First Read

Conflicts of Interest Abound
By John J. Lothian, JLN

Several years back, maybe 10 years now, I wrote a column about all the conflicts of interest that I could think of that related to my newsletter. Today, with a more complex operation the conflicts abound, so let me add a few to the list.

My son Tim will be interning at Eurex this summer in Frankfurt in their sustainability group. Tim is entering his senior year at University of Missouri, where he is studying geography. He has also taken two years of German, and this will give him an immersion opportunity to develop his German language skills, as well as give him real world application for his geography studies. He was offered the internship in writing in a letter congratulating him on earning the Eagle Scout rank in Boy Scouts three years back. Eurex is one of the sponsors of MarketsWiki.

I am bringing my daughter Kat and one of my other Eagle Scouts over to London next week for IDX as video interns. We had hoped to organize a Venture Crew trip to London, but too many conflicts got in the way for a larger group. So Tony and Kat will be working at IDX for John Lothian News, manning our video interview station. FIA is a sponsor of MarketsWiki.

We have signed a three-year sponsorship deal with the CME Group to produce the MarketsWiki Education series in five cities. The CBOE has also agreed to a three-year deal to sponsor the series in Chicago, New York and London. OCC is also a sponsor of MarketsWiki Education, along with The IFM and Trading Technologies, where we will hold the last Chicago session. The LME is a sponsor of our social event in London this year and we are hosting the New York event at Nasdaq’s Marketsite.

They are all the sponsors of MarketsWiki, MarketsReformWiki and the John Lothian News website and newsletters.

My conflicts of interest abound. But today I have more accountability than I have ever had, with a professional editorial staff of experienced journalists and industry professionals. I have a director of administration and finance that handles the company’s books and compliance. The biggest part of all of this is my responsibility to these people, and you my readers, to do the right thing.

Having conflicts of interest is inevitable. It goes with the territory of running a business, of being a journalist. But if you deal with them with integrity and transparency, those impacted by the conflicts can deal with them successfully.

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Letter from Lynette Lim, Director & Co-CEO – Phillip Capital Inc. to Cease Forex Offering
Phillip Capital Inc.
I regret to inform you that due to a recent Securities and Exchange Commission (“SEC”) release, Phillip Capital Inc. being dually registered as a broker dealer and forex dealer member, will no longer be allowed to offer retail forex to US customers beginning July 31, 2016. Please see the SEC release here. In response to this notice, Phillip Capital Inc. will therefore stop trading for existing forex accounts and will not open any new forex accounts effective June 1, 2016. We are also unable to offer forex to retail customers of Introducing Brokers.

***** Transparency from Phillip Capital Inc.

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High-security luxury smartphone launched for global elite; Solarin range will cost at least £9,500 and look to tap into growing privacy concerns
by: Daniel Thomas, Telecom Correspondent
A luxury smartphone that offers military grade security and high level cyber protection for the “international elite” has been launched by Israeli and Kazakh investors.
/goo.gl/8fXRuV

***** This is not to be confused with an iPhone with the shotgun app on it.

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EU hate speech deal shows mounting pressures over internet content blocking
BY YASMEEN ABUTALEB – Reuters
An agreement on Tuesday by four major U.S. internet companies to block illegal hate speech from their services in Europe within 24 hours shows the tight corner the companies find themselves in as they face mounting pressure to monitor and control content.
goo.gl/ak88gp

***** In a Venn Diagram does hate speech intersect with free speech?

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Tuesday’s Top Three
‘Tis the season for internships, and yesterday’s top clicked story fit the bill nicely – 10 tips for new Wall Street interns from hedge fund giant Citadel from Business Insider. A close second, however, was Bloomberg’s walk down memory lane, The Untold Story Behind Saudi Arabia’s 41-Year U.S. Debt Secret. Although, technically, an untold story IS a secret. In third place is an update on the biggest story of 2016, the impending (or imploding depending upon whom you ask) Deutsche Boerse/LSE deal

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WFE Monthly FOCUS E-Zine – May 2016

The World Federation of Exchanges represents 64 regulated exchanges across the world, and acts on behalf of a total of 99 organizations including affiliate members and clearinghouses.

Welcome to the May edition of FOCUS.

