First Impressions

OptionsCity CEO Hazem Dawani Talks Technology
Sarah Rudolph – John Lothian News

OptionsCity on Monday announced the release of Metro 5.0, the most recent update to its flagship trading and market-making platform.

Last week OptionsCity’s president and CEO Hazem Dawani spoke with JLN’s Sarah Rudolph on the new version of Metro and what’s going on in technology in the options industry.

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***JB: We occasionally like to include stories from some of our other publications to remind our readers that JLN provides a wide variety of market news. Be sure to check our website occasionally to see what is new.

Quote of the Day

“One should not take too much comfort in the fact that long-term inflation expectations are positive”

IMF authors in the story, “The spectre of eurozone deflation”.

Lead Stories

The spectre of eurozone deflation
Martin Wolf –
The European Central Bank is failing to hit its own target for price stability. The difficulty is that the bank’s governing council may be unable to agree on effective measures, largely because of splits on national lines. That might prove very dangerous.

EU Ministers Hold Line on Bank Failures as ECB Sees Risks
Rebecca Christie and Jim Brunsden – Bloomberg
European finance ministers made few concessions to break a deadlock on a bank-failure bill, as the European Central Bank warned that failure to enact it would hinder efforts to combat fragmentation of the financial sector.

Cyprus Names Its Top Auditor to Lead Central Bank
Cyprus on Tuesday appointed Chrystalla Georghadji, an anticorruption watchdog, to replace its central banker, who resigned abruptly a day earlier in the face of tensions with the government.

Lawsky’s Office Starts Taking Applications for the ‘BitLicense’
Paul Vigna – MoneyBeat – WSJ
The New York Department of Financial Services on Tuesday announced it is accepting proposals and applications for what is expected to become the “BitLicense,” a certificate allowing bitcoin-related exchanges to operate in the state. It expects to issue the licenses at some point later this year, marking the first official government oversight of digital-currency businesses.

***JB: And so the regulation begins for something whose primary selling point (for some at least) was a lack of regulation. It was bound to happen eventually and frankly some is probably necessary. I just doubt government will know when to stop.

Climate focus drives demand for ‘green’ bonds
Andrew Bolger –
With billions of dollars of investment required to cope with climate change, the market for “green” bonds that finance environmentally friendly projects has taken off – and is forecast to grow rapidly.

***JB: Shameless plug for the JLN Environmental/Energy Newsletter (we send it out as a daily email too if you prefer receiving it that way). If you are interested in the markets with a focus on the environment it is well worth a daily read. We steer clear of the political posturing and finger pointing surrounding the issue and simply focus on information worthwhile to investors interested in this space.

BlackRock’s Weinstein to Exit as Multisector Bond Head
Alexis Leondis and Elizabeth Stanton – Bloomberg
BlackRock Inc. (BLK)’s Brian Weinstein, head of the business that helps allocate money across all sectors of fixed income for institutional investors, is leaving the firm at the end of June.
Weinstein, who worked at the world’s largest money manager for 13 years, is departing to spend time with his family and reassess his career goals, according to a memo sent to clients by the firm’s co-heads of fixed income in the Americas, Rick Rieder and Kevin Holt.

Demand Stronger Than Expected for Puerto Rico Debt
Faced with strong demand from hedge funds and wealthy individuals, Puerto Rico sold 17 percent more debt on Tuesday than it had originally planned, a sign that the commonwealth still has ample access to the capital markets.

How Retail Bond Investors Can Get Info the Pros Won’t Share
Matt Wirz – MoneyBeat – WSJ
When Robert Kane sold his cyber-security business ten years ago, he wanted to put some of his new cash in municipal bonds. He went looking for an online resource to analyze potential investments, but “there was just nothing out there,” he says. So he built his own.

ETF Outflows Biggest in World on Economy: China Overnight
Elena Popina – Bloomberg
Exchange-traded funds focused on China are posting the world’s biggest outflows amid concern economic growth is slowing.
Withdrawals from U.S.-based Chinese ETFs totaled $87.5 million March 10, the most among 46 nations, bringing this year’s redemption to $380.7 million, according to data compiled by Bloomberg.

Mexico readies 100-year sterling bond
Mexico has begun marketing a new 100-year benchmark bond denominated in sterling in the 6% area, according to one of the lead managers.

Quits lacking => slacking?
Cardiff Garcia | FT Alphaville
Remember the Yellen labour market dashboard? Two of the five indicators she watched carefully before she became Fed chair are in the Jolts report, one of which is the quits rate (the hiring rate is the other).

Steady state of the great rate wait
Dan McCrum | FT Alphaville
Rainbows are always just over the horizon, the recovery is around the corner, and interest rate hikes are always two years away. That timescale tends toward the far enough that we won’t start to discount it just yet, but close enough that we can claim to be anticipating it.

