Breaking News

John Lothian Newsletter: CME Upgrade Soothes Critics Who Viewed Prior System as Unfair; Katten names new chairman; FICC revenues almost halved since 2011

First Read

NFA: The Next Generation
Jim Kharouf – JLN
With the announced retirement of National Futures Association President and CEO Dan Roth, the organization may face the biggest decision in its history. Roth led the organization since 2003, and succeeded Robert Wilmouth, the first NFA president, who led the organization starting in 1982. Roth, who will stay on until his successor is chosen, has overseen the organization through its greatest expansion in the wake of the Dodd-Frank Act and some of the industry’s greatest scandals such as MF Global and Peregrine Financial Group

Today, the organization’s profile stands tall in the industry and its position as a regulator and auditor for futures brokers and managed futures firms and now swaps participants makes it a critical piece of the industry’s infrastructure.

Whoever is chosen as the next president and CEO must be able to navigate in a more complicated and faster moving industry. We could suggest a few qualified names, but that will be handled by the NFA’s search committee. The good news is that the industry is rife with qualified, intelligent and savvy candidates who can guide the organization forward in the coming years. Roth has handled the reins at NFA in good times and during some dark days as well. The next leader of the NFA will be equally challenged.

++++++++++++++++++

NFA CEO Daniel Roth to retire; Board begins search for successor
Business Wire
NFA announced today that President and CEO Daniel Roth has announced his plan to retire in the coming year. NFA’s Board of Directors has authorized the formation of a committee to conduct a search for his successor. The search will consider both internal and external candidates. Mr. Roth joined NFA in September 1983 as an attorney and has held a number of positions with increasing responsibilities, including General Counsel, Executive Vice President and Chief Operating Officer. In January 2003, Mr. Roth began his tenure as President and CEO.
yhoo.it/1U9rcrn
***DA: Among the well-wishes and official statements are those from CFTC Chairman Tim Massad, CFTC Commissioner Sharon Bowen and FIA President And CEO Walt Lukken

And let’s not forget the statement from our CEO John J. Lothian:

***** It is a great accomplishment to retire from such an important organization after a 30-year career. Congratulations to Dan Roth on his many years of service to the industry we both love with great passion. The whole John Lothian News team wishes him well as he finishes serving the industry while the search goes on for someone to fill the shoes he has worn so well. Dan, you deserve a long and healthy retirement and don’t worry about finally finishing reading the entire Dodd-Frank Act. There are better things to read now. And good news, JLN is free for retired people.

++++

Today’s NFA: Have you Noticed Anything Different?
By Doug Ashburn – JLN

We recently did a two-part video interview with Dan Roth, CEO of the National Futures Association. He offered up an honest assessment, in my opinion, of the state of the agency in the wake of the MF Global and Peregrine Financial Group bankruptcies that rocked the industry in 2011 and 2012.

In Part 1, Roth summarizes the internal changes made at the NFA, from its audit and hiring practices to the delivery of information to NFA members and market participants.

Watch Part 1

Part 2 is a summary of changes made to the agency’s rules to restore customer confidence, namely on audit confirmations, residual interest (which differs from the CFTC‘s residual interest rule), and the treatment of customer segregated funds (the “Corzine Rule”).

Watch Part 2

The role of a self-regulatory organization consists of threading the needle between overall effectiveness and over-burdening members and member firms. While there is always room for improvement, I see today’s NFA as a much different organization than it was five years ago.

++++

This Libor Case Is Important, It Could Bankrupt The World’s 16 Biggest Banks
by Tim Worstall – Forbes
I’m not one normally for bloodcurdling predictions of imminent doom for most economic decisions and actions are going to have only marginal effects at that margin. A higher minimum wage is going to mean that some people just won’t be able to get jobs but probably not enough people will […]
goo.gl/kVvz7G

***** I need a bigger mattress.

++++

Sponsored Content

G. H. Financials Market Access and Clearing Services on Eurex

Since becoming a General Clearing Member (GCM) of Eurex in 2014, G. H. Financials Limited has become an active clearing member for its global client base.
We offer the following services on Eurex:

  • Act as GCM for a Non Clearing Member (NCM)
  • Support of the Eurex Multiple Clearing Relationships (MCR) model to aid counterparty diversification
  • Provide Direct Exchange Access (DEA) solutions for members requiring low latency market access
  • Support Individual and Omnibus Segregated Account structures (ISA and OSA)
  • Facilitate On-boarding for new NCMs

To find out more about the clearing solutions we offer, please contact Mark Phelps at mark.phelps@ghfinancials.com.

