Wall Street Watchdog Keeps Bitcoin ETFs on Ice

Jul 19, 2021

First Read


$51,556/$300,000 (17.2%)


Hits & Takes
John Lothian & JLN Staff

Wednesday is our MarketsWiki Education World of Opportunity Virtual event at 1:30 p.m. CT. If your interns or some of your newer employees have not signed up, they can click on the banner below and do so. This year’s one-hour program features a dialogue between Small Exchange CEO Donnie Roberts and myself, as well as a presentation by Ed Haravon of Get Real that will feature a virtual reality demonstration. You don’t want to miss it.

On Thursday, my wife and I head to West Virginia to visit our daughter Katherine at the Summit Bechtel Reserve of the Boy Scouts of America. This is the Scouts high adventure base where our daughter has been on staff the last four years. This will be our first visit to the Summit where we will be “glamping.”

There was a story I missed last week that is pretty amusing. The story was from the FT and titled “Crypto exchange FTX sets sights on blue-chip acquisitions; The 29-year-old billionaire owner of FTX has ambitions as lofty as buying Goldman Sachs.” It seems that Sam Bankman-Fried of FTX believes if FTX gets big enough they will be buying Goldman Sachs and maybe CME Group. We all need to have dreams, no matter how unrealistic. — FT

SEC Chairman Gary Gensler tweeted a poll this weekend with this question: What should the SEC focus on first, naked shorts or crypto clarity? Naked shorts won the poll with 74.4% of the 13,960 votes and crypto clarity took 25.6%. — Twitter

In a case before the SEC in the matter of S&P Dow Jones Indices, Inc., the SEC is requesting more time to submit a plan of distribution of funds to investors hurt by a feature in the reporting of the VIX where some prices were static during times of high volatility. —SEC

This is one way to solve a problem. The Malaysian police destroyed 1,069 bitcoin mining rigs with a steamroller after the owners of the machines “siphoned off almost $2 million worth of electricity to power the energy-intensive machines.” — NY Post

Microsoft is releasing a new version of Windows that seems like a game changer. The whole system runs in the cloud and you pay a monthly fee to run a virtual computer completely in the cloud. It allows you to use any device with a browser to access the system, which means those old computers of yours are now fully Microsoft 11 compatible. It has grave implications for the PC business because new releases of operating systems used to be a big boost for PC sales. Barry Collins of Forbes has a story about it. — Forbes

A man named Kevin Parry shot a very creative video where he falls on his face, but then turns into various things depending on what color he is wearing. When he falls while wearing yellow, he turns into a banana. — Twitter

There were no new donations to the JLN MarketsWiki Education GoFundMe campaign over the weekend. The last donation was by Cliff Histed of K&L Gates. Thank you to Cliff 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


The Spread – July 16, 2021

Options traders torn between higher Inflation and steady Fed policy; June market share up at MIAX; John Lothian talks about a World of Opportunity; SEC charges binary options shop with fraud; Moscow Exchange set to offer quarterly options on U.S. stock index futures; and the Options Institute’s Kevin Davitt talks about implied volatility in the “Term of the Week.”

Watch the video »


New Ways to Work Anywhere in the World; Covid-19 has changed the way digital nomads do their jobs far from home, and who decides to live their lives on the road
Krithika Varagur – WSJ
Matt Haynes anticipated a grand round-the-world itinerary when he decided to become a digital nomad in January 2020. The 32-year-old marketing consultant from York, England, would work remotely, spending a few weeks each in Bali, Thailand, a few Eastern European cities and beyond. Instead, the world shut down while he was visiting a friend in Lisbon that March. He stayed in a hostel there for a week, which turned into a month, which turned into 7½ months, during which he bonded intensely with the 13 others staying and working there.

****** My brother Dave just had an offer on a house in Lake Geneva accepted. He will be working remotely from Wisconsin, which sounds like a great idea.~JJL


JW Marriott Chicago faces $231 million foreclosure suit; It’s one of the largest and highest-profile foreclosure complaints against a Chicago hotel owner since the start of the pandemic, and a sign that some lenders are losing patience waiting for demand to come back.
Danny Ecker – Crain’s Chicago Business
The owner of the JW Marriott Chicago has been hit with a $231 million foreclosure lawsuit, a sign of hotel lenders running out of patience with pandemic-stung borrowers 16 months into a crisis that has battered the hospitality sector.

****** This is a venue close to the Chicago Board of Trade Building popular for lunches and events. It goes to show you the devastation to the downtown Chicago hotel business.~JJL



Can the Southwest Survive With Less Water?
Timothy L. O’Brien – Bloomberg
Sometime next month, for the first time, the federal government is likely to declare a water shortage at Lake Mead. This vast turquoise reservoir, formed in 1935 when the Hoover Dam corked the Colorado River in Arizona and Nevada, is part of a broader network of natural and artificial aqueducts and dams that supplies water to 40 million people and homes, farms, manufacturers and businesses across several states, tribal lands and parts of Mexico. Lights stay on in Phoenix, Tucson, Las Vegas, San Diego, Los Angeles and other Southwestern cities because Hoover Dam hydropower helps generate the region’s electricity.

***** I would suggest that people learn to be like astronauts and learn to drink their own pee.~JJL


Enormous scale of destruction is revealed as water subsides after historic western Europe flooding
Ivana Kottasová – CNN
At least 189 people are dead and hundreds more remain missing after catastrophic flooding hit large swaths of western Europe, with tens of thousands unable to return to their homes and many still left without access to power and drinking water. The flooding, caused by unprecedented rainfall, has hit parts of western Germany before shifting to neighboring Belgium and the Netherlands.

