Breaking News

John Lothian Newsletter: EU watchdog backs more competition in derivatives clearing; Derivative investors doubt benefits of LSE-Deutsche Börse tie-up; Oystacher Says Speed Chess, Not Spoofing, Is Behind His Trades

First Read

Counter (party) intuitive
Steven Strange, Compliance Product Manager, Fidessa

Once upon a time, a good credit rating was sufficient to establish a counterparty’s fitness as a trading partner. Counterparties were managed via simple ‘do not trade’ lists delivered to traders at the start of the day, and traders honoured these by hand, or using basic software and home-grown tools.

Times, of course, have changed drastically. Regulators now expect firms to aggregate their counterparty exposure across asset classes, and include a myriad of additional holdings where the counterparty is in any way affiliated. ‘Do not trade’ lists are monitored far more closely and updated swiftly as conditions change.

Clients are more demanding too, as everyone attempts to mitigate risk in an ever-nervous market. Having become used to the accuracy and speed of automated reporting, they are no longer satisfied with manually generated reports based on post-trade transactional data. Institutional clients are also more likely to have counterparty risk guidelines in place, which must be navigated individually – a task that quickly becomes complex when multiple clients are involved.

Read the rest of the paper at JohnLothianNews.com HERE

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US Predator Seals Funds For £10bn LSE Bid; The NYSE’s owner has lined up a trio of banks to back a proposed £10bn bid for the London Stock Exchange, Sky News learns.
By Mark Kleinman, City Editor – SKY News
The owner of the New York Stock Exchange (NYSE) has secured funding from a group of American and Asian banks as it prepares a £10bn takeover bid for the London Stock Exchange (LSE).
goo.gl/6L0p5g

***** Here is Reuters report on this story

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CHX Announces May 13 Start For SNAP Auctions
Business Wire
The Chicago Stock Exchange (CHX) announced plans to introduce its auction products – Participant-initiated on-demand SNAP Auctions as well as Exchange-Initiated SNAP Auctions – starting May 13, 2016. John Kerin, CHX President and Chief Executive Officer, said, “We believe that SNAP Auctions will be the safest and most effective mechanism to seek block size execution at the NBBO Midpoint by using a Midpoint Pegged Auction Only order. Exchange-initiated SNAP Auctions will assure that a SNAP Auction is called when sufficient size exists – at the NBBO Midpoint or another price – to execute block size.
jlne.ws/1S3BwgQ

***** CHX picks Friday the 13th to launch SNAP. They are giving away umbrellas to promote the launch, but the umbrellas can only be used inside.

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2016 Exchange CEO Series: SGX’s Boon Chye Expanding With New Products, New Platform in 2016
JohnLothianNews.com

Loh Boon Chye took over the Singapore Exchange CEO post in July 2015 with a focus on growing the overall business in derivatives, clearing and equities. But he faces headwinds across the asset classes as China’s economy slows. Boon Chye, however, believes the exchange is well positioned to move forward in 2016.

SGX has made a name for itself by introducing equity index futures with the Nikkei 225 futures, among others. The exchange now is broadening its China product suite with the introduction of a series of equity derivatives based on MSCI indexes including the MSCI China Free Index. The new product follows the FTSE China A50 futures contract, which ranked 18th among global futures exchange in 2015, and traded 95.8 million contracts last year, up 131 percent from 41.3 million contracts a year earlier, according to the Futures Industry Association annual survey. Watch the video »
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The Fall of China’s Hedge-Fund King
The New York Times
Xu Xiang was a legend in the country’s booming stock market
— until the bubble he helped to create took him down with it.
jlne.ws/1VqEKAx

**JK: Interesting read on the fund manager and money behind one of China’s once largest hedge funds.

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Motivated Sellers: Losing Weight For The Kids
The fundraising drive by Cathy Lyall, Mark Ibbotson, Clive Furness and Andy Ross called the Futures For Kids, or FFK Downsizing Challenge, is now complete, surpassing its goal of raising £3,000 over the first three months. The weight loss motivator for the children, and perhaps for their own wardrobes, raised £3,831. Clive Furness also surpassed his goal of losing 11.6 kg, losing 12.3 kg, and coming in at a svelte 89.4 kg. (Again, being the metric system, those of us in the US believe it to be about 15 pounds. Actually, it is 27.1 pounds – some of which were likely added back on in Boca.)
Nice job. Living on Cheerios and water in the name of charity ain’t easy.
jlne.ws/1UDYIc4

