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John Lothian Newsletter: Bats builds share in Russian names; China brokers boost prop trading profits; HKEx Appoints Group Chief Financial Officer

Bats Chi-X Europe more than doubles its market share for Russian depositary receipts over the last several months as it makes inroads into LSE territory. Securities brokers in China are doing better and better in their proprietary trading endeavors, while those practices are being increasingly outlawed in the West. Hong Kong Exchanges picks its new Group Chief Financial Officer.

First Read

John Lothian’s Knees-Breaking News
Patrick Thornton-SmithTraiana
As most readers know John has been off for a few weeks with, what he has tried to convince us of, a number of knee operations. I now can confirm that this is a lie and the truth is more alarming.

It is true that some time ago John decided to upgrade his perambulation equipment as his trusty V8 was spluttering and the fuel consumption was getting atrocious: 6 mpg (urban), 10 mpg (highway). Hopes of running the Chicago Marathon were fading fast.

Knowing his love of all things technological and innovative I can now reveal that he has in fact undergone a ground-breaking operation whereby his lower limbs have been adapted utilizing Segway technology.

Now John can glide silently across the lobby of the CBOT floor unannounced (think Gary Oldman in Dracula) and, at the merest incline, take off at great speed and stop on a dime. However there is, I feel, a serious flaw to this. Given the winds in Chicago and after effects of being in Ceres, I fear that the slightest movement or sway will dispatch John off at high speed, and woe betide anyone in his way. You have been warned. But on the upside, John will now be totally emission free.

And now some other news. Most of us have woken up to the excitement that all the major global equity indices are up, and the Dow has closed above 15,000 for the first time ever on the back of some strong USA employment numbers last week. Germany continues to be a European powerhouse, with the Dax hitting a record high after strong industrial export orders in March.

The sun even shone in Portugal, who issued 10-year government bonds for the first time since it received a bailout two years ago. Most importantly, yields fell to around 5.5%, lower than the 7% which is considered to be economically unsustainable for a country to repay its debts in the long term. Such news is encouraging for the European Union as for many months it has been mooted that some EU member states would be ejected from the Euro and fall back on exotic fruits and spoons for currency.

In Japan, the Nikkei rose 3.6% as the Bank of Japan announced new measures to pump liquidity into the financial system in an effort to get the country out of two decades of deflation. That has weakened the yen against other currencies and the Yen has fallen 15% against the dollar recently.

The FX traders at Toyota must be busy, as for every yen that drops against the dollar its annual operating profit will rise by 35bn yen (£230m). That’s quite an astonishing fact. Toyota produces many hybrid cars and I wonder if they will ever consider the self-leveling personal transportation market? And how about that for a Segway segue!

Enough facts for today, and even some serious ones for a change.

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HKEx Appoints Group Chief Financial Officer
Hong Kong Exchanges and Clearing Limited (HKEx) announced today (Wednesday) the appointment of Paul Kennedy as Group Chief Financial Officer, effective immediately.
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GFI Said Close to Hiring Phoenix Co-Founders Amid 30-Broker Move
Mary Childs & Matthew Leising – Bloomberg
GFI Group Inc. (GFIG) is in the process of hiring at least 30 inter-dealer brokers from rival Phoenix Partners Group LP, including the firm’s co-founders, according to a person with knowledge of the talks.
jlne.ws/YEWI7E

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E-Trading Finally Takes Over Fixed Income
Melanie Rodier – Wall Street & Technology
Five years ago, while electronic trading was already the norm in the equities market, old-fashioned phone and voice trading still dominated the fixed income space. But the tidal wave unleashed by the 2008 financial meltdown and the ensuing sweeping Dodd-Frank regulation has accelerated electronic trading in fixed income too. And while not all areas of fixed income are at the same stage of automation, asset classes that have been dragging their feet are finally getting pulled into the electronic era.
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***PTS: Takes me back to the late ‘90’s when the floors started to close. That’s today’s history lesson.