****** Too much heat in the U.S. West and too much water in Europe. I see room to make a deal.~JJL


‘No One Is Safe’: Extreme Weather Batters the Wealthy World; Floods swept Germany, fires ravaged the American West and another heat wave loomed, driving home the reality that the world’s richest nations remain unprepared for the intensifying consequences of climate change.
Somini Sengupta – NY Times
Some of Europe’s richest countries lay in disarray this weekend, as raging rivers burst through their banks in Germany and Belgium, submerging towns, slamming parked cars against trees and leaving Europeans shell shocked at the intensity of the destruction.

***** We are unprepared. That is never good.~JJL


Friday’s Top Three
Our top story on Friday was The collapse of Archegos Capital Management, from The Trade. Second was – for the second time in the top three – Can Chicago thrive in a work-from-home world? from The Financial Times. Third was the link to the Jones Day webinar Spoofing and Disruptive Trading in the Derivatives Markets, which takes place Tuesday, August 3, from 12:00 p.m. – 1:30 pm EDT.


MarketsWiki Stats
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MarketsWiki Statistics


Lead Stories

Wall Street Watchdog Keeps Bitcoin ETFs on Ice; Regulators weigh the potential dangers of widening investors’ access to cryptocurrencies
Michael Wursthorn – WSJ
For eight years, asset managers have tried to launch bitcoin exchange-traded funds, but success seems no closer now than it did in 2013. The Securities and Exchange Commission said this month it would seek public comment on WisdomTree’s proposal to launch a bitcoin ETF, focusing on whether the fund would be safe for investors. The agency has already sought comment on pitches from at least four other firms: SkyBridge Capital, VanEck, Valkyrie Digital Assets and Kryptoin Investment Advisors.

Wall Street’s China Dreams Get Jolt From U.S. Hong Kong Warning
Jennifer Surane and Mary Biekert – Bloomberg
Biden urges companies to reconsider presence in financial hub; ‘It certainly can cause a major rethink of strategic plans’
U.S. President Joe Biden has a message for Wall Street: Beware in Hong Kong. And with that, a question suddenly confronts C-suites across Manhattan. If the White House wants banks to reconsider their presence in Hong Kong because China is tightening its grip on the territory’s legal and financial systems, what does that mean for their long-held ambitions for expanding in the world’s second-largest economy and its market of 1.4

Wall Street Is Paying Bankers More Than Ever to Cloak a Brutal Work Life; As young workers quit or face burnout, companies are trying to turn the tide with raises, bonuses, vacations and even free Pelotons.
Anders Melin – Bloomberg
Rooms at the Fairmont Royal Pavilion, perched on the platinum beaches of Barbados, can run north of $1,000 a night. Catch the catamaran snorkel cruise in the morning; be back ashore in time for the royal afternoon tea.

Risks of Crypto Stablecoins Attract Attention of Yellen, Fed and SEC; Presidential panel including regulatory heads to meet on dollar-pegged digital currencies’ potential dangers to capital markets
Paul Vigna – WSJ
Stablecoins, digital currencies pegged to national currencies like the U.S. dollar, are increasingly seen as a potential risk not just to crypto markets, but to the capital markets as well.

Sparse Crowds Signal City of London’s Lackluster Office Return; Surging cases and the summer holidays hamper efforts to boost attendance
Aoife Kearins and Tom Metcalf – Bloomberg
More than 15 months after the last normal commute, the City of London can officially get back to the office today. But has it? To try to measure any changes our photographers documented some of the City’s pivotal locations a week ago, and then returned to the same locations this morning to see what, if anything, had shifted.

London Is Open Again. Here’s What You’ll Find If You Head In; You’ll get a seat on a train, at a restaurant and at your office. But watch out for the dreaded “ping.”
Adam Blenford – Bloomberg
So long social distancing, goodbye working from home. That was the plan, anyway. Yet while almost all restrictions imposed to curb the spread of coronavirus have now been lifted in England, sharply rising levels of Covid-19 mean the country is nowhere near returning to “normal.”

Crypto exchange FTX sets sights on blue-chip acquisitions; The 29-year-old billionaire owner of FTX has ambitions as lofty as buying Goldman Sachs
Eva Szalay – FT
Some of the world’s most prestigious financial institutions could become acquisition targets for young cryptocurrency companies, according to the 29-year-old chief executive of digital coin exchange FTX. Sam Bankman-Fried told the Financial Times the company he founded in 2019 could consider buying an established financial institution such as US banking giant Goldman Sachs or exchange CME Group, once it overtakes rivals Coinbase and Binance.

Binance ditches ‘stock tokens’ as global crackdown widens
Tom Wilson – Reuters
Binance said on Friday it had stopped selling digital tokens linked to shares, as Hong Kong’s financial watchdog became the latest in a string of regulators to crack down on the cryptocurrency exchange platform’s “stock tokens” offerings.

CME beating London as trading hub for key battery metal; Trading in cobalt futures is booming, and CME Group’s New York operation currently has the edge.
Cobalt futures trading is taking off in New York as CME Group Inc. steals a march on its rival bourse, the London Metal Exchange, in the volatile and rapidly growing market for the critical battery metal. Trading activity in CME’s contract has been gathering steam since its launch in December, with a flurry of recent transactions in long-dated contracts pointing to significant hedging activity by industrial users.

