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☆ Hindenburg takes aim at Dorsey's payments firm Block, shares plunge
▼ + stars: | 2023-03-23 | by ( Manya Saini | ) www.reuters.com time to read: +5 min

Block shares fell as much as 22% before paring losses and were last down 14% at $62.61 in afternoon trading. After reviewing the full report, Block said it was "designed to deceive and confuse investors". Hindenburg said that Block "obfuscates" how many individuals are on the Cash App platform by reporting misleading "transacting active" metrics filled with fake and duplicate accounts. The app had 51 million monthly transacting actives, a 16% year-over-year increase during December 2022, Block said in fourth-quarter earnings letter. "What I am really concerned about is the Cash App, accusations of fraud, multiple accounts, opening accounts and fake names.

☆ Hindenburg shorts Jack Dorsey's payments firm Block, shares plunge
▼ + stars: | 2023-03-23 | by ( ) www.reuters.com time to read: +2 min

[1/2] The logo of Cash App is seen at the main hall during the Bitcoin Conference 2022 in Miami Beach, Florida, U.S. April 6, 2022. REUTERS/Marco BelloMarch 23 (Reuters) - Hindenburg Research on Thursday disclosed short positions in Block Inc (SQ.N) and alleged that the Jack Dorsey-led payments firm overstated its user numbers and understated its customer acquisition costs. Shares of Block slid 20% to $57.85 in premarket trading following the report. Hindenburg added that Block "obfuscates" how many individuals are on the Cash App platform by reporting misleading "transacting active" metrics filled with fake and duplicate accounts. Founded in 2017 by Nathan Anderson, Hindenburg is a forensic financial research firm that analyses equity, credit and derivatives.

ORLANDO, Florida, March 22 (Reuters) - First the record wager on higher U.S. interest rates, now the record wipe out. Their record net short position in three-month Secured Overnight Financing Rate (SOFR) futures of 1.17 million contracts was slashed to 329,638 contracts in the week through March 14. chartchartExpectations of a 6% fed funds rate have long faded. In bonds and interest rates, yields and implied rates fall when prices rise, and move up when prices fall. The latest CFTC figures also revealed how the recent surge in volatility has put speculative accounts trading three-month SOFR futures out of the market.

☆ Explainer: The business of water: no one-size-fits-all approach
▼ + stars: | 2023-03-22 | by ( Isla Binnie | ) www.reuters.com time to read: +5 min

PUBLIC-PRIVATE PARTNERSHIPSA group of experts established by the Dutch government is proposing "Just Water Partnerships" in which development finance institutions would invest alongside private firms to improve water systems in lower-income countries. One of those, the Calvert Global Water Fund, tracks the performance of an index of companies that "are offering products or services that are part of a solution to global water challenges," said portfolio manager Jade Huang. "There is no one-size-fits-all approach that can help to approach the many aspects of dealing with water challenges," Huang added. Lance Coogan, who developed that concept for water price indexing, describes it as "the volume-weighted average of the actual water transactions that are taking place". How can you have those things without having the water price?"

ET (1800 GMT), with investors keenly awaiting Chair Jerome Powell's conference at 2:30 p.m. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 16, 2023. REUTERS/Brendan McDermidHowever, a scramble by troubled regional U.S. lender First Republic Bank (FRC.N) to secure a capital infusion has kept alive some worries about the banking sector. Declining issues outnumbered advancers by a 1.13-to-1 ratio on the NYSE and by a 1.44-to-1 ratio on the Nasdaq. The S&P index recorded one new 52-week high and six new lows, while the Nasdaq recorded 27 new highs and 75 new lows.

☆ Wall St regulator mulls ditching array of paper forms
▼ + stars: | 2023-03-22 | by ( ) www.reuters.com time to read: +1 min

March 22 (Reuters) - The top U.S. markets regulator on Wednesday unveiled a proposal to abolish a set of paper-based forms and digitize disclosure requirements to modernize how broker-dealers, stock exchanges, clearing agencies and others report to the government. The forms include annual compliance reports by securities-based swap dealers and risk assessments by broker-dealers. Under the proposal, securities exchanges could simply update their websites when they begin trading in new derivatives. The SEC decided the proposed text was not ready for adoption, a spokesperson said. Reporting by Douglas Gillison; Editing by Richard ChangOur Standards: The Thomson Reuters Trust Principles.

