John Lothian Newsletter: Hong Kong Bourse Quarterly Profit Worst Since ’09; LCH.Clearnet Taps Ex-J.P.Morgan Executive Amid U.S. Push; Regulators Hope for Libor Pacts

Feb 27, 2013

HKEx posts a tough quarter amid declining listings. LCH.Clearnet has a new CEO as it prepares to open a new US derivatives clearinghouse. Regulators pursuing justice, or at the very least large fines, against offenders in the LIBOR rate-fixing scandal are hoping to reel in three more major targets by summertime.

First Read

Hong Kong Bourse Quarterly Profit Worst Since ’09 on Trade Drop
Bloomberg
Hong Kong Exchanges & Clearing Ltd. missed earnings estimates, posting the lowest profit since the global financial crisis as turnover and listings fell at the world’s largest exchange operator by market value.
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***** Charles Li will be on the FIA’s CEO panel at the upcoming Boca conference moderated by Maria Bartiromo.

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CBOE’s VIX Options Establish New Single-Day Volume Record
Chicago Board Options Exchange today reported that options on the CBOE Volatility Index established an all-time, single-day volume record, totaling an estimated 1,388,937 contracts. Today’s VIX options volume beat the previous record of 1,219,226 contracts traded on September 11, 2012.
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***** Yada yada yada

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R.J. O’Brien Introduces Mobile Trading Application for iPhone, Android
R.J. O’Brien & Associates (RJO), the oldest and largest independent futures brokerage and clearing firm in the United States, today announced the release of the firm’s first-ever mobile trading application, RJO Mobile Trader (RJO MT). Available for clients of the firm and its introducing brokers (IBs) who use an iPhone or Android phone, RJO Mobile Trader is a secure application accessible via Apple’s App Store and Google Play.
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***** Mobile is so cool… and mobile!

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tradeMONSTER Releases Powerful Mobile App
tradeMONSTER announced today the release of tradeMONSTER Mobile, its markedly innovative and patent pending mobile trading app, the first and only proprietary mobile trading app built on HTML5. tradeMONSTER Mobile users benefit from having a mobile experience that now closely replicates its web-based trading platform rated “Best for Options Traders” three years running by Barron’s.
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***** Powerful mobile is so cool… and powerful!

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Goldman to lose electronic trading chief
Tracy Alloway in New York – FT.com
Greg Tusar, head of electronic trading at Goldman Sachs, is leaving the investment bank, according to an internal memo obtained by the Financial Times. His departure comes after 13 years at the bank, during which time Mr Tusar spearheaded many of Goldman’s forays into the world of electronic trading.
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***** I always assumed that their electronic trading chief was a robot named HAL.

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In Wall St. Tax, a Simple Idea but Unintended Consequences
STEVEN M. DAVIDOFF – NYTimes.com
Some say that a financial transaction tax is a cost-free way to kill many a bird with one stone — raising revenue, preventing financial crashes and making markets safer. But advocates of this neat idea conveniently ignore the century of less-than-successful experience with this tax, including New York State’s own failed attempt.
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***** Kind of like teenage hookups.

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As India derivatives demand surges, Singapore benefits
Reuters via Yahoo! Finance
After long failing to act on foreign investor complaints, Indian policy makers find themselves in an ironic bind: As global interest in Indian derivatives surges, it is Singapore, not Mumbai, that is reaping the benefits.
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***** A pro-Singapore piece NOT written by Jeremy Grant.

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Nine out of ten private equity execs are happy
Paul Hodkinson – Financial News
Optimism is returning to the ranks of executives working in private equity, according to research and recruiters.
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***** They’re happy, AND Mitt Romney didn’t get elected? Hmmm…

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Wall Street Pay Rises, for Those Who Still Have a Job
By SUSANNE CRAIG – NYTimes.com
Wall Street may be shrinking — cutting thousands of jobs over the last year — but for those who remain, the pay is still very lucrative.
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***** They’re higher paid, AND Mitt Romney didn’t get elected? Hmmm…

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DealBook: Obama’s Nominee for S.E.C. Tries to Allay Skepticism
New York Times
Mary Jo White, President Obama’s choice to lead the Securities and Exchange Commission, is telling Congress she can avoid conflicts of interest despite her long career on Wall Street.
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***** NO MATTER WHAT SHE SAYS I DON’T BELIEVE HER

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Tribune Company Plans To Sell Chicago Tribune, Los Angeles Times, Other Newspapers: CNBC
Reuters
Tribune Co has hired investment bankers to sell off its newspaper unit, which includes The Los Angeles Times and Chicago Tribune, CNBC reported on Tuesday.
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***** For the unknownth time, Col. Robert McCormick has rolled over in his grave.

