Industry news


Date: Mar 22, 2013

March 22, 2013: ICE Pitches NYSE Deal for EC Review; Milan Bourse Launches New Bond Trading Platform; US regulators warn banks on leveraged lending

ICE and NYSE Euronext want the EU to bless their anticipated merger, in the hope of avoiding regulatory quicksand in a variety of other nations. The Italian Stock Exchange announces the creation of a bond trading platform to accommodate new regulations. In the USA, regulators are concerned that banks are returning to high-risk behaviors that — no, seriously — that got them into trouble some years back.

First Read

Back to the day job then …
Steve Grob, Fidessa
It’s been great fun this week to be part of the JLN team. Witnessing at first-hand how a gazillion news stories are sifted, sorted and commented upon in a few frantic hours is really cool. The fact that this is done entirely electronically, over three different countries, is even more impressive. So, thanks Jim K and Jon M for letting me be a part of the John Lothian Newsletter this week and thanks also to JL for giving me “complete” editorial discretion. Finally, thanks to Katy Birch who corrects all my stupid mistakes and keeps me (mostly) the right side of the law.

Time to pass the baton and I trust that Big John (now with shiny new knees too) isn’t regretting his decision to let me and others loose on his newsletter. Now that I know what is involved in putting it together, I will read it with even more appreciation.

***JM: “NEARLY complete discretion”, he said protectively. Just kidding! It’s been a pleasure working with you, Steve, and the newsletter is better for your contributions and support. Thanks for your time, your perspective, and for not telling me to shut up as I mumble to myself in the editing sidebar. Next up is Andy Yemma, from Intermarket. The bar has been set high by Mr. Grob.

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Quick View: ICE-NYSE deal countdown begins
Philip Stafford – FT.com
A crucial 40 working-day clock has begun ticking for IntercontinentalExchange’s planned purchase of NYSE Euronext for $8.2bn in cash and shares. The two parties confirmed late last night – via a filing to the US Securities and Exchange Commission – they had asked the European Union to take jurisdiction to approve the deal, as widely expected.
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***SG: So why is ICE/NYSE different from NYSE/DB1? Firstly, it’s two US firms, so no nationalistic issues. Second, competition remains between EUREX and LIFFE as LIFFE simply gets a new owner. ICE NYSE Baby!

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Behind the Derivatives Gibberish, Risks Run Amok
New York Times
The Senate report on JPMorgan Chase’s multibillion-dollar trading loss documents incompetence and stupidity by the bank and its regulators.
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UK’s new financial watchdog will be no ‘pushover’ – CEO
Huw Jones | Reuters
The head of Britain’s new financial watchdog said on Thursday it would be no pushover and would bring more individuals to book, but that threats and fines alone would not end the abuses blamed for the financial crisis.
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***SG: Making sure people are punished for their individual wrongdoing (rather than punishing their employers) will go a long way to restoring customer confidence.

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News accounts for just 1/3 of commodity price moves-study
Emma Farge | Reuters
Only about a third of commodity price moves are caused by news, reflecting the growing role of high-frequency trading in steering prices, according to a study selected by the International Monetary Fund.
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***SG: And just when I thought that I would go the whole week without reading a nonsense HFT story – aren’t market prices moved by buyers and sellers?

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Stuart Adams to leave Fix Protocol European role
FT.com
Stuart Adams is to leave his role as European regional director at Fix Protocol after a reorganisation of the trading technology standards group. Mr Adams, who had been with Fix for more than four years, had been responsible for increasing the understanding among banks and exchanges of how the Fix protocol, predominantly an equities trading standard, could be used to increase overall market efficiency.
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***SG: I fear FPL will be a less effective, less energetic and harder to deal with organisation without Stuart. Let’s just hope I’m proved wrong.

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A ‘Cyprexit’ Might Not Hurt Euro Zone Much
New York Times
Cyprus is not too big to fail, and whatever grievances the Cypriot people have toward euro zone finance ministers might be better directed toward their national leaders.
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***SG: Regrettably for the people on the island, Cyprus probably is “small enough to fail”.

