Why Won’t Libor Die? It’s Complicated

Mar 10, 2021

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Hits & Takes
John Lothian & JLN Staff

I published a story yesterday on JohnLothianNews.com titled, Harry Potter – Sending My Oldest Son and His Friends to Hogwarts. Longtime readers may remember this story. I wanted to memorialize it by publishing this episode in my children’s and my life together. It is important to make young people use their imaginations. That was my goal for this elaborate prank I created with the help of some other parents and the principal at my son and his friend’s school.

FIA Boca-V has added two new keynote speakers to the program: Dr. Hakeem Oluseyi, astrophysicist and former Space Science Education Lead for NASA, and Derek White, vice president of global financial services at Google Cloud, are joining the lineup of keynote speakers at this year’s virtual Boca conference, Boca-V, taking place 16-18 March.

I have a prediction. Given his experience and the issues before the SEC, Gary Gensler has a chance to be the most consequential chairman of the U.S. Securities & Exchange Commission during my lifetime. I am rooting for you Gary!

Thank you to Sean O’Toole and Chuck Mackie for the invitations to join The Clubhouse yesterday. I am now a member and I can tell you that there are many cutting edge market professionals who are readers of this newsletter who are registered. I listened to my first session yesterday. It is like an ongoing conference that never stops with panel discussion after panel discussion with interesting speakers and topics.

Apex Clearing has been named to Fast Company’s “10 most innovative finance companies of 2021.”

Phillip Capital UK has a new website. The CEO of PhillipCapital UK is Jon Regan, a former Patsystems executive. It was at Pats that I met Jon, though we worked at different entities within the same firm back in the 1990s, Gerald Metals.

Here is your historical fact of the day. Journalist Roger Mudd died at the age of 93. According to ABC News, “Mudd, who was born in Washington, was a distant relative of Dr. Samuel Mudd, the doctor who was arrested for treating an injured John Wilkes Booth shortly after Booth assassinated President Abraham Lincoln. The doctor, who was eventually pardoned, said he hadn’t been aware of the killing when he aided Booth.”

We have had a new donation from an anonymous donor to our JLN MarketsWiki Education GoFundMe campaign. Here are some of the comments from some recent donors who went on the record about why they donated:

Ajay Jain: As an exchange executive from CME Group, I greatly value the need for educating the broader community about derivatives and expanding the opportunity for risk management and wealth creation to the general public. Keep up the good work!

Thomas Krabbe: John and team, I probably read your newsletter every day over the last 20 years and hope the JLN will be around for at least another 20 years. The newsletter has a great format from the get go and is evolving nicely over the years with new content, features and commentary! All the best, Thomas.

Robin M. Trott: Education is important. Market Structure continuously evolves – driven by participants who are armed with an understanding of what went before.

Dan Pritchard: You’re doing great work John. Definitely Library of Congress type stuff!

Julie Bauer: In appreciation of all those in the industry who welcomed me in as a young novice, shared their knowledge with me and gave me opportunities to learn and grow.

Support our efforts to preserve industry history by donation to our GoFundMe campaign.

Last night the Pathway to Adventure Council of the Boy Scouts of America held their annual meeting virtually. I was re-elected as an at-large member of the Council Executive Board.

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 first-ever trade of BitVol, the bitcoin volatility index created by T3 Index, transacted today with LedgerPrime, a quantitative crypto asset management firm as the market-maker. The counterparty to the transaction was an unnamed leading global macro Crypto asset manager. The transaction consisted of a March expiry 1 x 2 BitVol call spread, where the client bought the spread at even premiums (i.e. at ‘zero cost’). BitVol is a measure of the 30-day implied volatility of bitcoin based on tradeable bitcoin options prices; it is also the first bitcoin volatility index. T3 Index previously created the SPIKES Volatility Index.~MR

Ripple’s CEO, Brad Garlinghouse, has announced that YouTube has settled the charges brought against them by Ripple in April 2020 for allowing fake accounts to post XRP giveaway scams on YouTube. Details of the settlement have not been publicly disclosed. Garlinghouse said that Ripple and YouTube plan to “work together” to root out and remove such scams in the future. While this sounds like an amicable resolution, I’m not so sure. YouTube has a dubious history of dealing with harmful content on its platform.~MR



LME metals traders chorus disapproval at impending twilight of the Ring; Plans for a move to all-electronic dealing meet with stiff resistance from some participants
Philip Stafford and Henry Sanderson – FT
Brokers and industrial traders are pushing back against the London Metal Exchange’s plans to permanently close its historic Ring, where traders have gathered to trade for more than 140 years. The exchange proposed shutting the trading venue in January, ending in-person dealing of commodities in Europe after futures exchanges in the City of London shut their floors in the early 2000s and transactions shifted to screens.

*****There is an open outcry against closing the ring.~JJL


Trader Buys $36 Million of Copper and Gets Painted Rocks Instead
Andy Hoffman – Bloomberg
Commodities trader Mercuria Energy Group Ltd. struck a deal last summer to buy $36 million of copper from a Turkish supplier. But when the cargoes started arriving in China, all it found were containers full of painted rocks. The saga unfolds like a gangland thriller, with the Swiss trading house saying it’s been the victim of cargo fraud. Before its journey from a port near Istanbul to China even began, about 6,000 tons of blister copper in more than 300 containers were switched with jagged paving stones, spray-painted to resemble the semi-refined metal.

*****We need a rock solid copper to break up this rock copper caper.~JJL


Robinhood CEO Rebukes Critics in Call for Ubiquitous Investing
Annie Massa and Emily Chang – Bloomberg
‘It should just be something that people do,’ Vlad Tenev says; Rejects idea that investing in U.S. markets is like gambling
Robinhood Markets Chief Executive Officer Vlad Tenev said investing in financial markets should be as common as shopping on Amazon.com, defending his brokerage against watchdogs, lawmakers and critics. “Investing should be as ubiquitous as shopping online,” Tenev said in an interview with Bloomberg Television’s Emily Chang. “It should just be something that people do.”

