How hedge funds are fighting back against the SEC’s ‘aggressive’ agenda

First Read

Hits & Takes
John Lothian & JLN Staff

The Financial Times reported that Japan’s Prime Minister Fumio Kishida announced he will step down as leader of the ruling Liberal Democratic Party (LDP) in September, effectively ending his tenure as prime minister. His decision follows months of low approval ratings, rising living costs, and a political funding scandal that led to the dismissal of four cabinet ministers in 2023. Kishida emphasized the need for the LDP to demonstrate change, starting with his resignation. This leadership change occurs as Japan strengthens its defense role in the Pacific and deepens security ties with the US amid concerns over China’s rise. Economically, Japan has started to recover from prolonged deflation and low growth, attracting investors wary of geopolitical risks in China.

Australia’s market regulator, the Australian Securities and Investments Commission (ASIC), has sued the Australian Stock Exchange (ASX) for making “misleading and deceptive” statements about its failed blockchain-based clearing and settlement system upgrade, the Financial Times reported. Initially launched in 2017 as a pioneering project to integrate blockchain into global capital markets, the upgrade was abandoned in November 2022 after significant delays. ASIC’s lawsuit highlights a February 2022 ASX statement that falsely suggested the project was on track for an April 2023 launch. However, a subsequent review by Accenture revealed the project was only 63% complete. ASIC views this failure as a critical breach of trust, impacting the entire market. ASX wrote off A$250 million in costs due to the project’s failure and penalized former CEO Dominic Stevens by stripping him of A$3 million in long-term bonuses. Current ASX CEO Helen Lofthouse acknowledged the seriousness of the legal proceedings.

The SEC has charged OTC Link, a US broker-dealer and significant alternative trading system, with failing to file required Suspicious Activity Reports (SARs) over a three-year period starting in March 2020, the Financial Times’ FT Alphaville financial & markets regulation column reported. Despite being responsible for monitoring high-risk microcap and penny stock transactions, OTC Link’s anti-money laundering (AML) efforts were minimal, with its chief compliance officer dedicating only two hours per month to AML oversight. The SEC alleges that OTC Link ignored numerous red flags, such as unusual trading volumes and patterns in microcap stocks, and did not adequately review alerts from its automated surveillance system. The firm agreed to settle the charges by paying a $1.19 million fine without admitting guilt. Critics argue that the penalty is insignificant compared to the firm’s failures, amounting to little more than a “cost of doing business.”

The veteran journalist, editor and corporate communications professional Eugene Colter is joining MSCI as head of corporate communications. He has been with TIAA, Nuveen, Blackrock, PIMCO and Peppercorn since leaving The Wall Street Journal as a News Editor.

Nandini Sukumar, CEO of the World Federation of Exchanges, appeared on CNBC Africa and discussed the surge in investor appetite for listed securities in the first half of 2024, noting that trading values are up 11.7% and volumes increasing by 9.6%, marking the highest trading activity in five years.

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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Our most read stories from our previous edition of JLN Options were:
– OCC Welcomes MIAX Sapphire as Newest Options Exchange from OCC.
– WFE data: trading value and volumes surge as investors flock to markets from WFE.
– Wall Street’s Crowded Options Trade Survives Recent Stock Turmoil from Bloomberg. ~JB

Subscribe to the JLN Options Newsletter HERE (it’s free).

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TradeStation’s James Putra talks with JLN about options, crypto derivatives, AI and other trading tools at the OIC conferenceJohnLothianNews.com

JLN spoke with James Putra, vice president and head of product at TradeStation, at the Options Industry Conference in Asheville, NC. The interview is part of the JLN Industry Leader video series sponsored by OCC.

In the interview, Putra talked about the pressure on the spot crypto market and said that trying to squeeze it into traditional finance is not necessarily better for the individual customer, and brings high risk for that customer.

Watch the video »

Dan Sullivan and Michael Rothstein – JLN Podcast

Watch video »

Agricultural Futures: Navigating the Fields – John Lothian News

Watch Video »

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Lead Stories

How hedge funds are fighting back against the SEC’s ‘aggressive’ agenda; Funds have taken aim at US regulator’s authority in challenge to rule that would have forced greater transparency
Costas Mourselas and Stefania Palma – Financial Times
In February 2022, the chief legal officer of hedge fund Citadel, Shawn fa*gan, rang Eugene Scalia, a top lawyer who has made a career out of taking on US regulators. fa*gan wanted Scalia’s help in challenging a newly aggressive Securities and Exchange Commission, which under chair Gary Gensler was proposing rules that would bring private equity firms and hedge funds – part of a “shadow banking” sector whose rapid growth has alarmed regulators – under closer supervision. It was a natural choice. fa*gan had known Scalia for many years, having been a clerk at the US Supreme Court in the days when Eugene’s father Antonin Scalia, a conservative justice idolised by Republicans for his steadfast opposition to perceived government over-reach, was on the court. Following the call, Citadel and the other hedge funds and private equity firms opposing the plans decided on a strategy altogether more drastic than simply quibbling about individual aspects of the rule they did not like – challenging in court the SEC’s very authority to introduce such regulation.
/jlne.ws/3WNVVkO

Australian regulator sues stock exchange over botched blockchain upgrade; Corporate watchdog says ASX made ‘misleading’ statements about its clearing and settlement system
Nic Fildes – Financial Times
Australia’s market regulator has sued the country’s stock exchange, alleging it made “misleading and deceptive” statements about a plan to upgrade its clearing and settlement systems to blockchain technology. The Australian Securities and Investments Commission, which regulates companies in Australia, said in a lawsuit filed on Wednesday that there had been a “collective failure” by ASX’s board and management when it tried to transfer its ageing systems for settling trades to a blockchain-based platform.
/jlne.ws/3Axd7Uc

World’s Top Steel Producer Warns of ‘Severe’ Industry Crisis
Bloomberg
The world’s biggest steel producer sounded the alarm about an industry crisis in China that carries the potential to ripple around the globe and plunge the sector into a deeper downturn. Conditions in China’s steel sector are like a “harsh winter” that will be “longer, colder and more difficult to endure than we expected,” China Baowu Steel Group Corp. chairman Hu Wangming told staff at company’s half-year meeting, warning of worse challenge than major traumas in 2008 and 2015.
/jlne.ws/3SONDrE

