Why trade couldn’t buy peace

Sep 23, 2022

First Read

Hits & Takes
John Lothian & JLN Staff

Thirty-three years ago today, Cheryl Howard and I exchanged personalized wedding vows at the Glenview Community Church in front of family and friends and became man and wife. It is hard to believe that 1989 has become 2022 so quickly. Life happens fast.

Today is a big day for Doug Ashburn, Steven Brodsky and Britannica with the launch of the Britannica Money portal. Britannica Money is the one stop shop for information and commentary about retirement, investing, and household finance, without the jargon or agenda. And congratulations to Doug, who has been promoted to executive editor, Britannica Money. Steve helped find and recruit Doug to the Britannica team. Britannica Money is open for business.

It is time to go through your sock drawer and pull out all your old paper banknotes from your trip to London and the UK and to turn them in now. There is only a week left for this paper currency to have any value. After September 30, “almost £6 billion of old £50 notes and more than £5 billion of the £20 ones will no longer be accepted by UK businesses, the Bank of England said Friday,” Bloomberg reported. Your paper pounds will no longer be legal tender, but they will make good wallpaper.

The U.S. Securities and Exchange Commission extended the application deadline for its spring 2023 SEC Scholars paid internship program to Sep 30. They have openings for regional offices and headquarter offices: Regional Office Law, Headquarters Law, Regional Office Business and Headquarters Business.

Gary DeWaal and Dan Davis of Katten are out with a new commentary titled “CFTC Warns DeFi Traders: Exercise of Governance Tokens Could Result in Personal Liability for Illegal Activities of DeFi Protocol.”

CME Group’s CME Term SOFR “is now referenced in revolving credit facilities worth more than $2 trillion.”

On October 4, Marex Sugar is holding its fifth London Sugar Symposium. For information on this event, contact Gurdev Gill at ggill@marex.com

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

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In conjunction with Climate Week NYC, FTSE Russell has published two new research papers: Green equity exposure in a 1.5°C scenario: Applying climate investment trajectories with green revenues and Decarbonization in equity benchmarks: Smoke still rising. ~SR

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MWE SHORT: Paul Georgy – Your Future Starts with You
JohnLothianNews.com

In this video from MarketsWiki Education’s World of Opportunity event in Chicago, Paul Georgy, CEO of Allendale, breaks down what it takes to be successful in the futures business through the lens of his career. Georgy started out in the purebred cattle industry, but it went belly up after interest rates went higher and tax laws changed. After a few years of struggling as a commodity broker, Georgy and a friend started their own introducing broker business. It gave him the opportunity to grow as well as be creative — two keys to prosperity in today’s futures markets.

Watch the video »

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4-Day Workweek Brings No Loss of Productivity, Companies in Experiment Say
Jenny Gross – The New York Times
Most of the companies participating in a four-day workweek pilot program in Britain said they had seen no loss of productivity during the experiment, and in some cases had seen a significant improvement, according to a survey of participants published on Wednesday. Nearly halfway into the six-month trial, in which employees at 73 companies get a paid day off weekly, 35 of the 41 companies that responded to a survey said they were “likely” or “extremely likely” to consider continuing the four-day workweek beyond the end of the trial in late November. All but two of the 41 companies said productivity was either the same or had improved. Remarkably, six companies said productivity had significantly improved.
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****** I have been on a seven-day workweek for so long, I don’t even know what this means.~JJL

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Success at Work Is Warped by Your Co-Workers’ Salaries; There soon could be pay-transparency laws from Wall Street to Silicon Valley. What happens when you know more about what your colleagues make?
Ben Cohen – The Wall Street Journal
Like most people with regular jobs that don’t require wearing skates to work, professional hockey players had no idea how much money their colleagues made—until one morning in 1990 when a newspaper published the salary of everyone in the National Hockey League. It was an extreme case of a topic that captivates economists: pay transparency. So not long ago, intrigued by the consequences of that overnight shock, a researcher decided to exploit this natural experiment hiding in plain sight. It led to insights that have never been so relevant about how one industry’s wage disclosure affected the performance of those employees and their entire teams. Now a version of what happened in hockey is on the verge of happening across the U.S.
/jlne.ws/3Urr8bL

****** Is there such a thing as too much information?~JJL

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Are commission-fee brokerages ripping you off? The SEC doesn’t think so
Julie Hyman – Yahoo Finance
Who else is sick of talking about the Fed? Of course, the Federal Reserve and its battle against inflation using higher interest rates is vitally important. But I need a break. So, on to another crucial question: Are zero-commission brokerages ripping you off? The Securities and Exchange Commission is apparently deciding they are not — or at least that the SEC isn’t going to do anything about it even if they are. Bloomberg reports the agency has decided not to ban payment for order flow, known as PFOF. That’s a practice in which brokerages process customers’ trades through wholesalers, in a way that critics say saddle individual traders with hidden fees.
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****** See no evil.~JJL

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Thursday’s Top Three
Our top story Thursday was a tie between Ken Griffin moved Citadel out of Chicago after colleague was robbed at gunpoint: report, from The New York Post and Jamie Dimon calls crypto tokens ‘decentralized Ponzi schemes’, from Yahoo! Finance. Second was Inside a college student’s ‘abusive’ summer from hell on Wall Street, from Insider, which was the top story Wednesday. Third was the LinkedIn page for Kate Lahey, who was just promoted to lead project manager at the CME Group.

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MarketsWiki Stats
27,011 pages; 240,851 edits
MarketsWiki Statistics

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Lead Stories

Why trade couldn’t buy peace; We thought globalisation was immune from geopolitical risk. We were wrong
John Plender – Financial Times
“The story of the human race is war,” said Winston Churchill. “Except for brief and precarious interludes, there has never been peace in the world; and before history began, murderous strife was universal and unending.” In recent decades, policymakers and business leaders who attended gatherings at Davos and had the ears of western leaders were inclined to think otherwise. After the fall of the Berlin Wall in 1989, a near-consensus prevailed among them that peace was the natural condition of the developed world and that globalisation was immune from geopolitical risk.
/jlne.ws/3LAQos3

How to deal with the problem of ‘submerging markets’; A global effort to mitigate the effects of food insecurity, currency weakness and rising debt is essential
Soofian Zuberi – Financial Times
The toxic trifecta of soaring food and energy prices, coupled with the threat of drought, is having a severe impact on a number of developing nations. Several countries commonly referred to as emerging markets could perhaps be better described as “submerging markets”. Sri Lanka, where frustrated citizens stormed the presidential palace in July, could be merely the opening act in a wave of instability across the developing world. In 2015 the G7 made a commitment (reiterated in 2022) to lift over 500mn people out of hunger and malnutrition by 2030. At this point, however, we appear to be going in the opposite direction. The World Food Programme predicts that over 320mn people are at risk of acute hunger.
/jlne.ws/3ffK6Sv

FTX was in talks with FCA about crypto licence before watchdog’s warning; Digital asset exchange’s chief Sam Bankman-Fried says group was ‘surprised’ by UK regulator’s action
Joshua Oliver – Financial Times
The Financial Conduct Authority’s warning last week against FTX came as the cryptocurrency exchange was trying to secure a UK licence, setting up fresh tensions between the market watchdog and offshore crypto players. The FCA last Friday said the Bahamas-based crypto asset platform run by Sam Bankman-Fried was “targeting people in the UK” without authorisation and warned consumers against dealing with the company.
/jlne.ws/3R3FdJn

CFTC Penalizes Blockchain Protocol $250K, Files Action Against Successor DAO
Nelson Wang – CoinDesk
The Commodity Futures Trading Commission has issued an order filing and settling charges against blockchain software protocol bZeroX and its founders, the CFTC announced in a press release Thursday. The order penalizes the protocol and its founders Tom Bean and Kyle Kistner $250,000 for offering illegal, off-exchange trading of digital assets, registration violations and neglecting to adopt a customer ID program required by the Bank Secrecy Act compliance program.
/jlne.ws/3SqgGzb

The New York Stock Exchange and Tokyo Stock Exchange Announce New Collaboration to Support Cross-Border Investment Between the U.S. and Japan
ICE
The New York Stock Exchange, part of Intercontinental Exchange, Inc. (NYSE: ICE), and Tokyo Stock Exchange, Inc. (TSE) today announced a new agreement to support cross-border investment between the U.S. and Japan by collaborating in areas including product development, marketing, and information sharing. The two exchanges signed the memorandum during the visit of Japanese Prime Minister Fumio Kishida to the NYSE. The agreement was finalized in a ceremony on the iconic NYSE trading floor. The NYSE and TSE have developed a cooperative relationship over decades, including the signing of an agreement on cooperation in February 2000 and the establishment of a strategic alliance in January 2007.
/jlne.ws/3dvuGct