Massive passive: 50 years of the index fund; The industry’s growth has been breathtaking, but always accompanied by a fear it will somehow wreck markets
Robin Wigglesworth – FT
Happy birthday to the index fund, which this month turned 50 years old — looking fitter, feistier and more controversial than ever. Five decades ago, John “Mac” McQuown, a headstrong former farmhand from Illinois, led a team of brilliant iconoclasts at a Wells Fargo skunk works that cooked up ways to use newfangled computers in finance. Among the things the Management Sciences unit helped birth were Fico’s famous credit scores and Mastercard. But the greatest was the index fund.

Leaders’ love of offices is based on an outdated fantasy; Professional firms have long demanded that staff work across teams, time zones and clients’ premises
Laura Empson – FT
Depending on who you listen to, the pandemic-inspired shift to hybrid working is either a fundamental threat to how professional firms do business, or an exciting opportunity to address profound problems within the professional sector.

Tokyo Stock Exchange chief defends Japan’s progress on corporate governance; Leo Lewis and Kana Inagaki – FT
The head of the Tokyo Stock Exchange has defended Japan’s progress on corporate governance following a high-profile scandal at Toshiba, rejecting accusations a market overhaul due next year was extensively watered down.

Binance crackdown widens in Europe and Hong Kong; Lithuania, an important link in crypto exchange’s payments networks, issues warning
Adam Samson – FT
Regulators in Lithuania and Hong Kong on Friday became the latest to crack down on Binance, further complicating one of the largest global cryptocurrency exchange’s efforts to do business in key jurisdictions around the world.

Robinhood IPO Expected to Value Trading App at About $33 Billion; The Menlo Park, Calif.-based company expects to raise about $2 billion in the offering
Matt Grossman – WSJ
Trading app Robinhood Markets Inc. said it expects to raise about $2 billion in its initial public offering, which would give it a market value of about $33 billion, according to a securities filing Monday.

The Big Interview: Lynn Challenger; Global head of trading and order generation at UBS Asset Management, Lynn Challenger, tells Annabel Smith that order flow is increasingly being internalised as buy-side traders continue to grapple with trading costs.
Annabel Smith – The Trade
Annabel Smith: What impact does the UK’s regulatory divergence from Europe have on the buy-side?
Lynn Challenger: Prior to Brexit, the biggest impact or risk to the buy-side was uncertainty. The lack of regulatory clarity for buy-side trading made it very difficult to predict and prepare for this divergence. I did not know if we were going to have to move traders from London to cover our European clients, or if we could meet the regulatory requirements from our current locations. I could not predict the impact the potential changes would have on liquidity. All that preparation and contingency planning cost time and resources.

How Big Law will handle the return to office; One managing partner expects firms to be “much more flexible” in allowing people to work from home.
Elyssa Cherney – Crain’s Chicago Business
For much of the pandemic, Ray Koenig III trekked to his downtown Chicago law office to take advantage of the better technological set up. He was one of just a few attorneys working there while about 95 percent of his colleagues logged on from home.

The King of SPACs Wants You to Know He’s the Next Warren Buffett
Erik Schatzker – Bloomberg
Berkshire-like vehicle would be home to ‘all things Chamath’; Rules out bid for governor but won’t ‘cut and run’ like Musk
Chamath Palihapitiya has already drafted the next chapter in his charmed-life story. The immigrant kid who bootstrapped his way into riches at Facebook Inc., made billions as a risk-hungry investor and became the pied piper of the current blank-check craze now envisions himself as nothing less than the Warren Buffett of the Reddit era.


Vaccine hesitancy morphs into hostility, as opposition to shots hardens; Anti-vaccine rally protesters in Houston last month.
Dan Diamond, Hannah Knowles, Tyler Pager – Washington Post
On July Fourth, President Biden celebrated dramatic progress in the war on the coronavirus, with more than 150 million adults fully vaccinated and infections plunging 93 percent since Inauguration Day. “Together, we’re beating the virus,” Biden said at a party on the White House lawn.

U.K.’s Boris Johnson Will Self-Isolate as England Prepares for Reopening; The prime minister met with the health secretary, who tested positive for Covid-19; Treasury chief will also work from home for 10 days
Jason Douglas – WSJ
Boris Johnson’s office said the U.K. prime minister will remain in isolation for the next 10 days after his health minister tested positive for the coronavirus, just hours before a plan to drop almost all Covid-19 restrictions in England comes into effect.

Unvaccinated Americans Are Behind Rising Covid-19 Hospitalizations; Some hospitals in regions where vaccination rates are lower prepare for surges rivaling pandemic peaks
Melanie Evans and Julie Wernau – WSJ
The vast majority of patients driving up Covid-19 hospitalizations in parts of the U.S. are unvaccinated, according to hospitals, some of which are reactivating surge plans used in the peak of the pandemic.

Sajid Javid, England’s health secretary, tests positive for Covid; Javid says he has had two jabs and is self-isolating with mild symptoms after feeling ‘a bit groggy’
Nicola Slawson – The Guardian
England’s health secretary, Sajid Javid, has tested positive for coronavirus and has mild symptoms, he has said. In a video posted on Twitter on Saturday, Javid wrote: “This morning I tested positive for Covid. I’m waiting for my PCR result, but thankfully I have had my jabs and symptoms are mild.”

Covid Scotland: Scottish Government confirms a further 1,735 new cases
Jody Harrison – The Herald
More than 1,700 new cases of Covid-19 have been confirmed in Scotland during the past 24 hours. According to Scottish Government statistics, 1,735 new infections have been recorded since Saturday, a fall of almost 600 on the day before.

Zimbabwe Grain Board Urges Workers to Get Vaccinated by End-July
Godfrey Marawanyika – Bloomberg
Zimbabwe’s state-owned Grain Marketing Board has told employees to get vaccinated against the coronavirus by the end of July, or risk not being allowed to report for duty from August.

