John Lothian Newsletter: LSE’s Derivatives Market to Launch Despite Talks With Rival; Exchange consolidation puts clearing house risk in the spotlight; U.S. watchdog to probe Fed’s lax oversight of Wall Street

Mar 7, 2016

First Read

2016 and Counting…
Carl Gilmore, President, Integritas Financial Consulting
Carl Gilmore Good morning John Lothian Newsletter readers! It is good to be back as the guest editor for the week, and I want to thank my friends at JLN for the opportunity. For those of you who don’t know me, let me take a moment and introduce myself. My name is Carl Gilmore and I am the president of Integritas Financial Consulting. I’ve spent the last 26 years working for futures commission merchants and broker-dealers in operational, risk management, compliance, legal, client-facing and executive roles. Along the way I think I’ve done just about every job there is to do in an FCM. I’m also an attorney (please don’t hold that against me!!).

For a quarter of a century I’ve had a front row seat to many of the developments, problems and initiatives our industry has faced. I’ve watched us when we are at our best and I’ve watched us when we are at our worst. Nonetheless, throughout it all I’ve considered myself a fortunate person to be able to work in this business, and the ingenuity, creativity and hard work of everyone that I’ve met along the way is what makes me optimistic that the futures industry will not only survive, but thrive!

I started Integritas in 2015 to help futures industry participants navigate regulatory complexity. Since the onset of the financial crisis risk management, compliance, operations and regulatory disciplines have collided, in sometimes unintended ways. Fortunately (or unfortunately – depending on your point of view) I sit at the intersection of all of those disciplines by virtue of the history described above. If you want to learn about Integritas, take a moment and visit our website at

There are lots of things happening in our business these days. Some things are positive and some things…well, not so much. Over the course of this week I hope to share with all of you my views and where I think we might be headed, because as an unknown philosopher once said – “We all need to take great interest in the future because we will spend the rest of our life there.” On to the stories!


NFA Board Update—February 2016 Meeting
NFA Vice-Chairman Maureen Downs and President and CEO Dan Roth discuss highlights and other notable information from NFA’s February Board meeting, including Board elections, proposed Regulation AT and cybersecurity.
***DA: The first of these quarterly video updates in the post-Hehmeyer era.

***CG – Definitely worth watching. NFA is lucky to have those two looking out for everyone.

Sponsored Content


The 2016 Trading Technology 40
Institutional Investor
Institutional Investor released its 2016 Trading Technology 40, a list of the top executives in the space. Coming in at number one was Raymond Tierney III of Bloomberg.

***Notables in the Top 40 include: Chris Isaacson of Bats, Ari Studnitzer of CME Group, Mayur Kapani of ICE, Gerald O’Connell of CBOE, Nicholas Themelis of MarketAxess, Robert Cornish of ISE and Cinnober CEO Veronica Augustsson


Bankers jostle to be junior as UK accountability rules kick in
New rules to hold bosses responsible for wrongdoing at British banks is deterring some bankers from taking on senior management roles and even prompting big-hitters to play down their own importance, say legal and compliance experts. Public anger that so few senior bankers were punished after taxpayers bailed out the industry in the financial crisis, or for scandals such as Libor and currency-market rigging, has led to the rules which make it easier to hold them to account.

***CG: Working your way down the ladder.


FTSE 100 companies give less to charity
Charitable donations by the UK’s largest companies have fallen sharply, with cuts by a few large donors having the greatest impact, according to new research. Giving by companies in the FTSE 100 declined by 17 per cent in 2014, compared to 2013, according to the Charities Aid Foundation.
***CG: Come on, UK companies. Are you kidding?

***JK: You can make up for it by playing in the Futures For Kids Tennis Tournament at FIA Boca, with matching donations from sponsor Trading Technologies.

***DA: Or the Friday golf outing at Boca, sponsored by UBS and also to benefit FFK.


Bridging the Week by Gary DeWaal: February 29 – March 4, and 7, 2016 (Electricity; Prearranged Trades; Delivery Line Freshening; FCPA; Limiting Bank Exposure)
by Gary DeWaal, Katten Muchin Rosenman LLP
Last week, a federal court in California refused to stop the Federal Energy Regulatory Commission from seeking to affirm its July 2013 order that a bank and four of its traders manipulated electricity prices from 2006 to 2008 to benefit the bank’s swap positions, while the Securities and Exchange Commission settled charges with a company, claiming the firm’s hiring of relatives of Chinese government officials constituted violations of the Foreign Corrupt Practices Act. In addition the Board of Governors of the Federal Reserve System proposed rules to limit the credit exposure of big banks to any single counterparty. As a result, the following matters are covered in this week’s edition of Bridging the Week.


