First Read

Nonbank Runs – A Flight of the Fancy
Doug Ashburn – JLN

“Potter’s not selling; Potter’s buying. Why? Because we’re panicking and he’s not!” – George Bailey

We all remember the scene in “It’s a Wonderful Life when James Stewart (as George Bailey) tries to stave off a run by nervous depositors at his Bailey Bros. Building and Loan while, across town, financier Mr. Potter looks to swoop in at fire sale prices. These days, according to a panel of economists at Monday’s CME Group-MSRI Prize in Innovative Quantitative Applications seminar, it may well be the Mr. Potters of the world who touch off a bank run.

More on that in a moment. But first, here is a little about the annual prize awarded this year to University of Chicago finance professor Douglas Diamond. In 2006, CME Group teamed up with the Mathematical Sciences Research Institute (MSRI) to “reward exemplary work in the field of mathematical sciences and recognize the vital impact quantitative research and application play in shaping global financial markets.” Several past CME-MSRI winners, including Thomas Sargent, Jean Tirole, Robert Shiller and Lars Peter Hansen, have gone on to receive the Nobel Prize in Economics. Perhaps this bodes well for Prof.Diamond. For more on the prize and its past winners, click HERE

Monday’s panel discussion included several leading voices in the field of financial market structure, fragility and liquidity crises. All cite Diamond’s work with Philip Dybvig in 1983, “Bank Runs, Deposit Insurance, and Liquidity” as having set the standard model for analyzing bank panics.

Read the rest of the column at JohnLothianNews.com
CME-MSRI Prize 2015
***2015 CME Group-MSRI Prize in Innovative Quantitative Applications, (L-R) David Eisenbud, Douglas Diamond, Leo Melamed

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Douglas Diamond: The Father of Modern Banking Theory Continues Making Progress
By Kira Brecht – Open Markets
In the finance world, Douglas Diamond’s pioneering work on banking laid the groundwork for almost all modern financial economics research in that area. He played a key role in the development of the innovative and influential Diamond-Dybvig model of bank runs and related financial crises, which demonstrates how an institution with long-maturity assets and short-maturity liabilities may be unstable.
goo.gl/aAcZEp

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Sponsored Content
FinTech Exchange 2016 | Registration is Now Open – Limited Seats!

It’s back–the 2nd annual FinTech Exchange is set for April 21, 2016 in Chicago and we want to see you there! Hosted by Barchart OnDemand, this one-of-a-kind event brings together hundreds of financial markets, trading and technology leaders for an engaging event with 20 onstage presentations focusing on trading software, market data, cloud infrastructure, artificial intelligence, bitcoin, blockchain, binary options, and even more like R&D tax credits for fintech and trading firms. Last year’s event sold out, so get your tickets now before they are gone.

To view the event program or register, please visit www.fintechchicago.com

Fintech Exchange 2016

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Eurex Clearing receives U.S. regulatory approval
Eurex
Eurex Clearing: Eurex Clearing, Europe’s leading clearing house and part of Deutsche Börse Group, has been approved by the Commodity Futures Trading Commission (CFTC) as a registered Derivatives Clearing Organization (DCO). The CFTC issued the corresponding Order of Registration on 1 February 2016.
goo.gl/X9WBRu

***** Does anyone remember why we applied for this? Who is Rudy Ferscha anyway?

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Top US financial groups hold secret summits on long-termism
Stephen Foley and Ben McLannahan in New York – FT
The world’s largest asset managers have held secret summit meetings to hammer out proposals for improving public company governance to encourage longer-term investment and reduce friction with shareholders.
goo.gl/CMjuzi

***** I was going to attend, but then I forgot the secret handshake to get in. So embarrassing.

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A (Pretty) Penny for your Thoughts
Today, we plan to set a closing date for this year’s (very short!) survey. The bottom line is the cutoff date is coming, so please don’t wait. Help us help you by giving us three minutes of your time and sharing your thoughts. Plus, we tried to make it fun and colorful. The final kicker? You could win an Apple Watch. Click HERE to get started.