FT Cryptofinance: Kraken’s Jesse Powell joins list of crypto resignations; Plus, censorship woes for ethereum and an . . . interesting consumer warning on Binance
Scott Chipolina – Financial Times
The crypto industry isn’t as young as its supporters would have you believe. It’s been busy growing up with a whole host of C-suite names that have become synonymous with the brand of crypto itself. But the market’s near-unprecedented crash earlier this year didn’t just cost thousands of people their jobs (here’s to you, Coinbase, Gemini, Crypto.com and several others), its effects are now creeping over some of crypto’s most vocal and controversial personalities.
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Republicans to bank CEOs: ‘Stop embracing liberal ESG agenda’
Reuters
The heads of the nation’s largest banks faced pointed criticism on Thursday from Republicans complaining the firms are inappropriately taking liberal stances on social and cultural issues. Senator Pat Toomey, the senior Republican on the Senate Banking Committee, urged banks to stop “embracing a liberal ESG agenda that harms America,” as chief executives appeared before Congress for an oversight hearing. Toomey, frequently a bank ally, who has opposed stricter industry rules, argued firms are out of bounds when they weigh in on non-banking issues like guns and abortion.
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To PFOF or not to PFOF? Europe vs the US; US and European regulators look set to be taking starkly different stances on the contentious practice of paying for order flow.
Annabel Smith – The Trade
Regulators in the US and Europe have continued to assess the practice of payment for order flow (PFOF) throughout the course of this year following canvassing from participants who suggest the contentious process harms best execution. On both sides of the channel, it was presumed that following the ongoing discussions being held across the globe, the practice was set to have some form of limitation or ban put onto it.
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Crypto exchange Kraken has no U.S. SEC registration plans, says incoming CEO
Hannah Lang – Reuters
Cryptocurrency exchange Kraken has no plans to delist tokens the U.S. Securities and Exchange Commission has labeled as securities, or to register with the agency as a market intermediary, said incoming chief executive officer Dave Ripley on Thursday. The stance of the San Francisco-based platform, which says it has more than nine million clients, underscores the challenges the securities regulator is facing in its effort to rein in the crypto industry.
/jlne.ws/3SaCvTG

Turkish Small Investors ‘Robbed’ in Stocks Rout, Opposition Says
Taylan Bilgic – Bloomberg
Turkey’s main opposition leader said a recent rout in share prices suggested “the biggest stock manipulation in Turkish history.” “Small investors are being robbed,” Kemal Kilicdaroglu, leader of the Republican People’s Party, said at a speech in Izmir on Friday, without detailing his claims. He urged the Capital Markets Board to “carry out its duty” and “wipe out manipulators.”
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Record 38% Plunge in Bond ETF Leaves Bearish Traders Exhausted; TLT short-interest at all-time low despite abysmal performance; Investors ‘gun shy’ on shorting Treasuries: Contopoulos
Katherine Greifeld – Bloomberg
A brutal wipeout in a $25 billion bond exchange-traded fund has investors wagering that the worst is over on the eve of a crucial Federal Reserve decision. The price of the iShares 20+ Year Treasury Bond ETF (ticker TLT) has plunged 38% from its August 2020 peak in the biggest drawdown since the fund’s 2002 inception, according to Bloomberg data. Meanwhile, IHS Markit Ltd. data show that short interest as a percentage of TLT’s shares outstanding dropped to a record low of 0.15% on Monday, after reaching 13% earlier this year.
/jlne.ws/3xHzXnN

Pandemic Unemployment Fraud Estimate Rises to $45.6 Billion; A federal watchdog tripled its earlier estimate of benefits that the U.S. government paid to people who weren’t entitled to them.
Niraj Chokshi – The New York Times
A federal watchdog investigating the distribution of pandemic relief funds has tripled its estimate of the amount of money paid out in unemployment insurance that can be attributed to certain forms of fraud. The watchdog, the office of the inspector general of the Labor Department, previously attributed about $16 billion to duplicate payments or payments made to dead people, individuals with suspicious email accounts or federal prisoners. The office now says the federal government probably made $45.6 billion in such payments. Investigations by the inspector general’s office have led to criminal charges against more than 1,000 people accused of fraudulently receiving unemployment insurance benefits during the pandemic, the office said in a statement on Thursday.
/jlne.ws/3C5cfoq

Credit Suisse shares hit record low amid fears of a capital raise; The Swiss bank is under pressure to revamp its business and restore investor confidence
Owen Walker – Financial Times
Credit Suisse shares tumbled to a record low on Friday, taking their decline this year to more than 50 per cent, following a report that the embattled bank was sounding out investors for a new capital raise. Investors were responding to an article published by Reuters on Thursday afternoon that said the bank had been contacting investors to gauge interest in a fresh capital raise and that it was considering pulling its investment bank out of the US.
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A Day After Fed Raises Rates, Reverse Repos Hit New Record; The New York Fed says financial firms have parked $2.359 trillion at the central bank
Michael S. Derby – The Wall Street Journal
A wall of cash is continuing to flow into a central bank facility designed to help control short-term interest rates, even as officials expect activity there to decline over time. On Thursday, the Federal Reserve Bank of New York said that a day after the U.S. central bank pushed up its short-term target rate by a large 0.75 percentage point to between 3% and 3.25%, money-market funds and others parked a record $2.359 trillion at the New York Fed’s reverse repo facility. The facility last saw a record inflow on June 30, at $2.329 trillion. That surge came at the end of a quarter, often a time where the reverse repo facility pulls in a significant amount of money due to temporary market factors.
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Ukraine Invasion

4 things to watch as Putin escalates in Ukraine
Rick Newman – Yahoo! Finance
Russian President Vladimir Putin is bringing his war in Ukraine home. It’s a desperate move that could imperil Putin’s control of Russia and have momentous implications for Ukraine’s US and European allies. Putin announced a “partial mobilization” policy on Sept. 21, allowing the government to call some 300,000 Russians with military experience back into service. Since Russia invaded Ukraine on Feb. 24, Putin has avoided any kind of mobilization that would force ordinary Russians into uniform, relying on a peacetime military staffed with paid enlistees, career professionals, and an assortment of others.
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Ukraine Prisoner Exchange Sparks Backlash in Russia; Some Russian supporters of war in Ukraine have been vocal about what they describe as Kremlin’s battlefield failures
Isabel Coles – The Wall Street Journal
A prisoner exchange between Russia and Ukraine that included senior Ukrainian commanders was hailed as a victory by Kyiv but provoked criticism among nationalists in Russia who questioned the decision to release them. The prisoner swap, brokered by Turkey, was a rare diplomatic breakthrough in the war, which has shifted gears since Ukrainian forces compelled Russia to retreat from a large area in the east of the country. In response, Russian President Vladimir Putin this week ordered reservists to mobilize and pledged to use all the instruments at his disposal to prevail, hinting at nuclear strikes.
/jlne.ws/3xMfXAv

Russia’s Historic 100 Million-Ton Wheat Crop Piles Up at Home
Áine Quinn – Bloomberg
Russia’s wheat harvest could reach a historic 100 million tons, according to consultant SovEcon, with the commodity piling up at home as the nation struggles to export large volumes. Farmers across the country are finishing up the bountiful harvest after good growing conditions throughout the summer. The huge supply in the world’s top shipper would usually help to bring down world prices. But so far this season, government export taxes and logistical issues from its war in Ukraine are keeping more grain than usual at home.
/jlne.ws/3R4ZjCX

Putin’s Conscripts Won’t Win His War But May Drag It Out; From training quality to morale and arms, plan seen wanting; Recruits may create space for nuclear threats, energy tensions
Marc Champion – Bloomberg
Russian President Vladimir Putin’s move to draft in 300,000 reservists to reinforce his troops in Ukraine is likely to extend the war rather than influence its outcome. Still, it could buy him time to execute a wider strategy — including exacerbating Europe’s energy crisis and threatening a nuclear strike on unspecified targets — aimed at undermining foreign military and financial support for Kyiv’s war effort.
/jlne.ws/3Bz8VQO

Zelensky Asks Businesses to Join a ‘Marshall Plan’ for Ukraine; Ukraine estimates it would cost $750 billion to rebuild the war-battered country.
Andrew Ross Sorkin, Bernhard Warner, Vivian Giang, Sarah Kessler, Stephen Gandel, Michael J. de la Merced, Lauren Hirsch and Ephrat Livni – The New York Times
This month, President Volodymyr Zelensky of Ukraine announced that the country had assembled a team of bankers and researchers to solicit investments from private businesses to help pay for Ukraine’s recovery. Zelensky said the team had identified more than $400 billion of potential investment for what is effectively a Marshall Plan for Ukraine, the U.S. program that provided aid to Western Europe after World War II. Yesterday, DealBook spoke with Ukraine’s prime minister, Denys Shmyhal, about what it would take to rebuild the country battered by Russia’s war.
/jlne.ws/3SwJHtn

