Wall Street Visionaries Provide Chilling Views on Next Big Risk

Jan 12, 2021

First Read

$24,251/$300,000 (8.1%)
Scott Parsons, Jeff Bernacchi


Hits & Takes
John Lothian & JLN Staff

Inquiring minds want to know if the CME Group and ICE and other large corporate and Wall Street players in the markets will be following the lead of other Wall Street and corporate giants and refrain from making political donations. Giving money is considered the equivalent of free speech, and if that speech is supporting extremism, then that represents a HUGE problem for companies’ reputations.

JPMorgan Chase, Citigroup and Goldman Sachs have stopped ALL political donations to both the Republicans and the Democrats.

This is not a time to equivocate. It is a time to stand for the American principles that our markets were founded upon. It is time to take a step back. It is a time to be careful with our words and with our money, as both are dependent on free speech.

If any people or firms wish to exercise their right to free speech in monetary form, that is their right. But there are some leading corporate firms out there that have decided now is not the time to fan the flames and are discontinuing corporate political giving.

Just keep in mind, the situation in the U.S. can still get worse. In fact the FBI has issued a warning of possible armed protests at all 50 state capitols from January 16 to 20. Where do you stand?

The Federal Reserve of the United States sent the U.S. Treasury $88.5 billion in profits for 2020. That is based on about a $7 trillion balance sheet. Based on the standard 2 and 20 percent management and incentive fees, the Fed should have kept $140,000,000,000 in management fees and $1.4 trillion.

The World Federation of Exchanges published a research working paper on the procyclicality of CCP margin models.

On Twitter, Diane Swonk, chief economist at Grant Thornton, disclosed that she has been “diagnosed with breast cancer on December 23.” She caught it early. And wants to remind people of the need to keep your checkups current, despite the pandemic.

Scott Parsons, managing partner of Delta Strategy Group, a Washington, DC-based consulting firm, and former CME Group board member Jeffrey Bernacchi were the latest to give to the JLN MarkersWiki Education GoFundMe campaign. Scott is a southern gentleman who spent two years as an executive vice president of the Managed Funds Association and six years at the Commodity Futures Trading Commision, where he was chief of staff and COO under then-Chairman Jim Newsome. Jeff Bernacchi is a longtime trader and exchange leader whom we profiled for the Open Outcry Traders History Project. Thank you to Scott and Jeff and all who have given and all who have yet to give. Support our efforts to preserve industry history by giving to our GoFundMe campaign.

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


Worried about the investment landscape in 2021? A Wednesday webinar with Mandy
Xu, chief equity derivatives strategist at Credit Suisse, and Stacey Gilbert, a portfolio manager from Glenmede Investment Management LP, will address risk factors that include looming macroeconomic issues and the impact of implied volatility on strategy performance. Hosted by the Cboe Options Institute as part of its derivatives education series, the free webinar will be held at 11 a.m. CT. You can register here. ~SC


Democrats move to impeach Trump as fears grow over further US unrest; US president accused of inciting insurrection amid worries of more violence in run-up to Biden inauguration
Lauren Fedor – FT
House Democrats on Monday introduced an article of impeachment against Donald Trump for the second time, levelling an unprecedented charge against the US president of inciting an insurrection.

*****It looks like it is going to happen.~JJL


Business must set aside self-interest to battle extremism
Michael Moritz – FT
As events unfold in Washington, I have been thinking about my grandfather who, just over a century ago, fought for the German army at Verdun. That battle, the bloodiest of the first world war, lasted about as long as the US presidential election campaign and was fought to a stalemate even though it cost 750,000 casualties. The unexploded shells lying just beneath the surface of this patch of France still claim lives and much of the area on which the armies fought are too poisoned to be farmed or occupied.

******Here is some good advice.~JJL


Corporate America pulls political donations after Capitol assault; Wall Street banks and Big Tech among those to halt or review funding for lawmakers
Laura Noonan and Andrew Edgecliffe-Johnson – FT
Many of the biggest corporate donors on Wall Street and across the US are reviewing their political spending after last week’s assault on the Capitol building, threatening to pull millions of dollars from lawmakers whose opposition to the presidential election result contributed to the unrest.

*******Here are some people leading by example.~JJL


‘An Epiphany Moment’ for Corporate Political Donors May Have Arrived; As companies put their donations to candidates on hold, they should reassess political giving entirely, making the halt permanent.
Andrew Ross Sorkin – NY Times
As companies from Coca-Cola to Amazon to Citigroup appear to be tripping over each other to declare that they are “pausing” or “reassessing” donations to Republicans who sought to overturn the election — and, in some cases, suspending giving to both parties — they might want to look at a company that didn’t say anything. That company is IBM.

******Now is the time to have an epiphany about corporate political giving.~JJL


FBI Warns of Possible Nationwide Armed Protests Ahead of Biden Inauguration; Internal memo warns demonstrations may start later this week
Sadie Gurman and Dustin Volz – The Wall Street Journal
The FBI is warning in an internal memo of the possibility of armed protests at all 50 state capitols and in Washington, D.C., ahead of President-elect Joe Biden’s Jan. 20 inauguration, a law-enforcement official said.