****** This is not fair; Clive was in Chicago eating deep dish pizza before this competition.

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CERN Is Seeking Secrets of the Universe, or Maybe Opening the Portals of Hell; Operators of Large Hadron Collider gear up to battle conspiracy theories
By JOHN LETZING – WSJ
The European Organization for Nuclear Research, or CERN, is gearing up for another run at smashing particles together to unlock the secrets of the universe.
goo.gl/SlfpO0

****** Dan Brown, are you out there somewhere???

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Monday’s Top Three
Monday’s top-clicked story was a bit of jingoism directed at ICE from London’s Telegraph – LSE chief dismisses American suitor as ‘slash and burn interloper’. Second place was from CME Group, the announcement it had named Paul Houston as its new global head of FX. (FYI, yesterday we named Houston as our MarketsWiki Page of the Day). Third place went to famed investor Jim Rogers who, in an FT story, labeled himself “the world’s worst short-term trader.”

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Lead Stories

EU watchdog backs more competition in derivatives clearing
BY HUW JONES – Reuters
Nasdaq Inc, broker ICAP Plc and London Stock Exchange Group Plc won regulatory backing on Monday for their efforts to ensure more customer choice in the trading and clearing of financial derivatives in the European Union.
goo.gl/gH7FrJ

Derivative investors doubt benefits of LSE-Deutsche Börse tie-up
Philip Stafford – FT
Deutsche Börse’s $20bn combination with the London Stock Exchange Group promises an “industry-defining combination” but there are doubts that traders and investors relying on derivatives in a post-crisis world will see the benefits.
goo.gl/azQP0s

Oystacher Says Speed Chess, Not Spoofing, Is Behind His Trades
Matthew Leising – Bloomberg
Speed chess player has very fast reflexes, court filing says; U.S. seeks to bar Oystacher from market while case proceeds
Igor Oystacher, the co-founder of 3Red Trading LLC accused of manipulating markets by rapidly placing trades he never intended to execute, has exceptional reasoning skills — in the 99th percentile — that gave him the capacity to quickly follow through on orders, his lawyers said.
goo.gl/z8zalR

ICE prepares £10bn LSE bid to rival Deutsche Boerse; According to reports
Anna Fedorova – InvestmentWeek
The owner of the NYSE said it was considering bids following the news of merger talks between the LSE and Deutsche Boerse, Germany’s exchange.
goo.gl/GGimwy

***DA: That will buy a lot of “slash and burn interloping,” according to yesterday’s story in the Telegraph

Insurance: The Next Global Financial Danger
BY MORITZ KOCH AND FRANK WIEBE – Handelsblatt
The International Monetary Fund is warning that insurance companies could be the next big dangers for the global financial system. It’s a risk that Germany has already long been familiar with.
/goo.gl/7DYRcp

Pimco says had ‘good cause’ to fire Bill Gross: filing
BY JONATHAN STEMPEL – Reuters
Pacific Investment Management Co said former bond manager Bill Gross’ abusive conduct and effort to sabotage colleagues he deemed disloyal gave it “good cause” to oust him, and not pay any of the more than $200 million of damages he now seeks in a lawsuit.
goo.gl/cYTqKb

***DA: Also see Pimco Says Bill Gross Was Told He’d Lose $200 Million Bonus in Bloomberg and Pimco: Bill Gross Left Resignation Letter ‘in the Middle of the Night’ in WSJ.

Senate Panel to Vote on Two SEC Nominees Thursday; Lisa Fairfax, Hester Peirce nominated by President Obama last fall
By ANDREW ACKERMAN – WSJ
The Senate Banking Committee this week plans to advance the nominations of two lawyers tapped to fill openings at the Securities and Exchange Commission, the committee announced Monday.
goo.gl/IlJFiE

‘Panama Papers’ Shine Uncomfortable Spotlight on Wealth of the Global Elite
Gregory Viscusi
Ambereen Choudhury – Bloomberg
Leaked files draw outrage from leaders named in group’s report; Documents land at tricky time for world financial industry
From Moscow to Reykjavik to Buenos Aires and beyond, the same two words are suddenly reverberating in financial circles: offshore accounts.
goo.gl/bohxmN