Exchanges, OTC and Clearing

EEX Group and IncubEx Extend Cooperation to Further Develop Global Environmental Markets
EEX Group and IncubEx
EEX Group and IncubEx announced today a new cooperation agreement, extending their collaboration to grow and expand listed environmental markets on EEX and Nodal Exchange. The long-term agreement extends the collaboration and builds on the significant progress made since the initial cooperation between EEX Group and IncubEx which increased the environmental product range and liquidity in European and North American markets.
/jlne.ws/3fcKaT3

StoneX Offers Clients Access to Environmental Options & Futures Contracts via Nodal Exchange
CISION
StoneX Group Inc. (NASDAQ: SNEX) today announced that clients of its subsidiary StoneX Financial Inc. can now access the full suite of physically deliverable environmental futures and options contracts via the Nodal Exchange, enabling StoneX clients to implement and sustain environmentally conscious business practices, effectively manage risk, and maintain regulatory compliance. These contracts span markets that include sustainable energy, carbon emissions, renewable fuels, and pollutants such as sulfur dioxide and nitrogen oxide.
/jlne.ws/3SrUK6Z

Borsa Italiana simplifies rules to streamline process of going public in Italy
Euronext
The number of documents to be filed has been reduced and the listing process has been simplified to enhance the overall attractiveness of public listing. This reform is the result of the commitment of Borsa Italiana to the competitiveness of Italian financial markets represented in the Green Paper published by the Italian Ministry of Economy and Finance. This simplification of rules is fully aligned with Euronext’s strategy to make the listing process as attractive, competitive and efficient as possible in Europe, in particular across the seven listing venues it operates in Amsterdam, Brussels, Dublin, Oslo, Lisbon, Milan and Paris. Borsa Italiana, part of the Euronext Group, announced today the simplification of its listing rules, to the benefit of companies aiming to raise capital on its regulated market, Euronext Milan. Driven by the integration of Borsa Italiana into Euronext, the changes to Euronext Milan’s listing rules align the listing process in Italy with European and global standards.
/jlne.ws/3R9wDZw

The New York Stock Exchange and Tokyo Stock Exchange Announce New Collaboration to Support Cross-Border Investment Between the U.S. and Japan
NYSE
The New York Stock Exchange, part of Intercontinental Exchange, Inc. (NYSE: ICE), and Tokyo Stock Exchange, Inc. (TSE) today announced a new agreement to support cross-border investment between the U.S. and Japan by collaborating in areas including product development, marketing, and information sharing.
/jlne.ws/3y92dQP

Forfeiture of Unclaimed Interim Dividend for 2016
HKEX
On 5 August 2022, Hong Kong Exchanges and Clearing Limited (“HKEX”) announced that, pursuant to HKEX’s Articles of Association, the interim dividend for 2016 of HK$2.21 per share, payable on 23 September 2016 and remaining unclaimed on 23 September 2022, would be forfeited and would revert to HKEX. Accordingly, the unclaimed interim dividend for 2016 amounting to HK$11,040,105.05 is forfeited and reverts to HKEX today.
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Enhancement to the Sponsored Settlement Member Model
HKEX
OTC Clearing Hong Kong Limited (“OTC Clear”) is pleased to announce that regulatory approval has been obtained for the enhancement to the Sponsored Settlement Member (“SSM”) model. Effective from 30 September 2022, OTC Clear will enhance the existing SSM model to allow Clearing Members (“CMs”) incorporated in England and France, in addition to CMs incorporated in Hong Kong, to become sponsoring CMs of SSM Clients for clearing service at OTC Clear, by entering into the SSM Tripartite Agreement. The amendments to the Clearing Rules and Clearing Procedures will come into effect on 30 September 2022 and can be downloaded from the HKEX website.
/jlne.ws/3BC2JaN

Osaka Exchange and Tokyo Commodity Exchange Commence Holiday Trading
JPX
Osaka Exchange (OSE) and Tokyo Commodity Exchange (TOCOM) today successfully launched Holiday Trading, on schedule. Iwanaga Moriyuki, President and CEO of Osaka Exchange, Inc. (and Representative Director and Chair of Tokyo Commodity Exchange, Inc.), commented: I am pleased to announce that the JPX derivative markets, under OSE and TOCOM, have successfully launched holiday trading today. More than two years have passed since the Working Group for the introduction of holiday trading was established in January 2020 and discussions began. It is thanks to the cooperation of our trading participants and other related parties that we were able to make this day a reality. I would like to express my deepest gratitude to all those involved.
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Nasdaq to Hold Third Quarter 2022 Investor Conference Call
Nasdaq
Nasdaq (Nasdaq: NDAQ) has scheduled its Third Quarter 2022 financial results announcement.
WHO:Nasdaq’s CEO, CFO, and additional members of its senior management team
WHAT: Review Nasdaq’s Third Quarter 2022 financial results
WHEN: Wednesday, October 19, 2022
Results Call: 8:00 AM Eastern. Senior management will be available for questions from the investment community following prepared remarks.
/jlne.ws/3qXFQtz

Joint Press Release for Market Data of the securities listed or traded in India NSE, BSE and MSE
NSE
In view of the larger interest of investors and various market participants who use the daily price related information like open price, day’s high, day’s low, closing price etc. of securities for their downstream processes, the Exchanges have jointly decided to provide such information on their website as early as possible after the close of markets.
/jlne.ws/3BGLuVS

Historical/Referential Market Data Issue – Resolved – Missing files have been posted.
NYSE
NYSE advised customers that due to a processing issue, the NYSE Group Security Master Equity files and NYSE Group Closing Price files for 09/21/2022 were delayed in posting to the NYSE SFTP platform. The files have been reposted now. Please adjust your systems accordingly. We apologize for any inconvenience this may have caused.
/jlne.ws/3BEngeS

Shanghai International Energy Exchange has released its Circular on Approving Rubberland Products Company Limited to Change TSR 20 Product Belt Design
SFX
Shanghai International Energy Exchange has released its Circular on Approving Rubberland Products Company Limited to Change TSR 20 Product Belt Design as follows: Recently, the Shanghai International Energy Exchange (hereinafter referred to as “INE”) has received the application materials of Rubberland Products Company Limited.
/jlne.ws/3dA0U68

CFTC Staff Issues No-Action Letter to Taiwan Futures Exchange
TAIFEX
On 15th September 2022, the Commodity Futures Trading Commission (CFTC) issued No-Action Relief to Taiwan Futures Exchange (TAIFEX) for its swaps central clearing services. The relief allows TAIFEX to clear swaps for the proprietary trades of its clearing members that are U.S. persons or affiliates of U.S. persons without registering as a derivatives clearing organization (DCO) as required by the Commodity Exchange Act (CEA). TAIFEX has to report to a Swap Data Repository (SDR) data regarding the two swaps resulting from the novation of the original swap that had been submitted to TAIFEX for clearing. TAIFEX must also report the termination of the swap accepted for clearing by TAIFEX to the SDR to which the swap was originally reported. The No-Action Relief shall expire at 15th September 2023. If TAIFEX has not obtained the exemption from registration as a DCO before the expiration date, it will apply to the CFTC for an extension of the No-Action Relief to continue providing U.S. financial institutions with OTC derivatives central clearing services.
/jlne.ws/3LAWgkQ

Fintech

AccessFintech secures $60 million in Series C with investments from BNY Mellon, JP Morgan and Citi; Latest funding round brings the total capital raised by the fintech to $97 million since 2018.
Wesley Bray – The Trade
AccessFintech has successfully raised $60 million in a Series C funding round which saw a first-time investment from BNY Mellon along with further backing from JP Morgan and Citi.= Additional investment was secured from Bank of America, Goldman Sachs and Dawn Capital.
/jlne.ws/3S8LAwt

Fireside Friday… with Liquidnet’s Gareth Exton; The TRADE sits down with head of execution and quantitative services for EMEA at Liquidnet, Gareth Exton, to explore buy-side trading behaviour in current market conditions and the likeliness of continued regulatory divergence post-Brexit.
Annabel Smith – The Trade
How has buy-side electronic and quantitative trading behaviour changed in light of current market conditions? One of the biggest challenges facing traders in the market is the lack of liquidity, particularly during continuous trading, a theme we heard continually during the recent ITF conference in Lisbon. During September, average daily on exchange volumes have been 35% lower than those seen in Q1 2022. With lower volumes the natural reaction is to become more passive in trading styles, utilising more POV or VWAP type strategies. These strategies help spread the risk of strong intraday price movements and give traders time to react to market events. This low appetite to take risk is also evident in the smaller number of very large blocks, i.e., those >20x large in scale (LiS), being executed in the market. During Q3 2022, the notional traded of blocks >20x LiS has fallen approximately 65% vs Q1 2022.
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Cybersecurity