*****Here is the story from the Financial Times.

US Considers a Rare Antitrust Move: Breaking Up Google
Leah Nylen and Anna Edgerton – Bloomberg
A bid to break up Alphabet Inc.’s Google is one of the options being considered by the Justice Department after a landmark court ruling found that the company monopolized the online search market, according to people with knowledge of the deliberations. The move would be Washington’s first push to dismantle a company for illegal monopolization since unsuccessful efforts to break up Microsoft Corp. two decades ago. Less severe options include forcing Google to share more data with competitors and measures to prevent it from gaining an unfair advantage in AI products, said the people, who asked not to be identified discussing private conversations.
/jlne.ws/3yEcgk2

ASIC Deputy Chair Says Seeks Future Penalties in ASX Civil Suit; Sarah Court speaks in Bloomberg TV interview in Melbourne; ASIC says case in early stages, court to decide on allegations
Avril Hong and Paul Allen – Bloomberg
Australia’s markets regulator plans to seek penalties after it sued ASX Ltd. for misleading statements relating to years of concerns over the progress and delays of a technology project. Australian Securities and Investments Commission Deputy Chair Sarah Court said the case against ASX is in its “early stages” and while it “will be seeking penalties down the track,” it is now up to the Federal Court to decide on the allegations made in the civil case.
/jlne.ws/3yEf5l9

Google could be broken up after paying billions to block search rivals
Daniel Woolfson – The Telegraph
US officials are plotting a potential break-up of Google after the tech giant was found to have illegally maintained a monopoly over the online search market. The radical proposal is reportedly being considered by the US Department of Justice, which could force Google to sell parts of its business, such as its Chrome browser. It comes after Judge Amit Mehta of the US district court for the District of Columbia ruled last week that Google had unfairly blocked rivals by paying $26bn to become the default search engine on smartphones and web browsers.
/jlne.ws/3An0o6x

Amazon, Meta and Big Tech’s bid to rewrite the rules on net zero; Critics say a proposed rule change backed by Amazon and Meta could allow large energy users to hide their true emissions
Kenza Bryan, Camilla Hodgson and Jana Tauschinski – Financial Times
By its own account, Amazon is a green business leader. The world’s most visited online marketplace and leading cloud services provider says it hit its 100 per cent renewable energy goal seven years ahead of a self-imposed target. But by another, Amazon is a heavy polluter, emitting much more climate-warming greenhouse gases through its electricity usage than cloud computing rivals. In the US, Amazon’s vast home market, fossil fuels accounted for about 60 per cent of electricity generation in 2023.
/jlne.ws/46NtF6x

Gas and grain ships shun Panama Canal after drought disruption; Shipbrokers say commodities traders have grown accustomed to longer routes
Christine Murray, Oliver Telling and Shotaro Tani – Financial Times
The Panama Canal is struggling to persuade traders in liquefied natural gas and food commodities such as grains to return to the trade route after they were forced out by a historic drought last year. The 110-year-old canal, through which goods ranging from US LNG to Latin American crops have for decades reached the rest of the world, was forced to cap crossings last July because of a lack of rainfall needed to operate its locks. It hopes to return close to capacity in September after months of higher rainfall.
/jlne.ws/4dFnxzw

Cargill’s revenues drop from record levels as ample crops depress prices; Revenue decline comes as agricultural trader restructures organisation amid profit pressure
Susannah Savage – Financial Times
Cargill, the world’s largest crop trader, said annual revenues declined by a tenth as ample crop supplies have pushed down prices. The decline in revenues to $160bn for the year to May 2024 from a record $177bn the previous year comes as Brian Sikes, who took the helm of the trading company at the start of 2023, is overhauling its operations.
/jlne.ws/3M2udfg

China’s bond market is sending a signal policymakers can’t ignore; The country’s central bank is concerned about anaemic domestic demand
Robin Harding – Financial Times
There is a bubble in the Chinese government bond market – or so, at least, the People’s Bank of China would fervently like to believe. A bubble would be a worrying risk to financial stability. The existence of such a risk, however, is far more palatable than the plausible alternative: that bond markets are sending out an increasingly dire signal of concern about the prospects for China’s economy, the danger of deflation and the need for a change of course.
/jlne.ws/3WO5nVo

Bank of America Urges Bankers to Sound Alarm on Overwork After WSJ Investigation; The Wall Street Journal reported earlier this week that bank policies to prevent overwork are often ignored
Alexander Saeedy – The Wall Street Journal
Bank of America is urging young bankers to accurately report the hours they work after an investigation by The Wall Street Journal found bankers are often pressured to ignore rules meant to prevent dangerous overwork. Several junior investment bankers were told by their managers Monday to alert superiors or the human-resources department if they are being pressured to misreport hours. They were also told that the mandate to do so comes from the highest levels of the company.
/jlne.ws/3SNLe0s

To Save the Panama Canal From Drought, a Disruptive Fix; In the wake of a drought that hampered shipping, the Panama Canal’s overseers are eager to expand water storage. Climate change leaves them no choice.
Peter S. Goodman – The New York Times
Ricaurte Vasquez Morales is a man obsessed with water. An app on his phone displays the fluctuating level of Lake Gatún, the artificial reservoir that is the centerpiece of the Panama Canal system. He checks it constantly, the way a gambling addict monitors football scores. He keeps a vigilant eye on the weather.
/jlne.ws/3SRcrzA

How can bond investors access liquidity and trade effectively in a challenging, politically fuelled market
The Trade
Given the growing geopolitical pressures globally and some of the election outcomes to date, Christophe Roupie, head of EMEA and APAC, and chief executive of UK at MarketAxess discusses how the outlook for fixed income markets has changed materially from the start of the year. In early 2024, investor sentiment steadied against a more favourable rates environment and broadly improving market conditions. However, recent surprise election results and polling activity weighed heavily on bond investors as we moved into summer.
/jlne.ws/3YJDlgp