***CG: Always worth reading.

Lead Stories

LSE’s Derivatives Market to Launch Despite Talks With Rival
Bloomberg Business
London Stock Exchange Group Plc will go ahead as planned with the launch of its new derivatives market, even though the venue will compete with a market run by potential merger partner Deutsche Boerse AG. The project, called CurveGlobal Ltd., is on track to start trading later this year, according to LSEG Chief Executive Officer Xavier Rolet. The venture is a consortium with banks and the Chicago Board Options Exchange, and is explicitly designed to take on the giants of European interest-rate futures trading.

***CG – LSE throws some of our exchange friends a curve ball. Stay tuned.

Exclusive: U.S. watchdog to probe Fed’s lax oversight of Wall Street
A U.S. watchdog agency is preparing to investigate whether the Federal Reserve and other regulators are too soft on the banks they are meant to police, after a written request from Democratic lawmakers that marks the latest sign of distrust between Congress and the central bank.
***DA: The term “regulatory capture” is about to enter the vernacular.
***CG – Yikes. That about sums it up.

Exchange consolidation puts clearing house risk in the spotlight
Philip Stafford,
LSE and Deutsche Börse said that a combined Europe-based infrastructure group would create “significant benefits” for customers.
The exact nature of the savings has yet to be unveiled but they are unlikely to fall on investors who just want to trade shares on the market.

***CG – More risk in fewer hands. Hmmm….

Exchanges merger will settle London versus Frankfurt fight
Financial Times
It happened when the eurozone debt crisis forced Germany’s hand on sovereign bailouts. And we may see it again with a planned Anglo-German corporate merger, which would resolve a UK-eurozone stalemate over the location of the euro’s financial nerve centre.

***CG – Not sure it settles anything. It just changes the field of play.

Fight Over Sale of London Stock Exchange Is About to Get Nasty
A fight for control of London Stock Exchange Group Plc could get bare-knuckled as potential buyers jockey for dominance in an industry that’s quickly consolidating. After LSE said it was in merger talks with Germany’s Deutsche Boerse AG, the two largest exchange owners in the world, CME Group Inc. and Intercontinental Exchange Inc., or ICE, may step in with unsolicited offers.

***CG – What a surprise. Recall what happened when CME announced its bid to acquire the CBOT.

BoE set to review market risk managers
Financial Times
The Bank of England is set to review operations of the market risk managers at the heart of the bid for the London Stock Exchange Group, as average daily trading payments held at the utilities topped £80bn last year.

Nasdaq joins race to sell blockchain tech
Financial News
The global exchange group has received growing interest from clients of its market technology business on blockchain-based services, according to Fredrik Voss, vice-president and head of blockchain strategy at Nasdaq.
Nasdaq already provides exchange, clearing house, depository and surveillance technology to many large market structure providers. Voss believes these existing relationships, and the fact that clients often need a wide range of market technology solutions that connect to each other, give the group an edge in offering blockchain services.

***CG – Blockchain is coming faster than everyone thinks. More on that later this week.

CME Group and Thomson Reuters Announce China Construction Bank as First Chinese Bank to Join the LBMA Silver Price
CME Group
CME Benchmark Europe Limited and Thomson Reuters have operated the LBMA Silver Price since August 2014 when they took over responsibility from the London Silver Market Fixing Limited. CCB will be the first Chinese bank and the sixth price participant, joining HSBC Bank USA NA, JPMorgan Chase Bank, The Bank of Nova Scotia, The Toronto Dominion Bank and UBS AG.

Exchanges merger will settle London versus Frankfurt fight –
Sometimes in Europe, market forces settle matters where politics has hit an impasse. It happened when the eurozone debt crisis forced Germany’s hand on sovereign bailouts. And we may see it again with a planned Anglo-German corporate merger, which would resolve a UK-eurozone stalemate over the location of the euro’s financial nerve centre.