******It could get a lot worse. Be prepared.~JJL


Monday’s Top Three
Our top story Monday was Yahoo News’ Trump reportedly told Kelly Loeffler he’d ‘do a number on her’ if she didn’t back Electoral College challenge. Second was
Bloomberg’s U.K. Regulator Warns Crypto Investors Risk Losing ‘All Their Money’. (“The FCA’s concerns include price volatility, the complexity of products offered and the lack of consumer protection regulation around many of the products,” the story says.) Third was John Lothian News’ newly released documentary JLN Launches the History of Financial Futures Episode: Game Changers, Part II.


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Lead Stories

Wall Street Visionaries Provide Chilling Views on Next Big Risk; We asked three executives who’ve spent their careers on the cutting edge of the financial industry what they see coming in 5 to 10 years. Here are their answers.
Sonali Basak – Bloomberg
Few predicted—and most were unprepared for—the enormous challenges that have kicked off this decade: pandemic, economic collapse, social unrest, and political divisions around the world. Yet it’s the job of a Wall Street executive to factor in all the unknowns. So Bloomberg Markets asked three of the wisest and most visionary people in the industry about their worries for the next 5 to 10 years: R. Martin Chavez, who helped build Goldman Sachs Group Inc.’s trading and technology departments before he became a senior director in 2019; Eileen Murray, a Morgan Stanley veteran who was co-chief executive officer at Bridgewater Associates LP before stepping down in March 2020; and David Siegel, co-founder and co-chairman of quant trading giant Two Sigma Investments LLC. Their comments have been edited for length and clarity.

CME Group and IHS Markit to Form Leading Post-Trade Services Joint Venture for OTC Markets
CME Group
CME Group (NASDAQ: CME), the world’s leading and most diverse derivatives marketplace, and IHS Markit (NYSE: INFO), a world leader in critical information, analytics and solutions, today announced that they have agreed to combine their post-trade services into a new joint venture.

EU must act to profit from the UK’s Brexit losses; European companies need more responsive regulation that will let them compete with Britain
Miriam González Durántez – FT
Europeans are taking comfort from how much the UK has lost in the Brexit negotiations. The UK has ended up fully opening its market to all EU goods, including agriculture. And it has done so in exchange for roughly the same access to the EU services market that the bloc has granted to countries on the other side of the world, which are not even major exporters of services, such as Vietnam.

Commodity traders profit from blockbuster year of market chaos; Cash bonanza for staff as industry reaps rewards of volatility during the pandemic
Neil Hume – FT
Commodity traders are sharing bumper spoils with their workers as the industry emerges as one of the biggest winners from the coronavirus crisis. Trafigura’s record trading results last month provided a first glimpse of a blockbuster year for an industry dominated by a small group of mostly privately owned companies that can reap huge rewards by navigating the ups and downs of volatile commodity markets.

Singapore bourse tightens auditing rules after string of scandals; Corporate misconduct has hit stock market liquidity and valuations, discouraging listings
Tabby Kinder and Hudson Lockett – FT
The Singapore stock exchange has tightened its requirements for listed company auditors in the wake of a series of accounting scandals that have highlighted concerns over corporate governance.

Fed Sent $88.5 Billion in Profits to U.S. Treasury in 2020; Remittances rose last year for the first time since 2015
Kate Davidson – WSJ
The Federal Reserve sent $88.5 billion in profits to the U.S. Treasury Department in 2020, a nearly two-thirds increase from the previous year as lower rates held down the central bank’s interest expense.

Lost Passwords Lock Millionaires Out of Their Bitcoin Fortunes; Bitcoin owners are getting rich because the cryptocurrency has soared. But what happens when you can’t access that wealth because you forgot the password to your digital wallet?
Nathaniel Popper – NY Times
Stefan Thomas, a German-born programmer living in San Francisco, has two guesses left to figure out a password that is worth, as of this week, about $220 million.

CFTC General Counsel Dan Davis to Depart Agency on January 15
The Commodity Futures Trading Commission today announced that Daniel J. Davis, the CFTC’s General Counsel and head of the Legal Division, will depart the agency on January 15, 2021 for a role in the private sector. Mr. Davis has served as General Counsel since joining the agency in March 2017.

As Wall Street Heads South, Florida Braces for a Gold-Plated Makeover; Lockdowns showed many wealthy finance workers they didn’t need to be in the main office, and they’re flocking to sunshine and low taxes.
Jonathan Levin, Amanda L. Gordon – Bloomberg
Construction cranes pirouette above the skyline in Miami. Porsches are selling briskly in Coral Gables. Over in Palm Beach, along Worth and Hibiscus avenues, the Gucci set is counting new neighbors. The scent of fresh money hangs over Florida these days like the sweet smell of orange blossoms. In the midst of a deadly pandemic—and in truth, largely because of it—an optimism has taken hold among the state’s boosters.