GHF Eurex Clearing

++++

Investing: A Random Talk With Malkiel
By Nir Kaissar – Bloomberg Gadfly
For decades, Burton Malkiel has been a leading advocate of the efficient market hypothesis and its logical extension, the low-cost, passive approach to investing — as outlined in his bestselling book, “A Random Walk Down Wall Street.” Dr. Malkiel is a Princeton economist and Chief Investment Officer of a robo-adviser, Wealthfront.
goo.gl/xZABFy

***** A random walk down Wall Street will have you running into a security barrier.

++++

Opinion: This is the right way to make sense of the stock tips you hear on TV
By CHUCK JAFFE – MarketWatch
The latest study of Jim Cramer’s stock-picking prowess was released around the same time as the movie “Money Monster,” in which George Clooney plays a character clearly based on CNBC’s “Mad Money” front man.
goo.gl/R27uOy

**From the study: Cramer’s Action Alerts Plus portfolio has underperformed the S&P 500 by -0.85 percent in total cumulative returns since 2001, from researchers from the Wharton School.http://goo.gl/19GRYv

++++

****** Flush…..

++++

Monday’s Top Three
Doug Ashburn – JLN
Atop yesterday’s leaderboard was Listed UK hedge funds lose two-thirds of their assets; Investor outflows and fund closures drain two-thirds of assets. The three top complaints by investors? High fees, poor performance and limited transparency. Yeah; I guess those are bad things to have in an investment.

In second place was a repeater from the previous day, meaning readers clicked over after reading about it in this section – A brutal remark from a high-speed trader tells you everything you need to know about where Wall Street is headed, which summarized a recent explanatory video published by the Modern Markets Initiative

We actually had a tie for third place, between the weekly regulatory roundup from Katten Muchin Rosenman special counsel Gary DeWaal and a look at Donald Trump’s finances by Bloomberg.

++++

Lead Stories

CME Upgrade Soothes Critics Who Viewed Prior System as Unfair
Brian Louis – Bloomberg
CME Group Inc., the world’s largest exchange operator, just completed an upgrade traders said would eliminate a shortcoming that gave some participants an advantage. Under the old system, data connections that linked customers to CME — where key products like Treasury futures and contracts tied to the Standard & Poor’s 500 Index trade — had noticeably different speeds, opening up the potential for gaming, according to traders and other experts. Those who knew how to gain faster access could increase their odds of being first in line to trade. The new design appears to stamp that out.
goo.gl/3PDjw2

Katten names new chairman
By CLAIRE BUSHEY – Crain’s Chicago Business
Katten Muchin Rosenman soon will have a new chairman—and he isn’t based in Chicago. Intellectual property litigator Roger Furey will replace Vincent Sergi, who came in with Katten’s first associate class in 1974 and rose to lead the firm for 21 years. Furey, 61, joined 15 years ago in the firm’s Washington, D.C., office. His new role takes effect June 1..
goo.gl/bsL87n

FICC revenues almost halved since 2011; First quarter revenues across FICC, equities and investment banking divisions have declined year-on-year, in the slowest start to the year since the financial crisis.
By Hayley McDowell – The Trade
Fixed income, currencies and commodities (FICC) revenues in the first quarter this year have plummeted 49% since 2011, amid the slowest start to the year since the financial crisis, according to research.
goo.gl/uol1ra

NY lawmaker warns on U.S. financial security after SWIFT attacks
Reuters
Recent hacks of international banks through the SWIFT messaging system raise serious questions about cyber-related risks to U.S. firms, Representative Carolyn Maloney wrote on Monday in a letter to the country’s top banking regulators that asked about measures to strengthen systems’ security.
goo.gl/CbXWtc

Latest Charles Li Direct: Three Steps To Developing Our Fixed Income And Currency Business
HKEX
The RMB is currently at the early stages of being used for payment, ranking number five globally according to SWIFT. But as its use grows, it will develop into a global reserve currency commensurate with the size of China’s economy, followed by a global pricing currency.
These are tectonic shifts, and Hong Kong is in a great position to take advantage of these changes. We can make our mark, and build Hong Kong into a comprehensive wealth management centre.
goo.gl/fj5ICi