Scottish deficit adds to independence fiscal concerns
Mure Dickie and Sarah O’Connor –
Scotland had a wider government deficit than the UK as a whole in 2012-13, according to official data that underline concerns about the nation’s fiscal prospects should it vote for independence in September.

Central Banks

Draghi Hones ECB Rate Guidance With Economic Gauge to Watch
Jana Randow and Alessandro Speciale – Bloomberg
The European Central Bank has honed its forward guidance on interest rates by giving investors a new economic gauge to watch.
In the past week, ECB President Mario Draghi, Vice President Vitor Constancio and Executive Board member Sabine Lautenschlaeger have all cited the so-called output gap as a reason why the 18-nation euro area will need low rates even after growth and inflation pick up.

Is the BOE Determined to Be Behind the Curve?
MoneyBeat – WSJ
How far behind the inflation curve will the Bank of England be when it starts to hike rates? The consistent message from the Bank itself is that it won’t start until a substantial part of the economy’s remaining spare capacity is used up.

Bank of England Governor Pledges More Integrity After Currency Inquiry
The Bank of England’s reputation is at stake as its independent directors conduct a review into whether bank officials knew of or condoned potential manipulation of the currency markets, Mark J. Carney, the bank’s governor, told lawmakers on Tuesday.

***SR: The story quotes Carney saying the bank must be beyond reproach, therefore it “has adopted stricter policies requiring employees to escalate internally any reports they receive of improper conduct…” So, now they have to report improper conduct? Did the bank not have to be “beyond reproach” before this?

Exclusive: China central bank ready to cut bank reserves if growth falters – sources
China’s central bank is prepared to take its strongest action since 2012 to loosen monetary policy if economic growth slows further, by cutting the amount of cash that banks must keep as reserves, sources involved in internal policy discussions say.


SGX Introduces RMB FX futures
Singapore Exchange (SGX) will introduce a new set of Asian currency futures to expand its current suite of foreign exchange (FX) futures in the third quarter of 2014, subject to regulatory approval. The new Asian FX suite includes currency futures contracts on Chinese renminbi (RMB), Japanese yen and Thai baht follows closely after the initial launch of six FX futures contracts in November 2013, which have seen over US$1 billion in notional value traded in the four months since it began trading.

Offshore Yuan Breaks Eight-Month Low
Anjani Trivedi – MoneyBeat – WSJ
Global investors are souring on the yuan, sending the currency in offshore markets to its weakest level in more than eight months Wednesday, in line with its falling onshore counterpart as China continues its campaign to send it lower.

Currency traders mourn loss of volatility
Delphine Strauss –
Political crises and central bank action have played havoc with emerging markets currencies since the start of the year. But for many investors in the foreign exchange market, the bigger problem has been the unnatural calm prevailing in major currency pairs.

CFTC Studying Jurisdiction Over Bitcoin
MoneyBeat – WSJ
The Commodity Futures Trading Commission is looking at whether the agency has jurisdiction over bitcoin and other virtual currencies, the agency’s top official said.

***JM: What if we just declare Bitcoin to be a food. Then the FDA can regulate it and we’re good to go.

A Reminder of Why the FX Fix Exists
Katie Martin – MoneyBeat – WSJ
One issue that kept coming up in the Mark Carney’s parliamentary committee hearing on FX Tuesday: Why is it OK for banks to trade FX around the fix? Why is it tolerated at all?

BitBeat: Bitcoin Is Risky (In Case You Didn’t Know)
MoneyBeat – WSJ
You don’t need Albert Einstein’s brain, or Albert Edwards’s brain, or even Edward Grimley’s brain, to realize that bitcoin is a risky investment. Anything that goes from $10 to $600, back to $180, to $1,200, and then back to $600 in a span of 14 months is not exactly what you’d call stable.

Bitcoin Entrepreneur Readies Australia Listing for New Venture
Stephen Bell – MoneyBeat – WSJ
Bitcoin may have gotten a bad rap recently with the collapse of a major Japanese trading platform, but it isn’t stopping investors who see a bright future for the crypto-currency from trying to cash in.

Indexes & Index Products

SGX to launch options on China A50 futures
Singapore Exchange (SGX) aims to launch SGX FTSE China A50 Index options in the third quarter of 2014 to cater to the risk management needs of global investors, and in response to supportive industry feedback. Subject to final regulatory approval, the new contract will be listed as options on the SGX FTSE China A50 Index futures (SGX China A50 futures).

Platinum ETF holdings hit record high
Platinum holdings in physically backed exchange-traded funds have hit a record high after fresh inflows into funds listed in London and Johannesburg, and are set to rise further as a strike in major producer South Africa grinds on.


AIS Capital Management Sues Gold-Fix Banks
Francesca Freeman –
A U.S. investment-management firm is suing the five banks that set the London benchmark gold price, alleging that they conspired to manipulate the price of gold for their own gain.

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