Breaking News

John Lothian: Derivatives associations urge CFTC to split RegAT; Top German regulator says no to London HQ for Deutsche Boerse-LSE; LSE-Deutsche Börse dealmakers were wrong to ignore Brexit risk

First Read

Stars Of The Next Generation
Jim Kharouf

John and Doug are in New York today drumming up support for our MarketsWiki Education series in the Big Apple on July 19.

If you have not signed up your interns, or know of someone who would benefit from hearing the likes of Adena Friedman of Nasdaq, Jenny Knott of ICAP, Steve Gibson of Euclid Opportunities, Gary DeWaal of Katten, Bill Harts of the MMI, Kevin Wolf of Eris and Kenny Polcari of O’Neil Securities, then register here, http://bit.ly/1XxdC46.
Chicago’s series runs July 12, 14 & 15.

Meanwhile, the media spotlight is easing up on the Brexit a touch, and shining its light back on the LSE-Deutsche Boerse merger. There are a host of stories looking at the obstacles still to face. Germany’s top regulator said he would not allow London to be the headquarters for the merged company. Britain’s Nigel Farage probably didn’t help matters in his unwelcome visit to Brussels. And that’s just the start.

Stay tuned. Our Brexit coverage will be here for some time to come.

Finally, thoughts and prayers go out to the victims of another bombing, this time in Istanbul. The senselessness has to stop. How is the ultimate question.

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MWE Chi
MWE NY

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Neurensic’s Widerhorn on Inc. Radio
Inc.
David Widerhorn, CEO of Neurensic, was on an Inc. magazine radio show where listeners had an opportunity to learn a bit more about David’s background, Neurensic as a company and some common myths relative to artificial intelligence. The podcast was broken down into 3 segments (less than 30 min total) below.
David talks about starting his own business at 12 and graduating from MIT at 19; Neurensic | SEGMENT 4 | http://bit.ly/29lUan0;
He explains in laymen’s terms the purpose and function of Neurensic in the financial market, Streamlining Big Data | SEGMENT 5 | http://bit.ly/29lt5A7;
Will AI be an asset to humanity, or conquer it? David’s comprehensive knowledge of the AI world allows his to answer this one thoughtfully.
Myths in Artificial Intelligence | SEGMENT 6 | http://bit.ly/29lU1ji
goo.gl/TZhVNO

***DA: Three of the segments feature Neurensic CEO David Widerhorn, one of the speakers at our upcoming MarketsWiki Education series in Chicago. Have a listen, then click HERE for MW Education info and registration.

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How Amazon Triggered a Robot Arms Race
In 2012 Jeff Bezos scooped up warehouse automation firm Kiva. Everyone else is still trying to catch up.
Kim Bhasin and Patrick Clark – Bloomberg
An Amazon warehouse is a flurry of activity. Workers jog around a manmade cavern plopping items into yellow and black crates. Towering hydraulic arms lift heavy boxes toward the rafters. And an army of stubby orange robots slide along the floor like giant, sentient hockey pucks, piled high with towers of consumer gratification ranging from bestsellers to kitchenware.
Those are Kiva robots, once the marvel of warehouses everywhere. Amazon whipped out its wallet and threw down $775 million to purchase these robot legions in 2012. The acquisition effectively gave Jeff Bezos, its 52-year-old chief executive, command of an entire industry.
goo.gl/7axfK0

****JB: (In case they are listening…) I for one welcome our robot overlords.

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Profiles: Tom Kadlec
JohnLothianNews.com

From regulation to technology to the revenue structure, futures commission merchants have experienced drastic changes over the last 30 years, as Tom Kadlec, CEO of ADM Investor Services, knows full well. In this John Lothian Profiles piece, Kadlec talks about his career in the futures markets, the importance of mentoring, current challenges and opportunities, and “The ADM Way.”
Watch the video »