This edition is devoted to the annual IOSCO conference and the themes that gripped delegates. Held every year since 1974, the IOSCO annual conference gathers the world’s securities regulators to discuss the issues of the day – comparable in some ways to WFE’s General Assembly & Annual Meeting where the world’s exchanges & CCPs meet. It’s one of the most important events of the year for the global securities market industry and particularly significant for WFE which advocates on behalf of its members to the three global regulatory organizations: IOSCO, BCBS and the Financial Stability Board.

“WFE FOCUS”
is brought to you by:
WFE

 

Lead Stories

Deutsche Boerse to Seek Destiny Outside Europe If LSE Bid Fails
Angela Cullen – Bloomberg
Europe rivals too small, Asia not feasible, CEO Kengeter says; French uproar at LSE deal ‘deplorable,’ Kengeter says
Deutsche Boerse AG will seek its destiny outside Europe if its bid to form a regional powerhouse by combining with London Stock Exchange Group Plc fails, Chief Executive Officer Carsten Kengeter said.
goo.gl/xobjCi

Deutsche Bank eyed in Treasury rigging probe
By Kevin Dugan – NY Post
Investigators probing the $13 trillion market for US Treasurys are zeroing in on a second Wall Street bank, The Post has learned.
goo.gl/Otfjwm

The Most Powerful Man in Banking
By RYAN TRACY and EMILY GLAZER – WSJ
Fed governor Daniel Tarullo is known for his behind-the-scenes influence over everything from corporate strategy to capital rules
The most important person in the banking business isn’t a banker.
goo.gl/51dGn6

CCPs should consider how they interact with the buy-side; CME’s Tina Hasenpusch believes more discussions are needed to increase buy-side involvement in clearing.
By Joe Parsons – The Trade
Clearing houses need to consider the models they adopt to bring in the buy-side, according to the head of CME’s European clearing house.
goo.gl/g5O7ab

N.Y. Mets owners reach revised deal with Madoff trustee
Reuters
The owners of the New York Mets baseball team have reached a revised agreement with the trustee seeking to recoup money for the victims of Bernard Madoff’s fraud that gives them more time to pay up to $61 million, the parties announced on Tuesday.
goo.gl/ASiBaM

BlackRock’s Fink Expects Consolidation Among Asset Managers
Sabrina Willmer – Bloomberg
Predicts a ‘massive shift’ into more passive investing; Says too many investment firms struggle to deliver alpha
BlackRock Inc.’s Laurence D. Fink said he expects consolidation in the asset management industry as firms struggle to beat benchmarks and new U.S. rules favor passive strategies.
goo.gl/ZYW6M

Thomson Reuters Launches 2pm WM/Reuters FX Benchmark for Corporates Valuing Cross-Border Transactions; Calculated on available primary market data, WM/Reuters provides an accurate and robust FX rate that aligns with IOSCO principles for financial benchmarks
Thomson Reuters
Thomson Reuters today launches the WM/Reuters 2pm CET benchmark, a new FX benchmark service designed for corporates looking to value, hedge and settle cross-border transactions. The Thomson Reuters 2pm CET benchmark offers a reliable, transaction-oriented alternative to the European Central Bank (ECB) 2:15pm CET reference rates.
goo.gl/4q0nzS

Deutsche Boerse could be target if LSE merger fails – D.Boerse CEO
Reuters
Deutsche Boerse could become a takeover target if its planned $30 billion tie-up with London Stock Exchange flopped, the German exchange operator’s chief executive warned.
goo.gl/965lNx

SETL Launches Blockchain­Powered OpenCSD Platform
Press Release
SETL, the institutional payment and settlement infrastructure based on blockchain technology, has today announced the launch of its blockchain ­powered OpenCSD platform. The OpenCSD platform, SETL’s first commercial offering, enables any market participant to commission and run a permissioned registry service for payments, settlement and clearing of cash and other financial instruments. The platform is available today and powered by the SETL blockchain technology, which has been benchmarked to settle billions of transactions a day in real­time.
goo.gl/T9RSQm

Odd Lots: How Finance Took Over the World
Tracy Alloway, Joe Weisenthal – Bloomberg
Every week, hosts Joe Weisenthal and Tracy Alloway take you on a not-so-random walk through hot topics in markets, finance, and economics.
goo.gl/AjM4c4

