traded product (ETP) for the polkadot cryptocurrency. 21Shares, formerly known as Amun, said Tuesday that the Polkadot ETP (ticker: PDOT) will list on the Swiss SIX Exchange on Feb. 4. The firm said the listing came about because it wanted to stay “ahead of the curve” amid a surge in interest for the cryptocurrency asset class.
Is Boris Johnson Still Prime Minister of the United Kingdom? Johnson appears to have shrunk to the status of England’s chief executive. North of the border, Nicola Sturgeon is calling the shots.
Martin Ivens – Bloomberg
In the eyes of many voters, Boris Johnson stopped being prime minister for the whole of the United Kingdom as soon as the Covid pandemic began to rage last March. Instead he appears to have shrunk to the status of England’s uncertain chief executive, taking orders from technocrats and scientific advisers.
The U.K. Squares Off With China Over Hong Kong
Rosalind Mathieson – Bloomberg
The U.K. has opened a path to citizenship for holders of a special Hong Kong passport created before the city’s return to Chinese rule in 1997. Those with British National (Overseas) passports, or who are eligible for them, can apply with their close family members to enter Britain for up to five years, after which they can apply for settlement. The move by the U.K. comes as tensions rise with China over its crackdown on political freedoms in the former British colony, including the passage of a national security law last June. The big unknown is how many people may end up leaving for the U.K. under this route.
Opinion: The GameStop saga is a road map for the Kremlin and other enemies of America — here’s why
Josh Lipsky and William Wechsler – MarketWatch
It’s not often that a story about stock-market volatility becomes a trending subject for late night comedians. But it’s impossible to resist the David-beats-Goliath news of a bunch of amateur investors banding together on Reddit in to execute a classic short squeeze to nearly bankrupt a multibillion-dollar hedge fund. It’s a shame that Tom Wolfe is no longer alive to enjoy the near-universal schadenfreude from watching modern-day day master of the universes squeal.
Wall Street billionaire backed Republicans who later tried to overturn election result; Stephen Schwarzman, chief executive of the Blackstone Group. Public records show that Schwarzman donated about $33.5m to groups supporting Republicans in the 2020 election cycle.
Stephanie Kirchgaessner – The Guardian
The Wall Street billionaire who has been heralded for giving Oxford University its largest donation “since the Renaissance” gave campaign contributions during the election cycle to seven of the Republican lawmakers who later voted to overturn the 2020 election results and backed candidates late last year even as they disputed Joe Biden’s victory.
CFTC Says Trader John Patrick Gorman Manipulated Dollar Swaps
The U.S. Commodity Futures Trading Commission sued a managing director of a global investment bank for allegedly manipulating the price of U.S. dollar interest-rate swap spreads.
CFTC Charges Swaps Trader with Manipulation, Attempted Manipulation, and Making False Statements
The Commodity Futures Trading Commission today filed a civil enforcement action in the U.S. District Court for the Southern District of New York against John Patrick Gorman III, a swaps trader at a global investment bank, charging him with engaging in a scheme to deceive and to manipulate the price of an interest rate swap between a bond issuer and the bank. Additionally, Gorman is charged with making materially false statements to the CFTC in the course of the investigation.
FCA calls for urgent action on ‘buy now, pay later’ credit; UK financial regulator finds ‘significant potential’ for consumer harm
Matthew Vincent – FT
The UK financial regulator has said “buy now pay later” credit products offered by retailers and fintechs such as Klarna must be covered by its rules “as a matter of urgency” because of a “significant potential for consumer harm”.
Andrew Bailey under fire for FCA failures over LCF collapse; Inquiry head tells MPs current BoE governor did not provide ‘adequate reason’ for lack of protection for investors
Matthew Vincent – FT
Bank of England governor Andrew Bailey did not provide “an adequate reason or excuse” for failures to protect savers in the £236m London Capital & Finance collapse, the head of the independent inquiry into the scandal told MPs on Monday.
