Tag: Wall Street

Short sellers face end of an era as rookies rule Wall Street, BFSI News, ET BFSI

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The latest assault on Wall Street short sellers has a long tradition, dating back to, well, at least Napoleon. “Treasonous,” he called them for betting against government securities.

They survived that and numerous other attacks over the next several centuries. But the GameStop uprising could mark the end of an era for the public short — the long-vilified folks who try to root out corporate wrongdoing, take positions betting a stock will fall and then wage public campaigns.

The biggest casualty came Friday, when Andrew Left’s Citron Research said it will discontinue offering short-selling analysis after 20 years of providing the service. Others are already adopting less-aggressive tactics or evolving into different forms and shapes altogether. Melvin Capital was forced to retreat by dumping its short position on GameStop, Carson Block and others have cut bets, and some of the mightiest hedge funds are nursing double-digit losses and exploring their next steps.

Few on Main Street or in corporate America, who see short sellers as detestable vultures with dubious practices, are shedding many tears, of course. Yet some investors, who say shorts serve to police the markets, might be. Time and again, short sellers, who practice the risky art of selling borrowed stocks to buy them back at lower prices, have been seen as a critical antidote to sniff out fraudulent companies, those with questionable accounting and business plans, or just to keep valuations under check. Enron is the most notable example.

“I’m still in business, so nowadays I think that’s well enough,” said Fahmi Quadir, a short seller best known for her successful bet against Valeant Pharmaceuticals and founder of New York hedge fund Safkhet Capital. The more fundamental problem, she said, is that fewer and fewer firms are spending substantial money to research companies or, in her case, “identify businesses that are predatory or fraudulent.”

Even before the attack from Reddit’s wallstreetbets forum, where a 6-million strong mob has joined forces to fire up stocks most hated by hedge fund elites, short selling was hard enough. A vast majority of shorts were already irrelevant, thanks to the popularity of index funds and the longest-running bull market in history.

Their numbers have been dwindling for some time. Of the thousands of hedge funds in the $3.6 trillion industry, only about 120 specialize in mostly betting against stocks. And they have seen combined assets sliced by more than half to just $9.6 billion over the past two years alone, according to data compiled by Eurekahedge.

“It is like watching the police doing a bank raid,” Crispin Odey, one of the world’s most bearish hedge fund managers, said of the trend. “There were already fewer short positions in the market before the Reddit mob began their attack than we have seen for 15 years.”

Some of the most-feared short sellers are ducking for cover. Block, whose forensic research notes have sparked precipitous declines in a number of companies, has “massively” cut his short bets. A $1.5 billion London-based hedge fund with one of the best records of short selling declined to be even named in this story on fears of being hunted down by the retail investors. Another has assigned a staffer to scour the wallstreetbets page for signs of brewing revolts as it reassesses its bets.

Short seller Gabriel Grego, founder of Quintessential Capital Management, said he is pausing bearish wagers in the U.S. While he thinks “short-selling is alive and kicking,” he said it’s time for caution. The GameStop rebellion shows that retail investors are now conscious of their power and that won’t disappear, he added.

Hated But Necessary
Shorts have faced such sieges time and again in their more than four centuries of existence. The first such trade is said to have occurred in 1609, when Flemish merchant Isaac Le Maire attempted to short Dutch East India Company’s shares. A year later, the company convinced the Dutch government to outlaw short-selling, saying the likes of Le Maire were harming innocent stockholders, including “widows and orphans.”

Napoleon banned the practice 200 years later and during Wall Street’s crash of 1929, short-seller Ben Smith hired bodyguards because of threats from angry investors. When the financial crisis intensified in 2008, U.S. regulators restricted short selling of financial stocks. Many other countries followed. More recently, billionaire Elon Musk has taken to social media lambasting short sells, calling them a scam.

But in the more favorable view, shorts are seen as the ultimate cop on Wall Street, devoting countless hours of detective and forensic work, taking on mighty companies and regulators and exposing themselves to potentially unlimited losses. Supporters say that in a world where the traditional stock research industry has lacked the spine to put sell recommendations on struggling companies and as passive investing plays an even bigger role, the descendants of Le Maire are badly needed.

