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John Lothian Newsletter: Nasdaq Debuts Groundbreaking Nasdaq Financial Framework; China Wants to Set Prices for the World’s Commodities; Former SGX CEO joins Kouclo Group

First Read

MarketsWiki Education Is More Than Paying It Forward
John Lothian – JLN

Pay it forward. Do something nice for someone because some other person did something nice for you. In the case of MarketsWiki Education, you can pass on your passion for the markets and the underlying industry by sending your interns, your newer employees, or your son or daughter to the event series

You can help change someone’s life for the better, I promise you. That is the kind of response we have had from some attendees. This response has prompted us to expand the program’s reach even farther from its Chicago roots. We will be in Chicago for the fourth straight year, and New York and London again this year, but also Frankfurt and Paris.

The speakers we have lined up are all giving their time freely, not for us, but for the young people to whom they will be speaking. The speakers are paying it forward.

Read the rest of the article on HERE


Goldman Sachs blockchain cash equities trading
Business Insider
Wall Street is buzzing about blockchain. Nasdaq CEO Bob Greifeld has said his company needs to be a “rapid applier” of the technology. JPMorgan earlier this year launched a trial project with the blockchain startup led by its former executive, Blythe Masters. Autonomous Research has called the technology a “game changer.”

***DA: New Goldman Sachs research report says blockchain could save $2 billion annually in the U.S., and $6 billion globally. That’s a lot of disintermediation. Is it too late to go back and get a degree in computer science?


Bank of America tipster gets to keep his $58m reward
By Christina Rexrode and Aruna Viswanatha, WSJ
Edward O’Donnell blew the whistle on “the Hustle,” a high-speed mortgage-selling scheme that led to a $1.27 billion fine against Bank of America in 2014. On May 23, an appeals court threw out the penalty – but O’Donnell still gets to keep a $58 million reward.

***DA: A deal’s a deal. He did his part; it’s up to the authorities to make it stick. But, yeah, $58 million is a lot of money for a whistleblower.


Secrets of the Dow Jones Industrials
The Dow Jones Industrial Average turns 120 years old this month, on May 26. For 20 of those years it was my privilege to be “keeper of the Dow” — the staff person who watched over the globally famous index to make sure it kept on ticking. Not that I alone made the decisions about putting companies in or taking them out, but I had a vote. And sometimes I called the huddle to take such actions. Along the way, I learned some interesting things that many others don’t know about this icon of the investment world. Here are my top 10.

**JK: What does one say when Steve Jobs calls about getting on the Dow? Secret revealed!


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This hedge fund manager is still the richest person in Illinois
KATHERINE DAVIS – Crain’s Chicago Business
Citadel founder Ken Griffin is the richest person in Illinois with a net worth of $7.5 billion, according to a ranking by Forbes.

****JK: Cocktail party chatter. “So Ken, what’s your net worth these days?” “Oh about $7.5 billion, how about you?” End of conversation.


Citigroup to Pay $425 Million to End CFTC Benchmark Probes
Matt Robinson, Matthew Leising – Bloomberg
Citigroup Inc. will pay $425 million to resolve U.S. Commodity Futures Trading Commission claims that the bank attempted to manipulate global benchmarks for interest-rate products multiple times from 2007 to 2012.

***DA: And HERE is a selection of trader transcripts, courtesy of Business Insider.


Wednesday’s Top Three
Yesterday’s top clicked story was that of a local promotion – Mark Haraburda as CEO of Barchart. He also was named MarketsWiki Page of the Day. Second place was from Bloomberg View, Why the Law Failed to Punish Wrongdoers in the Financial Crisis. Third place went to the WSJ story on the CFTC’s final cross-border margin rule.


Lead Stories

Nasdaq Debuts Groundbreaking Nasdaq Financial Framework, Enhancing Operations for Over 100 Market Operators Globally
By GlobeNewswire
Nasdaq (Nasdaq:NDAQ) announced today the launch of the Nasdaq Financial Framework, the company’s harmonized approach to delivering robust end-to-end solutions to financial infrastructure providers globally in an open, agile environment. Nasdaq has also integrated the framework across all of its business units and will immediately make the Financial Framework available to its more than 100 market operator clients globally, including traditional exchanges, inter-broker dealers and alternative trading venues, clearing houses and central securities depositories (CSDs).

China Wants to Set Prices for the World’s Commodities
Bloomberg News
There’s ‘chance of a lifetime’ to become global center: CSRC; China plans to open up crude, iron ore and rubber markets
China has put the world’s traditional financial centers on notice that it wants to develop its raw material markets as hubs for setting prices, seeking to marry the country’s commercial heft with a much greater say in determining how much commodities cost.