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CME picks former FX research head as digital lead
By Anna Irrera – Financial News
CME Group, the US futures giant that is one of the financial institutions at the forefront of work assessing the potential of blockchain technology, has handed its former global head of foreign exchange and metals research a new brief leading its digital efforts.
goo.gl/gtFIfT

***DA: Sandra Ro is the perfect choice to lead CME Group’s digital efforts, as you can see by watching her talk at last fall’s MarketsWiki Education event in London.

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Sandra Ro, CME Group – Financial Services Disruption: the Rise of Bitcoin and Blockchain
MarketsWikiEducation.com

“There is this big debate as to whether bitcoin is a currency or a commodity. I would argue that it is its own category.”

Sandra Ro is a veteran in the world of bitcoin and blockchain, which simply means that she has been following the cryptocurrency and its underlying technology for over two years. In this MarketsWiki Education talk, Ro takes us through the nascent world of digital currencies, from the volatility of bitcoin, to the rise of blockchain technology and massive investments being made by venture capitalists, banks and other strategic investors. According to Ro, the next few decades are going to be exciting.

Watch the video »
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Yesterday’s Top Three
Apparently, clickbait headlines and story lines aren’t just for Buzzfeed; they attract clicks even in the John Lothian Newsletter. The top clicked story in yesterday’s newsletter was not part of our usual rotation of publications – the New York Post Trader exposes sexist horrors of the Wall Street ‘frat house’. The number two story contains references to IEX, the “Flash Boys” platform, so of course it polled well –
IEX Debate Escalates With Public Knock to NYSE’s Systems. Third place was the IEX commentary itself, with its clickbait-y title,
A NYSE Speed Bump You Weren’t Aware Of

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Wine Here! A Football Bud Gets Competition
By KEN BELSON – WSJ
Beer and football may go together like wine and cheese. But lately more and more people seem be favoring a Bordeaux over a Bud Light.
goo.gl/j2gqXv

***DA: An unfair comparison if you ask me. Bud Light is more akin to white zinfandel or Boone’s Farm than a fine Bordeaux.

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Lead Stories

More Dark Pool Investigations Under Way, Says New York’s Top Cop
Keri Geiger,Sam Mamudi, Christie Smythe – Bloomberg
Barclays, Credit Suisse reach record trading-venue settlements; Banks pay $154 million in deals with SEC and New York’s AG
Additional actions are likely against private trading venues run by some of Wall Street’s biggest banks, the nation’s top securities regulator and New York state’s attorney general said today as they announced record settlements with two global banks over their so-called dark pools.
goo.gl/pYKp8C

ISE Mercury to Launch on February 16, 2016; SEC Approves ISE’s Form 1 Application for Third Options Exchange
ISE
The International Securities Exchange Holdings, Inc. (ISE Holdings) today announced that the Securities and Exchange Commission (SEC) has approved its Form 1 application for ISE MercuryTM, ISE Holdings’ third options exchange. On February 16, 2016, ISE Mercury will begin trading with a small number of symbols and expects to quickly roll out listings in its first few weeks of operation.
goo.gl/lxk2Lf

Barclays reshuffles US derivatives leadership; Stephen Li will run the bank’s US derivatives business as Michael Yarian, head of its rates trading unit, departs.
By Joe Parsons – The Trade News
Barclays has promoted Stephen Li, the bank’s global head of OTC clearing, to run its US futures and OTC business, TheTRADE Derivatives understands.
goo.gl/ajouMZ

Nasdaq Completes Acquisition of Chi-X Canada
By GlobeNewswire
Nasdaq (Nasdaq:NDAQ) today announced the completion of its acquisition of Chi-X Canada, an Alternative Trading System for Toronto Stock Exchange (TSX) and TSX Venture listed securities, from Chi-X Global.
goo.gl/lhoAPc

Some Heresy on Wall Street: Look Past the Quarter
Andrew Ross Sorkin – NY Times
Most money managers clamor for companies to provide detailed guidance on their next quarter, down to the penny — but not the world’s largest investor.
goo.gl/lNum2P