Take for example Enron’s accounting scandal. Jim Chanos, the founder of hedge fund Kynikos Associates, helped expose the fraud and rode its decline from an average $79.14 per share in 2000 through December 2001, when it collapsed to 60 cents. And as recently as last year, German regulators praised short sellers after initially banning them for exposing Wirecard AG, which filed for insolvency proceedings after revealing that 1.9 billion euros ($2.3 billion) of cash was missing.

New Rule Book
Other observers are less sympathetic. Before the financial crisis in 2008, U.S. regulators modified certain rules to make shorting easier, according to Brian Barish, chief investment officer of Cambiar Investors. Some hedge funds used that as a tool to brutalize companies that were viable but in need of capital. Insolvencies that were preventable followed and real people got hurt, Barish said.

“I don’t think hedge fund books need any help,” Barish said. “Let them taste their own medicine.”

For now, hedge funds that tactically put on leveraged bets against companies for short-term profits face the biggest risk to their survival. They are expected to be selective, avoid crowded trades, borrow less and stay away from companies with heavy retail investor participation. Most importantly, they may retreat if required.

Peter Borish, chief strategist at Quad Group, predicts lower returns for such funds as they shy away from outright shorting of lower-priced stocks and take profits more quickly. “If you’re looking for a short-seller to hit home runs, you’re more likely to get singles and doubles,” he said of the new outlook.

Other funds may opt for using discrete over-the-counter put options to place short bets, since they don’t need to be disclosed in regulatory filings. Melvin Capital’s shorts being listed in their public filings helped make them a Reddit bro target.

Many still believe that ethical short-selling, or going after criminal companies, will survive. Retail investors may even be less motivated to revolt against a well-intentioned short that exposes a fraudulent company. They are less certain, however, about the resilience of passive short-selling, where traders bet against a stock not for criminal reasons but based on the fundamentals of a company. Melvin’s wager on GameStop, for example.
Some bears are taking the uproar mostly in stride. Jim Carruthers, who once ran Third Point’s short book and now heads Sophos Capital Management, is reported to be winding down some positions, but he’s not all that bothered.

“We believe this speculative fervor that has turned the stock market into a casino of late will eventually hit a wall, as all bubbles do, and will provide as target-rich an opportunity set we have seen in our careers,” he said.

For now, GameStop’s saga represents an unprecedented shift in power where a cocktail of cheap money, easy commission-free trading, a bored and quarantined society and a stick-it-to-The Man sentiment among masses of retail investors prompted them to hunt down the hunters.

As Citron’s Left put it in a YouTube video announcing his departure from the short world: “Twenty years ago I started Citron with the intention of protecting the individual against Wall Street — against the frauds and the stock promotions.” Since then, he added, Citron lost its focus: “We’ve actually become the establishment.”



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In duel with small investors over GameStop, big funds blink, BFSI News, ET BFSI

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Across most of America, GameStop is just a place to buy a video game. On Wall Street, though, it’s become a battleground where swarms of smaller investors see themselves making an epic stand against the 1%.

The funds serving the financial elite are starting to walk away in defeat. Big bets they made that GameStop’s stock would fall went wrong, leaving them facing billions of dollars in collective losses. All the wild action pushed GameStop’s stock as high as $380 on Wednesday, up from $18 just a few weeks ago.

The stunning seizure of power gives some validation to smaller-pocketed investors, many of whom are encouraging each other on Reddit and are trading stocks for the first time thanks to brokerages offering free-trading apps. It’s also left more investors on Wall Street asking if the stock market is in a dangerous bubble about to pop, as AMC Entertainment, Bed Bath & Beyond and other downtrodden stocks suddenly soar as well. The S&P 500 set a record high earlier this week, though it fell Wednesday.

Two investment firms that had placed bets for money-losing GameStop’s stock to fall have essentially thrown in the towel. One, Citron Research, acknowledged Wednesday in a YouTube video that it unwound the majority of its bet and took “a loss, 100%” to do so. But Andrew Left, who runs Citron, said that does not change his view that GameStop’s stock will eventually go down.