Createathon 2022 – Banishing Barriers to Bridge the Gap Between FINRA Communities
FINRA.org
At FINRA, we’ve built a framework and cultivated a mindset, a culture for innovation and collaboration. It not only helps ensure the securities industry follows the rules, but also it empowers our employees with projects, programs, and opportunities so they can be the best version of themselves. That allows them to build, grow, and shape their career as they protect investors.
/jlne.ws/3BHuhvi

Drawbridge Wins ‘Best Cyber-Security Service’ At The 2022 With Intelligence HFM US Quant Services Awards
Drawbridge
Drawbridge, a premier provider of cybersecurity software and solutions to the alternative investment industry, today announced it has been selected as ‘Best Cyber-Security Solution’ at the With Intelligence HFM US Quant Services Awards 2022. The With Intelligence HFM US Quant Services Awards celebrate the best in quant fund product and service provision in the US, recognizing exceptional innovation, customer service and business performance over the past 12 months. This is the fourth major industry award for Drawbridge in the last six months as the company was recently named ‘Best Cyber-Security Solution’ at the 2021 HFM European Quant Services Awards, ‘Best Cyber Security Provider’ at the 2021 Private Equity Wire US Awards and ‘Best Cyber Security Firm’ at the 2021 AltCredit European Performance & Services Awards.
/jlne.ws/3fcKGjX

New SEC Cybersecurity Rules Could Affect Private Companies Too
Chad Kime – eSecurityPlanet
For years, the U.S. Securities and Exchange Commission (SEC) strongly advised public companies to improve their cybersecurity. However, after minimal corporate adoption of stronger cybersecurity, the SEC has drafted rules to require more formal cybersecurity reporting and disclosure.
/jlne.ws/3LBPI5s

CISA and NSA Publish Joint Cybersecurity Advisory on Control System Defense
CISA
CISA and the National Security Agency (NSA) have published a joint cybersecurity advisory about control system defense for operational technology (OT) and industrial control systems (ICSs). Control System Defense: Know the Opponent is intended to provide critical infrastructure owners and operators with an understanding of the tactics, techniques, and procedures (TTPs) used by malicious cyber actors. This advisory builds on NSA and CISA 2021 guidance provided to stop malicious ICS activity against connect OT, and 2020 guidance to reduce OT exposure.
/jlne.ws/3r2aou0

Industry Objections Spur Changes to Cybersecurity Provisions in Defense Bill
Mariam Baksh – Nextgov.com
An important set of lawmakers trying to advance U.S. cybersecurity policy in this year’s National Defense Authorization Act—with implications for agencies’ procurement and risk management—is reworking their initial proposals after industry complaints, according to one of the lawmakers.
/jlne.ws/3R1Ny0l

Senators introduce a bill to protect open-source software
Tim Starks – The Washington Post
When researchers discovered a vulnerability in the ubiquitous open-source log4j system last year that could’ve affected hundreds of millions of devices, the executive branch snapped into action and major tech companies huddled with the White House.
/jlne.ws/3C6rcqh

Cryptocurrencies

Jamie Dimon told Congress that crypto is nothing but a ‘decentralized Ponzi scheme’
Chloe Taylor – FORTUNE
Cryptocurrencies are dangerous “Ponzi schemes” that put billions of dollars at risk every year, JPMorgan CEO Jamie Dimon declared in a scathing review of the volatile digital assets. In congressional testimony on Wednesday, Dimon referred to himself as “a major skeptic” on cryptocurrencies like Bitcoin. “They are decentralized Ponzi schemes, and the notion that’s good for anybody is unbelievable,” he told lawmakers, calling Bitcoin and other cryptocurrencies “dangerous.”
/jlne.ws/3LBZpkw

Binance Hired Compliance SVP From Rival Crypto Exchange Kraken
Jamie Crawley – CoinDesk
Cryptocurrency exchange Binance hired Steven Christie as its senior vice president (SVP) of compliance from rival Kraken, according to Binance founder Changpeng “CZ” Zhao. CZ tweeted that Christie joined Binance “a few months ago” and that the firm is still planning to hire “a few hundred more compliance people.” Christie leads a 750-strong team at the world’s largest cryptocurrency exchange which has been keen to demonstrate its commitment to compliance since receiving a string of warnings from central banks and other regulatory bodies last year.
/jlne.ws/3S97vDK

IRS Wins Order for SFOX Customer Data in Crypto Tax Push; M.Y. Safra must produce data on those who may have dodged IRS; US seeking to crack down on crypto holders who don’t pay taxes
David Voreacos – Bloomberg
M.Y. Safra Bank must produce information to the US Internal Revenue Service about customers who may have failed to pay taxes on cryptocurrency transactions through prime dealer SFOX Inc., a US judge ruled Thursday.
/jlne.ws/3S86LPj

Assessing China’s Crypto Ban One Year Later; The ripple effects caused throughout the industry are remembered on the first anniversary of China’s digital asset ban.
Victoria Vergolina – Bloomberg
This September marks the one-year anniversary of China declaring that crypto transactions were effectively illegal. At the time, the decision triggered sharp declines in crypto markets, even though it wasn’t entirely unexpected. It wasn’t the first time that China had sought to crack down on crypto — that’s been happening in one form or another in the country since at least 2013.
/jlne.ws/3r27R3e

Shareholders in Bankrupt Crypto Lender Celsius Seek ‘Fiduciary’; Lawyers say panel should represent holders of preferred shares; Crypto rout contributed to Celsius bankruptcy filing in July
Suvashree Ghosh – Bloomberg
Shareholders in cryptocurrency lender Celsius Network Ltd. filed a motion to set up a committee to ensure they are adequately represented in the company’s bankruptcy proceedings. Series B preferred shareholders “urgently require their own fiduciary,” according to the filing Thursday by lawyers for a group of equity owners.
/jlne.ws/3R8bBdR

Singapore’s DBS Expands Crypto Trading for Wealthier Clients; Bank is allowing greater use of DBS Digital Exchange platform; Qualified clients can trade Bitcoin, Bitcoin Cash, Ether, XRP
Natalie Ching Mun Choy – Bloomberg
DBS Group Holdings Ltd., Singapore’s largest bank, has widened access to a crypto trading service on its members-only digital exchange. The step comes as the bank’s wealth clients are increasingly choosing self-directed investment routes, DBS said in a statement Friday.
/jlne.ws/3xOO4rM

The Crypto Winter’s Latest Casualty Is Data Center Firm Compute North; Company listed as much as $500 million of debt in petition; Compute North provides data center services for crypto miners
Steven Church and David Pan – Bloomberg
Compute North Holdings Inc., which provides data center services for cryptocurrency miners and blockchain companies, filed for bankruptcy in Texas on Thursday. Based in Eden Prairie, Minnesota, Compute North said it owed as much as $500 million to at least 200 creditors. The company’s assets are worth between $100 million and $500 million, according to its Chapter 11 petition.
/jlne.ws/3LCFvpu

INX Debuts Trading Platform for SEC-Registered Security Tokens and Cryptocurrencies
Michael Bellusci – CoinDesk
The INX Digital Company has created a platform intended to allow trading of Securities and Exchange Commission-registered security tokens along with various cryptocurrencies. Dubbed INX One, the product will be open to both retail and institutional investors, and will also include services for issuers seeking to raise capital via a security token offering. In 2021, INX was the first company to complete a security token offering that was registered with the U.S. Securities and Exchange Commission (SEC), with its INX token issuance raising $85 million from more than 7,200 investors.
/jlne.ws/3SsVYic

Talos and Lukka Integrate Enterprise Software to Deliver End-to-end Crypto Transaction Services
Lukka – PR Newswire
Talos, the premier provider of institutional digital asset trading technology, and Lukka, the industry leader in enterprise software and data products, announce the integration of their leading product suites to continue to scale end-to-end crypto asset transactions. The integration gives Talos users access to Lukka’s premier crypto asset data management, valuation, and reporting solutions. Lukka and Talos have created seamless interoperability between Talos’ end-to-end trading technology with Lukka’s Enterprise Software. Lukka’s post-trade software is purpose-built for crypto asset and blockchain data and complements Talos’ full trade lifecycle support for crypto assets.
/jlne.ws/3LC02dS

Politics

BlackRock Takes Heat From New York City Over Climate Stance; New York City’s comptroller presses asset manager to recommit to achieving net zero emissions across its portfolio
Angel Au-Yeung – The Wall Street Journal
The official responsible for New York City’s public pension funds is pressing BlackRock Inc. to recommit to achieving net zero emissions across its investment portfolio. In a letter Wednesday to BlackRock Chief Executive Larry Fink, New York City Comptroller Brad Lander said the asset manager’s voting record in the 2022 proxy season and recent public statements have him concerned that BlackRock is backtracking on its climate commitments. Mr. Lander’s letter follows an early August missive from 19 state attorneys general that accused BlackRock of actively pressuring companies to phase out fossil fuels to the detriment of the local economies that depend heavily on the energy industry.
/jlne.ws/3r2wT28

