First Read

McGladrey: Tired of your mark to market election? IRS has good news.
John Lothian
Our friends at McGladrey shared the following commentary with JLN for publication

New Revenue Procedure makes it easy to revoke 475(f) elections

There are various reasons that traders find refuge in a mark to market election under IRC section 475(f). Some are looking to avoid disallowed losses caused by wash sales and straddles (offsetting positions), both of which can arise when trading frequently. Others find themselves with a losing year, and make the election to obtain ordinary treatment on losses, freeing them up for carryback to earlier years. In any case, circumstances change, and what was once a blessing can now be a curse. For those who’ve switched to buy and hold strategies, or gotten deep into 60/40-eligible commodities contracts, the mark-to-market election can rob the significant benefits of long-term capital gains.


Brand New: LME’s Jones Says Exchange Is Set For Growth, 2 Ways

London Metal Exchange had quite a year in 2014.

From its integration into the Hong Kong Exchanges & Clearing, launching its own clearinghouse, and addressing the metals warehousing problems, LME has the pieces in place for expansion. Garry Jones, CEO of the LME spoke with John Lothian News about the exchange’s focus on China and the potential for new products in the coming months.

LME launched its own clearing house last September and has brought its technology in-house, under the HKFE. All of that has added staff to LME, tripling its payroll over the past three years, as well as a new building set to open later in the year.

“There’s two main themes for the LME,” he said. “Our business, given that 40 percent of the world’s metals production and consumption is in China, we’re focused on that as well.”
Watch the video »

Deutsche Börse launches new ShortDAX and LevDAX indices
Deutsche Börse
Deutsche Börse today expanded its DAXplus strategy index offering with the launch of four new ShortDAX and LevDAX indices. The ShortDAX x9 and x10 indices and LevDAX x9 and x10 indices meet the needs of sophisticated market participants, based on different evaluations of market conditions, who are seeking access to leveraged investments in the DAX when prices rise or fall.


Opinion: Pope Francis’s new ‘Climate Change Encyclical’ sneak preview
By Paul B. Farrell, MarketWatch
Here’s a sneak peak of Pope Francis’s historic “Climate Change Encyclical,” soon to be released, complete with talking points for his upcoming address to the joint session of Congress. We’ll analyze them: The encyclical’s likely headline: “Safeguard Creation … We are the custodians of Creation … If we destroy Creation … Creation will destroy us,” a public warning often repeated by the pontiff this past year, a message certain to intensify the anger of GOP climate-science deniers, Big Oil, Koch Bros, Exxon Mobil and most fossil-fuel firms, as well as their banks, investors owning their stocks and capitalists everywhere.


What the Apple Watch Does Best: Make You Look Good; Apple isn’t just selling some wrist-worn computer, it’s selling good looks and coolness, too
There’s a reason we don’t wear the same clothes two days in a row, try to avoid the temptations of McDonald’s and Ben & Jerry’s, keep a regular hair appointment and make it to the gym as often as possible. It’s the same reason we’d consider buying an Apple Watch: We like to look our best.


Nadex First Quarter 2015 Trading Volume Rises 38%
Number of active traders on the exchange also reaches a new high
New binary option contracts – Bitcoin and China 50
Members can now fund their accounts using debit cards
The North American Derivatives Exchange (Nadex) today announced that the volume of binary options and spread contracts traded on the exchange rose 38% in the first quarter of 2015, versus Q1 2014 and in line with the trading update recently released by IG Group. The most heavily traded contracts were the US 500 (based on the CME® E-mini S&P 500 Index® Futures) and the EUR/USD. Nadex’s year-on-year growth highlights the growing popularity of exchange-traded binary options.


Shining Star: SGX’s Ramaswami Says Asia Risk Mitigation Still In Early Stages

When exchanges look at growth areas, Asia gets top ranking. The Singapore Exchange, which has positioned itself as the Asian gateway for international traders over the past 30 years, now sees great potential in the decades ahead.