The woman with the most stressful job in banking
By Christina Rexrode, The Wall Street Journal
When Bank of America bought Merrill Lynch in the depths of the financial crisis, it said it would lay off tens of thousands of employees and cut bonuses for those that remained.
goo.gl/3NBMog

Credit Suisse, HSBC dismiss “Panama Papers” tax avoidance allegations
Reuters
Credit Suisse and HSBC, two of the world’s largest wealth managers, dismissed on Tuesday suggestions they were actively using offshore structures to help clients cheat on their taxes.
goo.gl/9QfyHN

A Conversation With Panama’s Suddenly Notorious Offshore Lawyers
Blake Schmidt – Bloomberg
“The cat’s out of the bag,” says lawyer Jurgen Mossack; Firm is at center of ICIJ reports on use of shell companies
For decades now, Jurgen Mossack and Ramon Fonseca have been the go-to guys in Panama for international investors looking to put their money in far-flung places.
goo.gl/8ZNSjJ

Men Seeking Women for Boards Looking in All the Wrong Places
Jeff Green – Bloomberg
Surveys find male directors see a lack of qualified women; `There’s been too much reliance on an old boy network’
The men who dominate corporate boards in the U.S. still tend to pick men when seats open up. It may be that way because they’re old — and don’t know where to look.
goo.gl/yd0KGw

U.K. Bond Demand Highest Since 2013 in First Sale Since Revamp
Eshe Nelson – Bloomberg
Bid-to-cover ratio climbs to 2.01, most since December 2013; Nation sells 2.75 billion pounds of 2021 bonds Tuesday
Demand for U.K. government five-year bonds rose to the highest since 2013 in the first sale since the debt office’s revamp of issuance came into effect.
goo.gl/D6a0uK

Why Would You Break Into the Bureau of Labor Statistics?
Polly Mosendz, Luke Kawa – Bloomberg
That’s just what somebody did Monday—at the wrong place, at the wrong time. Goldfinger it wasn’t.
In a rare twist, the first Friday of the month wasn’t the most exciting day for the Bureau of Labor Statistics this time around.
goo.gl/NNKVGO

Regulatory

CFTC Announces Whistleblower Award of More Than $10 Million
CFTC
The U.S. Commodity Futures Trading Commission (CFTC) today announced an award of more than $10 million to a whistleblower who provided key original information that led to a successful CFTC enforcement action. The award is the largest made by the CFTC’s Whistleblower Program to date and the third award to a whistleblower who provided valuable information about violations of the Commodity Exchange Act (CEA).
jlne.ws/25GGzhF

Is ESMA’s EUR64,000 Fine of the DTCC the First of More to Come?
Finance Magnates
The fine answered the lingering question: when will we start to see fines for failing to comply with the regulations?
jlne.ws/228ZRaS

Europe retreats in US derivatives battle
Financial News
Europe’s markets regulator has issued its final report on how much margin is required to be posted at clearing houses for derivatives trades – and has come down in favour of a US approach that was heavily contested for years.
jlne.ws/2290K3b

Basel Warns Against `Myopic’ Calls to Ease Bank Capital Demands
Bloomberg
Global regulators on the Basel Committee on Banking Supervision are pushing back against calls for them to ease capital requirements on lenders to stimulate lending. The job of the committee, which brings together regulators from Australia and China to Italy and the U.S., is to define minimum standards rather than to set out the “optimal level” of capital, Secretary General William Coen said in the text of a speech to be delivered Tuesday in Sydney. That approach doesn’t preclude individual jurisdictions from making tougher demands, if that is what they wish to do, he said.
jlne.ws/2295beh

Regulators seen as exhausted in effort to end too-big-to-fail banks
By Greg Robb – MarketWatch
One reason the nation’s biggest banks remain too-big-to-fail is that regulators are simply worn out, according to proponents of further reform speaking at a Minneapolis Fed conference Monday.
goo.gl/XIyDUf

Firms unaware of Mifid II’s impact on recordkeeping; Whitepaper published by Smarsh claims firms are unaware of rules on recordkeeping, and need to prepare now to be compliant by January 2018.
By Hayley McDowell – The Trade News
Businesses are unaware of the impact Mifid II will have on recordkeeping obligations, according to a whitepaper authored by archive solutions firm Smarsh.
goo.gl/CxDg46