BlackRock’s pension funds face ESG criticism from New York Comptroller
Brendan McDermid – Reuters
New York City Comptroller Brad Lander said he is reassessing business relationships with BlackRock Inc (BLK.N), among other asset managers, on concerns that it is straying from its “climate commitments”. The world’s largest asset manager has faced criticism from many sides in the debate on low-carbon fuels, with environmentalists protesting it does too little to press for change at fossil fuel portfolio companies on one side, and Republican U.S. politicians accusing it of boycotting energy stocks.
/jlne.ws/3f76gGl

BlackRock Faces Blue America Backlash From NYC Comptroller; Brad Lander slams firm’s touting of oil and gas investments; The firm manages a quarter of the assets in three NYC pensions
Silla Brush – Bloomberg
Red America complains BlackRock Inc. is too green. Now blue America is complaining it’s not green enough. In another sign of how the nation’s fractious politics are intruding even on Wall Street, the comptroller of New York City warned in a Sept. 21 letter to BlackRock Chief Executive Officer Larry Fink that he was “re-assessing” the Big Apple’s business with BlackRock, the world’s largest asset management company. The reason: BlackRock “abdicates responsibility” in not pushing corporations to do more to combat global warming.
/jlne.ws/3LAYAZc

Push to Enhance CFTC’s Crypto Watchdog Role Gets a Boost in US Congress
Jesse Hamilton – CoinDesk
Congress’ attempt to make the Commodity Futures Trading Commission (CFTC) the primary U.S. cryptocurrency regulator took a procedural step forward on Thursday, with a House of Representatives lawmaker introducing a bill supporting a parallel effort in the Senate. The Senate legislation – introduced in August by the leaders of the Senate Agriculture Committee, Chairwoman Debbie Stabenow (D-Mich.) and senior Republican, John Boozman (R-Ark.) – is a relatively narrow effort to install the CFTC as a leading agency to oversee digital assets trading and to exercise new authority over crypto spot markets. Now, that effort has been joined in the House, shepherded by Rep. Sean Patrick Maloney (D-N.Y.), the chairman of the Commodity Exchanges, Energy, and Credit Subcommittee and also the Democratic Congressional Campaign Committee.
/jlne.ws/3r22yRc

UK’s Biggest Tax Cuts Since 1972 Trigger Crash in Pound, Bonds; Package costing £161 billion is aimed at stimulating economy; Economists say measures will add to inflation and debt
Philip Aldrick – Bloomberg
Liz Truss’s new UK government delivered the most sweeping tax cuts since 1972, slashing levies on rich households and companies in a bid to boost economic growth in a move that triggered a massive market selloff of the currency and bonds.
/jlne.ws/3LzWKYJ

UK Is Still Deciding Who Will Access Huge Energy Liquidity Pot; Energy Markets Financing Scheme to provide backstop credit; Questions remain whether traders and funds can use facility
Archie Hunter and Joe Mayes – Bloomberg
The UK is still determining who will be able to access the £40 billion liquidity fund it’s creating for the energy industry, amid market rumblings that trading shops and hedge funds could also be eligible. “We are working on the eligibility criteria for the scheme with the Bank and will update in due course,” a spokesperson for the UK Treasury said in a statement to Bloomberg News.
/jlne.ws/3SqtLZA

Hong Kong Ends Hotel Quarantine in Biggest Covid Shift Yet; Travelers still need PCR on arrival, face movement curbs; City has trailed reopening efforts of its major global rivals
Jinshan Hong and Kari Soo Lindberg – Bloomberg
Hong Kong scrapped hotel quarantine for inbound travelers in the most substantial move yet to end its pandemic isolation, and signaled more easing is likely as the city tries to salvage its status as a global financial center.
/jlne.ws/3LCEhuo

Regulation

OCC Announces New Executive Committee Members
Office of the Comptroller of the Currency
The Office of the Comptroller of the Currency (OCC) today announced three new members of its Executive Committee, effective October 10, 2022. Beverly Cole has been selected as the Senior Deputy Comptroller for Midsize and Community Bank Supervision. She will lead a team of 1,600 people in the supervision of more than 1,000 national banks and federal savings associations. In addition to being a member of the OCC’s Executive Committee, she will serve on its Committee on Bank Supervision.
/jlne.ws/3DMCGAg

Boeing Reaches $200 Million Settlement With Regulators Over Its 737 Max; The S.E.C. said Boeing had misled investors by suggesting that human error was to blame for two deadly crashes, and omitting the company’s concerns about the plane.
Matthew Goldstein and Niraj Chokshi – The New York Times
Boeing reached a $200 million settlement with U.S. securities regulators on Thursday to resolve an investigation into claims that the aircraft manufacturer and a former chief executive had deceived investors about problems with its 737 Max plane that led to two deadly crashes in 2018 and 2019
/jlne.ws/3ffphqo

UK Introduces Law to Seize, Freeze and Recover Crypto
Camomile Shumba – CoinDesk
The U.K. introduced a bill to make it easier for law enforcement agencies to seize, freeze and recover crypto assets when used for criminal activities such as money laundering, drugs and cybercrime, the government said Thursday. The 250-page Economic Crime and Corporate Transparency bill, first promised in May, was introduced by the Home Office, Department for Business, Energy & Industrial Strategy, Serious Fraud Office and Treasury and covers more than just crypto. It had its first reading in the House of Commons on Thursday, with the second reading scheduled for Oct. 13.
/jlne.ws/3dzHZbN

BaFin investigates Trading Global (Hoxton), LTD
BaFin
Trading Global (Hoxton), LTD establishes unsolicited contact with German customers and offers them the prospect of recuperating money lost from earlier online investments. On its website, hoxglobal.com, the company also offers asset management services to prospective customers. In accordance with section 37 (4) of the German Banking Act (Kreditwesengesetz – KWG), BaFin would like to make clear that Trading Global (Hoxton), LTD, has not been granted authorisation under the KWG to conduct banking business or provide financial services. The company is not supervised by BaFin.
/jlne.ws/3DOgRAr

Canadian Securities Regulators Initiate Review Of The Distribution Of Mutual Fund Securities Through A Principal Distributor
British Columbia Securities Commission
The Canadian Securities Administrators (CSA) is reviewing the practices of mutual funds that have principal distributor relationships with registrants to distribute their securities. This is in alignment with the CSA’s 2022-2025 CSA Business Plan, which includes assessing whether additional mutual fund sales practice rule modernization is needed to improve investor protection and maintain investor confidence in our capital markets.
/jlne.ws/3R6xc6s

CFTC Imposes $250,000 Penalty Against bZeroX, LLC and Its Founders and Charges Successor Ooki DAO for Offering Illegal, Off-Exchange Digital-Asset Trading, Registration Violations, and Failing to Comply with Bank Secrecy Act
CFTC
The Commodity Futures Trading Commission today issued an order simultaneously filing and settling charges against respondent bZeroX, LLC (bZeroX) and its founders Tom Bean (Bean) and Kyle Kistner (Kistner) (collectively, respondents) for illegally offering leveraged and margined retail commodity transactions in digital assets; engaging in activities only registered futures commission merchants (FCM) can perform; and failing to adopt a customer identification program as part of a Bank Secrecy Act compliance program, as required of FCMs.
/jlne.ws/3DJsicJ

Dissenting Statement of Commissioner Summer K. Mersinger Regarding Enforcement Actions Against: 1) bZeroX, LLC, Tom Bean, and Kyle Kistner; and 2) Ooki DAO
CFTC
Today the Commission is called upon to consider novel and complex questions about how our governing statute, the Commodity Exchange Act (CEA), applies in a world of digital assets, blockchain technology, and decentralized autonomous organizations (DAOs) —technology that did not exist when the statute was enacted in 1974, and that has just started to develop since Congress last amended the statute as part of the Dodd-Frank Act in 2010.
/jlne.ws/3qYDP03

CFTC Charges Five Entities for Failing to Register as FCMs
CFTC
The Commodity Futures Trading Commission today announced it has filed charges against five entities for operating as unregistered futures commission merchants (FCM). The entities, which claim to be based in either New York, N.Y. or at the same street address in Los Angeles, California, are Cryptostockoptionstrade Ltd, Global Smart Option Broker Ltd, Hypertradingoption Ltd, Stockbrokertechniques Ltd., and SprintTrade. Each complaint seeks an order directing the respondent to cease and desist from committing violations of the Commodity Exchange Act (CEA) and CFTC regulations.
/jlne.ws/3UuyNpE