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Tuesday’s Top Three
Yesterday’s top three stories covered two topics near and dear to everyone’s hearts and wallets, the Brexit and data. Taking the top spot is a Washington Post story on the broader view of what Brexit means The world’s losers are revolting, and Brexit is only the beginning, followed by Financial News’s piece What next for LSE and Deutsche Börse if the deal fails?. And in third, we had ICE’s announcement on its Data Services division, Intercontinental Exchange Launches Expanded ICE Data Services

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Lead Stories

Derivatives associations urge CFTC to split RegAT
FIA and ISDA urge the CFTC to divide up RegAT and rethink rules on source codes.
By Joe Parsons – The Trade News
Trade bodies representing the largest US derivatives traders has urged the Commodity Futures Trading Commission (CFTC) to split regulation on automated trading (RegAT).
In a joint letter to the derivatives watchdog, the bodies including the Futures Industry Association (FIA), International Swaps and Derivatives Association (ISDA), and the Managed Funds Association (MFA), has called for the regulation to be split, focusing on pre-trade risk controls and separate legislation on algorithms.
goo.gl/i9rsek

Top German regulator says no to London HQ for Deutsche Boerse-LSE
Reuters
Germany’s financial market regulator delivered a double blow to London on Tuesday, saying it could not host the headquarters of a planned European stock exchange giant after Britain leaves the EU, and nor could it remain a centre for trading in euros.
reut.rs/293gzEW

LSE-Deutsche Börse dealmakers were wrong to ignore Brexit risk
Financial Times
Anyone who believes that the merger between Germany’s Deutsche Börse and the London Stock Exchange is going ahead must have their head buried in the sand. Just like the people who designed the deal. It was meant to bring together London, Europe’s leading financial hub, with Frankfurt, the home of the European Central Bank, to create a behemoth able to trade in equities and futures, and supply benchmarks, index and data analytics. When it was first announced in February, both sides were publicly dismissive of the impact of a British vote to leave the EU — and it appears the deal terms were designed with similar insouciance. These terms cannot now be changed — making the likelihood of the deal closing vanishingly small, despite reassuring utterances by both companies to the contrary.
/goo.gl/jo8Lmh

Hollande Takes Aim at City of London in Euro Clearing Threat
Helene Fouquet and John Detrixhe – Bloomberg
The City of London is facing the first direct threat to its role as Europe’s dominant financial center as French President Francois Hollande takes aim at a key pillar of the U.K. industry.
“The City, which could handle clearing operations in euros thanks to the U.K.’s presence in the EU, won’t be able to do them any more,” Hollande said after the first day of a European Union summit in Brussels.
goo.gl/Gnmm6N

CFTC charges ex-Chicago Board Options Exchange director with fraud
Reuters
The Commodity Futures Trading Commission said Alvin Wilkinson fraudulently accepted at least $6.9 million from 30 people for trading from 1999 until now. Wilkinson served as a director of the options exchange, now owned by CBOE Holdings Inc, from around 2001 to 2004, the company’s annual reports show.
reut.rs/293h4id

U.S. Questions Whether Futures Markets Can Police Themselves
Matthew Leising – Bloomberg
A top executive at 3Red Trading LLC reassured his co-founder about the future of the firm, even as federal regulators and two exchanges were investigating them for alleged market manipulation.
“Just finished up with the head honchos,” Edwin Johnson wrote about a meeting with Intercontinental Exchange Inc. executives. “We will do a very basic phone interview next week. Then it will all go away,” he texted his partner in the spring of 2013. “I was given their word last night.”
Likewise, he texted, top brass at CME Group Inc. “are 100 percent behind us.”
goo.gl/3eG1mR

Every Banker in the World Is Chasing the Saudi Aramco Deal
Stefania Bianchi and Matthew Martin – Bloomberg
When news broke in January that Saudi Arabia was considering an initial public offering of its state-owned oil company, the first reaction on Wall Street was shock. Then calls began pouring into Dubai — the Middle East’s financial hub — from senior bankers in London and New York. Investment banks around the world are clamoring to join what promises to be a bonanza, and not just the IPO of Saudi Arabian Oil Co., or Aramco, which could be valued at upward of $2 trillion. The kingdom is planning to sell hundreds of state assets to bolster its finances and reduce its dependence on oil. That includes as much as $15 billion of bonds.
goo.gl/Uquhya