Ukraine Invasion

Ukraine claims more advances, prisoners taken as it presses an incursion into Russia
Illia Novikov and Emma Burrows – Associated Press
Ukrainian forces pushed on with their major cross-border incursion into Russia’s Kursk region for a second week Wednesday, claiming to have taken more ground, captured more Russian prisoners and destroyed a jet bomber while launching what officials said was a massive attack on Russian military airfields. Since the start of the day, assault troops had advanced 1-2 kilometers (miles) in some parts of Kursk, the commander of the Ukrainian military, Oleksandr Syrskyi, said in a video posted on President Volodymyr Zelenskyy’s Telegram channel. Also, Ukrainian troops on Wednesday took more than 100 Russian soldiers prisoner, Syrskyi said. Zelenskyy said they would be used to swap for Ukrainian POWs.
/jlne.ws/4dsiyCM

Ukraine launches huge drone attack on Russia; Kyiv’s forces face increased Russian resistance on ninth day of their cross-border incursion
Isobel Koshiw – Financial Times
Ukraine has launched one of the largest drone attacks on Russia as Kyiv’s forces are facing increased resistance in their attempt to push further into Russian territory, nine days into their daring cross-border incursion. Russia’s defence ministry said on Wednesday that Ukraine had launched 117 drones, as well as missiles, not only in the Kursk region, but also in the regions of Voronezh, Belgorod and Nizhny Novgorod. The attack is one of the largest recorded since Moscow’s 2022 full-scale invasion of Ukraine.
/jlne.ws/3X2A3DB

Russian Businesses See Billions Stuck Abroad on Payment Delays; Foreign financial assets jumped by $45 billion in Jan.-July; US sanctions threat has slowed international payments
Bloomberg News
Russian businesses saw a massive jump this year in the amount of cash piling up abroad as the threat of secondary financial sanctions from the US causes increasing delays in international trade settlements. Foreign financial assets increased by almost $45 billion in the first seven months compared with a gain of $21 billion in the same period the previous year, according to Bank of Russia data published Tuesday. While some of that is investment abroad, the surge is mainly an accumulation of Russian companies’ accounts receivable due to difficulties with international payments, the central bank said.
/jlne.ws/3Ap3U0k

Israel/Palestine Conflict

Hamas to stay out of Gaza truce talks, Iran considers Israel attack
Nidal Al-Mughrabi – Reuters
The Palestinian Islamist group Hamas said on Wednesday it would not take part in a new round of Gaza ceasefire talks slated for Thursday in Qatar, dimming hopes for a negotiated truce that Iranian sources say could hold back an Iranian attack on Israel. The U.S. has said it expects indirect talks to go ahead as planned in Qatar’s capital Doha on Thursday, and that a ceasefire agreement was still possible. However, Axios reported that U.S. Secretary of State Antony Blinken has postponed a trip to the Middle East that had been expected to begin on Tuesday.
/jlne.ws/4cm9uh7

Exchanges, OTC and Clearing

ASX STATEMENT ON ASIC PROCEEDINGS
ASX
ASX advises that civil proceedings were filed against ASX Limited by the Australian Securities and Investments Commission (ASIC) in the Federal Court of Australia on 13 August 2024. The proceedings concern certain statements made in February 2022 by ASX in relation to the previous CHESS replacement project.
/jlne.ws/3X0qTrp

MIAX Sapphire joins OCC; The move follows the official launch of the MIAX Sapphire electronic exchange on 12 August 2024; Sapphire is MIAX’s fourth US listed options exchange.
Claudia Preece – The Trade
The Options Clearing Corporation (OCC) has confirmed that MIAX Sapphire has become the newest options exchange participant. Andrej Bolkovic, chief executive of OCC, said: “OCC congratulates MIH on the launch of its fourth listed options exchange. As the central counterparty clearinghouse for all US listed options, we are pleased to offer our clearing and settlement capabilities to MIAX Sapphire and to support the exchange-traded options industry’s continued growth.”
/jlne.ws/4dl8on3

Rule 807. Open Long Positions During Delivery Month
CME Group
At such times and in such manner as shall be prescribed by the Manual, clearing members shall submit a complete and accurate record of dates of all open purchases for use in making deliveries. Clearing members shall be fully responsible for inventories submitted to the Clearing House. This rule shall not apply to trading in options contracts.
/jlne.ws/3ytMoHN

Effective Dates for Spot Month Position Limits in the September 2024 Core Products
CME Group
Dear Market Participant: Spot month limits are effective at the close of trading on the dates listed (in chronological order): MSN08-08-24SpotMonthPositionLimitsintheSeptember2024CoreContracts
/jlne.ws/3WM2NPL

Applications for Increase in Soybean Meal Regularity
CME Group
Pursuant to Regulation 703.A, notice hereby is given that Cargill, Inc. has applied to the Exchange for an increase in regularity in Soybean Meal at their facilities below. The following chart provides the facilities current DROL, requested DROL, current maximum allowable certificates, and requested allowable maximum certificates as follows:
/jlne.ws/46PGM7s

ICE Futures U.S. 2024 Columbus Day and Canadian Thanksgiving Day Trading Schedule
ICE Futures U.S.
There will be no trading in Canola futures and options contracts on Monday, October 14, 2024, in commemoration of Canadian Thanksgiving Day. This Canadian holiday coincides with the U.S. Columbus Day holiday, and all ICE Futures U.S. contracts other than Canola futures and options will follow regular trading hours and daily settlement window times on this day. . Please note that due to the fact that Columbus Day is a bank holiday in New York, October 14, 2024 shall not be considered a Business Day for purposes of determining Notice and Delivery Days for the October 2024 Cotton No. 2 contract.
/jlne.ws/4dEGD91

24 229 Lifting of Suspension for Lead brand IBIS
LME
Further to Notice 24/160 issued on 5 April 2024, please be advised that the suspension of Lead brand IBIS has been lifted with immediate effect.
/jlne.ws/4ddDi0N

24 228 Lifting of Suspension for Special High Grade Zinc brand IBIS SHG
LME
Further to Notice 24/162 issued on 5 April 2024, please be advised that the suspension of Special High Grade Zinc brand IBIS SHG has been lifted with immediate effect.
/jlne.ws/4fMPrvw

24 227 Probationary Authorised Dealer
LME
The undermentioned has been admitted as a probationary authorised Dealer in conformity with the LME Rulebook:- Mr Sean Regan – Amalgamated Metal Trading Limited
/jlne.ws/3WZRJ2U