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SEC chief to review ‘no admit or deny’ policy
MARCY GORDON | AP
The new chairman of the Securities and Exchange Commission says she will review the agency’s policy of letting companies and individuals settle charges without admitting or denying wrongdoing.
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**JK – Although she neither admits, nor denies reviewing it.

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INTERVIEW-CME eyes new U.S. Gulf Coast crude futures launch by year-end
Jonathan Leff – Reuters
The CME Group intends to launch at least two new U.S. crude oil futures contracts before the end of this year, as the rapid growth in U.S. oil production and infrastructure boosts liquidity in Gulf Coast spot markets. The contracts, likely to include one light sweet crude near the Houston hub and a reboot of its Louisiana sour contract, would complement rather than compete with its existing West Texas Intermediate (WTI) futures that is based on delivery into Cushing, Oklahoma, Dan Brusstar, Senior Director of Energy Research & Product Development at CME, told Reuters in an interview late last week.
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*** PTS: Competition heats up in the energy space.

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Commodities hedge funds suffer weak first quarter
Javier Blas in London – FT.com
The commodities hedge fund industry is bleeding money. The average fund lost 0.8 per cent in the first quarter of the year, according to a closely watched index compiled by brokerage Newedge.
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Tips From Wall Street Hedge Fund Gurus Fail to Reward Faithful
Dan McCrum and Arash Massoudi – Financial Times via CNBC
Advice from the gurus of Wall Street may be rather less valuable than their fans would like to believe. Investors who bought on the basis of top tips from one of New York’s most celebrated hedge fund conferences last year spectacularly failed to beat the market.
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Giving is a must for successful founders
Luke Johnson – FT.com
It is not only for moral reasons that those who accumulate substantial assets should give them away. Philanthropy is an important economic factor that plays an especially prominent role in the area of innovation. This function is elegantly outlined in Why Philanthropy Matters by the academic Zoltan Acs, easily the best work on the subject I have read.
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*** PTS: If this means micro-financing then its great philanthropic work.

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The top financial tweeters to follow (Part I)
Financial News
Click through for the first of three galleries that FN will be running this week of our pick of the top financial tweeters to follow…
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Chicago’s Fortune 500 companies aren’t a place for Millennials
Joe Cahill – Crain’s Chicago Business
Fortune magazine’s annual list of the 500 biggest U.S. companies and Crain’s first list of 20-something business hotshots both appeared this week. That’s pretty much where the overlap ends.
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MarketsWiki

MarketsWiki Page of the Day
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jlne.ws/12enPne

MarketsWiki Recent Updates

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Diane Saucier; Naomi Kim; Andrea Weidemann; Leticia Adam; Frank Herkenhoff; Heiner Seidel

Companies, Organizations and Groups

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38,958,043 pages viewed, 7,476 articles, 158,622 edits
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Lead Stories

Bats builds share in Russian names
Tim Cave – Financial News
Bats Chi-X Europe, the region’s largest share trading venue, has more than doubled its market share in Russian depositary receipts in recent months, heralding a new front in its five-year-old battle with the London Stock Exchange.
jlne.ws/YEWI7Q

China brokers boost prop trading profits
Paul J Davies in Hong Kong – FT.com
Chinese securities brokers are boosting the profits they make from proprietary trading and other investment activities even as these are being outlawed among western banks following the financial crisis. The country’s securities regulators have handed a boost to this business by cutting the capital that brokers must hold against their prop trading activities and expanding the kinds of assets in which they can invest.
jlne.ws/YEWH3B

SEC Charges 4 in Bond-Trading Kickback Scheme
By Dow Jones Business News
Traders at New York-based broker-dealer Direct Access Partners allegedly arranged a multimillion dollar bribery scheme with a top Venezuelan banking official to secure the bond trading business of a state-owned bank in that country, the Securities and Exchange Commission said on Tuesday.
jlne.ws/YEWH3z

