Industry news
Date: Jan 23, 2013
January 23, 2013: EU states to get go-ahead for tax on trading; Thomson Reuters At Center Of High-Speed Trading Squabble; SEC Reins In Ratings Firm
EU states get an all-clear to begin creating new financial transaction-based taxes; howls and applause are expected from the usual corners of the room. Thomson Reuters finds a hard place next to the rock in the high-frequency trading realm as an escalating dispute cuts off the company from a significant source of quote data. The SEC gives a sharp smack to ratings firm Egan-Jones, who goes to the penalty box for inventing work history.
First Read
CBOT Building Owners Sponsor MarketsWiki
John Lothian News is pleased to announce that the CBOT Building and its new owners, GlenStar Properties and USAA Real Estate Company, have agreed to become a Partner level sponsor of MarketsWiki.
The new ownership team is redeveloping the 1.3 million square foot north and south towers of the CBOT building and leveraging the building’s extraordinary technological infrastructure and redundancies to attract technology firms, trading firms, traditional office firms and data center users.
GlenStar and USAA Real Estate plan to preserve the tradition of the iconic Chicago Board of Trade Building while introducing to the market its unmatched infrastructure that can support the long term needs of a broad group of business operations.
“I could not be happier to have the new owners of the CBOT Building support MarketsWiki and the work of John Lothian News,” said John J. Lothian, President & CEO of John J. Lothian & Company, Inc. and founder of the online knowledge base. “This building is our home and I believe GlenStar and USAA Real Estate will make this an even more dynamic and desirable location from which to run a business.”
Learn more about the CBOT Building at www.cbotbuilding.com.
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New Restoring Customer Confidence Video
The eighth video in our Restoring Customer Confidence series again deals with high frequency trading. Each week we will post a new idea answering the question – how do you restore customer confidence and bring traders back?
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| Restoring Customer Confidence | More ideas» |
HFT Rules: Rules for the Algo Highway Customer confidence has been hit by a number of different events over the past several years and high frequency trading (HFT) problems have been among them. Ben Van Vliet, assistant professor of finance, Stuart School of Business, Illinois Institute of Technology has been looking the creation of a standard set of rules high frequency trading participants can use to ensure safer markets. Van Vliet has helped initiate the AT 9000 system, which would implement standards for HFT design, backtesting, implementation and portfolio and risk management. Van Vliet says its important that the industry support such a project, rather than wait for regulators to dictate new standards and rules for participants. This video is sponsored by: +++++ About the Restoring Customer Confidence video series The Restoring Customer Confidence video series answers that question by exploring potential solutions using expert interviews and simple animations. John Lothian News interviewed more than a dozen professionals in the industry to get their ideas and solutions. As these ideas become practice, or as new concepts are adopted by the industry, we will continue to add them to the site. Visit the video series page on MarketsWiki.tv over the next several weeks for new ideas and solutions. |
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BOX Goes Jumbo
The Boston Options Exchange, run by a normal sized CEO by the name of Tony McCormick, has decided that bigger is better. BOX, as the exchange is known, has filed a proposal with the SEC for a jumbo sized SPY contract, or SPYJ as it will be known.
This super-sized contract will be 1000 shares rather than the 100 of the SPY. Trading increments will be 5 cents rather than the SPY’s 1 cent minimum.
The new contract is expected to attract institutional interest, especially as it allows for lower fees relative to the CBOE’s OEX contract based on the S&P 100 index.
Of course, all of this is subject to regulatory approval, but BOX expects the jumbo SPYJ could launch alongside the micro options awaiting launch in March.
There is no certainty on whether this jumbo contract comes with larger volume gains for BOX, but if it works, it could be the next big thing.
~John J. Lothian
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CME surveys grain traders on hours
Gregory Meyer in New York – FT.com
The biggest US futures exchange opened the door to shorter grain trading sessions amid discontent from some of the most important names in agribusiness. CME Group, which lists benchmark corn, soyabean and wheat contracts on its Chicago Board of Trade platform, on Tuesday began formally surveying producers and other traders to gauge views on near round-the-clock grain trading hours begun last year.
jlne.ws/UTXoRr
***** CME living up to the Lothian family motto: Sero Sed Serio (“Late, but in earnest”)
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Fenics and 360T sign software collaboration agreement
FENICS Software Ltd, a GFI Group Inc. company, announced today that it has signed an agreement with 360 Treasury Systems AG “360T” to embed the FENICS FX Options Pricing engine into 360T’s TEX multi-dealer trading system.
jlne.ws/UTXoRt
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[Video] Derivatives Losing Lovers
TheStreet.com
Derivatives volumes are falling, while ICE prepares to take over the New York Stock Exchange. Dan Dicker looks at the future for the exchanges.