CFTC Orders Two California Precious Metals Companies to Pay Over $1 Million for Fraud, Illegal Offering of Retail Commodity Transactions, and Registration Violations
CFTC
The Commodity Futures Trading Commission today issued an order filing and simultaneously settling charges against Goldline, Inc. (Goldline) and A-Mark Precious Metals, Inc. (A-Mark), both California companies, for fraud in connection with off-exchange retail commodity transactions; failing to register as a Futures Commission Merchant (FCM); and engaging in illegal off-exchange retail commodity transactions. The order requires Goldline and A-Mark to disgorge $627,801.78; pay, jointly and severally, a $450,000 civil monetary penalty; and to cease and desist from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.
/jlne.ws/3S5MObS

Twelve Exciting Companies Make The Shortlist For The European Small And Mid-Cap Awards
Federation of European Securities Exchanges
EuropeanIssuers, FESE, and the European Commission are delighted to announce the shortlisted companies of the 9th annual European Small and Mid-Cap Awards. These twelve companies have been chosen for the shortlist from amongst a high standard of nominations from across Europe. A ‘Special Mention’ will also be awarded to an individual or company which has had a significant impact on small and mid-cap issuers accessing capital markets. The winners of each category, as well as the ‘Special Mention’, will be revealed at a special Awards ceremony taking place on 16th November 2021 during the European Commission’s SME Assembly in Portorož, Slovenia.
/jlne.ws/3LD9HB5

Boeing to Pay $200 Million to Settle SEC Charges that it Misled Investors about the 737 MAX; Former CEO Agrees to Settle to Same Charges and Pay $1 Million
SEC
The Securities and Exchange Commission today charged The Boeing Company and its former CEO, Dennis A. Muilenburg, with making materially misleading public statements following crashes of Boeing airplanes in 2018 and 2019. The crashes involved Boeing’s 737 MAX airplane and a flight control function called the Maneuvering Characteristics Augmentation System (MCAS). According to the SEC’s orders, after the first crash, Boeing and Muilenburg knew that MCAS posed an ongoing airplane safety issue, but nevertheless assured the public that the 737 MAX airplane was “as safe as any airplane that has ever flown the skies.” Later, following the second crash, Boeing and Muilenburg assured the public that there were no slips or gaps in the certification process with respect to MCAS, despite being aware of contrary information.
/jlne.ws/3LD77Lg

Opening Statement of Commissioner Christy Goldsmith Romero Before the Energy and Environmental Markets Advisory Committee
CFTC
Good morning. I’m pleased to join you today for this meeting of the Energy and Environmental Markets Advisory Committee (EEMAC). I want to thank Commissioner Mersinger, her staff, and Lauren Fulks, for coordinating this event. I also appreciate my meetings with committee members to discuss the challenges that they face. I look forward to hearing more today about the important, and very timely, topics on the agenda.
/jlne.ws/3UrriQp

SEC Charges Former Business News Commentator with Misappropriating Client and Investor Funds
SEC
The Securities and Exchange Commission today announced the filing of a civil injunctive action against James Arthur McDonald, Jr. and his SEC-registered investment adviser firm, Hercules Investments, LLC in connection with two fraudulent securities offerings. The SEC alleges that McDonald, a former guest commentator on CNBC, raised more than $5.1 million from 23 investors and clients, and misappropriated more than $2.9 million of those funds for personal expenses and Ponzi-like payments to earlier investors. In a parallel action, the United States Attorney’s Office for the Central District of California announced criminal charges against McDonald.
/jlne.ws/3LzZdCt

SEC Charges Former EY Employee with Insider Trading
SEC
The Securities and Exchange Commission charged Michael Weiss with insider trading in the stock of four Ernst & Young LLP (“EY”) clients or prospective clients (“EY Client Companies”) made while he was employed as an EY Business Development Director. The SEC’s complaint, filed in federal court in Manhattan, alleges that Weiss’ work on EY business development teams or “pursuits” provided him with access to clients’ and prospective clients’ confidential and sensitive information. On four separate occasions between July 2014 and September 2015, while in possession and on the basis of that material nonpublic information, and in breach of his duties to EY and its clients, Weiss purchased EY Client Companies’ shares in advance of earnings and acquisition announcements. As alleged in the complaint, Weiss obtained illicit profits from those trades of approximately $10,286.
/jlne.ws/3Sn59AK

ESMA Consults On CCP Business Reorganisation Plans
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today published a consultation paper seeking views on proposed rules for Central Counterparties’ (CCPs) business reorganisation plans. The proposed rules are part of the CCPs resolution regime under the CCPRRR. The draft Regulatory Technical Standard (RTS) provides clarifications and covers the minimum elements to be included in the business reorganisation plans that CCPs are expected to implement as part of their resolution tools under CCPRRR, as well as the criteria to be fulfilled by them. The objective of the proposed measures is to ensure that CCPs which are failing or likely to fail, maintain continuity of their critical functions and core business lines, as well as to reduce the impact of any failure on the EU financial system.
/jlne.ws/3r7joxT

RBNZ and FMA seeking feedback on draft FMI Standards
Financial Markets Authority
The Reserve Bank of New Zealand – Te Putea Matua (RBNZ) and the Financial Markets Authority (FMA) – Te Mana Tatai Hokohoko are inviting feedback on the exposure drafts of standards for financial market infrastructures (FMIs). The Financial Market Infrastructures Act 2021 (the FMI Act) establishes the RBNZ and the FMA as the joint regulator of designated FMIs. The development of the FMI Standards is a key milestone in the implementation of the FMI Act. The FMI Standards provide a comprehensive framework for the regulation of FMIs operating in New Zealand.
/jlne.ws/3Uzm05u

Korea finds more ‘abnormal’ FX transactions via crypto exchanges
Kyungji Cho – Bloomberg
South Korea confirmed more cases of “abnormal” foreign-exchange transactions, mostly related to cryptocurrencies, the nation’s financial watchdog said. The Financial Supervisory Service (FSS) discovered an additional US$680 million of “abnormal” money transfers, taking the value of confirmed unusual transactions found since June to US$7.2 billion, it said in a statement on Thursday. Most transactions have involved funds transferred from cryptocurrency exchanges to local companies before the money was sent overseas, the FSS said.
/jlne.ws/3xIKAXC

Investing and Trading

Robinhood Stock Drops, Virtu Financial Shares Rise After Payment for Order Flow Report
Hannah Miao – The Wall Street Journal
Shares of Robinhood Markets and Virtu Financial swung after Bloomberg reported the Securities and Exchange Commission would not ban payment for order flow. Both companies saw shares open higher, but Robinhood turned lower as the trading session continued. Take a look at the stocks closed Thursday.
/jlne.ws/3r1RfbK

Brokerages jump on report SEC stops short of banning PFOF deals
Mehnaz Yasmin and Medha Singh – Reuters
Shares of retail brokerage Robinhood Markets Inc and market maker Virtu Financial jumped following a media report that the U.S. Securities and Exchange Commission (SEC) will stop short of banning payment-for-order-flow (PFOF). The SEC may still enact other changes that make the practice less profitable, Bloomberg News reported on Thursday, citing people familiar with the matter. The regulator had mulled over the controversial practice for months that critics believe creates conflicts of interest.
/jlne.ws/3R8PTq2

Analysis: Europe says goodbye to negative rates – or just ‘au revoir’?
Mark John and Dhara Ranasinghe – Reuters
Europe’s decade-long experiment with negative interest rates, which ended on Thursday with the Swiss National Bank’s return to positive territory, showed one thing: they can exist beyond the realms of economic science fiction. Launched to revive economies after the 2007/08 financial crisis, the policy flipped standard money wisdom on its head: banks had to pay a fee to park cash with their central banks; some home-owners found mortgages that paid them interest; and rewards for the act of saving all but vanished. With the exercise now abandoned in the face of galloping inflation brought on by pandemic and the Ukraine war, doubts linger over its effectiveness and under what circumstances it will ever be used again.
/jlne.ws/3DK5Gc0

iShares Debuts Water ETF With ESG Criteria
Heather Bell – ETF.com
iShares rolled out an exchange-traded fund on Thursday that focuses on water sustainability. The iShares MSCI Water Management Multisector ETF (IWTR) tracks the MSCI ACWI IMI Sustainable Water Transition Extended Capped Index, which has a dual focus on water supply activities and water usage. IWTR comes with an expense ratio of 0.47% and lists on the Nasdaq stock exchange. The new fund’s underlying index is global in scope. Part of the portfolio targets companies that provide water-related products and services, with at least 10% of their revenues coming from sustainable water activities; the other part of the portfolio focuses on companies that have demonstrated efficient water management, according to the prospectus.
/jlne.ws/3dDeXry

