April 22, 2021
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The Treasury Department under Janet Yellen is embracing a "whole-of-economy" approach to climate, and more details are beginning to emerge with the creation of the Treasury's Climate Hub earlier this week. The division will accelerate the shift away from fossil fuels and help prepare the economy for climate risk. On Wednesday, Yellen and US Special Presidential Envoy for Climate John Kerry cast a wider net by launching the Glasgow Financial Alliance for Net Zero, which will help the global finance sector coordinate on net-zero.
Full Story: The Hill (4/21),  United Nations (4/21) 
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The EU has proposed requiring public companies and large private firms to provide standardized reports on environmental, social and governance performance. The requirement would extend to credit companies, including US banks operating in the EU.
Full Story: The Wall Street Journal (4/21) 
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HSBC will not let tensions between Western countries and China sway its global strategy, CEO Noel Quinn says. "We operate in 60 countries around the world, and we're a guest in most. ... I don't look at it from a nation-state perspective. I look at it from a customer-by-customer perspective," Quinn says.
Full Story: Financial Times (subscription required) (4/21) 
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CEOs from 20 leading banks have met with Deputy Treasury Secretary Wally Adeyemo to discuss the Biden administration's infrastructure plan and how public-private partnerships could play a part in improving economic inclusion for low- and moderate-income communities. Adeyemo has told the CEOs "now is the moment to reimagine and rebuild a new American economy."
Full Story: Reuters (4/20) 
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Bloomberg Insights
Major corporations are publicly setting goals for emissions reductions and BloombergNEF predicts that to meet stated targets these companies will have to triple clean energy buys by 2030. This will "drive an acceleration of the transformation of US electricity markets."
Full Story: Bloomberg Professional Services (4/20) 
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JPMorgan strategists led by Nikolaos Panigirtzoglou wrote that if bitcoin does not rise back above $60,000 in the near future, "[m]omentum signals will naturally decay from here for several months, given their still elevated level." The strategists say the buildup on long futures positions, and their recent unwinding, was likely driven by Commodity Trading Advisors and crypto funds.
Full Story: Bloomberg (4/20) 
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The upcoming generation of financial traders will need to be fully equipped with quant, data and coding skills, says Sarah Heffron, global co-head of electronic client solutions and program trading for equities at JPMorgan Chase. In a wide-ranging interview, Heffron and fellow JPMorgan executive Joanna Martin discuss the future of trading along with the necessity of liquidity, the impact of Brexit on their operations and returning to the office after pandemic lockdowns.
Full Story: Bloomberg (4/21) 
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Trading Trends
Global markets are reacting to a flare-up of coronavirus cases, with Asian markets bearing the brunt. The World Health Organization says cases are increasing everywhere except Europe, with Asia, particularly India, seeing the biggest rise. "Markets that have become too comfortable with the reopening trade and have loosened social restrictions can be in jeopardy with any COVID spike and variants," says Paul Sandhu of BNP Paribas Asset Management. "Markets with high vaccination rates somewhat circumvent this downside risk."
Full Story: The Wall Street Journal (4/20),  Bloomberg (4/21) 
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Chinese banks must prepare for a spate of nonperforming loans, says Xiao Yuanqi, vice chair of the China Banking and Insurance Regulatory Commission. Changes to global and local supply chains in response to the coronavirus pandemic are likely to produce defaults, Xiao says.
Full Story: Reuters (4/20) 
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Some commercial real estate collateralized loan obligations issued since 2019 may transition away from US dollar Libor two years ahead of schedule due to fallback clauses that were triggered by announcements confirming the Libor benchmark end dates. The clauses were triggered following the Alternative Reference Rates Committee's March 8 announcement that a "benchmark transition event" had occurred.
Full Story: Risk (subscription required) (4/22) 
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Operational Efficiencies
Shares of Coinbase will be delisted from Deutsche Boerse's stock exchange in Frankfurt, Germany, and from Deutsche Boerse's Xetra trading platform by the end of this week in light of use of a wrong legal entity identifier. "The only way for Coinbase to resume trading is for the issuer to apply for an LEI," Deutsche Boerse says.
Full Story: Reuters (4/22) 
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Establishment banks can take a number of steps to ensure they remain competitive in the payments space, according to Finextra Research. These include rethinking how they view data, embracing alternative payment methods, leveraging the trust associated with their brands and partnering with fintechs.
Full Story: Finextra Research (4/21) 
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Regulatory Review
Legislation that would allow banks to do business with legal cannabis companies will get its fourth attempt at Senate approval, following the House's passage of the Secure and Fair Enforcement Banking Act. Analysts say Senate Democrats appear poised to add social justice provisions to the bill that would likely cost it the Republican votes needed to avoid a filibuster.
Full Story: Reuters (4/20) 
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An independent review of UK crisis-era rules led by former Standard Life Aberdeen CEO Keith Skeoch is expected to report to the Treasury within a year and recommend changes where appropriate for the post-Brexit era. The review "presents a unique opportunity to consider whether the ring-fencing regime and the rules applied to proprietary trading have met the original intentions of the legislation ... and whether they strike the right balance for today's world," Skeoch says.
Full Story: Financial News (UK) (tiered subscription model) (4/20),  Reuters (4/20) 
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A bill that would require the US Securities and Exchange Commission to request data on investors for its Consolidated Audit Trail on a case-by-case basis has been introduced in the Senate.
Full Story: Pensions & Investments (free access for SmartBrief readers) (4/20) 
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