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Gorkana reports:
The Wall Street Journal
Christian Berthelsen is now Commodities Markets Reporter for The Wall Street Journal. He joined Dow Jones in September 2011 and has reported for the commodities, equities and banking wire desks, most recently covering J.P. Morgan Chase and Bank of America. He previously was a Knight-Bagehot fellow in business and economic journalism at Columbia University and has worked for the Los Angeles Times and the San Francisco Chronicle. Christian can be reached at christian.berthelsen@wsj.com

Crosstie Media Services / Freelance Update
Terry Wooten is now Editorial Director and Owner/Publisher of Crosstie Media Services, providing editing, writing and content development on contract. Terry recently was Consulting Editor for Kitco News, part of Kitco Metals in Montreal, and was Managing Editor, Commodities for Dow Jones Newswires. Terry can be reached at terry.wooten@crosstiemedia.com or found on Twitter at www.twitter.com/crosstiemedia

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jlne.ws/Yyj6J3

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Lead Stories

LCH.Clearnet Taps Ex-J.P.Morgan Executive Amid U.S. Push
Katy Burne – Dow Jones
LCH.Clearnet Group Ltd. announced Wednesday it has hired a chief executive at its new U.S. subsidiary as it gets closer to launching a U.S. derivatives clearinghouse to rival the likes of CME Group Inc. David Weisbrod, the new U.S. CEO, recently served as vice chairman of risk management at J.P. Morgan Chase & Co.
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Regulators Hope for Libor Pacts
DAVID ENRICH And JEAN EAGLESHAM – WSJ.com
Regulators investigating alleged interest-rate manipulation are hoping to reach settlements with at least three major financial institutions by the end of summer, according to a person familiar with the probes.
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A new European tax on financial transactions is set to go global
Washington Post
A new European tax on financial transactions will hit investors worldwide — including in the United States — who buy stocks and bonds of European companies, do business with European banks or engage in any of a broad array of financial activities. Read full article >>
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Hedge-Fund Manager Aurelius Backs J.P. Morgan in MF Global Fight
Joseph Checkler – Dow Jones
A New York hedge-fund manager wants J.P. Morgan Chase & Co. ( JPM ) to go after MF Global Holdings Ltd. over a $928 million claim, echoing J.P. Morgan’s sentiments that a win could improve recoveries for creditors of an MF Global financing subsidiary.
jlne.ws/ZAkVbB

FSA bans short-selling in some Italian stocks
Reuters via Yahoo! Finance
LONDON – The Financial Services Authority has temporarily banned short-selling of Banco Popolare and three other Italian stocks, echoing a move by Italian market watchdog Consob on Tuesday.
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The sad record of fiscal austerity
Martin Wolf – FT.com
At the Toronto summit of the Group of 20 leading economies in June 2010, high-income countries turned to fiscal austerity. The emerging sovereign debt crises in Greece, Ireland and Portugal were one of the reasons for this. Policy makers were terrified by the risk that their countries would turn into Greece. The G20 communiqué was specific: “Advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilise or reduce government debt-to-GDP ratios by 2016.” Was this both necessary and wise? No.
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Takenaka Says Japan Has Best Shot to End Deflation in Decade
Bloomberg
Japan has the best opportunity to beat deflation in more than a decade, said Heizo Takenaka, the architect of policy changes credited with solving the nation’s bad loan problems after a burst real-estate bubble.
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Regulatory