*****While I believe anyone should be able to invest, I don’t believe everyone should be able to invest. We have rules and laws about suitability. Some investments are not suitable for everyone.~JJL


New Stanford study says Zoom calls trigger our ‘fight or flight’ survival reflex
Anagha Srikanth – The Hill
Does every meeting need to be a Zoom call? Americans are marking the one-year anniversary of stay-at-home orders and remote working with a growing sense of pandemic fatigue. And a new study finds that staring at your coworkers’ faces, up-close and personal, and your own is probably triggering your “fight or flight” survival reflex.

*****I prefer to fight. Flying is dangerous.~JJL


Traffic congestion dropped by 73 percent in 2020 due to the pandemic
Jonathan M. Gitlin – Ars Technica
In 2020, the average US driver spent 26 hours stuck in traffic. While that’s still more than a day, it’s a steep decline from pre-pandemic times; in 2019 the average American sacrificed 99 hours to traffic jams. Around the world, it’s a similar story. German drivers averaged an identical 26 hours of traffic in 2020, down from 46 the year before. In the UK, 2019 sounded positively awful, with 115 hours in traffic jams. At least one thing improved for that island nation in 2020: its drivers only spent 37 hours stationary in their cars.

*****There is a daily traffic jam in my driveway with the cars just going nowhere.~JJL


Tuesday’s Top Three
Our top story Tuesday was the Wall Street Journal’s Billionaire Vincent Viola’s New York Mansion to Sell for Roughly $60 Million. Second was Business Insider’s coverage of the same story, which includes many pictures of the house, A billionaire has been trying to sell his Versailles-inspired mansion for nearly 8 years — and it’s finally set to sell at a 47% discount. Look inside the Manhattan townhouse. Third was the job description on Linked in for a Manager – Futures Compliance at Phillip Capital Inc.


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Lead Stories

Why Won’t Libor Die? It’s Complicated; The broken interest rate benchmark still dominates derivatives trading. Regulators may need to be more forceful in persuading banks to drop it.
Mark Gilbert – Bloomberg
The funeral dates for Libor are finally set, with some sensible concessions that keep part of the suite of interest rates alive for longer than initially planned. Those exemptions must be strictly controlled so as not to impede a much broader acceptance of the replacement benchmarks. For now, that’s proving harder than even those most resistant to change might have expected. So market regulators need to step up efforts to force bankers and financiers to embrace Libor’s successors.

There is a way to keep the UK at the top of global finance; The City should focus on wholesale markets, a historic strength, and bow to the inevitable elsewhere
Andrew Large – FT
Having spent my professional life in global capital markets, regulation and financial policy, I am dismayed by the lack of strategic thinking about the future of the UK as a financial centre. Given the populist rancour of the Brexit debate, neglect of the City was perhaps inevitable. But to avoid irreparable damage to such a significant part of our economy, the UK needs a realistic strategy.

Crowded Bet Against 10-Year Treasury Hits Repo Market; Hedge funds, others are paying to lend cash in exchange for 10-year Treasurys amid bets on rising rates
Julia-Ambra Verlaine and Sebastian Pellejero – WSJ
Investor bets on rising U.S. interest rates are testing the short-term cash markets that serve as the financial system’s plumbing. Hedge funds and other institutional investors are paying an annual rate of as much as 4% to borrow the most recent issue of the 10-year U.S. Treasury note in the market for repurchase agreements, or repos. These hedge funds and others want to borrow and sell the bonds now in a wager that they can buy them back later for less, as rising U.S. rates push bond prices lower.

Wall Street A-Listers Fled to Florida. Many Now Eye a Return
Katherine Burton, Annie Massa, Amanda L Gordon, and Jonathan Levin – Bloomberg
USPS data shows few New Yorkers moved to Miami, Palm Beach; New Jersey, California and Connecticut were most popular moves
The “Upper East Side” cocktail at Sant Ambroeus is just the same as in Manhattan, the carpaccio at Cipriani as meaty red as on Wall Street. Here is the private-equity billionaire Stephen Schwarzman, on his way to La Goulue, the clubby French bistro popular with Park Avenue socialites. There is David Solomon, the Goldman Sachs Group Inc. chief, a team of financiers in tow.

GameStop Saga Prompts SEC to Weigh Review of Payment for Order Flow; Practice of funneling small investors’s stock orders to high-speed trading firms draws regulator’s scrutiny
Dave Michaels – WSJ
The Securities and Exchange Commission’s acting chairwoman signaled support for a wholesale review of a practice that funnels many small investors’ stock orders to be filled by high-speed trading firms. The system, known as payment for order flow, is decades old but has generated greater scrutiny as more individual investors trade on brokerage apps operated by companies such as Robinhood Markets Inc. Online brokers like Robinhood make money by selling customers’ orders to firms such as Citadel Securities and Susquehanna International Group LLP, which trade with them.

EU Must Look at Carbon Market Speculation, Denmark Says
Ewa Krukowska – Bloomberg
Danish Climate Minister Dan Jorgensen speaks in interview; Carbon prices in Europe surge to record as investors flock in
The European Union needs to analyze the impact of investor speculation on the world’s biggest carbon market when reforming the program, Denmark’s Climate Minister Dan Jorgensen said. Permits to pollute in the EU Emissions Trading System jumped to a record 41.04 euros Wednesday, extending their gains to 50% in the past six months. The prospects of stricter climate goals under the European Green Deal and higher prices has lured new financial investors, including hedge funds.

Deutsche Börse eyes quantum computing Pilot application to model enterprise risks cuts computation time from 10 years to 30 minutes
Luke Clancy – Risk.net
Deutsche Börse has completed a pilot study into the application of quantum computing to calculate proprietary business risks, in a use case that could enter full production within the next three years, according to independent experts. A study published today (March 10), co-authored by Carsten Schäfer – the exchange’s risk manager for business risk and IT operational risk and a supervisory board member – and fintech firm JoS Quantum, describes a quantum computation for risk sensitivity analysis

Credit Suisse Starts Probe of Collapsed Funds, Suspends Managers
Patrick Winters – Bloomberg
Bank reached out to external firms to assist with its probe; Credit Suisse clients face losses after $10 billion frozen
Credit Suisse Group AG started an internal probe into the collapse of a $10 billion group of supply chain finance funds and temporarily replaced three employees in its asset management unit who were tied to the strategy. The Swiss lender has reached out to external firms to deal with regulators’ queries surrounding the collapse of the funds, which it ran with Australian financier Lex Greensill, people familiar with the matter said, asking for anonymity in discussing internal information.