N.Y. Cases Above 1,000; Vaccine Protests in France: Virus Update
Bloomberg News
New York state reported more than 1,000 new cases for first time since mid-May, and a New York City council member called for renewed mask mandates in indoor public spaces.

Surgeon general: ‘I am worried about what is to come’
Michael Schnell – The Hill
Surgeon General Vivek Murthy on Sunday said he is “worried about what is to come” in the COVID-19 pandemic as cases increase throughout the U.S., primarily among those who are not vaccinated. “I am worried about what is to come because we are seeing increasing cases among the unvaccinated in particular. And while if you are vaccinated you are very well protected against hospitalization and death, unfortunately that is not true if you are not vaccinated,” Murthy told host Dana Bash on CNN’s “State of the Union.”

Unvaccinated States Feel Brunt of Delta-Led Covid Uptick
Lauren Leatherby and Amy Schoenfeld Walker – NY Times
Coronavirus cases and hospitalizations in the United States remain low but are slowly rising again, driven by outbreaks in patches of the country’s center, south and west, and by tiny increases almost everywhere else.

C.D.C. Director Warns of a ‘Pandemic of the Unvaccinated’; Cases, hospitalizations and deaths remain far below last winter’s peak, but the director urged people to get fully vaccinated.
Emily Anthem and Alexandra Petri – NY Times
As the highly contagious Delta variant of the coronavirus fuels outbreaks in the United States, the director of the Centers for Disease Control and Prevention warned on Friday that “this is becoming a pandemic of the unvaccinated.”

US surgeon-general warns of more local mask mandates as Covid surges; Vaccination campaign has stalled and infections are rising for the first time since January
Kiran Stacey – FT
More US cities are likely to reimpose mask mandates in the coming months, the US surgeon general has warned, as alarm grows at the top of the Biden administration about the spread of the Covid-19 Delta variant.

Singapore tightens Covid restrictions after rise in local cases; Cluster linked to karaoke lounges deals blow to country’s efforts to recover from pandemic
Stefania Palma – FT
Singapore has tightened social-distancing restrictions after reporting the highest number of locally transmitted Covid-19 cases in nearly a year, as the city-state grapples with a swelling cluster linked to karaoke lounges.

Delta variant takes hold in developing world as infections soar; Poorer countries with low vaccination rates face surge in Covid cases and deaths
John Burn-Murdoch and David Pilling – FT
The Delta coronavirus variant that has rapidly become dominant across much of the world is exacting a grim toll on dozens of developing countries, where vaccination levels are insufficient to prevent a surge in cases from becoming a wave of deaths.

Exchanges, OTC and Clearing

Former HKEX boss joins board of directors at MarketAxess; Charles Li has been elected to the board of directors at fixed income platform provider MarketAxess after stepping down as CEO at HKEX.
Hayley McDowell – The Trade
The former chief executive of Hong Kong Exchanges and Clearing (HKEX) has been elected to the board of directors at MarketAxess. Charles Li joined the board at MarketAxess on 13 July as the fixed income trading platform provider grows its business in Asia Pacific. Stats from the firm revealed that with trading from participants on MarketAxess in the region increased 37% year-on-year to $23.9 billion in the second quarter this year.

MOEX Records First GCC-Repo Trades With Precious Metals Used As Collateral
On 15 July 2021, Asian-Pacific Bank (APB) and RT-Finance executed the first GCC-repo transactions using precious metals as collateral.

LME Progresses Sustainability Agenda With Launch Of New Lithium And Scrap Cash-Settled Futures
LME press release via Mondovisione
Six new cash-settled futures include lithium hydroxide, two regional steel scrap contracts, European HRC, aluminium scrap, and a duty paid European aluminium premium contract
Lithium and scrap contracts deliver key part of LME sustainability agenda – providing pricing and access for products and services that support the circular economy and EV transition
New cash-settled futures trade monthly out to 15 months and priced in USD
The London Metal Exchange (LME) is today pleased to announce the launch of six new cash-settled futures – including lithium hydroxide, steel scrap and aluminium scrap contracts – offering pricing and risk management solutions for metals that support the electric vehicle (EV) transition and circular economy.

Ikonisys lists on Euronext Growth Paris
EUR4.0 million raised – market capitalisation of EUR55 million; Listing brings number of MedTech companies listed on Euronext to 46
Euronext today congratulates Ikonisys, a MedTech specialising in cellular diagnosis, on its listing on Euronext Growth Paris (ticker code: ALIKO).

Energy Transition Partners B.V. lists on Euronext Amsterdam
EUR175 million raised successfully;15th SPAC listing on Euronext’s markets in 2021;10th SPAC listing on Euronext Amsterdam markets this year
Euronext today congratulates Energy Transition Partners (ENTP), a Special Purpose Acquisition Company (SPAC), on its listing on Euronext Amsterdam (ticker code: ENTPA). It is the 10th SPAC listing on Euronext Amsterdam in 2021, and the 15th SPAC on Euronext’s markets this year.

VAM Investments SPAC B.V. lists on Euronext Amsterdam
EUR225 million raised successfully; 14th SPAC listing on Euronext’s markets in 2021
Euronext today congratulates VAM Investments SPAC B.V., a Special Purpose Acquisition Company focusing on the consumer and services sector, on its listing on Euronext Amsterdam (ticker code: VAM). It is the 14th SPAC listing on Euronext markets in 2021.