“We move on,” Left said. “Nothing has changed with GameStop except the stock price,” He also said he has “respect for the market,” which can run stock prices up much higher than where critics say they should be, at least for a while.

Melvin Capital is also exiting GameStop, with manager Gabe Plotkin telling CNBC that the hedge fund was taking a significant loss. He denied rumors that the hedge fund will fail. The size of the losses taken by Citron and Melvin are unknown.

Before its recent explosion, GameStop’s stock had been struggling for a long time. The company has been losing money for years as sales of video games increasingly go online, and its stock fell for six straight years before rebounding in 2020.

That pushed many professional investors to make bets that GameStop’s stock will decline even further. In such bets, called “short sales,” investors borrow a share and sell it in hopes of buying it back later at a lower price and pocketing the difference. GameStop is one of the most shorted stocks on Wall Street.

But its stock began rising sharply earlier this month after a co-founder of Chewy, the online seller of pet supplies, joined the company’s board. The thought is that he could help in the company’s transformation as it focuses more on digital sales and closes brick-and-mortar stores. Its shares jumped to $19.94 from less than $18 on Jan. 11. At the time, it seemed like a huge move for the stock.

Smaller investors were meanwhile exhorting each other online to keep GameStop’s stock rolling higher.

The raucous discussions are full of sarcasm, self deprecation and emojis of rocket ships signifying belief that GameStop’s stock will fly to the moon.

“WHAT IS AN ACTUAL RATIONAL SELLING POINT, (ABOVE 200? 500?) SO I DONT HAVE TO WATCH THIS TICKER EVERY SECOND UNTIL FRIDAY/MONDAY????” one user wrote in a Reddit discussion Tuesday afternoon as GameStop soared. “I HAVE NO IDEA WHAT I’M DOING,” adding that they had other things to do.

There is no overriding reason why GameStop has attracted this cavalcade of smaller and first-time investors, but there is a distinct component of revenge against Wall Street in communications online.

“The same rich people that caused the market crash in 2007/08 are still in power and continue to manipulate the market to get even richer, we are just taking back our fair share,” one user wrote on Reddit.

“hey mom i can’t come up for dinner,” another user wrote. “i’m bankrupting a 10 figure hedge fund with the boys.”

Beyond personal attacks, the battle has also created big financial losses for Wall Street players who shorted GameStop’s stock.

As GameStop’s gains grew and short sellers scrambled to get out of their bets, they had to buy shares to do so. That accelerated the momentum even more, creating a feedback loop. As of Tuesday, short sellers of GameStop were already down more than $5 billion in 2021, according to S3 Partners.

Much of professional Wall Street remains pessimistic that GameStop’s stock can hold onto its immense gains. The company is unlikely to start making big enough profits to justify its $22.2 billion market valuation anytime soon, analysts say. The stock closed Wednesday at $347.51. Analysts at BofA Global Research raised their price target Wednesday – to $10.

All the mania is raising some concern that investors are taking excessive risks, and reporters asked Federal Reserve Chair Jerome Powell on Wednesday whether the Fed’s moves to support markets through the pandemic is helping to push stock prices too high.

Powell downplayed the role of low interest rates and pointed to investors’ expectations for COVID-19 vaccines and more stimulus from Washington for the economy as drivers for record stock prices.

The Securities and Exchange Commission said Wednesday that it’s noticed all the volatility in the market, though it did not name GameStop specifically. The agency said it’s “working with our fellow regulators to assess the situation and review the activities” of investors in the market.

Later Wednesday, the Reddit discussion group where much of the GameStop stock push has taken place, called r/WallStreetBets, was taken private, making it inaccessible to outsiders. Some longtime users also took to Twitter to say they could no longer access it. A Reddit representative confirmed that the group’s moderators took it private but gave no other comment.

In addition, the gamer-friendly platform Discord shut down a text and audio chat group also called r/WallStreetBets for “continuing to allow hateful and discriminatory content after repeated warnings,” the company said in a statement.