China Weighs Tighter Rules on STAR Board IPOs, Fintech Curbs
Bloomberg News
China is considering tighter rules for first-time share sales on Shanghai’s Nasdaq-style STAR board that will require firms to prove their technology credentials and raise the bar for companies such as Ant Group Co.

Banks adopt new debt terms to avoid repeat of Citi’s $900m payment mishap; Moves come after US court ruled lender could not reclaim funds sent to Revlon creditors in error
Nikou Asgari – FT
US banks have begun injecting legal terms in debt documents to protect themselves against accidental fund transfers in the wake of Citigroup’s $900m payment debacle.

SEC Goes After Analyst Foreshadowing; Also GameStop, corporate Bitcoins and gift-card taxation.
Matt Levine – Bloomberg
A Reg FD case!
There is a rule, called Regulation FD, that says that U.S. public companies cannot selectively disclose material nonpublic information to some analysts or investors without disclosing it publicly. So a chief executive officer can’t meet with a big mutual fund, or a Wall Street analyst, and say “our earnings will be $1.75 per share this quarter,” unless her company has disclosed those earnings publicly. 1 It is a weird set of stylized facts that:

GameStop Prompts U.S. to Consider New Rules for Options, Shorts
Benjamin Bain – Bloomberg
SEC, Finra leaders say they are reviewing regulatory gaps; Agencies respond to questions from Senator Elizabeth Warren
The GameStop Corp. trading frenzy has prompted U.S. regulators to consider new rules for everything from short-selling to investing with options and gamification, indicating watchdogs are just getting started in responding to the market mayhem.


U.K. Accuses EU of Harming Britons’ Health as Vaccine Row Grows
Tim Ross and Kitty Donaldson – Bloomberg
Cabinet minister says EU damaged British immunization program; U.K. summons EU diplomat to discuss Charles Michel’s comments
The U.K. accused senior European Union politicians of damaging its vaccination program by making “misleading” statements that cast doubt on the AstraZeneca shot, in an escalation of post-Brexit tensions between the two sides.

UK slams EU over ‘completely false’ claim of ban on vaccine exports; Accusations highlight growing tensions over coronavirus jab supplies
Michael Peel and Sam Fleming and George Parker – FT
Tensions between the EU and UK over coronavirus vaccine supplies exploded in an angry public row when London denounced claims from Brussels that it had imposed an export ban.

The Long Covid Picture Is Stark. Why? More patients are seeking help for lingering effects of Covid like fatigue and brain fog. But there are limited resources and answers.
Therese Raphael – Bloomberg
The downslope of the Covid crisis is proving to be its own bumpy ride — and there’s no telling yet how long it will last. We’ve learned a tremendous amount about the disease itself, but in terms of grasping the impact of lingering post-Covid Syndrome, or Long Covid as it’s often called, we’re just getting started.

Swiss Firm Could Make Russian Vaccine as Early as Third Quarter
Daniele Lepido, John Follain, and Flavia Rotondi – Bloomberg
Adienne Pharma head Di Naro speaks in Bloomberg interview; No decision on where vaccine will be distributed, Di Naro says
The first European company to reach a deal to produce Russia’s Covid-19 vaccine said it could start manufacturing as early as the third quarter, and rejected charges it was part of a propaganda effort as “absurd.”

BioNTech Sees Potential to Supply 3 Billion Doses in 2022
Naomi Kresge and Matthew Miller – Bloomberg
CEO Sahin says lifting vaccine production depends on demand; Company already in discussion about Covid booster shots
BioNTech SE could have capacity to make 3 billion doses of Covid-19 vaccine with U.S. partner Pfizer Inc. next year, the German company’s chief executive officer said, making their pioneering shot far more widely available around the world.

What’s the Best Covid Vaccine? Why It’s Not So Simple
Jason Gale – Bloomberg
As scientists raced to develop Covid-19 vaccines, public health specialists were hoping that more than one group would succeed. Having multiple companies producing vaccines would make it easier to inoculate a lot of people fast. Be careful what you wish for. A range of vaccines with different efficacy results now has given rise to worries that some people may refuse the shot on offer in hopes of getting a “better” one later. In reality, comparing efficacy numbers isn’t necessarily the best way to measure a vaccine’s value. And as suppliers struggle to meet global demand, experts say the best vaccine for you is probably whichever one you can get now.

Pandemic blamed for falling birth rates across much of Europe; Sharp declines in babies being born 9 months or more on from lockdowns in France, Italy and Spain
Victor Mallet, Daniel Dombey and Martin Arnold – FT
It is not just that many more people are dying as a result of the coronavirus pandemic. In several countries, considerably fewer are being born.

Zambian Covid-19 Cases May Have Been 92 Times More Than Reported
Matthew Hill – Bloomberg
Zambia’s young population meant many cases were asymptomatic; Southern African nation is yet to start a vaccination program
Coronavirus cases in Zambia from March to July may have been 92 times higher than official statistics showed, according to estimates from a study published in the Lancet Global Health journal.

Exchanges, OTC and Clearing

Euronext announces annual review results of the AEX® family
Euronext today announced the results of the annual review for the AEX®, AMX® and AScX®. The changes due to the review will be effective from Monday 22 March 2021.

Eurex Exchange Readiness Newsflash | Self-Match Prevention (SMP) changes – Reminder
With this Newsflash, we would like to remind you again about an envisaged change to the Exchange Rules of Eurex Deutschland, which requires Exchange Participants to mark specific algorithmically generated orders and quotes with the Eurex Self-Match Prevention flag (T7 SMP ID – tag 28744 “MatchInstCrossID”).