Muthukrishnan Ramaswami, president of SGX spoke with John Lothian News editor-in-chief Jim Kharouf at the FIA Boca conference, and said the exchange is ready to expand geographically through technology upgrades and by asset class as well, especially in FX and commodities.
Watch the video »


MarketsWiki Page of the Day
CME Europe

MarketsWiki Recent Updates


Martin Mosbacher; William Parke; John A. Bunnell; Justin Bouchard; Patrick L. Young; Ian Wall; Thomas W. Farley; Andrew J. Bowden

Companies, Organizations and Groups

CME Europe; CME Group; Ethiopia Commodity Exchange; Chicago Board Options Exchange; Virtu Financial LLC


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Lead Stories

Swiss, Mexican Bond Deals Represent Milestones for Debt; Switzerland is first with 10-year bond at negative yield as Mexico lines up 100-year euro bond
By EMESE BARTHA in Frankfurt, CHIARA ALBANESE in London and ANTHONY HARRUP in Mexico City, WSJ
Until Wednesday, no country had ever sold 10-year debt that gives investors a yield of below 0%. And no

Defender of market complexity leaves SEC
Nicole Bullock in New York and Philip Stafford in London, FT
Gregg Berman, one of the US securities markets key regulators, is to leave his role assessing the controversial practice of high-frequency trading at the Securities and Exchange Commission.

Hong Kong trading volumes soar, stocks up 3.9%
Stock market euphoria from the mainland has just given the Hong Kong market – and the Stock Exchange operator – a major lift.

Chinese Stock Buying Frenzy Sweeps Into Hong Kong; Surge comes months after government opened up trading link between city and Shanghai
A buying frenzy that sent Chinese stocks surging in recent months is bleeding over into Hong Kong, where a rally is picking up steam but exposing global investors to the type of volatility and unpredictability typically only seen on the mainland.

Jamie Dimon warns next crisis could see ‘more volatile’ markets
Tom Braithwaite in New York, FT
Jamie Dimon, chief executive of JPMorgan Chase, said the next financial crisis should see “more volatile” markets and a “rapid decline in valuations” because regulators have hamstrung the banks.

Wall St. Is Told to Tighten Digital Security of Partners
Wall Street’s oversight of cybersecurity measures at outside firms it does business with remains a work in progress, according to a review by New York State’s top financial regulator.

High-speed traders face capital speed bumps
By Tim Cave, Financial News
High-frequency traders, already under close scrutiny by regulators, may be running up against another speed bump in European securities markets.

Why the California drought will be worse than everyone thinks
By David Weidner, MarketWatch
We’re told by economists that the California drought is no cause for concern to the nation. The agriculture industry isn’t being forced into additional cuts. Food prices will increase only slightly.


Gregg E. Berman, Associate Director in the Division of Trading and Markets, to Leave SEC
The Securities and Exchange Commission today announced that Gregg E. Berman, Associate Director of the Office of Analytics and Research in the Division of Trading and Markets, is leaving the agency later this month.

Manipulation is not hedging says CFTC in federal court lawsuit against Kraft Foods Group and Mondelez Global
Gary DeWaal, Katten Muchin Rosenman LLP logo
The Commodity Futures Trading Commission filed a lawsuit against Kraft Foods Group, Inc. and Mondelez Global LLC claiming that trades they entered on the Chicago Board of Trade for the alleged purpose of hedging were in fact entered for the purpose of artificially lowering prices in the related cash market. This activity, claimed the CFTC, was a violation of federal law and the Commission’s rules.

Bylaw 1101 guidance for pools which investment management authority has been delegated pursuant to CFTC No-Action Letters 14-69 and/or 14-126 and related BASIC display changes
In 2014, the CFTC’s Division of Swap Dealer and Intermediary Oversight (“DSIO”) issued No-Action Letters 14-69 and 14-126 setting forth the criteria for seeking streamlined registration no-action relief for commodity pool operators (“CPOs”) that delegate certain of their responsibilities as a CPO to another person who is registered as a CPO. Since this relief is self-executing, NFA is not notified of the delegation and is not able to provide this information on NFA’s BASIC system. As a result, Members conducting Bylaw 1101 due diligence on a particular pool are not always able to confirm through NFA’s BASIC system that the CPO of a particular pool is an NFA Member or exempt from such requirement.