‘Dark Pool’ Settlements Bring Tangled Relationships to Light; Banks quietly catered to high-speed traders in dark pools
By SCOTT PATTERSON – WSJ
The latest round of penalties over “dark pools” highlights how reliant banks and exchange operators have become on business from high-frequency traders—even on platforms that promised to blunt their advantage.
goo.gl/9RXCjM

Regulators Aren’t Done With ‘Dark Pool’ Investigations
By LIZ MOYER – NY Times
Settlements by Barclays and Credit Suisse for misrepresenting their private stock trading sites to customers are unlikely to be the last as regulators continue to pursue abuses in electronic trading.
goo.gl/HxAPT6

U.S. justice officials seek details on Tullett-ICAP deal
BY ESHA VAISH AND VIDYA L NATHAN – Reuters
The U.S. Department of Justice has requested additional information over British interdealer broker Tullett Prebon Plc’s (TLPR.L) proposed acquisition ICAP Plc’s (IAP.L) voice broking business, the companies said on Tuesday.
goo.gl/Clh9Ty

Regulatory

Keynote Speech of Chairman Timothy Massad before the Commodity Markets Council
CFTC
Today I’d like to discuss some of the recent actions we have taken – in areas such as recordkeeping requirements, margin requirements for uncleared swaps and in other areas. Then I’d like to discuss some of the issues on our agenda for the first part of 2016 that may be of interest to you.
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Statement of Chairman Timothy Massad on CFTC’s Decision to Grant Eurex Clearing AG Registration as a Derivatives Clearing Organization
CFTC
Today we are approving the registration of Eurex Clearing. I am very pleased that Eurex has chosen to register with the CFTC, and that the Commission has unanimously approved this application.
goo.gl/t08qUj

ESMA ISSUES OPINIONS ON UK PENSION SCHEMES TO BE EXEMPT FROM CENTRAL CLEARING UNDER EMIR
ESMA
The European Securities and Markets Authority (ESMA) has today issued a set of opinions regarding the exemption of 16 UK pension schemes from the obligation to centrally clear OTC derivative contracts under the European Market Infrastructure Regulation (EMIR).
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ESMA UPDATES ON SUPERVISORY WORK ON CLOSET INDEXING
ESMA
The European Securities and Markets Authority (ESMA) has published a Statement providing details of its work on closet index tracking funds.
/goo.gl/WDR26p

FCA criticised by MPs but escapes ‘no confidence’ vote; Watchdog faced heavy criticism
Carmen Reichman – Investment Week
MPs have severely criticised the Financial Conduct Authority (FCA) for recent blunders but the watchdog avoided a vote of no confidence in the House of Commons last night.
goo.gl/QAR7Tk

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

    • ICC: ICE Clear Credit Rulemaking: 2015
    • ICC: Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Revise the ICC Risk Management Framework (Release No. 34-76997; File No. SR-ICC-2016-001; January 29, 2016)
    • MSRB: MSRB Rulemaking Archive: 2015
    • MSRB: Notice of Filing of a Proposed Rule Change Consisting of Proposed Amendments to Rule A-3, on Membership on the Board (Release No. 34-76999; File No. SR-MSRB-2016-01; January 29, 2016); see also Exhibit 5
    • MSRB: Exhibit 2 (Release No. 34-76999; File No. SR-MSRB-2016-01; January 29, 2016)
    • NYSE Arca: Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the NYSE Arca Equities Schedule of Fees and Charges for Exchange Services (Release No. 34-77000; File No. SR-NYSEArca-2016-22; January 29, 2016); see also Exhibit 5

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Exchanges & Trading Facilities

Eurex: Trading statistics January 2016; Eurex Exchange: ADV 7.2 million contracts/ ISE: ADV 3.0 million contracts
Eurex
Eurex: In January 2016, the international derivatives markets of Eurex, part of Deutsche Börse Group, recorded an average daily volume of 10.2 million contracts (January 2015: 8.8 million). Of those, 7.2 million were Eurex Exchange contracts (January 2015: 6.6 million), and 3.0 million contracts (January 2015: 2.2 million) were traded at the New York based International Securities Exchange (ISE). The volume traded on the spot and derivatives power markets of the European Energy Exchange (EEX) amounted to 332.4 terawatt
goo.gl/NioHtM