UBS Chairman Backs CEO Hamers as ING Scandal Casts Shadow
Marion Halftermeyer and Tom Mackenzie – Bloomberg
Chairman also comments on his own succession in interview; Says UBS could consider deals in wealth or asset management
UBS Group AG Chairman Axel Weber says he still backs Chief Executive Officer Ralph Hamers after a probe of his role in a money laundering scandal at his former employer, but declined to predict whether the new chief is here to stay. Speaking in an wide-ranging interview at UBS’s Greater China Conference on Monday, Weber said that at the time of Hamers’s hiring, the matter had been settled between the Dutch prosecutor and ING Groep NV, which Hamers ran until last year. The chairman didn’t answer directly when asked whether he was confident that Hamers would continue to steer Switzerland’s largest bank.

By failing to prepare, you are preparing to fail; It’s time for the front-office to pay attention to settlement fails, writes Jonathan Watkins. Regulation is incoming and the costs and complexities are set to rise meaning this process will have a significant impact on traders.
Jonathan Watkins – The Trade
Some trades fail to settle on time, that’s just the way it is. Or at least the way it was. Europe’s capital markets watchdog is now intent on fixing this back-office process, with the effects reverberating all the way through to traders in the front-office. What was once very much an issue for someone else has now landed on the trading desk.

Zombies Could Stunt the Bank Recovery; Europe’s lockdown-support programs risk creating the kind of festering bad-debt problems that damaged its economy after the financial crisis
Rochelle Toplensky – WSJ
A decade ago, Europe’s recovery from the global financial crisis was held back by the lingering bad-debt problems of its banks. History risks repeating itself. The region’s generous lockdown-support programs and patchwork of insolvency laws could create so-called zombie firms—inefficient companies kept alive by cheap debt. Last month, the European Central Bank said this remains a risk.


U.S. Urges States to Start Vaccines for a Larger Pool of People
Jennifer Jacobs – Bloomberg
Trump administration officials on Tuesday plan to strongly encourage states to expand access to Covid-19 vaccinations to anyone older than 65, regardless of underlying conditions, and anyone 16 and older with a pre-existing condition, according to two U.S. officials.

Turkey Set for 10 Million New Doses in Second Vaccine Shipment
Firat Kozok – Bloomberg
Authorities expect shipment to arrive in batches in two weeks; Medics first in the line for vaccination starting by Friday
Turkey expects to receive 10 million new doses of Covid-19 vaccine from China’s Sinovac Biotech Ltd. over the next two weeks, as authorities prepare to begin inoculating by Friday.

Singapore to Open Covid-19 Vaccination Centers, ST Reports
Faris Mokhtar – Bloomberg
Centers can facilitate big groups, chief health scientist says; City-state has conducted 5.6 million swab tests to date
Singapore is setting up special centers to administer Covid-19 vaccinations daily to large groups of people, on top of allowing the jabs to be taken at clinics and other established health-care facilities.

Sweden Says About 80,000 People Have Had Their First Covid Shot
Veronica Ek – Bloomberg
Sweden provided a first real glimpse of how its Covid vaccination program is progressing. The country’s public health authority said that roughly 80,000 people had received a Covid-19 vaccine jab as of Jan. 10, though the actual number is probably higher because some regions have yet to submit fresh data.

India’s Cadila Aims to Supply Up to 150 Million Vaccine Doses
Chris Kay – Bloomberg
Cadila Healthcare Ltd., an Indian drugmaker working to develop an indigenous coronavirus vaccine, said it expects to supply between 100 million to 150 million doses of its candidate this year.

Indonesia Has Deadliest Day in Pandemic a Day Before Vaccination Kicks Off
Rieka Rahadiana and Harry Suhartono – Bloomberg
Indonesia reported the deadliest day in its coronavirus outbreak, before President Joko Widodo is set to kick off the mass vaccination program by getting the first shot on Wednesday.

EU’s Covid vaccine chief defends procurement scheme; Sandra Gallina denies wrong products have been bought and says member states remain committed to joint action
Michael Peel and Mehreen Khan – FT
The head of the EU’s multibillion-euro coronavirus vaccine-procurement scheme has denied the wrong products have been bought and that the programme risks falling apart as member states seek to secure their own supplies.

Why the Covid crisis in UK hospitals is likely to get worse; With virus admissions greater than discharges, the quality of care is expected to decline and death rates to rise
Chris Giles – FT
The UK’s hospitals are facing a more acute crisis than in the first Covid-19 wave in the spring with many more patients being treated for the virus and, despite the national lockdown, only the faintest glimmers of hope emerge from the latest data that relief might be imminent.

Europe’s faltering start in the vaccine race; The political damage from a botched rollout could be severe
The editorial board – FT
The almost miraculous development of effective coronavirus vaccines offers a route out of a pandemic that many countries are otherwise struggling to control. So it is all the more baffling that European governments that have long awaited light at the end of the tunnel can now only crawl towards it. Even countries like Germany and Finland that had a relatively good record of managing infections and limiting mortality last year are now way behind global pacesetters such as Israel and the UK in the vaccine rollout. The sluggishness could prove more damaging to political incumbents in Europe than the curtailment of civil liberties or economic paralysis inflicted on populations for the past 10 months.