Forget December. Forget Next Year. Fed Done Hiking Until 2018
Liz McCormick and Matthew Boesler
Circle Jan. 31, 2018, on the calendar. That’s the soonest the Federal Reserve hikes next.
At least if money market derivatives are to be believed.
Traders, who have consistently been better at projecting the path of interest rates than the Fed itself, are now pricing in a greater probability that policy makers will cut rates in upcoming meetings than raise them. They don’t assign more than a 50 percent chance of an increase until the beginning of 2018, and don’t price in a full rate hike until the final quarter of the year.
goo.gl/y2hBMp

Brexit

Brexit vote sparks US fears over transatlantic regulation
Financial Times
The Brexit vote has cast doubt over US-EU initiatives to harmonise transatlantic regulation, with a senior Democrat and potential vice-presidential candidate warning against a return to a “patchwork” of global rules.
/goo.gl/OEPvei

JP Morgan says Scottish independence, new currency now its ‘base case’
Reuters
U.S. bank JP Morgan said on Wednesday it now expects Scotland to vote for independence and introduce its own currency before Britain leaves the European Union in 2019.
goo.gl/a7nlNy

The Weird Idea That Brexit Would Be Good for London
By Henry Grabar – Slate
Thursday’s vote in the United Kingdom suggested Brexit was a referendum on the global elite; a rebuke of cosmopolitanism, globalization, and the postwar order. London, an island of strong “Remain” support, was marooned in a sea of “Leave.” Dispatches from the British hinterland confirmed the impression of Capital against Country. “In shorthand,” Peter Mandler wrote in Dissent, “Britain’s EU problem is a London problem.”
goo.gl/D9k3QF

EU leaders meet without UK to plan Brexit response
FT
European leaders met in Brussels without the UK for the first time on Tuesday in a historic informal meeting where the EU-27 will attempt to pick up the pieces from the Brexit vote and lay down terms of engagement for any divorce talks. The breakfast is a symbolic watershed for the EU, marking a political separation after 43 years of British membership that paves the way to London ultimately leaving the bloc.
/goo.gl/rQcVdM

Brexit Sends Tourists Flocking to London to ‘Buy, Buy, Buy’
Andrew Roberts – Bloomberg
By voting to leave the European Union, Britons have delivered a potential windfall to tourists eager to snatch up Burberry trenchcoats, Harrods Stilton and Liberty scarves on the cheap.
The outcome of Thursday’s referendum sent the British currency plunging, making the country’s goods and services cheaper for foreign buyers. Consumers reacted immediately: Searches by Chinese for U.K. holidays “skyrocketed” on Ctrip.com International Ltd.’s travel booking app, the company said, while Chinese news site Phoenix implored visitors to London to “Buy, Buy, Buy.”
goo.gl/gDkkhP

Brexit backers hit by big losses on company shares
Financial Times
Business leaders who were among the biggest donors to the Leave campaign have had almost £500m wiped off their holdings in quoted companies as stock markets have tumbled in the days since the EU referendum. Peter Hargreaves, who founded financial adviser Hargreaves Lansdown and was the second-largest donor to the Leave campaign has been the biggest loser. His 32 per cent stake in the group fell by about £400m in the days after the referendum — somewhat overshadowing the £3.2m he contributed to the Leave cause — as Hargreaves’ share price dropped. A rebound reduced his paper losses to about £330m by Wednesday morning.
/goo.gl/jq5nml

Axioma Risk Monitor – Brexit Vote Ignites Equity Market, Currency And Style Factor Risk
Press Release
Please find attached a risk monitor paper published by Axioma, a risk modelling provider. The paper investigates the result of the Brexit vote and how it precipitated dramatic changes in equity and currency risk, driven by higher volatility and substantial changes in correlation.
goo.gl/AaSOL0