Increase in ceiling amount payable out of Investor Protection Fund Trust
NSE
As per Chapter XIII of the Exchange Byelaws, Clause 15, the Investor Protection Fund Trust (IPF) has increased the maximum permissible limit against a single claim from the current amount of Rs. 25 Lakh to Rs. 35 Lakh per investor per claim. This limit shall be applicable for claims received against the Trading members who have been declared defaulter or have been expelled from the date of this press release.
/jlne.ws/4dyYLkM

Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and Montreal Exchange Closed for Labour Day
TMX
Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and Montreal Exchange will be closed on Monday, September 2, 2024 for the Labour Day holiday. The Exchanges will re-open and resume regular trading hours on Tuesday, September 3, 2024.
/jlne.ws/4723tFD

Fintech

Intel sells stake in chip designer Arm Holdings
Reuters
Intel, which is cutting thousands of jobs as it struggles to stay relevant in the chip industry, sold its 1.18 million share stake in British chip firm Arm Holdings in the second quarter, a regulatory filing showed on Tuesday. Intel would have raised about $146.7 million from the sale, based on the average price of Arm’s stock between April and June, according to Reuters calculations.
/jlne.ws/3SNMoch

Cybersecurity

News outlets were sent leaked Trump campaign files. They chose not to publish them
Jon Passantino and Liam Reilly – CNN Business
In the hours after President Joe Biden’s historic decision to step aside from the 2024 presidential race last month, journalists across three major US newsrooms began receiving emails from an anonymous person claiming to have tantalizing new information about the election. The individual, who identified themself only as “Robert,” sent a trove of private documents from inside Donald Trump’s campaign operation to journalists at Politico, The New York Times and The Washington Post.
/jlne.ws/3yB2Upm

Russia’s critics targeted with global hacking campaign, rights group says
Zeba Siddiqui – Reuters
Hackers linked to Russian intelligence are targeting the Kremlin’s critics around the globe with phishing emails, according to new research published on Wednesday by digital rights groups Citizen Lab and Access Now. The phishing campaign is part of a sweeping internet espionage operation, the researchers say, and comes as U.S. officials are closely monitoring computer networks to thwart any cyberattacks against the 2024 presidential election. The email hacks began around 2022 and have targeted prominent Russian opposition figures-in-exile, former U.S. think tank and policy officials and academics, U.S. and EU nonprofit staff, as well as media organizations, the report said.
/jlne.ws/3WZXFsG

Cryptocurrencies

Goldman Sachs Holds Over $400M in Bitcoin ETFs
Sam Reynolds – CoinDesk
Goldman Sachs (GS) holds positions in a variety of bitcoin {{BTC}} exchange-traded funds (ETFs), according to a 13F filing. The investment bank in its quarterly 13-F report disclosed that it holds positions in seven out of the 11 BTC ETFs in the U.S. Its largest holding is the iShares Bitcoin Trust (IBIT) at $238.6 million, followed by Fidelity’s Bitcoin ETF (FBTC) at $79.5 million, then $56.1 million of Invesco Galaxy’s BTC ETF (BTCO), and $35.1 million in Grayscale’s GBTC. It also holds smaller positions in BITB, BTCW, and ARKB.
/jlne.ws/4dmrdpY

DBS launches treasury tokens with Ant International for cross-border liquidity management
South China Morning Post
DBS, Singapore’s largest banking group, has launched a treasury token pilot project with Ant International to improve cross-border treasury and liquidity management. The project, which operates on DBS’ permissioned blockchain, will enable Ant International, the operator of the widely used mobile payment service Alipay+, to use the digital token to achieve instant, multicurrency treasury and liquidity management for their entities across multiple markets, the bank said in an announcement on Tuesday.
/jlne.ws/3yE5N8L

Politics

Goldman Sachs says voters are shifting to Kamala Harris-and the odds of a blue wave are swelling
Marco Quiroz-Gutierrez – Fortune
Kamala Harris has pulled ahead of Donald Trump in national polls as voters turn away from third parties and the odds of a blue wave increases, according to Goldman Sachs. The vice president is up by about three percentage points nationally since she became the presumed Democratic nominee after President Biden ended his reelection bid last month. Her margins have also improved in key swing states, including Pennsylvania, with 19 electoral votes, where Trump has just a 0.2 percentage point lead over Harris, according to the Goldman analysts. The vice president needs at least 270 electoral votes to win the election.
/jlne.ws/3X3yhlW

‘The dumbest climate conversation of all time’: experts on the Musk-Trump interview
Oliver Milman – The Guardian
Donald Trump and Elon Musk both made discursive, often fact-free assertions about global heating, including that rising sea levels would create “more oceanfront property” and that there was no urgent need to cut carbon emissions, during an event labeled “the dumbest climate conversation of all time” by one prominent activist. Trump, the Republican US presidential nominee, and Musk, the world’s richest person, dwelled on the problem of the climate crisis during their much-hyped conversation on X, formerly known as Twitter and owned by Musk, on Monday, agreeing that the world has plenty of time to move away from fossil fuels, if at all.
/jlne.ws/3M5fcJz

$350 Could Cost You Thousands: Wall Street Banks Clamp Down On Harris-Walz Donations
AJ Fabino – Benzinga
Vice President Kamala Harris’s selection of Minnesota Gov. Tim Walz as her running mate has created an unexpected challenge for Wall Street’s political donors. Major financial institutions are now grappling with stringent regulations that could limit their employees’ ability to contribute to the Harris-Walz campaign.
/jlne.ws/3YGieLR

Scotland’s fiscal deficit widens on lower oil and gas revenues
Financial Times
Scotland’s net fiscal deficit – the difference between revenue and public expenditure – has widened on the back of lower North Sea oil and gas revenues, according to data published on Wednesday. The net fiscal balance grew to £22.7bn, or 10.4 per cent, in the 2023-24 period, up from 8.4 per cent the previous year. This compares with a deficit of 4.5 per cent for the whole of the UK.
/jlne.ws/4dpla48