ISE Holdings Reports Business Activity for January 2016
ISD
ISE and ISE Gemini combined to represent 17.4% of equity options market share, excluding dividend trades.
ISE and ISE Gemini reported a combined ADV of 3.0 million contracts.
Dividend trades made up 0.1% of industry volume in January 2016.
goo.gl/82cPJJ

Turnover at Deutsche Börse’s cash markets at 133.7 billion euros in January
Deutsche Börse
Order book turnover on Xetra, Börse Frankfurt and Tradegate Exchange across all asset classes stood at EUR133.7 billion in January (January 2015: EUR148.5 billion).
goo.gl/WeCu2T

CME Group Hit Record Average Daily Volume of 18.2 Million Contracts per Day in January 2016, up 16 Percent from January 2015
Average daily options volume reached a record 4.3 million contracts, electronic options also hit a record 2 million contracts per day traded; Energy average daily volume was a record 2.6 million contracts, which included a record for WTI crude oil average daily volume of 1.4 million contracts; Electronic trading reached a record 15.4 million contracts per day; Open interest was 107.9 million contracts, up 18 percent from December 2015, the highest ever monthly increase
goo.gl/eH6rdF

Boerse Stuttgart Generates Turnover In Excess Of EUR 6.9 Billion In January – Increases In Turnover In Equities, Securitised Derivatives, Investment Funds And Exchange-Traded Products
Mondovisione
According to its order book statistics, Boerse Stuttgart generated turnover in excess of EUR 6.9 billion in January 2016. The overall trading volume was more than 7 percent higher than in the previous month.
goo.gl/or7Eha

Key figures for SIX Swiss Exchange and SIX Structured Products
Exchange: January 2016
SIX
Trading turnover of CHF 112.7 billion (+13.8% month-on-month) and number of trades 4,635,785; Average trading turnover per day: CHF 5.6 billion
A total of 4,635,785 transactions were conducted on SIX Swiss Exchange and SIX Structured Products Exchange in January 2016, a month-on-month increase of 19.9%. The structured products and warrants segment posted the strongest growth, with 74,214 trades (+28.4%). The number of transactions in the equities including funds + ETPs segment increased by 20.2% to 4,437,167. There was an increase of 7.9% in the number of trades in the ETFs segment to 90,205. The only decline was in the CHF bonds segment, which, with 33,023 trades, saw a decrease of 3.1% on the December figure.
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CBOE to List SPX Wednesday-Expiring Weeklys Options
CBOE
Will Provide More Precise Trading, Hedging Opportunities; Align with VIX Weeklys Futures and Options Expirations
The Chicago Board Options Exchange (CBOE) announced that it plans to list S&P 500 Index (SPX) Wednesday-expiring WeeklysSM options beginning February 23, 2016.
goo.gl/Un3r7g

OneChicago Announces Trading Volume for January 2016; OneChicago finalizing plans for offering Basis Point at Cash Close trading
OneChicago
OneChicago, LLC (OCX), a securities finance exchange, today announced its January 2016 volume of 862,488, an increase of 58% year-over-year. OneChicago is a CFTC and SEC regulated exchange offering Single Stock Futures (SSF), a Delta One product, on approximately 1,800 equities, including ADRs and ETFs.
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CBOE Holdings Reports January 2016 Trading Volume; Total Volume of 103.0 Million Contracts; Up 14% from December 2015, Down 4% from January 2015; ADV of 5.4 Million Contracts; Up 32% from December 2015 and 1% from January 2015
CBOE
CBOE Holdings, Inc. (NASDAQ: CBOE) reported today that total trading volume in January for options contracts on Chicago Board Options Exchange® (CBOE®) and C2 Options Exchange (C2) and futures contracts on CBOE Futures Exchange (CFE®) was 103.0 million contracts, with an average daily volume (ADV) of 5.4 million contracts, increases of 14 percent and 32 percent, respectively, from December 2015.
goo.gl/kqxpK6