SGX reports market statistics for February 2021
Derivatives average volume rises; Investor demand for SGX-listed ETFs stays robust
Singapore Exchange (SGX) today released its market statistics for February 2021. Daily derivatives volume increased while investor demand for exchange-traded funds (ETF) stayed robust.

Older and Younger Millennial Loan Activity Differs, According to Latest ICE Mortgage Technology Millennial Tracker
Intercontinental Exchange, Inc.
According to the latest Millennial Tracker from ICE Mortgage TechnologyTM, a division of Intercontinental Exchange, Inc. (NYSE: ICE) and the leading cloud-based loan origination platform provider for the mortgage industry, average interest rates for all millennials reached 2.88% in January – the lowest percentage since ICE Mortgage Technology began tracking the data in 2016. Older millennials (between 30-40 years old) and younger millennials (between 21-29 years old) took advantage of these low rates in different ways.


Symphony and AccessFintech form partnership with an eye on resolving trade exceptions; Two FinTech organisations team up to expedite the resolution of trade exceptions with greater ease and efficiency as industry looks to curb trade fails.?
Jon Watkins – The Trade
Symphony and AccessFintech have teamed up to extend data sharing, communications and workflow collaboration across their platforms. The partnership combines Symphony’s collaboration and communication platform with AccessFintech’s data management and workflow network solution to expedite the resolution of discrepancies such as trade fails and mismatches in the post-trade environment.

Refinitiv integrates equity ownership data with client management platform Tier1; Tier1 said the integration will eliminate participants needs to harmonise input from disparate data platforms, instead streamlining data within its CRM technology.
Annabel Smith – The Trade
Data and analytics giant Refinitiv has integrated its equity ownership data with the client relationship management (CRM) platform provider, Tier1. The integration will provide participants using the Tier1 platform with normalised holdings, profiles and contacts data, streamlining consumption of data for capital markets participants.

Former trading integration project manager at ITG joins LiquidityBook; Stephanie Minister joins LiquidityBook as managing director of connectivity services after 15 years with ITG, now Virtu Financial.
Annabel Smith – The Trade
Trading platform provider LiquidityBook?has hired a former ITG executive to oversee its business development of its proprietary LBX Connect FIX network. Stephanie Minister joins LiquidityBook as managing director of connectivity services, where she will lead a newly created arm of the firm’s corporate structure.

Artis Launches New Loan Product In Association With Etrading Software
Etrading Software, the independent, global provider of technology-led solutions designed for financial institutions and industry initiatives, in partnership with Artis Holdings, today announced the launch of its new loan technology to help provide automation and bring much needed efficiencies to the Loan Market.

One Password Isn’t Enough to Protect You Anymore; The hackers are more sophisticated and state-backed than ever. We need better defenses.
Mark Gongloff – Bloomberg
The Cyber Cold War Is Here, and You’re Enlisted
I have a confession: There’s a website I’ve visited occasionally for the past 14 years, and for all that time my password has been one of those passwords the “experts” always tell you not to use. It’s not a website with sensitive information, and I don’t use that password anywhere else. But still, it’s a very dumb password I am incapable of changing, due to my chronic case of not wanting to. Here at Bloomberg, meanwhile, I not only have a password that changes routinely but also a fingerprint scanner, to keep people from stealing important newsletter secrets.

SoFi Is Buying a Community Lender to Speed Up Banking Expansion; Fintech startup to pay $22 million for California-based Golden Pacific
Peter Rudegeair – WSJ
Fintech startup Social Finance Inc. agreed to buy a tiny California community lender to accelerate its push into the banking business. The San Francisco-based company will spend about $22 million to acquire Golden Pacific Bancorp Inc., which has three branches in and around Sacramento and about $150 million in assets. SoFi plans to contribute an additional $750 million to capitalize the bank for a national, digital expansion should regulators approve the transaction.


Sorry Coinbase, You’re Not Worth $100B; Coinbase is going to market at an opportune moment, but $100 billion is still a helluva lot of money in an industry teeming with competition.
Thomas Meyer – Coindesk
Recent private sales value Coinbase at approximately $100 billion, but investors should proceed with caution. Over the past 11-plus years, cryptocurrency has grown from a single coin to a global asset class worth more than $1.5 trillion. That growth has been spurred, in part, by the inflow of institutional capital from the likes of MicroStrategy, Square and Tesla. The market is as bullish as it’s ever been and Coinbase, the largest crypto exchange in the United States, has opted to strike while the iron is hot.

US Lawmakers Introduce Bill to Clarify Crypto Regulations
Nikhilesh De – Coindesk
Congress may soon try to clarify digital asset regulation in the U.S. Reps. Patrick McHenry (R-N.C.) and Stephen Lynch (D-Mass.) introduced legislation Tuesday to create a working group composed of industry experts and representatives from the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) to evaluate the current legal and regulatory framework around digital assets in the U.S.

India’s Internet and Mobile Association Calls for Crypto Regulation, Not Ban
Tanzeel Akhtar – Coindesk
The Internet and Mobile Association of India (IAMAI) appealed to the Indian government Wednesday not to ban cryptocurrencies. The IAMAI is proposing the government introduce “robust mechanisms” to regulate the cryptocurrency sector as the country could see considerable benefits from digital assets such as job creation, according to a report from The Hindu Business Line. “Given the scale and diversity, the good governance and regulation of the cryptocurrency ecosystem in India is critical and will give impetus to the government of India’s Digital India vision,” said the IAMAI.

JPMorgan to Launch ‘Cryptocurrency Exposure Basket’ of Bitcoin Proxy Stocks
Danny Nelson – Coindesk
Just weeks after JPMorgan Chase published a report warning that traditional financial companies are at risk of falling behind in digital finance, the largest U.S. bank is looking to issue debt linked to cryptocurrency-focused companies. J.P. Morgan Cryptocurrency Exposure Basket, the incoming debt instrument, is long on MicroStrategy (20%) Square (18%), Riot Blockchain (15%) and chipmaker NVIDIA (15%) with positions in 11 companies total. It does not invest directly in cryptos, according to the prospectus.

