First Read

IOMA Notes – Clearing Things Up
Doug Ashburn in Kuala Lumpur, JLN

While readers in the EMEA and Americas regions slept, the World Federation of Exchanges kicked off its annual IOMA conference in Kuala Lumpur, Malaysia. For those unfamiliar with IOMA, it began in 1983 as the International Options Market Association, and in 2002 became affiliated with the WFE. The focus of the conference has drifted over the years and its sessions are now squarely centered on the post-trade derivatives space – clearing, settlement, blockchain, systemic risk, and the panel I am moderating, trade reporting.

Is a name-change imminent? At the opening reception, I could count on one (maybe two) hands the number of options practitioners in the room. The trouble is that the name still has tremendous brand equity, and walking away from a storied name with a storied past is a daunting proposition. Perhaps we should arrange a conversation between the WFE and Dan Day-Robinson, who last year changed the name of the iconic SFOA to the International Commodities and Derivatives Association

CCP clearing is a chief topic of conversation at this year’s conference. If the issues could be boiled down into one overarching bullet point, it would be this: Tremendous progress has been made in the migration of OTC markets into central clearing, but the recent equivalency decision between the US and the EU is the tip of a global harmonization iceberg. Plus, though the clearing model has served the futures markets well through the last several crises, when all is said and done, we will not know for sure how much safer we are until the first time an entity needs an orderly wind-down.

Read the rest of the commentary, HERE

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One systemic issue on the minds of WFE delegates is Brexit, which recent polls show is running close to even. Whilst sipping a gin and tonic last night and watching Leicester City pull off a tie against West Ham on a penalty kick 4 minutes into added time, it was explained to me that the fate of Britain’s inclusion in the EU may reside with the football crowd. The Brexit vote, you see, is scheduled for June 23, just after the first stage of the European Championship. If Britain is eliminated before the knockout stage, anti-European sentiment will be running high, and their anger may be vented at the polling place.

How about that for a high-stakes game?

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2016 Exchange CEO Series: CurveGlobal’s Michael Davie Looking For New Twist On Interest Rates
JohnLothianNews.com

New exchanges are looking to disrupt the status quo or add value to the marketplace. And CurveGlobal, a subsidiary of the London Stock Exchange Group, is planning to do both when it launches later this year.

While much is being made of the LSEG’s potential merger with Deutsche Boerse, Curve Chairman Michael Davie told JLN at the FIA Boca conference that the exchange is focused on continuing its work to pull the exchange and its customer base together.

The exchange has seven banks on board to date with a plan to launch in Q3.
Watch the video »
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NLX chief Crosswell steps down to join board
by Alice Atwood – FOW
Global exchange group Nasdaq has restructured the leadership team of its European futures exchange, NLX, with executive officer Charlotte Crosswell to take on a new board member role as CTO Carl Slesser steps up as president. Crosswell, who let the exchange since its inception, will step down on May 1, according to a memo seen by FOW.
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*****Ms. Crosswell will stay on as a Nasdaq employee, JLN has learned.

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CME GROUP TRADING CHALLENGE: WHERE ARE THEY NOW?
By Evan Peterson – CME Open/Markets
Over the last 13 years, the CME Group Trading Challenge has hosted students from hundreds of colleges and more than 40 countries.
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***** Some are in trading, some are not, but all are exceptional.

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Deutsche Boerse sees Brexit risk for potential US suitors for LSE
Reuters
A British vote to leave the European Union could be a threat to any rival bidder from the United States for the London Stock Exchange but would not undermine the planned $30 billion merger between Deutsche Boerse and LSE, the German exchange’s finance chief said in “Euro am Sonntag”.
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***** Not only is Brexit a risk, but so is inaction.

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A Little Fuzzy on Brexit? A Two-Minute Video Explainer; Polls suggest the vote in Britain could go either way.
Robert Hutton – Bloomberg
Don’t know your Schengen Agreement from your subsidiarity? The referendum on a British exit from the European Union, or Brexit, can be a trifle confusing.
goo.gl/EGwwrT

***** The next big theme will be MEXIT, where Donald Trump will try to disconnect Mexico from the U.S.

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This finance trend is so hot even Amazon wants in
BI Intelligence
The arrival of the age of fintech is about to shake up the financial services world as we know it. Traditional powerhouses are already trying to figure out ways to co-exist with startups that are disrupting aging models. Look no further than the rise of mobile and digital banking and the declining relevance of brick-and-mortar banks, particularly among millennials, for evidence of that fact.
goo.gl/Cx6TZb

***** It is the strangest thing; now derivatives trades show up in my Google search sponsored links from what I was looking for on Amazon.

