First Read

John’s Back, Redux
By John J. Lothian

I am back editing this newsletter with a back brace reminding me to mind my activities. My recovery has been good, though I am still struggling to sleep when I am supposed to.

I want you to know that this latest surgery lifted a cloud that has been hanging over my head since last summer. Having constant physical pain is a draining experience and it is hard to comprehend how it can completely impact every aspect of your life. I am grateful for the skill of my surgeons for bringing me back my life. I hope this is the end of me going under the knife for a while, as five surgeries in four years is a lot of pain, pills and physical therapy.

Thank you for your well wishes and prayers while I have been out. I appreciated all the kind words I received in Boca and am glad to have made it through the week, though I don’t remember sleeping.

Thank you also to talented and loyal JLN team for getting this newsletter out every day during my absence. Thank you to Don Wilson, Carl Gilmore and Martin Mosbacher for filling in for me as Guest Editors. You each brought something unique to this newsletter and we are better for it.

While I have been out, I have been grinding out financial and other news that interests or amuses me on my Twitter account, @johnlothian. As you can see from the story below, @johnlothian is the number 2 ranked Twitter account to follow for financial news according to Benzinga. On the Streeteye website, where this data came from, @johnlothian has been ranked #1 on their Twitter Leaderboard for several months.

A tip of the hat to Nasdaq’s Allan Schoenberg for encouraging me to get on Twitter in 2008 and helping me get started. Allan has landed a great job as global head of corporate communications for Nasdaq, as we reported a couple of weeks ago.

It is good to be back at the best job in the world. I get to be me and now that the back pain is gone, I am myself again.

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The Top 100 People To Follow On Twitter For Financial News
Benzinga
A couple of days ago we posted Mapping the Financial / Media Twittersphere, an illustration of the Twitter accounts that are most central for financial news. A network centrality analysis, ie finding the people who have the most followers and the most influential followers, is a good starting point if you want to find the stories that are generating the most traction in social media and in the markets.
Top Twitter Sharer
1. @FGoria
2. @JohnLothian
3. @GTCost
4. @Techmeme
5. @MarkThoma
6. @moorehn
7. @HamzeiAnalytics
8. @prchovanec
9. @YanniKouts
10. @ComfortablySmug
goo.gl/QjzER9

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2016 Exchange CEO Series: CME’s Gill Looking For Customer Efficiencies PART 2 of 2
JohnLothianNews.com

With new capital requirements of banks and other institutions, John Lothian News sat down with CME Group’s CEO Phupinder Gill at the FIA Boca Conference to talk about CME’s new cleared swaptions service through its clearinghouse, and a repo futures contract.

CME is now well-focused on developing products that do two things – provide tradeable contracts and also reduce the overall costs constraints on market participants. In interest rates, the exchange is expanding beyond traditional futures and options products into the so-called repo market, or Treasury repurchase transactions space, which has struggled in recent months.

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CME’s Gill, an immigrant from Singapore, leads global growth strategy
Lynne Marek, Crain’s Chicago Business
The man driving CME Group’s growth strategy was an unlikely leader when he arrived at the Chicago company in 1988, but today he’s perhaps just what it needs. Born in Malaysia to parents of Indian descent, Phupinder Gill moved to the U.S. for college and, despite a stutter that developed in childhood, climbed an old-world Chicago hierarchy to become CME’s CEO in 2012. Now he’s refocusing CME on international growth, as rivals like German exchange operator Deutsche Boerse make acquisition moves to expand globally.
goo.gl/aurQyY

***DA: Marek’s story is well timed to run concurrently with Gill’s two-part contribution to our annual exchange CEO series, shot at FIA Boca.

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David Dixon, Despite a Reassuring Text Message, Dies in Brussels Attacks
By KATIE ROGERS – NY Times
David Dixon had not heard about the explosion at Brussels Airport until a concerned aunt in Britain sent a text message asking if he was safe. He told her he was, and then he made his way to the Maelbeek subway station. Mr. Dixon, 51, a British software developer who worked for Euroclear, a financial services company, was one of about 20 people killed when a suicide bomb ripped through the station, which he passed through most days on his way to work.
goo.gl/2r38GT

***** Such a senseless tragedy in Brussels. Our thoughts and prayers for the family and friends of David Dixon.

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FT City Network: Examining the future of the LSE after a merger
Patrick Jenkins, Financial Editor – FT
Deutsche Börse’s merger with the London Stock Exchange will either end the independence of the LSE on its own, or prompt a rival takeover. Does it matter? Do we need an independent London Stock Exchange? Or is an enlarged exchange for Europe actually a better thing for the City of London? Those were the questions posed to the FT City Network — a panel of more than 50 top financiers and policymakers — in this month’s online debate.
goo.gl/coqIiH
****** In London it should be the Top 50 Top Hatted Financiers and Policymakers.