Discord said it has been monitoring that group – called a “server” for historical reasons – for “some time” due to repeated violations of its rules, including hate speech, glorifying violence and spreading misinformation and issued multiple warnings to its administrator.

“To be clear, we did not ban this server due to financial fraud related to GameStop or other stocks,” Discord said. “We are monitoring this situation and in the event there are allegations of illegal activities, we will cooperate with authorities as appropriate.”



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How Reddit revolt propelled this stock to unbelievable levels, BFSI News, ET BFSI

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NEW YORK: There’s some irony in the fact that Reddit, an online chat community full of gamers, has propelled GameStop Corp. to unbelievable levels. After all, video game fans have loved to hate the struggling retailer for decades.

Over the past week, a collective of individual traders on Reddit’s r/WallStreetBets community sent GameStop stock to astronomical heights in an experiment to stick it to hedge funds, which had sold the stock short. At the beginning of this year, GameStop was trading at $17. By Wednesday afternoon, it was over $340, valuing the unprofitable company at more than $25 billion.

GameStop’s resuscitation may seem like it should be inherently good news for video game fans. But unlike the beloved retailer Toys R Us Inc., GameStop was never very popular among gamers. The Reddit community choosing GameStop as the stock to pump may have been one giant practical joke.

“It’s like in movies when the bullies vote for the nerd to be prom queen just to prank her,” said Andy Cortez, a host and producer for the video game YouTube channel Kinda Funny.

Gamers have a long list of complaints about Grapevine, Texas-based GameStop, from the way they treat employees to their pushy and controversial sales tactics.

Over the years, many gamers begrudgingly shopped at GameStop only because they had little choice. The store made it easy to trade in old games for money or to be used toward other purchases, which cash-strapped fans could appreciate. But the values became a punchline. A brand new game, which cost $60, might fetch $30 at your local GameStop. Older games would return a few bucks at most. Social media is full of jokes about how you can trade GameStop’s stock back to the retailer for a fraction of the price.

The company also became known for questionable practices such as selling opened copies of games as if they were new. Sometimes, customers would take home a “new” game only to discover that someone else’s save file was already on the cartridge.

Many video game fans grew tired of the way GameStop treated staff and the way those employees had to act with customers. Worker performance was tied to the number of game pre-orders and rewards cards they sold, which led to constant hawking. It was impossible to call or visit a GameStop store without being pushed to pre-order whatever games were coming out next.

In 2017, GameStop made headlines for its controversial Circle of Life program, which essentially punished employees for selling new instead of pre-owned games. As a result, some staff said they would lie to customers about whether they had new copies in stock.

Video game publishers have little love for GameStop, either. When customers bought pre-owned games, the people who actually made those games didn’t see a dime, which led companies like Electronic Arts Inc. to pioneer strategies to get people to buy new copies. The publisher decided to put a one-time-use code in each copy of some games, rewarding whoever got to it first — and punishing the secondhand market.

So, for many gamers, seeing GameStop as the butt of a joke on Wall Street is a dose of schadenfreude.

Such widespread disdain for the retailer from all corners of the gaming industry has probably helped fuel the frenzy behind GameStop on Reddit.

The stock surge makes no sense. GameStop has struggled as many former customers switched to buying digital copies directly on their consoles. The coronavirus pandemic, which has kept most people out of the malls where many GameStops operate, exacerbated the company’s decline, and it reported sales fell 30% in the quarter ended October 31.

The r/WallStreetBets campaign shows that most investors driving up the shares are motivated by a populist desire to take down hedge funds with big short positions. But the whole play has also been egged on by internet jokes, or memes. And to gamers, there are few bigger memes than GameStop.

“If this was just Google or something, no one would care that much,” said Allen, a r/WallStreetBets poster who asked only to be identified by his first name, in a phone interview. “But the fact that it’s GameStop, that we’re going to take on a hedge fund because they shorted GameStop, it’s funny. There are great memes to be made out of it.”

Allen said he now has over 1,000 shares in the retailer, which he bought a few months ago for less than $20. He said he sees this as an opportunity for GameStop to become a better corporation without the pressure from Wall Street short sellers. “If this company is going to go out of business, they deserve to go out of business on their own terms,” Allen said.