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

  • CBOE: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend the Fees Schedule (Release No. 34-74669; File No. SR-CBOE-2015-038; April 7, 2015); see also Exhibit 5


  • CBOE: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend the Fees Schedule (Release No. 34-74668; File No. SR-CBOE-2015-032; April 7, 2015); see also Exhibit 5


  • ICC: Notice of Filing of Proposed Rule Change Related to Settlement Finality (Release No. 34-74676; File No. SR-ICC-2015-008)


  • NYSE: Notice of Filing of Proposed Rule Change Amending Rule 13 and Related Rules Governing Order Types and Modifiers (Release No. 34-74678; File No. SR-NYSE-2015-15); see also Exhibit 5


  • NYSE Arca: Order Approving a Proposed Rule Change to List and Trade Shares of WisdomTree Put Write Strategy Fund Under Commentary .01 to NYSE Arca Equities Rule 5.2(j)(3) (Release No. 34-74675; File No. SR-NYSEArca-2015-05)


  • NYSEMKT: Notice of Filing of Proposed Rule Change Adopting a Principles-Based Approach to Prohibit the Misuse of Material Nonpublic Information by Specialists and e-Specialists by Deleting Rule 927.3NY and Section (f) of Rule 927.5NY (Release No. 34-74677; File No. SR-NYSEMKT-2015-23); see also Exhibit 5


  • OC: Notice of Filing of Proposed Rule Change Relating to Ownership and Control Reports (Release No. 34-74679; File No. SR-OC-2015-01); see also Exhibit 4


Exchanges & Trading Facilities

Euronext trading glitch rolls into Thursday
Futures & Options World
European exchange has revived two of the three problematic trading gateways
Euronext said it was still experiencing a technical problem on Thursday as one of its trading servers was still down after the European exchange managed to revive two of the three client gateways that crashed late on Tuesday.

Societe Generale to Acquire Most of Jefferies Bache Futures Activities
Press Release
Jefferies Group LLC announced today that it has entered into a definitive agreement for Societe Generale S.A. to acquire most of the futures activities of Jefferies’ Bache business. Under the terms of that agreement, a majority of the client activities currently serviced by Bache will be transferred to Societe Generale, which has the diversified platform, solid balance sheet and deep experience that will result in a seamless transition for the business.

ASX clearing signs up first foreign member
The Trade
GH Financials has become the first remote clearing participant of the Australian Securities Exchange’s (ASX) clearing house.

Tearing down walls at the ASX
Liz Tay, ITNews
ASX CIO Tim Thurman’s take-no-prisoners approach to agile management has laid the groundwork for the organisation’s $50 million tech transformation.

Plant Advanced Technologies (PAT) lists on Alternext Paris
Raises EUR7 million, market capitalisation totals EUR26 million
EnterNext, the Euronext subsidiary dedicated to promoting and growing the market for SMEs[1],today congratulated Plant Advanced Technologies (PAT), a company specialised in identifying and producing rare plant molecules, on its successful listing on Alternext in Paris.

TOM MTF reports 55% growth in turnover for Q1 2015 versus Q1 2014
Options trading volume at TOM MTF rose to 7,990,014 contracts in Q1 2015, which equates to a 55% increase versus Q1 2014.

Hedge Funds & Managed Futures

Investor activism may be hard on corporate creditors -Moody’s
Tactics that activist investors say will benefit a company’s shareholders may also raise the risk for the firm’s creditors, a leading credit rating agency warned on Thursday.

Wealth Adviser: Saving Younger Clients from Facebook Envy
There’s “a worrying trend among higher-earning millennials,” says Ted Jenkins, whose Georgia-based advisory firm serves Gen X and Y clients. Even those who rake in six-figure salaries aren’t putting enough of it aside for the future. Writing on Wealth Adviser at, he places some of the blame on social media sites such as Facebook FB -0.05% and Instagram. “They see friends posting photos of themselves on expensive vacations, in the front row of concerts, and at dinner at the most exclusive restaurants in New York City,” Mr. Jenkins says. “Envy is an extremely powerful emotion and it drives a lot of Gen Y clients to go out and spend more money.” He urges advisers to embrace their role as educators, to help younger clients learn spend within their means and to save towards their goals. “When they’re invested in building and following a real financial plan, they’re less likely to be swayed by the unsustainable behavior they see around them. “

Currency, Oil Help Managed-Futures Funds; Funds revive with help from clearer trends in certain markets
After several years of disappointing returns, managed-futures mutual funds are hot again.