U.S. ability to police ‘shadow banking’ under threat: senator
Reuters
Recent moves in the U.S. Congress and courts could defang the country’s overarching financial regulatory council when it comes to policing “shadow banking,” the most powerful Democrat on the Senate Banking Committee said on Monday.
goo.gl/ysgJYo

EBS BrokerTec completes rebrand of EBS Treasury; a multi-product platform for Corporates
ICAP
EBS BrokerTec, ICAP’s market-leading electronic foreign exchange (FX) and fixed income business, announces today that it has completed a rebrand of the product formerly known as MyTreasury and launched EBS Treasury as a cash and FX liquidity management centre for treasurers. As announced in July 2015, EBS Treasury has now gone live with a new FX offering, fully integrated into the new platform to act as a single gateway to multiple markets.
goo.gl/aqzfL5

‘Massive Bailout’ Needed in China, Banking Analyst Chu Says
Paul Panckhurst – Bloomberg
Autonomous Research partner Charlene Chu talks in interview; She’s not yet convinced China is serious about tackling debt
Charlene Chu, a banking analyst who made her name warning of the risks from China’s credit binge, said a bailout in the trillions of dollars is needed to tackle the bad-debt burden dragging down the nation’s economy.
goo.gl/CjpWl4

BofA’s $1.3bn penalty dismissed by appeals court; Decision reverses government victory in case over defective home loans known as ‘the Hustle’
Alistair Gray and Kara Scannell in New York
US authorities on Monday were dealt a setback in their efforts to hold banks accountable for the financial crisis when an appeals court dismissed a judgment and $1.3bn penalty against Bank of America.
/goo.gl/7gBkY3

Handicapping Insider Trading Case Against a Gambler
By PETER J. HENNING – NY Times
The case has all the ingredients to put the spotlight back on insider trading: a flawed corporate director accused of repeatedly leaking information to a high-rolling Las Vegas gambler that helped him realize about $40 million in gains and losses avoided, and passing along a tip about an impending corporate spinoff that helped a near-legendary professional golfer repay nearly a million dollars lost on bets.
goo.gl/Yw0P2N

For Bond Traders Things Can Only Get Better; Compared with the first quarter, the rest of the year will feel like a relief
By PAUL J. DAVIES – WSJ
Bond trading looked bust after one of the bleakest first quarters of recent years even including the crisis. But there are reasons for optimism—a little at least.
goo.gl/4sebVp

Regulatory

Softer line on European trading rules approaches
Philip Stafford, FT.com
After years of being buffeted by tougher capital markets rules, Europe’s financial community may soon feel a favourable wind of change from the region’s regulators. Financial executives have welcomed the softening stance from authorities as they grapple with the thousands of pages of new markets and banking reforms designed underpin trading in the wake of the financial crisis.
/goo.gl/2jkxSi

?SEC weighing alternatives to disputed CAT trading standard
Neil Roland, MLex (Subscription Required)
The US Securities and Exchange Commission said it is considering alternatives to an important but controversial trading standard in its massive data repository proposal last month. The pending plan for a consolidated audit trail (CAT) sets a clock-synchronization standard that reflects most but not nearly all industry participants’ practices. The SEC said its proposal “may have the unintended effect of setting a standard that delays adopting advances in technology.”
goo.gl/8HdHgP

Manipulation threat to FRTB data pooling
Risk.net
A strong governance framework to prevent the manipulation of submitted data will be essential for any data-pooling initiative to aid compliance with Basel’s Fundamental Review of the Trading Book (FRTB), consultants warn. The costs, however, could deter participants and prompt alternative approaches.
goo.gl/8AkjxE

Brokers should prepare for corporate culture reviews, Finra official says
Anjelica Tan, MLex (Subscription Required)
All Wall Street firms should be ready to answer questions about their corporate cultures, regardless of whether they are among the brokers being targeted by the Financial Industry Regulatory Authority, an official said Monday.
goo.gl/yBl4mB