Small Firm Could Turn the Vote on Dimon
SUSANNE CRAIG and JESSICA SILVER-GREENBERG – NYTimes.com
The fate of Jamie Dimon of JPMorgan Chase could hinge on a small, London-based firm that is virtually unknown, even on Wall Street. The firm, Governance for Owners, has been tasked with voting the shares of the bank’s largest shareholder — the asset management behemoth BlackRock — on the question of whether to split the jobs of chairman and chief executive.
jlne.ws/YEWI7U

DAX Hits New High
HERBERT RUDE and MARTIN ESSEX – WSJ.com
Germany’s benchmark DAX stock-market index hit its highest level ever Tuesday, becoming the first major European stock-market index to follow Wall Street into new territory as investors bet on the continued success of the country’s exporters.
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*** PTS: See-I do read all the stories.

Japan’s trading houses pledge diversity
Ben McLannahan in Tokyo – FT.com
Japan’s top trading houses have vowed to accelerate investments in unconventional areas such as food, retail and healthcare, as earnings from their mainstay energy and minerals businesses suffer from across-the-board falls in commodity prices.
jlne.ws/YEWI7V

My capital ratio is higher than your capital ratio
William Wright – Financial News
The medieval towers that puncture the skyline in hilltop towns across Tuscany were the ultimate expression of competitive displays of wealth. Hundreds of years after modern banking was invented in the region, the Italian word “campanilismo” still roughly translates as “my bell tower is taller than your bell tower”.
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The German model is not for export
Martin Wolf – FT.com
Germany is reshaping the European economy in its own image. It is using its position as the largest economy and dominant creditor country to turn members of the eurozone into small replicas of itself – and the eurozone as a whole into a bigger one. This strategy will fail.
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Regulatory

White Makes Case for Bigger S.E.C. Budget
BEN PROTESS – NYTimes.com
Mary Jo White cleared a rite of passage on Tuesday: she asked Congress for more money.
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SEC Announces Panelists for Credit Ratings Roundtable
The Securities and Exchange Commission today announced the panelists for its Credit Ratings Roundtable, which will be held on May 14.
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Exchanges & Trading Facilities

Liffe Commodity Trading Surges 28% in April on Cocoa and Coffee
Bloomberg
Daily commodities trading on NYSE Euronext in Europe jumped 28 percent in April as the most-ever cocoa futures were traded and on increased buying and selling of robusta coffee in London and milling wheat in Paris.
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London Stock Exchange Group Reported To Acquire EuroTLX For EUR40m
jlne.ws/YEWH3K

BM&FBOVESPA Publishes April Market Performance
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Summary Of April 2013 Activities At TOCOM – TOCOM April 2013 Volume Averaged 155,999 Contracts Per Day, Up 38.5%
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Vienna Stock Exchange Monthly Statistics – April 2013
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Vienna Stock Exchange Monthly Statistics: Derivative Market – April 2013
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Warsaw Stock Exchange Derivatives Market In April 2013
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BM&FBOVESPA Widens Its Offer In Interest Rate Derivatives
Portfolio To Include New Products Referenced On The Average Rate In Repurchase Agreements Backed By Federal Securities
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Another Foreign Company Newly Listed On The Warsaw Stock Exchange
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YMAGIS lists on NYSE Euronext in Paris
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ERYTECH celebrates successful listing on NYSE Euronext in Paris
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NYSE MKT TO DELIST SECURITIES OF GEOGLOBAL RESOURCES INC.
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Direct Edge Regulatory Notice #13-02 – Section 31 Fee Changes
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Hedge Funds & Managed Futures