Soros had Deutsche Bank ‘short’ bet at time of Brexit fallout
Reuters
Billionaire investor George Soros took out a bet of more than 100 million euros ($111 million) that Deutsche Bank (DBKGn.DE) shares would fall at the time of Britain’s vote to quit the European Union, according to a regulatory filing.
Soros, who is renowned for successfully betting against the pound in 1992, had a “short” position of 0.51 percent or about 7 million Deutsche Bank shares on June 24, the filing shows. There was no record of such a position in the days before.
goo.gl/zG2CIy

Regulatory

SEC Proposes Rule Requiring Investment Advisers to Adopt Business Continuity and Transition Plans
SEC.gov
The Securities and Exchange Commission today proposed a new rule that would require registered investment advisers to adopt and implement written business continuity and transition plans. The proposed rule is designed to ensure that investment advisers have plans in place to address operational and other risks related to a significant disruption in the adviser’s operations in order to minimize client and investor harm.
1.usa.gov/29m3erU

Hong Kong regulator censures Bank of America units for takeover code breaches
Hong Kong’s Securities and Futures Commission (SFC) has publicly censured two units of Bank of America for breaches of the city’s takeover codes in two deals last year, the regulator said on Wednesday.
The SFC said the censures were linked to the role of the units in a partial offer for China Resources Beer (CRB) and the privatization of Power Assets Holdings Ltd.
goo.gl/XNzSFt

Oaktree Employee Faces Extradition to UAE. in Fight Over $644m Award
WSJ City
An employee of distressed-debt firm Oaktree Capital Management was arrested in London and faces the possibility of being extradited to the United Arab Emirates on charges that he stole millions on Oaktree’s behalf.
/goo.gl/bnu4tx

MiFID II: Key Considerations for Asset Managers
Lexology
The Council of the European Union on 13 May 2014 formally endorsed a new regulatory regime that will replace the current Markets in Financial Instruments Directive (MiFID), which has been in force since 2007. The new legislation, in the form of a recast Directive (MiFID II) and Regulation (MiFIR), is scheduled to go into effect on 3 January 2018.
goo.gl/VxYLYQ

Exchanges & Trading Facilities

Deutsche Börse To Provide IT Infrastructure For Private Bank Donner & Reuschel
Press Release
Since June, Deutsche Börse Managed Services provides the IT infrastructure for the trading platform of German private bank Donner & Reuschel. These services enable a seamless connection to the trading platforms Xetra and Eurex. The Managed Services form part of Deutsche Börse’s Infrastructure Services offer, which comprises licensing, hosting and maintenance of Deutsche Börse applications and infrastructure elements to external clients.
goo.gl/Yjwl8E

NSE’s Road to Listing
Business Standard
After going back and forth for several months on its decision to go public, the National Stock Exchange of India (NSE) has finally decided to hit the market with its initial public offering (IPO), providing an exit to its institutional shareholders. The decision took some time coming. Here’s how it all panned out.
goo.gl/Y8zFpB

LME electronic volumes surge in battle over traditional trading
By Eric Onstad | LONDON – Reuters
Electronic trade on the London Metal Exchange has climbed by nearly a fifth this year as the LME lures more speculators, sparking a battle with members who worry about threats to the traditional structure symbolized by the open outcry floor.
The 139-year-old exchange, the only one in Europe still maintaining open outcry trading, has been seeking to placate members, especially brokers, worried about losing lucrative business.
goo.gl/66Mt1v

HKFE Announces Revised Margins For Futures Contracts
Mondovisione
Please be advised that pursuant to Exchange Rule 617(d) and HKCC Rule 402, the Exchange and the Clearing House have determined that with effect from the commencement of trading on Monday, 4 July 2016, the margin levels of the following Futures Contracts shall be as follows:
goo.gl/FdnZLG

Politics

No Brexit general election if Boris Johnson wins Tory leadership
Johnson team source says leave campaigner does not believe he needs new mandate to negotiate exit from EU
Boris Johnson would not call a general election immediately if he won the Conservative party leadership election and took over as prime minister, it is understood.
Johnson is one of several Tories about to formally launch their bids to replace David Cameron as nominations open on Wednesday, with his main rivals set to include the home secretary, Theresa May, and a joint ticket of Stephen Crabb, the pensions secretary, backed by Sajid Javid, the business secretary.
goo.gl/v77l1A