***DA: I thought they wear bowlers, not top hats, in the City. You know, like in Mary Poppins.

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Why Investors Face Roller-Coaster Markets
By Mohamed A. El-Erian – Bloomberg View
Risk assets such as stocks, corporate bonds and bank loans have been trading in a wide and volatile range, taking investors on a roller-coaster ride up and down, including most recently a rally of about 10 percent in U.S. equity markets.
goo.gl/6QSLBE

****** Markets are not roller-coasters, roller-coasters have better risk controls.

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Hunk a Hunk of Churning Love
By Michael P Regan – Bloomberg Gadfly
Without a doubt, the buzziest story of the week just landed on Thursday. It’s about the secret “Focus Five” list kept by the research desk at Citigroup and other lists of high-rollers that get all the TLC at investment banks. The main takeways are: “It represents a growing trend on Wall Street where the most-lucrative clients get the best service: the top trade ideas, hours-long calls with analysts, intimate soirees with executives, bespoke trading models, on and on” and “Even on Wall Street, the divide between the privileged few and everyone else is growing.”
goo.gl/vob6qn

***** What is the best advice from a bank?

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The Oxford and Cambridge Rowers Really Want to Work on Wall Street
Timothy Coulter – Bloomberg
Britain is the best-represented nation in the past 15 years, but the U.S. is gaining ground.
Professional rowing offers little, if any, of the riches that dominate modern sports. So what do the competitors do after putting away the oars?
goo.gl/Oe6N2d

***** DA: Row into the harbor, turn right at the East River. If you hit the Statue of Liberty, you have gone too far.

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CAIA Corner
If you are a professional in the alternatives space, you should consider CAIA, the Chartered Alternative Investment Analyst designation. To learn more about CAIA, click HERE. The preparation period for the September 2016 exam is underway, and there a number of scholarships available. If you are a woman & a member of 100 Women in Hedge Funds, 100WHF offers 10 scholarships per test. The deadline is April 8. Info HERE. Also, if you are a member of the Chicago chapter (or would like to become a member of the Chicago chapter), contact Doug Ashburn. We also offer scholarships, ideally to a candidate whose firm does not already cover the exam cost.

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Bridging the Week by Gary DeWaal: March 21 – 25, and 28, 2016 (Spoofing; Position Limits; FINRA Authority; Large Trader Reports; Algorithmic Trading)
Gary DeWaal, Katten Muchin Rosenman LLP
Navinder Sarao, a London-based futures trader, appears closer to facing trial in the United States for his alleged spoofing and manipulation of E-mini S&P futures contracts traded on the Chicago Mercantile Exchange and his purported role in partly causing the May 2010 “Flash Crash,” following a judge’s ruling last week in his UK extradition hearing. Separately, one firm was fined for supposedly violating enhanced speculative position limits in wheat futures, while an affiliated company was sanctioned for purportedly filing misleading information with the Commodity Futures Trading Commission about the alleged violation. Also, a broker-dealer challenged in a federal court the authority of the Financial Industry Regulatory Authority to bring an administrative action against it based on its alleged violations of provisions of the first US federal securities law.
bit.ly/15ZyR7H

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Thursday’s Top Three
The industry turns to JLN for a morning overview of the latest exchange, regulation, market structure and technology news. Often, however, it is the “supplemental” stories that actually get the clicks. Thursday’s top-clicked was Bloomberg’s Tips on How to Get a Table at the Hottest Restaurants. Perhaps it was the lead-in featuring Sir Alec Guinness. Second place went to Time’s Phil Gramm – 25 People to Blame for the Financial Crisis. And, yes, Gramm received a well-deserved Bronx Cheer from guest editor Martin Mosbacher. Rounding out the top three was Bloomberg’s Inside Look at Wall Street’s Secret Client List

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Lead Stories

City of London split over LSE-Deutsche Börse merger
Patrick Jenkins, Financial Editor – FT
The prospective sale of the London Stock Exchange Group to a foreign rival has split the City of London elite, with stark differences of opinion emerging over whether it matters that the exchange’s 300 years of independence are poised to come to an end.
goo.gl/2xKabg

Customer reporting failures top big bank fines
Laura Noonan- FT
Failures in customer reporting have cost the world’s top investment banks $43bn in fines over the past seven years, making it the single most expensive compliance issue, according to new research.
goo.gl/FjoiGY

Big Banks’ Mermaid Problem; Selling off parts of Citigroup would be easier said than done
By AARON BACK – WSJ
Keefe Bruyette & Woods analysts made waves last week by suggesting in a research note a breakup of Citigroup, starting with the sale of international assets like Mexican unit Banamex. Not everyone was buying it. Karen Shaw Petrou at Federal Financial Analytics likened this to becoming a mermaid – a nice idea, but hard to achieve in the real world.
goo.gl/MgSwem