Hedge fund chief Paulson loses big on gold
Reuters via Yahoo! Finance
Hedge fund billionaire John Paulson is emerging as one of the biggest losers in this year’s gold rout, further tarnishing his once legendary status in the $2 trillion hedge fund industry. Paulson’s $700 million gold fund lost a whopping 27 percent in April, when the price of the metal plunged 17 percent over a two-week stretch, according to performance figures provided by a person familiar with the fund.
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SAC Gains While Greenlight Drops as Hedge Funds Rise 0.5%
Bloomberg
Hedge funds returned 0.5 percent in April, lagging behind global stock markets for the sixth straight month.
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Hedge Funds Rush Into Debt Trading With $108 Billion
Bloomberg
Hedge funds using debt-trading strategies honed on Wall Street are expanding at a record pace as they profit from risks big banks are no longer taking.
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Adams Street Partners Closes Global Secondary Fund 5
Adams Street Partners, one of the world’s largest managers of private equity for institutional investors, announced today the closing of its Adams Street Global Secondary Fund 5.
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Elliott’s Singer Joins Spanx’s Blakely in Buffett Pledge
Bloomberg
Hedge-fund manager Paul Singer and hosiery tycoon Sara Blakely promised to donate at least half of their fortune to charity as part of the initiative started by Warren Buffett and Bill and Melinda Gates.
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Analysis: Hedge funds in search of distress take a look at Detroit
Reuters via Yahoo! News
By Tom Hals – In the past two decades, a group of specialized hedge funds have transformed corporate bankruptcies, injecting much-needed capital while at the same time drawing fire as “vultures.” Now these same funds may be poised to descend on another landscape: struggling cities and counties – and no place beckons more than Detroit.
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Pondering a Berkshire Without Buffett
WILLIAM ALDEN – NYTimes.com
At the Berkshire Hathaway annual meeting, Warren E. Buffett rejected the notion that the company would go the way of Teledyne, a conglomerate that was broken up after its leader, Henry E. Singleton, stepped down as chief executive.
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Cargill Breaks Ground On A U.S. $100 Million Investment In Indonesia To Meet Growing Customer Demands And To Stimulate Growth Of The Cocoa Sector In Asia
Investment In Indonesia Will Establish Cargill’s First Cocoa Processing Operation In Asia
jlne.ws/YEWJZn

Banks & Brokers

Citigroup Sues Barclays over Currency-Trade Clearing
Dow Jones
Citigroup Inc. is claiming that Barclays Plc refuses to cover losses of more than $141 million it sustained from clearing Lehman Brothers Inc. currency trades just before the investment bank collapsed.
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BofA Traders Have Perfect Quarter as Morgan Stanley Lags
Michael J. Moore & Hugh Son – Bloomberg
Bank of America Corp. (BAC)’s traders posted gains every business day during the first quarter as Morgan Stanley (MS)’s lost money in eight sessions, double the rate a year earlier.
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American Express CFO Henry planning to retire
Associated Press via Yahoo! News
American Express Chief Financial Officer Dan Henry is planning to retire after 23 years with the financial services company.
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Goldman Sachs must face fraud claims from insurer: N.Y. court
Reuters
Goldman Sachs Group Inc must face fraud claims brought by CIFG Assurance North America over insurance it provided for $275 million in mortgage-backed securities, a New York state appeals court ruled on Tuesday.
jlne.ws/YEWJZr

Citigroup Names Wieting Chief Strategist for Private Banking
Bloomberg
Citigroup Inc. , the third-biggest U.S. lender, named Steven Wieting global chief strategist of its private bank, the unit that claims relationships with a third of all billionaires.
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JPMorgan’s Saudi chief leaves for central bank job
Reuters
JPMorgan Chase Inc confirmed on Tuesday that its top banker for Saudi Arabia, Abdulaziz Al Helaissi, is leaving to take a position with Saudi Arabia’s central bank.
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JPMorgan Said to Plan Commodity Trader Job Cuts in London, Dubai
Bloomberg
JPMorgan Chase & Co. , the biggest U.S. bank , told about 10 traders in its commodity business that their jobs may be eliminated, according to two people with knowledge of the situation.
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JPMorgan Said to Agree to Acquire Tower for $650 Million
Bloomberg
JPMorgan Chase & Co. ’s asset- management unit agreed to buy the 31-story tower at 425 Lexington Ave. in midtown Manhattan for about $650 million, a person with knowledge of the plans said.
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Clearing & Settlement