Nigeria Is Now Rewarding Citizens for Using Licensed Money Senders, Not Crypto
Tanzeel Akhtar – Coindesk
The Central Bank of Nigeria (CBN) is incentivizing citizens to use licensed international money transfer operators (IMTOs) to send and receive money, according to a report by the BBC. In a letter dated March 5 and signed by Associate Director A.S. Jibrin, the CBN said it launched the “Naira 4 Dollar Scheme” for remittances in a bid to funnel payments from abroad through official channels. The incentive program went into effect on Monday and ends May 8. “In effect, a typical recipient of diaspora remittances will, at the point of collection, receive not only the USD sent from abroad but also the additional [5 naira] per [1] USD received,” the letter states.

CrossTower trades record volumes of $150MM in the month of February
CrossTower credits its strong continued growth to the caliber of its platform, products and services. In addition to trading record volume, the company also accomplished multiple milestones in February including:Launch of a new capital markets desk for institutional clients led by securities industry veteran Greg Bunn, formerly with Citadel;Launch of structured products that help institutional clients capture market opportunity between crypto derivatives and spot prices; Launch of its new Bitcoin Fund that offers accredited investors exposure to Bitcoin through standard privately placed security The company also recently rolled out margin trading on CrossTower Global; Since its launch in 2019, CrossTower has over 55 institutional clients, including 17 market makers and 15 hedge funds representing over$25B AUM.

No, Bank of America. A digital euro won’t be “kryptonite for crypto”. First Citi now BoA with the crypto nonsense.
Jemima Kelly – FT
Um, remember last week when a huge American investment bank put out a Very Silly report on bitcoin? Well we regret to inform you that another offending article has landed in our inbox. This time, the subject in question is not actually bitcoin or crypto, but rather a digital euro. So you might have thought that the former would not even come into it, given that a digital central-bank-issued currency has nothing to do with the crypto market or the blockchain?

There are good reasons for business leaders to invest in bitcoin; Cryptocurrencies can be a store of value, like digital gold
Dambisa Moyo – FT
Scepticism over the viability of cryptocurrencies has its roots in the framework of money as a medium of exchange, unit of account and store of value. Critics of bitcoin point to its instability and lack of nimbleness in transactions, but there are very good reasons for business leaders to invest in it.

Korean crypto exchanges to be subject to penalties for any AML failures
Yogita Khatri – The Block
South Korea’s Financial Services Commission (FSC), the country’s top financial regulator, has introduced new penalty standards for crypto exchanges if they fail to implement proper anti-money laundering (AML) measures. The standards, announced Wednesday and effective from April 20, align with Korea’s revised act on Reporting and Using Specified Financial Transaction Information that is going into effect later this month. Under the new penalty standards, virtual asset service providers (VASPs), including crypto exchanges, will be subject to fines if they are found to violate three duties: Internal control (e.g., failure to report suspicious transaction activities), data maintenance (e.g., failure to keep relevant data on suspicious transactions), and duties specifically pertaining to VASPs (e.g., failure to keep separate management of customers’ transactions records).

Quant Fund Manager Bets on Crypto With Brazil Startup Investment
Felipe Marques – Bloomberg
Giant Steps buys minority stake in Polvo cryptocurrency firm; A new fund blending crypto and quant is in the works
Giant Steps Capital, Latin America’s biggest quantitative asset manager, bought a minority stake in a cryptocurrency-focused startup and will launch a fund to invest in futures of Bitcoin and other digital assets.

Bankrupt Crypto Lending Platform Cred Had UK Fugitive in Charge of Funds
Jamie Crawley – Coindesk
Cred, a cryptocurrency platform being investigated by the bankruptcy court in Delaware, had a U.K. fugitive as its chief capital officer (CCO). James Alexander was employed as the CCO of Cred, the crypto lender which filed for bankruptcy in November 2020 with liabilities of between $100 million and $500 million. Alexander had been convicted of crimes relating to illegal money transfers in the U.K. in Dec. 2007 and sentenced to over three years in prison.

In Nevada, a Utopian Vision Gets a Blockchain Twist; A cryptocurrency tycoon is pushing a state bill that would let private sector “innovation zones” test new technologies in mixed-use communities. What could go wrong?
Laura Bliss – Bloomberg
For as long as Nevada has been a state, private sector influence has been a part of public life. Lobbying by 1950s casino owners shielded the Las Vegas Strip and its billions in annual gaming revenue from municipal taxation and oversight. Decades before slot machines came along, the state constitution enshrined tax limits on the mining industry, which persist to this day.

Gaming Crypto-Artists Court Controversy While Cashing in on NFTs
Jason Schreier – Bloomberg
Mining cryptocurrency comes with sky-high energy costs; Non-fungible tokens allow artists to create stamp of ownership
Last week, the artist Ben Mauro was dividing his paychecks into three categories: rent, food, and art. Now, suddenly he’s a multimillionaire. Mauro, who has created concept art for films including The Hobbit and video games such as Halo, is newly wealthy thanks to the phenomenon of non-fungible tokens, or NFTs. These tokens are a type of cryptocurrency, similar to Bitcoin, but each one is unique and can’t be replaced or replicated. They’ve grown popular among digital artists because they serve as certificates of authenticity. In the online world, where anyone can replicate images an infinite number of times, NFTs allow artists to create a stamp of ownership. With ownership comes value.

Bitcoin’s Climate Problem; As companies and investors increasingly say they are focused on climate and sustainability, the cryptocurrency’s huge carbon footprint could become a red flag.
Andrew Ross Sorkin – NY Times
“Bitcoin uses more electricity per transaction than any other method known to mankind, and so it’s not a great climate thing.” That was what Bill Gates recently told me.


Tech’s War With News Outlets Flares as U.S. Lawmakers Ready Bill
David McLaughlin and Sara Forden – Bloomberg
News media could band together under bill to bargain with tech; Australia law marked a major victory for news publishers
The battle between news publishers and Alphabet Inc.’s Google and Facebook Inc. that flared up in Australia recently is coming to the U.S. Lawmakers plan to re-introduce legislation Wednesday to allow news organizations to band together to negotiate with the technology companies over payment for content and the data the companies have about readers.