Ex-Barclays man charged with leaking tips to plumber; Former director charged with giving insider information on upcoming mergers to friend
by: Ben McLannahan in New York
A former Barclays director was arrested on Tuesday on charges of passing insider information on upcoming mergers to his friend, a plumber, who allegedly repaid him in part by doing up his bathroom.
/goo.gl/ZqWLx4

Investment banks’ hopes of big cost savings ‘a pipe dream’; Only a handful of groups will be able to meet their cost of capital, says BCG
by: Laura Noonan – FT
Transformational cost savings are a “pipe dream” for investment banks and only a handful will “eventually” be able to meet their cost of capital, the Boston Consulting Group has warned.
/goo.gl/5076tv

Ex-Calpers CEO Gets 4 1/2 Years Prison for Bribery Scheme
Joel Rosenblatt – Bloomberg
Buenrostro took $200,000 cash from ex-board member Villalobos; U.S. judge calls crime ‘dagger in the heart of public trust’
A former chief executive officer of the country’s biggest pension fund was sentenced to 4 1/2 years in prison for steering $14 million in placement fees to an ex-board member in exchange for cash bribes and gifts.
goo.gl/WD3sPs

‘Hustle’ Mortgage Fraud Case Falls Into Crevice of the Law
White Collar Watch
By PETER J. HENNING – NY Times
Proving fraud usually starts with finding a lie made to mislead someone into pursuing a transaction or spending money when they would not have done so if they knew the truth.
goo.gl/u6wYrD

Brexit: Paris stock exchange to ‘assert its strength’
By Euractiv.fr
The Paris stock exchange plans to “assert its strength” to attract international businesses, taking advantage of the potential damage Brexit could do to the City of London, French sources said on Monday (30 May).
goo.gl/oKJ1QI

Regulatory

Banks Should Get Down on Their Knees and Pray for Regulation
by Joshua M Brown – The Reformed Broker
Everyone’s talking about this Wall Street Journal article that covers the regulatory flood. The banks brought it on themselves because of their actions before and after the Great Financial Crisis. And now they’ve got to live in the world they’ve created
goo.gl/eV0Pjy

JOINT COMMITTEE OF ESAS LAUNCHES WEBSITE
ESMA
The Joint Committee of the European Supervisory Authorities (EBA, EIOPA, ESMA – ESAs) is pleased to announce the launch of its dedicated website. The new website presents information and news about the cross-sectoral work of the three ESAs.
/goo.gl/oWtpoj

ESMA PUBLISHES UPDATED EUSEF AND EUVECA Q&A
ESMA
The European Securities and Markets Authority (ESMA) has published an updated questions and answers document (Q&A) on the application of the European Social Entrepreneurship Funds (EuSEF) and the European Venture Capital Funds (EuVECA) Regulations.
/goo.gl/n0jEus

ESMA CONSULTS ON CSDR GUIDELINES ON PARTICIPANT DEFAULT RULES AND PROCEDURES
ESMA
The European Securities and Markets Authority (ESMA) has launched a consultation on Guidelines on participant default rules and procedures under CSDR.
/goo.gl/tAl7wg

Dubai Financial Services Authority Hosts Outreach On Extended Audit Reports
MondoVisione
The Dubai Financial Services Authority (DFSA) and the Institute of Chartered Accountants in England and Wales (ICAEW) jointly organised an outreach event last week to conduct a briefing on the new Extended Audit Reports.
goo.gl/t01z10

IOSCO And IFRS® Foundation To Strengthen Cooperation In The Development And Implementation Of IFRS Standards
MondoVisione
The International Organization of Securities Commissions (IOSCO) and the IFRS Foundation have today announced a Statement of Protocols that describes an ambitious programme of work to promote and facilitate transparency within capital markets through the development and consistent application of IFRS Standards.
goo.gl/kBQQee

Exchanges & Trading Facilities

Japan Exchange Group released Trading Overview in May 2016.
Japan Exchange Group
Cash Equity Market; In May 2016, the daily average trading value for the TSE 1st Section (domestic common stocks) reached JPY 2.3542 trillion; In the ETF market, the monthly trading value was JPY 4.3119 trillion, exceeding JPY 4 trillion for the twelfth consecutive month.
Derivatives Market; In May 2016, total derivatives trading volume was 20,349,713 contracts and the daily average trading volume reached 1,071,038 contracts; Total derivatives trading value was JPY 121 trillion, and trading value for equity index derivatives reached JPY 61 trillion; Trading volume for the night session was 7,122,656 contracts and the ratio of the night session was 35.0%, exceeding 30% for the thirteenth consecutive month.
goo.gl/izsjBn