Pound-Dollar Parity Now a One-in-Four Chance, According to Options Bets; Sterling drops toward $1.10 handle and bearish wagers pick up; UK bonds plunge at the prospect of more fiscal stimulus
Vassilis Karamanis – Bloomberg
Can the pound reach parity versus the dollar? It’s now a one-in-four chance when it comes to options pricing. The UK currency is heading for its biggest daily loss since early May after Chancellor of the Exchequer Kwasi Kwarteng outlined the government’s plans to stimulate the economy with tax cuts and spending. The simultaneous sharp sell off in Gilts suggests that tackling inflation will be a very hard task for UK authorities and that the currency market sees no easy way out for the Bank of England.
/jlne.ws/3C1HbFQ

Environmental, Social and Corporate Governance

Stakeholder Capitalism Metrics Initiative: over 120 companies implement the ESG reporting metrics
World Economic Forum
For the private sector to drive progress towards the UN Sustainable Development Goals, a common reporting system is essential. Over 120 companies have co-designed the Stakeholder Capitalism Metrics – a set of data points that allows companies to consistently report non-financial disclosures. 121 companies are now reporting against the Stakeholder Capitalism Metrics, 48 of which have reported for two years in a row.
The impact of aligning ESG frameworks. Global challenges amplified by the COVID-19 pandemic have made Environmental, Social and Governance (ESG) issues even more pressing for policymakers, boards and executives. To promote alignment among existing ESG frameworks, the World Economic Forum, with Partners including Deloitte, EY, KPMG and PwC, has identified a set of universal metrics and disclosures – the Stakeholder Capitalism Metrics.
/jlne.ws/3C4jxbT

4 ways ESG disclosures are transforming how successful companies operate; ESG disclosures can be used by companies to improve their branding, make more efficient use of data and improve company culture; In Europe, North America and worldwide, environmental, social and governance (ESG) is moving from optional to mandatory for businesses; The Forum’s flagship Stakeholder Capitalism Metrics provides businesses with a common approach to ESG disclosures; As global regulation develops and the risk of divergence grows, businesses should be a leading voice in pushing for a single, streamlined set of sustainability disclosures.
World Economic Forum
The global transition toward environmental, social and governance (ESG) in business is changing the world, making a tangible difference the world over. While ESG disclosures have long been voluntary, there is now a tectonic shift underway. Mandatory ESG regulation efforts in the European Union, the US, and internationally are picking up pace. Coupled with increasing stakeholder focus on company ESG performance and concerns over corporate greenwashing, these regulations could have a far-reaching impact, on anything from raising capital to talent acquisition.
/jlne.ws/3xJxt8M

De-ESG or Keep Paying the ESG Tax; ESG acts as a carbon tax on the West, with the ‘revenue’ going to China, Russia, Saudi Arabia, and others.
Russ Greene – The National Review
It seems like everyone these days is talking about ESG. And yet, it’s still not easy to explain what ESG is, beyond the obvious: “Environmental, Social, and Governance factors.” ESG approaches often contradict each other, and sometimes even themselves. According to Goldman Sachs, over $100 trillion in “global assets under management have signed up to UN PRI (Principles for Responsible Investment) and are implementing ESG metrics.” For comparison, the total 2020 U.S. gross domestic product was about $21 trillion. So it’s no wonder that it’s hard to quickly summarize such a large and heterogenous field.
/jlne.ws/3xLUrvT

An ESG Champion Stumbles; The California Public Employees’ Retirement System posts a decade of lackluster returns.
James Freeman – The Wall Street Journal
There is no such thing as a free lunch. Activists who think they can use public companies to pursue political agendas without endangering shareholder returns are indulging in a fantasy. Disappointing results at a giant government pension fund cannot all be tied to political agendas, but the retired workers who rely on Calpers have every right to demand that fund managers adopt a singular focus on maximizing returns.
/jlne.ws/3RcqTyi

The greenwashing wave hits securities litigation
Roger E. Barton – Reuters
Securities litigation comes in all shapes and sizes. And it comes in a new color now as well. The phenomenon of “greenwashing” is when an entity (such as a company, a product, a process, or an investment fund) is presented as more environmentally friendly, socially impactful, or sustainable than it truly is. Greenwashing can also occur when a company or figure touts the ESG (Environmental, Social, & Governance) benefits of something but fails to also disclose the negative ESG-related consequences of that same thing.
/jlne.ws/3UrriQp

California Moves to Ban Natural Gas Furnaces and Heaters by 2030
Angel Adegbesan – Bloomberg
California is committing to a plan that will make it the first US state to phase out gas-fueled furnaces and water heaters in homes, a move environmentalists are betting will provide a template for other states.
/jlne.ws/3DVQpom

UK Government to Relax Planning Rules for Onshore Wind; Britain to cut red tape for offshore wind, oil and gas; UK aims to eliminate rules to stimulate economic growth
Will Mathis – Bloomberg
The UK government will relax planning rules for onshore wind to allow projects to be deployed more easily, marking a significant policy shift. Britain vowed to speed up the planning process for energy infrastructure including offshore wind farms and new oil and gas fields in Chancellor Kwasi Kwarteng’s mini-budget on Friday. Onshore wind was effectively banned in 2016, but developers were allowed to enter the government’s latest subsidy competition in a softening of policy.
/jlne.ws/3r1K2IH

Institutions

Credit Suisse Shares Hit Record Low on Strategy Questions; Reuters reported talks of potential US exit, capital raise; Credit Suisse slumps as much as 8% in early Zurich trading
Myriam Balezou – Bloomberg
Credit Suisse Group AG shares slumped to a record low as investors signaled that doubts remain over the troubled lender’s upcoming strategy revamp and its capital position. The bank on Thursday issued a denial after a Reuters report that it’s weighing moves as drastic as its investment bank exiting the US market. The firm also faces questions of whether it will need to raise capital through asset sales or a stock offering to fund any moves it plans to make in a new strategy that’s due next month. “Credit Suisse is not exiting the US market. Any reporting that suggests otherwise is categorically false and completely unfounded,” a representative for the bank said in a statement late Thursday.
/jlne.ws/3BxrZ1G

The £500 Billion Money Manager Battling an Identity Crisis; Abrdn is in the middle of an overhaul that some staffers at the UK fund company are struggling to get their heads around.
Loukia Gyftopoulou – Bloomberg
Sitting in a bright yellow armchair and wearing a pink striped shirt, abrdn Plc Chief Executive Officer Stephen Bird answered a question emailed from one of his 5,000 staff. What was the plan for the next six months? It was, he said, to prove his new business model worked. The trouble was that many of the recipients of the recorded video on Aug. 31 weren’t sure what the model actually was. What they did know is that the same day it landed in their inbox, abrdn was being axed from the benchmark FTSE 100 stock index after a decade. Once the UK’s biggest manager of investment funds, it was now too small. The shares fell to another record low on Friday.
/jlne.ws/3Ss1CRP

Deutsche Bank’s Trump Exposure Dropped 87% in a Matter of Weeks
Steven Arons – Bloomberg
For more than a decade, Deutsche Bank AG was the single biggest lender to the Trump Organization. That may finally have changed in May. The real estate company of former US President Donald Trump that month repaid two loans worth at total of $295 million to Germany’s largest lender, according to a lawsuit filed Wednesday by New York Attorney General Letitia James. There’s now only one loan left, a facility worth $45 million covering the Trump Chicago building, according to the suit.
/jlne.ws/3UwhPXZ

Exclusive-Credit Suisse sounds out investors about capital hike -sources
Oliver Hirt – Reuters
Credit Suisse is sounding out investors for fresh cash, two people familiar with the matter said, approaching them for the fourth time in roughly seven years as it attempts a radical overhaul of its investment bank. The bank started in recent weeks to speak to investors about the move, the people said. Various scenarios are under discussion for the investment bank, including the most drastic option of largely exiting the U.S. market, two sources said. It is unclear how keen investors are and interest may be dampened by the fact that the bank, which has struggled with a string of scandals, has gathered almost 12 billion francs ($12.22 billion) in capital since 2015 – almost equivalent to its current market value.
/jlne.ws/3E44JLZ

Goldman Sachs Announces Preliminary Court Approval of Shareholder Derivative Settlement Relating to 1MBD
Goldman Sachs
The Goldman Sachs Group, Inc. (NYSE: GS) today announced that on September 16, 2022, the U.S. District Court for the Southern District of New York preliminarily approved a settlement agreement resolving a shareholder derivative lawsuit involving the firm. In accordance with the Court’s order preliminarily approving the settlement, Goldman Sachs is making disclosure of the settlement to its shareholders in the Notice of Settlement of Shareholder Derivative Litigation and Hearing (Notice) attached hereto.
/jlne.ws/3RbDWA2

Office Of Financial Research Updates Research On Banks’ Counterparty Choices
Andrew Ellul and Dasol Kim – Office of Financial Research
Today, the OFR updated a working paper examining whether banks’ counterparty choices in over-the-counter derivative markets contribute to network fragility. The authors found that banks have a greater propensity to choose densely connected nonbank counterparties, particularly riskier ones, suggesting the existence of “moral hazard behavior” in network formations. Finally, the working paper shows how these exposures are correlated with systemic risk measures despite greater regulatory oversight after the 2008 financial crisis.
/jlne.ws/3xNmtXI