New York Bank Fined For Anti-Money-Laundering Law Failures; Apple Bank for Savings will pay the FDIC $12.5 million for allegedly failing to comply with the Bank Secrecy Act
Dylan Tokar – WSJ
Apple Bank for Savings agreed to pay $12.5 million to settle a regulator’s claims that it failed to comply with anti-money-laundering rules. The bank allegedly violated the Bank Secrecy Act, an anti-money-laundering law, between April 2014 and September 2018, the Federal Deposit Insurance Corporation said. The order was issued in December and made public on Friday.
ESMA publishes Annual Report on the application of waivers and deferrals for equity instrumentsINSTRUMENTS
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today published its Annual Report on the application of waivers and deferrals for equity instruments under MiFIR.
2021 Report on FINRA’s Examination and Risk Monitoring Program
This Report on FINRA’s Risk Monitoring and Examination Activities (the Report) is designed to inform member firms’ compliance programs by providing annual insights from FINRA’s ongoing regulatory operations. For selected regulatory obligations, the Report: (1) identifies the applicable rule and key related considerations for member firm compliance programs, (2) summarizes noteworthy findings from recent examinations and outlines effective practices that FINRA observed during its oversight, and (3) provides additional resources that may be helpful to member firms.
FINRA Publishes 2021 Report on FINRA’s Examination and Risk Monitoring Program;Report Combines and Replaces Annual Exam and Risk Monitoring Findings Report, Priorities Letter
FINRA today published the 2021 Report on FINRA’s Examination and Risk Monitoring Program to inform member firms’ compliance programs by providing annual insights from FINRA’s Examinations and Risk Monitoring programs. The Report combines and replaces two previously published annual reports, the Report on Examination Findings and Observations and the Risk Monitoring and Examination Program Priorities Letter.
SEC Charges Three Individuals in Digital Asset Frauds
The Securities and Exchange Commission today charged three individuals with defrauding hundreds of retail investors out of more than $11 million through two fraudulent and unregistered digital asset securities offerings.
John Coates Named Acting Director of the Division of Corporation Finance
The Securities and Exchange Commission announced today that John Coates will serve as Acting Director of the agency’s Division of Corporation Finance.
Acting Chair Allison Herren Lee Announces Executive Staff
The Securities and Exchange Commission today released a roster of the executive staff for Acting Chair Allison Herren Lee. The executive staff is responsible for advising the Chair on matters before the Commission, working closely with agency staff, and helping the Chair perform all day-to-day operations needed to fulfill the SEC’s mission.
Satyam Khanna Named Senior Policy Advisor for Climate and ESG
The Securities and Exchange Commission announced today that Satyam Khanna will serve as Senior Policy Advisor for Climate and ESG in the office of Acting Chair Allison Herren Lee. In this new role, Mr. Khanna will advise the agency on environmental, social, and governance matters and advance related new initiatives across its offices and divisions.
Statement of Acting Chairman Rostin Behnam on Trading in Silver Markets
Commodity Futures Trading Commission Acting Chairman Rostin Behnam released the following statement regarding recent trading in the silver markets:
FCA publishes review into unsecured credit market
The FCA has published a report on change and innovation in the unsecured consumer credit market following a Review by its former Interim Chief Executive, Christopher Woolard CBE.
Investing and Trading
The Reddit Frenzy Has Already Quadrupled Silver’s Options Volume
Michael Roschnotti – Bloomberg
Premium paid for calls surges to the highest since 2007; IShares Trust implied volatility jumps as traders buy up calls
The silver options market, normally a quiet zone compared to gold or oil, has burst to life, roiled the most in years by the Reddit frenzy. Volume of Comex calls and puts Monday were more than four and a half times the previous year’s average.
Reddit Trades Crumble as GameStop, AMC and Silver Plunge
Michael Msika and Jake Lloyd-Smith – Bloomberg
GameStop, AMC shares sink more than 20% in U.S. pre-market; Robinhood has loosened trading restrictions on some stocks
The wild run-up of trades popular with Reddit crowds is starting to come crashing down. GameStop Corp. sank 34% in U.S. pre-market trading, extending a 31% plunge on Monday. AMC Entertainment Holdings Inc. slid 25% and Express Inc. lost 18%. Silver tumbled more than 5% after surging to an eight-year high.