BNP Paribas and Clearstream’s collateral management collaboration goes live
A collateral management service developed for customers of both Clearstream and BNP Paribas Securities Services has now launched across multiple markets and for both fixed income and equities. The live service enables mutual customers to use Clearstream’s global collateral allocation, optimisation and exposure coverage while BNP Paribas Securities Services remains the local custodian, managing local settlement and asset servicing for its clients.
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Eurex Clearing: German Banking Industry Associations Presents The Clearing Framework Agreement (Clearing-Rahmenvereinbarung – CRV) For German Banks And Their Buy-Side Customers
With the publication of the clearing framework agreement, the main associations of the German Banking Industry Committee (Deutsche Kreditwirtschaft – DK) have created an important legal framework for clearing standardized OTC derivatives in Germany. This new standard documentation can be used by banks and their customers with immediate effect.
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CME Group Clearing Advisory: Swap Counterparty Legal Entity Identifier
jlne.ws/YEWKfL

Indexes & Products

Exchange-traded Australian Government Bonds to commence trading on ASX
jlne.ws/YEWIVa

Deutsche Börse introduces new corporate bond indices
jlne.ws/18sbVLa

STOXX Introduces EURO STOXX 50 Buywrite 100% Index
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NASDAQ OMX Nordic: New OMX Copenhagen Benchmark Portfolio Selected – The New Portfolio Of The OMX Copenhagen Benchmark Index Will Become Effective On June 3, 2013
jlne.ws/YEWIVd

NASDAQ OMX Nordic: New OMX Stockholm Benchmark Portfolio Selected – The New Portfolio Of The OMX Stockholm Benchmark Index Will Become Effective On June 3, 2013
jlne.ws/YEWKfV

NASDAQ OMX Nordic: New OMX Helsinki Benchmark Portfolio Selected – The New Portfolio Of The OMX Helsinki Benchmark Index Will Become Effective On June 3, 2013
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Moscow Exchange Indices Weekly Review: April 29 – May 3, 2013
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Technology

Susquehanna Financial Group Extends its Relationship with SunGard’s Protegent Trading Compliance
Susquehanna Financial Group, LLLP (SFG), the institutional broker-dealer member of the Susquehanna International Group of Companies (SIG), has extended its relationship with SunGard’s Protegent Trading Compliance as the firm’s platform for trading compliance of its institutional equities trading business.
jlne.ws/YEWKfY

Continuum Announces Global Connectivity with NinjaTrader, LLC
Continuum today announced its continued collaboration with NinjaTrader, LLC to allow global connectivity between their systems. The partnership gives traders using the NinjaTrader 7 platform the ability to connect to Continuum’s network and makes this collaborative solution available to FCMs worldwide.
jlne.ws/YEWKg1

SIX Financial Information’s Intraday Pricing Service Bolsters Triangle Park Capital Markets Data Service
jlne.ws/YEWKg3

Enforcement

Hedge fund trial to raise pressure on UK fraud prosecutor
Reuters via Yahoo! Finance
Britain’s top fraud prosecutor is likely to face serious criticism over its handling of an investigation into the $600 million collapse of one of London’s oldest hedge funds, a judge said on Tuesday.
jlne.ws/YEWIVj

SEC Charges Traders in Massive Kickback Scheme Involving Venezuelan Official
The Securities and Exchange Commission today charged four individuals with ties to a New York City brokerage firm in a scheme involving millions of dollars in illicit bribes paid to a high-ranking Venezuelan finance official to secure the bond trading business of a state-owned Venezuelan bank.
jlne.ws/YEWIVl

New York State Investigating Pension-Advance Firms
JESSICA SILVER-GREENBERG – NYTimes.com
New York’s top banking regulator has begun an investigation into pension advance firms, the lenders that woo retirees to sign over their monthly pension checks in return for cash.
jlne.ws/YEWIVm