Ethereum, a Virtual Currency, Enables Transactions That Rival Bitcoin’s
By NATHANIEL POPPER – NY Times
Even as Bitcoin, riven by internal divisions, has struggled, a rival virtual currency — known as Ethereum — has soared in value, climbing 1,000 percent over the last three months. Beyond the price spike, Ethereum is also attracting attention from giants in finance and technology, like JPMorgan Chase, Microsoft and IBM, which have described it as a sort of Bitcoin 2.0.
goo.gl/mZ7dkB

The asset management brontosaurus wakes up
Sophia Grene – FT
The asset management industry has often struck me as being like the slow dinosaurs we learnt about when I was little. Their nervous systems were so rudimentary that if something attacked a brontosaurus’s tail, it might take days for the message to reach its brain.
goo.gl/o2y9P5

Phibro CEO eyes opportunities in banks’ retreat from energy
Ex-Morgan Stanley commodities chief Greenshields revives famed trading firm
Simon Greenshields, Alexander Osipovich – Risk.net
Just over a year after he stepped down as global co-head of commodities at Morgan Stanley, Simon Greenshields let the world know he was back in business. On January 26, he acquired the remains of Phibro, the venerable commodity trading house founded as Philipp Brothers in 1901. Acting through a vehicle called Energy Arbitrage Partners, Greenshields got the rights to the Phibro name, its customer database and IT systems – and little else, since Phibro was largely a hollow shell by then. An oil…
goo.gl/aOy1sr

Oil traders enjoy commodity price rout
David Sheppard and Neil Hume in London – FT
Trading houses that specialise in oil have emerged as big winners from the commodity price crash, reporting some of their best results on record, as rivals that focus on grains and metal struggle.
goo.gl/xDoude

Hottest Emerging Market for High-Speed Trades Wants to Cool Down
Santanu Chakraborty – Bloomberg
Rapid computer trading is 40% of India’s stock-market volumes; Regulator and exchanges looking at ways to rein in excesses
India’s flash boys are discovering that even the biggest emerging market for computerized trades has its limits.
goo.gl/kbrfqe

How This Crowded Trade Tramples Stocks
By JUSTIN LAHART – WSJ
Stock markets across the world have seen an influx of foreign investors, and that aggravates their tendency to rise and fall together
Like vacationers at a tourist trap, investors who put money overseas may end up surrounded by the same crowd they hoped to escape.
goo.gl/lZT15C

Markit chief’s persuasive skills needed for bet on IHS tie-up
Philip Stafford – FT
Lance Uggla, Markit’s charismatic chief executive, was once asked if his UK data company would consider taking over the administration of Libor, the bank lending rate hit by a rigging scandal.
goo.gl/JGjqm8

The Fed Fails to Connect the Dots
By Editorial Board – Bloomberg
Monetary policy works best when financial markets understand the central bank’s intentions. That’s the correct thinking behind the Federal Reserve’s forward guidance — and it’s why one aspect of its approach needs to change.
goo.gl/bNOVsb

The Fed Wants Markets to Stop Taking the Dot Plot So Seriously
Craig Torres – Bloomberg
Vice Chair Fischer leading efforts to improve rate forecasts; St. Louis Fed’s Bullard considering withholding his dot
Since the day they were unveiled in January 2012, the Federal Reserve’s interest rate forecasts have been criticized for taking on too much importance and become fodder for mockery in financial markets.
goo.gl/lsquBK

London Mayor Says Finance Industry Would Flourish Outside EU
Thomas Penny – Bloomberg
Mayor sees `shallow’ support for EU among business leaders; Sterling would be `strong and robust’ outside 28-nation bloc
London’s finance industry would “flourish mightily” if Britain votes to leave the European Union in the referendum on June 23, Mayor Boris Johnson told lawmakers.
goo.gl/gLQisi

Putnam ‘Absolute Return’ Funds Often Fail to Hit Targets; The firm emphasizes to advisers that it offers no guarantees on return ‘targets’ set for the funds
By DAISY MAXEY – WSJ
Putnam Investments took a bold step several years ago in naming each of its four “absolute return” mutual funds for a specific performance target.
goo.gl/LV0A9x

Has truce been declared in the currency wars?
Roger Blitz in London, Leo Lewis in Tokyo and Jennifer Hughes in Hong Kong – FT
Marc Chandler of Brown Brothers Harriman could not have been more sniffy about the idea of a currency wars truce being declared by the world’s main central banks.
goo.gl/Dv4jvP