ESMA rules out open access exemption for listed derivatives; ESMA stated there is no risk to exchanged traded derivatives in relation to open access.
By Joe Parsons j – The Trade News
The European Securities and Markets Authority (ESMA) has ruled out a temporary exclusion for listed derivatives from the incoming open-access regime, marking a victory for the London Stock Exchange Group (LSEG) which have campaigned to open up competition in derivatives clearing.
goo.gl/D2tPgw

ESMA PUBLISHES UPDATED AIFMD Q&A
ESMA
The European Securities and Markets Authority (ESMA) has published an updated questions and answers document (Q&A) on the application of the Alternative Investment Fund Managers Directive (AIFMD). The Q&A includes a new question and answer on notification requirements relating to additional investment in existing Alternative Investment Funds (AIFs).
/goo.gl/im5VvO

ESMA PUBLISHES UPDATED UCITS Q&A
ESMA
The European Securities and Markets Authority (ESMA) has published an updated questions and answers document (Q&A) on the application of the Undertakings for the Collective Investment in Transferable Securities Directive (UCITS). The Q&A includes a new question and answer on UCITS investment in UCITS feeder funds.
/goo.gl/WsQaOx

ESMA ISSUES AMENDED RULES FOR ACCESS, AGGREGATION AND COMPARISON OF DATA ACROSS TRADE REPOSITORIES
ESMA
The European Securities and Markets Authority (ESMA) has published today amended regulatory technical standards (RTS) implementing the European Market Infrastructure Regulation (EMIR). The amended RTS deal with the access, aggregation and comparison of data across trade repositories.
/goo.gl/QyPxgv

Questions remain after final EU uncleared margin rules; Industry gives a positive welcome, but the treatment of non-netting jurisdictions is still uncertain
Samuel Wilkes – Risk.net
Final European rules on uncleared derivatives margin have accommodated some industry concerns, but outstanding questions will need to be resolved quickly if banks are to meet their first deadline in September. The treatment of jurisdictions with no legal opinion on the ability to net payments is top of that list of potential hurdles and banks are also fretting about the timeline for posting margin on cross-border trades. “There are a number of positive elements in the rules compared with the previous…
goo.gl/4p02DF

FCA publishes 2016/17 Business Plan
UK FCA
The Financial Conduct Authority (FCA) has today published its annual Business Plan.
goo.gl/gAzP4b

EU Needs Tools to Address Tax-Avoidance `Cancer,’ Katainen Says
Rebecca Christie – Bloomberg
Katainen says `best thing’ in Panama Papers issue is the leak; ECB action puts onus on nations to aid economies, he says
Revelations that some of the world’s richest people are using Panama-based lawyers to channel funds through off-shore accounts show that authorities need to step up efforts to stamp out tax avoidance, European Commission Vice President Jyrki Katainen said.
goo.gl/nhkDvt

Exchanges & Trading Facilities

Bats Global Markets, Inc. Announces the Launch of its
Initial Public Offering
BATS
Bats Global Markets, Inc. (“Bats”), a leading global operator of exchanges and services for financial markets, today announced the launch of its initial public offering of 11,200,000 shares of its common stock by certain Bats stockholders. The initial public offering price per share is expected to be between $17.00 and $19.00.
goo.gl/63pfzc

Euronext appoints latest senior management
Futures & Options World
Euronext has appointed a new chief talent officer, chief innovation officer and chief communications officer, marking the latest senior management changes under new Euronext chief executive Stephane Boujnah. Amaury Houdart has been appointed as chief talent officer of Euronext where he will head both human resources and initiatives related to talent development and organisational changes across Euronext. Previously, Houdart was group human resources director at Steria, a European IT services company. His earlier roles include senior management positions at Unilog, an international IT services company.
jlne.ws/23btlY0

***DA: Read the full press release HERE

MarketAxess Announces Monthly Volume Statistics for March 2016
MarketsAxess
MarketAxess Holdings Inc. (Nasdaq:MKTX), the operator of a leading electronic trading platform for fixed-income securities, and the provider of market data and post-trade services for the global fixed-income markets, today announced total monthly trading volume for March 2016 of $118.2 billion, consisting of $66.1 billion in U.S. high-grade volume, $46.6 billion in other credit volume, and $5.5 billion in liquid products volume.
goo.gl/pY4eRh

Warsaw Stock Exchange: First Client Starts Using Colocation Service Offered By GPW
Mondovisione
The colocation service for domestic and foreign clients is once again available from GPW; ERSTE Securities Polska is the first Exchange Member to start operations and offer its clients the fastest access to GPW’s trading system
goo.gl/hIQNwf