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Why You Should Clean Up Your Desk, but Not Too Much; There’s a sweet spot for the amount of clutter that makes you work well. Too little is as bad as too much.
Seth Porges – Bloomberg
If you’ve ever scoffed at a colleague’s messy desk, it should come as no surprise that clutter on the job can invite shame. A survey by the hiring firm Adecco found that 57 percent of workers admitted to judging their peers by the cleanliness of their workspace. Another Adecco survey found that nearly one-third of workers said people who left desks and common spaces messy were their single biggest office annoyance.
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***** I am not saying who has a messy desk, but his name rhymes with John.

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Art market ripe for abuse, say campaigners
Josh Spero and James Pickford – FT
The art world has become increasingly secretive and opaque in the past two years, according to the main authority on the industry, and it is now difficult to know even the size of the market.
goo.gl/GcbmbC

***** Jeff Bergstrom’s commentary on Blockchain addressed how it might help the art world. Of course, a fraud is still a fraud.

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Friday’s Top Three
Our top story Friday was one of our own and, it is gratifying to note, on top by a long shot was What is Blockchain? The second most read story was ‘I interviewed over 100 people at Goldman Sachs, and this was the biggest mistake job candidates made’. Interviewing tips are always worthwhile. Last was the story Tudor Investors Ask to Pull More Than $1 Billion From Firm. Hope everyone had a good weekend!

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Lead Stories

Commodity futures lead charge in exchange-traded derivatives
Philip Stafford – FT
Trading in commodity and currency derivatives surged on the world’s exchanges last year as traders in emerging economies used futures to hedge themselves against rising market volatility.
goo.gl/Kei244

SEC faces opposition to planned share trading rules change
Nicole Bullock in New York – FT
US markets regulators are facing fresh opposition to their plans to amend stock trading rules that could pave the way for the approval of the trading venue IEX Group as a new exchange.
goo.gl/IqQVJ7

BATS Shares Climb in I.P.O., Marking Year’s Biggest Deal
By LESLIE PICKER – NY Times
Shares of BATS Global Markets began trading on Friday, claiming the title of the largest deal of the year so far, though the exchange operator’s biggest feat was avoiding technical problems like those that doomed its first attempt to go public four years ago.
goo.gl/sQ54hO

MIAX Options Exchange Announces Promotion of Shelly Brown to Executive Vice President
MIAX
MIAX Options Exchange, a wholly-owned subsidiary of Miami International Holdings, Inc. (MIH), today announced the promotion of Shelly Brown to Executive Vice President, Strategic Planning and Operations, effective immediately. He will continue to remain responsible for business strategy and functionality requirements as well as establishing and maintaining client relationships for MIAX Options and MIAX PEARL, MIH’s second options exchange, following its expected launch in late 2016, subject to SEC approval. Shelly will also continue in his role as a Senior Vice President of MIH.
goo.gl/XWwBu9

SEC Seen Likely to Approve New IEX Stock Exchange; IEX has probably satisfied concerns about how the market would operate, says Finra’s Richard Ketchum
By DAVE MICHAELS – WSJ
The Securities and Exchange Commission is likely to approve a startup stock exchange proposed by IEX Group Inc. despite months of lobbying by Wall Street firms that have sought to block its launch, according to a senior brokerage industry regulator.
goo.gl/0yUjjG

Brexit vote could not see merged London Stock Exchange group’s headquarters moved from UK to Germany, sources close to deal confirm
William Turvill – City AM
Sources close to the London Stock Exchange-Deutsche Boerse deal have dismissed the prospect of the merged company having its headquarters outside of the UK in the event of a Brexit.
goo.gl/D8TD6b