America’s Marijuana Exchange and the Wall Street Vets Behind It
Bloomberg Business
Legal marijuana is a $5 billion business in the U.S., and Steve Janjic figured he’d get a piece of it. With a commodity exchange. For a product that can’t be transported across state lines. Not to worry. “It’s never easy to pioneer an industry,” says Janjic, a former foreign-exchange executive at Tullett Prebon LLC who has put $1 million into Amercanex Corp., an electronic cannabis-trading platform that handles sales of about 100 to 150 pounds of weed a week.

***CG – Perhaps they could utilize block “chain smoking” technology.

Connors Set to Leave BAML
Profit & Loss
Kevin Connors is leaving his position as global head of FX sales at Bank of America Merrill Lynch (BAML), according to market sources. Although a spokesperson from BAML declined to comment on Connors’ departure, Profit & Loss understands that he has informed the bank of his intention to leave in order to pursue philanthropic interests.

Jamie Dimon on Finance: “Who Owns the Future?”
Bloomberg Business
What is the future of finance? Will Silicon Valley challenge Wall Street? Can China build global banks? There are few better places to contemplate such questions than Jamie Dimon’s office, high in JPMorgan Chase’s headquarters in New York City above Park Avenue.

***CG – I’ve great respect for Jamie Dimon. However, I suspect there are other places to contemplate the future.

Faith in central banks’ healing powers faltering: BIS
Financial markets’ shaky start to the year shows they are losing faith in the “healing powers” of central banks, the Bank for International Settlements (BIS) said on Sunday while voicing concerns over sub-zero interest rates and emerging economies. The Swiss-based organization, which fosters cooperation between central banks in the pursuit of monetary and financial stability, said that recent worries over China’s economy, oil and commodity prices and some European banks had come as fundamental shifts take place in the global economy.

Bank Bondholders Helped Fuel Tumble in Share Prices, BIS Says
Bloomberg Business
A slump in financial shares was partly driven by bondholders hedging the riskiest type of banking debt, according to the Bank for International Settlements. “Movements in the prices of bank securities have been exacerbated by market dynamics,” BIS said in a report published Sunday. Fixed-income investors may have shorted bank stocks to offset potential losses from contingent-convertible, or CoCo, notes, said the Basel, Switzerland-based coordinator of the world’s biggest central banks.

***CG – I suppose we have to blame it on someone.

A world stumped by stubbornly low inflation
Lawrence Summers in
Today’s risks of embedded low inflation tilting towards deflation and of secular stagnation in output growth are at least as serious as the inflation problem of the 1970s. They too will require shifts in policy paradigms if they are to be resolved. In all likelihood the important elements will be a combination of fiscal expansion drawing on the opportunity created by super low rates and, in extremis, further experimentation with unconventional monetary policies.

***CG – It isn’t the 70’s that worry me when I think about these policies. It’s the early 80’s.


Fed’s Yellen says counterparty credit plan will reduce systemic risks
Neil Roland, MLex
US Federal Reserve Chairman Janet Yellen said a new proposal to limit the credit exposure of the largest US banks to each other and other counterparties will set a “bright line” that will help reduce risks. “We are determined to do as much as we can to reduce or eliminate the threat that trouble at one big bank will bring down other big banks,” she said Friday. is such a hovel

Prisoner’s Dilemma reveals bond fund risks
The road to Hell is paved with well-intentioned risk management initiatives. Burgeoning bond funds are seen as amplifying risks of a market rout. Fund managers such as BlackRock in the US and Aberdeen Asset Management in the UK have set up extra credit lines as shock absorbers. But British regulators are now worried these could exacerbate a crisis rather than avert it.

*** CG – I knew it. The road to Hell is actually paved with risk managers!

Italian closet trackers sanctioned by regulator
The Italian regulator has taken action against some of the largest investment companies in its home market for mis-selling actively managed funds that closely hugged an index. Consob, the Italian finance watchdog, investigated the 10 largest domestic asset management companies over concerns they were selling funds that charged high fees for active management but simply following an index.

Hong Kong’s Securities And Futures Commission Publishes Consultation Conclusions On Principles Of Responsible Ownership
The principles, which are voluntary, are intended to apply to investors who invest money or hold shares on behalf of clients or stakeholders to whom they are accountable.