FCA Research into the issue of de-risking
UK FCA
The FCA, along with fellow agencies and authorities, has a long-standing programme of work in place to ensure the UK financial system is a hostile environment for money launderers. The work not only continues, but has been reinforced by the Government’s recent action plan.
goo.gl/WJUZj7

Occasional Paper No. 17: Access to Financial Services in the UK
UK FCA
This paper aims to stimulate ideas and foster a culture of access and inclusion throughout retail financial services, that embraces firms, regulators, government and consumer organisations.
goo.gl/hTw7N9

NFA’s Board approves Fiscal Year 2017 budget
NFA
On May 19, NFA’s Board of Directors approved a budget of $91 million for the upcoming fiscal year. NFA’s operating expenses are budgeted to increase by approximately 10 percent, due in large part to an increase in NFA’s staff. NFA’s fiscal year runs from July 1 through June 30.
/goo.gl/XYUqLx

Self-Regulatory Organization (SRO) Rulemaking and National Market System (NMS) Plans
SEC

    • BOX: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to amend BOX Rule 12140 (Imposition of Fines for Minor Rule Violations) to amend the sanctions for Quotation Parameters and permit the aggregation of violations for the purpose of determining what is an occurrence (Release No. 34-77877; File No. SR-BOX-2016-22; May 20, 2016); see also Exhibit 5

 

    • NYSE Arca: Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the NYSE Arca Options Fee Schedule (Release No. 34-77885; File No. SR-NYSEArca-2016-75); see also Exhibit 5

 

    • NYSE Arca: Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the Exchanges Schedule of Fees and Charges to Eliminate the Listing Fee in Connection with Exchange Listing of Certain Exchange Traded Products (Release No. 34-77883; File No. SR-NYSEArca-2016-69); see also Exhibit 5

 

    • Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees as they Apply to the Equity Options Platform (Release No. 34-77884; File No. SR-BatsBZX-2016-17); see also Exhibit 5

 

    • Notice of Filing and Immediate Effectiveness of a Proposed Change to the Market Data Section of its Fee Schedule (Release No. 34-77886; File No. SR-BatsBYX-2016-08); see also Exhibit 5

/goo.gl/h0yuDn

Exchanges & Trading Facilities

Vienna Stock Exchange appoints new management team; The exchange has appointed a new CEO, CFO and COO amid revision of strategy and development of new products.
By Hayley McDowell – The Trade
Vienna Stock Exchange’s supervisory board has announced the appointment of a new management team, including a new chief executive officer.
goo.gl/zg0lTH

Dr Christoph Boschan von dem Bussche To Join The Vienna Stock Exchange – Managing Director Of Boerse Stuttgart GmbH Appointed To The Vienna Stock Exchange
MondoVisione
Dr Christoph Boschan von dem Bussche (38), Managing Director of Boerse Stuttgart GmbH, is to give up his appointment with Boerse Stuttgart in order to accept a new career challenge. This Monday he has been appointed as the new CEO of Börsenholding CEESEG AG and of Wiener Börse AG.
goo.gl/U2GOrP

Pakistan to sell 40 percent of stock exchange end-2016/early-2017
Reuters
Pakistan plans to sell a 40 percent stake in its stock exchange in coming months, and Turkey’s Borsa Istanbul has expressed some initial intent, the head of the bourse said on Monday.
goo.gl/3Tzjci

DISRUPTIVE ACTIVITIES VIOLATIVE OF THE FEDERAL SECURITIES LAWS
AND RULES OF THE NYSE, NYSE MKT AND NYSE ARCA
NYSE
Critical responsibilities of each of the NYSE Exchanges include promoting just and equitable principles of trade, preventing fraudulent and manipulative acts and practices, and promoting free and open markets. Our Members are important partners in fulfilling these missions and in preserving the safety and integrity of our markets. The purpose of this bulletin is to assist our Members in identifying activity that may disrupt our markets and undermine investor confidence.
/goo.gl/ekSdUh

NYSE ARCA: FEE CHANGE EFFECTIVE JUNE 1
NYSE ARCA EQUITIES
Pending effectiveness of a filing with the SEC, NYSE Arca intends to make the following change to the NYSE Arca Equities Fee Schedule in securities with a per share price of $1.00 or above beginning June 1, 2016.
/goo.gl/w6qV9Z