The World Federation of Exchanges Releases 2015 Derivatives IOMA Market Survey; Exchange traded derivatives volumes rose 12%; Equity derivatives retain top slot but currency and commodity derivatives show largest volume growth.
WFE
The World Federation of Exchanges, which represents more than 200 market infrastructure providers including exchanges and CCPs, today released the IOMA 2015 Derivatives Market Survey. The report was released at the WFE’s IOMA Post-Trade & Derivatives Conference hosted by Bursa Malaysia in Kuala Lumpur April 17-19.
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SGX aims to be multiasset exchange
YUI NAKAMURA, NQN and MAYUKO TANU – Nikkei
Amid consolidation among major global bourses, Singapore Exchange has decided to pursue an altogether different strategy from many of its peers. One of its focuses will be to offer new derivative products in the hope of tapping investor demand.
goo.gl/y0Ffqw

EU Weighs Softer Derivatives Rules as MiFID Delay Bogs Down
Silla Brush, John Detrixhe – Bloomberg
Dutch proposal to member states on delay obtained by Bloomberg; Paper sets out changes on derivatives and other trading rules
Banks and asset managers moved closer to winning easier rules for derivatives as European Union member states signaled support for amending regulations as part of a delay in the wider law that revamps oversight of trading across the continent.
goo.gl/hZCUZz

FCA study on high-frequency trading provides few answers
Philip Stafford – FT
A paper by the UK markets regulator appeared to have a definitive answer to one of modern trading’s most cryptic conundrums: do high-frequency traders prey on other market participants?
goo.gl/0BGmE4

US regulator who has biggest banks in his sights
Barney Jopson in Washington – FT
Forty years before Tom Hoenig reached the upper echelons of bank regulation, he was drafted to fight in the Vietnam war. A talented mathematician, he was put to work in an artillery unit doing the calculations that gun crews needed to hit their targets. Today he has a different foe in his sights: the US’s biggest banks.
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Paul Constantinou to bolster Contango sales team
Contango
Contango, the specialist derivatives consultancy, is delighted to announce that Paul Constantinou will be working with its sales and business development team, with a specific emphasis on Technology.
goo.gl/v72vc6

G20 top nations warn against reliance on low interest rates
Chris Giles in Washington – FT
The world’s top financial leaders have warned that low interest rates alone were not the solution to returning the fragile global economy to stable growth.
goo.gl/8G6Brf

FXCM Slashes Targets Executives Must Hit to Collect Bonuses
Caleb Melby – Bloomberg
FXCM Inc., the currency-trading firm bailed out by Leucadia National Corp., cut by half the profit target its executives need to hit to collect bonuses.
goo.gl/RNIY4W

Shrunken Citigroup Illustrates a Trend in Big U.S. Banks
By NATHANIEL POPPER and MICHAEL CORKERYA – NY Times
Citigroup became the nation’s first megabank some two decades ago by expanding into new businesses while pushing to knock down barriers that limited its size.
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Brexit doubts slow UK business activity
Sarah Gordon, Business Editor – FT
Uncertainty over the outcome of Britain’s EU referendum is having a chilling effect on business activity, with companies pulling back on hiring and investment across sectors from real estate to recruitment.
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Regulatory

Nuts and bolts of Treasury’s view of Brexit
Chris Giles, Economics Editor – FT
The Treasury will publish details of its long-term economic assessment of EU membership on Britain’s economy and prosperity on Monday, but the approach the Treasury has taken is clear from a George Osborne article in the Times.
goo.gl/iwWLZs

SEC Charges Litigation Marketing Company With Bilking Retirees
SEC
The Securities and Exchange Commission today charged a Los Angeles-based litigation marketing company and its co-founders with defrauding retirees and other investors who were told their money would be used to help gather plaintiffs for class-action and other lawsuits and they would earn hefty investment returns from settlement proceeds.
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G-20 Threatens Penalties on Tax Havens After Panama Papers
Andrew Mayeda, Mark Deen – Bloomberg
Finance chiefs call on jurisdictions to adopt transparency; G-20 strikes less alarmed tone on growth as markets rebound
Group of 20 economies threatened to penalize havens that don’t share information on their banking clients after the leak of the Panama Papers provoked a global uproar over tax evasion.
goo.gl/g0z9WV