Whitepaper: valuable insights into Eurex Passive Liquidity Protection (PLP)
The planned rollout of Passive Liquidity Protection (PLP) into further Eurex index option products in September 2021 is a welcome opportunity to provide our customers with further comprehensive background information on PLP.

Novem Group SA new in the Prime Standard of the Frankfurt Stock Exchange
Deutsche Börse Group
Novem Group SA (ISIN: LU2356314745 ) has been listed in the Prime Standard of the Frankfurt Stock Exchange since today . The initial price of the share was 16.50 euros and the issue price was 16.50 euros.

Builders FirstSource Completes Listing Transfer to the New York Stock Exchange
Intercontinental Exchange, Inc.
The New York Stock Exchange, a wholly-owned subsidiary of Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of data, technology and market infrastructure, announced that Builders FirstSource (NYSE: BLDR) has completed its listing transfer and will begin trading today as an NYSE-listed company.

First Tech Federal Credit Union Selects ICE Mortgage Technology’s Encompass Product and Pricing Service to Streamline Automation and Scale; Credit Union Adopts EPPS to Future-Proof Mortgage Lending Demands
Intercontinental Exchange, Inc.
ICE Mortgage TechnologyTM, part of Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of data, technology and market infrastructure, today announced that First Tech Federal Credit Union, one of the nation’s premier credit unions, has chosen ICE Mortgage Technology’s Encompass® Product and Pricing Service (EPPS) to enhance automation, compliance, and scalability and meet the demands of its more than 720,000 credit union members.


Apple Plans Larger Finance Push, But Its Credit Card Still Needs Work
Mark Gurman – Bloomberg
This week: Apple should improve its Apple Card amid its larger push into financial technology, Netflix plans to add video games to its service, details on the next iPhones, and Apple launches a MagSafe battery pack.

Microsoft Supercharged the PC Industry. Now It Could Kill It.
Barry Collins – Forbes
There was once a time when the release of a new version of Windows would result in a huge upswing in PC sales. Now, ahead of the release of Windows 11, Microsoft could well plunge a dagger through the heart of the PC industry.

Bored Ex-Lehman Trader Builds a $6.7 Billion Fortune With a Hot App; Nikolay Storonsky’s financial-services firm, Revolut, is worth $33 billion and rapidly expanding, but it’s also drawing regulatory scrutiny.
Benjamin Stupples and Charlie Wells – Bloomberg
Nikolay Storonsky took seven years to finally quit investment banking, working at Lehman Brothers and Credit Suisse Group AG during his 20s before exiting the industry in 2013.

Zoom buys cloud call centre company Five9 for almost $15bn; Video conferencing start-up looks to capitalise on dizzying growth during Covid lockdown
Ortenca Aliaj – FT
Zoom Video Communications, the video conferencing start-up whose services became globally popular during the coronavirus pandemic, has agreed a deal to buy cloud software provider Five9 for about $14.7bn in its first major acquisition.

Nvidia Stock’s Surge Makes Chip Maker 10th-Biggest U.S. Listed Company; Company’s shares are up nearly 80% over the past year
Hardika Singh – WSJ
The post-pandemic boom in the semiconductor business has powered Nvidia Corp. NVDA -4.25% into the top 10 U.S. public companies, joining the likes of Apple Inc. and JPMorgan Chase & Co. Shares on the Santa Clara, Calif., firm have risen nearly 80% over the past year, giving it a market value of around $453 billion. That is more than rivals Intel Corp. and Broadcom Inc. combined.

Broadridge partners with OpenFin on digital workspace; Asset managers to benefit from flexible workspaces, configurable layouts and intuitive workflows as Broadridge and OpenFin join forces.
Wesley Bray – The Trade
Broadridge Financial Solutions has teamed up with OpenFin to deploy its operating system for financial desktops in a bid to boost the productivity and efficiency of its trading and portfolio management solution.


Private Israeli spyware used to hack cellphones of journalists, activists worldwide; NSO Group’s Pegasus spyware,
licensed to governments around the globe, can infect phones without a click
Dana Priest, Craig Timberg and Souad Mekhennet – Washington Post
Military-grade spyware licensed by an Israeli firm to governments for tracking terrorists and criminals was used in attempted and successful hacks of 37 smartphones belonging to journalists, human rights activists, business executives and two women close to murdered Saudi journalist Jamal Khashoggi, according to an investigation by The Washington Post and 16 media partners.

US, allies blame China-linked hackers for Microsoft Exchange breach
Morgan Chlfant – The Hill
The United States and several allied countries on Monday are publicly blaming hackers affiliated with the Chinese government for the Microsoft Exchange Server hack that left tens of thousands of organizations vulnerable to compromise earlier this year.

US accuses China of masterminding cyber attacks worldwide; Washington alleges Beijing was behind Microsoft breach that hit thousands of organisations
Kiran Stacey Hannah Murphy and Helen Warrell – FT
The Biden administration has accused the Chinese government of teaming up with criminal gangs to commit widespread cyber attacks, including one on Microsoft this year that affected tens of thousands of organisations.

Probe claims spyware used to hack journalists, activists and executives; Investigative consortium alleges Pegasus software licensed to governments by NSO Group was misused
Miles Kruppa – FT
A spyware tool licensed by the Israeli company NSO Group was used to target smartphones belonging to 37 journalists, human rights activists and other prominent figures, according to an investigation released on Sunday.


Can Coinbase Keep Wall Street Happy During the Crypto ‘Pause’?
David Z. Morris – Coindesk
I’d love to spend this morning writing about yesterday’s announcement that Square will be developing what sounds like its own decentralized finance (DeFi) platform on Bitcoin. But there’s nearly no information in the world about the project right now – even the name is (for now literally) TBD.