WHO warns that herd immunity won’t happen in 2021, even with vaccines
The World Health Organization (WHO) has warned that social distancing measures will need to stay in place “for the rest of this year,” even as vaccination rollouts get under way globally, because it takes time to build up herd immunity. WHO’s Chief Scientist Dr. Soumya Swaminathan said herd immunity — a situation where the majority of a population becomes immune to the virus either because they have become infected and recovered, or through vaccination — won’t be achieved this year.

Exchanges, OTC and Clearing

Full year and December 2020 figures at Eurex; Partnership Program continues to facilitate growth in OTC Clearing; Traded ESG derivatives contracts up by over 80% in 2020
Eurex’s Partnership Program continued its success story in 2020. In the OTC Clearing segment, notional outstanding volumes grew by 29%, up from 12.9 trillion EUR in 2019 to 16.6 trillion and average daily cleared volumes grew by 16% overall – up from 103 billion EUR in 2019 to 122 billion EUR in 2020. Longer dated Interest Rate Swaps grew even more strongly with a 33% rise. These volumes were driven to a substantial degree by the Partnership Program which offers participants the chance to share in the economics of OTC IRD clearing and have a say in the governance of Eurex Clearing. Portfolio switch activity also increased significantly throughout the year, while Eurex contracts continue to show a similar spread with no material basis compared to LCH.

NYSE US Exchanges to Close in Observance of Martin Luther King Jr. Day
In observance of Martin Luther King Jr. Day, the New York Stock Exchange, NYSE American Equities, NYSE Arca Equities, NYSE Chicago, NYSE National, NYSE American Options, NYSE Arca Options, and NYSE Bonds markets will be closed on Monday, January 18, 2021.

Euronext launches sixth edition of pre-IPO programme TechShare in ten European countries
The sixth edition of TechShare, Euronext’s dedicated pre-IPO programme for European Tech companies, will see participants join from ten countries across Europe. All Tech sectors are represented this year, with a strong emphasis on biotech, health tech and e-commerce. With the inclusion of Norway as a participating country, TechShare once again demonstrates its steady growth in the domain and its relevance to the Tech industry.

Building a green Euro-interest rate curve to create a leading sustainable financial market ecosystem; Adding green sovereign bonds into German Fixed Income Futures deliverable baskets
The Federal Republic of Germany – Finance Agency recently released its issuance outlook for the Federal Government for 2021. Although the majority of the annual issuance volume in 2021 will be placed via the Federal Government’s conventional money market and capital market instruments, the issuance outlook for 2021 includes two key Green Federal securities. Together with its standard conventional bonds, the Federal Government intends to issue the first 30-year Green Bund in May, as well as a new 10-year Green Bund in September. When the Green German Federal twin security is issued, the conventional bond will be increased by the same amount at the same time.

Intercontinental Exchange and ADP Join Forces to Provide Municipal Bond Market with Actionable Data Insights
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of mortgage technology, data and listings services, and ADP (NASDAQ:ADP), a leading global technology company providing human capital management (HCM) solutions, announced plans today to launch a new alternative data offering for the U.S. municipal bond market. This first joint offering leverages ICE Data Services’ background in turning unstructured data into actionable insights and ADP’s deep expertise with workforce data. Initially, this data will be available through the Snowflake Data Marketplace and directly from ICE Data Services.

Effective Dates for Spot Month Position Limits in the February 2021 Core Products
CME Group
Spot month limits are effective at the close of trading on the dates listed (in chronological order):

Exercise & Assignment and Clearing Transformation Trade Types Project Phase 1 – PRODUCTION DATE CHANGE – Effective February 22, 2021
CME Group
Please be advised that, as per Clearing House Advisory 20-256, CME Clearing will be adding two new Trade Types, starting with Exercise & Assignment (E/A) Trades in Phase 1. The Production date for Phase 1 of the Exercise & Assignment and Clearing Transformation Trade Types Project has been moved to Monday February 22, 2021.

Product Modification Summary: Delisting of Four (4) Coal (Platts OTC Broker Index) Futures and Options Contracts – Effective January 11, 2021
CME Group
Delisting of Four (4) Coal (Platts OTC Broker Index) Futures and Options Contracts.

OTC FX Production – Notice of Two Reporting Changes
CME Group
CME will introduce the new OTC FX XV report and decommission the existing FIXML FX Trade Register Report.

UPDATE: Regulatory Relief Concerning COVID-19 Pandemic
CME Group
The regulatory relief issued by the CFTC in response to the COVID-19 pandemic is set to expire on January 15, 2021. Information on the relief was set forth in CME Group Special Executive Report S-8599RR issued on September 14, 2020, which may be viewed here.