B.C. man agrees to sanctions for illegally distributing securities
jlne.ws/YEWKwk

Environmental & Energy

Europe’s Carbon Market Fix Set for July Second-Chance Vote
Ewa Krukowska – Bloomberg
The European Parliament will hold a second plenary vote in early July on a stopgap plan to bolster prices in the world’s biggest carbon market after it rejected the draft measure last month.
jlne.ws/ZFftDa

UK calls for “urgent steps” to reform EU Emissions Trading System
GreenWise staff
The UK and eight other European countries, including France and Germany, have joined together to call for urgent action to rescue the EU’s flagship scheme for cutting carbon emissions.
jlne.ws/ZFdUFw

EPEX SPOT SE: European Market Coupling tests begin
The day-ahead price coupling projects for power markets in North-Western Europe (NWE) and South-Western Europe (SWE) today jointly announce the start of end-to-end testing across their combined regions, using the Price Coupling of Regions (PCR) system solution.
jlne.ws/YEWIVn

Asia-Pacific

SGX and China Beijing International Mining Exchange collaborate to develop iron ore market
Singapore Exchange (SGX) and China Beijing International Mining Exchange (CBMX) have signed a Memorandum of Understanding (MOU) to cooperate in the development of both Chinese and international iron ore markets. The agreement was signed in Singapore at the Singapore Iron Ore Week 2013, between Dong Chaobin, President of CBMX and Magnus Böcker, CEO of SGX.
jlne.ws/YEWJbG

No-one is impressed by China’s amazing April trade figures
Kate Mackenzie | FT Alphaville
The good news is China’s April trade figures are super high! The bad news is no-one believes them, which is fair enough because just a few days ago the Chinese foreign exchange authority virtually said that the export numbers are not reliable — it plans to crackdown on companies that appeared to be over-invoicing for exports as a way of skirting capital inflow restrictions.
jlne.ws/YEWJbI

Survey reveals gaps in risk information from Asian buy-side institutions
Risk.net
The survey entitled Closing the communication gap: How institutional investors are building risk-aware cultures was conducted in the first quarter of 2013, and has found that relevant and timely information on risk remains a problem for buy-side firms.
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HKEx 2013 First Quarter Results
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HKEx Appointments To Various Committees And Consultative Panels
jlne.ws/YEWJbJ

SGX welcomes OKH Global to Mainboard
jlne.ws/YEWKMM

HKEx: Forfeiture Of Unclaimed Final Dividend For 2006
jlne.ws/YEWKMO

HKEx: Condensed Consolidated Financial Statements For The Three Months Ended 31 March 2013 (Unaudited)
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HKEx Monthly Market Highlights – April 2013
jlne.ws/YEWKMV

SGX Welcomes OKH Global To Mainboard
jlne.ws/YEWJbP

HKEx On-Floor & Off-Floor Trading Statistics
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Hong Kong’s Securities And Futures Commission Bans Andy Pau Chin Hung For 10 Years
jlne.ws/YEWJbU

Frontier Markets

Global Board Of Trade (GBOT), The First Exchange In Africa, To Successfully Launch Contracts For Difference (CFDs)
Global Board of Trade, the first international multi-asset bourse from Mauritius has successfully launched Contracts for Difference (CFDs). The launch of CFDs on GBOT makes it the 1st exchange in Africa and 2nd in the world to introduce CFDs.
jlne.ws/YEWKMY

Israel Opportunity 2013, 12th Tel Aviv Stock Exchange London Investor Conference Being Held 13 June 2013
jlne.ws/YEWJbW

Abu Dhabi Securities Exchange Implements BCC For DVP
jlne.ws/YEWJbX

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About Author

Matte is chief operating officer of John J. Lothian & Co. He edits the John Lothian Newsletter, JLN Forex and MarketsWiki.