The French tech company Kerlink lists on Alternext Paris to accelerate growth
EUR10.2 million raised; market capitalisation EUR37.05 million
Euronext
EnterNext, the Euronext subsidiary dedicated to promoting and growing the market for small and medium-sized companies (SMEs), today celebrated the listing of Kerlink, a French company specialising in the Internet of Things (IoT), on Alternext Paris.
/goo.gl/MqJH0t

ForFarmers lists on Euronext Amsterdam
Euronext
Euronext today welcomes ForFarmers, the European market leader of conventional and organic feed solutions for livestock on Euronext Amsterdam.
/goo.gl/7a0Idh

Moscow Exchange: Final Testing Of The New FX Market ASTS+ Trading And Clearing System
MondoVisione
This Saturday, 28 May 2016, the public testing of the FX market ASTS+ trading and clearing system will be held on the production environment. This release is scheduled to go live on May 30, 2016 (see http://moex.com/n12840).
goo.gl/md8Lxv

One Year Of Trading In Agriculturals At EEX: Dairy Products On A Growth Path
MondoVisione
Following the successful migration of the agricultural products from Eurex Exchange to its platform, the European Energy Exchange (EEX) has reported positive results one year on.
goo.gl/qsxZ7y

ITG Launches PowerMatch for POSIT Alert
By GlobeNewswire
ITG (NYSE:ITG), a leading independent broker and financial technology provider, today announced the launch of PowerMatch and PowerScore, new features on ITG’s block crossing network, POSIT Alert®.
goo.gl/uYtSOA

Technology

Markit Hires S&P’s Dos Santos as Head of North America Biz Strategy; The pricing veteran will be responsible for Markit’s fixed income pricing services business.
Faye Kilburn – Waters Technology
Markit has hired Frank Dos Santos as head of North American business strategy for its fixed income pricing services, responsible for expanding the vendor’s pricing, transparency and liquidity data for 2.5 million instruments, spanning municipal bonds, corporate and sovereign bonds, securitized products, bank loans and credit default swaps.
goo.gl/Kzs103

SWIFT CEO Reveals Customer Security Programme At Industry Conference
MondoVisione
SWIFT CEO Gottfried Leibbrandt delivered the keynote address at the 14th annual European Financial Services Conference in Brussels today. During the speech, Leibbrandt announced SWIFT’s five-part Customer Security Programme to reinforce the security of our shared, global financial system.
goo.gl/q2c4c3

Bangladesh Bank theft shines light on cyber risk; Banks and regulators increasingly concerned amid high-profile cyber security breaches
Paige Long – Risk.net
In the wake of the Bangladesh Bank theft, which saw cyber criminals steal $81 million from the Asian central bank, financial institutions and regulators worldwide are ramping up their efforts to defend against cyber threats. “Regulators are asking us how we are handling information security; how we ensure that the second line has the necessary oversight and that the first line consolidates those efforts on a daily basis,” says one chief operational risk officer at a European bank. In the…
goo.gl/n9qH3s

The Road to Blockchain – Why a Silver Bullet Is No Good Without a Way to Fire It
Trevor Belstead – Delta Capita via Tabb Forum
Blockchain and distributed ledger solutions seek to transform established business models, from trading to settlement. This transformation is so disruptive to some existing businesses that it will challenge many banks’ ability to survive. As a first step, banks need to re-evaluate their business models and architectures in the context of reduced complexity and fewer opportunities of differentiation in basic services.
goo.gl/1yl5KX

Politics

Wall Street Lobbyists Decide Against Pushing Trump for Specifics — for Now; Representatives from the nation’s largest financial institutions met in Washington last week and discussed the Republican party’s presumptive nominee.
Kevin Cirilli – Bloomberg
The banking industry is flummoxed on what to do about Donald Trump, even as their fears grow that his likely opponent has moved too far to the left.
goo.gl/TPd9UG

Trump Boasts of Rapport With Wall St., but the Feeling Is Not Quite Mutual
By SUSANNE CRAIG – NY Times
“I am friends with all the major banks,” he said in an interview. “They are dying to do business with me.”
goo.gl/TLMwK9