Delisting of Four (4) Coal (Platts OTC Broker Index) Futures and Options Contracts
CME Group
Effective today, Monday, January 11, 2021, New York Mercantile Exchange, Inc. (“NYMEX” or “Exchange”) delisted four (4) coal (Platts OTC Broker Index) futures and options contracts (the “Contracts”) as set forth in the table below. There is no open interest in the Contracts.

UPDATE: Regulatory Relief Concerning COVID-19 Pandemic
CME Group
The regulatory relief issued by the CFTC in response to the COVID-19 pandemic is set to expire on January 15, 2021. Information on the relief was set forth in CME Group Special Executive Report S8599RR issued on September 14, 2020, which may be viewed here. While CME Group is currently in discussions with the CFTC to request an extension of that relief in some form, if no such extension is granted, the relief from various Exchange rules detailed in the aforementioned Special Executive Report will also expire on January 15, 2021.

Closing remarks by Tan Boon Gin, CEO of SGX RegCo, at the ACRA, SGX, SID Audit Committee Seminar
At some point, someone is going to write the great history book about what happened in 2020. From an accounting perspective, that book is going to start very soon, with the release of the audited results of companies with year-end 31 December 2020. I say that for 3 reasons:

SGX RegCo enhances rules on auditors, valuers and valuation reports
Singapore Exchange Regulation (SGX RegCo) will enhance requirements on auditors and valuers in their dealings with listed companies, and standards governing valuation reports. “Supporting market development is central to SGX RegCo’s role. These latest rule changes heighten the standards required of auditors and property valuers in their dealings with listed companies. We expect the quality of the market and investor protection to improve as a result. Our collaboration with the relevant authorities and bodies towards greater trust and confidence in our markets will continue,” said Tan Boon Gin, CEO of SGX RegCo.


Exchange Data International (EDI) Introduces the US Dividend Reclassification service
Exchange Data International
Exchange Data International (EDI) are pleased to introduce the US Dividend Reclassification service. This service can be utilized to create 1099s for clients, as well as being a secondary source to validate the primary provider or as a tool for a client support team to research customer inquiries.

BXS Launches Rule 606 Consolidator Tool for Competitive Routing Analysis
BXS, the industry’s leading compliance reporting and analytics solutions provider, today announced the launch of a new Rule 606 Consolidator tool. Available to all existing BXS customers, the new add-on provides a comprehensive view of brokers’ public Rule 606 report filings, allowing market centers to analyze how their clients and prospects are routing order flow and how their competitors are interacting with these entities, all through a consolidated, easy-to-use web portal.

Checkout.com Nearly Triples Value to $15 Billion After Funding
Katie Roof – Bloomberg
London-based fintech’s funding round led by Tiger Global; Propels payment company’s value above Global Switch, Klarna
Payments business Checkout.com has become Europe’s largest startup after a fundraising round led by Tiger Global Management that nearly tripled its valuation to $15 billion.

Revolut Applies for U.K. Banking License
Stefania Spezzati – Bloomberg
Revolut Ltd., one of Europe’s largest startups, has asked U.K. regulators for a full banking license to fuel expansion beyond its fintech roots. The license would enable Revolut to offer overdrafts, loans and deposit accounts, it said in a statement Monday. The firm would also be covered by the U.K.’s Financial Services Compensation Scheme, which protects customer deposits of 85,000 pounds ($114,700) or below if a business goes bust.

Get ready for self-driving banks; Lenders run by algorithms and blockchain technology will require 21st century regulation
Brian Brooks – FT
In 1961, Popular Science magazine envisioned self-driving cars. The reality arrived sooner than anyone anticipated, and before safety regulators could adapt. Most automotive laws — on speed limits, giving signals, drink-driving — had been designed to protect against dangerous drivers, not dangerous cars. Autonomous vehicles brought new risks that legacy rules never considered. As one headline on the Wired website put it: “Who’s Regulating Self-Driving Cars? Often, No One”.

Chinese brokerage migrates to FlexTrade FlexOMS; FlexTrade welcomes Chinese-based financial group migrating from Bloomberg SSEOMS to FlexOMS.
Kiays Khalil – The Trade
Trading system provider FlexTrade has announced the successful migration of Chinese based brokerage Tianfeng Securities International (TFI) to its order management system (OMS).

Walmart Creates Fintech Partnership With Ribbit Capital; New fintech startup will be majority-owned by Walmart
Adriano Marchese – WSJ
Walmart Inc. WMT 0.45% said Monday that it has joined with investment firm Ribbit Capital LEAP -2.85% to create a new fintech startup to further expand its financial-services offerings. The new company will be majority-owned by Walmart, and the board will include Chief Executive of Walmart U.S. John Furner, Executive Vice President and Chief Financial Officer Brett Biggs, as well as Meyer Malka, managing partner of Ribbit Capital.

E-Book Showcases 5 Ways to Comply Smarter with Financial Regulation
London, 12 January 2021: SteelEye, the compliance technology and data analytics firm, today released a new e-book titled “Five Ways to Comply Smarter with Financial Regulation.”