GameStop Short Interest Plunges in Sign Traders Are Covering
Katherine Greifeld and Lu Wang – Bloomberg
Short interest ratio at about one-third of previous highs; Stock plunges Monday following a wildly volatile week
After absorbing a $20 billion hit, bears appear to have started covering their GameStop Corp. positions in earnest as the stock plunges. Short interest in the video-game retailer plummeted to 39% of free-floating shares, from 114% in mid-January, according to IHS Markit Ltd. data. Data from S3 Partners, another market intelligence firm, showed a similar pattern, with GameStop’s short sales having fallen to about 50% of its total stock available to trade, down from a high of roughly 140% reached earlier this year.
Robinhood’s Other Drama: An IPO Firm May Need More Than Ever
Gillian Tan, Lizette Chapman, and Annie Massa – Bloomberg
Brokerage has been planning for a traditional IPO around May; Direct listing or SPAC deal also could give backers a windfall
For months, Robinhood Markets’ plan to pursue an initial public offering midyear looked more and more auspicious. Now, it looks increasingly critical. As 2021 began, investors stuck at home in sweatpants kept signing up for the firm’s popular no-fee trading app, even plowing U.S. stimulus checks into fresh bets on ever-rising stocks. People close to the brokerage said it was planning to hold an IPO around May. The timing would be fortuitous: before summer and widespread vaccinations let droves of users return to pre-pandemic hobbies.
Richard Branson Richer Than Ever From Reddit Traders and Space Plans
Benjamin Stupples – Bloomberg
Richard Branson is expected to fly into space this year, but his fortune has already hit the stratosphere. The billionaire has added $1.8 billion to his wealth since mid-January as shares in Virgin Galactic Holdings Inc. have surged to a peak after a succession of positive events.
It’s Time to Move On From the Reddit Trade; The power of the social-media crowd to really take on the system is wildly overstated. Limitless QE is the real danger.
Marcus Ashworth – Bloomberg
It’s been an exciting distraction while everyone is working from home but the actual ability of the Reddit mob to move markets, become a systemic risk or justify the absurd amount of column inches wasted on them (to which I am about to add) is about to fizzle out. The power of the social-media crowd to really take on the system is wildly overstated, a point emphasized by JPMorgan Chase & Co. analysts. It’s a blip compared to what the world went through in March last year, as market volatility indicates.
Silver Traders Ask Who Wrote Reddit Posts to Spark a Run-Up
Joe Deaux – Bloomberg
After a surge in silver futures to the highest in almost eight years, traders are still trying to solve a mystery: Who penned the Reddit posts that ignited this staggering run-up in prices — and why were they taken down? The two posts on Reddit that prompted investors to pile into the iShares Silver Trust, known as SLV for short, were put up last week by the user jjalaj30. The user appears to have created the account nine months ago and has only written in the WallStreetBets forum twice — after investors on the board sent GameStop Corp.’s shares soaring. The posts have since been removed.
Moonpig shares soar on investor enthusiasm for ‘Covid winners’; Online greeting card company benefited from surge in gift and card sending during the pandemic
Jonathan Eley – FT
Shares in greetings card company Moonpig soared by as much as 28 per cent on its stock market debut as investor enthusiasm for “Covid winners” continued unabated. The shares were priced at 350p and the initial surge during conditional dealings — which takes place between the IPO pricing and the admission of the shares to the market — took them to 450p. At 9am they were 422p, a rise of 20 per cent, giving the company a market capitalisation of £1.44bn.
BP reports first annual loss in a decade; Oil major posts 96% drop in fourth-quarter profit as industry continues to reel from pandemic
Anjli Raval – FT
BP reported its first annual loss in a decade after a 96 per cent drop in fourth-quarter profit as the UK oil major continues to reel from the hit to energy demand from the pandemic.
Clubhouse’s stock is surging. It’s the wrong Clubhouse; We detect The Elon Effect. In all its exuberant, ebullient, entirely rational glory.
Jemima Kelly – FT
We’ve already seen The Elon Effect on dogecoin, bitcoin, and GameStop (and OK yes, Tesla too). And now, The Elon Effect has reached Clubhouse.