Obama’s SEC Pick Wary of Zealous Wall Street Prosecutions
Bloomberg
As Manhattan’s top federal prosecutor during the 1990s, Mary Jo White could have sought the corporate equivalent of the death penalty: indicting Prudential Securities Inc. for fraudulently marketing $8 billion in ruinous energy partnerships to small investors.
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SEC To Host Credit Ratings Roundtable
The Securities and Exchange Commission today announced that it will hold a Credit Ratings Roundtable on May 14 in response to a recent staff report on credit ratings and related matters.
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FINRA to appeal Charles Schwab class-action ban ruling
Reuters via Yahoo! News
The Financial Industry Regulatory Authority will appeal a ruling that allowed Charles Schwab Corp to require customers to waive their right to participate in class-action suits, a spokeswoman said on Tuesday.
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Statement Of CFTC Commissioner Bart Chilton Before The International Roundtable On Financial Benchmarks, Washington, DC
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CFTC Chairman Gary Gensler To Testify Before The U.S. Senate Committee On Agriculture, Nutrition And Forestry
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CFTC Chairman Gary Gensler’s Opening Remarks At Roundtable On Financial Market Benchmarks
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[France] The Autorité des Marchés Financiers issues a reminder that its name must not be used in any way that might be misleading
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[France] The AMF wishes to reiterate to issuers their obligation to provide information when issuing equity securities or securities giving access to capital of the issuer without a prospectus
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Exchanges & Trading Facilities

Australia Exchange CEO Funke Kupper Plans Hiring for Derivatives
Bloomberg
ASX Ltd. , Australia ’s main exchange operator, will hire at least 25 more people this year to expand its clearing business as the contribution of derivatives to profit expands and equity volume falls.
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CME Group exec chairman leaves door open for possible big deals
Reuters
CME Group Inc Executive Chairman Terrence Duffy said on Tuesday the trading volume growth of the Chicago-based exchange operator is due to its past acquisitions, and suggested the company may yet have appetite for more big deals.
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CME Merger Talks Raise Fee Concern That May Stymie Deal
Bloomberg
CME Group Inc. ’s overtures toward Deutsche Boerse AG are likely to raise the same concern among customers about higher fees that helped scuttle last year’s deal with NYSE Euronext.
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EEX Executes First Flemish EUA Auction
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[CBOE] Restrictions on Transactions in Adjusted Leucadia National Corporation (LUK1)
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Hedge Funds & Managed Futures

Private Equity Seeks European Bank Assets, but Deals Are Slow to Come
MARK SCOTT – NYTimes.com
Private equity is circling Europe’s banks. Faced with bloated balance sheets and efforts to cut back on lending, the Continent’s largest financial institutions offer enticing opportunities for leading firms like Apollo Global Management and Kohlberg Kravis Roberts.
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Calpers to Boost Allocations to Event-Driven, Macro Funds
Bloomberg
The California Public Employees’ Retirement System plans to boost its allocations to event-driven and global macro hedge funds to help reduce the impact of fluctuations in the stock market.
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Fortress Investment Group Posts $107M in Pre-Tax Distributable Earnings for 4Q
Amy Or – WSJ
Fortress Investment Group on Wednesday reported that pre-tax distributable earnings, which represent cash flow to investors, rose to $107 million from $50 million a year ago.
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Fund managers weigh in on Kay Review
Sarah Krouse – Financial News
The Business, Innovation and Skills Committee on Tuesday continued its inquiry into the Kay Review of UK equity markets and long-term decision making, with two sessions attended by senior fund managers and buyside researchers.
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The Fabulous Life Of David Tepper — The Hedge Fund Manager Who Made The Most Money In 2012
Business Insider
David Tepper, the founder of $12 billion distressed debt hedge fund Appaloosa Management, is one of the most successful hedge fund managers in the world.
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Peru Bond Yields Match 2013 High on European Concern; Sol Slips
Bloomberg
Peru’s bond yields rose to match their highest level this year as the election stalemate in Italy renewed concern about Europe’s ability to deal with its debt crisis, diminishing demand for higher-yielding assets.
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Sell currencies of serial QE offenders
Bill Gross – FT.com
Big Macs are out, horsemeat is in … not in burgers perhaps, but at least in the latest headlines. What is rather evident, though, is that my favourite valuation metric for currencies – the relative pricing of Big Macs in individual countries, is being subordinated to the willingness and ability of central banks to print money.
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Big Investors Differ on Gold’s Prospects
GREGORY ZUCKERMAN and MATT DAY – WSJ.com
John Paulson still believes in gold. That has been a painful stance lately. But Monday finally brought some good news for the well-known hedge-fund manager and other gold bulls.
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Barchart.com Launches Equity Option Covered Call Screener
jlne.ws/ZAkWMp