Bitcoin Rebounds While Leaving Everyone in Dark on True Worth
Eric Lam – Bloomberg
Digital currency stabilizes after flirting with bear market; Recent climb in dollar may be test for yearlong rally
Bitcoin rebounded after Monday’s steep plunge left investors grasping for clues about what lies ahead for the world’s largest cryptocurrency. The digital coin rose 4.9% to $35,616 as of 11:30 a.m. in London, following yesterday’s 11% slide. The latest bout of roller-coaster volatility recalls past boom and bust cycles including the 2017 bubble, and has investors debating whether this is a healthy correction or the end of the latest bull run for cryptocurrencies.

Bitcoin’s Slide Dents Price Momentum That Dwarfed Everything
Vildana Hajric and Lu Wang – Bloomberg
Bitcoin drops quickly into a bear market with 20% decline; Prior rally surpasses all others in past 50 years, BofA says
While little exists intrinsically to judge the fair value of a digitized currency, comparing Bitcoin to other high-momentum assets of the past shows how heated its rally has become — and why it’s vulnerable to swoons like Monday’s.

Crypto Platform Bakkt to Go Public Through Blank-Check Merger
Jennifer Surane – Bloomberg
Gavin Michael, formerly of Citigroup, named Bakkt’s CEO; ‘Average consumer holds a wealth of digital assets,’ he says
Bakkt Holdings LLC, the cryptocurrency platform majority-owned by Intercontinental Exchange Inc., plans to go public through a merger with blank-check firm VPC Impact Acquisition Holdings. The deal values Bakkt at approximately $2.1 billion, according to a statement Monday. Gavin Michael, the former head of technology for Citigroup Inc.’s global consumer bank, will join Bakkt as its chief executive officer. The merger plans were first reported by Bloomberg last week.

Crypto marketplace Bakkt to go public through Spac deal; Intercontinental Exchange-owned digital currencies group to be valued at about $2bn
David Carnevali – FT
Bakkt Holdings, a cryptocurrency platform majority owned by Intercontinental Exchange, has announced plans to go public by combining with a blank-cheque company, bringing together two of the frothiest elements of US markets.

Cryptocurrency traders could ‘lose all their money,’ UK watchdog warns
Noah Manskar – NY Post
Britain’s financial watchdog issued a dire warning to cryptocurrency traders Monday as Bitcoin took investors on another wild ride. The UK’s Financial Conduct Authority said consumers who invest in the red-hot cryptocurrency market “should be prepared to lose all their money” because there are so many risks involved.


House Set to Give Pence Ultimatum Before Moving to Impeach Trump
Billy House, Erik Wasson, and Steven T. Dennis – Bloomberg
Pence signals he’ll reject demand to act on Trump’s ouster; House will begin work on article of impeachment on Wednesday
The House is set to issue a largely futile ultimatum to Vice President Mike Pence on Tuesday, demanding he invoke constitutional authority to remove President Donald Trump from office, as a prelude to an expected vote to impeach the president for the second time in little more than a year.

Trump and Pence Signal President Won’t Resign or Be Removed
Jennifer Jacobs – Bloomberg
Two men pledged to work together until end of term: official; President and vice president spoke for first time since riot
Vice President Mike Pence signaled he’ll spurn demands to immediately oust Donald Trump over a deadly riot by the president’s supporters as the two met and agreed to work together for the remainder of the term, according to a senior administration official.

Why Big Tech, U.S. Conservatives Battle Over Speech
Sarah Kopit – Bloomberg
When Twitter banned President Donald Trump after a mob he had encouraged stormed the U.S. Capitol on Jan. 6, the White House fell into an unusual social media silence. But the company’s move, followed by actions by Facebook, Apple, Google and Amazon to cut off individual users or social media platforms they saw as inciting violence, turned a simmering feud with conservatives into a full-throated battle. Trump supporters complained their free speech rights were being limited, but many liberals applauded what they saw as overdue steps to limit misinformation and prevent bloodshed.

Behind the NYSE’s Swerves on Delisting China Stocks
Bailey Lipschultz – Bloomberg
In the course of a week, the New York Stock Exchange said it would delist a trio of Chinese companies, then that it wouldn’t and then that it would, stoking confusion among investors globally. The moves were the result of an initiative by President Donald Trump to punish companies with close ties to the Chinese military as part of a crescendo in U.S.-China tensions. The dizzying sequence also reflects ambiguity over both how Trump’s push would work and what its impact would be. As global index providers, banks and money managers raced to comply with the order, investors are bracing for the possibility of wider fallout.

Troops Flood a Rattled Washington Ahead of the Biden Inauguration; Chad F. Wolf, the head of the department overseeing the agency leading inauguration security, announced that he would resign as acting secretary on Monday night.
Zolan Kanno-YoungsHelene Cooper – NY Times
Law enforcement authorities, responding to threats of violence before the Jan. 20 presidential inauguration, will deploy up to 15,000 National Guard troops to the nation’s capital and set up checkpoints in the city to avoid the botched response that helped rioters overrun the Capitol last week.