Regulatory

Hedge Funds for Retail Class Face Regulatory Reckoning; ‘Alternative’ mutual funds say SEC rules would crimp options for investors
By DAVE MICHAELS – WSJ
A flashy class of mutual funds that allows retail investors to tap into exotic strategies pioneered by hedge funds is colliding with the one force that threatens its growth: regulators on the hunt for systemic risk.
goo.gl/EOaVjg

Banks may get more choice in capital models despite Basel curbs on benefits
Neil Roland, MLex
Banks could gain greater choice in how they use bespoke risk models for setting capital requirements, despite new restrictions on the benefits they derive from those in-house risk formulas. The prospect of more freedom appears as a counterpoint within yesterday’s proposal to bar the use of models for some loans and limit the impact for others.
goo.gl/dVkwWb

US derivatives users cheer hedge accounting rejig; Rule change ends years of uncertainty and piecemeal reform accounting-numbers
Louie Woodall – Risk.net
Market participants are cheering a fix to US accounting rules that ensures derivatives used as hedges won’t lose favourable accounting treatment if a user novates a trade to another counterparty. International standard-setters have no plans to make a similar clarification, however. The US Financial Accounting Standards Board (FASB) issued an update on the effect of derivatives contract novations on existing hedge accounting relationships on March 10. The update clarifies that a derivative owner…
goo.gl/SZJYaJ

Self-Regulatory Organization (SRO) Rulemaking and National Market System (NMS) Plans
SEC

    • BATS: Notice of Designation of a Longer Period for Commission Action on a Proposed Rule Change, as Modified by Amendment No. 2, to List and Trade Shares of the SPDR DoubleLine Short Duration Total Return Tactical ETF (Release No. 34-77451; File No. SR-BATS-2016-04)
    • CBOE: Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, to Amend Interpretation and Policy .01 to Rule 1.1(ggg) Relating to the Professional Customer Definition (Release No. 34-77450; File No. SR-CBOE-2016-005)
    • ICC: Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Extend Single Name Backloading Incentive Program (Release No. 34-77446; File No. SR-ICC-2016-004)
    • ICEEU: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Equity Futures and Options (Release No. 34-77448; File No. SR-ICEEU-2016-005)
    • NASDAQ: Order Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto, to Amend Rule 4120 (Release No. 34-77445; File No. SR-NASDAQ-2016-008)
    • Phlx: Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. , Relating to the Professional Customer Definition (Release No. 34-77449; File No. SR-Phlx-2016-10)
    • Phlx: Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend the Exchanges Continuing Education Fee Schedule (Release No. 34-77444; File No. SR-Phlx-2016-34); see also Exhibit 5
    • Phlx: Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Delete Rule 756 (Release No. 34-77443; File No. SR-Phlx-2016-37); see also Exhibit 5

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Exchanges & Trading Facilities

FIA speakers and delegates identify keys to industry success
Eurex
FIA’s 41st annual International Futures Industry Conference in Boca Raton Florida was joined by a record number of participants to consider the future of the industry. One-third of the 1,150 attendees were from outside the U.S. Participants included industry leaders and regulators from 27 countries and an exceptional lineup of speakers.
goo.gl/fSuhhj

CME Group Inc (CME) Receives A+ Credit Rating
MicroCap Magazine
CME Group Inc (NASDAQ:CME) has received an “A+” credit rating from analysts at Morningstar. The research firm’s “A+” rating suggests that the company is a low default risk. They also gave their stock a three star rating.
goo.gl/K1oah6

HKEX Responds to Media Enquiries
HKEx
In response to media enquiries, Hong Kong Exchanges and Clearing Limited (HKEX) issues the following statement. HKEX welcomes Premier Li Keqiang’s remarks at today’s Boao Forum for Asia Annual Conference saying Shenzhen-Hong Kong Stock Connect will be launched at an appropriate time this year.
goo.gl/NWX4Ce

Will London Stock Exchange Merge With Deutsche Börse? Criticism Over Potential Deal Heats Up In UK, Germany
New York News
Criticism of the potential sale of the London Stock Exchange Group to its German rival Deutsche Börse is heating up in both countries. Shareholders, industry veterans and politicians are split over the merger outlined this month, which would create one of the world’s largest exchange operators.
goo.gl/7MbMDp

Let the LSE’s ill-matched union go no further
The Telegraph
With almost every passing day, it seems, the likelihood of the London Stock Exchange pulling off a merger with Deutsche Boerse diminishes that little bit more. From the outset, the proposed tie-up looked like it would struggle to get off the ground. In their desperate attempts to avoid upset about the balance of power on either side, the legion of bankers behind the deal have managed to cook up a proposal that has struggled to win much support in either country.
goo.gl/ZB4uaa