Cryptocurrency Exchange Binance to Stop Support for Stock Tokens
Joanna Ossinger – Bloomberg
Binance Holdings Ltd. is phasing out support for stock tokens just a few months after the cryptocurrency exchange started to offer the product.

Over 1,000 Cryptocurrency Rigs Destroyed By Malaysian Authorities Using A Steamroller
Michael Cohen – Benzinga
Authorities in Malaysia have destroyed 1,069 cryptocurrency rigs after they were confiscated in raids earlier this year. A steamroller was used to crush the hardware in the city of Sarawak, after the electric utility company of the Malaysian province accused the mining operators of stealing electricity for their activities.

Crypto Traders Loved Big Leveraged Bets Until Inexplicable Crash
Justina Lee – Bloomberg
On the day of one of the cryptocurrency market’s worst routs, Alex Holland woke up to a wave of messages from friends and family. They knew he had made a big wager recently that prices would fall. But when he went to check his account on the online exchange Binance, he saw that the value of his leveraged bet against Ethereum was sinking rather than reaping gains a few times greater than the declines in the second-largest cryptocurrency.

Crypto Experts in Demand as Countries Launch Digital Currencies; Rebels against traditional monetary systems find themselves advising governments
James T. Areddy – WSJ
Monetary authorities around the world are rushing to design digital currencies, and many are asking: Who knows how to do this? Some of the first governments to go digital have found an answer in cryptocurrency enthusiasts. For these rebels against traditional approaches to finance, the digital trend presents an opportunity to create virtual money for a whole nation.

Crypto ‘Yield Farmers’ Chase High Returns, but Risk Losing It All; Digital-currency investors face scams and volatility in quest for attractive interest rates
Alexander Osipovich – WSJ
One of the hottest trends in cryptocurrencies is a financial activity that dates back to biblical times: lending money to earn interest. Instead of just waiting for their bitcoin, ether or other digital coins to rise in value, cryptocurrency investors are now actively chasing returns by lending out their crypto holdings or pursuing other strategies to earn yield. Such “yield farming” can earn double-digit interest rates, far higher than the rates one can get with dollars.

How the U.S. became the world’s new bitcoin mining hub
MacKenzie Sigalos – CNBC
Well before China decided to kick out all of its bitcoin miners, they were already leaving in droves, and new data from Cambridge University shows they were likely headed to the United States.

JC Flowers acquires 30% stake in FX and crypto exchange LMAX; A $300 million minority investment from JC Flowers values FX and crypto trading venue operator LMAX at $1 billion.
Hayley McDowell – The Trade
US private equity investor JC Flowers has acquired a 30% stake in FX and cryptocurrency exchange operator LMAX Group for $300 million. LMAX confirmed in a statement that the cash acquisition values the London-based group at $1 billion and CEO, David Mercer, will continue to lead the business after retaining a substantial stake in the firm with his management team.


Macron Sets Up Fake-News Agency to Shield Election From Meddling
Ania Nussbaum – Bloomberg
With the presidential election just around the corner, the French government is creating a national agency to fight foreign powers that might try to influence the results through fake news. The cabinet adopted on Tuesday a decree to set up a “service of vigilance and protection against foreign digital interference,” according to its agenda.

Biden order to strengthen hand of small farmers in legal fights
Saul Elbein – The Hill
A new executive order from President Biden targeting anti-competitive business practices is expected to give a major boost to sustainability efforts in the agriculture industry. The wide ranging order is poised to upend the business models of some of the biggest food producers — household names like Tyson, Perdue Pilgrim’s Pride and Sanderson Farms — by potentially making it easier for small farmers to sue them.

Most American adults live in blue states. Most unvaccinated adults live in red ones.
Philip Bump – Washington Post
During a news conference Friday, Centers for Disease Control and Prevention Director Rochelle P. Walensky offered a pointed bit of context for the recent increase in coronavirus cases in the United States.

France Limits Use of Health Pass for Shopping Amid Protests
Albertina Torsoli and William Horobin – Bloomberg
Pass won’t be mandatory to access smaller malls, Le Maire says; Health minister warns of strong resurgence of Covid-19
France will limit the use in shopping malls of a contested digital “health pass” that provides evidence of Covid status, even as the spread of the coronavirus accelerates again.

Political Risk Back on Radar in Emerging-Market Currency Trades
Netty Idayu Ismail and Selcuk Gokoluk – Bloomberg
Citigroup, Deutsche Bank recommend shorting rand after riots; Covid fallout will worsen socio-economic challenges, BofA says
South Africa’s unfolding turmoil is putting emerging-market political risks at the fore, and traders are hunting for currencies vulnerable to political hazards and playing them off against their more stable peers.

US gas exporters face EU methane curbs after carbon tax reprieve; LNG producers’ relief at being excluded from European climate plan set to be shortlived
Derek Brower – FT
US oil and gas exporters have been warned that they face a further tightening of European anti-pollution rules despite energy’s exclusion from a swath of climate proposals introduced in Brussels last week.

EU plan for world’s first carbon border tax provokes trading partners; Russia sharply critical of policy of limiting climate change by imposing cost on imports linked to emissions
Leslie Hook, Max Seddon and Nastassia Astrasheuskaya – FT
The EU’s proposal for a carbon border levy to combat climate change has triggered a sharp response from trading partners led by Russia, while others are considering adapting their climate policies in response.