Bridging the Week by Gary DeWaal: April 11 – 15, and 18, 2016 (Business Conduct; CCOs; HFTs; Suspense Accounts; Customer Reserve Accounts; More Money)
By Gary DeWaal, Katten Muchin Rosenman LLP
Substantially after the Commodity Futures Trading Commission adopted and implemented similar rules, the Securities and Exchange Commission finally approved business conduct rules as well as requirements related to chief compliance officers of security-based swap dealers and major security-based swap participants. However, the two agencies’ rules are not fully aligned. In addition, the UK Financial Conduct Authority issued a report concluding that, at least in London, there is no evidence that high-frequency traders are front running other market participants because of speed advantages in receiving order information. As a result, the following matters are covered in this week’s edition of Bridging the Week:
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Self-Regulatory Organization (SRO) Rulemaking and National Market System (NMS) Plans
SEC
<ul.

  • BATS: Order Granting Approval of a Proposed Rule Change, as Modified by Amendment Nos. 1, 2, and 5, to List and Trade Shares of the REX VolMAXX Long VIX Weekly Futures Strategy ETF and the REX VolMAXX Inverse VIX Weekly Futures Strategy ETF of the Exchange Traded Concepts Trust (Release No. 34-77620; File No. SR-BATS-2015-124; April 14, 2016)

 

  • BatsEDGX: Notice of Filing of an Advance Notice Related to the Adoption of an Options Exchange Risk Control Standards Policy (Release No. 34-77628; File No. SR-OCC-2016-801)

 

  • BatsEDGX: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees as they Apply to the Equities Options Platform (Release No. 34-77631; File No. SR-BatsEDGX-2016-09)

 

  • BatsBZX: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Modify the Fee Schedule Applicable to the Exchanges Options Platform (Release No. 34-77632; File No. SR-BatsBZX-2016-06)

 

  • CBOE: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend the Fees Schedule (Release No. 34-77621; File No. SR-CBOE-2016-031; April 14, 2016); see also Exhibit 5

 

  • FINRA: Notice of Designation of Longer Period for Commission Action on a Proposed Rule Change to Adopt FINRA Rule 4554 (Alternative Trading Systems – Recording and Reporting Requirements of Order and Execution Information for NMS Stocks) (Release No. 34-77635; File No. SR-FINRA-2016-010)

 

  • ICC: Notice of Filing of Proposed Rule Change to Update and Formalize the ICC Stress Testing Framework (Release No. 34-77633; File No. SR-ICC-2016-005)

 

  • ICEEU: Notice of Designation of Longer Period for Commission Action on Proposed Rule Change Relating to Additions to Permitted Cover (Release No. 34-77634; File No. SR-ICEEU-2016-004)

 

  • NASDAQ: Notice of Designation of a Longer Period for Commission Action on Proposed Rule Change Relating to the Listing and Trading of the Shares of the iSectors Post-MPT Growth ETF of ETFis Series Trust I (Release No. 34-77623; File No. SR-NASDAQ-2016-028; April 14, 2016)

 

  • NASDAQ: Order Granting Approval of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Relating to the Listing and Trading of the Shares of the First Trust Alternative Absolute Return Strategy ETF of First Trust Exchange-Traded Fund VII (Release No. 34-77619; File No. SR-NASDAQ-2016-021; April 14, 2016)

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Exchanges & Trading Facilities

Bats shares surge amid successful listing
Nicole Bullock in New York – FT
Bats Global Markets traded without incident on Friday and achieved a coveted double-digit “pop” — a stark contrast to the exchange’s botched listing four years ago.
goo.gl/ZQj1VV

Witbe lists on Alternext Paris to step up its international expansion; EUR15.4 million raised, market capitalisation EUR37.1 million
Euronex
EnterNext, the Euronext subsidiary dedicated to promoting and growing the market for small and medium-sized companies (SMEs), today announced the first day of trading on Alternext Paris of Witbe, a technology company that analyses the quality of experience (QoE) delivered to end-users by digital service providers.
/goo.gl/NfkYMJ

London bourse to launch trading in Chinese depositary receipts – sources
BY MICHELLE PRICE AND ENGEN THAM – Reuters
The London Stock Exchange (LSE) will launch trading of global depositary receipts (GDR) of Chinese companies next year, kicking off a partnership between the bourse and its Shanghai counterpart, sources with knowledge of the matter said.
goo.gl/6fIH1P