Former SGX CEO joins Kouclo Group; Magnus Bocker, former CEO of SGX to head up Kouclo Group’s capital markets and listing businesses.
By Hayley McDowell – The Trade
Magnus Bocker ex-chief executive officer at the Singapore Stock Exchange (SGX) has been appointed chief strategy officer at Chinese enterprise, Kouclo Group.

**JK: Magnus Bocker is Kouclo for Coco Puffs.

Nasdaq slams recommendations to restrict market jurisdiction; SEC advisory group did not include input from NYSE and Nasdaq
Nicole Bullock in New York
Nasdaq has slammed recommendations that would restrict the jurisdiction of stock markets for not including the input of the best-known US exchange operators.

Mt. Gox Creditors Seek Trillions Where There Are Only Millions
That figure — $2.4 trillion for those with an untrained eye for very large numbers — is in the same ballpark as the annual economic output of France.

Global watchdog says shadow-banking supervision too patchy
BY HUW JONES – Reuters
Regulators have yet to get a firm handle on the world’s $35 trillion shadow banking sector with supervision and data gathering still too patchy for spotting risks properly, the global Financial Stability Board said on Wednesday.

Bloomberg Launches Entity Exchange to Help Buy Side Handle KYC, Onboarding Demands
Dan Malakian – Waters Technology
Fortress Investment’s David Sharpe says the platform helps to “establish relationships with new trading partners quickly and securely.”
Bloomberg’s Dan Matthies explains the genesis of the vendor’s new Entity Exchange platform, how it will help the buy side answer KYC and onboarding rules, while offering user-firms a robust set of security features.

Citi traders’ 2008 manipulations revealed; Staff boasted in messages how far they had ‘moved the screen’
by: Philip Stafford
As Citigroup became the latest big bank to pay a fine over the attempted manipulation of Libor, the US regulator’s investigation revealed embarrassing evidence about the behaviour of its traders during the financial crisis.

Markit in letter to employees says received all regulatory approvals IHS merger
May 25 Markit In Letter To Employees
In past few weeks, received all the regulatory approvals required for merger with IHS to be completed – Sec filing Source ( Further company coverage:

Selling out? No, the Baltic Exchange is truly global
JAMES QUINN – Telegraph
So a London-based exchange is being bought by an overseas suitor.
Sound familiar? Only this time it’s not the London Stock Exchange and Deutsche Boerse – which proponents would proffer is a merger in any case – but Singapore’s SGX buying the Baltic Exchange.

U.S. Lawmakers Add Fuel to Old Spat Between Brokers, Exchanges
Elizabeth Dexheimer, Annie Massa – Bloomberg
New bill would give brokers more say in stock market rules; NYSE, Nasdaq say only exchanges should have voting power
New legislation is intensifying an old fight between two powerful forces on Wall Street: stock exchanges and brokers. So far, the brokers seem to be winning this battle.

Wall Street’s New Balance Sheet Is an ETF
Lisa Abramowicz – Bloomberg
A mystery has underpinned recent comings and goings of money in the $1.3 trillion U.S. high-yield bond market.


CFTC top cop ramps up use of anti-manipulation rule; Agency’s new authority under Dodd-Frank is “very promising”, Goelman says
Alexander Osipovich –
Historically, the US Commodity Futures Trading Commission (CFTC) has had a spotty track record of winning market manipulation cases in court. But Aitan Goelman, director of the CFTC’s division of enforcement, is determined to change that. Goelman, who was appointed in 2014, is luckier than many of his predecessors in that the CFTC has a powerful new authority, granted by the US Dodd-Frank Act, to prosecute manipulation. Before the law was passed in 2010, the commission’s lawyers needed to prove…

Occasional Paper No. 18: Market-Based Finance: Its Contributions and Emerging Issues
This paper provides an overview of the evolution as well as recent innovations in market-based finance (MBF). It argues that MBF is not merely an alternative way of providing banking-like services; it is in many ways a more efficient means of creating, distributing, and managing money, credit and risk globally. Properly regulated and supervised MBF can contribute to a dynamic and competitive financial services sector, develop new and innovative products to meet customers’ needs.

FCA proposes cap on early exit charges
The Financial Conduct Authority (FCA) has today announced the level at which it will consult to cap early exit charges for those consumers wishing to make use of the pension freedoms.

Alibaba SEC Probe: The Red Flags Fly Higher; Alibaba’s revelation that it is being investigated for accounting practices hammers home for investors risks about the company
As the adage goes, where there’s smoke, there’s usually fire. And the smoke is growing thicker around Alibaba.