Removing Bankers’ Bonus Cap Is A Good Thing – SteelEye Response
Mondovisione
Following news that the new UK Chancellor of the Exchequer, Kwasi Kwarteng, is considering removing the bankers’ bonus cap to boost the UK economy, Matt Smith, CEO at RegTech firm SteelEye, welcomes the change and argues that capping bonuses is not an efficient way of de-risking markets.
/jlne.ws/3UvnVIb

Wall Street’s Bosses Reassert Themselves With the Return of Annual Culls; Even junior bankers gained ground during the pandemic. But now the bosses—from David Solomon at Goldman Sachs on down—are preparing to shed staff and bring down bonuses.
Sridhar Natarajan and Hannah Levitt – Bloomberg
JPMorgan Chase and Co. executives were in a bind. Amid a flurry of job-hopping on Wall Street last year, Chief Executive Officer Jamie Dimon had told the bank’s US staff it was time to return to offices on a regular basis. But with Covid-19 cases climbing at the time, some managers were reluctant to take a hard line with staff who could quit. A number of divisions were already wrestling with resignations and racing to refill positions. So an informal strategy emerged to shield the rank and file from the CEO’s dictate without antagonizing him, according to people with direct knowledge of the matter, who asked not to be named discussing internal practices.
/jlne.ws/3QXISsg

Wellness Exchange

This Is What Life’s Like in the World’s Strictest Covid Zero City; Seven times since last March, Ruili—on China’s Myanmar border—has felt the full force of Xi Jinping’s Covid Zero policy.
John Liu with Claire Che – Bloomberg
China’s 1,300-mile border with Myanmar traverses some of the most rugged landscapes in Asia. Mountains rise as high as 19,000 feet above sea level, fast-running rivers flow between steep cliffs, and dense forests shelter giant hornbills, snub-nosed monkeys, and elephants. The region has never been an economic development priority for either country, and it has few roads and even fewer large settlements. Ruili, a Chinese city of a little more than a quarter-million people located on one of the only areas of flat land, is the exception. The city hugs the border, which divides it from Muse, a smaller city on the Myanmar side. Together they constitute a binational urban area—an analog to El Paso and Juárez on the US-Mexico boundary—and a crucial node for commerce. For decades, throngs of people crossed every day: Burmese workers looking for factory jobs, Chinese residents visiting relatives, and traders of both nationalities carrying a huge range of goods, some legal, some not.
/jlne.ws/3f33wK8

Icy Swim May Cut ‘Bad’ Body Fat, Protect Against Obesity, Study Suggests
Nina Massey, Press Association
Taking a dip in icy water may cut bad body fat in men and reduce the risk of disorders such as diabetes, a new study suggests. Researchers looked at 104 studies and found that many reported significant effects from cold water swimming, including also on good fat which helps burn calories.
/jlne.ws/3LFVOlG

Can you get the flu shot and the new booster at the same time?
Dani Blum – The New York Times
Yes. Some public health officials are strongly recommending getting both the flu shot and the new bivalent booster at once — Dr. Asish Jha, who leads the White House’s pandemic response, remarked in a press briefing that “God gave us two arms: one for the flu shot and the other one for the Covid shot.”
/jlne.ws/3DKggje

What Is Legionnaires’ Disease and How Can I Protect Myself?; Nearly one out of every 10 people who gets sick with Legionnaires’ dies because of complications from the illness. Here’s what to know about prevention, detection and treatment.
Knvul Sheikh – The New York Times
Last week, the New York State Department of Health announced that it was investigating eight possible cases of Legionnaires’ disease that had occurred between June and September at the Amsterdam Nursing Home in Manhattan’s Morningside Heights neighborhood. Four of the eight people who might have been infected have died. Earlier this month, city officials also found evidence of the bacteria that causes Legionnaires’ at the Jacob Riis Houses in Manhattan’s East Village.
/jlne.ws/3C4zJtN

Regions

China Will Benefit From Cheap Russian Gas—Eventually; But there is a problem: For now, China is a coal- and oil-powered economy.
Nathaniel Taplin – The Wall Street Journal
The “limitless” friendship between China and Russia notwithstanding, President Xi Jinping of China appears to be at least somewhat miffed at President Vladimir Putin of Russia. For a hint of why that might be, consider the energy sector. In theory, over the long run, Russia’s isolation from its major oil and gas customers in the West could be a boon for China—particularly with regards to natural gas, since the two nations have already agreed to expand the existing pipeline network between them. But there is a problem: For now, China is a coal- and oil-powered economy, and the transition to moving toward gas will be long and expensive. In the meantime, Mr. Putin’s war in Ukraine has helped push coal and petroleum prices through the roof. All this comes as China’s economy is already struggling with a punishing property downturn and deeply discouraged consumers.
/jlne.ws/3DNjnXN

Japan to Restore Visa-Free Travel From Oct. 11 as Covid Pandemic Recedes; Prime Minister Kishida makes announcement in New York; Domestic travel discounts will be introduced at the same time
Isabel Reynolds – Bloomberg
Japan will abolish a slew of Covid border controls from Oct. 11, Prime Minister Fumio Kishida said in New York, in a move that looks set to revive the tourism industry. Individual visitors will be allowed to enter, and Japan will reinstate visa waivers, Kishida said at a news conference Thursday morning in New York. The cap on daily arrivals in Japan will also be ended, he said. Later in the day, at the New York Stock Exchange, Kishida said Japan “will relax border control measures to be on par with the US,” spurring applause from the audience.
/jlne.ws/3BBuznr

Does the U.K. Really Depend on the Kindness of Strangers?; As the Bank of England raises interest rates by less than expected, Britain’s record-high current-account deficit is worrying investors—perhaps too much
Jon Sindreu – The Wall Street Journal
Three decades after Britain was forced to leave the European Exchange Rate Mechanism, fears of a new sterling crisis are spreading across markets. The currency is hitting 37-year lows against the U.S. dollar just as the country’s current account is at a record deficit and borrowing is about to jump to finance new Prime Minister Liz Truss’ plan to freeze energy bills, which could cost north of £150 billion, equivalent to around $169 billion. But worries about the pound might be exaggerated.
/jlne.ws/3DMEhGg

Sovereign Fund To Manage Mozambique’s LNG Riches Takes Shape; Draft law revises fund’s allocation of oil, gas revenue; Islamic State-linked violence has held up giant gas projects
Matthew Hill – Bloomberg
Mozambique has trimmed the proportion of revenue it intends to direct toward a sovereign wealth fund that’s being set up to help manage an estimated $96 billion expected to flow from its fledgling natural gas industry, a draft law shows. The state will channel 40% of total oil and gas revenue to the fund for the first 15 years, and 50% thereafter, according to a copy of the unpublished bill seen by Bloomberg. A 2020 outline of how the fund would work stated that the gas revenue would be evenly split between the government and the fund for the first two decades, whereupon the fund’s share would increase to 80%.
/jlne.ws/3SmHbpa

Bank of England Says Paper Banknotes Only Good for One More Week; UK central bank is issuing polymer notes to replace paper ones; At least £11 billion of old notes remain in circulation
David Goodman – Bloomberg
British consumers have just one week left to spend the last £11 billion ($12.4 billion) of paper banknotes that remain in circulation before the cash ceases to become legal tender. As of Sept. 30, almost £6 billion of old £50 notes and more than £5 billion of the £20 ones will no longer be accepted by UK businesses, the Bank of England said Friday. That’s a total of more than 360 million notes.
/jlne.ws/3R3AN5f

After Years of Low Mortgage Rates, Home Sellers Are Scarce; Homeowners wearing the ‘golden handcuffs’ of low mortgage costs are reluctant to sell their homes now that rates are much higher
Nicole Friedman – The Wall Street Journal
Homeowners with low mortgage rates are balking at the prospect of selling their homes to borrow at much higher rates for their next homes, a development that could limit the supply of houses for sale for years to come. Housing inventory has risen from record lows earlier this year as more homes sit on the market longer. But the number of newly listed homes in the four weeks ended Sept. 18 fell 20% year-over-year, according to real-estate brokerage Redfin Corp. That is an indication that sellers who don’t need to sell are staying on the sidelines, economists say.
/jlne.ws/3LDyVPF

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China commodity trader woe a setback for Glencore

China commodity trader woe a setback for Glencore

First Read Hits & Takes John Lothian & JLN Staff Congratulations to Larry Tabb. STA announced Larry as the 2022 Dictum Meum Pactum (DMP) Award recipient. Here is a success story for you. The Greenwood Project placed four interns at Goldman Sachs this summer...

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