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Market’s Illusion Of Calm Over Cyprus
Katie Martin – WSJ
“The situation in Cyprus is not good,” analysts at Nomura said with darkly comical understatement at the start of this week. Since then, the situation has deteriorated.
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Markets Insight: US ‘snowbird’ effect is what Europe needs
Gillian Tett – FT.com
This spring, as Cyprus writhes, Miami estate agents are licking their lips. Back in 2008 Miami prime property prices in the city crashed by about 40 per cent. But these days they are estimated to be a third up from their lows – and rising.
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Hedge fund managers hail revival at last
Sam Jones, Hedge Fund Correspondent – FT.com
Leading hedge fund managers are reaping some of their biggest profits in years with many now hopeful that 2013 will prove to be a turnround year for the troubled industry.
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An alleged scheme to pay off the last scheme
Al Lewis – MarketWatch
Some investment guy holed up in Florida claims he can get Facebook, LinkedIn, Groupon and Zynga stock before these companies go public. All he needs to buy this stuff is your money.
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***JM: A tale from the popular horror series, “Neither Admit Nor Deny”…

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Judge: Aggregator of AP news can’t have free ride
Associated Press via Yahoo! News
A federal judge concluded that an Internet news clipping service essentially resold stories from The Associated Press, saying in a decision released Thursday that the ability of news organizations to perform “an essential function of democracy” is jeopardized when a company merely redistributes the news of others.
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***JM: There’s a huge difference to me between compiling links to stories, and rebroadcasting those stories. AP and every other news provider should absolutely be aggressive in defending against sites that say, “Here’s AP’s story; you don’t need to visit their site.” But they should be delighted by every service that attempts to drive traffic to their stories. Why on earth would you NOT want people to say, “Hey, check out this story Reuters did on CME Group”?

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MarketsWiki.tv

Profiles: Neal Kottke

John Lothian Profiles: Neal Kottke
MarketsWiki.tv

Neal Kottke, chairman of Kottke Associates in Chicago, is one of those industry veterans who has done it all in his career, from the commercial side to clearing, to starting his own clearing firm to proprietary trading. His contributions to the futures industry also included a term as chairman of the Board of Trade Clearing Corporation as well as two terms as vice chairman of the Chicago Board of Trade.

Kottke has seen more events and trends than most during a career that now spans four decades. In this John Lothian Profile, JLN explores Kottke’s experiences, how the markets have changed and evolved and how “discipline” is the key feature for successful trading. He also talks about how to manage volatility in the markets, managing risk and Black Swan events.

Watch the video >

MarketsWiki

MarketsWiki Page of the Day
GETCO
jlne.ws/15wVFnZ

MarketsWiki Recent Updates

People

Neal Kottke; Magnus Böcker

Companies, Organizations and Groups

Global Electronic Trading Company (GETCO); Singapore Exchange Limited

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VIX; The NASDAQ Options Market; ICE FCOJ-A

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37,029,909 pages viewed, 7,437 articles, 156,196 edits
MarketsWiki Statistics

Lead Stories

ICE Pitches NYSE Deal for EC Review
Jacob Bunge and Michelle Price – Dow Jones
IntercontinentalExchange Inc. (ICE) and NYSE Euronext (NYX) have launched their formal pitch for antitrust officials in Brussels to oversee their proposed merger, aiming to sidestep national regulators and smooth the passage of the $8.2 billion deal.
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Milan Bourse Launches New Bond Trading Platform, Cerved to Debut
Dow Jones
The Italian Stock Exchange announced Thursday that it is launching a new bond trading platform designed to help Italian businesses access funding under new rules announced by the government late last year.
jlne.ws/164OV2F

US regulators warn banks on leveraged lending
Dow Jones Newswires
US regulators are seeking to rein in a form of risky lending by banks, warning that financial firms engaged in so-called leveraged lending have started to revert to pre-financial crisis standards.
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Lenders reject latest Cyprus bailout plan
Kerin Hope in Athens and Andreas Hadjipapas and Joshua Chaffin in Nicosia – FT.com
European officials rejected Cyprus’s plans for an alternative package to save its banking sector and remain in the euro, starting a fresh round of talks with Nicosia as time was running out to avert a financial collapse of the island nation.
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Who Else Might Have Been Dinged by Bank Regulators?
CNBC
When the Senate report on the JPMorgan Chase “Whale” fiasco revealed the fact that the bank’s management had received a rebuke from the Office of Comptroller of the Currency, it was natural to assume that this was specifically a JPMorgan thing-another consequence of those CIO derivatives losses. But that assumption could be wrong.
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Cyprus: Welcome To The Roach Motel
Forbes
Dig deep into the hyperbole surrounding the EU-Cyprus crisis and you find yet more hyperbole: It’s the end of deposit insurance, the end of the Euro and of Europe, the beginning of massive bank runs, the complete loss of credibility for the mandarins of global finance. Of course it is none of these things, but it is a little bit of each. Should you be scared? Maybe not, but worried!
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Hurdles remain for EU fund manager bonus cap
Mark Cobley – Financial News
A European Parliament body voted to cap fund managers’ bonuses in a similar way to bankers’ payouts yesterday, but there are reasons to believe the measure will not go through in its current form.
jlne.ws/164OV2M