ICAP Electronic Markets Volumes – March 2016
ICAP
goo.gl/LkSMlX

Nasdaq Dubai Welcomes Designation As National Numbering Agency For Financial Instruments In DIFC – Role Covers Shares, Sukuk, Bonds, Derivatives And Other Products
Mondovisione
Nasdaq Dubai, the region’s international stock exchange, has welcomed its designation as the sole National Numbering Agency (NNA) for financial instruments in the Dubai International Financial Centre (DIFC).
goo.gl/d4YRsl

Politics

Opposition calls on Cameron to tackle British tax havens
BY ELIZABETH PIPER – Reuters
The leader of Britain’s main opposition party will call on government on Tuesday to do more to tackle tax havens, saying it was time British Prime Minister David Cameron stopped “pussyfooting around on tax dodging”.
goo.gl/t9qPq7

Why Bernie’s Right About Glass-Steagall; Sanders believes that the repeal of the act in 1999 led to the formation of banks that became “too big to fail” — and will lead to another crisis without corrective legislation.
BY EDWARD MORRIS
This post originally appeared at History News Network.
Both Hillary Clinton and Bernie Sanders are talking tough about Wall Street reform. But only Bernie Sanders is advocating a reprise of the 1933 Glass-Steagall Act, specifically that section of the Depression-era act that had prohibited commercial banks and investment banks from operating under the same roof. Sanders believes that the repeal of Glass-Steagall in 1999 led to the formation of banks that became “too big to fail,” contributed to the financial crisis in 2008 — and will lead to another crisis without corrective legislation.
goo.gl/Pt9o5N

Hedge Funds & Managed Futures

Wrongfooted US mutuals run into trouble
Robin Wigglesworth, US markets editor – FT
US mutual funds have underperformed the equity market by the greatest margin in nearly two decades as a turbulent first quarter wrongfooted many traditional asset managers in another blow to their dominance of the investment industry.
goo.gl/ITgAof

There’s a ‘Spring Cleaning’ Going On in the Credit Markets
By BEN EISEN – WSJ
Rating agency downgrades are helping shift the pricing dynamics across the U.S. corporate bond market.
goo.gl/c4yBJj

Investors rake over ashes of a dismal quarter
John Authers – FT
The W-shaped markets since last August have confused many, and created opportunities. They have made money for some but not, on the whole, for long-suffering investors with their money in active equity funds.
goo.gl/HSgmwu

Fed’s Rosengren Sees Possible Rate Increases Sooner Than Markets Imply; Boston Fed President says very slow removal of accommodation reflected in futures-market pricing could prove too pessimistic
By KATY BURNE – WSJ
Federal Reserve Bank of Boston President Eric Rosengren said Monday that prices in futures markets imply traders may have reacted too strongly to volatility in recent months and warned they could be underestimating the possible pace of near-term rate increases.
goo.gl/uuoIz5

Swiss National Bank Keeps Cards Close to Chest; Central bank’s cautious style prevents officials from dropping hints they can’t deliver on
By BRIAN BLACKSTONE – WSJ
Central bankers have cemented their status as among the most powerful forces in financial markets, with their signals on future policy decisions sparking sharp moves in stocks, bonds and currencies.
goo.gl/8ZSyb1

Lockstep Moves Ease, Futility Doesn’t for U.S. Equity Managers
Oliver Renick – Bloomberg
Mutual fund managers’ least-favorite stocks gain 4.4 percent; Dispersion in equity returns expands to most in four years
It was a stock picker’s market in the first quarter. Too bad about the stock picks.
goo.gl/ZS6upn

Gold is the pile of poker chips in the next global crisis
By James Rickards – WSJ
Author James Rickards maintains that gold remains the real underpinning, of the international monetary system. Governments may disparage it, he says, yet many of them have held on to gold — and China and Russia have been acquiring more.
goo.gl/A7UNLJ

Banks & Brokers

CQG partners with OANDA to expand U.S. Forex trading
LeapRate
The connection to OANDA’s fxTrade platform is powered by Continuum’s API, Continuum Connect. Customers using CQG Integrated Client, CQG QTrader, CQG M, and CQG FX, as well as those who have written to third-party applications via CQG’s suite of API products, are now able to connect to fxTrade.
jlne.ws/23btH0H