Exchanges & Trading Facilities

Exchanges: How LSE’s Strategy Tees Up a Deal
Some days on the stock markets it is hard to discern a clear direction. Last year’s results from the London Stock Exchange, which is discussing a merger with Deutsche Börse, were a bit like that.

Canada’s TSX hires Bitcoin guru, studies currency’s technology
The Toronto Stock Exchange has hired a Bitcoin entrepreneur as its first chief digital officer as it explores the capabilities of blockchain, the technology behind the virtual currency, a senior executive at TSX parent TMX Group said on Thursday.

***CG – Believe it. Blockchain is coming fast to an exchange near you.

Survey finds investors outside Hong Kong and Exchange Participants’ principal trading are driving trading growth in HKEX’s securities market
HKEX News Release
According to the survey findings, the contribution of investors outside Hong Kong to total trading in HKEX’s securities market from October 2014 to September 2015 was steady at 39 per cent, while their trading value increased by 71 per cent from the previous 12-month period , compared to an increase of only 45 per cent in trading value from local investors, whose market share fell to 39 per cent. The value of EPs’ principal trading increased by 124 per cent, and its market share rose to 22 per cent.

Singapore bourse to boost freight derivatives with pursuit of Baltic Exchange
Singapore Exchange’s (SGX) (SGXL.SI) bid to buy London’s Baltic Exchange is aimed at burnishing its derivatives credentials among ship brokers and commodity merchants, fitting hand in glove with its efforts to develop Asian pricing benchmarks for bulk commodities.

Nasdaq Appoints Lauri Rosendahl As New President Of Nasdaq Nordic And Nasdaq Stockholm
Nasdaq Inc. (NASDAQ: NDAQ) today announced that Lauri Rosendahl has been appointed President of Nasdaq Nordic and Nasdaq Stockholm. Rosendahl has been with Nasdaq since 2009 as Senior Vice President and President of Nasdaq Helsinki.

Tokyo Stock Exchange: Handling Of Tick Sizes From April 1 Onward
As previously announced, TSE have applied a separate set of narrower tick sizes to TOPIX100 constituents from January 14, 2014 onward. The handling of the application from April 1 onward shall be as follows.

ASIC report: ASX, Chi-X Australia meet cyber resilience obligations
The Australian Securities and Investments Commission (ASIC) has earlier today released a “Cyber resilience assessment report: ASX Group and Chi-X Australia Pty Ltd”, with the document presenting the assessments of the cyber policies at Australia’s major domestic financial market infrastructure providers.


Donald Trump’s Three Friends in Finance
Donald Trump’s supporters are a collection of strange bedfellows. Among the most surprising: two billionaire financiers who teamed up against Mr. Trump in a legal battle less than a decade ago.

Donald Trump’s business disaster is worse than you think
Why is Donald Trump getting a pass for his disastrous and incompetent track record of running a public company? The Republican front-runner has made much of his supposed “success” in business and says he now wants to do the same for America. But the only part of his business track record for which we have the full picture shows that Trump wasn’t a successful executive but an absolute catastrophe.

Clinton Sees ‘No Basis’ for Indictments in E-Mail Server Probe
Bloomberg Politics
Hillary Clinton said there’s “no basis” for indicting anyone after one of her former aides was reportedly granted immunity in the U.S. investigation of her use of a private e-mail server when she was secretary of state.

Hedge Funds & Managed Futures

Unicorn Slaughter Continues: Mutual Funds Lower Startups’ Valuations
Once considered one of the most promising investments on Wall Street, the legendary title of unicorn—startups with a valuation of $1 billion or more—is becoming a name that ring alarm bells among investors.

***CG – could it be that unicorns don’t really exist?

Finance theory creates a distorted image of the investment world
Finance theory seemed to work well enough in stable macroeconomic environments, but is now misleading asset allocators into false complacency. The things we name risk free — an abuse of the English language — are now some of the riskiest. Investing in assets perceived as risky may constitute the best hedge available for the worst scenarios.

Inside investment: When Harry met Mr Market
Euromoney magazine
Monetary authorities still have ammunition aplenty. Recent inflation readings in the US and Sweden also suggest the deflationary doom-mongers are wrong.

Negative Interest Rates Are Working Just Fine So Far: BIS
Bloomberg Business
Negative interest-rate policies currently in use by central banks around the world have worked through their respective systems in much the same way as positive rates, though it’s not known how far below zero that would continue to be the case, the Bank for International Settlements said.

