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In 2021, Dimon was drawn into a fiery exchange with Democratic Senator Elizabeth Warren about overdraft fees, while last year she grilled him over fraud on bank payment network Zelle.

Big banks subsequently reduced overdraft fees and expanded Zelle fraud protections.

The net short position has grown to $800 billion from about $650 billion in July, the central bank said, citing calculations based on Commodity Futures Trading Commission data.

That suggests a jump in the so-called basis trade, which is where investors seek to exploit price differences between futures and bonds.

“Sharp increases in volatility in market interest rates could lead to increases in margin required on the futures positions, or hedge funds may fund it harder to refinance their borrowing in the repo market,” the BOE said in a report Wednesday.

“This, combined with any breaches of risk- or loss-limits, could force funds rapidly to unwind their positions.” The BOE’s warning adds to a growing body of international regulatory concern.

The UK central bank warned in July that the basis trade poses a risk to financial stability.

The leveraged trade in US Treasury futures has regained popularity with hedge funds is attracting scrutiny from US regulators.

The report said the trade poses spillover risks to the UK because the same hedge funds are also active in the UK bond market, meaning a blowup in their US Treasuries could impact their gilt positions.

The message on the basis trade was part of the BOE’s broader warning about risks in market-based finance.

Officials also said there “continues to be an urgent need to increase resilience” in that market, and pointed to the “opacity” and lack of frequent re-pricing of private credit assets.

That increases their vulnerability to sharp and correlated falls in value, they said.

In the same report, the BOE said regulations to improve the liquidity positions of so-called liability-driven investment funds — at the heart of a gilt market blowup last year — had improved their resilience.

The regulations require LDI funds to have enough cash to withstand a rise in bond yields of as much as 2.5 percentage points.

Still, it warned that some LDI funds were too slow to recapitalize their positions to reflect falling gilt prices.

The expected response time is five days.

The BOE said it welcomed proposals currently under consultation to increase the resilience of UK money-market funds.

Those would see their daily and weekly liquidity requirements rise to 15% and 50% respectively.

However, given that around 90% of sterling money-market funds’ assets are domiciled in the European Union and therefore not subject to UK regulation, the rules needs to be mirrored by other jurisdictions, the BOE said.

That’s to avoid “regulatory arbitrage.” (Adds BOE’s message on private credit in seventh paragraph.)

-- British American Tobacco Plc is writing down some of its US cigarette brands by about £25 billion ($31.5 billion), sending shares to the biggest decline in almost four years.

The maker of Lucky Strikes is taking the non-cash impairment to reflect the diminishing carrying value of the brands over the next 30 years as more smokers quit, switch to cheaper brands or adopt smoking alternatives.

The cigarette maker also alarmed investors Wednesday by saying organic revenue growth this year will reach only the lower end of its forecast range, while the outlook for next year is for growth in the low single digits.

The “disappointing” mid-term guidance highlights challenges in the US cigarette market and increased competition in new categories such as vapes, nicotine pouches and heated tobacco, Morgan Stanley analysts Rashad Kawan and Sarah Simon said.

The shares fell as much as 10% in London, the steepest intraday drop since the onset of the pandemic in March 2020.

The stock is down about 30% this year, triple the decline in Marlboro maker Philip Morris International Inc. Smoking Alternatives As demand for cigarettes cools in the US and elsewhere, BAT and rivals are battling for market share in tobacco alternatives.

The seller of Vuse vapes and Velo nicotine pouches said its alternatives business should break even in 2023 — ahead of schedule — and be profitable next year.

It predicted alternatives will account for about half of sales by 2035 — about a decade behind a similar goal from bigger rival Philip Morris.

BAT’s pod refill Vuse vapes are facing stiff competition from disposable vapes from upstart competitors, many of whom are based in China.

Chief Executive Officer Tadeu Marroco said recently that disposables now account for more than half of the US market, the biggest market for vapes.

Governments in France, the UK and the US are considering a crackdown on disposables and vape flavors amid concerns the products are targeting underage users.

BAT has said it is planning a media campaign to curb underage vaping.

Cigarette giants have been struggling for years to adapt to a more hostile attitude toward smoking by governments and waning demand from consumers in key markets.

The move was also pitched as a way to set free faster-growing overseas operations while the US business was entangled in smoker lawsuits.

Still, the outlook looks “grim” as 2024 guidance was disappointing and some investors may have been expecting news of a share buyback, RBC Capital Markets analysts James Edwardes Jones and Emma Letheren said in a note.

--With assistance from Joel Leon and James Cone.