Politics

My Shared Shame: The Media Helped Make Trump
Nicholas Kristof – NY Times
THOSE of us in the news media have sometimes blamed Donald Trump’s rise on the Republican Party’s toxic manipulation of racial resentments over the years. But we should also acknowledge another force that empowered Trump: Us. I polled a number of journalists and scholars, and there was a broad (though not universal) view that we in the media screwed up. Our first big failing was that television in particular handed Trump the microphone without adequately fact-checking him or rigorously examining his background, in a craven symbiosis that boosted audiences for both.
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Donald Trump Sure Is Confused About Trade: Oil Is Fungible
Tim Worstall – Forbes
What worries about Donald Trump and trade is not that he’s being aggressive about using trade as a weapon (not a good idea in itself but…) but that he doesn’t really seem to know very much about how trade works. Here he is, in an interview with the New York Times NYT +0.48%, suggesting that he would stop America buying oil from Saudi Arabia in order to make that country pay more of its own defence costs and also to engage more forcefully with Isis and IS. This is, of course, superficially attractive: however, it also betrays a rather large ignorance about how trade works.
goo.gl/nZncx6

Hedge Funds & Managed Futures

Japan Seen Stuck With Negative Yields on 70% of Bonds for 2016
Kevin Buckland, Shigeki Nozawa, Yumi Ikeda
Primary dealers’ median forecast for 10-year yield at -0.1%; `The BOJ has dominated the bond market,’ says JPMorgan Chase
Japanese primary dealers say negative bond yields are here to stay in 2016, and room for capital gains has run out.
goo.gl/Lspu5l

US high-street banks face $5bn hit from Fed’s more dovish stance; With only two rises on the cards this year, pain spreads among the more rate-sensitive lenders
Alistair Gray in New York – FT
Executives at US high-street banks had been looking forward to 2016.
This was meant to be the year they would finally gain some relief from rock bottom interest rates, which have hurt the industry’s profit margins.
goo.gl/9g2AVB

‘Wall of committed capital’ heads for private equity
Attracta Mooney – FT
The majority of institutional investors plan to increase their allocation to private equity over the next five years, but a lack of transparency in the sector is proving a barrier to investment.
goo.gl/UlhV8C

Why We Think We’re Better Investors Than We Are
By GARY BELSKY – NY Times
From their earliest days, the loosely confederated research efforts that came to be known as behavioral economics spawned a large quantity of studies centered on securities investment. This was not because the field’s pioneers were especially interested in stocks and bonds, nor was the early research commonly underwritten by financial services firms.
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Quarter of investors think Brexit is likely
Chris Newlands – FT
More than a quarter of some of the world’s largest investors believe Britain will vote to leave the EU in June and have begun taking measures to protect their investment portfolios.
goo.gl/mH9YwV

If Every Bond’s a Winner, Why So Many Losers?
By Lisa Abramowicz – Bloomberg Gadfly
Mar 24, 2016 10:09 AM CDTIf you bought bonds at the end of last year and just hung onto them, you probably have a little extra spending money in your pocket. In some cases, you may have cashed in big time.
goo.gl/2g65Tq

Hedge Fund Invasion of U.S. Treasuries Puts Bond Traders at Risk
Liz McCormick, Alexandra Scaggs – Bloomberg
Jump in volatility adds to worries in $13.3 trillion market; Foreigners culled Treasuries for first time since year 2000
Hedge funds are crowding into U.S. Treasuries, and that has bond traders bracing for more turbulence.
goo.gl/QRenyz

Muni-Bond Funds Burned Chasing Yield With Wood-Pellet Bankruptcy
Brian Chappatta – Bloomberg
Almost $300 million of debt in default owned by biggest firms; Muni-financed Louisiana plant couldn’t hit production targets
Wood pellets are made to be burned. It turns out a Louisiana facility that was built to make the pieces for power plants is doing the same to municipal-bond investors.
goo.gl/AH7NNB

Banks & Brokers

Credit Suisse spooked by what lurks within; Mistakes do happen but it takes good managers and intelligence to bring them to light
Brooke Masters, Companies editor – FT
Tidjane Thiam, Credit Suisse’s relatively new chief executive, was really annoyed on Wednesday. Just five months after outlining a strategic plan to set the bank on a new course, he was having to try again — this time with deeper job cuts and bigger losses than previously expected.
goo.gl/mBXwtd

US financial firms are eager to capitalize on Cuba
Ian Kar – Quartz
The reinstatement of diplomatic ties between the US and Cuba is expected give a big boost to the Cuban economy. US companies in the hospitality industry like Airbnb and Starwood clearly stand to benefit, but so do financial companies that can help businesses expand to the US and move money in and out of Cuba.
goo.gl/SgX9Js