BlackRock Announces Portfolio Manager Changes and Addition of Sub-Advisor to Certain BlackRock Closed-End Funds
jlne.ws/ZAkWMt

Banks & Brokers

UBS Said to Be in Talks With TrueEX for Swaps Execution
Mary Childs and Matthew Leising – Businessweek
UBS AG (UBSN) is in advanced talks to send interest-rate swap orders by its customers to swaps exchange trueEX Group LLC as the bank adjusts to rules under the Dodd- Frank Act, according to two people familiar with the matter.
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Goldman Sachs Electronic Trading Chief Tusar to Leave Company
Bloomberg
Goldman Sachs Group Inc. , which generates the most revenue from equity trading of any bank in the world, said Greg Tusar, global head of electronic trading, will leave after 13 years at the firm.
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JPMorgan cuts 19,000 jobs, calls it a good sign
The Christian Science Monitor
JPMorgan cuts 15,000 jobs from its troubled mortgage sector, citing healthier home mortgages. The other 4,000 job cuts come from consumer banking.
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Morgan Stanley’s Nides Rejoins Firm as Vice Chairman
Dow Jones
Morgan Stanley (MS) said Thomas R. Nides has rejoined the firm, this time as vice chairman, fresh off his stint as Deputy Secretary of State for Management and Resources in the Obama administration.
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Deutsche Bank to redo shareholder meeting
Associated Press via Yahoo! Finance
Deutsche Bank is redoing last year’s shareholder meeting after decisions from it were challenged in court. The extra meeting is slated for April 11 in Frankfurt, Germany.
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Morgan Stanley Posted Trading Losses on 37 Days During 2012
Bloomberg
Morgan Stanley , owner of the world’s biggest brokerage, lost money in its trading businesses on 37 days last year, down from 64 days in 2011 and the fewest since 2007.
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Barclays Could Have 600 Million-Pound Earners
Dow Jones
Barclays is expected to reveal next week that as many as 600 of its staff are paid more than £1 million, in the most detailed disclosure yet about how much its 140,000 employees take home each year, U.K. daily The Guardian reported on its website Tuesday, citing analysts.
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Nomura’s Larkin Said to Quit at Americas Equities Trading
Bloomberg
Nomura Holdings Inc.’s head of Americas equities trading, Jonathan Larkin, is leaving after about a year at the Japanese brokerage, according to two people with knowledge of the matter.
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Jefferies builds banks equity research team
Matt Turner – Financial News
US bank Jefferies, which has been on the lookout for equity analysts covering the European banking sector for the past two years, has finally made its first two hires in the sector.
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Clearing & Settlement

CME Group Clearing Advisory: NYMEX Options Expiration Operational Procedures for the Trading Floor and Clearing Members (OE, OT, OU, OY, JCL, PEP, PML, PSG, CSZ, N9P, PJD, PJN, 9T, 9U, 9V, F, JO, Z) Effective Wednesday, February 27, 2013
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Indexes & Products

FTSE Launches the FTSE Implied Volatility Index Series
jlne.ws/ZAkX37

STOXX Changes Composition Of Benchmark Indices – Results Of The First Regular Quarterly Review To Be Effective On March 18, 2013
jlne.ws/ZAkX39

Technology

FCM360 Joins with TradeStation to Give Institutional Traders One-Stop Low-Latency Solution
FCM360 and TradeStation Institutional have just announced ultra-low latency connectivity and managed hosting solutions for traders that wish to connect to the TradeStation matching engine and execution network.
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Fixnetix Relies On Rackwise DCiM X To Plan Data Center Expansion – Managed Services Provider Utilizes Rackwise To Plan And Manage Expanding IT Infrastructure
jlne.ws/ZAkXjs

FixSpec Launches Innovative Multi-Venue Certification Utility
jlne.ws/ZAkXjv

SIX FinanciaI Information Enhances The DisclosureNet Global Data Coverage
jlne.ws/ZAkXjw