More ESG Shareholder Proposals Could Reach Ballots Under New SEC Leadership; SEC guidance under the Trump administration emboldened some companies to block shareholder resolutions on environmental and social issues
Dieter Holger – WSJ
Shareholder resolutions on environmental and social issues could find more support from the Securities and Exchange Commission’s new leadership, some investors and former SEC officials say, potentially creating headaches for large companies that have to publicly respond to investor demands.

Reports on suspicious trades declined in 2020 as traders worked from home, FCA says; The FCA found that there was a reduction in suspicious transaction and order reports (STORs) in 2020 due to conditions caused by the pandemic.
Annabel Smith – The Trade
Reports on potentially manipulative trades and orders declined last year during the global pandemic as traders worked from home, the UK’s financial watchdog has said. Executive director of enforcement and market oversight at the Financial Conduct Authority (FCA), Mark Steward, stated in a speech that the regulator noted a decline in suspicious transaction and order reports (STORs), despite a 34% increase in transaction reports during the year.

Regulation for recovery: when pilots become enduring practice; A speech by Deputy Chair Karen Chester, to the AFR Business Summit 2021, Wednesday 10 March 2021.
Let me begin by acknowledging the Traditional Owners of the land upon which we meet today – the Gadigal people of the Eora nation – and pay my respects to their Elders past, present and emerging. My thanks to the AFR for inviting me to speak today. And congratulations to the AFR journalists for their 2020 awards – due recognition of your tenacious investigative reporting. Topped off no less by a Walkley for young Mr Roddan last week.

SEC Charges Unregistered Investment Adviser with Defrauding Investors in Decade-Long Scheme
The Securities and Exchange Commission today charged George Heckler, of Charleston, South Carolina, for operating a decade-long investment adviser fraud through two private hedge funds, Cassatt Short Term Trading Fund LP (Cassatt) and CV Special Opportunity Fund LP (CV Special), that Heckler formed to conceal massive losses incurred by Conestoga Holdings LP (Conestoga), another fund controlled by Heckler.

SEC Awards Approximately $1.5 Million to Whistleblower
The Securities and Exchange Commission today announced an award of approximately $1.5 million to a whistleblower whose information and assistance led to a successful SEC enforcement action.

ESMA’s recruitment tool currently unavailable
ESMA would like to inform users of its online recruitment tool that, due to a major incident at our datacentre provider, it is currently unavailable.

PODCAST: Cybersecurity: Current and Emerging Industry Priorities and Threats
Over the past year, cybersecurity has only increased in importance as huge swaths of the workforce began—and continue—to access networks remotely, resulting in a significant shift to the cybersecurity landscape. On this episode, we hear from John Brady, FINRA’s Chief Information Security Officer (CISO), and Eric Pickersgill, FINRA’s Deputy CISO, on how FINRA handled the transition and areas of focus for the year ahead.

New York State Department Of Financial Services Issues Cybersecurity Alert To Regulated Entities Concerning Microsoft Exchange Email Servers
The New York State Department of Financial Services (“DFS”) today issued the following industry letter to all of its regulated entities following the recent discovery of cybersecurity vulnerabilities in Microsoft Exchange Server.

Investing and Trading

Why The Ongoing War of Words Between Charlie Munger and Robinhood Underline The Lack of Inclusivity in Investing
Dmytro Spilka – FX Empire
With accusations of investing apps like Robinhood being labeled a “dirty way to make money” by Berkshire Hathaway vice-chairman, Charlie Munger in an attack that the app dismissed as “disappointing and elitist,” it’s clear that a war on inclusivity is only just beginning.

Death of 60/40 Portfolio Makes Returns Harder for Funds
David Ramli and David Scanlan -Bloomberg
Singapore, Australia sovereign funds say bond buffer is gone; Future Fund head Brake sees more ‘fragility’ in markets
Two of the world’s largest sovereign wealth funds say investors should expect much lower returns going forward in part because the typical balanced portfolio of 60/40 stocks and bonds no longer works as well in the current rate environment.

Seven More Ways to Fool Yourself Into Good Financial Decisions; Being boring has its advantages, behavioral economists say.
Peter Coy – Bloomberg
Newbies investing money for the first time and people on tight budgets can be illogical about money, but so can those with loads of cash in the bank. “You aren’t insulated from human nature because of a high salary,” says Katy Milkman, a professor at the University of Pennsylvania’s Wharton School and author of the forthcoming How to Change: The Science of Getting From Where You Are to Where You Want to Be. You are, however, able to use behavioral economics to make better financial decisions. I covered seven basic tricks in this article. Here are seven more: Conduct a “premortem.” To fight overoptimism, imagine that the big investment you’re excited about has already failed. Write down why, in detail. “I suddenly ideate reasons why it had to turn out that way,” says Torben Emmerling, a behavioral scientist and managing partner at Affective Advisory in Zurich. “It’s so simple, no? But people don’t do it.”

Juventus’s Champions League Exit Spells Deja Vu for Investors
Joe Easton – Bloomberg
Italian soccer club’s shares tumble after defeat to Porto; Ronaldo was seen as key to success in lucrative tournament
Juventus Football Club S.p.A. shares dropped the most in seven months after the Italian soccer club missed out on a spot in the UEFA Champions League quarter finals following a sensational defeat to Portugal’s F.C. Porto in Turin.

GE to Wind Down GE Capital After Shedding Jet-Leasing Unit; The conglomerate agrees to merge Gecas with AerCap in deal worth more than $30 billion
Thomas Gryta – WSJ
General Electric Co. GE -1.20% Chief Executive Larry Culp is turning off the lights at GE Capital, a once sprawling lender, and shedding debts that have hung over the industrial giant since the 2008 financial crisis.

Volatility Hits the Sizzling SPAC Market; Shares of blank-check companies are gyrating alongside popular technology and electric-car stocks
Amrith Ramkumar – WSJ
Shares of technology firms and special-purpose acquisition companies surged on Tuesday, bouncing back after a weekslong streak of declines that pushed some popular SPACs down 20% or more in a month.