RCM Alternatives Promotes Paul Rieger to Managing Director and
Industry veteran will focus on promoting the benefits of managed futures with investors and wealth advisors
RCM Alternatives, a brokerage firm that provides investors and wealth advisors with education and services for investing in managed futures, announced that Paul Rieger has been promoted to managing director and partner. In this role, Rieger will consult family offices and wealth advisors on their asset allocation strategies. His mandate is part of the company’s broader mission to be the world’s premier provider of education and services in the managed futures space.
(No Link)

Banks & Brokers

Goldman Says a Fed Delay on Rate Hikes Will Hurt Bank Profits
Lower rates for longer are good news for the broad stock market. But the same may not be true for bank shares.

JPMorgan CEO defends bank size and breadth of product offerings
Jamie Dimon, chief executive officer of JPMorgan Chase & Co, the biggest U.S.-based bank, defended the size and business model of his company, which has been criticized as being too big and complicated.

A Rich Day for Banks Advising on Big Merger Deals
By MICHAEL J. de la MERCED, NY Times
On one day alone, Goldman Sachs has helped shepherd roughly $100 billion worth of merger deals.

ICAP’s EBS Select – Not a Dark Pool – Goes Live With First Trade
by Phil Albinus, Traders Magazine
It’s a “non-disclosed, segmented, bilateral liquidity pool” for foreign exchange, okay?
ICAP’s electronic FX business EBS revealed that EBS Select completed its first trade on March 24, 2015. In a press statement the firm does not refer to it as a dark pool but as a “non-disclosed, segmented, bilateral liquidity pool” that has gone live with a beta version.

Clearing & Settlement

UBS To Offer Clients Clearing Member Services For Nodal Exchange
Nodal Exchange, LLC announced yesterday that UBS Securities, LLC, through its LCH.Clearnet Ltd membership, is now offering clients Clearing Member services for Nodal Exchange.

No Deal Yet for Chicago on Wells Fargo Swaps
The Bond Buyer
Counterparty Wells Fargo has so far refused to lower the rating threshold for three Chicago swaps that reached termination events through recent downgrades, a market source familiar with negotiations said.
Though it hasn’t changed the threshold, Wells Fargo has not demanded, by designating an early termination date, that the city make an estimated payment of $38 million based on a recent negative mark-to-market valuation.

G. H. Financials Joins ASX 24 and ASX Clear (Futures) as First Remote Clearing Participant
Press Release
G. H. Financials (GHF), an independent clearing firm for exchange-traded derivatives, announced today that they had been approved for Trading Participation of ASX 24, and in an industry first, had also been approved as a fully remote Clearing Participant of ASX Clear (Futures).

Sebi ups limit for currency derivatives trades to $15 mn
Business Standard News
Market regulator, Sebi, has issued a circular revising the positional limits applicable to both domestic and foreign investors for exposure in currency derivatives. After the RBI notified the revision on April 1, Sebi in a circular on Wednesday also revised the limits upwards to $15 million in conjunction with the RBI revision.

Indexes & Products

Nasdaq to calculate, market Keefe Bruyette & Woods indexes
BY RICK BAERT, Pensions & Investments
Keefe Bruyette & Woods’ index family will be calculated and marketed by Nasdaq OMX Group through a partnership announced Wednesday.

iShares MSCI Switzerland Index Fund Sees Large Decrease in Short Interest (EWL)
iShares MSCI Switzerland Index Fund (NYSE:EWL) was the target of a large decline in short interest in March. As of March 13th, there was short interest totalling 356,203 shares, a decline of 55.1% from the February 27th total of 793,670 shares, Analyst Ratings Net reports. Based on an average trading volume of 595,445 shares, the days-to-cover ratio is presently 0.6 days.

Active vs passive investing: which wins?
Money Management
Most Australian funds in all categories except small-cap equity funds failed to outdo their respective index benchmarks in 2014, bringing the active versus passive investing debate back into the fore.

KBW, Nasdaq Partner on Financial Services Indexes
ETF Trends
Nasdaq OMX (NasdaqGS: NDAQ) bolstered its indexing footprint today by unveiling a partnership with Keefe Bruyette & Woods (KBW). KBW, a unit of Stifel Financial (NYSE: SF), specializes in financial services indexes, some of which are used as benchmarks for exchange traded funds.