***DA: I guess they didn’t ask my dad, an octogenarian living on a fixed income, how he feels about the double whammy of negative interest rates to stoke inflation.

***CG – and therein lies the problem.

Bank for International Settlements warns of negative rates risk
Negative interest rates risk backfiring the longer and more deeply central banks in Europe and Japan venture into this unconventional monetary policy, economists from the Bank for International Settlements have warned.

GRAPHIC-One year of ECB quantitative easing
A year into the European Central Bank’s money printing programme, Mario Draghi and his colleagues have spent more than 700 billion euros, and yet the results are far from what they would have hoped. Having spent the equivalent of 1.3 million euros a minute or 2,000 euros ($2,200) for every man, woman and child in the 19-country euro zone, inflation barely registers, economic growth remains sluggish, and stock markets are down 13 percent.

Iron Ore Jumps Most on Record as Market Goes ‘Berserk’
Bloomberg Business
Iron ore soared the most ever after Chinese policy makers signaled their willingness to buttress economic growth, boosting the outlook for steel consumption in the top user and igniting speculation that some investors who’d bet against the market had been caught out.

Top Chinese Official Rebuts Soros Prediction for Hard Landing
Bloomberg Business
China will avoid the kind of hard landing predicted by the likes of billionaire investor George Soros as policy makers still have enough tools to maintain reasonable growth as they seek to overhaul the world’s second-largest economy, the country’s top economic planner said.

Hedge funds take a hit after Budget
Business Standard News
The 1,400-point-plus rally after the Union Budget has caught hedge funds on the wrong foot, say market people. A number of large hedge funds and foreign institutional investors had gone short on the Indian market before the Budget. However, when the market turned around, they were forced to cover their shorts, that too at a loss of five-six per cent. “Domestic entities, including fund houses, who had kept their faith and invested consistently have come up trumps after the Budget,” says a fund manager.

Banks & Brokers

Fitch cuts Barclays Africa after parent says to sell down stake
Credit ratings agency Fitch downgraded South Africa’s Barclays Africa Group (BGAJ.J), citing a lower likelihood of support from the bank’s British parent as it sells down its stake. Barclays plc (BARC.L) said on Wednesday it would sell its 62 percent holding in Johannesburg-listed Barclays Africa down to a minority stake over the next two to three years.

HSBC Says ‘Cash Is King’
Bloomberg Business
Despite some recovery in the world’s equity markets following a turbulent start to the year, strategists at HSBC Holdings Plc are urging caution when attempting to buy a dip in stocks. “Cash is king in a world with [debt] overhangs,” the team, led by Global Head of Asset Allocation Fredrik Nerbrand, said in a note published late on Thursday

BofA Bond, Stock Trading Revenue Said to Decline This Year
Bloomberg Business
The second-largest U.S. lender’s revenue from fixed-income trading, which includes credit, currencies and commodities, dropped about 10 percent from a year earlier, the people said, asking not to be identified discussing the firm’s performance. The bank has collected 11 percent to 12 percent less from equity trading this quarter than last year, one of the people said.

European companies urged to back investment banks
European companies should do more to help the continent’s investment banks stay in the global game, a new policy paper from think-tank Bruegel argues. The paper charts the demise of European investment banks in the past few years and says European corporates should help stem this by making sure to have at least one European bank involved in every deal.

In JPMorgan Fintech Bunker, Coders Are Too Focused for Foosball
Bloomberg Business
For the biggest U.S. bank, the best way to fight Silicon Valley is to mimic it. JPMorgan Chase & Co.’s. new technology hub across the street from the Hudson Yards development on Manhattan’s West Side — a 125,000-square-foot space so vast it’s subdivided into five neighborhoods — has all the trappings of a startup: foosball tables, a game room, industrial decor and fridges stocked with sodas and snacks.

Clearing & Settlement

Intercontinental Exchange announces COO appointments at ICE Futures U.S. and ICE Clear U.S.
Press Release
Hester Serafini joins ICE as COO of ICE Clear U.S., effective today. In this role, she reports to Tom Hammond, President of ICE Clear U.S., and is responsible for managing the clearing house operations and interpreting and implementing regulatory changes. Serafini joins the company from J.P. Morgan, where she led the OTC clearing and intermediation business for credit, FX and rates derivatives in Europe, the Middle East and Africa. Before that, she was global head of credit prime brokerage and clearing for Deutsche Bank.