Hedge Funds & Managed Futures

Fed Shouldn’t Kid Itself on Rate Risk, Says $200 Billion Manager
Emma Orr, Katherine Chiglinsky – Bloomberg
Reaction is going to be negative, OppenheimerFunds CIO says; Memani sees Federal Reserve lifting rates in July or September
Federal Reserve policy makers must appreciate the danger that higher interest rates could hurt the U.S. economy by strengthening the dollar and pressuring global growth, said Krishna Memani, chief investment officer of OppenheimerFunds Inc.
goo.gl/ScMHcv

Waddell & Reed says CEO Henry Herrmann to retire
Reuters
Philip J. Sanders named as successor to Herrmann
goo.gl/cY6y6o

Brexit fear hits foreign direct investment; Property prices and deteriorating infrastructure add to concern
by: Sarah Gordon, Business Editor
Investors’ perceptions of the UK have become markedly gloomier over the past 12 months, driven by fears over a potential British exit from the EU and by concerns over high property prices and deteriorating infrastructure.
/goo.gl/E5rhkX

Old Mutual nears deal to sell US business; Board ‘endorses’ deal with New York-listed AMG as part of South African group’s retrenchment
by: Andrew England in Johannesburg and Oliver Ralph in London
Old Mutual is close to a deal to sell its US asset management business to New York-listed Affiliated Managers Group as part of its radical restructuring plan.
/goo.gl/AKTsVF

Banks & Brokers

Why Bank of America Won; Knowingly selling Fannie and Freddie bad mortgages wasn’t bad enough to count as fraud.
By JOHN CARNEY – WSJ
Bank of America’s just-announced victory in the “Hustle” case is a pretty big setback for the government’s efforts to hold banks accountable for their role in the financial crisis.
goo.gl/1Y8u57

JPMorgan Chase CEO Jamie Dimon: Yes, tech will kill some jobs. But slowing tech down is the wrong answer.; “There are downsides to flying — people die every now and then. Do you want to stop all air flights?”
BY ERIC JOHNSON – Recode
So, what would Dimon do if he were in charge?
goo.gl/iesJav

Countrywide Mortgage Hustle Turns Out Not to Be Fraud
By Matt Levine – Bloomberg
Let’s say that there are two kinds of mortgages in the world: Acceptable and Unacceptable. You want to buy Acceptable mortgages, but not Unacceptable ones. I make the mortgages, in my mortgage factory, and I know which ones are Acceptable and which are Unacceptable. But you do not. I sell the mortgages to you.
/goo.gl/KBn8gW

Moody’s downgrades Deutsche Bank’s credit rating; Rating agency warns of challenges as it makes second cut this year
by: James Shotter in Ansbach
The credit rating agency Moody’s has cut Deutsche Bank’s debt rating for the second time this year, arguing that the German bank faces “increased challenges” in pulling off its turnround plan.
/goo.gl/fmU3Wy

Clearing & Settlement

LCH to offer equities clearing on SIGMA X MTF
LCH
LCH, the global clearing house, announced today that it will be offering equities clearing on SIGMA X MTF from July 2016. With the addition of SIGMA X MTF, LCH’s EquityClear service will offer clearing across 17 active interoperable European equities trading venues. As a result of this expansion and LCH’s open access approach, users of multiple trading venues will be able to further consolidate their trading activity through one clearing house.
goo.gl/kIjyx0

Jeffrey Cohen Rationalizes Automated Optical Clearing House
Digital Journal
The good news is, business of any kind can hugely benefit with Automated Clearing House transactions. There are four basic uses of ACH; consumers can easily pay for their products and services, businesses can pay suppliers and vendors for their services, employers get to make direct payrolls into their employees’ bank accounts and lastly, individuals can easily transfer money through different banking accounts.
goo.gl/olLX7Y

CPA Issues Consultation Paper On Vision For Canadian Payment Ecosystem
Mondaq
On April 20, 2016, the Canadian Payments Association (the “CPA”) released a consultation paper “Developing a vision for the Canadian payment ecosystem” (the “Consultation Paper”), outlining its planned vision for the proposed modernization of the Canadian payments system. The Consultation Paper was issued following the CPA’s consultation with broad classes of stakeholders including financial institutions, fintechs, businesses, government and consumers.
goo.gl/DP6iCV