Banks sublet office space after staff cuts
Emma Dunkley and Judith Evans – FT
Thousands of job cuts and a drive to slash costs are prompting a number of the largest global banks based in the UK to sublet office space, close branches and sell off real estate. In the past few weeks it has emerged that a number of banking groups are developing plans to sublet thousands of square feet in Canary Wharf office space as jobs are axed or moved to cheaper locations.
goo.gl/dyvO6C

Wealth Adviser Daily Briefing: Merrill, Other Big Brokerages Brace for Fiduciary Rule
By MICHAEL WURSTHORN – WSJ
With the Labor Department’s new rule on retirement-account advice just days away, some brokerages are preparing to adjust their operations and communicate changes to clients. Merrill Lynch’s brokers have been provided details on the individual retirement accounts they manage in recent months, writes WSJ.com’s Wealth Adviser, citing people with knowledge of the matter.
goo.gl/8C12we

Broker bosses adapt as fees dry up
By Lucy Burton and Tim Burke – Financial News
Increasingly conscious that the sector in which they operate is shrinking, mid-cap brokers have been ramping up their efforts to adapt.
goo.gl/LpbYBj

UBS Publishes Agenda For The Annual General Meeting Of UBS Group AG On 10 May 2016 – Robert W. Scully And Dieter Wemmer Proposed For Election To The Board Of Directors At The Annual General Meeting
Mondovisione
goo.gl/Xv4RXp

Credit Suisse faces tough questions after $1 billion write-downs
BY JOSHUA FRANKLIN – Reuters
On Jan. 19, Credit Suisse (CSGN.S) Chief Executive Tidjane Thiam contacted the head of the Swiss bank’s markets business asking for more details about the fourth-quarter results at the trading division, according to materials seen by Reuters.
goo.gl/GWUvg3

Goldman Profit Estimates Cut Again as Analysts Project 45% Drop
Dakin Campbell – Bloomberg
First-quarter EPS estimate sliced 94 cents over 4 weeks; Morgan Stanley, Citigroup also face downbeat revisions
Three months after predicting Goldman Sachs Group Inc. would put the tumultuous end of 2015 behind it and stabilize profits, analysts are reversing course and cutting projections. Again.
goo.gl/6ugDFJ

Clearing & Settlement

The DTCC Blockchain Symposium in 12 Quotes
CoinDesk
The Depository Trust & Clearing Corporation (DTCC) held a private blockchain event in New York last week, a move that coincided with the announcement it would embark on its first test of the technology with partner Digital Asset Holdings. The all-day affair saw a number of new names debut at a blockchain industry conference, with marquee representatives from Blackrock, Goldman Sachs, the SWIFT Institute and the White House joining a cast of more experienced blockchain innovators from Chain, R3 and tØ.
jlne.ws/228ZWet

ISDA Announces Revised SIMM Licensing Program
iSDA
The International Swaps and Derivatives Association, Inc. (ISDA) today announced an update to the licensing program for ISDA’s proprietary and patent-pending Standard Initial Margin Model (SIMM) for non-cleared derivatives, offered commercially under the name ISDA SIMM™.
goo.gl/GAO2CT

Indexes & Products

Index Investing or Stock Picking? In Japan, It’s the Same Thing
Anna Kitanaka, Yuko Takeo, Nao Sano – Bloomberg
Mothers index falls hostage to one drugmaker as Sosei soars; Weighting distorts gauge’s ability to show investor sentiment
Mothers is high on drugs. Japan’s startup share gauge is surging mostly because of one pharmaceutical company: Sosei Group Corp. The maker of medicines for cancer and lung disease, with little more than 100 employees, has risen fivefold in the past year and now accounts for 15 percent of the Tokyo Stock Exchange Mothers Index. It’s sent the measure to a 13 percent gain in 2016, almost double what it would’ve been if Sosei weren’t around.
goo.gl/KA47j0

Great Performance by High Yield, One Time or Early Signs?
Indexology – S&P Dow Jones Indices
As with the weather for the northern hemisphere, the U.S. high-yield market seems to be making a comeback. The 0.54% return in February for the S&P U.S. Issued High Yield Corporate Bond Index appears to be the green shoot of return for high-yield bonds. March 2016 followed the prior month’s gain with a blossom of its own. The index returned 4.5% for the month, which was the largest monthly return since October 2011’s return of 5.07%. Year-to-date, the index returned 3.36%, which is refreshing to high-yield investors, who, before this month, had not seen a positive year-to-date return since November 2015.
jlne.ws/2291lSp