The Next Perfect Banking Storm
By Christopher Langner – Bloomberg Gadfly
Those looking for when the next financial crisis might be should set a reminder for Jan. 1, 2018.
goo.gl/KmT8ia

Dealers ‘getting very creative’ ahead of FRTB implementation; The FRTB will force banks to rethink the structure of their businesses
Nazneen Sherif – Risk.net
In order to use their own internal models under the Basel Committee on Banking Supervision’s Fundamental review of the trading book (FRTB), major dealers are going to have to work hard to interpret the rules and up their game when it comes to modelling.
goo.gl/tyzIvc

Clearing & Settlement

Swaps Reporting Deadline Pushed Back
Waters Technology
The US securities industry regulator grants exemption to facilities that need to register as reporting venues, thereby also pushing back the deadline for reporting. An industry source has told Inside Reference Data that the deadline for compliance with the Securities Based Swaps Reporting (SBSR) rules of the Securities and Exchange Commission (SEC) has been pushed back three months. According to the source, the delay is due to the Depository Trust and Clearing Corporation (DTCC), which failed to register as operationally ready to be a Swap Data Repository.
goo.gl/xfVAzv

DCCC expands Collateral Basket to include major G6 currencies
Zawya – Thomson Reuters
The Dubai Commodities Clearing Corporation, the central counter-party for the Dubai Gold & Commodities Exchange ( DGCX ), on Monday announced that Clearing members will now be able to deposit cash collateral to the Corporation in the form of Euro, UK Pound (GBP) and Japanese Yen (JPY) in addition to UAE Dirhams (AED) and U.S. dollars.
/goo.gl/CfngRG

Float management isn’t easy
FT Alphaville
Banks are being bamboozled by the idea that the solution to most of their problems lies in becoming more like the fintech upstarts currently threatening their turf. This is strange because if anyone should know the degree to which fintech’s cost advantage is linked to unadulterated regulatory arbitrage, the exploitation of banks’ own subsidy systems against them, cartel-based solutions or complete disregard for par value protection of the payment float, it should be banks.
on.ft.com/1RJRoew

Indexes & Products

Index IDEA: Key UK equity market drivers highlighted by variation of FTSE 100 index
FTSE Russell
Viewing the UK equity market through the lens of the FTSE 100 Semi Annual Equally Weighted Index illuminates positive and negative drivers for this market year-to-date and over the last five years. The index automatically reweights all individual constituents within the FTSE 100 Index to 1% every June and December, making it an effective lens through which to analyse outsized price swings in UK-listed stocks
goo.gl/a5ZJT3

Lattice: Is Your Smart Beta Risk-Efficient?
ETF.com
The challenges facing investment advisors seem to get more complex every day: volatile markets; an uncertain political environment; and an unending array of new investment approaches to understand. In the past, it seemed there were two “schools of thought”: 1) since markets are efficient, use low-cost, cap-weighted passive; or 2) find managers to beat the market and manage risk. Today we see an incredible proliferation of choices in “the space between” passive and active strategies.
goo.gl/9uzhjT

Passive Beats Active in ’15: Report
ThinkAdvisor
Last year was tough for the equity market thanks to falling oil prices, a strengthening U.S. dollar and other factors. The S&P 500 had a total return of nearly 1.4% in 2015 vs. 1.0% for the S&P Composite 1500. But how did the active mutual funds fare? That’s what the S&P Dow Jones Indices’ research looks at every six months, when it posts its S&P Indexes Versus Active Research, or SPIVA, U.S. Scorecard.
goo.gl/R3y6sS

Hologic, Centene Tapped For The Big Show, Will Join S&P 500 – Focus on Funds
Barrons.com
The big-cap U.S. stock benchmark will receive two new members. S&P Dow Jones Indices announced after the closing bell on Thursday that Hologic (HOLX) and Centene (CNC) will join the S&P 500 after the close of trading on Tuesday, March 29. Hologic makes medical diagnostic and imaging equipment and surgical products. It will replace Pepco Holdings (PEP), which is being acquired by Excelon (EXC).
on.barrons.com/1RJROkZ

Can House Prices Keep Rising?
Indexology – S&P Dow Jones Indices
The next S&P/Case-Shiller Home Price report will be releases at 9 AM Tuesday morning. It will show whether the west’s dominance continues and whether prices will keep climbing despite questions about the availability of financing.
goo.gl/eOHL77

Technology

Fintech firms will help banks succeed – not eat their lunch: MAS
Banking News & Top Stories – The Straits Times
Fintech firms are not a threat to banks but “enablers” whose success will lie in partnering with banks, and enabling them to succeed, said a senior regulator from the Monetary Authority of Singapore (MAS). “The initial euphoria that (fintech firms) will eat their lunch and eat their dinner has gone away,” Mr Sopnendu Mohanty, MAS chief fintech officer, told reporters at a briefing on Monday (March 28).
goo.gl/dbC4Qs