SGX welcomes Acromec to Catalist
SGX
Singapore Exchange (SGX) today welcomed Acromec Limited (Acromec) to Catalist under the stock code “43F”.
goo.gl/YkbEso

Technology

Banks to boost financial technology projects in Asia-Pacific as China drives investment
South China Morning Post
Major banks are poised to escalate their participation in financial technology (fintech) projects across Asia-Pacific as mainland China continues to drive these investments in the region, according to industry experts.
Global management consulting company Accenture has estimated that fintech investments in Asia-Pacific grew 517 per cent in the first quarter to US$2.7 billion, up from US$445 million in the same period last year, on the back of initiatives in the world’s second-largest economy.
goo.gl/xWgdRg

Fintech revolution will augment the reality of modern-day banking
Silicon Republic
There are some who believe the disruptive forces of fintech threaten the banking world. The reality is fintech could help banks reinvent themselves, writes John Kennedy.
/goo.gl/jjExY0

Applications Open For Accentures Asia Pacific Fintech Innovation Lab 2016
EconoTimes
Accenture has started accepting applications for Asia-Pacific’s third annual FinTech Innovation Lab – the 12-week program that helps early- and growth-stage fintech companies accelerate product and business development by gaining exposure to top financial institution executives. Those interested to participate can apply till May 31, 2016.
goo.gl/p3yIYZ

FX data referee sets up its own pitch for big players
By Mike Foster – Financial News
New Change FX, which provides currency trading price data to institutional investors, is setting up a platform for clients to swap their foreign exchange exposures.
goo.gl/ZHnnFK

Politics

Both Hillary And Bernie Are Wrong About Dealing With Too Big To Fail Banks
Tim Worstall – Forbes
The debate in New York yesterday seemed to see Hillary Clinton retreating from what had been her reasonably sensible policy to deal with too big to fail banks (tax them into compliance, as President Obama has also proposed). Bernie Sanders also doubled down on his insistence that it is regulations that we need to sort this problem out for us. And there’s no doubt that we do have a problem here. We really don’t want there to be organisations out there which, if they fail, bring the entire financial system down into a pile of smoking rubble. It’s rather the point of a market and capitalism based system that sure, people who get things right get to make a lot of money. But we do need that other side to it, that those who get it wrong lose theirs. Being too big to fail means being able to get it wrong and yet being bailed out to get it wrong again. Just not what we want the system to be doing at all.
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Hedge Funds & Managed Futures

McGraw Hill to sell J.D. Power to XIO Group
BY LIANA B. BAKER AND SUDARSHAN VARADHAN – Reuters
McGraw Hill Financial Inc (MHFI.N) agreed on Friday to sell car rating unit J.D. Power and Associates to buyout firm XIO Group for $1.1 billion in a move set to expand the well-known brand into Asia given XIO’s links to the region.
goo.gl/jK5nwh

T. Rowe Price Marks Down Most of Its Tech Startups; Baltimore firm cut the values of its stakes in 12 companies valued at $1 billion or more
By ROLFE WINKLER – WSJ
T. Rowe Price Group Inc. marked down in the first quarter most of its investments in private technology companies, including Uber Technologies Inc. and Dropbox Inc., deepening Silicon Valley’s woes as mutual funds pull back on their startup bets.
goo.gl/yQXNRj

Chesapeake’s Winning Trade
By Liam Denning – Bloomberg Gadfly
Chesapeake Energy is not a name you associate with “winner” these days. “Doomed,” perhaps; “survivor” if you’re feeling generous (or own the stock.) But “winner?”
goo.gl/RgZsKO

EU’s Hard Line on Soft Dollars May Push US Investment Managers to Stay Home
By George Bollenbacher, Capital Markets Advisors via Tabb Forum
Soft dollars have been a significant contributor to the bottom lines of many investment managers. With the most recent delegated directive under MiFID II, however, European regulators have mandated major changes to the use of soft dollars. While this has been the No. 1 topic of conversation among IMs in Europe, it also has a significant impact on IMs in the US (or anywhere else that allows soft dollars).
goo.gl/24dylv

Man Group’s AHL fund steps up AI push
Robin Wigglesworth in New York – FT
Man Group’s computer-powered AHL hedge fund plans to ratchet up its investment in “machine learning”, a hot new area of artificial intelligence that is garnering increasing attention in the investment industry.
goo.gl/ReAzsQ