☆ Why Goldman Sachs alumni are being hoovered up by elite hedge funds like Citadel and Millennium
▼ + stars: | 2023-03-21 | by ( Alex Morrell | ) www.businessinsider.com time to read: +14 min

In November, one of the world's most consequential hedge funds announced a shake-up at the top of its power structure. In an internal memo, the founder of Millennium Management, Izzy Englander, said that Bobby Jain would be vacating the co-CIO role. "You can't readily find that managerial experience at other hedge funds and Goldman is a perfect place to look for those people." 8 former Goldman Sachs leaders are now Millennium execsEnglander isn't alone — firms rarely are in the copycat world of multistrats. In a statement to Insider, Abbey Collins, a spokesperson for Goldman Sachs, said, "Goldman Sachs has always been and remains a talent magnet.

☆ Boaz Weinstein's trade looks set to flourish on Credit Suisse demise
▼ + stars: | 2023-03-20 | by ( Nell Mackenzie | ) www.reuters.com time to read: +3 min

[1/2] Boaz Weinstein, founder and chief investment officer at Saba Capital Management, speaks during the SALT conference in Las Vegas, Nevada, U.S. May 17, 2017. REUTERS/Richard BrianLONDON, March 20 (Reuters) - Hedge fund manager Boaz Weinstein pinned hopes on Credit Suisse's survival, but also money on its demise. At the time Weinstein told Reuters he thought the derivatives were mis-priced because he believed Credit Suisse's problems would be resolved, either way, more quickly. As the trade is both long and short, Weinstein stands to profit from the short leg of his trade much more than he will lose from the long side. Weinstein led a proprietary trading fund at Deutsche Bank which was spun out to start Saba Capital Management in 2009.

☆ Switzerland puts up 260 billion francs for Credit Suisse rescue, documents show
▼ + stars: | 2023-03-20 | by ( John Revill | ) www.reuters.com time to read: +3 min

The total of 259 billion francs of support is equivalent to a third of Switzerland's entire economic output, which stood at 771 billion francs last year. Credit Suisse said last Wednesday it would take 50 billion francs from the scheme, which provides funding secured against collateral such as mortgages and securities. On top of this, the Swiss National Bank offered the combined bank an emergency liquidity loan of up to 100 billion Swiss francs. UBS and Credit Suisse were both in a group of the 30 global systemically important banks watched closely by regulators. A failure by Credit Suisse failure would ripple throughout the entire financial system, the Swiss government said late on Sunday.

It will change the landscape of banking in Switzerland, where branches of Credit Suisse and UBS are dotted everywhere, sometimes just metres apart. The Credit Suisse rescue, orchestrated with public money, shows banks' continued vulnerability and how their problems can quickly rebound on their home country. But it also removes a competitor to Wall Street, with UBS planning to pare back much of Credit Suisse’s investment bank. During the great financial crash, it was UBS and not Credit Suisse that needed state support. UBS earned $7.6 billion in profit in 2022, while Credit Suisse lost $7.9 billion.

☆ Credit Suisse's $3.2 billion cut-price sale signals an ongoing crisis that could expose unicorn fintechs
▼ + stars: | 2023-03-20 | by ( Hasan Chowdhury | ) www.businessinsider.com time to read: +5 min

The firesale of Credit Suisse to UBS is putting the banking world on high alert. A $54 billion loan from the Swiss National Bank wasn't enough to keep Credit Suisse afloat, and UBS stepped in. Credit Suisse suffered idiosyncratic problems, such as a spying scandal involving former CEO Tidjane Thiam, as well as crises relating to its relationships with hedge fund Archegos Capital and financial group Greensill Capital. "There's already a lot of soul searching about what fintech business models are," says Paul Rolles, an ex-Morgan Stanley managing director and cofounder of money-management service HyperJar. Rolles believes the banking issues of the past couple of weeks are as much about confidence as intrinsic issues.

☆ Asia's regulators say banking system is robust and stable after UBS-Credit Suisse takeover deal
▼ + stars: | 2023-03-20 | by ( Sumathi Bala | ) www.cnbc.com time to read: +3 min

Last week, Credit Suisse logged their worst weekly decline since the onset of the coronavirus pandemic. Hong Kong says industry is resilientThe Hong Kong Monetary Authority said the city's banking sector is resilient with strong capital and liquidity positions. "The total assets of Credit Suisse, Hong Kong Branch amounted to about HK$100 billion, representing less than 0.5% of the total assets of the Hong Kong banking sector. Credit Suisse customers will continue to have full access to their accounts and "contracts with counterparties remain in force. Japan banks 'shielded'As for Japan, the country's banking system is unlikely to be affected by the deal, said Cyrus Daruwala, managing director of IDC Financial Services.