Sheldon Adelson, Billionaire Donor to G.O.P. and Israel, Is Dead at 87; Mr. Adelson drew a cornucopia of cash from casinos and resort hotels and poured money into right-wing causes.
Robert D. McFadden – NY Times
Sheldon G. Adelson, a cabdriver’s son who built the world’s largest empire of casinos and resort hotels in Las Vegas, Macau, Singapore and other gambling meccas and used his vast wealth to promote right-wing political agendas in America and Israel, died Monday night. He was 87.

Deutsche Bank to Pull Back From Business With Trump and His Company
Sophie Alexander, Sonali Basak, and Steven Arons – Bloomberg
Deutsche Bank has decided not to do more business with Trump; Signature Bank closes personal accounts, calls for resignation
Deutsche Bank AG and Signature Bank, two of Donald Trump’s favored lenders, are pulling away from the billionaire president in the wake of last week’s deadly riot at the U.S. Capitol. The German lender has decided not to conduct any further business with Trump and his company, said two people with knowledge of the matter, asking not to be identified because the deliberations were confidential. Trump owes the Frankfurt-based lender more than $300 million.

New York City to consider ending contracts with Trump that bring his company $17 million a year
David A. Fahrenthold and Jonathan O’Connell – Washington Post
The city of New York said Monday that it was “reviewing whether legal grounds exist” to terminate its business relationships with President Trump, whose company has contracts to run a carousel, two ice rinks and a golf course in city parks.


ASIC cancels AFS licence of Halifax Investment Services
ASIC has cancelled the Australian financial services (AFS) licence held by Halifax Investment Services Pty Limited (Halifax). The cancellation took effect from 8 January 2021.

ESAS’ BOA Decides in ESMA’s Favor in the Appeal by Scope Ratings
The Joint Board of Appeal (BoA) of the European Supervisory Authorities (ESAs – European Banking Authority, European Insurance and Occupational Pensions Authority, and European Securities and Markets Authority) decided in ESMA’s favour in the appeal put forward by Scope Ratings GmbH (Scope) against ESMA’s decision from May 2020.

Holiday Reminder Regarding FINRA Market Transparency Reporting Systems
In observance of Martin Luther King Jr. Day, FINRA’s Market Transparency Reporting Systems will be closed on Monday, January 18, 2021. Affected applications include:

ABN Amro Clearing Chicago LLC Chicago Board Options Exchange, Inc. and C2 Options Exchange, Inc.

SEC Small Business Capital Formation Advisory Committee: Notice of Meeting

Investing and Trading

Extraordinary Re announces its Intent to Develop an Asset Owner/Asset Manager Consortium
Extraordinary Re
Extraordinary Re, the InsurTech that developed the first trading platform for insurance liabilities, today announced its intent to develop an asset owner/manager consortium. The eight interested organizations involved in the first consortium meeting manage more than $10 trillion in assets combined.

Oil Producers Commit to Supply Curbs, Sustaining Price Rally; U.S. crude futures recently rose above $50 per barrel for the first time since last February
Amrith Ramkumar and Collin Eaton – WSJ
Oil is extending a steady recovery into 2021, aided by fresh signals that the world’s biggest producers won’t turn on the spigots and flood the market. U.S. crude futures recently rose above $50 a barrel for the first time since last February, the latest milestone in a rebound powered by an uptick in travel and economic activity following the easing of coronavirus restrictions. Output cuts by large suppliers from Saudi Arabia to U.S. companies are turbocharging the advance, giving traders confidence that demand will exceed supply.

Environmental, Social and Corporate Governance

UK urged to introduce mandatory climate votes at AGMs; The Investor Forum backs ‘say on climate’ initiative spearheaded by hedge fund billionaire Chris Hohn
Attracta Mooney – FT
The British government has been urged to give shareholders a vote on how businesses are responding to global warming in a sign of growing investor concern about the risks of climate change to financial returns.

Wind power overtakes coal in Texas electricity generation; Renewables capacity is surging in US state that is the heartland of fossil fuels
Justin Jacobs – FT
Wind power surged past coal in Texas’ electricity mix for the first time in 2020, the latest sign of renewable energy’s rising prominence in America’s fossil fuel heartland.

Covid-19 Took a Bite From U.S. Greenhouse Gas Emissions in 2020; Emissions plunged more than 10 percent. If the trend can be sustained, it would put the United States within striking distance of one of its major goals under the Paris climate agreement.
Brad Plumer – WSJ
America’s greenhouse gas emissions from energy and industry plummeted more than 10 percent in 2020, reaching their lowest levels in at least three decades as the coronavirus pandemic slammed the brakes on the nation’s economy, according to an estimate published Tuesday by the Rhodium Group.