CBOE Futures Exchange Reports Gain In January 2016 Trading Volume; VIX Futures ADV Up 19% from January 2015; Record Volume Set During Extended Trading Hours; 5.2 Million VIX Futures Contracts Traded; VIX Posts Monthly ADV of 271,994 Contracts
CBOE
CBOE Futures Exchange, LLC (CFE®) today reported that January average daily volume (ADV) was up 19 percent from January 2015 and 32 percent higher than in December 2015. Exchangewide total volume also rose in January, up 13 percent compared with January 2015 and up 14 percent from December 2015.
goo.gl/vhR3Hs

Dark Pools Turned Out to Be Really Murky
By Matt Levine
Here’s how Credit Suisse Securities (USA) LLC described one of its dark pools, which it cleverly named Light Pool:
goo.gl/5FFqpX

Exchange Publishes Listing Document Simplification Guide
HKEx
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), published today (Tuesday) a new Guidance Letter (HKEX-GL86-16): “Guide on Producing Simplified Listing Documents Relating to Equity Securities for New Applications” (the Listing Document Simplification Guide).
goo.gl/Ja1kWr

SGX revises calculation methodology for minimum trading price requirement
SGX
Singapore Exchange (SGX) is changing the methodology used to determine whether a company share price meets the minimum trading price (MTP) requirement, following market feedback. The change comes after SGX’s extension last month to 1 September 2016 the date of the review of the volume weighted average price (VWAP) of shares of companies which consolidate their shares before 1 March 2016.
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TOCOM January Volume Averaged 128,910 Contracts per Day, Up 27.5 %; Crude Oil Futures Volume Hit New High for Second Consecutive Month
TOCOM
The Tokyo Commodity Exchange announced today that average daily volume for January 2016 was 128,910 contracts, up 27.5% from December 2015. TOCOM Dubai Crude Oil, one of TOCOM’s leading contracts, saw volume rise sharply – up 54.5% to 37,016 contracts. The Gold standard contract was also active with volume increasing 19.0% to 32,488 contracts.
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Politics

What Millennials Like About Bernie Sanders
By Cass R. Sunstein – Bloomberg
Bernie Sanders is the oldest candidate in the presidential race, but as of now, he seems to be the younger generation’s candidate. According to a recent survey, Sanders is favored by 46 percent of voters between the ages of 18 and 34, where Hillary Clinton is preferred by 35 percent.
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Hedge Funds & Managed Futures

Hudson Executive, Other Investors Call for CIT Group to Break Up; CIT owns planes and railcars, does various types of corporate lending and has an online bank
By RACHEL LOUISE ENSIGN and DAVID BENOIT – WSJ
A new activist hedge fund has taken a stake in CIT Group Inc. and wants the lender to break up, echoing a call that other investors have quietly made in recent months.
goo.gl/QDcEgX

Activist hedge fund wants lender CIT Group to break up: WSJ
Reuters
Activist hedge fund Hudson Executive Capital LP wants CIT Group Inc (CIT.N) to break up, the Wall Street Journal reported, citing people familiar with the matter.
goo.gl/wU86PC

Fidelity Writes Down Snapchat Holding by 2 Percent
Sarah Frier, Drew Singer – Bloomberg
Snapchat had raised funds at $16 billion valuation last year
Fidelity also marked down Snapchat shares in September
Snapchat Inc.’s valuation was cut by 2 percent in December by one of its largest investors. This was Fidelity Investments’ second writedown of the photo-sharing app maker in three months.
goo.gl/dyOsbh

Odd Lots: How a Professor Made 500 Percent on His Money by Gambling on an Obscure Sport; Computerized trading of a different sort.
Joe Weisenthal, Tracy Alloway – 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. This week we talk to Steven Skiena, a professor of computer science at Stony Brook University, who tells us about the time he made 500 percent on his money by gambling on the obscure sport of jai alai.
goo.gl/1SQDf3

Corporate bond yields and the cold pull of negativity
David Keohane – FT
With a h/t to Tracy Alloway…
Here’s the dark — once implausible, now almost inevitable — future of European corporate yields from Deutsche’s Jim Reid, with our emphasis:
goo.gl/ApjZO6