Fast-Growing Brokerage Firm Often Tangles With Regulators
By NATHANIEL POPPER – NY Times
The low-cost model that has aided LPL Financial’s explosive growth has brought with it a host of shortcomings, authorities and analysts say.
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Regulatory

IOSCO Consults On Regulatory Issues Raised By Changes In Market Structure
The International Organization of Securities Commissions (IOSCO) published today a Consultation Report on Regulatory Issues Raised by Changes in Market Structure, which identifies possible outstanding issues and risks posed by existing or developing market structures. It also provides recommendations to address these potential risks.
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***SG: There’s a great chart in Appendix E.

ISDA Comment Letter To The IASB On Exposure Draft 2013/2 ‘Novation Of Derivatives And Continuation Of Hedge Accounting – Proposed Amendments To IAS 39 And IFRS 9′
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Inclusion Is A Strength: Corporate America And The SEC Should Reflect America By Commissioner Luis A. Aguilar, U.S. Securities And Exchange Commission
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[France] The AMF highlights the entry into force of certain provisions of the “EMIR” regulation with effect from 15 March 2013
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Exchanges & Trading Facilities

ASK THE EXPERTS: THE 2013 USDA PROSPECTIVE PLANTINGS REPORT
Webinar Wednesday, March 27, 2013
The March 28, 2013, USDA Prospective Plantings report will have a major impact on agricultural markets, providing the first survey-based indication of the expected plantings for the 2013 season. In anticipation of this report, please join us as experts from CME Group and Thomson Reuters discuss acreage expectations and the current market outlook.
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Borsa Italiana Launches ExtraMOT PRO
Borsa Italiana has today broadened its bond market offering with a new professional segment on its ExtraMOT market, dedicated to the trading of debt instruments issued by both listed and unlisted Italian companies.
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Program Trading Averaged 39.0 Percent of NYSE Volume during Mar. 11-15
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NYSE Reviewing the Continued Listing of the American Depositary Shares of Suntech Power Holdings Co., Ltd.
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New York Stock Exchange Announces Date of Review of Decision to Remove Dex One Corporation From the List
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NYSE to Suspend Trading in the Preferred Stock of Mexico Equity %26 Income Fund, Inc.
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Cyprus Securities and Exchange Commission: Inaccurate Reports In The Media
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Cyprus Stock Exchange Bulletin – February 2013
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Cyprus Stock Exchange – Monday 25 Of March 2013 Is A Public Holiday
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Oslo Børs: Appeal On Violation Charge Forwarded To The Stock Exchange Appeals Committee
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Hedge Funds & Managed Futures