BP sells $2.6bn stake in Oman gas block to Thailand’s PTT; Disposal is part of $25bn divestment plan as oil major seeks funds to invest in clean energy
Anjli Raval – FT
BP has agreed to sell a 20 per cent stake in an Oman gas block for $2.6bn to Thailand’s national oil company PTT as part of the UK energy major’s $25bn divestment programme.
Wood-Pulp Prices Surge as Speculators Pounce in China; Demand rises for premium napkins and toilet paper, with more people home during the Covid-19 pandemic
Ryan Dezember – WSJ
Wood-pulp prices are soaring thanks to speculators in China, with help from paper takeout containers, a weaker dollar and people using restrooms at home instead of the office. Bleached softwood kraft pulp futures have risen 48% on the Shanghai Futures Exchange since Dec. 1, to about $1,037 a ton. Meanwhile, producers around the world are boosting prices for the wood mash at unusually sharp rates. Domtar Corp. UFS 2.90% , based in South Carolina, said it would raise prices this month between $100 and $130 a ton, depending on grade.
Environmental, Social and Corporate Governance
Hitting Net Zero Emissions by 2050
Laura Millan Lombrana and Jess Shankleman – Bloomberg
More than 100 countries have pledged to get to net-zero emissions in the next 30 years, according to the U.K.-based nonprofit Energy & Climate Intelligence Unit. China, the world’s biggest polluter, has a 2060 goal. The stakes are high. Failure could result in the Earth warming so much that it effectively becomes unlivable for dozens of species of plants, animals, and millions of human beings.
Shell Binges on North Sea Crude With Oil Prices Powering Higher
Sherry Su – Bloomberg
Company bought most benchmark barrels in at least a decade; Premiums for North Sea grades crude strengthened sharply
Royal Dutch Shell Plc snapped up the largest amount of North Sea oil in over a decade during the market’s main trading window for physical cargoes, underpinning signs of sharply tightening supplies.
Time to clean up climate reporting standards; Companies should back up their rhetoric with accounts that reflect the true risks
The editorial board – FT
The cause of climate change has been an unlikely winner from the coronavirus pandemic. The health crisis has proved a wake-up call to governments and companies of the perils of ignoring external risks and undervaluing resilience. Experts have long warned of the consequences of global warming and there is hope that 2021 will be a pivotal year in the fight against it.
US oil and gas fears end of the line for big pipe projects; Biden administration moves quickly on election promise to clamp down on sector
Justin Jacobs – FT
As a string of infrastructure projects hits the buffers, America’s oil and gas industry is facing up to an uncomfortable new reality: the era of building big new pipelines has probably come to an end.
Exxon to Create ‘Low Carbon’ Business Unit as It Faces Activists; The company will seek to commercialize its carbon capture and storage technology, investing $3 billion through 2025
Christopher M. Matthews – WSJ
Exxon Mobil Corp. XOM 0.18% is forming a business unit that will focus exclusively on technologies to lower carbon emissions, as the oil giant faces increasing pressure to step up its sustainability investments.
Risky Borrowers Hope to Boost Green Credentials; Some companies are asking investors to trim their interest costs on risky loans if they hit ESG targets
Paul J. Davies – WSJ
Investors’ thirst for yield in debt markets is driving demand for the risky loans that fund private equity deals. That is allowing companies to begin testing new features designed to boost their green and governance credentials.
Carson Block Suspects Hedge Fund Coordination in Short Squeezes
Erik Schatzker – Bloomberg
Theory would undercut role of retail orders in GameStop rally; Muddy Waters has hired full-time trader to fend off attacks
Carson Block, the activist short-seller famous for targeting Chinese frauds, recognizes familiar behavior in the rally of shares such as GameStop Corp. To him, the parabolic moves look less like the product of Reddit-driven retail orders than a short squeeze by hedge funds targeting other hedge funds. “I’ve wondered, is there coordination with these hedge funds?” Block said in an interview on Bloomberg Television. “What constitutes coordination? Did they cross the line? That could be interesting.”