Kent villagers oppose plans for communications mast
Nicholas Megaw in Sandwich – FT
Fields overlooking an abandoned power station near the English Channel are the new battleground for traders trying to earn millions using high-speed telecom networks.
goo.gl/pw21eq

The internet’s age of assembly is upon us
Ehud Shapiro – FT
I was fortunate to witness the birth of the world wide web up close. Initially, there were only pages of text connected by hyperlinks, but no people. So I formed one of the first internet start-ups, Ubique, with the mission of adding people to the web by developing social networking software which offered instant messaging, chat rooms and collaborative browsing.
goo.gl/siH5kr

New physical ‘wallet’ keeps your bitcoins safe and sound
By Kevin Dugan – NY Post
The February Bangladeshi central bank heist that resulted in the theft of more than $100 million from its account with the Federal Reserve Bank of New York could have been thwarted by a 3.6-inch piece of computer hardware — so say the tech entrepreneurs behind KeepKey, a physical bitcoin “wallet” with beefed-up security designed to keep out thieves. The business is self-funded and started less than a year ago, writes our Kevin Dugan.
goo.gl/OteIPU

Enforcement

SEC Halts Fraud by Manager of Investments in Pre-IPO Companies
SEC.gov
The Securities and Exchange Commission today announced fraud charges and asset freezes obtained in a case filed against a New Jersey-based fund manager and two firms he controls that marketed shares in promising pre-IPO tech companies in the Bay Area. The SEC alleges they stole $5.7 million from investors and diverted millions more to other improper and undisclosed uses.
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CFTC Charges Virginia Resident Tracy Lee Thomas and His Firm, Cayman Islands-Based Marbury Advisors Inc., with Fraudulently Soliciting over $1.2 Million in a Commodity Futures Scheme
CFTC
Specifically, the CFTC Complaint alleges that, from at least February 2011 to August 2012, Thomas, Managing Director of Marbury, fraudulently deceived at least two customers, including Thomas’ father-in-law, to give Thomas and Marbury over $1.2 million for the ostensible purpose of investing in “T-Bills” or Treasury Bills. For example, according to the Complaint, Thomas misrepresented the Defendants’ prior investment and trading success, and misrepresented that they would invest in Treasury Bills on their customers’ behalf and that Thomas would manage investments in a conservative manner.
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NFA bars Chicago, Ill., sole proprietor commodity trading advisor Tina Mozhayski, d/b/a RF INTL, from membership
NFA
National Futures Association (NFA) has permanently barred Chicago, Ill., sole proprietor commodity trading advisor (CTA) Tina Mozhayski, d/b/a/ RF INTL, from membership and from acting as a principal of an NFA Member.
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Environmental & Energy

Wall Street’s Retreat From King Coal
NY Times
The grave environmental damage from coal-fired power plants has done nothing to deter the Senate majority leader, Mitch McConnell, from decrying a “war on coal” and orchestrating his own war against the Obama administration’s climate change agenda. But he and other coal-state Republicans would be foolish to ignore the growing consensus on Wall Street that King Coal, for all its legendary political power, has turned into a decidedly bad investment.
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Oil Firms Slow Exploration to Weather Low-Price Era; Major energy companies combined replaced 75% of their production in 2015
By SARAH KENT – WSJH
The world’s biggest oil companies are draining their petroleum reserves faster than they are replacing them—a symptom of how a deep oil-price decline is reshaping the energy industry’s priorities.
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Norway’s oil fund increases bet on property markets
Madison Marriage – FT
Norway’s $830bn oil fund plans to double the size of its property team as the world’s largest sovereign wealth fund seeks to improve performance after posting its worst annual return since 2011.
goo.gl/KFLa7o

Why Power Markets Tilt Toward Renewables Even With Cheap Oil
Anna Hirtenstein – Bloomberg
Six charts show leverage for wind and solar in power market; UN Environment Program and BNEF show tilt toward clean energy
If you’re a power plant developer, chances are you’ll be selling renewables in a developing nation in the decades ahead — even with fossil fuel prices bumping along historic lows.
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Asia-Pacific

China says renminbi is stable, but in reality it’s not
Economic Times
Li Keqiang, China’s premier, stated on Thursday that China’s currency, the renminbi, will remain stable, noting that there was no basis for a long term depreciation of its value given it would not help Chinese firms become more competitive.
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China’s biggest broker spent more on bailing out the stock market than it earned in 2015
Zheping Huang – Quartz
Citic Securities, China’s biggest brokerage, reported a big jump in annual profit in 2015, even after leading Beijing’s stock market bailout last summer and being investigated for illegal trading.
goo.gl/EFvY2C