Enforcement

SEC Charges Connecticut-Based Hedge Fund Managers With Fraud
The Securities and Exchange Commission today charged a pair of hedge fund managers and their Connecticut-based advisory firm New Stream Capital with lying to investors about their fund’s structure and financial condition before it failed during the financial crisis.
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Three Charged In Ridgefield Hedge Fund Fraud Case
The Daily Wilton
RIDGEFIELD, Conn. – Three men from a Ridgefield-based hedge fund surrendered to the FBI in New Haven on Tuesday morning after being charged with conspiracy, securities fraud and wire fraud.
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Three Arrested In UK’s Financial Services Authority Insider Dealing Investigation
The Financial Services Authority (FSA), with the assistance of the Metropolitan Police Service, have this morning executed six search warrants in the City of London and Greater London Area. Three men aged 33, 37 and 39 have been arrested and are currently in custody to be questioned in connection with an investigation in to insider dealing and market abuse.
jlne.ws/ZAkXzX

Barclays loses “confidential” treatment of regulatory fight
Reuters via Yahoo! News
WASHINGTON – Details of Barclays’ fight with the U.S. energy regulator over alleged power market manipulation will be made public now that officials have rejected the investment bank’s claim the probe is a publicity stunt
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A Legal Secret Weapon May Help Hold Deloitte US Firm Liable for ChinaCast Fraud
Forbes
ChinaCast was a Delaware company traded on NASDAQ that has a significant number of US investors. The company’s operations, providing post-secondary education and e-learning services, are in China.
jlne.ws/ZAkXA7

Environmental & Energy

Carbon market intrigue after European Parliament vote cancelled
EurActiv
A planned European Parliament vote today (26 February) on fast-tracking negotiations with EU states over carbon market reform was inexplicably cancelled as rumours and counter-rumours swirled around Brussels.
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**RKB — Coverage continues. . .quite a few quotes from the players in this piece.

EU Regulator to Provide Guidance on UN Carbon Offset Treatment
Bloomberg
The European Union’s regulatory arm plans to provide guidelines on its treatment of imported carbon credits following a rule change in the bloc’s emissions trading system, according to a statement published today.
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COLUMN-Bulgaria is a warning on regulated power markets: Wynn
Reuters
Bulgarian street protests over electricity prices illustrate the problems with a regulated approach where several European countries are preparing to step back from fully liberalised markets.
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Asia-Pacific

Mao’s $300 Red Army Liquor Suffers Before China Congress: Retail
Bloomberg
Kong Guoqing hasn’t seen a quieter Chinese New Year in the 12 years his family has been running their small liquor and tobacco shop in downtown Shanghai. They didn’t sell a single bottle of the high-end spirit made by Kweichow Moutai Co. that has become synonymous with banquets and gift-giving during China ’s national holiday.
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KRX To Supply The Philippines SEC With New Market Surveillance System
jlne.ws/ZAkXAf

HKEx 2012 Final Results
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HKEx’s Elaboration On HKEx’s 2012 Results Announcement
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Presentation By HKEx Group Chief Executive Charles Li, Deputy Chief Financial Officer Vincent Kwong And London Metal Exchange Chief Executive Martin Abbott On 2012 Final Results Announcement
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HKFE Announces Revised Margins For Futures Contracts
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Japan Exchange Group: Notice Regarding Cancellation Of Treasury Shares
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Frontier Markets

U.A.E. Central Bank Governor Says New Mortgage Law May Be Eased
Bloomberg
The head of the central bank in the United Arab Emirates said new restrictions on mortgages may be changed after protests by the nation’s lenders.
jlne.ws/ZAl12R

Abu Dhabi Securities Exchange Performance 2012
Click
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Global Market Players Converge In Malaysia For The 24th Annual Bursa Malaysia Palm Oil Conference
Bursa Malaysia will host its 24
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Keynote Address By Ybhg Datuk Ranjit Ajit Singh, Chairman, Securities Commission Malaysia At The Edge-Lipper Malaysia Fund Awards 2013
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Securities Commission Malaysia: World Bank Recognises Malaysia As A Regional Leader In Corporate Governance
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