Nasdaq stokes Canadian expectations; Buying Chi-X Canada was just the start. A suite of follow-on deals and Nasdaq’s announcement of plans to enter the dark pool market have many in Canada’s trading and listing community anticipating what’s to come
By Jim Middlemiss – Listedmag.com
From the moment Nasdaq Inc. cemented its arrival into Canada last December with the $US110-million purchase of Chi-X Canada and its 22% share of the order flow of S&P/TSX Composite securities, expectations of a shake-up in the country’s trading and listing scene have been running high.
goo.gl/ETTmHb

Tradeweb upgrades RFQ for European bonds amid ‘liquidity challenges’; Tradeweb develops its RFQ model to ‘reduce risk of trading information leakage.’
By Hayley McDowell – The Trade
Tradeweb has announced it has upgraded its RFQ process that allows traders to send and receive quotes for European credit bonds.
goo.gl/ujkfXb

Qatar Stock Exchanges Stresses The Importance Of Disclosure And Transparency For Investors And The Financial Market
Mondovisione
Qatar Stock Exchange (QSE) today held the 2nd Annual Consultative Meeting on Disclosure Procedures with the participation of representatives from the Qatar Financial Markets Authority (QFMA) and the Qatar Central Securities Depository (QCSD), and the presence of representatives from various listed companies. The meetings aimed to promote cooperation and coordination between communication officers of the listed companies and the QFMA, QCSD, and QSE for the best interest of investors through exchanging views and listening to suggestions from the participants in order to overcome the difficulties encountered in the application of the best disclosure practices in the market
goo.gl/c28EPH

Cyprus Stock Exchange Bulletin For April 2016
Mondovisione
On the last trading session of April 2016 the General Index reached 66,97 points, representing a relative decrease of 0,79% from the previous month. The value of shares traded exhibited a decrease of 95,6% compared to the previous month.
goo.gl/1bIyU8

NIE and SGX Extend Investor Education Partnership for Educators
SGX
As a step towards further collaboration in investor education for teachers, SGX and the financial literacy and investment training arm of NIE, the Citi-NIE Financial Literacy Hub for Teachers (FinLit Hub), jointly organised the inaugural NIE-SGX Value Investing Symposium for teachers, held today in the Lee Kong Chian Lecture Theatre at Nanyang Technological University.
goo.gl/vGPmyL

Coca-Cola European Partners celebrates first day of trading on Euronext
Euronext
Coca-Cola European Partners (ticker symbol: CCE), a major European fast-moving consumer goods company and the world’s largest independent Coca-Cola bottler based on net sales, began trading today on the Amsterdam and London markets of Euronext.
/goo.gl/eOxHZr

Politics

Opinion: Donald Trump’s promise to ‘make America great again’ is a political swindle
By Simon Johnson – MarketWatch
Donald Trump, the Republican Party’s presumptive nominee to contest the United States’ presidential election in November, is clearly not a standard Republican. The party’s leaders and elected officials fought against him during the primary, and many are still reluctant to endorse him. Trump is now aligning some of his policy proposals with mainstream Republican ideas, but he is also clearly determined to retain his distinctive identity.
goo.gl/ywcqXX

Economic Scars Help Explain Bizarre 2016 Race
WSJ
The search for an explanation of this year’s bizarre political climate leads to a basic conclusion: The recession that started in 2007 and the financial crisis of 2008 and 2009 scared and scarred the electorate more deeply and more permanently than has been recognized before. Yes, the economic statistics say there’s been a recovery—a relatively nice one at that. But mentally, many Americans have never recovered, and perhaps never will. The experience has altered their attitudes about the political and economic systems and their leaders, and left them willing to consider risky alternatives.
on.wsj.com/1sJbmux

Donald Trump is the ultimate tail-risk candidate, but voters aren’t focusing enough on how risky he is
Josh Barro – Business Insider
In investing, risk requires compensation. Investors will expect a higher return from a risky bet, and — conversely — will pay for certainty. It’s why you pay double-digit rates on your credit cards, while the federal government can borrow for next to nothing.
goo.gl/gd0L4E