Contenders Position to Take Control of Tory Party
WSJ City
Stephen Crabb, the work and pensions secretary, on Wednesday declared he intends to stand for the Conservative party leadership. Crabb is the first contender to publicly announce his candidacy following Cameron’s decision to step down in the fall following the UK’s decision to exit the European Union. Crabb said in an article for the Daily Telegraph newspaper that he wants to lead a government that delivers on the expectations of the 17 million Britons who in a referendum chose to leave the EU, even though he voted to remain a member.
/goo.gl/dJsNqN

Adios, Three Amigos: Obama heads to last summit with Canada, Mexico
Reuters
President Barack Obama will meet with the leaders of Canada and Mexico on Wednesday for his final “Three Amigos” summit, a meeting that may signal how keen the North American partners are to tout trade at a time of rising protectionist sentiment.
goo.gl/Hl5LLL

Hedge Funds & Managed Futures

Inflation Becomes Bondholders’ Boon
Lukanyo Mnyanda – Bloomberg
Mario Draghi’s headache after Britain’s decision to exit the European Union is proving to be a gift for holders of the region’s riskier government bonds.
A measure of investors’ future inflation expectations slumped to a record after last week’s Brexit vote, making an extension of the European Central Bank’s asset-purchase program almost a certainty for some investors. Lower consumer-price increases enhance the value of payments from fixed-income securities, and hamper ECB President Draghi’s principal goal of guiding inflation back toward 2 percent.
goo.gl/c7s51x

Europe Bond Market Reopens After Brexit With Molson Coors Offer
Sally Bakewell – Bloomberg
Molson Coors Brewing Co. is selling euro-denominated bonds, the first corporate-debt offering in Europe since the Brexit referendum sent world markets spinning.
Proceeds from the U.S. brewer’s planned sale, along with those from a dollar bond deal and Canadian dollar private placement on Tuesday, will help fund its acquisition of SABMiller Plc’s stake in MillerCoors, the company said in a statement. The euro notes will mature in eight years, according to a person familiar with the matter who asked not to be identified because they’re not authorized to speak publicly.
goo.gl/NMYBaU

Banks & Brokers

Stress test inc.: Billions of dollars and bank consultants to manage other consultants
Financial News
After Citigroup unexpectedly failed the Federal Reserve’s annual stress tests in March 2014, the bank opened its checkbook and called in the consultants. The firm had to address several of the regulator’s concerns in a short time frame, and no single consulting firm could do the job, according to people familiar with the matter. The bank hired multiple firms and said it spent about $180 million on stress tests during the second half of 2014. The next year, it passed.
goo.gl/sN3Ufu

Goldman denies plans for Frankfurt office switch after Brexit
Reuters
U.S. investment bank Goldman Sachs (GS.N) has denied speculation it is poised to shift London-based staff and operations to offices in Frankfurt as soon as Britain’s divorce proceedings from the European Union formally begin.
“We have not made any changes to our real estate requirements in Frankfurt as a result of the referendum result,” the bank said in a statement issued on Wednesday.
“As we have already communicated to our employees, there is no immediate change to the way we conduct our business or where we conduct our business.”
goo.gl/MmZgV5

China broker braves post-Brexit IPO market
Jennifer Hughes in Hong Kong – The Financial Times
A Chinese public offering that braved Brexit to pitch to investors in London last Friday has priced in spite of the turmoil, raising $1.16bn for Orient Securities, listing in Hong Kong.
/goo.gl/VTKMNf

Goldman Sachs chief apologises for belated BHS disclosure
FT
Michael Sherwood, co-head of Goldman Sachs in Europe, has apologised to a UK parliamentary hearing for belatedly disclosing that the US bank received a request to provide £40m of financing for the sale of collapsed retailer BHS. “I apologise for providing it to you late,” Mr Sherwood told MPs on Wednesday after being asked why Goldman had not initially disclosed two calls he received from Sir Philip Green about the retail billionaire’s sale of BHS last year.
/goo.gl/b6ntaO