UBS wealth management businesses hit by market turmoil
Laura Noonan in London and Ralph Atkins in Zurich – FT
UBS’s low-risk strategy and “treacherous” market conditions took a heavy toll on its fourth-quarter results, including net outflows of client money from its key wealth management division and lower earnings at its investment bank.
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Banks & Brokers

Morgan Stanley: This Is What a World Without Oil Looks Like; Very different.
Tracy Alloway – Bloomberg
Much ink has been spilt over the leakage of collapsing crude prices into wider markets.
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Citigroup Cautions Investors Against Dumping Stocks Over China
Rachel Butt – Bloomberg
Latest stock market tumble more a correction than bear market
Real issue: How much yuan policy has been priced into markets?
As investors grapple with whether to stay in or pull out of stocks, Citigroup Inc.’s advice is not to jump to hasty conclusions when it comes to China — the source of most of the angst.
goo.gl/ixlQMS

Should Banks Drain the Dark Pools?
Michael P Regan – Bloomberg Gadfly
There are two ways to look at the $154 million that Barclays and Credit Suisse Group paid to settle allegations that they misled clients regarding how their dark pools operated.
goo.gl/Ii75ti

UBS survives stumble to post record year for equities trading
By Tim Burke – Financial News
Swiss bank UBS started 2015 with a bang as fixed income and equities trading hit record highs since a restructuring three years ago of its investment bank under chief executive Andrea Orcel. It ended it with a whimper, as the equities business suffered its worst quarter since the revamp.
goo.gl/kI5AkP

Clearing & Settlement

CFTC Grants Eurex Clearing AG Registration as a Derivatives Clearing Organization
The U.S. Commodity Futures Trading Commission (CFTC) today issued an order granting Eurex Clearing AG (Eurex Clearing) registration as a derivatives clearing organization (DCO) under the Commodity Exchange Act (CEA). This action furthers the CFTC’s commitment to working across borders to promote central clearing. Under the order, Eurex Clearing will be authorized to provide clearing services for swaps for U.S. clearing members as well as their customers under Section 5b of the CEA.
jlne.ws/1nJgzAW

LCH.Clearnet gets Singapore green light
By Tim Cave – Financial News
LCH.Clearnet, the London Stock Exchange-controlled clearing house, has secured regulatory approval to operate in Singapore as it seeks to benefit from regulatory changes there.
goo.gl/xG0bnG

Central clearing of LBMA benchmarks best move to increase liquidity: sources
Platts
To make participation of non-bank entities on the suite of London Bullion Market Association benchmark prices possible, central clearing is needed to allow those without that facility, sources said Monday. There have been some hiccups with the LBMA Silver Price so far this year, which has caused many to question the electronic system’s effectiveness.
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Indexes & Products

Billionaire Pan’s Goldin Properties Extends Decline on MSCI Move
Bloomberg
Shares in billionaire Pan Sutong’s Goldin Properties Holdings Ltd. fell as much as 9.6 percent after MSCI Inc. said it was removing the company from its equity indexes, extending a six-day decline that has shaved almost 40 percent from the stock price.
jlne.ws/1Pwygh1

History says stocks are screaming buys when the S&P, Dow crater
www.marketwatch.com
jlne.ws/1Pwz5q4

Be Careful What You Wish For
Craig Lazzara – S&P Dow Jones Indices
One of the few things more reliable than active managers’ general run of underperformance is their confidence that, despite what happened last year, this year will be different. http://jlne.ws/1PwzrwY

Technology

Fintech: Silicon Valley vs Wall Street
The Market Mogul
Driven by the desire to revamp or obviate the need for the banking legacy systems, the fintech industry has risen to prominence. The term, used loosely, generally describes a company that utilises technology to innovate in the financial sector. This includes cryptocurrency, peer-to-peer lending, payment processing and insurance services. Over the past five years, the number of fintech companies has skyrocketed from a couple hundred to just under a thousand. Along with that trend, the venture capital deployed to fund fintech has consistently increased to reach $ 7.6bn in 2015.
jlne.ws/205Iiay