Ex-Credit Suisse chief Tidjane Thiam to launch blank cheque vehicle; Banker joins Spac craze with $250m fund to invest in financial sector
Stephen Morris and Ortenca Aliaj and James Fontanella-Khan – FT
Former Credit Suisse chief executive Tidjane Thiam is raising a $250m special purpose acquisition vehicle to invest in financial services businesses in the developed and developing world, according to people familiar with the matter.

Louis Bacon rides stormy 2020 trading to make bumper gains; Billionaire investor bought US government bonds before pandemic sent them to record highs
Laurence Fletcher – FT
Billionaire investor Louis Bacon chalked up one of the biggest profits of his long trading career during 2020’s market turmoil, helped by a decision to return money to outside investors that cleared the way for riskier bets.

BlackRock and Vanguard face heavy burden of US sanctions on China; The two largest asset managers had heavy exposure to blacklisted Chinese companies
Echo Huang – Ft
BlackRock and Vanguard face having to offload billions of dollars worth of investments in order to comply with the US government’s decision to blacklist Chinese companies with military connections.

Blackstone Hires Former Brown Endowment Chief as Hedge-Fund Unit Co-Head; Addition of Joe Dowling signals a new focus on the funds as big generators of return
Juliet Chung – WSJ
Blackstone Group Inc. BX -0.33% has hired Joe Dowling, the former chief executive of Brown University’s endowment, as co-head of its $78 billion hedge-fund business.

Plato Partnership appoints UBS veteran to chair sell-side; Chris McConville, global head of platform licensing at UBS, becomes chair of the sell-side for not-for-profit Plato Partnership.
Annabel Smith – The Trade
The global head of platform licensing at investment bank UBS, Chris McConville, has been selected by not-for-profit Plato Partnership to chair its sell-side operations.

Westwood Holdings picks Northern Trust for outsourced trading services; Northern Trust will be responsible for equity and fixed income trading, as well as, middle office trade settlement support for the $12 billion asset management firm.
Annabel Smith – The Trade
US-based asset management firm Westwood Holdings Group has selected custodian Northern Trust to provide outsourced trading through its integrated trading solutions (ITS) service.


Russia for First Time Holds More Gold Than U.S. Dollars in $583 Billion Reserves
Natasha Doff and Anna Andrianova – Bloomberg
Gold made up 23% of central bank’s stockpile as of end of June; Putin has made ‘de-dollarization’ a key policy amid sanctions
A multi-year drive to reduce exposure to U.S. assets has pushed the share of gold in Russia’s $583 billion international reserves above dollars for the first time on record. Gold made up 23% of the central bank’s stockpile as of the end of June 2020, the latest date for which data on the breakdown is available, according to a report published late Monday. The share of dollar assets dropped to 22%, down from more than 40% in 2018.

India Court Bars Modi From Executing Laws That Irked Farmers
Upmanyu Trivedi – Bloomberg
Court forms panel to hold discussions with protesting farmers; New laws lift restrictions on buying, selling farm produce
India’s Supreme Court put on hold the implementation of three controversial farm laws, a setback for Prime Minister Narendra Modi’s administration. A three-judge bench headed by Chief Justice of India Sharad A. Bobde also formed a panel to facilitate talks with tens of thousands of farmers staging protests on the outskirts of the national capital for nearly two months. The judges said they will resume hearing on Monday. The lawyer for one of big farmer groups, Dushyant Dave, did not join the hearing on Tuesday.

Chinese investors flood Hong Kong’s bruised stock market with cash; Record holdings of city’s shares by mainland traders underscores their growing influence
Hudson Lockett – FT
Chinese money is pouring into Hong Kong’s beaten-down stock market, highlighting the growing sway of mainland traders as political turmoil threatens to undermine the city’s status as a global finance hub.


Sunak says Brexit will ‘reinforce’ City as world leading financial centre; Despite chancellor’s confidence, UK officials fear lengthy stand-off with EU over crucial equivalence decisions
George Parker, Philip Stafford and Chris Giles and Jim Brunsden – FT
Chancellor Rishi Sunak on Monday told MPs Brexit will help “reinforce the UK’s position as a globally pre-eminent financial centre”, in spite of what threatens to be a protracted regulatory stand-off with Brussels.

EU must act to profit from the UK’s Brexit losses
Miriam González Durántez – Financial Times
Europeans are taking comfort from how much the UK has lost in the Brexit negotiations. The UK has ended up fully opening its market to all EU goods, including agriculture. And it has done so in exchange for roughly the same access to the EU services market that the bloc has granted to countries on the other side of the world, which are not even major exporters of services, such as Vietnam.

Dutch Officials Take Sandwiches From British Truckers in Brexit Rule Change
Basit Mahmood – Newsweek
Dutch officials are seizing ham sandwiches from drivers arriving into the country from the UK due to post-Brexit rules banning the import of meat and dairy products into the EU.
Footage shown on Dutch TV shows customs officials confiscating the food from bemused drivers, as they are told they can no longer bring “certain foods to Europe, like meat, fruit, vegetables, fish, that kind of stuff” following the end of the transition period between the U.K. and the EU on New Year’s Day.

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