Hedge funds storm back into form
Sam Jones, Hedge Fund Correspondent – FT.com
With crisis in Cyprus, gloom in the UK’s Budget and growing fears of a correction in the US Treasury market, you could be forgiven for thinking markets were as turbulent as ever.
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Europe’s Bonus Clampdown Hits Two-Thirds of Fund Managers
Bloomberg
The European Parliament’s vote to cap bonuses in the asset-management industry could affect two- thirds of senior fund managers in the U.K., U.S. funds in Europe and hedge funds open to small investors.
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DealBook: Pressured, Investment Firm Is Said to Skip Fees
New York Times
Faced with weaker returns, the Yucaipa Companies, the money management firm run by the billionaire Ronald W. Burkle, has been pushing private equity firms to lower fees or make other concessions.
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Derivatives Trading Revenue Rose 73 Percent in Fourth Quarter
Reuters
Trading revenue at U.S. banks increased 73 percent last quarter, on a surge in trading of over-the-counter interest rate derivatives, according to a report on Wednesday by the Office of the Comptroller of the Currency.
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Ex-Eladian trio seal Spire switch
Tim Cave
A team of former traders at the defunct high-frequency trading house Eladian Partners are among a string of recent hires made by Spire Europe, where they will reunite with former colleague Yunus Saatchi.
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Inside SAC Capital Advisors: Lots of Big Bets, Built Fast
TOM MCGINTY, JOHN CARREYROU AND MICHAEL ROTHFELD – WSJ.com
SAC Capital Advisors LP bet big on a firm called Ardea Biosciences Inc. at the beginning of last year.
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Pressured, Investment Firm Is Said to Skip Fees
RANDALL SMITH – NYTimes.com
Score one for private equity investors. After suffering steep losses in one fund, the Yucaipa Companies, the money management firm run by the billionaire Ronald W. Burkle, has cut fees for investors in the portfolio.
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Chuck Jaffe: When to take investing advice from Twitter
Market Watch
The message to take from recent social-media activity that has investors wondering if Twitter is a place to get an insider’s edge on the stock market, is: The more things change, the more they stay the same.
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High-Frequency Trading Continues To Grow, Despite Regulatory Initiatives, Reveals GreySpark
Despite regulatory efforts to curb high-frequency trading (HFT), capital markets players will continue to rely on HFT and its use will continue to grow, reveals a new report published today by GreySpark Partners, a London-based capital markets consultancy. HFT systems will remain popular in competitive markets due to financial incentives and drivers of market efficiency support their use. These key findings are contained in the new research report, High-Frequency Trading: The Fast and the Furious.
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UBS Global Allocation Trust Announces First Quarter Distribution
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Banks & Brokers

Self-regulation system planned for funding body
Jonathan Moules, Enterprise Correspondent – FT.com
The trade body for providers of funding based on company assets is creating a system of self-regulation following complaints about its members unfairly withdrawing credit lines and imposing excessive fees.
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Canada to set higher capital requirements for key banks
Reuters via Yahoo! News
By Randall Palmer OTTAWA – Canada’s federal budget laid out plans on Thursday to impose higher capital requirements on banks whose failure could disrupt the Canadian financial system and economy.
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Weinstein Says ‘Whale’ Was a Bet, Not a Hedge
FOX Business
Boaz Weinstein, a hedge-fund manager who traded opposite J.P. Morgan Chase %26 Co.’s (JPM) “London Whale,” said a Senate report clearly indicates that the losing positions were “not a hedge, it was a bet.”
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Citigroup Says Pay Plan Shareholders Rejected Helped Keep Corbat
Bloomberg
The plan was essential for the survival of the New York- based lender as “important executives” were leaving for competitors, the bank said in an annual proxy filing. The firm designed the awards in 2009 after it received a $45 billion U.S. bailout to prevent its collapse amid the financial crisis.
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JPMorgan Said to Hire Former Morgan Stanley Mexico Chief
Bloomberg
JPMorgan Chase %26 Co. hired Felipe Garcia-Moreno, the former head of Morgan Stanley’s Mexico office, to oversee investment banking and corporate lending in the country, a person with knowledge of the matter said.
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UBS Plans Hiring in Istanbul as Turkey Growth Trumps Global Cuts
Bloomberg
UBS AG , the Swiss bank cutting about 10,000 jobs, is planning to expand in Turkey as the nation’s economic growth boosts demand for assets.
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Deutsche Bank Had ‘Solid’ First Quarter, co-CEO Jain Says
Bloomberg
Deutsche Bank AG co-Chief Executive Officer Anshu Jain said the lender had a “solid” performance in the first quarter helped by lower costs.
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Ex-RBS Trader Accused of Lying for Bank Sues Over Firing
Bloomberg
A former Royal Bank of Scotland Group Plc trader, who was criticized by a judge for giving dishonest testimony on behalf of the bank in a 2010 trial, sued at a London tribunal saying he was unfairly fired.
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Peregrine Financial trustee seeks accountant’s documents
Reuters
The trustee overseeing the collapse of Peregrine Financial Group is seeking documents from the futures broker’s former accountant in an attempt to track down millions of dollars missing from customers’ accounts, court records show.
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Clearing & Settlement