Nasdaq to Deliver SMARTS Trade Compliance Technology to Koch Supply & Trading
Nasdaq (Nasdaq:NDAQ), the world’s leading provider of market technology, today announced it will deliver SMARTS Trade Surveillance compliance technology to Koch Supply & Trading (KS&T). KS&T companies actively participate in a range of energy and commodity markets worldwide. The SMARTS Trade Surveillance technology, which is now live across the major energy and metals markets, will be leveraged across KS&T’s span of exchange trading in energy, metals and other commodity products.
jlne.ws/205IzKH

Could Vietnam become the next Silicon Valley?
BBC News
Binh Tran is the co-founder of a successful tech company, Klout, which he sold for $200m (£140m) in 2014. Eddie Thai, the younger of the two, was educated at Harvard and Yale. But the pair have decided to set up their venture capital firm away from the ultra competitive corner of California that’s home to Google, Apple and Facebook.
jlne.ws/205ICWF

OCBC enters fintech arena with Open Vault, Banking News & Top Stories
The Straits Times
OCBC has started a new unit to drive its partnership with financial technology start-ups to help it capitalise on innovative systems that are being developed. The Open Vault at OCBC, as the unit is known, will bring in fintech start-ups to use the bank’s database and interfaces to test and develop new ideas into solutions. It will focus on wealth management, credit and financing, insurance, cyber security and artificial intelligence.
jlne.ws/205IeHO

Fintech Is Just Getting Started
TechCrunch
There are five categories I see positioned to succeed in continued investment and innovation this year: payments, cryptocurrency, retail financial services, institutional financial services and capital formation (equity financing).
jlne.ws/205IaI2

Enforcement

SEC Charges Software Company With FCPA Violations
SEC.gov
The Securities and Exchange Commission today announced that software manufacturer SAP SE has agreed to give up $3.7 million in sales profits to settle charges that it violated the Foreign Corrupt Practices Act (FCPA) when procuring business in Panama. An SEC investigation found that SAP’s deficient internal controls allowed a former SAP executive to pay $145,000 in bribes to a senior Panamanian government official and offer bribes to two others in exchange for lucrative sales contracts.
jlne.ws/1nJgqx6

Barclays, Credit Suisse Charged With Dark Pool Violations
SEC.gov
The Securities and Exchange Commission today announced that Barclays Capital Inc. and Credit Suisse Securities (USA) LLC have agreed to settle separate cases finding that they violated federal securities laws while operating alternative trading systems known as dark pools and Credit Suisse’s Light Pool. The New York Attorney General’s office is announcing parallel actions against the two firms. Barclays agreed to settle the charges by admitting wrongdoing and paying $35 million penalties to the SEC and the NYAG for a total of $70 million.
jlne.ws/1nJhiC0

Hochtief accused of insider trading during Leighton share purchase
Kylar Loussikian – THE AUSTRALIAN
German construction giant Hochtief engaged in insider trading during its on-market acquisition of Leighton Holdings shares, the Australian Securities & Investments Commission alleges.
goo.gl/366PGp

Goldman Censured by Hong Kong Regulator Over Wing Hang Deal
Cathy Kit Ching Chan- Bloomberg
Asia unit executed trades without making requisite disclosures; Goldman had advised Wing Hang on its takeover by OCBC
Goldman Sachs Group Inc.’s Asia unit was censured by Hong Kong’s securities regulator for breaching the city’s takeovers code while advising Wing Hang Bank Ltd. on its acquisition by a Singaporean lender.
goo.gl/EJ5nsg

Environmental & Energy

Think Crude’s Cheap? Biodiesel’s Going for Free in Some Places
Laura Blewitt, Mario Parker – Bloomberg
Incentives have reduced biodiesel costs to customers; Congress reinstated $1-a-gallon tax credit in December
Biodiesel’s become so cheap in the U.S. that some refiners are being paid to use it.
goo.gl/8uMVxi

Collapse in crude brings North Sea fields near end of production
Christopher Adams, Kiran Stacey and Chris Tighe – FT
As many as 50 North Sea oil and gasfields could cease production this year after a collapse in crude prices to 12-year lows, industry experts have warned.
goo.gl/mF0GXp