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Nifty ends above 14,500 aided by financials; Sensex jumps 800 points, BFSI News, ET BFSI

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At close, the Sensex was up 1.72% at 49,398.29, and the Nifty added 1.68% at 14,521.20. About 2077 shares have advanced, 861 shares declined, and 139 shares are unchanged. Nifty bank index traded green at Rs 32,424 adding 1.94%, while BSE Bankex ended at 36,730 up by 1.95%.

Amongst the top gainers were- IDFC First Bank at Rs 50 adding 7.50, followed by RBL Bank at Rs 254 (-4.03), Bank of Baroda at Rs 75 (3.70%), PNB at Rs 36 (2.96%), ICICI Bank at Rs 546 (2.49%), Kotak Mahindra Bank at Rs 1,887 (-2.17%), Bandhan Bank at Rs 362 (1.77%).

Nifty Financial Services ended at 15,614 adding 2.41%. Amongst the top gainers were Cholamandalam at Rs 437 adding 7.01% followed by Bajaj Finserv at Rs 8,924 (6.82%), Indiabulls hsg at Rs 240 (6.75%),Bajaj Finance at Rs 4959 (5.07%) and Power Finance at Rs 122 (4.17).

Other key takeaways

Indian Railway Finance Corporation IPO subscribed fully:
The public offer of Indian Railway Finance Corporation has been subscribed 1.01 times on January 19, the second day of bidding, largely supported by retail investors so far. The IPO has received bids for 126.7 crore equity shares against offer size of over 124.75 crore equity shares (excluding anchor book portion), the subscription data available on the exchanges showed.

The portion set aside for retail investors witnessed subscription of 1.95 times and that of employees 18.27 times, while the reserved portion of non-institutional investors was subscribed 17.4 percent and that of qualified institutional buyers 0.02 percent.

Gold Updates
Gold prices on the MCX in the futures market were weak by a tad and this is in line with international gold pricing. At around 11:38 am, gold on the MCX quoted down by Rs. 44 or 0.09% at Rs. 48850 per 10gm. Silver on the other hand was firm at Rs. 65507 per kg.

Internationally price of gold has gained as a larger US bail-out outweighs any firmness in the dollar. Furthermore, back in India the roll out of the coronavirus vaccine which began on January 16, 2021 is seen as a positive propelling risk sentiment and in turn taking the sheen out of safe haven assets such as gold.

Rupee Updates
Indian rupee erased some of the gain but still traded higher at 73.22 per dollar, amid buying seen in the domestic equity market. It opened 11 paise higher at 73.17 per dollar against previous close of 73.28. The dollar-rupee January contract on the NSE was at Rs 73.32 in the last session. The open interest increased almost 15% in the February series while marginal decline was seen in January series contracts.

Wall Street ends higher:
U.S. stock futures moved higher early Tuesday as Wall Street looked to bounce back from a rough week ahead of President-elect Joe Biden’s inauguration. Futures contracts tied to the Dow Jones Industrial Average rose 166 points. Those for the S&P 500 and the Nasdaq 100 also traded in positive territory.

The move in futures comes after a slump for equities last week. The Nasdaq Composite and S&P 500 lost 1.5%, while the Dow was off 0.9%, respectively. It was the worst week for the three major indexes since October.



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Wall Street drops as big banks fall after results, BFSI News, ET BFSI

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By Devik Jain and Medha Singh

– Wall Street‘s main indexes dropped on Friday, weighed down by losses in major U.S. lenders after their earnings reports, while incoming President Joe Biden’s $1.9 trillion stimulus plan also sparked fears of an increase in corporate taxes.

Shares of JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co, which had seen a strong rally in the run-up to earnings, were all down even as the banks posted better-than-expected fourth-quarter profits.

JPMorgan fell 2.2% following a seven-day winning streak that had pushed the stock about 12% higher.

The S&P 500 banks index shed 3.3%.