What is Smart Beta and Why Are Investors Flocking to It?
Equities.com
It certainly helps the popularity of smart beta ETFs and mutual funds that many of them have been on a performance tear of late. A lot of money is flowing into smart beta ETFs. At the end of the day, when I look at smart beta, it is really just another way to slice and dice the return stream in a particular portfolio. Thus you can have smart beta value funds, smart beta growth funds, smart beta momentum funds, smart beta…. There are literally multiple hundreds of smart beta funds available now.
jlne.ws/2291vZX

The Week In ETFs: March ETF Flows Reflect Risk Demand Conflict
NASDAQ.com
ETF inflows registered their highest monthly total for the year, with $36 billion in net inflows, bringing 2016’s total new assets for the space to $29.5 billion. As impressive as that figure was, the year is still trailing 2015 in total net flows, which had $59 billion at this time last year.
jlne.ws/2291Agl

ETFs key to inclusion of China A-shares in MSCI Emerging Markets Index
ETF Strategy
MSCI, a leading provider of indices to the exchange-traded funds industry, has announced that the removal of anti-competitive clauses surrounding financial products such as China-linked ETFs will be important in facilitating the partial adoption of A-shares into the MSCI Emerging Markets Index.
jlne.ws/2291BAK

Technology

(Re) Introducing TradeCo | Trading Technologies
TradeCo Mission & Vision
TradeCo is a proprietary trading group that is a subsidiary of Trading Technologies. It has been operating for around 15 years under a few different names, but always known internally as “TradeCo.” Traditionally, TradeCo was set up as a group of individual traders making their living as independent shops under one roof. Now, we are a small group working together as single unit.
jlne.ws/1VqE6mw

SWIFT Kicks Off Pilot For Global Payments Innovation Initiative – 21 Banks Piloting SWIFT’s New Initiative To Improve Cross-Border Payments
Mondovisione
SWIFT announces today that 21 banks have started the pilot for its global payments innovation initiative, intended to improve the customer experience in correspondent banking by increasing the speed, transparency and predictability of cross-border payments.
goo.gl/ekXtFK

San Francisco Tech Firms See Workers Flee From $4,500 Rents
Alison Vekshin – Bloomberg
Growth in technology jobs in the city slowed to 5% in February; Seattle, Portland and Los Angeles are seeing some gains
When automation-software company executive David Nichols and his wife were preparing to start a family last year, he learned that the rent on his San Francisco office was set to jump 50 percent. So he picked up and moved to Portland, Oregon.
goo.gl/xGB2Le

Enforcement

SEC Charges Four in Fraudulent “Free Dinner” Scheme
SEC.gov
The SEC alleges that Philadelphia residents Joseph Andrew Paul and John D. Ellis, Jr. lied about the track record of their investment advisory firm and recruited James S. Quay of Atlanta and Donald H. Ellison of Palm Bay, Florida, to lure potential victims with promises of lofty returns. According to the SEC’s complaint, Paul and Ellis created fraudulent marketing materials including some with performance numbers that were “cut and pasted” from another firm’s website. The complaint further alleges that Quay and Ellison used these materials to mislead seniors who responded to their mass-mailing offer of a free dinner at a Tampa restaurant.
jlne.ws/23bs8jk

The US government is going after a $19 billion hedge fund
Julia La Roche – Business Insider
The US Department of Justice has filed a civil suit against ValueAct Capital, a $19 billion hedge fund led by Jeff Ubben, accusing it of violating premerger notification requirements.
goo.gl/WPMwgz

Environmental & Energy

Judge Approves $20 Billion Settlement in BP Oil Spill
NY Times
Judge Carl J. Barbier of Federal District Court in New Orleans granted final approval Monday to an estimated $20 billion settlement over the 2010 BP oil spill in the Gulf of Mexico, resolving years of litigation. The settlement, first announced in July, includes $5.5 billion in civil Clean Water Act penalties and billions more to cover environmental damage and other claims by the five gulf states and local governments. The money is to be paid over 16 years. BP has estimated its costs related to the spill, including cleanup and various settlements and penalties, will exceed $53 billion.
goo.gl/ADKr3y

Oil glut up close: How Cushing copes with full crude tanks
BY JESSICA RESNICK-AULT – Reuters
From the air above this small Oklahoma town, the 300 steel oil storage tanks that dot the landscape appear filled to the brim, their floating lids bobbing atop more than 65 millions of barrels of oil.
goo.gl/v08Qbf