Asia-Pacific

How Can Hong Kong Snap Out Of The Bear Market?
Barrons.com
Just like its economy, Hong Kong’s stock market is stuck between a rock and a hard place, importing unwanted volatility from the US and China. No doubt Hong Kong’s stock market has become very cheap. The Hang Seng Index now trades at only 7.8 times earnings and 0.9 times book.
jlne.ws/205Jk6y

Financial sector hiring in Hong Kong worst since 2008 crisis as banks and brokers tighten purse strings
South China Morning Post
Brokerage firms rather than other banks in Hong Kong are freezing recruitment and salary hikes like HSBC, with headhunters saying the current level of hiring is the worst since the 2008 global financial crisis.
jlne.ws/205JsTp

The Hong Kong Economic Crisis is Bad but Not the Worst
South China Morning Post
Hong Kong’s economy showed a lot of strength in 2015, as Gross Domestic Product increased by 2.5% with quite a steady inflation rate. However, its economy is now feeling pressure after the huge plunge in the Chinese stock market in August and in the beginning of this year. Therefore, many investors withdrew their money from Hong Kong amid the negative impact of panic in China.
jlne.ws/205JA5s

Did Japan’s Stock Market Hit A Bottom? Or Simply Another Scene of Financial Kabuki? | Stock News & Stock Market Analysis
IBD
While not all follow-through rallies work out, IBD’s research of more than 100 years’ worth of market action in the U.S. exchanges shows that every important market bottom presented a follow-through. Japanese traders are no different from U.S. investors; they show the same emotions that drive stock prices.
jlne.ws/205JHhc

Singapore still 2nd freest economy in the world but gap with top-ranked Hong Kong widens, Economy News & Top Stories
The Straits Times
Singapore retained its position as the second freest economy in the world for the 22nd consecutive year, but the margin with its rival Hong Kong has widened. With a score of 87.8 points this year on the Index of Economic Freedom, published by the Heritage Foundation and the Wall Street Journal, Singapore was 0.8 point shy of the Chinese financial hub. Last year, the margin between the two cities was 0.2 point.
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Frontier Markets

Egypt Suffers From Shortage of Dollars; Ability to import essential goods from drugs to wheat is threatened
By DAHLIA KHOLAIF – WSJ
Visitors aren’t showing up as before to Egypt’s beaches and pyramids. Political unrest and a string of terror attacks have given investors pause. And what both groups brought with them, dollars, are in critically short supply.
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Saudi debt sale at mercy of oil volatility
Elaine Moore – FT
Saudi Arabia’s ambition to tap global bond markets in 2016 has international banks lobbying hard for a place on the deal, competing to convince Riyadh they can secure the best borrowing rate for what is expected to become a new benchmark in Middle Eastern debt.
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Mandatory disclosure of PAN backfires, boosts unofficial gold trade; Jewellers issue many small invoices or informal receipts to skirt the rule, casting a doubt over the success of the move
Reuters
Try as it might, the Indian government appears to be unable to curb the country’s love for gold.
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Mutual funds not in favour of commission disclosures in investors’ statements; They say transparency can’t be at the cost of the sector’s growth
Business Standard
Ankit Patel (23), a Lucknow-based young mutual fund advisor, is worried about what course his advisory business will take if his commission is disclosed in the investors’ monthly account statements. According to him, it’s hard to convince new investors about mutual funds as an investment product. “And, if investors get to know my commission, they may discontinue investments with me or may ask for a share of it,” he says.
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Sebi begins review of risk management, delivery systems at commexes; Move follows impasse in castor seed contracts; regulator sets up task force, asks for report in three weeks
Rajesh Bhayani – Business Standard
Aiming to achieve smooth functioning and settlement at commodity derivative exchanges, market regulator Sebi has decided to review existing risk management systems, delivery mechanism and procedures, and processes of accrediting and supervising warehouses by the exchanges. The Securities and Exchange Board of India has set up a task force for the purpose, and has asked it to submit its report in three weeks.
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