Hedge Funds & Managed Futures

BlackRock CEO says he is ‘nervous’ about Europe ahead of Brexit vote
Reuters
BlackRock Inc Chief Executive Laurence Fink on Tuesday said he is “nervous” about Europe ahead of a June referendum on whether Britain should remain in European Union, the region’s multinational governance bloc.
goo.gl/HYXb3Y

Jose Canseco Whiffed on His Gold Prediction; The four-time winner of baseball’s Silver Slugger award predicted gold would hit $1,500 by Memorial Day. It didn’t happen.
By ERIK HOLM AND CHRISTIAN BERTHELSEN – WSJ
We were hoping Jose Canseco was better at market forecasting than he was at boxing, gun-cleaning or catching baseballs with his head.
goo.gl/uEfHxb

Russian and Saudi investors cut US assets; Commodity price rout forces retreat as UK portfolios pile in
by: Eric Platt in New York
Investors in Russia and Saudi Arabia cut their combined holdings of US securities by more than $50bn between the middle of 2014 and 2015, as the commodity price rout reverberated through global markets.
/goo.gl/3ePzoc

Banks & Brokers

Tough times for stockbrokers
The Australian
It has never been tougher to be a stockbroker. As hundreds gather in Melbourne this morning for the annual two-day stockbrokers’ conference, the traditional retail broking model is facing deep examination. A new wave of “robo advice” systems and online trading that have minimal human intervention is cutting the lunch of old-fashioned brokers who are more used to working up trading ideas for their clients. At the same time, a string of global and local banks have pulled back from stockbroking in Australia over recent years, costing hundreds of brokers’ jobs, while rising compliance costs mean wafer-thin returns for those that are left. Just last week Morgan Stanley slashed adviser pay and said it was cutting commissions as it prepared for a leaner future amid greater comp­et­ition from superannuation funds.
goo.gl/6n0rk6

Goldman hires new co-head of commodities trading; Bank taps Mercuria’s US power and gas head for senior role
Risk.net staff
Goldman Sachs has hired Mercuria’s Jeremy Taylor as a partner and co-head of global commodities trading, according to an internal memo obtained by Risk.net and confirmed by a spokesperson for the bank.
goo.gl/2UYB13

Credit Agricole Said in Talks for London HQ in Canary Wharf
Jack Sidders – Bloomberg
Credit Agricole SA has chosen a Canary Wharf office building currently occupied by Morgan Stanley as its preferred option for a new London headquarters, according to two people with knowledge of the matter.
goo.gl/3nJCCK

Deutsche Bank’s Russia CEO to Leave as Lender Shrinks Business
Jake Rudnitsky – Bloomberg
Pavel Teplukhin will remain on bank’s Russia supervisory board; Bank under investigation for potential money laundering
Deutsche Bank AG’s head of Russian operations, Pavel Teplukhin, will step down in August as the German lender scales back its local business in the wake of a money-laundering scandal.
goo.gl/PBvLEx

Goldman’s Cohn defends bank’s trading business amid revenue slump
BY OLIVIA ORAN – Reuters
Goldman Sachs Group Inc (GS.N) President and COO Gary Cohn defended the bank’s trading business on Tuesday, as investors have questioned the units’ slumping revenue.
goo.gl/7Hwtlx

Clearing & Settlement

CFTC’s Division of Clearing and Risk Issues No-Action Letter for Shanghai Clearing House
CFTC
The no-action relief applies to swaps accepted for clearing by SHCH and subject by the People’s Bank of China to mandatory clearing in the People’s Republic of China, including certain interest rate swaps denominated in renminbi. It is limited to SHCH’s clearing of the proprietary trades of U.S. clearing members and their affiliates and is effective until the earlier of May 31, 2017, or the date on which the CFTC exempts SHCH from registration as a DCO under Section 5b(h) of the CEA.
jlne.ws/1P2CGZV