The Tech Stocks Rebound Is a Dinosaur Brain Event; The tail has been bitten, but the signal hasn’t reached the control center yet.
John Authers – Bloomberg
Whiplash for the Brontosaurus
When markets are their most bizarre, as they have been in the last 24 hours, I find myself embracing the brontosaurus. That long-tailed dinosaur was the hero of an analogy drawn by Jeremy Grantham, the highly respected co-founder of fund management firm GMO in Boston, back in the summer of 2007. I have found it useful ever since. The brontosaurus symbolizes the stock market, and the key point is that giant dinosaurs were exceptionally slow on the uptake.

The Stocks Rotation Ride Is Real, and Violent; There’s no room left for doubt that a major shift is under way.
John Authers – Bloomberg
Rotation, Rotation, Rotation
Last November, when excellent vaccine test results sparked a surge in stocks that had suffered most from the pandemic lockdown, it was still possible to doubt whether there had been a true market rotation. The initial drama was followed by a month or two of dithering. That doubt is over. The market is unquestionably going through a major shift. The question is how long it will continue.

Pimco, Fidelity Among Firms Devising Net-Zero Investing Standard
Alastair Marsh – Bloomberg
A group of investors managing a combined $33 trillion has developed what it hopes will become the global standard for net-zero investing.

The Stock Market is Smarter Than You
The Reformed Broker
Join Downtown Josh Brown and Michael Batnick for another round of What Are Your Thoughts? On this week’s episode, Josh and Michael discuss the biggest topics in investing and finance, including:

Conagra in Talks to Sell Hebrew National to JBS; Popular hot dog brand, Egg Beaters and Odom’s Tennessee Pride brands could fetch $700 million
Jacob Bunge and Cara Lombardo – WSJ
Hebrew National may soon answer to a different authority. Conagra CAG -1.34% Brands Inc. is in talks to sell the famous hot dog brand to Brazil’s JBS SA, JBSAY 3.85% people familiar with the matter said. A deal, which the people said could also include the Egg Beaters and Odom’s Tennessee Pride brands, could be valued at around $700 million. Any agreement is likely weeks away and Conagra could end up keeping the business or selling it to someone else, the people cautioned.

Environmental, Social and Corporate Governance

Greenwashing in finance: Europe’s push to police ESG investing; New EU rules on what can be considered a sustainable investment fund could become the global standard
Attracta Mooney – FT
Marcus Björksten manages one of Europe’s best-performing sustainable funds. His Fondita Sustainable Europe product returned an impressive 41.6 per cent last year, while its benchmark lost around 3 per cent.

HK-listed groups badly lag behind global peers on women directors; As many white men sit on the boards of city’s largest listed groups as women of all backgrounds
Hudson Lockett and Alice Woodhouse, Christine Zhang – FT
Hong Kong’s top listed companies are badly lagging behind their global peers in terms of gender parity, with women holding just 14 per cent of board seats at big companies in the city compared with 36 per cent in London.

Harvest aims for global investors with HK-listed China sustainable ETF; The fund will track a bespoke index of 100 A-share companies rated for ESG investment criteria
Echo Huang – FT
Harvest Global Investments is launching an exchange traded fund in Hong Kong targeting demand from institutional investors in the Asia-Pacific, Europe and the US for sustainable Chinese investments.

BP and other oil giants are betting big on being able to bury pollutants under the ocean.
NY Times
Lots of attention is being paid to carbon capture as a way to meet the targets in the 2016 Paris climate agreement. The idea sounds deceptively simple: Divert pollutants before they can escape into the air, and bury them deep in the ground where they can do no harm.

Texas Energy Fallout Tips Power Retailer Just Energy Into Bankruptcy; The Toronto-based energy retailer is filing for protection from creditors in the U.S. and Canada over more than $250 million in bills stemming from the Texas energy crisis
Alexander Gladstone – WSJ
Energy retailer Just Energy Group Inc. filed for bankruptcy protection in the U.S. and Canada on Tuesday, hit with massive bills from the Texas energy crisis as the financial fallout spreads after last month’s dramatic spike in power prices.

New Data Expose Precisely How White and Male Some U.S. Companies Are
Jeff Green, Gerald Porter Jr., Cedric Sam and Christopher Cannon – Bloomberg
It used to be difficult to get information about the racial makeup of a company’s workforce. That’s quickly changing, at least for the largest U.S. companies, offering a revealing look at how much progress they need to make to reflect the population at all levels.


Hedge Fund Bronte Shorts Credit Suisse on Frozen Greensill Funds
Matthew Burgess and Stefania Bianchi – Bloomberg
John Hempton is also wagering on declines in Tokio Marine, IAG; Fund manager has highlighted how the bank marketed its funds
An Australian hedge fund is betting against Credit Suisse Group AG, expecting the Swiss lender may end up having to compensate clients for losses tied to billions of dollars invested in funds it ran with embattled financier Lex Greensill.

Apollo’s Greensill bid crumbles as Credit Suisse puts staff on leave; US private equity group halts talks to buy parts of stricken finance company
Robert Smith, Cynthia O’Murchu and Owen Walker and Sujeet Indap – FT
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Apollo Global Management’s plan to buy parts of stricken finance company Greensill Capital out of administration is on the verge of collapse, according to people familiar with the matter.

Citi Blocks Firms With Errant Revlon Payout From Debt Deals
By Katherine Doherty, Paula Seligson, and Jennifer Surane – Bloomberg
Brigade, HPS, Symphony among those left out of debt offerings; Bank is on the hook for over $500 million of wayward cash
Citigroup Inc. is punishing investment firms that kept payments the bank accidentally sent to Revlon Inc. lenders by blocking them from certain new debt offerings led by the bank, according to people with knowledge of the matter. The bank is choosing to not invite these money managers, who hung on to over $500 million, to its new-issue debt deals, the people said, asking not to be identified discussing a private matter. Firms targeted include Brigade Capital Management, HPS Investment Partners and Symphony Asset Management, the people said.