Commodity Futures Trading Commission (CFTC) data shows that speculators held the largest ever net short position in three-month SOFR rate futures in the week ending March 7, only a few weeks after amassing a record short position in two-year Treasuries futures. Implied rates then plunged as much as 200 basis points in a week as traders drastically redrew their Fed outlook. Analysts at Deutsche Bank say the huge disconnect between bond and rates volatility over equity volatility recently is partly down to the extreme positioning in fixed income. A short position is essentially a wager that an asset's price will fall, and a long position is a bet it will rise. In bonds and interest rates, yields and implied rates fall when prices rise, and move up when prices fall.

☆ Derivatives that track bonds at the heart of Credit Suisse rescue slide
▼ + stars: | 2023-03-20 | by ( ) www.reuters.com time to read: +1 min

LONDON, March 20 (Reuters) - Derivatives that track the value of key bank debt fell sharply on Monday, after UBS (UBSG.S) agreed to rescue rival Credit Suisse (CSGN.S), forcing a massive writedown of the latter's additional tier-one debt as part of the deal. Invesco's AT1 Capital Bond exchange-traded fund (INAT1.L), which tracks the value of AT1 debt, dropped 14% in early trading, while WisdomnTree's AT1 CoCo bond ETF was indicated 3% lower. Additional tier-one bonds, known as AT1s, are a type of contingent convertible debt that make up part of the capital buffers that regulators require banks to hold to protect themselves in times of market turmoil. If a bank's capital levels fall below a set threshold, AT1s can either be converted into equity or are written off, as they were in the case of Credit Suisse, which had to write off around $16 billion worth. Reporting by Amanda Cooper; Editing by Dhara RanasingheOur Standards: The Thomson Reuters Trust Principles.

He now faces renewed criticism over his agenda at the Fed, where he oversaw efforts to reduce regulations on regional banks. U.S. regional banks are expected to pay higher rates to depositors to keep them from switching to larger lenders, leaving them with higher funding costs. In 2008, regulators had to contend with billions of dollars in toxic mortgages and complex derivatives sitting on bank books. Currently, regional banks below $250 billion in assets have simpler capital, liquidity and stress testing requirements. "SVB is not a very complicated bank," said Dan Awrey, a Cornell Law professor and bank regulation expert.

☆ Exclusive: Some Credit Suisse counterparties curb dealings as bank heads into scenario meetings -sources
▼ + stars: | 2023-03-17 | by ( Shankar Ramakrishnan Stefania Spezzati Sumeet Chatterjee | Shankar Ramakrishnan | Stefania Spezzati | ) www.reuters.com time to read: +5 min

Credit Suisse declined to comment. Credit Suisse intends to borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank in what it called "decisive action" to boost its liquidity on Thursday. The five people with direct knowledge of the bank's trading counterparties requested anonymity because of the sensitivity of the situation. Credit Suisse has said that it is a strong, global bank. Among possible scenarios, analysts, bankers and investors speculate that Credit Suisse could sell or wind down some of its existing businesses with a break-up potentially on the cards.

☆ Analysis: As worries over banks swirl, investors seek protection against market crash
▼ + stars: | 2023-03-17 | by ( Saqib Iqbal Ahmed | ) www.reuters.com time to read: +5 min

The S&P 500 is down 5% from its early February high though it remains up 3% year to date. ... Now the downside tail has a lot more risk priced into it," said Chris Murphy, co-head of derivatives strategy at Susquehanna. Volatility in the Cboe Volatility Index (.VIX), which reflects expectations of stock volatility, has been muted by comparison, though the index hit a five-month high earlier this week. "That is something worth monitoring closely to gauge the expansion of risk within the system," he said. Reporting by Saqib Iqbal Ahmed; Editing by Ira Iosebashvili and Mark PorterOur Standards: The Thomson Reuters Trust Principles.