Will Blockchain Become The Internet Of Finance?
Forbes
Perhaps an even better question is: When did back-office record-keeping become so sexy?
For anyone who’s been following innovation in the financial technology space, the word blockchain has become the buzzword du jour in the span of about 12 months. Conference sessions, news stories, regulatory testimony – they are all consumed with the underlying ledger technology that powers Bitcoin. It’s estimated that $1 billion has been invested in blockchain start-ups since the technology was introduced.
jlne.ws/1O4T4hu

Indexes & Products

Thomson Reuters launches 2pm WM/Reuters FX Benchmark for Corporates
LeapRate
This is the first new benchmarking initiative announced since Thomson Reuters acquired WM/Reuters Foreign Exchange Benchmarks from State Street Corporation in April. With the announcement that the ECB plans to publish its euro foreign exchange reference rates at a later time solely for information purposes, Thomson Reuters believes that there is a need in the market for a reliable, transparent and independent 2pm benchmark.
jlne.ws/1O4PhAH

Institutional Smart-Beta ETF Adoption is Quickly Rising
NASDAQ.com
Exchange traded funds that track smart beta strategies or alternative indexing methodologies are quickly gaining traction among institutional investors. According to a recent FTSE Russell smart beta survey, global institutional asset owners currently evaluating smart beta has doubled to 36% in 2016 from 15% at the first survey in 2014, and 62% of asset owners with an existing smart beta position are now considering additional allocations.
jlne.ws/1O4TlRv

China and MSCI: Index Inclusion Creates Illusion of Grandeur
WSJ
Passive investing means investors don’t need to worry about picking stocks. But MSCI, one of the biggest index compilers, is considering a big stock pick that should make investors tracking its indexes nervous. MSCI is expected to make a decision later this month on whether to include shares listed on China’s domestic exchanges, also known as A shares. The inclusion was widely expected one year ago and MSCI’s surprise decision to put the matter on hold partially precipitated last summer’s market meltdown.
jlne.ws/1O4TPXU

US equity ETFs in focus as Dow Jones celebrates 120th anniversary
ETF Strategy
Global index provider S&P Dow Jones Indices has celebrated the 120th anniversary of the Dow Jones Industrial Average (DJIA), a premier indicator for US stock market performance. The DJIA is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ and is the benchmark for several exchange-traded funds that target US equity exposures.
jlne.ws/1O4U99b

Commodities Return Best 3-Months Since 2009
Indexology – S&P Dow Jones Indices
Commodities are starting summer hot and early. Ending May, the Dow Jones Commodity Index (DJCI) was flat, but the S&P GSCI gained a total return of 2.2%, making it the third consecutive positive month for the index. This is the first time commodities have gained three months in a row since the period ending in Apr. 2014, and this is the biggest three month gain, 18.1%, for commodities since the period ending in July 2009 when they returned 20.9%.
jlne.ws/1O4U19G

Technology

itarle AG opens algorithmic trading service bureau in Zurich
PRESS RELEASE
itarle AG (itarle), a leading provider of multi asset algorithmic trading and analytics services for the sell-side, today announced it has established an algorithmic trading service bureau at the Equinix ZH4 data centre in Zurich.
jlne.ws/1kFNIbz

Institutional investors see blockchain potential, yet to commit: survey
Reuters
Most investment institutions still haven’t taken concrete steps to better incorporate “blockchain” technology in their operations, according to a survey from State Street and Oxford Economics.
goo.gl/U49jCs

Deloitte just trashed the hype around a $180 billion fintech market
Oscar Williams-Grut – Business Insider
Deloitte just trashed the hype around the online lending industry.
goo.gl/4bgWQL

Barclays’ Simon Taylor joins fintech consultancy 11:FS
Business Insider
A Barclays executive who helped lead the bank’s efforts on blockchain, the hot tech behind bitcoin, is leaving the bank to join startup fintech consultancy 11:FS. Simon Taylor leaves the bank on June 24 and will become a cofounder of 11:FS, taking a stake in the new venture.
jlne.ws/1O4UuZo

Bankers must learn to behave or fintech will tear them apart, warns Barclays’ ex-boss
Telegraph UK
Britain’s bankers have not yet convinced the public that they are reformed characters – and if banks do not change their ways, fintech companies will poach their customers, Barclays’ former chairman has warned.
jlne.ws/1O4UFnB