A Tale Of 2 Benchmarks: Factors
Seeking Alpha
This is the third in a series of blog posts relating to the in-depth analysis of performance differential between the S&P SmallCap 600 and the Russell 2000.
As we noted in the previous post, the reconstitution effect seen in the Russell 2000 doesn’t fully explain the differences in returns between the S&P SmallCap 600 and Russell 2000. Our analysis turns to factor testing, first using the Fama-French three-factor model, which includes the Market, Size and Value factors (see table below).


JP Morgan lifts lid on global tech programme
The Trade
Automation and standardisation of transactions have become priorities for the equities team at JP Morgan Asset Management.

Orange Seeks to Invest in Bitcoin Startups in Silicon Valley
by Olga Kharif, Bloomberg
Orange SA is looking to invest in bitcoin startups in the coming months, making it one of the first big international phone carriers to become interested in the technology behind the digital currency.

Tearing down walls at the ASX – CXO Challenge
ASX CIO Tim Thurman’s take-no-prisoners approach to agile management has laid the groundwork for the organisation’s $50 million tech transformation.

First Fintech-Only Hub Opens in Sydney to ‘Disrupt Banking’
In recent weeks, Accenture published a research report showing fintech investment has tripled year over year with no signs of slowing. The report also interviewed 25 executives from traditional financial services who candidly stated that the old model isn’t working anymore and that the rise of fintech will disrupt their businesses.

Will fintech digital disruption lead to banking destruction?
While banking has been on a path towards digitisation for a number of years, it is the advent of the mobile device that has dramatically accelerated the pace of change. We have gone from almost nobody banking via their phone to millions of people using their apps to check their accounts and make payments every day.


‘Stay tuned’ for more Swiss bank deals over tax evasion: U.S. official
More Swiss banks that helped wealthy Americans evade taxes will soon strike agreements with the Department of Justice to avoid prosecution, an official overseeing the U.S. government program told Reuters.

SEC Charges Oregon-Based Defense Contractor With FCPA Violations
The Securities and Exchange Commission today charged Oregon-based FLIR Systems Inc. with violating the Foreign Corrupt Practices Act (FCPA) by financing what an employee termed a “world tour” of personal travel for government officials in the Middle East who played key roles in decisions to purchase FLIR products. FLIR earned more than $7 million in profits from sales influenced by the improper travel and gifts.

Environmental & Energy

If We Dig Out All Our Fossil Fuels, Here’s How Hot We Can Expect It to Get
NY Times
World leaders are once again racing to avert disastrous levels of global warming through limits on greenhouse gas emissions. An agreement may be in reach, but because of the vast supplies of inexpensive fossil fuels, protecting the world from climate change requires the even more difficult task of disrupting today’s energy markets.

Some Wisconsin state workers can’t talk about climate change
Bloomberg via Crain’s Chicago Business
Discussing climate change is out of bounds for workers at a state agency in Wisconsin. So is any work related to climate change—even responding to e-mails about the topic.

The Oil Industry’s $26 Billion Life Raft
by Asjylyn Loder, Dakin Campbell, Bloomberg
or U.S. shale drillers, the crash in oil prices came with a $26 billion safety net. That’s how much they stand to get paid on insurance they bought to protect themselves against a bear market — as long as prices stay low.

Central Banks at Zero Failing to Turbocharge Effect of Cheap Oil
by Simon Kennedy, Bloomberg
Central bankers unable to cut interest rates are failing to turbocharge the effect of declining oil prices.

PEGAS: New record volumes in March 2015 on the Spot and the Derivatives Market
PEGAS, the pan-European gas trading platform operated by Powernext, announced that a total volume of 91.9 TWh was traded in March 2015. This represents the highest monthly volume
(No Link)


Can Hong Kong Stocks Keep Defying Gravity?
Hong Kong stocks have been on the up and up…and then up some more.
It’s been a great few days for bulls as the Hang Seng Index has marched relentlessly higher, with a roughly 3% gain by late Thursday afternoon bringing the benchmark’s advance since the start of the month to more than 8%. Turnover has reached record levels as traders have stampeded into the red-hot market, with momentum driving the Hang Seng through 25,000 points, 26,000 points and then 27,000 points in quick succession.