Indexes & Products

HKEX and Thomson Reuters Sign Agreement for New Index Series
HKEx
Hong Kong Exchanges and Clearing Limited (HKEX) and Thomson Reuters today (Tuesday) signed an agreement for the creation of a new series of Renminbi (RMB) indices.
goo.gl/IsQQg8

STOXX Launches Euro STOXX 50 Multi-Asset Indices That Blend Equities And Bonds
MondoVisione
STOXX Ltd., the operator of Deutsche Boerse Group’s index business, and a global provider of innovative and tradable index concepts, today launched the EURO STOXX 50 Multi-Asset Indices that combine the core asset classes equity and fixed income. The indices replicate a hypothetical portfolio which tracks the performance of the EURO STOXX 50 Index and the EURO STOXX 50 Corporate Bond Index, thus creating multi-asset index concepts with pre-defined equity and bond exposure levels.
goo.gl/mgRJfT

Smart beta and factor investing: Special report
Risk.net
This special report takes a closer look at smart beta – an area of rapid growth and innovation. It uses rules-based systematic weightings to track stocks that exhibit factors such as low volatility or momentum, rebalancing at set intervals to refresh the constituents they offer exposure to.
Investors like to use the strategies as a simple, cost-effective way of gaining diversification from traditional long-only equities investments – tracking only undervalued stocks as a putative way of avoiding market bubbles, for instance – or as naked plays on particular strategies, such as tracking low-volatility stocks.
goo.gl/hQKGXf

MSCI’s Decision On China A-Shares Nears
ETF.com
Last June, MSCI decided against including China’s so-called A-shares in the index, a benchmark for some $1.5 trillion of assets, due to investment restrictions. Since then, China has addressed many of MSCI’s concerns by relaxing its $81 billion qualified foreign institutional investor (QFII) scheme, a quota-based foreign investment scheme, and clarifying foreign ownership rights, prompting MSCI to reconsider inclusion of the A-shares.
goo.gl/F0gzDM

Enforcement

Regulators crack down on Swiss bank BSI over 1MDB scandal; Singapore authority points to ‘worst gross misconduct’ it has seen
by: Michael Peel in Bangkok – FT
Authorities in Europe and Asia have taken the most dramatic action yet against Swiss private bank BSI over the multibillion-dollar scandal around Malaysia’s 1MDB state investment fund.
/goo.gl/u9SQWO

Environmental & Energy

Public Campaign Against Exxon Has Roots in a 2012 Meeting
By John Schwartz – The New York Times
The activists who have painted a bright target on the back of Exxon Mobil have “colluded to push politically motivated investigations of climate dissent,” and conducted a “real-life RICO-type conspiracy.”
nyti.ms/1TvZIKp

Carbon pricing under binding political constraints
By Sofia Cardamone – MIT Energy Initiative
In a new working paper titled “Carbon pricing under binding political constraints,” MIT Institute for Data, Systems and Society doctoral candidate Jesse Jenkins and Sloan School of Management Assistant Professor Valerie Karplus discuss the political obstacles facing efforts to price carbon emissions — either via a carbon tax or emissions cap and permit trading system — and outline a set of starting points that are both politically palatable and steps toward effective policies to curb climate change.
bit.ly/20tGTf1

Oil Traders Are Borrowing From Banks to Store Crude at a Loss
Tracy Alloway – Bloomberg
The waters between Singapore and Malaysia used to heave with wooden ships carrying exotic spices. Now the Straits of Malacca are filled with vessels carrying a very different sort of commodity.
goo.gl/nd7c5T

Hedge-Fund Star Kyle Bass Slips on Oil — Energy Journal
By CHRISTOPHER HARDER – WSJ
The energy-price collapse extended hedge-fund manager Kyle Bass’s worst streak since he launched Hayman Capital Management LP a decade ago, Gregory Zuckerman and Rob Copeland report. That followed his mistake of buying shares of oil producers like Concho Resources Inc. and Whiting Petroleum Corp. after being reassured in part by a meeting with energy investor T. Boone Pickens.
goo.gl/3foM5Z

Iran fulfils pledge to raise oil production; Tehran battles to regain share but future exports depend on effect of sanctions on shipping finance
by: Anjli Raval, Oil and Gas Correspondent – FT
Iran is fulfilling its pledge to raise oil production and exports almost six months after western sanctions on the sector were lifted, surprising many analysts and commentators.
/goo.gl/UoBL3o