The risks of central banks’ radical treatments; Extreme monetary policy can have unintended consequences
Martin Wolf, FT
Have we reached the limits of monetary policy? No. The central banks’ medicine cabinet is still full. Yet using the old treatments more aggressively or using altogether new treatments creates political, financial and economic risks. Worse, such action cannot solve some of the bigger difficulties the high-income economies confront. In an ideal world, therefore, monetary policy, should not remain “the only game in town”, as the title of a book by the economist and investment manager Mohamed El-Erian suggests it now is. Unfortunately, we do not live in an ideal world. In the real world, central banks must remain our doctors of choice.

NYSE Governance Services And FTI Consulting Announce 16th Annual Corporate Law Firms Rankings
Given the volatility that can occur during an election year, coupled with the current concerns on global economies and an ever-evolving regulatory climate, trusted outside legal counsel is of utmost importance to today’s CEOs, boards and general counsel. From industry-shaking technology advancements to the continued presence of activist investors, the need for expert legal advice and consulting has never been greater.

The European Securities and Markets Authority (ESMA) has issued today a Communication clarifying the reporting of reference data under the Market Abuse Regulation (MAR).

SIFMA Publishes Quarterly Research Report for 1Q 2016
SIFMA today published its Research Quarterly Report for the first quarter of 2016. This report compiles statistics, including issuance data, for a broad range of asset classes across the U.S. capital markets. The full report is available at the following link:

Revised TRACE Securitized Products API Specification
FINRA has updated the TRACE Securitized Products Web API specification. Sub Product Asset Codes and their descriptions have been added to Appendix 1 as illustrated in the document.

Exchanges & Trading Facilities

Object Trading Platform Goes Live at TMX Group’s Co-Location Center
Traders News
Object Trading has expanded its Direct Market Access (DMA) service platform by making it available at TMX Group’s co-location center for access to the Montréal Exchange. This expansion is available to the buyside and sellside to access liquidity. Object Trading’s clients now have production access to seven co-location centers and more than 60 global markets.

London’s Baltic Exchange confirms entered into exclusive talks with Singapore’s SGX over possible sale
London’s Baltic Exchange confirms entered into exclusive talks with Singapore’s SGX over possible sale The next phase will be to continue discussions with SGX and consult with Baltic stakeholders before making a final recommendation

Top banks gain from discontent over hefty LME fee increases
By Pratima Desai – Reuters
Core industrial clients of the London Metal Exchange (LME), unhappy with a steep rise in trading fees, are taking some of their business to top-tier investment banks and rival exchanges, industry sources said.

EEX: Today’s Auction Of EUAs Cancelled
The European Energy Exchange (EEX), in its capacity as the transitional common auction platform acting on behalf of Poland, could not execute today’s auction of EU Emission Allowances (EUAs), because it would have cleared below the reference price. The reference price is calculated on the basis of the secondary market price during the bidding window.

Planned upgrade of the FX market trading and clearing system
The next release of the MOEX FX market trading and clearing system is scheduled to go live on 30 May 2016. Besides the implementation of market projects the new version of the system has undergone significant architectural changes. These changes improve the system performance and represent the significant step in the development of the next generation of trading and clearing platforms. We have named this version of the system ASTS+.

MTS expands data coverage for European government bond market
London Stock Exchange Group
MTS, one of Europe’s premier fixed income trading venues, has expanded coverage of its low-latency market data offering, MTS Live, to include government bond data from additional Central European countries and Israel. This expansion is part of an initiative designed to further enhance its pre- and post-trade market data offering in the European government bond market for fixed income market participants globally.

Sebi bans wilful defaulters from markets, holding board positions; Besides, any company or its promoters and directors categorised as wilful defaultes are not allowed to take control over other listed company
Business Standard
Wilful defaulters will no longer be able to tap the securities markets to raise funds and hold board positions at listed companies with Sebi notifying the amended norms in this regard.


Neptune integrates into Fidessa’s buy-side OMS platform
Automated Trader
Neptune, the open standards network utility for pre-trade indications in bond markets, has completed connectivity to Fidessa’s buy-side OMS platform to distribute pre-trade data to assist the buy-side with liquidity and price discovery utilising their existing workflows.

Blockchains, bazaars and price fixing cartels
Izabella Kaminska- FT
While in Istanbul for a blockchain conference, we came across Matt Levine’s latest Money Stuff column, in which he observes the following about the Libor manipulation and anti-trust case:

Artificial Intelligence Is Far From Matching Humans, Panel Says
Never mind Terminator-like killer robots. Artificial intelligence researchers are grappling with more realistic questions like whether their creations will take too many jobs from humans.