EPA chief: Climate change study backs up agency’s carbon regulations
By Devin Henry – The Hill
The head of the Environmental Protection Agency said Monday that a new study on the effects of climate change on public health reinforces the need for the Obama administration’s work on greenhouse gas emissions.
jlne.ws/23czhA2

Asia-Pacific

Credit Suisse has high hopes for China
Jennifer Hughes in Hong Kong – FT
Credit Suisse is planning a further push into China, where it has been “underweight”, as the bank’s chief executive shrugs aside fears over the slowdown in the world’s second-largest economy.
goo.gl/NC3Yn7

SGX welcomes ZZFS International as Derivatives Trading Member
SGX
Singapore Exchange (SGX) is pleased to welcome Hong Kong-based ZZFS International (H.K.) Limited (ZZFS International) as the newest trading member of its derivatives market.
goo.gl/B5nA4T

China Bulls Become an Extinct Species; Bears come in from the cold as 4%-6% Chinese growth becomes ‘code for doing well’
By ANDREW BROWNE – WSJ
The definition of a China “bull” used to be those who saw the Chinese economy rushing full speed ahead into the distant future.
goo.gl/3MYGfx

China stockpiles intrigue copper market
Henry Sanderson in Santiago – FT
The Santiago marathon may have just ended Sunday, but for the world’s largest miners and traders attending the industry’s annual gathering in the city, the five-year slump in copper prices is turning into an endless slog.
goo.gl/j5PnHK

Frontier Markets

Vietnam firms seek proper derivatives system
News VietNamNet
Vietnamese securities companies are in a hurry to seek a suitable system to work with when the first-ever derivatives market is launched by this year-end, according to local media.
jlne.ws/2290CAJ

Sebi plans trading in weather derivatives; Panel meets this week to further discuss issues in this regard
Shrimi Choudhary – Business Standard
The Securities and Exchange Board of India (Sebi) plans to allow trading in weather derivatives, a financial instrument for managing this risk in the agricultural sector.
goo.gl/dCoVMX

Saudi’s Plan to Boost Non-Oil Revenue to Balance Budget
Deema Almashabi, Glen Carey – Bloomberg
Number of listings to jump by about 70 within seven years; Regulator to boost debt-capital and derivatives markets
Saudi Arabia plans to almost double the size of its stock market, among the most closed in the world, by adding dozens of companies and making it easier for foreigners to invest.
goo.gl/SYyPct

Don’t Cry for Argentina’s Investors
By Matthew A. Winkler – Bloomberg View
In the four months since former Buenos Aires Mayor Mauricio Macri was elected president, Argentina has become a lodestone for global investors. They’re anticipating the biggest spurt of growth in Latin America, a corresponding retreat of inflation and the best returns from the continent’s healthiest companies.
goo.gl/8tC7Zt

Why draining Vladimir Putin’s secret bank accounts is so difficult
Jeff Spross – The Week
If you’d like to know how Russian President Vladimir Putin and some of his closest associates allegedly hid billions from their own country, an anonymous leak shed 2.6 terabytes worth of light on the subject over the weekend.
goo.gl/3VZod3

Angolan central bank head promises new forex measures this week
FurtherAfrica.com
Angola’s new central bank governor, Valter Filipe da Silva, said on Monday that the bank would this week introduce unspecified measures aimed at the foreign exchange market.
goo.gl/UgmHLF

Miscellaneous

The Gig Economy Is Powered by Old People
By Justin Fox – Bloomberg View
Much ink and many pixels have been spilled over the past few years about the rise of the gig economy, sharing economy, on-demand economy, 1099 economy, freelancer economy or whatever you prefer to call it. Some of the claims about its growth have been overstated, and I’ve written several columns trying to debunk them, or at least put them in context.
goo.gl/N6RH2p

Farmer belt-tightening threatens U.S. ag companies’ profits
BY TOM POLANSEK AND KARL PLUME – Reuters
North Dakota farmer Randy Thompson plans to apply 30 percent less nitrogen fertilizer to his corn this year to save money in the face of crashing crop prices.
goo.gl/RNF6JP

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About Author

Doug Ashburn is a former editor-at-large of John Lothian News. He left in late 2016 and is now the managing editor of T3 Custom.