Asia-Pacific

Smart-Beta ETFs are in Vogue, But Not in Asia
Barron’s
Asia’s wealthy clients have little access to one of the hottest investing strategies. Smart-beta exchange-traded funds – passive index trackers with an active streak – are flying off the shelf in the U.S. and, to some extent, Europe, but private banks and financial advisors in Asia find the fees on these low-cost products aren’t lucrative enough to justify selling them.
goo.gl/GqFgRD

Standard Bank Lost $19 Million to ‘Sophisticated’ Fraud in Japan
Renee Bonorchis – Bloomberg
Standard Bank Group Ltd., Africa’s biggest bank by assets, said it lost as much as 300 million rand ($19 million) to organized fraud in Japan.
goo.gl/fA2GqR

Hong Kong Exchange to work quickly to build a China bond connect scheme
By Michelle Chen – Reuters
The operator of Hong Kong’s stock exchange said on Tuesday it will “work very quickly” on a plan to link bond markets in China with those in the Asia’s financial centre, giving global investors more access to yuan-related assets.
goo.gl/4yY653

A Rare Look Inside China’s Central Bank Shows Slackening Resolve to Revamp Yuan; Minutes of closed-door meetings show how leaders lost interest in making the yuan’s value more market-based; Xi Jinping’s second thoughts
By LINGLING WEI – WSJ
Behind closed doors in March, some of China’s most prominent economists and bankers bluntly asked the People’s Bank of China to stop fighting the financial markets and let the value of the nation’s currency fall.
goo.gl/ksQ1Nc

China’s Brokerages: The Next Leverage Frontier; Regulatory changes that could boost leverage at the heart of China’s shaky financial markets seem like an invitation to trouble
By ANJANI TRIVEDI – WSJ
In a world where financial institutions are squirming in regulatory straitjackets, Chinese brokerage firms are being let loose without having to perform Houdini-like escapes.
goo.gl/CHH4xc

Chinese banks lead ‘green’ bond boom; Emerging markets are for the first time borrowing as much as western groups to fund ‘green’ projects
by: Jennifer Hughes in Hong Kong and Gavin Jackson and Thomas Hale in London – FT
A surge in Chinese bank borrowing for environmental projects has pushed emerging market borrowers’ use of the so-called “green” bond market to match that of the developed world for the first time.
/goo.gl/v7fcwY

China finance ministry to sell offshore renminbi bonds in London; Finance ministry’s Rmb3bn sale is latest milestone in China’s currency internationalisation
by: Gabriel Wildau in Shanghai – FT
China’s finance ministry will issue Rmb3bn ($458m) of bonds in London’s offshore renminbi market, a test of foreign investors’ appetite for Chinese assets amid concerns about the currency’s depreciation and capital flight.
/goo.gl/sO35ra

Frontier Markets

Company Law Board hears FTIL plea on modifying interim order
Sayan Ghosa – Business Standard
The principle bench of the Company Law Board (CLB) on Monday heard Financial Technologies (India) Ltd’s (FTIL) plea for modification of its interim order on managerial mismanagement of the National Spot Exchange Limited (NSEL) scam.
goo.gl/rJV3im

Sugar Is So Scarce in Venezuela That Coca-Cola Will Stop Production
Andrea Navarro, Jennifer Kaplan – Bloomberg
Beverage maker joins Kraft, Clorox in interrupting operations; Country’s economic crisis has led to shortage of raw materials
Coca-Cola Co. is halting production of sugar-sweetened beverages in Venezuela as the company’s namesake soda pop becomes the latest victim of a lack of raw materials in the cash-strapped country.
goo.gl/uX5PKn

Miscellaneous

Podcast: our long chat with Paul Volcker (plus transcript and highlights)
Cardiff Garcia – FT
This episode is a two-part chat with Paul Volcker.
In the first part we discuss his intellectual influences and early career, during which he shuffled between the New York Fed, Chase Manhattan, and the US Treasury department. We end with his under-appreciated role in the conclusion of the Bretton Woods monetary system during his time as Treasury undersecretary for monetary affairs in the early 1970s.
goo.gl/lAIIqr

0.00 avg. rating (0% score) - 0 votes

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.