Clearstream and Bloomberg to deliver greater trade processing efficiency for the triparty repo market
Clearstream today announced a collaboration with Bloomberg to provide clients an automated order routing service that delivers an additional means of accessing tri-party repurchase agreements (repo) transactions. The new service offers market participants faster and easier access to tri-party repo services in Clearstream’s integrated collateral and risk management environment, the Global Liquidity Hub, through the Bloomberg Professional service.
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CFTC Issues Amended Registration Order for Natural Gas Exchange Inc.
On March 20, 2013, the Commodity Futures Trading Commission issued an amended order of registration as a derivatives clearing organization (“DCO”) to the Natural Gas Exchange Inc. (“NGX”).
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Indexes & Products

New gold ETC from ETF Securities launched on Xetra
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Guggenheim Investments Announces Distribution Schedule for the Liquidation of Nine Exchange Traded Funds (ETFs)
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Technology

Thomson Reuters Positioned As Category Leader In Chartis RiskTech Quadrant(TM) For Enterprise Governance, Risk And Compliance Systems
Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, announced it has been positioned as category leader in the Chartis RiskTech Quadrant for Enterprise Governance, Risk and Compliance Systems, with specific reference to its strengths in Financial Services.
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Enforcement

SEC Charges Rengan Rajaratnam with Insider Trading
The Securities and Exchange Commission today charged Rajarengan “Rengan” Rajaratnam for his role in the massive insider trading scheme spearheaded by his older brother Raj Rajaratnam and hedge fund advisory firm Galleon Management.
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ASIC warns consumers about Global Capital Wealth
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Environmental & Energy

Irish Minister Optimistic on EU Carbon Fix Success
Bloomberg
Ireland favors a European Union plan to bolster the bloc’s emissions trading system and expects EU lawmakers to support the measure, the country’s environment minister said.
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Asia-Pacific

China forecast to overtake US by 2016
Simon Rabinovitch in Beijing – FT.com
China is on track for a fourth consecutive decade of rapid growth and will overtake the US as the world’s biggest economy in 2016 after accounting for price differences, according to a new report by the Organisation for Economic Co-operation and Development.
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February Foreign Customer Trades On Tokyo Commodity Exchange Renewed Record
The Tokyo Commodity Exchange, Inc announced today that the monthly volume of customer trades (sell %26 buy) originating overseas totalled 1,920,053 contracts, 31.4% of the total volume in February 2013. It topped the all time record renewed in January 2013 at 1,662,426 contracts after 15 months.
jlne.ws/164OXHY

Instinet Announces Asia-Pacific Organizational Changes
Shaun Bramham Named Head Of Instinet’s Asia-Pacific Business, Glenn Lesko Global Head Of Client Strategy And US International And Product Sales
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Dalian Commodity Exchange: Notice On Suggestion Collection For Egg Futures Contract And Rules
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Dalian Commodity Exchange Coking Coal Contract Size Set At 60 Tons Per Contract And Both Market Liquidity And Industrial Demand Taken Into Account
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Dalian Commodity Exchange: Coking Coal Contract To Be Traded In Market This Friday
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Thai Bourse’s Board Agrees To Improve Financial Literacy Plan, Amend Cash-Account Rule
The Stock Exchange of Thailand (SET) announces that its board has agreed to improve financial literacy plan for capital market professionals and investors, develop back-up trading terminal, and amend cash-account rule to reduce risk to the clearing system.
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HKEx: Stock Exchange Participants’ Market Share Report
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Frontier Markets

FTSE Licenses MCX Stock Exchange Limited With The Industry Classification Benchmark (ICB)
FTSE Group (“FTSE”), the award winning global index provider, announces that MCX Stock Exchange Limited (MCX-SX), is adopting the Industry Classification Benchmark (ICB), the global company classification standard, across its listing and index offerings.
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Securities Commission Malaysia Charges Three Former Directors Of Axis Incorporation Berhad
The Securities Commission Malaysia (SC) today charged three former directors of Axis Incorporation Berhad (Axis) for providing false information to Bursa Malaysia Securities Berhad between 2006 and 2008.
jlne.ws/164P06D

Move over, BRIC nations, make room for the TIMPs, says Turner Investments commentary
Business Wire
BERWYN, Pa.—-A new Turner Investments’ commentary by Bob Turner, chairman and chief investment officer, says Turkey, Indonesia, Mexico, and the Philippines may be the next set of BRIC-like economic pacesetters.
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MCX Weekly Market Report March 15, 2013 To March 21, 2013
jlne.ws/164OYeY

Lahore Stock Exchange: Capital Market Players In SARC Region Support The Agenda Of The Regional Financial Integration Within South Asia
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