Wall Street Veterans Bet on Low-Income Homebuyers
By ALEXANDRA STEVENSON and MATTHEW GOLDSTEIN – NY Times
As the head of Goldman Sachs’s mortgage department, Daniel Sparks helped make the bank more than a billion dollars betting against the market as housing prices began to crash in 2007.
goo.gl/A5P14h

Fund managers struggle with image problem
By Andrew Pearce – Financial News
Executives at fund managers representing over £1.2 trillion in combined assets have delivered a damning indictment of their industry’s public image.
goo.gl/T5ttmq

Banks & Brokers

Morgan Stanley’s top stock strategist blows up everyone who thinks they’re just so smart
Myles Udland – Business Insider
Morgan Stanley’s Adam Parker has heard enough from self-styled contrarian investors.
goo.gl/gxHV8H

GOLDMAN SACHS DECLARES PREFERRED STOCK DIVIDENDS
Goldman Sachs
The Goldman Sachs Group, Inc. (NYSE: GS) today announced that it has declared dividends on the following series of its non-cumulative preferred stock (represented by depositary shares, each representing a 1/1,000th interest in a share of preferred stock, except for the Series L and Series M preferred stock in which each depositary share represents a 1/25th interest in a share):
goo.gl/3jc2Sq

UBS to now pay $69.8 million in U.S. credit union settlement
Reuters
UBS AG is now expected to pay $69.8 million to resolve a U.S. regulator’s lawsuit alleging it sold toxic mortgage-backed securities to corporate credit unions that later failed, according to a Friday court filing.
goo.gl/PRioaA

Citigroup Plans to Eliminate Shrinking Citi Holdings Unit
Dakin Campbell – Bloomberg
Citigroup Inc. said it will no longer break out results for Citi Holdings after this year. The so-called bad bank was created in 2009 by then-Chief Executive Officer Vikram Pandit to house about $600 billion of troubled businesses and toxic assets. The company has since whittled that to $73 billion. “Winding down Holdings has been a longtime goal and shows Citi’s progress in becoming a simpler, smaller, safer and stronger institution,” CEO Mike Corbat, who ran the unit before succeeding Pandit, said Friday in a statement.
goo.gl/vGfG15

Conference Call Narcolepsy
By Michael P Regan – Bloomberg Gadfly
Apr 15, 2016 12:06 PM CDTAll available evidence seems to signal that most of Wall Street fell asleep while listening to banks’ earnings conference calls this week.
goo.gl/Htyx7n

TD Asset Management moves with banking industry’s ‘seismic shift’
DAVID BERMAN – BANKING REPORTER – The Globe and Mail
Soon after Toronto-Dominion Bank returned to the exchange-traded fund business with the launch of six funds late last month, speculation immediately turned to what the bank would introduce next. Is a TD robo-adviser in the works?
goo.gl/7O5nX7

Interactive Brokers Group Set Up for a Strong 2016; Growth in customers, client equity, and a stable stock market should make for a strong start to the year at Interactive Brokers Group.
Motley Fool
The monthly update Interactive Brokers Group (NASDAQ:IBKR) gives investors shows that it continued its steady account growth in the first quarter. And when the company reports first-quarter 2016 earnings on Tuesday, April 19, after the market closes, we’ll get an idea of what that meant for earnings.
goo.gl/JfrTI7

Why megabanks do not want to think about death
Jonathan Ford – FT
It isn’t just humans that shrink from the thought of their own mortality. Banks too have an aversion to dwelling on the possibility of their eventual demise.
goo.gl/gnHgdE

Clearing & Settlement

NASDAQ CLEARING COMPLETES FIRST ROUND OF OTC PORTFOLIO COMPRESSION SERVICE
NASDAQ
288 billion SEK in notional eliminated in Nasdaq Clearing’s first compression run for Interest Rate Swaps (IRS); In connection with the compression, backloading into Nasdaq Clearing (registering of historical trades to clearing) was commenced for part of participating members’ SEK IRS portfolios
Nasdaq announced today that a compression session in collaboration with TriOptima and several Nordic banks has been carried out for the majority of the Nordic banks. Five clearing members eliminated 288 billion SEK in the first compression cycle for SEK interest rate swaps (IRS) at Nasdaq Clearing.
goo.gl/kCcxeu