Soaring Yields Oust the Euro as the ECB’s Biggest Problem; The last thing the central bank needs right now is a taper tantrum.
Marcus Ashworth – Bloomberg
Christine Lagarde has some explaining to do at Thursday’s European Central Bank meeting. Amid the fixed-income rout and soaring yields, the ECB has been far too cautious in using its most visible weapon: Quantitative Easing bond buying. The bank has bought only 12 billion euros ($14 billion), net of redemptions, over each of the last two weeks — short of the 18 billion euros it had been buying on average each week since the pandemic program started a year ago.

Argentina Is Torn Between Its Shale Dream and Climate Goals; Natural gas fracking could be its ticket out of a years-long economic crisis, but it jeopardizes a promise to wipe out emissions by 2050.
Jonathan Gilbert, Laura Milan Lombrana – Bloomberg
President Alberto Fernandez took to a makeshift stage in Argentina’s Vaca Muerta shale deposit in October to announce the nation was doubling down on fossil fuels. “Today we are relaunching the oil and gas economy,” he declared, starting with $5 billion of government subsidies.

Saudi Arabia Vows Steps to Ensure Oil Supply, Deter Attacks
Vivian Nereim and Dana Khraiche – Bloomberg
World must take strong stance to stop attacks, minister says; Prince: Iran to blame for supplying Houthis with arms in Yemen
Saudi Arabia will take measures to ensure global energy security and deter attacks on its oil infrastructure, Foreign Minister Prince Faisal bin Farhan said in Riyadh on Wednesday, days after a missile and drone assault on Saudi Aramco facilities.

BOJ Board Nominee Junko Nakagawa in Her Own Words
Yuko Takeo – Bloomberg
Junko Nakagawa, a Nomura Holdings executive picked by Prime Minister Yoshihide Suga to join the Bank of Japan’s board, is seen as a policy moderate who’s likely to support the board’s current direction after her trailblazing rise in Japan’s male-dominated finance industry.

Japan Nominates Nomura Asset Chief to Replace Only Woman on BOJ Board
Toru Fujioka and Yoshiaki Nohara – Bloomberg
Nomura Asset Management CEO seen as a likely neutral on board; Nakagawa was first woman to become an exec at Nomura Holdings
The nomination of Nomura Asset Management Chief Executive Officer Junko Nakagawa for the Bank of Japan’s board is seen maintaining the existing balance of opinions among the bank’s nine policy-setting members.

Record Drought Strains the Southwest; Water supplies are low and wildfire risks are high in states like Utah and Nevada, as snow and rain stay scarce
Jim Carlton | Photographs – WSJ
For the first time ever, rancher Jimmie Hughes saw all 15 of the ponds he keeps for his cattle dry up at the same time this year.


Brexit Border Friction Rises With More Cargoes to U.K. Rejected
Lizzy Burden – Bloomberg
Friction at the U.K. border is rising again following Brexit as shipping companies rejected more cargoes due to cross the English Channel from France. The rate that freight companies declined to take shipments that were scheduled to move rose last week and is now 69% higher than the average in the third quarter, according to the logistics platform Transporeon.

Brexit: What will happen when EU-GB grace periods expire?
John Campbell – BBC News
Grace periods for implementing post-Brexit checks on goods going from Great Britain to Northern Ireland are at the centre of tensions between the EU and UK. The UK has unilaterally increased these grace periods, which allow for lighter touch controls on some goods. The EU says this is a breach of the Northern Ireland Brexit deal and is planning legal action. But these are not the only Brexit grace periods. They also apply on trade from the EU to England, Scotland and Wales.

Brexit: EU poised to take legal action against UK over Northern Ireland
Jon Henley and Daniel Boffey – The Guardian
The European Union is set to launch a two-pronged legal assault on the UK in the coming days after the British government’s unilateral decision to allow businesses in Northern Ireland more time to adapt to post-Brexit rules. EU27 ambassadors were briefed on Tuesday on the plans, which are likely to involve initiating a formal “infringement proceeding” that could end up at the European court of justice (ECJ), and triggering the dispute mechanism in the Brexit withdrawal agreement.

EU’s Sefcovic to brief U.S. lawmakers on Northern Ireland’s Brexit puzzle
Reuters staff
EU Commission Vice President Maros Sefcovic and Irish Foreign Minister Simon Coveney will brief the U.S. Congress’ influential Irish-American caucus on Wednesday on difficulties implementing Northern Irish Brexit arrangements. The fate of Northern Ireland, closely watched by U.S. President Joe Biden, has been the most bitterly contested Brexit issue. London ultimately agreed to leave the British-run region aligned with the EU’s single market for goods when it left the bloc’s orbit last year, necessitating checks on some items arriving there from elsewhere in the United Kingdom.


Hackers Breach Thousands of Security Cameras, Exposing Tesla, Jails, Hospitals
William Turton – Bloomberg
Hacker group says it wanted to show prevalence of surveillance; Video footage was captured from Sequoia-backed startup Verkada
A group of hackers say they breached a massive trove of security-camera data collected by Silicon Valley startup Verkada Inc., gaining access to live feeds of 150,000 surveillance cameras inside hospitals, companies, police departments, prisons and schools.

Lego Unveils Record Sales as Toy Bricks Become a Lockdown Winner
Christian Wienberg -Bloomberg
Lego A/S booked record sales and profit last year, as consumers of all ages turned to its iconic toy bricks during the pandemic. Net income rose 19% to 9.9 billion kroner ($1.6 billion), the company, which is based in western Denmark, said on Wednesday. Sales gained 13% to 43.7 billion kroner, the most Lego has ever brought in during a single year.

BuzzFeed lays off 47 HuffPost workers weeks after acquisition.
Katie Robertson – NY Times
When BuzzFeed announced last year that it would buy HuffPost, it was expected that cost-cutting would follow the completion of the deal. On Tuesday, less than a month after the acquisition went through, BuzzFeed laid off 47 workers at HuffPost and closed the publication’s Canadian edition.

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