Hedge Funds & Managed Futures

Bill Gross: U.S. Needs to ‘Re-Normalize’ Interest Rates
Bill Gross, Janus Capital fund manager, comments on U.S. fiscal and monetary policies. He speaks with Bloomberg’s Erik Schatzker at the Bloomberg FI16 conference in Beverly Hills, California. (Source: Bloomberg)

Banks & Brokers

Credit Suisse, Leader in Global Cleared Derivatives, Selects FIS Derivatives Utility
Business Wire
Credit Suisse, a leader in the global cleared derivatives industry, has selected the Derivatives Utility from FIS™ (NYSE: FIS), a global leader in financial services technology, for its post-trade futures and cleared over-the-counter (OTC) derivatives operations and technology.

Wells Fargo stays coy as investment bank grows
To the surprise of exactly no one, Wells Fargo played down talk of expansion in its investment banking business during this week’s investor day presentations.

ABN Amro To Issue Letters Of Credit For DME Trading From Singapore
DME, the premier international energy futures and commodities exchange in the Middle East, announced today that ABN AMRO Bank N.V. has been approved to issue Letters of Credit (LCs) for trading on DME directly from Singapore. The approval comes after extensive joint efforts to facilitate the trading activities of DME’s and ABN AMRO’s customers in Asia.

Bank ‘living wills’ light on information, but reveal problems: U.S. monitor
There is not enough information in the public section of the “living wills” major banks file with U.S. regulators to fully explain how the organizations could undergo bankruptcy without taxpayer aid, the country’s financial monitor said on Wednesday.

Clearing & Settlement

LCH Launches Portfolio Margining
Markets Media
Portfolio margining is initially available for sterling and euro-denominated short-term interest rate futures cleared by LCH – which are those traded on Nasdaq NLX. In the third quarter of this year LCH Spider is also set to include futures contracts from CurveGlobal, the interest rate derivatives joint venture that the London Stock Exchange is launching with a number of major dealer banks and CBOE.

Economists question cost benefits of derivatives clearing; New research finds no compelling economic rationale for central clearing
Peter Madigan –
Central clearing does not provide meaningful cost benefits for derivatives counterparties from either a capital or collateral perspective, according to a pair of leading academics. “The overall conclusion is that we don’t find a strong, if any, capital and collateral cost incentive in favour of central clearing. The main drivers in favour are the netting comparison [against bilateral derivatives trading] and that turns out to be less favourable to central clearing than might have been expected,”…

The Clearing House and Isda analyse CCP resolution
As central counterparties (CCPs) continue to play an increasingly important role in the global financial system, The Clearing House and the International Swaps and Derivatives Association today issued a white paper identifying key issues that regulators should consider as they develop a comprehensive resolution framework for systemically important CCPs.

***DA: Resolution plans are to of the wish list, to ensure no entity is too big to fail.

Goldman Sachs: Blockchain Tech Could Save Capital Markets $6 Billion a Year
A new report from Goldman Sachs Investment Research projects that the implementation of blockchain technology could streamline the clearing and settlement of cash securities, saving capital markets $2bn in the US and $6bn globally on an annual basis.

Indexes & Products

Markit to double staff in index team
By Tim Cave – Financial News
Markit is planning to double the size of its team managing financial indices this year, as the data group looks to capitalise on moves by banks to outsource the administration of their in-house index products.

SIX Swiss Exchange welcomes new ETF issuer
SIX Swiss Exchange
UniCredit is building on its well-established history as an ETF provider and launching two products on European convertible bonds on the SIX Swiss Exchange.

MSCI Unlikely To Include China A-Shares: Credit Suisse
As trading volume languishes in mainland China, investors and market commentators are hoping the MSCI will include China A-shares in its benchmark indices this June, bringing in a flood of foreign portfolio money. They are likely to be disappointed. China A-shares were added to MSCI’s market classification review watch list in 2013, and while this is the third time MSCI has reviewed China A-shares, many problems remain.

This mutual fund giant could give the ETF business a run for your money
Fidelity Investments made its reputation in the world of traditional mutual funds by being a little bit smarter than the other guys. Now it’s trying to do the same thing in the exchange-traded fund space, where its biggest advantage may be its reputation and a strategically late entry to the market.

STOXX Expands Range of Smart-Beta Indices
Finance Magnates
STOXX, the operator of Deutsche Borse Group’s index business and a provider of tradable index concepts, has announced an extension of the STOXX Select and STOXX Diversification Select index families introduced last October.