RPT-Libya wealth fund boss screamed, cursed at Goldman bankers -witness
Reuters
The Libyan wealth fund’s former deputy chief screamed and cursed at Goldman Sachs bankers in a stormy meeting over derivatives trades made on the bank’s advice that ultimately turned out to be worthless, a witness told a court on Tuesday.
goo.gl/TEUqgJ

Clearing & Settlement

François Hollande rules out City’s euro clearing role
Financial Times
The City of London should no longer be able to clear euro-denominated trades, the French president said on Tuesday, adding to post-Brexit fears. François Hollande said at the end of a summit in Brussels where EU leaders started trying to pick through the wreckage of David Cameron’s referendum defeat that it would be unacceptable for the crucial stage in the trading of derivatives and equities to take place in the UK. “The City, which thanks to the EU, was able to handle clearing operations for the eurozone, will not be able to do them,” he said. “It can serve as an example for those who seek the end of Europe?…?It can serve as a lesson.”
/goo.gl/xRTh4Z

Eurex launches OTC clearing incentive scheme for buy-side
Eurex hopes to attract buy-side firms for its interest rate swaps clearing business.
By Joe Parsons – The Trade News
Eurex has launched a new fee incentive programme for its OTC derivatives clearing business in a bid to attract buy-side customers.
The scheme will provide “registered customers”, including buy-side firms, a waiver from booking and maintenance fees until 30 September.
goo.gl/MgyeDi

Indexes & Products

Fidelity Just Made Buying an Index Fund Vanguard-Cheap
WSJ
Money manager Fidelity Investments plans to slash prices on more than two dozen funds that track stock and bond indexes, a big concession to an industry shift toward cheap products. The fees after the changes will be below or on par with those of low-cost pioneer Vanguard Group and Charles Schwab Corp., another firm that offers ultralow customer expenses.
goo.gl/IwFizS

Brexit prompts $350m outflows from UK equity funds on Monday alone
Investment Week
UK equity ETFs suffered outflows of $350m on the second trading day after the Brexit vote, while investors pulled $14.2bn from global equity vehicles on the day of the EU referendum and the two following trading days, according to data from EPFR and Markit. The data, compiled by the FT, showed deep risk aversion among investors as the UK voted to leave the European Union. In the days that followed, $3trn was wiped off stockmarkets, sterling fell to a 31-year-low and 10-year gilt yields dropped below 1% for the first time on record.
goo.gl/aNJIYw

Chinese ETF Flows Showing a Split Between U.S., Local Sentiment
Bloomberg
To see just how different the outlook for Chinese equities is between U.S. and local investors, take a look at the trend in exchange-traded fund flows. Traders have pulled $1.7 billion from U.S.-traded ETFs focused on China’s mainland and offshore shares this year, data compiled by Bloomberg show. Similar funds available on Chinese exchanges grew by about $1.7 billion during the same period.
goo.gl/MJrzBp

Euro STOXX 50 And DAX Indices Licensed To iShares To Underlie Two Exchange-Traded Funds In Hong Kong
Press Release
STOXX Ltd., the operator of Deutsche Boerse Group’s index business, and a global provider of innovative and tradable index concepts, today announced that the EURO STOXX 50 and the DAX have been licensed to iShares, to serve as the underlying for two exchange-traded funds (ETFs) in Hong Kong. iShares are a family of exchange traded funds (ETFs) marketed and managed by BlackRock. The new ETFs will be available on the Hong Kong Stock Exchange as of today.
goo.gl/25aU7s

Technology

CQG co-locates servers at HKEX Data Center
Finextra
CQG, a global provider of high-performance trade routing, reliable market data, and advanced technical analysis, has relocated its servers into the HKEX data center in Tseung Kwan Industrial Estate.
/goo.gl/eTDTsE