Blockchain: Can Big Banks Now Go Bye-Bye?
In my memo last week, I counselled that Neel Kashkari’s TBTF initiative must consider the critical, if unheralded, role big banks play preserving the financial-market infrastructure on which payment, clearing, and settlement depend along with the rest of us. This generated a lot of comment from proponents of big-bank break-up, who countered that nice though infrastructure is, we don’t need big banks for it because blockchain can make them disappear. Maybe so, but we were all supposed to have flying cars by now.

Indexes & Products

China A-shares set for MSCI index breakthrough
Euromoney magazine
China took a big step towards opening its domestic markets to international capital in February in a move that might win the A-share Chinese stock market membership of key MSCI benchmark indices.

How the U.S. Government Launched the $3 Trillion ETF Industry
Bloomberg Markets
The 840-page report from the U.S. Securities and Exchange Commission contained an unexpected present.
It arrived on Nathan Most’s desk at the American Stock Exchange in February 1988. Four months earlier, on Oct. 19, Wall Street had collectively gasped as the Dow Jones industrial average plummeted 508 points, or 22 percent. Black Monday, as the rout became known, remains the biggest one-day crash in history, and this 5-pound white paper, titled The October 1987 Market Break, was the SEC’s postmortem on the event.

China indexing dreams could finally come true
Pensions & Investments
Reforms announced by Chinese regulators last month have put the country’s stock and bond markets on the threshold of gaining entry to global benchmark indexes. The quest of Shanghai- and Shenzhen-listed A shares to win inclusion in benchmarks, such as MSCI’s emerging markets stock index, has been a drawn-out affair. By contrast, the People’s Bank of China’s announcement on Feb. 24 of quota-free access to China’s interbank bond market for all but the most speculative foreign investor segments was sudden. It could prove to be the more significant development for foreign institutional investors, some market players contend.


At RSA Conference, Unlikely Allies Address Value of Digital Security
The New York Times
Speaking to an audience of computer security professionals at the RSA Conference, Mr. Yoran, who heads the RSA Security division of the data-storage provider EMC, explained his exasperation with officials who he says want to weaken the data protection in computer products despite the growing threat of hackers and other attacks.

Ray Tomlinson, who invented email and popularized @ sign, dies at 74
Ray Tomlinson, the computer scientist who invented modern email and came up with the idea of using the “@” sign in email addresses, has died. Raytheon, Tomlinson’s employer, confirmed his death Sunday.

Lombard Risk Launches AgileREPORTER For Global Regulatory Reporting – The Solution That Makes Regulatory Data A Value-Added Decision Tool
Lombard Risk Management, a leading provider of collateral management and regulatory reporting solutions for the financial services industry, is pleased to announce the launch of AgileREPORTER, its next generation agile solution for regulatory reporting. Today, the company also unveils its new global identity; one that reflects the agility and competitive advantage the firm brings to its clients, and launches its new website.


Leaked Barclays US supervisory report from New York Fed
Business Insider
Barclays was the first bank to settle with authorities over Libor fixing in 2012. But that was just the start of its troubles.

March is Fraud Prevention Month – Three steps to protect yourself from investment fraud
AMF Quebec
March is Fraud Prevention Month and the Canadian Securities Administrators (CSA) are encouraging the public to research investments when making any investing decisions. The CSA recommend that investors follow these three easy steps

Forex scam: CBI conducts fresh searches in Delhi, NCR
Business Standard News
The CBI on Sunday carried out searches at 10 locations in Delhi and the National Capital Region (NCR) as part of its investigation into the alleged Rs.6,000 crore Bank of Baroda forex scam.

Environmental & Energy

China carbon dioxide emissions may be falling, says LSE study
China’s carbon dioxide emissions are likely to peak by 2025 — and may even have done so already — according to a new paper that suggests the country’s economic slowdown and transition, combined with rapid adoption of renewable energy, mean previous projections of China’s emissions are far too pessimistic.

Ontario PC leader Brown announces revenue-neutral climate strategy
The Globe and Mail
Ontario Progressive Conservative Leader Patrick Brown has staked out new ground on climate change, announcing to delegates at his party’s weekend convention a climate-change strategy that includes carbon pricing but is revenue neutral.