Analysis-Japan’s Kishida championed ‘new capitalism’ but was undone by yen
Yoshifumi Takemoto and Mariko Katsumura – Reuters
Fumio Kishida pushed through Japan’s biggest wage increases in decades, but it was not enough to make up for the impact the battered yen has had – or keep him in his job as prime minister. Kishida on Wednesday succumbed to months of woeful public support numbers and said he would step down next month. While his tenure was marred by scandals, including one involving party slush funds, the weak yen was arguably his undoing.
/jlne.ws/4e0G0XF

Thai court removes prime minister over cabinet appointment; Ruling that Srettha Thavisin violated ethical standards follows tensions between his party and conservative establishment
A. Anantha Lakshmi – Financial Times
/jlne.ws/4dz0AOE

Regulation

Poland received German request to arrest Nord Stream suspect but he’s left country, prosecutors say
Rachel More and Anna Wlodarczak-Semczuk – Reuters
Poland received a European arrest warrant issued by Berlin in connection with the 2022 attack on Nord Stream pipelines, but the suspect, a Ukrainian man named as Volodymyr Z, has already left Poland, Polish prosecutors told Reuters. He was able to leave as Germany had failed to include his name in a database of wanted persons, added the prosecutors.
/jlne.ws/3ArsDRF

Germany issues arrest warrant for Ukrainian over Nord Stream gas pipeline attacks; Undersea infrastructure that transported gas from Russia to Germany was destroyed in 2022 blasts
Guy Chazan and Natalia Sawka – Financial Times
Germany’s chief prosecutor has issued an arrest warrant for a Ukrainian man suspected of blowing up the Nord Stream gas pipelines in the Baltic Sea nearly two years ago. A spokesperson for the Polish prosecutor’s office, Anna Adamiak, confirmed on Wednesday that the German authorities issued the European arrest warrant in June for Volodymyr Z, a Ukrainian citizen who had been living in Poland. The spokesperson said he moved to Ukraine in early July, before he could be arrested.
/jlne.ws/4dEBMVe

EU banks warn about ‘protectionist’ UK plans to cap payments fees; Regulator PSR argues that charges have risen five-fold since Brexit
Akila Quinio – Financial Times
European banks have raised “serious concerns” with the Treasury about a plan by the UK regulator to cap international digital transaction fees that generate revenue for EU banks and payment companies. Two trade bodies – the European Banking Federation and Payments Europe – warned the proposed move was “potentially discriminatory” and a “risk to the integrity of national payments and retail banking markets in the EU”.
/jlne.ws/3X2T8Wj

Europe ramps up its battle with Elon Musk Intervention ahead of Trump interview adds to tensions over first-of-its-kind investigation into social media platform X
Alice Hanco*ck and Daria Mosolova in Brussels and Anna Gross and Stephanie Stacey in London – Financial Times
A public dispute between Elon Musk and the EU has sharpened concerns in Europe about its ability to wield power over the sprawling social media platform X at a time when disinformation and deepfakes have helped to fuel political discord and an outbreak of UK rioting. Europe has taken a tougher approach to regulating digital platforms than the US, but Musk’s acquisition of X, then called Twitter, almost two years ago has brought the issue into greater focus after he slashed its moderators, restored previously banned accounts and increased his own outspoken posts.
/jlne.ws/4dCF6A4

Conflicts of Interest in Artificial Intelligence | Office Hours with Gary Gensler
Chair Gary Gensler – SEC
Chances are you may be watching this video because an AI-powered search algorithm suggested it to you. How might similar algorithms affect your investment choices? Artificial intelligence is about using math, using data, using computational power to recognize patterns and make predictions. Companies now can use it to narrow-cast in other words, to individually target or personalize a message, pricing, or products to each of us individually. In finance, robo-advisors and brokerage applications are using such algorithms.
/jlne.ws/3WJtOTR

SEC Charges Former New York CPA in Penny-Stock Fraud Scheme
SEC
The Securities and Exchange Commission today filed a complaint against North Carolina resident Stephen Durland, formerly a certified public accountant licensed in New York, for his role in an alleged $112 million pump-and-dump scheme orchestrated by Texas resident Philip Verges. The Commission previously filed charges against Verges and others on September 26, 2023, for their roles in the alleged scheme.
/jlne.ws/4dslkIc

SEC Obtains Final Judgment Against Former SPAC Accounting Consultant Charged with Insider Trading
SEC
On August 9, 2024, the U.S. District Court for the District of New Jersey entered a final consent judgment against Robert Del Prete. The SEC had charged Del Prete with insider trading when he purchased shares of HighCape Capital Acquisition Corp. (“HighCape”), a special purpose acquisition company, in advance of the company’s announcement that it would merge with Quantum-Si Incorporated (“QSI”).
/jlne.ws/3X2U9xB

SEC Obtains Final Judgment Against Barred Broker Who Posed As A Hedge Fund Manager
SEC
On August 12, 2024, the U.S. District Court for the Eastern District of New York entered a final judgment against Rand Heckler, enjoining him from violating certain provisions of the federal securities laws.
/jlne.ws/3yH3nX5

A guide to ‘good’: delivering better retirement outcomes and member services for Australians
ASIC
Speech by ASIC Commissioner Simone Constant at a joint ASIC/APRA session at the Conexus Institute Retirement Conference, 14 August 2024.
/jlne.ws/3YJf0Yf

ASIC sues ASX for alleged misleading statements
ASIC
ASIC has commenced proceedings in the Federal Court against Australia’s largest market operator, ASX Limited, for allegedly making misleading statements related to its Clearing House Electronic Subregister System (CHESS) replacement project. ASIC alleges statements made in ASX announcements on 10 February 2022 that the project remained “on-track for go-live” in April 2023 and was “progressing well” were misleading.
/jlne.ws/3YKB7NR

Central Markets Investment Management Limited enters liquidation
FCA
On 2 July 2024, Central Markets Investment Management Limited (CMIM) entered creditors’ voluntary liquidation. Dominik Thiel-Czerwinke and Louise Donna Baxter of Begbies Traynor (Central) LLP were appointed as joint liquidators.
/jlne.ws/3yOX3wB

FCA fines FXTB for unfair customer treatment practices
FCA
The FCA has fined Cypriot contract for differences (CFD) firm Forex TB Limited (FXTB) £276,100 for failing to treat its customers fairly, and for providing investment advice without being authorised to do so.
/jlne.ws/3WMhORv