Deutsche Bourse to provide IT infrastructure for private bank Donner & Reuschel
www.finextra.com
Since June, Deutsche Börse Managed Services provides the IT infrastructure for the trading platform of German private bank Donner & Reuschel.
These services enable a seamless connection to the trading platforms Xetra and Eurex. The Managed Services form part of Deutsche Börse’s Infrastructure Services offer, which comprises licensing, hosting and maintenance of Deutsche Börse applications and infrastructure elements to external clients.
/goo.gl/79HRAo

Attunity Launches New Platform
Waters Technology
Attunity debuts Visibility for Hadoop, which supports management of large data sets based on the open-source technology
Big data management software company Attunity has launched a new version of its data analytics platform, Attunity Visibility for Hadoop, with improved data support for regulatory and auditing requirements, as well as more precise and efficient management of data warehouse and data lake information.
goo.gl/Gbcj6s

Bottomline launches universal payments system aggregator
Finextra
Bottomline Technologies (NASDAQ: EPAY), a leading provider of cloud-based payment, invoice and digital banking solutions, has today announced the launch of Bottomline Universal Aggregator™ and the accreditation of its Faster Payment processing capability.
/goo.gl/PndtTa

Enforcement

CFTC Charges Former CBOE Member Alvin Guy Wilkinson and his Connecticut-based Entities with Fraud, Misappropriation, Failing to Register with the CFTC, and Making Misrepresentations to the NFA
CFTC
The Complaint, filed on June 28, 2016, alleges that, from July 1999 to the present, Wilkinson fraudulently solicited and accepted at least $6.9 million from at least 30 individuals for purchase of interests in WFOF and CIP, claiming that he would trade a portfolio of financial instruments on their behalf, including futures contracts, using a market volatility strategy. However, instead of trading participants’ monies as he represented he would, Wilkinson allegedly misappropriated at least $5.2 million, and he returned at least $1.7 million to participants of WFOF and CIP as return of capital and purported profits in the manner of a Ponzi scheme.
1.usa.gov/29lSMAT

Judge Rules for Exchanges in Fight With Brokers Over Market-Data Fees
WSJ
on.wsj.com/293cVLj

Environmental & Energy

Top science groups tell climate change doubters in Congress to knock it off
By Jason Samenow – Washington Post
More than half of the Republicans in Congress question the science of human-caused climate change, according to the Center for American Progress. The presumptive Republican nominee for president, Donald Trump, has also said he is not “a great believer in man-made climate change.” In a letter dated Tuesday, 31 leading U.S. scientific organizations sent members of Congress a no-nonsense message that human-caused climate change is real, poses risks to society and is backed by overwhelming evidence.
/goo.gl/8AA0Fg

Ignore climate change at your peril, Lord Browne warns oil groups
FT
Oil companies could go bankrupt if they do not address the risks created by climate change and invest more in renewable energy, Lord Browne has warned. The former chief executive of BP said the big oil and gas groups could go the way of Peabody Energy, the world’s biggest private sector coal producer, which filed for bankruptcy protection in April.
/goo.gl/b5Qi55

Obama’s New Clean Energy Goal For North America: 50 Percent By 2025
By Scott Horsley – NPR news
President Obama and his counterparts from Canada and Mexico are preparing to unveil an ambitious new goal for generating carbon-free power when they meet this week in Ottawa.
goo.gl/6y7Bxz

Volkswagen reaches $14.7B settlement for emissions cheating
By Timothy Cama – The Hill
Volkswagen Group agreed Tuesday to spend up to $14.7 billion in civil penalties and consumer compensation to settle numerous lawsuits for cheating on diesel emissions tests.
goo.gl/85PZkT

How Investors Can Position Their Portfolios As Natural Gas Surpasses Coal
The Motley Fool
Last week, natural gas finally surpassed coal as the major power source for electricity for the United States.
goo.gl/kcKrLp