Wall Street’s main indexes are set to wrap up the week lower after climbing to record highs recently on bets of a hefty fiscal package and optimism about vaccine distribution.

Also weighing on markets was a Washington Post report that said COVID-19 vaccine reserve was already exhausted when the Donald Trump administration vowed to release it this week, dashing hopes of expanded access. (https://wapo.st/2MZoiwa)

“It’s a concern of the vaccine and maybe, to a lesser extent, the Biden spending plan that he outlined last night,” said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago.

“It’s more of a healthy correction to some of the advances that we’ve seen in the market.”

Biden’s stimulus proposal, unveiled on Thursday, includes some $1 trillion in direct relief to households and has sparked fears that the government would need to hike corporate taxes to fund the spending.

“Biden’s concern is not the stock market, his concern is Main Street and that’s a good thing … but that tells you there’s going to be an increase in corporate taxes,” said Dennis Dick, proprietary trader at Bright Trading LLC in Las Vegas.

Meanwhile, data showed a further decline in U.S. retail sales in December – the latest sign the economy lost considerable speed at the end of 2020.

Nine of the 11 major S&P sectors fell, with energy, financials and industrials posting the steepest declines after leading markets higher in the recent rally.

The defensive utilities and real estate were the only sectors trading higher.

At 11:39 a.m. ET, the Dow Jones Industrial Average fell 135.21 points, or 0.44%, to 30,856.31, the S&P 500 lost 18.40 points, or 0.48%, to 3,777.14 and the Nasdaq Composite lost 60.55 points, or 0.46%, to 13,052.08.

Earnings for S&P 500 companies are expected to decline 9.5% in the final quarter of 2020 from a year ago, but are expected to rebound in 2021, with a gain of 16.4% projected for the first quarter, according to IBES data from Refinitiv.

Exxon Mobil Corp fell 3.6% after a report said the U.S. Securities and Exchange Commission launched an investigation of the oil major, following a whistleblower’s complaint that the company overvalued a key asset in the prolific Permian shale oil basin.

Spotify Technology SA dropped about 5% after Citigroup downgraded its shares to “sell”.

Hewlett Packard Enterprise Co rose 1% after J.P. Morgan upgraded the enterprise software maker’s stock to “overweight”.

Declining issues outnumbered advancers by a 2.8-to-1 ratio on the NYSE and by a 2.9-to-1 ratio on the Nasdaq.

The S&P 500 posted 5 new 52-week highs and no new lows, while the Nasdaq recorded 180 new highs and eight new lows.



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Nifty and Sensex hit its fresh record highs in today’s market rally, BFSI News, ET BFSI

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Nifty bank index traded Green at Rs 32,084 adding 0.40%, while BSE Bankex ended at 36,658 adding 0.46%. The rally in the market was broad-based as the Midcap and Smallcap indices clocked gains of about a percent.

Shares that contributed the most were- Bandhan Bank at Rs 419 adding 3.35% followed by HDFC Bank at Rs 1,431 (1.09%), Kotak Mahindra at Rs 1,970 (0.94%), Axis Bank at Rs 672 (0.24%), ICICI Bank at Rs 542 (0.18%). While all the other major indices remained green, Induslnd Bank at Rs 939 (-1.29%) and SBI traded lower at Rs 286 (-0.59%).

Nifty Financial Services ended at 15,511 adding 0.56%. Amongst the top gainer were Indiabulls HSG at Rs 241 adding 3.08%, followed by Bajaj finserv at Rs 9,171 adding 2.02%, Power Finance at Rs 120 (1.38%), Cholamandalam at Rs 431 (0.10%). HDFC Shares traded lower at Rs 2,657 (-0.14%).

Other key takeaways

India’s GDP to contract by 7.7% in 2020-21: Government
The central government projects the country’s economy to contract by 7.7 percent in the current fiscal year 2020-21, as per the first advance estimates of GDP released by the National Statistical Office on January 7.

“The movement of various high-frequency indicators in recent months, points towards broad-based nature of resurgence of economic activity. The relatively more manageable pandemic situation in the country as compared to advanced nations has further added momentum to the economic recovery,” the government said in a press release.