Riskiest Bank Capital Cheaper in Gulf Than for UBS or HSBC
Archana Narayanan – Bloomberg
Saudi bank raised $1.25 billion at record-low yield for region; Middle East lenders facing lower oil prices, virus fallout
The sale by Saudi Arabia’s biggest bank of a high-risk type of bond — at better rates than larger international peers — is spurring concerns that investors are mispricing risk amid booming global valuations. National Commercial Bank last month issued Additional Tier 1 notes at 3.5%, the lowest yield yet for the instrument from the region. That’s also cheaper than issuances over the past six months by higher-rated firms including HSBC Holdings Plc, UBS Group AG and Standard Chartered Plc. Also known as AT1, the notes are the first type of bank debt to suffer losses in a crisis.
Bank Clients in Sweden Face New Climate Hurdle to Get Credit
Hanna Hoikkala and Frances Schwartzkopff – Bloomberg
A growing number of Swedish banks will start turning clients away if their businesses aren’t clean enough to justify new loans. Swedbank AB, Sweden’s biggest mortgage bank, just became the latest in the country to limit lending based on climate criteria. The Stockholm-based bank won’t provide fresh credit for new oil and gas projects. Nor will it provide funds to enable production in the Arctic.
For Shrinking Greylock Hedge Fund, $100,000-a-Month Rent Proved Too Much
Katia Porzecanski, Luca Casiraghi, and Ezra Fieser – Bloomberg
The hedge fund filed for bankruptcy to end lease in Manhattan; Greylock was active in deals in emerging markets like Greece
Argentina, Mozambique, Barbados and the Republic of Congo have two things in common: They’ve all restructured their debt, and they’ve all tangled with Greylock Capital Management. Now Greylock, one of the best-known hedge funds in emerging markets investing, finds itself at a similar crossroads. Some 25 years after its founding, the firm — its assets headed to a mere $350 million or so by the end of March — on Sunday filed for bankruptcy protection in New York. The firm is seeking to end its lease in midtown Manhattan after investors pulled their money following three years of losses, most recently stemming from the pandemic.
Hedge funds are getting crushed by the worst short squeeze in a quarter century
Matt Egan, CNN Business
Hedge funds that bet against GameStop and other stocks have been crushed by the Reddit army — and they’re infecting the rest of Wall Street. The most heavily shorted stocks have nearly doubled in value over the last three months, according to Goldman Sachs. Those staggering gains created distress for short-sellers, setting off a negative spiral in the broader markets.
Russia Starts Embezzlement Trial of U.S. Investor Calvey
Jake Rudnitsky – Bloomberg
Calvey could face prison time in case that spooked investors; U.S. businessman calls charges ‘unreasonable and unfair’
A Moscow court began the criminal embezzlement trial of prominent U.S. investor Michael Calvey Tuesday, even after a related corporate dispute was settled, in a case that’s rattled foreign businesses in Russia. Calvey and several colleagues at Baring Vostok Capital Partners face as much as 10 years in prison if convicted on charges they defrauded a bank that the private equity group’s funds used to control. Calvey maintains his innocence, according to his opening statement.
Nordea Bank Is Reorganizing Its $390 Billion Wealth Business
Frances Schwartzkopff and Jonas Cho Walsgard – Bloomberg
Nordea Bank Abp is reorganizing its wealth and asset management unit as part of a years-long program to make the largest Nordic bank more streamlined across the countries in which it operates. The Helsinki-based bank is merging private banking units and investment and securities advisory operations into single wealth management units in each of its four main Nordic markets, according to posts on LinkedIn that were confirmed by the bank’s spokesman.
ByteDance Sues Arch-Rival Tencent Over Alleged Monopolies
Zheping Huang – Bloomberg
ByteDance accuses Tencent of blocking Douyin content; Lawsuit comes as China steps up scrutiny over tech monopolies
ByteDance Ltd. sued Tencent Holdings Ltd. over alleged monopolies in its WeChat and QQ platforms, escalating a feud between the leading Chinese social media giants. The TikTok owner filed a lawsuit in Beijing on Tuesday, claiming that Tencent had allegedly violated Chinese antitrust laws by blocking access to content from Douyin, the Chinese twin of its globally popular short video app, on WeChat and QQ. It’s asking the court to order Tencent to cease its actions and pay 90 million yuan ($14 million) in compensation.