Asia-Pacific

Sorry Shanghai, There’s a New China Stock Exchange King
Bloomberg News
The Shanghai Stock Exchange’s reign as the premier venue for trading Chinese equities is coming to an end.
For the first time in at least a decade, China’s oldest bourse has lost its position at the top of turnover rankings for the nation’s four major trading venues. The new leader is Shenzhen’s Small and Medium Enterprise Board, a 12-year-old market for mostly non-state companies that first climbed to No. 1 on May 17. It has since jockeyed for position with the Shanghai, with both bourses handling about 180 billion yuan ($27.1 billion) of trades on average over the past five days.
goo.gl/DjrEBA

Orient Securities Prices $1 Billion Hong Kong IPO Near Bottom of Range
WSJ
Citigroup Inc. ‘s Chinese securities joint-venture partner, Orient Securities Co. , priced its Hong Kong initial public offering toward the bottom end of its indicative range, the latest sign of cooling investor appetite for China’s brokerage firms.
goo.gl/flGWVS

Brexit: Bank of Japan urged to free up cash for Japanese companies in UK | Business
Business | The Guardian
Shinzo Abe has urged Japan’s central bank to ensure ample funds are available to help Japanese companies operating in Britain and shore up business at home after the UK’s shock vote to exit the European Union.
/goo.gl/i2N52T

China broker braves post-Brexit IPO market
Financial Times
A Chinese public offering that braved Brexit to pitch to investors in London last Friday has priced in spite of the turmoil, raising $1.16bn for Orient Securities, listing in Hong Kong.
The day of London meetings was arranged before the outcome of the UK’s EU referendum was known, and was part of a roadshow for the broker that took in Hong Kong and Singapore before ending in New York on Monday.
goo.gl/2ErLrM

China’s Cross-Border Investment Programs Show Funds’ Exodus
Bloomberg
China’s investors want out, and foreigners aren’t showing much appetite to jump in.
A program allowing some domestic and Hong Kong mutual funds to be sold on either side of the border has seen about 37 times more money leave China than enter so far this year. In addition, a link between the Shanghai and Hong Kong stock exchanges has to date enabled southbound outflows that are 39 percent more than the amount that’s moved north. In the first quarter, Chinese residents also poured a record HK$13.2 billion ($1.7 billion) into Hong Kong’s insurance products, a popular way to move funds offshore.
goo.gl/HMGsYX

Li to open investment door wider
www.china.org.cn
Premier Li Keqiang promised wider market access for foreign investment and intensified efforts to tackle financial risks when he addressed a roomful of corporate executives in Tianjin on Tuesday.
“The participation of foreign firms is needed in China’s efforts to push economic transformation and upgrading through reform and innovation, and to realize healthy and sustainable growth,” Li said.
goo.gl/4kWhSs

Frontier Markets

Abu Dhabi state funds to complete merger by end-2017 -source
Reuters
The merger of Abu Dhabi state funds Mubadala Development Co and International Petroleum Investment Co should be completed by the end of 2017, a source close to the discussions on the deal said on Wednesday.
goo.gl/djgl7l

Brazil’s BTG Pactual proceeds with spinoff of commodities arm
Reuters
Grupo BTG Pactual SA , which is recovering from a corruption scandal, is moving ahead with plans to spin off Engelhart CTP, its fast-growing commodities sales and trading unit, the Brazilian investment bank said on Wednesday.
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Brexit Torpedoed Every Nation’s Stock Market Except One
Lusaka’s All Share Index defies the slump.
Isobel Finkel
Greece, Spain, Italy, Ireland, and Namibia — all have felt the cool wind of Brexit coursing through their equity markets.
Indexes based in those countries plummeted in the wake of Thursday’s vote, and more so even than London’s own FTSE 100 which had registered a 12 percent drop, by 2:20 p.m. on Tuesday. Ireland’s Overall Index dropped 16 percent and in currency-adjusted terms was the most affected of the 94 major equity indexes tracked by Bloomberg.
While the only country with which the U.K. shares a land border suffered the most, it didn’t suffer alone.
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Bergstrom is chief information officer of John J. Lothian & Co. He edits MarketsWiki and JLN Options.