LONDON, March 17 (Reuters) - Hedge funds are watching growing U.S.-Chinese geopolitical tensions and have spotted ways to trade them. Taking a short position on investment grade bonds would make up for losses on long positions elsewhere, he said. If tensions were resolved, being caught with a negative view on Chinese stocks would not be beneficial, and therefore she would not short Chinese AI firms but invest in U.S. ones instead. "The most sensitive commodity to a break down in trade between China and Russia and the West is graphite," he added. "Supply chains are already shifting to Penang, and they are receiving investment from both China and the U.S.

☆ Jefferies sees softer impact of Credit Suisse crisis on India
▼ + stars: | 2023-03-16 | by ( ) www.reuters.com time to read: +2 min

March 16 (Reuters) - India's banking sector will likely have a softer impact from the troubles at Credit Suisse (CSGN.S), given the Swiss lender's relatively small presence in the country, equity analysts at Jefferies said on Thursday. Credit Suisse has a 1.5% share among foreign banks' assets in India and a 'small' 0.1% share of overall banking assets in the country, Jefferies estimated. It has only 1 branch in India and total assets of over 200 billion rupees ($2.42 billion), it said. "Given the relevance of Credit Suisse to India's banking sector, we see softer adjustments in assessment of counter-party risks, especially in the derivative market," analysts Prakhar Sharma and Vinayak Agarwal said in a note. This may also lead to institutional deposits moving more towards larger or quality banks, Jefferies said.

☆ Wu Silverman: Even before the SVB collapse last week, there was some buying in downside trades of the regional banks
▼ + stars: | 2023-03-16 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailWu Silverman: Even before the SVB collapse last week, there was some buying in downside trades of the regional banksAmy Wu Silverman, head of derivatives strategy at RBC Capital Markets, discusses the recent trends in options trading surrounding the banks, and ahead of Friday's triple-witching expirations.

☆ About Those ‘Safe’ Silicon Valley Bank Treasurys
▼ + stars: | 2023-03-15 | by ( The Editorial Board | ) www.wsj.com time to read: 1 min

One surprise for investors in the Silicon Valley Bank failure is that it didn’t hold exotic derivatives, structured debt products or other horrors that caused so much financial carnage 15 years ago. SVB held boring Treasurys and highly rated mortgage-backed securities in large quantities. Bad management and negligent oversight from the San Francisco Federal Reserve Bank played a role. But the politicians and regulators who supposedly fixed the financial system after 2008 share responsibility. The banking rules they introduced after 2008 made sovereign bonds such as Treasurys and the mortgage securities of Fannie Mae and Freddie Mac the coin of the realm for bank capital standards.

Liquidity in the U.S. Treasury market has fallen sharply since the collapse of Silicon Valley Bank. The markets for the world’s safest and most liquid assets, the government bonds issued by the U.S. and other rich countries, are coming under immense stress on Wednesday following a week of worries about the health of global banks. Liquidity, the capacity to trade quickly at quoted prices, has fallen sharply in two of the keystone markets, those for U.S. Treasurys and German bunds, traders said. Difficulties in trading are now spreading to many other markets, including those for derivatives that firms and traders use to lock in prices and hedge risks weeks and months ahead of time, such as options, futures and swaps.

Commodity Futures Trading Commission (CFTC) data published on Tuesday shows that speculators held the largest net short position in three-month 'SOFR' rate futures since September, and the biggest net short 10-year Treasuries futures position since 2018. While they trimmed their net short 2-year Treasuries futures position, it was only a reduction of around 5% from the record short a couple of weeks earlier. They trimmed their two-year futures net short to 656,575 contracts - two weeks prior they were net short 696,686 contracts, a record. chartA short position is essentially a wager that an asset's price will fall, and a long position is a bet it will rise. In bonds and interest rates, yields and implied rates fall when prices rise, and move up when prices fall.

☆ 'Go-to place to get liquidity': ETF efficiency amid the SVB collapse
▼ + stars: | 2023-03-15 | by ( Kevin Schmidt | ) www.cnbc.com time to read: +2 min

"People look at the ETF as a price discovery tool." And because most of an underlying stock within a bank ETF does not actually trade, investors are able to access liquidity without having to trade individual companies. "And we find that the ETF is the go-to place to get liquidity and to see what the market expects." The SPDR S&P Bank ETF (KBE) has fallen nearly 24% since the start of last week, although volumes in the fund were among the highest ever recorded in its 18-year history. Draper said that the larger liquidity story remains strong, and that ETFs are a big driver of that story.

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