The European Commission proposed on Wednesday delaying by three years a tightening of local content rules that would have led to import tariffs on many electric vehicles (EVs) traded between the European Union and Britain from the start of 2024.

The Commission also said it was setting aside an additional 3 billion euros ($3.24 billion) to boost the EU's battery manufacturing industry, a move designed to boost local content and reduce reliance on batteries and materials from China.

The post-Brexit Trade and Cooperation Agreement (TCA) says that, to qualify for zero tariffs, at least 55% of the value of EVs need to be from the European Union or Britain, with values of 65% for battery cells and modules and 70% for battery packs.

However, it contains two transition periods, the first with EVs requiring 40% local content and battery packs and components 30%, the second for 2024-2026 at 45% for EVs, 50% for battery cells and modules and 60% for battery packs.

The proposal is to extend the first transition period for three years to 2027, when the full local content requirements of the TCA will apply.

The second transition period will not apply.

European Commission Vice President Maros Sefcovic, who oversees EU relations with Britain, said that Russia's invasion of Ukraine and soaring energy prices, along with support schemes of rivals, meant that EU battery production had not scaled up as planned.

Given batteries represent 30-40% of a car's value and that most are from China, many carmakers argued they would have struggled to meet the content requirements of the second transition period.

-- Trafigura Group and one of its longstanding top executives have been charged over allegations of bribing public officials in Angola, in a major blow to one of the world’s largest commodity traders.

Trafigura acknowledged the Swiss charges in a statement, and also revealed for the first time a US Department of Justice investigation into “improper payments” made in Brazil.

The charges are the latest in a series of actions from global prosecutors targeting corruption in the commodity trading industry, and the most serious so far against Trafigura, a leading oil and metals trader.

The charges against Mike Wainwright, who as Trafigura’s chief operating officer has for a decade formed part of the top trio running the company, make him the one of the most senior commodity traders ever to be charged for corruption.

Trafigura’s top competitors Glencore Plc and Vitol Group have in recent years both agreed to pay fines to settle wide-ranging US investigations into corruption, but until now only a few, largely mid-level individuals have been charged in those cases.

But it has also heightened scrutiny of an industry that has since the days of Marc Rich had a reputation for corruption and wrongdoing.

For Trafigura, the charges follow a series of setbacks that have pressured its leadership and fueled tensions among the senior ranks — including having fallen victim to a massive alleged nickel fraud.

Still, the company continues to reap huge profits from its energy divisions.

Cash Payments In a statement Wednesday, the Swiss federal prosecutor’s office said that Trafigura, through its unit Trafigura Beheer BV, failed to take necessary organizational measures to prevent the payment of bribes in Angola between 2009 and 2011.

The trading house paid €4.3 million euros ($4.6 million) to a bank account in Geneva and made cash payments of $604,000 to an Angolan official between April 2009 and October 2011 in relation to its activities in the country’s petroleum industry, the prosecutor said in the statement.

It also paid hotel and meal expenses of 797 Swiss francs ($911) for a stay in Geneva.

In return, the Angolan official, the former chief executive officer of a subsidiary of the state oil company Sonangol, favored Trafigura in shipping contracts, the Swiss prosecutor alleges.

Trafigura’s alleged profits from those contracts amount to $143.7 million.

Under Swiss law, Trafigura faces penalties equivalent to the total illicit profit plus a fine of up to 5 million francs — or around $150 million in total.

That compares to net profits of $5.5 billion reported by Trafigura in its latest half year accounts.

Trafigura said it expects to resolve the DOJ case “shortly” and has made a $127 million provision in its 2023 financial year accounts.

It said that the investigations related in part to statements made by former Trafigura executive Mariano Ferraz as part of a plea agreement following his conviction in a separate case in Brazil.

Ferraz was charged with corruption and money laundering as part of the Petrobras Carwash probe, while Trafigura and several of its senior executives have been accused of corruption by Brazilian prosecutors in a civil lawsuit.

Court Defense Trafigura said it had been willing to settle the Swiss investigation out of court, but that now it would defend itself in court.

It said Wainwright rejects the Swiss charges and will be mounting a court defense.

“We sincerely regret these incidents which breached our code of conduct and are contrary to our values,” Trafigura CEO Jeremy Weir said in the statement.

“Our compliance policies and procedures have been externally reviewed and found to meet relevant legal requirements and international good practice standards. These historical incidents in no way represent the company we are today.” If Wainwright is found guilty, he faces a potential fine or a maximum of five years in prison.

Trafigura earlier this year announced his planned retirement in March 2024, but he has now handed over his responsibilities and is on a leave of absence to focus on his defense, according to a person familiar with the matter.