FCA suspects insider dealing in almost 25% of activity in 2020; That’s higher than the 17% it suspected the year before as traders flocked to home-working during the pandemic
Lucy McNulty – Financial News
The Financial Conduct Authority found examples of possible insider dealing in 21.9% of the activity it monitored in 2020, up from 17.5% in the previous year.

Chair Gensler Announces Composition of Policy Team
The Securities and Exchange Commission today announced the appointments of Corey Klemmer, Adam Large, Mika Morse, Sirimal Mukerjee, and Sai Rao to Chair Gary Gensler’s policy staff, led by the Policy Director Heather Slavkin Corzo.

Why US regulation is failing the cryptocurrency test; America has so many financial rulemakers that sometimes it winds up without rules
Gary Silverman – FT
The US is a funny country. We have so many financial regulators that we sometimes wind up without proper financial regulation. Cryptocurrencies represent the latest example.

ASIC publishes Internal Dispute Resolution data dictionary and glossary ahead of pilot
ASIC has released internal dispute resolution (IDR) reporting documents, which will be tested in a pilot involving financial firms from across relevant industry subsectors in late 2021.

ASIC provides guidance on streamlined external administration lodgements
ASIC has updated Information Sheet 29 External administration – controller appointments and schemes of arrangements – most commonly lodged forms (INFO 29) to help external administrators, controllers and scheme administrators comply with their lodgement and publication requirements following the introduction of three new types of external administration.

Victorian director disqualified from managing companies
Daniel Zeidan of Kinglake, Victoria has been disqualified from managing companies for four years due to his involvement in the failure of three companies.

MyBudget applies for AFS licence following ASIC investigation
Following ASIC’s recent investigation into MyBudget Pty Ltd’s (MyBudget) operating model, MyBudget has applied for an Australian financial services (AFS) licence.

UBS Settles Charges Related to Investments in Complex Exchange-Traded Product; More Than $8 Million Returning to Harmed Investors as Part of Ongoing Risk-Based Initiative
The Securities and Exchange Commission today filed a settled action against UBS Financial Services Inc. for compliance failures relating to sales of a volatility linked exchange-traded product (ETP). This is the sixth matter arising from the Enforcement Division’s ETP Initiative.

ESMA finds NCAs imposed sanctions of EUR8.4 million for MiFID II breaches in 2020
The European Securities and Markets Authority (ESMA), the EU’s Securities Markets Regulator, has published today its third report on the use of sanctions and measures by National Competent Authorities (NCAs) under the Markets in Financial Instruments Directive (MiFID II).

ESMA consults on remuneration requirements under MiFID II
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today launches a consultation on draft ESMA guidelines on certain aspects of the MiFID II remuneration requirements.

REMINDER: Modifications to TRACE Dissemination Protocols for Specified Pool Transactions (MBS) – Effective
As announced in Regulatory Notice 21-02, FINRA is modifying the convention for rounding the original loan-to-value ratio used in the dissemination of transactions in agency pass-through mortgage-backed securities and Small Business Administration (SBA)-backed asset-backed securities traded in specified pool transactions. This change will become effective on Monday, July 26, 2021. On this day, the TRACE RDID Master File will be updated with the security changes.

Guiding principles on design, delivery and disclosure of ESG and sustainable investment funds
We have published a letter to the chairs of authorised fund managers setting out our expectations on the design, delivery and disclosure of environmental, social and governance (ESG) and sustainable investment funds. We receive a high volume of applications for authorisation of funds with a sustainable focus. However, many of these applications are poor-quality and fall below our expectations. We also expect clear and accurate ongoing disclosures to consumers where funds make ESG-related claims.

Investing and Trading

Record Stock Rally Ignores Wall Street’s Phobia About Optimism; Warnings about overly bullish sentiment have been better left unheeded this year. Have times changed?
Caitlin McCabe – WSJ
The latest victim of the rampaging bull market in stocks is the Wall Street maxim that glowing investor sentiment is a sell signal. Throughout 2021, a range of surveys, fund-flow figures and options activity have shown investors big and small to be exceptionally bullish. Yet major U.S. indexes continue to rally to records, putting the Dow Jones Industrial Average up a healthy 13% for 2021.

Hudson River Trading (HRT) Case Study 2021: Explorations into the Firm’s European Trading Operations, US Equity & Equity Option Strategies, Comparative Analysis
PR Newswire
The “2021 Case Study: The Rise of Hudson River Trading (HRT)” company profile has been added to ResearchAndMarkets.com’s offering.

Hedge Funds Are Blindsided by Bond Rally Stumping Wall Street
Cecile Gutscher and Cormac Mullen – Bloomberg
Leveraged fund short positions have been rising for long bonds; U.S. 10-year yield on course to drop for fourth month in a row
Even the fast money has been caught off-guard by the latest leg of a relentless bond rally that’s stumping traders and strategists across Wall Street. Hedge funds have been increasing their bets against longer-dated Treasuries for weeks, positioning for the reflation trade to get back on track as data points to an economic resurgence.

Bonds That Fight Poverty Are Booming in Nations Strafed by Covid
Sydney Maki – Bloomberg
Health crisis underscores need for socially-focused spending; Issuers from EMs sold $15.9 billion this year in social debt
A new weapon is gaining traction in the fight against the economic fallout of Covid-19: Debt sales designed to alleviate suffering.

Wall Street’s New Fear Is That the Economy Has Already Peaked
Eric Lam and Sunil Jagtiani – Bloomberg
Covid spread and price pressures are putting investors on edge; Strategists raise concern that growth estimates look too rosy
Investment strategists are starting to consider a new bearish scenario: the economy has already hit its speed limit. With the ferocious spread of Covid-19’s delta variant and central banks already talking about tighter monetary policy to bring inflation under control, there’s a growing sense of worry that financial markets have become too optimistic.