LCH-JSCC basis rockets for cleared yen swaps; Cost of receive-fixed swaps at JSCC jumps fivefold in a week
Tom Osborn and Lukas Becker – Risk.net
The relative cost of clearing yen interest rate swaps at the Japan Securities Clearing Corporation (JSCC) compared with LCH blew out significantly this week, with the price of a 10-year receive-fixed swap at the Japanese clearing house jumping nearly fivefold. The blowout is thought to have been caused by an oversupply of receive-fixed swaps from Japanese banks at the JSCC, which has left clearing banks having to hedge at LCH, and requiring two initial margin funding requirements. “Dealers are…
goo.gl/33s1Eo

Mifid II transparency rules pose swaps pricing challenge; Isda AGM: dealers fear pre-trade transparency could lead to front-running of hedges
Lukas Becker -Risk.net
Dealers fear a low pre-trade transparency size threshold in Europe’s electronic execution rules will lead to front-running when they try to hedge over-the-counter derivatives, making pricing a challenge and potentially increasing costs for end-users. “The reason we’re concerned about pre-trade transparency is we believe it has the biggest impact on price,” said Mario Muth, global head of rates eTrading sales at Deutsche Bank, speaking at the International Swaps and Derivatives Association’s 31st…

Regulatory intervention triggers complicate CCP resolution; Isda AGM: Role of supervisors will vary for each situation, say market participants
Catherine Contiguglia – Risk.net
Uncertainty over the appropriate timing for regulatory intervention could make it impossible to standardise recovery and resolution protocols for clearing houses, say bankers and regulators. Regulators are currently trying to produce standards for resolution and loss allocation processes for central counterparties (CCPs) in the case of member defaults or operational non-default losses. However, as work progresses, some are coming out in favour of more bespoke approaches, particularly on the appropriate…
goo.gl/dSRBPQ

Indexes & Products

ETF Investors Were Skittish Ahead Of Brazil Impeachment Vote
Todd Shriber, ETF Professor , Benzinga Staff Writer
Ahead of Sunday’s vote by Brazil’s lower house of congress to impeach President Dilma Rousseff, exchange traded funds investors did not scamper into ETFs tracking Latin America’s largest economy in big numbers.
As of 12 a.m. Eastern time, 439 votes had been cast in Brazil’s lower congressional body with 321 voting in favor of impeachment. The number needed to move the vote over to Brazil’s senate is 344. Once the senate considers Rousseff’s fate, a simple majority is all that is needed. The vote to impeach Rousseff took place less than 110 days from Brazil’s hosting of the 2016 Summer Olympics.
goo.gl/pPCPe6

Japan quants rush to please BOJ and excite normal investors
by Anna Kitanaka – Bloomberg
A man walks into a tailor, orders a custom-made suit and then says he’s bound by his own rules to only buy half of it. Sell the rest to someone else, he says.
That, essentially, is the conundrum facing S&P Dow Jones Indices, except that instead of a suit, it’s designing a stock gauge to the specifications of the Bank of Japan.
The central bank wants to buy baskets of shares based on indexes that pick companies partly on whether they raise wages. Salaries are a key battleground in the BOJ’s efforts to spur inflation, and firms have so far been hard to budge.
goo.gl/kFlXUB

Enforcement

Tabernula trial jury hears defendant traded on ‘free advice’
Caroline Binham, Financial Regulation Correspondent – FT
There is no evidence that the “odd” middleman nicknamed “Nob”, who was once a consultant to top retailers Lord Rose and Sir Philip Green, ever knew he might be in possession of inside information, the jury in the UK’s most high-profile case of insider trading has heard.
goo.gl/IwrQLH

Environmental & Energy

Wall Street’s Oil Crash, a Story Told in Charts
Asjylyn Loder – Bloomberg
Big banks add $2 billion for energy loan losses in 1Q; Oil woes at JPMorgan, Citigroup, Bank of America, Wells Fargo
This is what it looks like on the down side of the biggest oil boom in U.S. history.
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Bill threatens Polish wind power, warns industry
By Henry Foy in Warsaw and Pilita Clark in London – FT
Poland’s thriving wind energy industry has warned that it faces bankruptcies, rapid divestment and an end to growth under a bill that threatens executives with prison.
goo.gl/Uts3ye