Japan’s negative rates a looming headache for central bank
BY LISA TWARONITE AND LEIKA KIHARA – Reuters
Driving interest rates below zero, the Bank of Japan has turned a comatose government bond market into an enormous free-for-all, complicating the central bank’s own efforts to kick-start growth and end deflation.
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Japan Looks to Kickstart ‘Fintech’ Revolution
Fortune
A laggard in embracing the ‘fintech’, or financial technology, revolution, Japan is set to ease investment restrictions that could free up the flow of capital in an economy sitting on an estimated $9 trillion in individuals’ cash deposits.
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Online Auctioning Made Easier With Asia-Based Apps; More people in Asia shop on smartphones than in the West
By NEWLEY PURNELL in Singapore and JURO OSAWA in Hong Kong – WSJ
Instead of listening to music or playing videogames during his daily train commute in Singapore, Jay Pang uses the down time for something different: selling rare sets of Legos via his smartphone.
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Frontier Markets

Sebi mulls new price discovery method for commodity spots
Shrimi Choudhary – Business Standard
An advisory panel plans price polling mechanism for all commodities and derivatives as per quality and quantity of the commodity
The Securities and Exchange Board of India (Sebi) is mulling the idea of introducing a new price discovery mechanism for the spot market, to ensure fairer pricing.
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Amfi’s MF platform in trouble?
Joydeep Ghosh & Samie Modak – Business Standard
A number of mutual fund (MF) houses seem to be unhappy with the Association of Mutual Funds of India’s (Amfi) MF platform, called MF Utility. Of the 43-entity sector, only 25 have joined it. Thus, the burden of expenses to run the platform is being borne by only these players. The problem is that fund houses are being asked to share costs according to the proportion of transactions. While fund houses are happy in paying variable costs according to the number of transactions, they want the fixed costs to be shared equally between all the fund houses. Sources say in a recent Amfi meeting, some fund houses expressed their displeasure with this costing, and suggested all fund transactions should be routed only through this platform to make it more cost-effective.
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Egypt Says Foreigners Invested $500 Million After Devaluation
Ahmed Feteha – Bloomberg
Investments in debt, stock markets, central banker says; Central bank devalued the pound by more than 10% in March
Foreign investors bought $500 million in Egyptian debt and stocks since the central bank devalued the currency this month, according to central bank Governor Tarek Amer, who said more measures will be taken to attract funds.
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Will not spare any bank defaulter: Modi; Attacks Congress for ‘opening banks for the rich during its rule’
Business Standard
At a public rally in Assam, Prime Minister Narendra Modi said no bank defaulter would be spared. “You know how the rich have usurped public money. My government has tightened the screws on the bank defaulters. They are sweating due to fear of going to jail and are fleeing. But no one will be spared,” he said at a rally in Assam on Sunday afternoon.
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Stock Trading Comes to Myanmar With First Company Listing
Anuchit Nguyen, Kyaw Thu – Bloomberg
First Myanmar Investment shares climb 19% on Yangon debut; Five more stocks to be added to the bourse later this year
After a delay of more than 20 years, Myanmar’s stock exchange opened for its first day of business, with the trading of a single company.
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Miscellaneous

Wall Street Journal Vows To Fix Pay Gap For Women And Minorities; Surprise! White, male journalists make more than their female coworkers or colleagues of color.
Alexander C. Kaufman, Emily Peck – Huffington Post
The Wall Street Journal has vowed to address the pay gap between women and minorities and their white, male colleagues.
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What does it mean to be “economically literate” anyway?
Matthew C Klein – FT
A well-rounded education should give some understanding of economics and finance. So, in principle, it’s a good thing there are organisations such as America’s Council for Economic Education, a non-profit backed primarily by large financial and industrial companies aiming to train teachers and provide resources for children to understand basic concepts.
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28 Years of Stock Market Data Shows a Link Between Employee Satisfaction and Long-Term Value
Alex Edmans – Harvard Business Review
Does employee satisfaction improve firm value? The answer to this question is not obvious. While it seems natural that satisfaction will facilitate worker recruitment, retention, and motivation, investing it is costly. So the question is, do the benefits outweigh the costs?
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There’s a New King of the Chess Internet, and Fans Are Outraged; A company claiming a monopoly on live chess tournament coverage has upended a sprawling online ecosystem.
Carol Matlack – Bloomberg
Hunched over chess boards in a cavernous hall a few blocks from the Kremlin, eight top players are currently participating in one of the year’s most closely-watched competitions. The winner of the World Chess Candidates Tournament, which ends on Wednesday, will earn the right to challenge world champion Magnus Carlsen of Norway at the Chess World Championships in New York City in November.
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