Enforcement

SEC: Nashville Firm Schemed to Collect Extra Fees From Hedge Funds
SEC.gov
Examiners in the SEC’s Atlanta office detected the misconduct during an examination of Hope Advisers Inc., which is owned by Karen Bruton. The SEC alleges that in order to circumvent the funds’ fee structure under which the firm is entitled to fees only if the funds’ profits that month exceed past losses, Hope Advisers and Bruton have been orchestrating certain trades that enable the funds to realize a large gain near the end of the current month while basically guaranteeing a large loss to be realized early the following month. Without the fraudulent trades, Hope Advisers would have received almost no incentive fees since October 2014.
jlne.ws/1P2CGc8

Mortgage Company and Executives Settle Fraud Charges
SEC.gov
First Mortgage Corporation (FMC) is a mortgage lender that issued Ginnie Mae RMBS backed by loans it originated. The SEC alleges that from March 2011 to March 2015, FMC and its senior-most executives pulled current, performing loans out of Ginnie Mae RMBS by falsely claiming they were delinquent in order to sell them at a profit into newly-issued RMBS. FMC caused its Ginnie Mae RMBS prospectuses to be false and misleading by improperly and deceptively using a Ginnie Mae rule that gave issuers the option to repurchase loans that were delinquent by three or more months.
jlne.ws/1P2CPwc

Investment Banker and Plumber Charged With Insider Trading
SEC.gov
The Securities and Exchange Commission today announced insider trading charges against an investment banker and his close friend, a plumber who allegedly helped remodel his bathroom and put cash in his gym bag in return for illicit tips about upcoming mergers and acquisitions.
jlne.ws/1P2CV7g

Illegal practice as securities adviser – Luc Bousquet and MIB Conseils inc. fined $50,000
AMF
On April 6, 2016, the Bureau de décision et de révision (“Bureau”) approved an agreement reached by the parties and imposed administrative penalties of $25,000 on Luc Bousquet and $25,000 on the accounting firm MIB Conseils inc. (MIB) for illegal activities as securities advisers.
goo.gl/OjSf3M

ASIC cancels licence of AFS wholesale service provider
ASIC
ASIC has cancelled the Australian financial services (AFS) licence of TMK Index Limited (AFS Licence No 314823) for failing to comply with a number of key obligations, including requirements around the lodgment of accounts, breach notifications, meeting Net Tangible Asset requirements and maintaining adequate, competent staffing arrangements.
goo.gl/r4zx0G

FCA fines CT Capital Ltd for failures related to PPI complaint handling
UK FCA
The Financial Conduct Authority (FCA) has today fined CT Capital Ltd (CT Capital) £2,360,900 for serious failings in its historic Payment Protection Insurance (PPI) complaint handling processes.
goo.gl/vcgOls

Environmental & Energy

U.S. regulated power firm Great Plains to buy Westar for $8.6 billion
By Amrytha Gayathri – Reuters
Great Plains Energy Inc, the owner of regulated power utility Kansas City Power & Light, will buy bigger rival Westar Energy Inc for $8.6 billion, the largest deal in the U.S. electricity distribution market so far this year.
reut.rs/24hQNBo

Russian govt approves blueprint for Urals crude futures
Reuters
The Russian government has approved a blueprint aimed at launching Urals crude futures in November, including some changes related to oil exporting schedules, according to a document seen by Reuters on Tuesday.
goo.gl/eH2oCJ

China’s Coal-Plant Binge Deepens Overcapacity Woes
By Brian Spegele – The Wall Street Journal
In a whir of hammering and welding, construction crews in the industrial town of Shouguang put finishing touches on a new coal power plant that testifies to a building binge by Chinese companies—one that is compounding an oversupply of power.
on.wsj.com/25xLoZA

China added half of new global wind power capacity in 2015
By Josh Marks – inhabitat
China is making massive investments in clean energy as the government works to meet climate targets and clean up polluted cities.
bit.ly/1TV2nj8

Asia-Pacific

China’s ‘third board’ emerges as threat to Hong Kong’s IPO market
South China Morning Post
More start-ups are cancelling plans to go public in Hong Kong and choosing instead to join the mainland’s National Equities Exchange and Quotations (NEEQ) – known as the “new third board” – especially now that the securities regulator has split the market to emulate the US Nasdaq system. China’s securities authority last Friday officially divided the over-the-counter NEEQ into two levels. Companies with a robust financial performance, or bigger market capitalisation, will be listed on the higher “innovation level” to set them apart from other companies at the “basic level”.
jlne.ws/1O4VGMn