FCA fines and bans Martin Sarl for dishonest and reckless conduct
FCA
The FCA has banned Martin Sarl from working in the financial services industry and fined him £5,021 for acting without honesty and integrity.
/jlne.ws/3An3ffL

MAS Collaborates with Banks and Technology Partners on Quantum Security
MAS
The Monetary Authority of Singapore (MAS), DBS, HSBC, OCBC, UOB, SPTel and SpeQtral today signed a Memorandum of Understanding (MoU) to embark on quantum security collaboration and study the application of Quantum Key Distribution (QKD) [1] in financial services. QKD can help financial institutions (FIs) protect the exchange of cryptographic keys to address the cybersecurity threats posed by quantum computing.
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Investing and Trading

The Dramatic Turnaround in Millennials’ Finances; Soaring home prices and smart investments have helped boost a generation once considered perpetually behind
Joe Pinsker and Veronica Dagher – The Wall Street Journal
Millennials are now wealthier than previous generations were at their age. They can’t believe it either. Fifteen years ago, Andy Holmes was a college graduate living with his parents, mowing lawns and digging ditches for extra income. He and his college pals who could only get low-paid jobs wondered if they would have a shot at the success their parents had. Today, Holmes is a chief financial officer in Kansas City, Mo., on track to retire at 52.
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Stock market bears may have the calendar on their side until the election
Jared Blikre – Yahoo Finance
Investors love patterns. Whether charting technical indicators or dissecting an earnings report, finding themes that repeat can offer investors a sense of predictability amid chaotic markets. The most reliable patterns in finance tend to be based on the calendar year. Seasonality, as it’s called, refers to predictable and recurring changes in markets that tend to happen at the same time every year. And though markets have steadied after last week’s abrupt sell-off, stock market bears looking at seasonal patterns will be encouraged by this history ahead of this year’s election.
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Demand for fixed income products drives July European ETF sales; Sales of equity ETFs dipped as markets began to look more ‘vulnerable’, according to LSEG Lipper
Alf Wilkinson, Ignites Europe – Financial Times
The European exchange traded funds industry enjoyed another healthy month of inflows in July, helped by a rise in demand for bond products. ETF firms in Europe recorded estimated net inflows of EUR20.9bn last month, according to the latest figures from LSEG Lipper. July’s inflows compare with EUR19.3bn the industry attracted in June, and bring total net inflows over the first seven months of 2024 to EUR125bn. The net sales garnered by the European ETF space in July “occurred in a positive market environment”, said Detlef Glow, head of Europe, the Middle East and Africa research at LSEG Lipper.
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Thyssenkrupp swings to loss as costs climb
Christoph Steitz and Tom Kackenhoff – Reuters
Thyssenkrupp swung to a quarterly net loss due to higher than expected costs for legacy projects and halted the sale of one of its businesses, underscoring the industrial group’s restructuring challenges and sending its shares to a new low. The German company, which cut its annual profit forecast for the third time last month, is struggling to sharpen the focus of its sprawling empire amid subdued demand. In particular, it is in the midst of a conflict-ridden process to divest half of the shares in its steel division to Czech billionaire Daniel Kretinsky.
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BHP removes striking workers at huge Chile copper mine, output at risk
Fabian Cambero and Daina Beth Solomon – Reuters
Mining giant BHP (BHP.AX) said on Tuesday it had started removing workers on strike at its Escondida copper mine in Chile, deepening tensions at the site after a powerful union rejected the company’s latest invitation for talks on pay. The strike at the world’s largest copper mine was declared hours earlier after negotiations collapsed and could lead to a major hit to production. “After a new invitation from the company to reach an agreement, Union No. 1 declined to restart talks,” BHP said in a statement, referring to the labor group that represents about 2,400 people. Escondida, which produced 1.1 million metric tons of copper last year, said the mine was continuing to operate but did not specify how much operations had been scaled down.
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Receding AI Stock Euphoria Has Bulls Seeing Some Opportunities
Ryan Vlastelica – Bloomberg
Skeptics had long warned that artificial intelligence-related stocks were in a bubble. Now that some of the froth has come off, bulls see an opportunity. Shares in makers of AI hardware and infrastructure – including Dell Technologies Inc., Super Micro Computer Inc., ARM Holdings Plc. and Nvidia Corp. – have come under huge selling pressure in recent months, bringing their valuations back down to earth. And with most of their big customers planning to continue spending billions of dollars on AI, some say that it’s time to selectively get back in.
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Corporate and Municipal CUSIP Request Volumes Fall for Second Consecutive Month in July
Slowdown Led by Lull in New Corporate Debt and Certificate of Deposit Issuance
CUSIP Global Services
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Value investing is due for a big comeback; Four reasons why the ‘rope-a-dope’ strategy should narrow a valuation gap with a growth-orientated approach
Rob Arnott – Financial Times (opinion)
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Environmental, Social and Corporate Governance