U.A.E. Sees Crude Markets Correcting Before Year-End — Energy Journal
MoneyBeat – WSJ
Global crude markets will see a correction before the end of this year as current prices are forcing producers to freeze production, United Arab Emirates energy minister Suhail al-Mazrouei said, Nicolas Parasie and Summer Said report. Mr. Mazrouei said there is daily evidence the oil glut is decreasing while demand is solid.

Oil jumps as sentiment boosted; analysts warn of glut
Oil prices extended gains on Monday that have lifted crude benchmarks by more than a third from this year’s lows, as tightening supply and an improving global outlook strengthened the sentiment for a market recovery.


Hong Kong and China ‘heading for bigger showdown’
Hong Kong and China will remain locked on a collision course unless both sides can make tough compromises, Hong Kong delegates have warned on the sidelines of China’s annual legislative sessions in Beijing. Tensions between Beijing and the semi-autonomous city have escalated to the worst point since Britain handed back the territory in 1997.

IMF Will Identify Yuan in FX Reserve Database From October
Bloomberg Business
The International Monetary Fund said it will start identifying the yuan in its official foreign-exchange reserves database starting in October, advancing China’s push for a bigger international role of its currency, which is also known as the renminbi.

In New Economic Plan, China Bets That Hard Choices Can Be Avoided
The New York Times
As economic growth has fallen while debts and excess industrial output have risen, Chinese leaders have faced growing questions about whether they will carry out the painful policy surgery many experts say is needed to cut away the financial dead weight on the economy.

China says economy will ‘absolutely not’ experience hard landing
China’s economy isn’t headed for a hard landing and isn’t dragging on the global economy, China’s top economic planner said on Sunday, but uncertainty and instability in the global economy do pose a risk to the country’s growth. China on Saturday acknowledged it faced tough battle to keep world’s No.2 economy growing by at least 6.5 percent over the next five years while pushing hard to create more jobs and restructuring state-owned enterprises.

China’s $175 Billion Outflow Wasn’t Investor Flight: BIS
Persistent capital outflows from China since mid-2014 were probably driven more by local companies paying down their dollar-denominated debt — in anticipation of a stronger U.S. currency — than investors ditching assets, according to the Bank for International Settlements.

Govt may set up expert panel on bank consolidation
Business Standard News
Finance Minister Arun Jaitley said on Saturday that the government was considering setting up an expert committee to look into consolidation of state-owned banks. Such a body, if set up, will be separate from the Banks Board Bureau, which is also meant to look into consolidation of banks among other things.

Sebi to fast-track market reforms, ease startup funding
Business Standard News
Seeking to expedite its various reform measures to deepen the capital markets, Sebi is set to usher in easier capital raising norms for startups and remove ambiguities from its takeover regulations.

Frontier Markets

Emerging Stocks Have Best Rally in 11 Months on Oil, Fed Outlook
Emerging-market stocks rose, extending the longest rally since April, as oil’s advance toward $40 a barrel bolstered commodity companies and U.S. jobs data suggested the Federal Reserve won’t rush to raise interest rates. The yuan ended a four-day gain after Chinese leaders refrained from announcing specific support measures.

Barclays’ African sale shows decline of universal banking model
Barclays announced last week that it intends to sell its African operations. The emergence of Bob Diamond, the bank’s former chief executive, as a possible buyer raises the question of which bits of its business it should be cutting.

In Volatile Year, Smaller Markets Stand Tall
The aftershock of China’s stock-market mayhem earlier this year has had a ripple effect across global markets, affecting the U.S. and Europe. And experts say the uncertainty isn’t over.

Is It Time to Make Up With Emerging Markets?
Last year, investors pulled back sharply from emerging-market stocks and bonds. Net outflows hit $76.6 billion, according to data compiled by J.P. Morgan. Currencies from the ruble to the rand sank sharply; the MSCI Emerging markets index lost 14.9%.

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CME to permanently close most trading pits

CME to permanently close most trading pits

First Read $40,626/$300,000 (13.5%) Anonymous ++++ Hits & Takes John Lothian & JLN Staff Without fanfare or amplification from its executives, the CME Group shut the books on most -- but not all -- of its floor trading history Tuesday afternoon with the...

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