Environmental, Social and Corporate Governance

Hedge Funds Short ESG Market Darling Credito Real; Payroll lender won over foreign investors by promising to lend to Mexico’s underbanked poor, but some now question its financial reporting.
Matt Wirz – WSJ
Mexico’s largest payroll lender has had a tough year. Wall Street short sellers are betting it’s going to get worse. Credito Real SA CREAL 2.69% B de CV raised money from bond funds and the U.S. government in recent years, using its status as a lender to Mexico’s poor to tap into the booming trend of socially conscious investing. Hedge funds including Millennium Management LLC and Bybrook Capital LLP have questioned the company’s accounting and wagered that prices of its roughly $2 billion of bonds will tumble, according to people familiar with the matter. Millennium and Bybrook declined to comment

Could Banking Magic Save Cities From Climate Disaster?
Alex Yablon – NY Times
A flawed but historically robust emergency response to the Covid-19 pandemic by Congress and our nation’s central bank helped America avoid the second Great Depression that so many prominent economists feared. Still, few progressives are declaring mission accomplished: The Biden administration and Democratic legislators are mired in political trench warfare over how to pay for desperately needed infrastructure and a climate change package.

The private equity backlash against ESG; Why buyouts may be fuelled by a reaction against right-thinking public companies
Patrick Jenkins – FT
Call it Newton’s law of corporate ownership. As listed companies come under increasing investor pressure to act on everything from executive pay to carbon emissions, a reaction against those constraints seems to be fuelling a spate of buyouts by private equity firms.


Credit Suisse Is Losing Mideast Staff Over a Toxic Work Culture; The executive who built a regional wealth powerhouse also fostered a brutal workplace, current and former employees say.
Marion Halftermeyer, Archana Narayanan – Bloomberg
Bruno Daher, Credit Suisse Group AG’s top executive in the Middle East, had an unusual message at a May sales meeting: an apology. He was sorry about having said earlier that he’d put a gun to his bankers’ heads if they didn’t shape up. He tends to speak in metaphors, he explained.

Bill Ackman abandons Spac plan to take $4bn stake in Universal Music; Hedge fund manager changes course to buy into world’s biggest music label after SEC intervention
Arash Massoudi and Oliver Ralph, and Leila Abboud – FT
Bill Ackman’s special purpose acquisition company has abandoned plans to buy a $4bn stake in Universal Music Group after a backlash from regulators and investors.

FTSE Russell to review $9tn US index shake-up; Massive concentration of trading around rebalancing prompts review
Steve Johnson – FT
FTSE Russell has launched an internal review into the annual rebalancing frequency of its widely followed family of US stock indices. The benchmarks, which are followed by about $9tn of investors’ money, currently only are reconstituted once a year.


China Signals End to $2 Trillion U.S. Listings Juggernaut
Sofia Horta e Costa and Richard Frost – Bloomberg
For two decades Chinese tech firms have flocked to the U.S. stock market, drawn by a friendly regulatory environment and a vast pool of capital eager to invest in one of the world’s fastest-growing economies. Now, the juggernaut behind hundreds of companies worth $2 trillion appears stopped in its tracks.

Top China Fund Manager Bets on Tech as Beijing Tightens Grip
Bloomberg News
China Asset Management completes fundraising for new product; Share price declines are a buying opportunity: Tu Huanyu
One of China’s largest mutual fund companies is betting on the nation’s internet giants, just as a clampdown by Beijing sends shockwaves through the sector.

India tech IPO boom to provide crucial test of investor appetite; Flurry of listings including Zomato comes as Beijing cracks down on China’s internet groups
Stephanie Findlay and Benjamin Parkin and Mercedes Ruehl – FT
Food delivery app Zomato has kicked off a flurry of stock market debuts by Indian start-ups that hope crackdowns on Chinese technology groups could prompt global investors to turn their attention to India’s tech offerings.

Norway’s prime minister Erna Solberg says Oslo remains committed to oil and gas; Future of fossil fuel industry will be heavily debated ahead of September’s elections
Richard Milne – FT
Norway’s prime minister insisted the Scandinavian country would continue to drill for oil and gas, ahead of a re-election campaign in which the future of the fossil fuel industry will be intensely debated.


As the Press Weakens, So Does Democracy
Charles M. Blow – NY Times
I came to The New York Times in 1992, 29 years ago this summer, as the first intern in its graphics department. I arrived in Manhattan, a little Black boy from a hick town in Louisiana, and it blew my mind. In those first months I saw how one of the best newsrooms in the country covered some of the biggest stories of the era, and it shaped me as a journalist and in my reverence for the invaluable role journalists play in society.

John Lothian Newsletter

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Past JLN Newsletters

The Spread – July 30, 2021

The Spread – July 30, 2021

Earnings season in full bloom; Options lead year-to-date derivatives volume; Robinhood’s IPO; John gets real with Get Real VR: Conflicting factors underpin volatility; Cboe cleared for fall European competition; and the Cboe Options Institute’s Kevin Davitt talks about vega in this week’s “Term of the Week.”

The Four Biggest Ways That Robinhood Changed Investing

The Four Biggest Ways That Robinhood Changed Investing

First Read $51,906/$300,000 (17.3%) ++++ Options Continue to Lead Derivatives Volume Uptrend, but Q2 Lags, FIA Data Show Suzanne Cosgrove - John Lothian News Global futures and options volumes continued to trend higher in the first half of 2021 compared to both 2020...

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