Trump’s Project 2025 promises billions of tonnes more carbon pollution – study; Experts say climate policies contained within rightwing manifesto would wreck US climate targets and cost jobs
Oliver Milman – The Guardian
The impact of Donald Trump enacting the climate policies of the rightwing Project 2025 would result in billions of tonnes of extra carbon pollution, wrecking the US’s climate targets, as well as wiping out clean energy investments and more than a million jobs, a new analysis finds. Should Trump retake the White House and pass the energy and environmental policies in the controversial Project 2025 document, the US’s planet-heating emissions will “significantly increase” by 2.7bn tonnes above the current trajectory by 2030, an amount comparable to the entire annual emissions of India, according to the report.
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‘Adverse weather’: Insurance industry reports record level of payouts as climate impacts bite
James Murray – Business Green
Association of British Insurers confirmed industry paid out £1.4bn during the second quarter, with weather impacts fuelling record level of claims. Insurers paid out a record £1.4bn in claims during the second quarter of the year, according to the latest figures from the Association of British Insurers (ABI), with adverse weather conditions playing a significant role in the latest increase.
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India to offer incentives for critical minerals extraction, govt source says
Neha Arora – Reuters
India plans to provide funding for research institutes to give technical assistance to miners, according to a government source and a letter reviewed by Reuters, to try to develop a critical minerals industry. The funding illustrates the efforts India is making to get the critical mineral industry off the ground and cut the country’s near-total reliance on imports of lithium and rare earths mineral that are key to energy transition technologies.
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How Extreme Heat Is Threatening Education Progress Worldwide; Children today face many more extreme weather hazards that can undermine global gains in education.
Somini Sengupta – The New York Times
The continued burning of fossil fuels is closing schools around the world for days, sometimes weeks at a time, and threatening to undermine one of the greatest global gains of recent decades: children’s education. It’s a glimpse into one of the starkest divides of climate change. Children today are living through many more abnormally hot days in their lifetimes than their grandparents, according to data released Wednesday by Unicef, the United Nations Children’s Fund.
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Balkans’ new love for air conditioning strains grid as temperatures soar
Fatos Bytyci and Ivana Sekularac – Reuters
Raba Peci never wanted air conditioning – the cold air made people sick, she thought. Then this year a string of heatwaves in her town of Mitrovica in northern Kosovo finally changed her mind. “This summer is very hot and unbearable and that’s why we decided to buy one now,” she said as she prepared Turkish coffee for two workers who were installing a new unit in her home. Her next door neighbour already had two put in. Many in the Balkans region of central Europe have long mistrusted artificial cooling methods. In some areas, away from the tourist hot spots, people even avoid chilled drinks and ice cream for fear of catching a cold.
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Texas oil regulator under scrutiny as zombie wells gush back to life
Valerie Volcovici – Reuters
On a sprawling ranch in Pecos County in late July, oil well control specialist Hawk Dunlap used a backhoe to uncover an abandoned or so-called zombie well that had sprung back to life despite being plugged just over a year earlier, hissing gas and bubbling toxic water into the dry Texas dirt. Dressed in bright red coveralls and a silver hard hat, Dunlap hopped off the machine and into the hole to clear away remaining soil with a shovel, and then picked up a brittle chunk of cement that was part of the casing meant to keep fluids and gases underground. He crushed the cement into dust with a light squeeze of his fingers as the Briggs family, who own the ranch, formed a circle around him.
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New drilling technology to put billions of barrels of oil in reach, analysts say
Gary Mcwilliams – Reuters
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China constructs world’s first dual-tower solar thermal plant – and it will help generate nearly 2 billion kWh annually
Laurelle Stelle – The Cool Down
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Institutions

JPMorgan reshuffle erodes power base of top deputy to Jamie Dimon; Exits of protégés have raised questions about Daniel Pinto’s future and the bank’s succession plans
Joshua Franklin, Arash Massoudi and Ortenca Aliaj – Financial Times
At a gathering of his top executives in South Florida in 2022, JPMorgan Chase president Daniel Pinto reflected on the preceding decade. When he turned to what the decade ahead would bring for the US lender, he told his troops that he wouldn’t be there to see the end of it. Neither, it turned out, would many of his protégés.
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Banks Clawed Back $150 Billion of Losses in Six Weeks, Mayo Says
Bre Bradham – Bloomberg
US banks erased $150 billion of unrealized losses since the start of the third quarter and have shrunk them by nearly half since 2022, offering a “silver lining” for the industry as economic growth slows, according to Wells Fargo & Co. analyst Mike Mayo. A bond market rally helped improve unrealized losses on securities by roughly $300 billion from a peak of nearly $700 billion in 2022, according to Mayo. The paper losses were a major concern for investors during last year’s regional banking crisis, and continued to raise concern as interest rates held at high levels for longer than many analysts had predicted.
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US banks may (or may not) be bracing for a hard landing; What’s CECL trying to tell us?
Bryce Elder – Financial Times
La Haine (1995) is bookended by a sort-of joke about a man who falls off a skyscraper: On his way down past each floor, he kept saying to reassure himself: “So far so good…” “So far so good…” We’re reminded of the scene at least once a month, when the BofA global fund manager survey lands in our inbox. The August edition that arrived yesterday shows that more than three-quarters of respondents expect a soft landing for the US economy, though a majority think Fed needs to cut harder to guarantee no recession:
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Heard on the Street: UBS’s Megamerger Aftermath Is Going Well
Jon Sindreu – The Wall Street Journal
For UBS’s investors, the party they threw after snatching Credit Suisse at a bargain price was always marred by fears of a big hangover. So far, however, the integration of a troubled bank of roughly equal size is going pretty smoothly. UBS reported today a second-quarter net profit of $1.14 billion. That is less than the previous quarter and an order of magnitude below the $27.33 billion it made a year earlier, when it booked a massive gain for taking over Credit Suisse far below its book value at the behest of Swiss regulators. But the profit still significantly surpassed analysts’ expectations, leading to a jump in the lender’s share price.
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Hedge fund Caxton makes $270mn in market turmoil; Bets on US Treasuries and yen put London-based firm among big winners from early August volatility
Laurence Fletcher – Financial Times
Hedge fund Caxton Associates has made gains of about $270mn this month, as bets on US government debt and the Japanese yen made it one of the big winners from the recent turmoil in global markets. The London-based firm made 3.9 per cent in its $4.5bn Macro fund, which is personally managed by chief executive Andrew Law, in the first nine days of August, according to numbers sent to investors and seen by the Financial Times. It also made a gain of 1.1 per cent in its $8.5bn Global fund, according to an investor. The profits come in a turbulent month for global markets, driven by fears that the US Federal Reserve has been too slow to cut interest rates in response to signs of a slowing economy.
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Martin Gilbert attempts to woo investors for AssetCo plan; City veteran is trying to turn around lossmaking Aim-listed vehicle by splitting its shares
Emma Dunkley – Financial Times
City veteran Martin Gilbert is trying to attract investor support for AssetCo, as he attempts to turn around the lossmaking asset-management acquisition business. Gilbert, AssetCo’s executive chair, has met prospective investors – including other fund managers – in recent weeks as well as existing shareholders to explain plans to split the Aim-listed company’s shares, according to three people close to the situation.
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UBS beats expectations with $1.1bn net profit in second quarter; Swiss lender steps up integration of former rival Credit Suisse
Ortenca Aliaj – Financial Times
UBS has reported a $1.1bn net profit for the three months to the end of June, twice what analysts expected, helped by a strong performance from its investment bank and the ongoing integration of Credit Suisse. The Swiss lender also recorded revenues of $11.9bn for the quarter, up 25 per cent from the same period last year, slightly higher than analyst expectations of $11.6bn.
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30 years of bond investment; An interview with Jim Leaviss, outgoing CIO of M&G Investments
Financial Times – FT Podcast
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Work & Management