Federal Court Orders California Resident David Bryant to Pay More than $6 Million in Restitution and Penalties for Fraud and Misappropriation
The U.S. Commodity Futures Trading Commission (CFTC) announced that the Honorable Edmond E. Chang of the U.S. District Court for the Northern District of Illinois entered a Consent Order for permanent injunction against David Bryant of Los Angeles County, California. The Order requires Bryant to pay a $3 million civil monetary penalty and $3,087,343 in restitution. The Order also imposes permanent trading and registration bans on Bryant, and prohibits him from committing further violations of the anti-fraud and registration provisions of the Commodity Exchange Act, as charged.

Citigroup to pay $425 mln over attempted forex, rate manipulation
Citigroup Inc has agreed to pay $425 million to resolve civil charges that it tried to manipulate foreign exchange and interest rate benchmarks.

FCA sends communication regarding potentially misleading marketing to all firms carrying out currency transfer services
The Financial Conduct Authority (FCA) has today sent an email to all firms carrying out currency transfer services explaining that some firms may be marketing their services in a misleading way. Specific concerns relate to the misleading presentation of the interbank rate, savings claims and use of FCA authorisation status to promote their services. The communication has also been sent to trade bodies representing this market.

Over 55s at heightened risk of fraud, says FCA
A study, published today by the regulator, reveals that the current low interest rate environment is one of the key reasons over 55s are considering investing in a wider range of unfamiliar types of investment products. Among those contacted by a firm they hadn’t heard of in the last 12 months, 4 in 10 (40%) reported a sharp rise in the volume of unsolicited investment calls – the most common tactic used by investment fraudsters.

Environmental & Energy

Pollution From Canadian Oil Sands Vapor Is Substantial, Study Finds
OTTAWA — The amount of pollution created by vapor from Canada’s oil sands, which contributes to climate change, ranks on par with most major cities in North America, according to a new study by the country’s environmental regulator that was published on Wednesday.

Oil Is the Odd Commodity Out. Is that Bad for Crude?
Oil is riding high these days, even as other commodities and emerging markets have turned lower.

Brent oil breaks above $50 for first time in seven months
Brent oil futures climbed above $50 a barrel on Thursday for the first time in nearly seven months as a global supply glut that plagued the market for nearly two years showed signs of easing.


China Turns From Foe to Friend in the Fed’s Quest to Raise Rates; Beijing’s focus on stability probably brings a smile to Janet Yellen’s face.
Luke Kawa – Bloomberg
China’s emphasis on stability looks to be lending support to the Federal Reserve’s efforts to normalize monetary policy, in stark contrast to the financial volatility the world’s second-largest economy sparked in summer 2015.

Is China Sending a Message to the Fed Through the Yuan?
By weakening the yuan, China may be sending a message to the Federal Reserve: Go slow in raising rates.

Corn glut in China set to pressure U.S. wheat market
China’s efforts to cut its domestic corn stocks by shunning imports and alternatives have already roiled U.S. sorghum and renewable fuel markets, and are now poised to hit U.S. wheat prices just as a bumper harvest rolls in.

Singapore bourse in Baltic Exchange talks; Vow to keep user fees unchanged for 5 years
by: Kate Burgess and Philip Stafford in London
The Baltic Exchange, one of the City’s oldest institutions, may be set for foreign ownership after it agreed to exclusive talks with SGX, the Singapore Exchange.

Frontier Markets

Regulator to clean bourses of suspended firms; To allow exit for shareholders of the 1,200 companies
Business Standard
The Securities and Exchange Board of India (Sebi) has decided to reduce the number of listed companies on the BSE (formerly Bombay Stock Exchange) and the National Stock Exchange (NSE). The move follows an off-site meeting of Sebi’s top team last month where several focus areas were discussed, including reduction of listed companies which have been suspended.

Emerging-market mutual funds take in most U.S. money in a year: ICI
Mutual fund investors showed a flash of optimism after a year of fleeing risky assets, putting the most money in U.S.-based emerging-market products since April 2015 during the latest week, Investment Company Institute data showed on Wednesday.

CEO Of MSCI Visits Qatar Stock Exchange
Qatar Stock Exchange welcomed a delegation of MSCI executives on Thursday of last week, led by Mr. Henry Fernandez, Chairman and CEO of MSCI. The delegation met several senior officials to understand the strategy and vision for development of capital markets in Qatar.


Women From Venus, Men Still From Mars on Facebook, Study Finds
Women used warmer, gentler words in their status updates on Facebook compared to men, who were more likely to swear, express anger and use argumentative language, a study of 10 million postings released on Wednesday found.

New York Times Co. to Offer Buyouts to Employees
In a bid to continue aggressive digital expansion while controlling costs, The New York Times will offer voluntary buyout packages to members of the newsroom and several business departments at the end of the month, the company announced on Wednesday.

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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.