China’s banks ramp up compliance as global push hits snags
BY MATTHEW MILLER AND SHU ZHANG – Reuters
China’s biggest banks are beefing up their risk management and compliance programs, following a series of high-profile judicial investigations and regulatory probes in the United States and Europe.
goo.gl/uAnz4q

PBOC Shines Light on Risks in $8 Trillion Shadow Loan Market
Bloomberg
China’s central bank is expanding the fight to monitor and control risks emerging in the burgeoning market for loosely-regulated shadow lending. The People’s Bank of China has started collecting data from the murky world of online financing, in which firms make loans for everything from weddings to mining projects. It’s a growing part of a shadow banking market that ballooned 30 percent last year to 53 trillion yuan ($8.1 trillion), or four-fifths the size of the economy, Moody’s Investors Service data show.
jlne.ws/1O4VDQP

Korea to Boost Investments in FinTech & Blockchain Startups
NewsBTC
The Korean government has unveiled its plans to support the development and growth of startups in the country. To be more precise, they will support venture capital for Fintech and blockchain startups in Korea going forward.
jlne.ws/1O4UCIq

Abe to Delay Putting Japan’s Sales Tax Increase Into Effect
The New York Times
Prime Minister Shinzo Abe of Japan announced on Wednesday that he would delay an unpopular increase in the national sales tax, in what amounted to an acknowledgment that the country’s economy remained worryingly fragile. The decision, which was widely expected, was informed by painful experience: After Mr. Abe allowed a tax increase to go ahead in 2014, consumer spending dried up and Japan fell into recession. It was a serious setback for a leader who had won office on a promise to turn Japan’s long-struggling economy around.
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Frontier Markets

One licence for equity bourses, commexes likely; Regulator panel suggests reducing minimum ticket size for participation in start-up IPOs to Rs 5 lakh from Rs 10 lakh
Shrimi Choudhary – Business Standard
Leading equity exchanges National Stock Exchange (NSE) and BSE will soon be able to enter commodities trading, while the Multi Commodity Exchange might be able to offer trading into equities.
goo.gl/FquuJ2

Raghuram Rajan has laid the groundwork for a financial market that can match those in the developed world
The Economic Times
When Raghuram Rajan became the governor of the Reserve Bank of India nearly three years ago, the expectation was that he would unleash the capitalist thoughts of Chicago tradition on Indian central banking. But 33 months later, the industry is disappointed because it didn’t have its way on lower interest rates, and bankers are grumbling that they are being targeted for the faults of the polity and corrupt bureaucracy .
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Sebi tightens redemption rule for fund houses; Up to Rs 2 lakh to be allowed in any circumstance; some restriction in exceptional circumstances
Business Standard
Nearly a year after the Amtek Auto crisis hit two schemes of JPMorgan Asset Management Company, the Securities and Exchange Board of India (Sebi) has said fund houses can’t restrict investors’ redemption requests till Rs 2 lakh. The markets regulator has permitted fund houses a partial restriction on redemptions in only emergency situations, meaning those which could lead to a systemic crisis. In a circular issued on Tuesday, it said recent instances of restrictions on redemption had necessitated a relook at the issue.
goo.gl/2RvRdZ

Miscellaneous

Hershey Chases the Protein Craze With Beef Jerky
Craig Giammona – Bloomberg
Candy company faces falling U.S. chocolate consumption; American icon turns to high-protein snacks to fill gap
Hershey, Pennsylvania, smells like chocolate. The streetlamps are shaped like Hershey Kisses, and its roads bear names like Cocoa Avenue.
goo.gl/N5PXK1

Photographer: Daniel Acker/Bloomberg; Not Just Flying Selfie Sticks: World’s Top Drone-Maker Aims Higher
Manufacturers go large to carry payloads and passengers
Selina Wang – Bloomberg
With its ubiquitous Phantom drones, Chinese manufacturer SZ DJI Technology Co. brought aerial photography to millions. Now, with dozens of competitors biting at its heels, the world’s biggest producer of consumer drones needs to prove that its products are more than just glorified selfie sticks.
goo.gl/FvIb3b

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