The Swiss attorney general’s office stressed in today’s statement that this is the first time that a case against a company for alleged bribery of public officials has ever been sent to the country’s top criminal court.

Swiss indictments of companies are rare and convictions even rarer.

--With assistance from Hugo Miller.

-- Nissan Motor Co. will be a major customer to Renault SA’s combustion-engine venture as the partners push on with reshaping their troubled alliance and make progress in the EV transition.

The Japanese carmaker will receive gearboxes and engines for 12 of its plants, as well as half a million parts annually, the companies said Wednesday.

Junior alliance partner Mitsubishi Motors Corp. will also be a customer alongside multiple others in the Horse combustion-engine unit, set up with China’s Zhejiang Geely Holding Group Co. The steps are part of a major revamp of working together following years of growing tensions, allowing the manufacturers to take on new partners and independent ventures.

This includes Renault’s plan to list its electric-vehicle unit Ampere, targeting a valuation of as much as €10 billion ($10.8 billion), with both Nissan and Mitsubishi confirming significant investments.

“What we are doing now is, from size and impact, much bigger than we we did in the alliance in the last ten years,” Renault Chief Executive Officer Luca de Meo told reporters.

“The most important thing is to show that this alliance can create business value.” Nissan will work with Renault’s Ampere unit to develop a battery version of its Micra compact car for the European market, a move that will cut development costs for the model by 50%, de Meo said.

Nissan’s solid-state batteries — a potential next technology breakthrough for EVs — could be licensed by Renault and Mitsubishi in the future.

Mitsubishi will work with Ampere to develop and make its first electric mid-size sport utility vehicle.

Read more: Renault to Start Selling Nissan Stake Soon Amid EV IPO Pitch Nissan plans to acquire a stake in Renault’s battery recycling unit that already generates annual sales of some €1 billion, de Meo said.

With that step, the Japanese automaker would anticipate stricter European Union rules to help clean up the EV supply chain.

Nissan also is interested in the venture for markets outside Europe, CEO Makoto Uchida said.

Earlier this year, Nissan finalized plans to invest as much as €600 million in Ampere, which has faced headwinds from an EV price war, alongside an earlier commitment of €200 million from Mitsubishi.

In November, Renault Chief Executive Officer Luca de Meo said his company wants to start selling its stake in Nissan, worth about €4.3 billion, “very soon” as part of its ambitious electric-vehicle development plan.

The plan to lower the stake removes a major source of tension for the partners.

Among other joint projects, Renault and Nissan said in February they will invest $600 million in India to expand their car lineup, add jobs and decarbonize a manufacturing plant in Chennai.

Read more: Renault’s Twingo to Be Reborn as Under €20,000 Electric Car (Updates with details on joint projects starting in fourth paragraph)

- The chief executives of the biggest U.S. banks are set to appear before the Senate Banking Committee on Wednesday, where they will probably push back on proposals for stricter capital rules.

The Committee's Democratic chair Sherrod Brown has alleged that banks "reward corporations that raise prices on Americans." Congress convenes the CEOs as part of its annual oversight of Wall Street firms.

Here are the bank CEOs scheduled to testify: JAMIE DIMON, CEO OF JPMORGAN CHASE Dimon, the outspoken chief of the biggest U.S. bank, has chided regulators over the draft capital rules, saying they would curb lending and economic growth if implemented.

Dimon, who assumed his current role in 2006, previously clashed with the Committee's member Senator Elizabeth Warren on overdraft fees.

Warren also criticized banking watchdogs for allowing JPMorgan to get even bigger when it bought failed lender First Republic Bank in May.

BRIAN MOYNIHAN, CEO OF BANK OF AMERICA Moynihan, who became CEO in 2010, rebuilt the second-largest U.S. lender after its financial crisis-era acquisitions of Wall Street giant Merrill Lynch and mortgage lender Countrywide.

More recently, he has joined the industry chorus against the tougher capital rules.

The bank has raised its minimum hourly wage to $23, with a goal of eventually boosting it to $25 by 2025.

Raising pay has been a centerpiece of the Biden administration's strategy.

JANE FRASER, CEO OF CITIGROUP Fraser, the first woman to lead a major Wall Street bank, took the helm in 2021.

Her focus has been on streamlining the lender and refocusing on core markets.

The CEO is carrying out its biggest reorganization in decades to cut bureaucracy and increase efficiency.

She has warned that there is "no room for bystanders" as the bank looks to close the gap with its peers.

CHARLIE SCHARF, CEO OF WELLS FARGO Scharf has led Wells Fargo's cleanup efforts since he became CEO in 2019.