Bitcoin hit $40,000 for first time and falls by 5% a day later
Bitcoin topped $40,000 for the first time on Thursday, as it continues a rally that has seen the digital currency climb more than 700% from a March 12 closing low.

Bitcoin fell more than 5 percent on Friday, a day after topping $40,000 for the first time. The world’s most popular digital currency fell as low as $36,750 on Bitstamp exchange, after reaching an all-time high of $40,402.46 in the previous session

Rupee trades flat
Indian rupee erased early losses and traded flat around 73.32 per dollar, amid buying witnessing in the domestic equity market. It opened lower at 73.39 per dollar against Thursday’s close of 73.32.

Gold Updates
Gold prices traded down with COMEX spot gold prices fell below USD 1,890 per ounce on Friday losing more than 1 percent. Gold February future contracts at MCX were trading down to Rs 50,242 per 10 grams with fall in COMEX prices. Experts Expect gold prices to trade down with COMEX gold resistance at USD 1,910, support at USD 1,860. MCX Gold February support lies at Rs 49,700 with resistance at Rs 50,400.

Wall St ends higher:
Stocks on Wall Street hit record levels on Thursday as investors bet a Democrat-controlled Congress will deliver more stimulus spending to help the U.S. economy overcome a steep pandemic-induced downturn.

The Dow, S&P 500 and Nasdaq all set new highs amid growing calls for President Donald Trump’s removal, one day after Trump supporters stormed the U.S. Capitol in a harrowing assault on American democracy.



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Wall Street revives dream of Bitcoin ETF with new SEC filing, BFSI News, ET BFSI

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For years, regulators have quashed hopes of a Bitcoin exchange-traded fund, citing worries about everything from market volatility and industry manipulation to thin liquidity. Just like Bitcoin itself, issuers keep fighting back.

VanEck Associates Corp. has started a new push to launch an ETF tracking the world’s largest digital currency, according to a filing Wednesday to the U.S. Securities and Exchange Commission. The VanEck Bitcoin Trust would reflect the performance of the MVIS CryptoCompare Bitcoin Benchmark Rate.

It’s a bold move for the New York-based firm. There have been multiple applications for crypto-tracking ETFs over the years, and the SEC has denied them all.

VanEck may be betting that a change in SEC leadership — with Jay Clayton stepping down as chairman — combined with Bitcoin’s growing adoption on Wall Street have improved the odds of regulatory approval, according to analysts.

“All indications from the SEC are that a bitcoin ETF still faces an uphill battle,” said Nate Geraci, president of the ETF Store, an investment advisory firm. “That VanEck has the confidence to file for a Bitcoin ETF might indicate some shifting viewpoints within the SEC. Clearly, a key to watch as this drama continues unfolding is who President Biden taps as SEC chair.”

VanEck’s filing comes in a week when Bitcoin has continued to set record highs. The world’s largest digital asset has advanced about 300% this year, catching the attention of some of Wall Street’s most famous investors, including Paul Tudor Jones, as well as mainstay firms like PayPal Holdings Inc.

While crypto fans see its rally continuing, many are also aware its high-profile surge could attract greater scrutiny. The new SEC chair may take a softer line than Clayton, but President-elect Joe Biden has nominated Janet Yellen as Treasury secretary. In the past she has described Bitcoin as a “highly speculative asset” and “not a stable store of value.”

“By filing now, it will restart the clock for a review when there will be new SEC membership and leadership,” said Todd Rosenbluth, director of ETF research for CFRA Research. “However, I think the SEC has made it clear they have concerns that need to be overcome.”

According to the filing, VanEck’s ETF plans to hold Bitcoin and will value its shares based on prices contributed by exchanges that MV Index Solutions GmbH believes represent the top five exchanges for the cryptocurrency.

Bitcoin was trading 0.3% lower at around $28,800 as of 7:49 a.m. in New York.

Such an ETF “could be taken as bullish for Bitcoin because it does broaden the universe of investors who could be aware of Bitcoin,” said Everett Millman, finance expert with Gainesville Coins.



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