Talks on oil freeze collapse under Saudi opposition
Anjli Raval in Doha and David Sheppard in London – FT
Attempts by some of the world’s biggest oil producers to freeze output ended without a deal on Sunday night, after Saudi Arabia insisted Iran should be part of any agreement.
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Asia-Pacific

People: Nomura names new group chief operating officer; Citi loses forex algo director; BNPP’s metals head relocates to Singapore; new appointment at Malaysia central bank
Asia Risk staff – Risk.net
Nomura has named Tetsu Ozaki, chief executive of the Japanese bank’s wholesale division, as its new group chief operating officer (COO) – one of a series of changes recently made to senior management by Tokyo-based chief executive Koji Nagai.
goo.gl/92EhOi

Japan’s pitch for FX action meets cool G20, U.S. response
BY LEIKA KIHARA – Reuters
Japan’s efforts to seek informal consent to act against an unwelcome yen rise bore little fruit, with the United States offering a cool response to concerns voiced by Tokyo that the currency’s gains are too sharp and may justify intervention.
goo.gl/VmKfDj

Frontier Markets

New ‘scramble’ for Africa
The Southern Times
The third India-Africa summit which opened this week to deepen economic cooperation between the Asian country and the continent, is another testimony of a renewed scramble for Africa which is increasingly becoming the major focus of both former colonial powers and emerging economies desperate for commodities and influence.
Just last year, major summits for Africa were hosted by the United States, Turkey and the European Union. Three more will be held before the end of the year.
goo.gl/xDTGHD

Boldly going: the exotic ‘frontier’ markets that intrepid investors are tipping for take-off
Yahoo Finance
It was 15 years ago that academics began to predict a shift in economic power from the old order of developed economies to the newly named “Bric” nations.
Ever since, Brazil, Russia, India and China have been regarded as the coming powers, blessed with young populations, fast-urbanising societies and natural resources to fuel rapid growth.
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Sebi begins audit of NSEL brokers; The audit will also check whether there was mis-selling of NSEL products with promise of assured returns.
Jayshree P. Upadhyay – Livemint
Mumbai: The Securities and Exchange Board of India (Sebi) has started an audit of the brokers that sold products of National Spot Exchange Ltd (NSEL), two people directly familiar with the matter said.
goo.gl/4Zxx36

Brazil’s Rousseff faces impeachment vote
By: Yoel Minkoff, SA News EditorBrazil’s lower house of Congress is gearing up for a crucial vote today on whether to impeach President Dilma Rousseff on charges of manipulating fiscal numbers, in a decision that could hasten the end of 13 years of Workers Party rule.
The recent political turmoil has seen the approval ratings of the leftist president plunge as low as 9%, and Brazil’s economy dip into its worst recession in generations.
goo.gl/QEgtGe

Miscellaneous

Bank Crime Rules Are Surprise Headache in Swedish Migrant Crisis
Amanda Billner – Bloomberg
Asylum seekers without ID have trouble opening bank account; EBA offers compromise solution over money laundering rules
Banks around Europe are trying to figure out how to provide their services to asylum seekers while making sure they stick to strict rules blocking money laundering and terror financing.
goo.gl/qnEPwH

London’s super-rich turn to renting
Judith Evans – FT
The UK’s “generation rent” may be priced out of home ownership, but renting is also on the rise among a very different group: London’s super-rich.
goo.gl/1aH2aU

Americans are more likely than the rest of the world to believe hard works pays off
Marta Cooper – Quartz
Big cars, high-volume sports, immense portion sizes. The US is different from other countries in many ways. Here’s another: Americans are more likely than most people to believe that hard work pays off.
goo.gl/N9110R

Girl Who Asked Obama to Put Women on Banknotes Opposes Delay
Margaret Talev, Angela Greiling Keane – Bloomberg
Sofia, then 9, wrote to president asking for a woman on money; Treasury backing off promise to put woman on $10 bill `soon’
When a 9-year-old girl named Sofia wrote to President Barack Obama in 2014 to ask him why U.S. money didn’t feature women’s faces, her innocent question and penciled list of worthy candidates helped galvanize the administration’s commitment to making it happen as soon as possible.
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