Brexit checks at Northern Ireland ports suspended after threats to staff; Move follows ‘sinister behaviour’ in areas dominated by pro-British unionists opposed to trade protocol
Arthur Beesley – FT
Brexit checks on animal products and food at Northern Ireland’s largest ports have been suspended because of concern about threats to staff enforcing the protocol on the region’s trade with Great Britain.
Boutique London fund managers hit early Brexit turbulence; Further disruption for smaller investment managers as Société Générale closes services for UK funds
Owen Walker – FT
London’s boutique investment managers are struggling to negotiate new post-Brexit rules and trading arrangements in order to continue serving their European clients.
Northern Ireland leaders to discuss Brexit tensions with UK and EU
Lisa O’Carroll – The Guardian
The Cabinet Office minister, Michael Gove, Northern Ireland’s first minister, Arlene Foster, the deputy first minister, Michelle O’Neill, and the European commission vice-president Maroš Šefcovic will meet on Wednesday to discuss escalating tensions over Brexit in Northern Ireland. The meeting comes after all Northern Irish and EU officials were withdrawn from duties conducting physical checks on goods from Great Britain amid concerns over their safety after reports of “menacing behaviour”. The threats have been widely condemned, with Ireland’s taoiseach, Micheál Martin, describing them as “sinister and ugly” on Tuesday.
Lights out: Brexit shuts off market for English cheese truckles
MATLOCK, England (Reuters) – An English company that has long been selling its wax-coated mini barrels of cheese directly to European consumers says it can no longer do so because of Brexit, pushing it to consider new investment in France. Slideshow ( 5 images ) Last year The Cheshire Cheese company sold 180,000 pounds ($247,000) worth of artisan truckles — the traditional name for cheese shaped like a barrel — to European Union customers, but Managing Director Simon Spurrell says that is no longer possible.
Brexit: Soil ban ‘could cost nursery £500,0000’
A plant nursery fears losing £500,000 a year due to a post-Brexit soil ban preventing sales to Northern Ireland. North Yorkshire firm Johnsons of Whixley has called for urgent action over rules it “didn’t see coming”. Soil from non-EU states cannot be taken into NI, which remains within the bloc’s plant health system. The Department for Environment, Food and Rural Affairs (Defra) said it was providing assistance to the horticulture industry. Irish Sea border arrangements mean Northern Ireland must apply EU rules on products entering from Great Britain.
Fifteen-Hour Brexit Wait Prompts Freight Firms to Avoid U.K.
Lizzy Burden – Bloomberg
Truckers are trying to avoid the U.K. as Brexit red tape keeps them waiting to get to the continent. New weekly data highlight the additional costs companies face when trading between Britain and the European Union after U.K. left the single market on Dec. 31. While the two sides agreed not to impose tariffs on goods, so-called non-tariff barriers are nevertheless creating obstacles for business. Freight firms are shunning the U.K., keeping rejection rates on contracts well above the third-quarter average last week, according to high-frequency data from Transporeon, the global logistics platform. This was at least partly because haulers are being put off by delays — the median time truckers spent in lines at Ashford, southeast England, was about 15 hours.
The government must pay the farmers and fishers struggling with its bad Brexit deal
Simon Jenkins – The Guardian
There is little doubt what is currently the angriest programme on air: Radio 4’s Farming Today. Every morning, enraged farmers and despairing fishers fume as their food rots in lorries and warehouses, unable to export to Europe or even Northern Ireland because of Brexit. Fishing boats lie idle. Meat cannot be moved. The talk is of animal product bans, faulty vet certificates, 50-page customs forms and impossible bureaucracy.
Ja Rule speaks out on Robinhood, GameStop stock chaos
Alexandra Steigrad – NY Post
The Grammy-nominated artist joined CNBC’s “Squawk Alley” Monday to talk all things GameStop and Robinhood, after the millennial investing app restricted trading on some stocks.