Hong Kong Defends Currency Peg as Stocks Jump to 7-Year High
Hong Kong’s de facto central bank stepped in for the first time since August 2014 to prevent the city’s currency from rising against the U.S. dollar as a surge in stocks drove up demand.

A giant pool of volatile Chinese investment is surging into Hong Kong’s stock market
After pushing Chinese technology stocks into ominous bubble territory, mainland Chinese investors have now turned to Hong Kong. H shares, as Hong Kong stocks are known, have soared this week, with the benchmark Hang Seng Index up 3.8% by midday Thursday, its highest level in seven years. Trading volume hit a record HK$252.4 billion ($32 billion) on Wednesday.

Sidewalk Touts Trade Tips On Shanghai’s Booming Bull Market
On weekend afternoons, large crowds descend on a pair of street corners across from People’s Square in downtown Shanghai to trade stock tips. Shen Yuxi has set up a homemade desk with two laptops, a big flat screen and offers insights like this:
“When a Communist Party chairman takes office, I buy stock in companies from his hometown,” Shen tells a crowd of about 20 people that spills out over the sidewalk.

Japan’s Nikko Asset Adds Political-Risk Analysis With Eurasia Deal; Firm shifts emerging-markets strategy to one where geopolitical risks are considered first
One of Asia’s largest asset managers, Japan’s Nikko Asset Management, is teaming with political-risk advisory firm Eurasia Group to create emerging market funds that incorporate political-risk analysis.

Osaka Exchange: Introducing A Fee Discount Campaign In Connection With The Introduction Of Weekly Options
Osaka Exchange, Inc. (OSE) will introduce a fee discount campaign for Weekly Options starting from the listing date to promote further entry of market participants. The outline of the campaign is as follows.

Fubon Futures joins SGX as Derivatives Trading Member
Singapore Exchange (SGX) is pleased to welcome Taiwan-based Fubon Futures Co., Ltd (Fubon Futures) as the newest trading member in its derivatives market. Fubon Futures, a wholly-owned subsidiary of Fubon Securities, is one of the leading broking firms that provides professional brokerage and clearing services in Taiwan.

Frontier Markets

Securities and Exchange Board of India Notices
PR – Interim Order in the matter of BNP India Developers and Infrastructure Limited
Order in respect of M/S Sri Ganesh Stocks and Shares, Mr. Venkatesan Chandran and Ms. Krishnamurthy Vijaya Bharathi
Fine structure for non-compliance with the requirement of Clause 49(II)(A)(1) of Listing Agreement
Revision of limits relating to requirement of underlying exposure for currency derivatives contracts
VRL Logistics Limited
KYC (Know Your Client) Registration Agency registered with SEBI as on April 08, 2015
GMR Infrastructure Limited – Third Corrigendum

Russian rates tempt the carry traders
Jamie Chisholm
Concerns about credit and geopolitical risk seen as subservient
A board showing currency exchange rates in Moscow©Reuters
At the end of last week, Strategas, the New York-based research boutique, presented the “wall of worry” issues currently exercising its clients.

Iceland’s grand monetary experiment?
Matthew C Klein, FT Alphaville
One of the oddest things about the aftermath of the financial crisis is the extent to which things haven’t changed.

Nigeria: SEC Releases New Rule On Unlisted Securities
By Bukky Olajide, AllAfrica
Securities and Exchange Commission [SEC] has released a new rule on unlisted securities.


Cargill’s purchase of Zamanita moves closer as Zambeef shareholders unanimously approve deal
Cargill and Zambeef Products PLC have made progress towards completing a deal for Cargill to purchase Zamanita Limited, the soybean crushing and refining subsidiary of Zambeef. The deal has been formally approved by Cargill’s Board of Directors and today Zambeef’s shareholders voted to approve the transaction in an extraordinary general meeting (EGM) of shareholders.

Noble Group comes under fresh attack
Jennifer Hughes in Hong Kong, FT
Muddy Waters, the US-based short seller, has joined an attack against Noble Group, announcing it has made a bearish bet against agribusiness trader’s shares in a report that questions the Singapore-listed company’s financial strength and governance.

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