The Tech Job Paying Six Figures, No College Degree Required; The technicians who keep America’s colossal data centers humming enjoy huge demand and earnings potential-and defy the traditional blue- and white-collar categories of work
Te-Ping Chen – The Wall Street Journal
To get one of the hottest jobs in tech, Deborah Martinez Castellanos didn’t need a bachelor’s degree. She needed a flair with a screwdriver-and a high tolerance for artificial lighting. The 24-year-old works the night shift at a giant, mostly windowless data center in Ashburn, Va., part of a fast-growing legion of workers who keep the nation’s internet running. From 6 p.m. to 6 a.m., she monitors screens that track the temperature and humidity of halls storing thousands of servers. If a server becomes at risk of overheating, alarms ring on her phone and flash on screen. When that happens, her job is to fix the problem. Left alone, such glitches can keep countless users from logging onto their bank accounts or put their email service on the fritz.
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Ivy League Degrees Aren’t Worth What They Used to Be in College Sports; In an era in which college athletes are able to be compensated for their skills and stardom, some of the nation’s most prestigious institutions have been unwilling to pay up.
Jared Diamond and Robert O’Connell – The Wall Street Journal
Basketball players at the University of Pennsylvania tend to spend their summers interning for top-tier finance firms, clerking for judges or working in medical research labs. But after his freshman season at Penn, Tyler Perkins chose somewhere very different. He went to Villanova, sacrificing his chance to earn a coveted Ivy League degree in favor of transferring to a different school to continue his basketball career.
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Chief Compliance Officer Pay Rises, but at a Slower Pace; CCO salary increases have slowed amid corporate belt-tightening and a murky economic outlook, a BarkerGilmore survey finds
David Smagalla – The Wall Street Journal
Chief compliance officers continue to rake in more money, but increases in most sectors have slowed, according to a new survey. Median compensation-which includes base salary plus bonus-for compliance chiefs at public companies rose 7% to $419,000 in 2024, while it climbed 12% to $250,000 at nonprofits, according to a March survey of compliance heads conducted by boutique executive search firm BarkerGilmore. The median CCO salary and bonus at private companies dropped 1% to about $300,000.
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Wellness Exchange

Late-Summer Travel Plans? You Might Want to Put On a Mask.
Ceylan Yeginsu and Dani Blum – The New York Times
It is the height of the summer travel season: Airplanes and cruises are packed, hotels are booked, and travelers are crowding theme parks and attractions. Yet throughout the United States, Covid-19 is currently circulating at very high levels. During the peak of the pandemic, masks were ubiquitous in hotels, airports and other public places. They were required to fly, and many travelers donned them elsewhere to help reduce the transmission of the deadly coronavirus. Since the end of the mandate, and as travel has returned to or surpassed prepandemic levels, most travelers have abandoned preventive measures, particularly masks.
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5 Health Trends We Debunked This Year; Apple cider vinegar, pimple patches, under-eye creams – do any of these actually work?
Julia Calderone – The New York Times
About a decade ago, a massage therapist in Santa Cruz, Calif., gave me a lecture on the healing properties of coconut oil. Once a day, she said, she’d scoop a tablespoon into her mouth and swish it around for 20 minutes. Her gums had never looked healthier, she exclaimed, and she even had fewer colds. I was in graduate school for science journalism at the time and I knew I should be skeptical. But I thought about the dull pain I sometimes felt between two of my molars, which my dentist warned could eventually turn into gum disease. Maybe this oil thing would help. For several months, I swished and spat until my jaw hurt. And yet my gums still ached. When my dentist probed them with her metal spike at my next checkup, they didn’t look any better.
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Regions

Is there a bubble waiting to burst in India? Investors could be in for a rude awakening
Financial Times – FT Podcast
Indian equities are soaring right now. The country’s benchmark Nifty 50 index has doubled in just five years, beating out the pace of Japan, China and even the US. And it’s all being driven by millions of domestic investors who are piling into the market for the first time. But this boom has regulators sounding the alarm. The FT’s Mumbai correspondent Chris Kay explains why a bubble might be forming and what could happen to these first-time investors if it bursts.
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Thai court removes PM Srettha Thavisin for gross ethics violation
Panu Wongcha-um and Chayut Setboonsarng – Reuters
Thailand’s Constitutional Court on Wednesday dismissed Prime Minister Srettha Thavisin for “grossly” violating ethics by appointing a minister who had served jail time, raising the spectre of political upheaval and a shakeup in the governing alliance. Real estate tycoon Srettha becomes the fourth Thai premier in 16 years to be removed in verdicts by the same court after its judges ruled 5-4 in favour of dismissing him for failing to perform his duty with integrity. Srettha’s exit after less than a year in power means parliament must convene to choose a new premier, with the prospect of more uncertainty in a country dogged for two decades by coups and court rulings that have brought down multiple governments and political parties.
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Turkey’s Instagram spat shows the limits of global content governance; There are growing divisions over how to treat groups such as Hamas online
Sinan Ulgen – Financial Times
On August 2, a few days after unveiling an ambitious incentive programme to boost the country’s digital transformation, the Turkish government suspended access to Instagram. The platform, which is used by many SMEs as their main digital sales channel, remained inaccessible until last Saturday when, after negotiations with the Meta leadership, access was re-established. As the rationale for its heavy-handed intervention, Ankara claimed that Instagram was censoring pro-Hamas content, particularly eulogies to Ismail Haniyeh, the slain leader of the Palestinian Islamist group. On the surface, this is a clear-cut case. The country’s Constitutional Court has previous jurisprudence confirming that these types of wholesale restrictive measures are not only disproportional but also constitute a violation of fundamental rights.
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How hedge funds are fighting back against the SEC’s ‘aggressive’ agenda | John Lothian News (2024)