jlne.ws/UTXqsr
***** More Paul Simon: Turns out there are more than 50 ways…
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Electronic trading changes the game for commodities
Anna Reitman – Financial News
Correlations across stocks and commodities have sidelined fundamental trading strategies and created new opportunities. Research by Ebullio Capital Management, a commodities fund, shows Apple shares (widely viewed as a proxy for equity markets) moving in unison with a commodities basket throughout 2012. As a result, quantitative hedge fund strategies are entering the commodity derivatives market boosted by increasingly liquid, electronically traded commodity markets.
jlne.ws/UTXoRx
***** Markets are correlated until they aren’t. And then it hurts.
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Likely Pick to Head SEC Is Veteran Prosecutor, Litigator
JESSICA HOLZER AND SCOTT PATTERSON – WSJ.com
For the first time, a former prosecutor appears poised to be nominated as the nation’s top securities regulator. Mary Jo White, who made her name pursuing terrorists, mobsters and white-collar criminals as a federal prosecutor in New York, is the Obama administration’s likely pick to lead the Securities and Exchange Commission, according to people familiar with the administration’s search.
jlne.ws/UTXp7O
***** And I was so hoping for another lame ex-Congressman.
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How SEC Is Trying to Break From Its Troubled Past
CNBC via Yahoo! Finance
It is hard to imagine things getting any worse at the Securities and Exchange Commission than they were when the Bernard Madoff and Allen Stanford scandals came to light four years ago, and even some of the agency’s harshest critics now say things have gotten a whole lot better.
jlne.ws/UTXnwM
***** SEC: Now they’re totally hardcore.
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No press allowed: A step back for PE transparency
Dan Dunkley – Financial News
The London School of Economics yesterday held an Alternative Asset Conference at London’s Marriott hotel in Grosvenor Square, but why was press reporting restricted? The press were invited to hear from the world of private equity with press passes printed for Financial News/Private Equity News, Reuters, Bloomberg, The Economist, the Financial Times, Unquote, PEI Media et al. Except there was a last minute hitch: the press were not allowed to attend all but a few of the talks on the agenda.
jlne.ws/UTXp7P
***** Stupid is, as…
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Borsa Italina delivers hedging tool to pasta makers
Suzi Ring – Financial News
Borsa Italiana has launched the first durum wheat futures contract in Europe under a new agricultural arm, making it the latest exchange group to try and capitalise on volatility in the grain markets.
jlne.ws/UTXnwW
***** Delivery specs include al dente and plastic-wrapped.
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Four Trends Shaping Financial Services in 2013
Steve Woodyatt, Ian Grieves and Gerry Turner – FOW
With the implementation of Dodd Frank, and the ESMA Directives, amongst other long awaited regulations, firms are facing a number of new, and sometimes conflicting, guidelines for different geographies and jurisdictions, including increased reporting standards. The costs for reaching operational compliance in multiple markets can put a serious strain on a firm’s bottom line, particularly when margins are already so thin and the costs of failure can be so high.
jlne.ws/UTXqsn
***** Food for thought, no cooking required.
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Deal Professor: Reports Reveal Financial Challenges, but Few Solutions
New York Times
Mandatory reading at the World Economic Forum should be two reminders from JPMorgan Chase and the Federal Reserve that we are far from preventing financial crises.
jlne.ws/UTXpoi
***** …and a lack of imagination.
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The women of Davos 2013
Financial News
The World Economic Forum has for the third year running stipulated that at least one in five delegates sent to Davos by strategic partners is female. Here are some of the women who will be attending this year’s event.
jlne.ws/UTXqsu
***** I could not come up with a comment that wasn’t sexist or just plain stupid for this headline.
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MarketsWiki
MarketsWiki Page of the Day
Egan-Jones
jlne.ws/UTXpop
MarketsWiki Recent Updates
People
Dax Rodriguez; Paul Finnegan; Elmer Funke Kupper; Robert Elstone; Bette Smith
Companies, Organizations and Groups
CME Group, Inc.; Egan-Jones Ratings Company; Broadway Technology, LLC; Australian Securities Exchange
Products
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Underwriter; Subprime mortgage crisis
Statistics
33,943,760 pages viewed, 7,341 articles, 152,524 edits
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Lead Stories
EU states to get go-ahead for tax on trading
John O’Donnell and Robin Emmott | Reuters
Germany, France and nine other euro zone countries will get the go-ahead on Tuesday to start work on a financial transactions tax, a measure likely to unsettle banks and trading houses but which will please voters and could raise much-needed revenue.
jlne.ws/UTXqsB
Thomson Reuters At Center Of High-Speed Trading Squabble
EVA SZALAY – WSJ.com
The currencies-trading arm of Thomson Reuters (TRI) has found itself in the center of a row over high-speed trading as one multi-trillion-dollar client stopped feeding prices to the system in a squabble over how the trading platform dealt with a rival’s tactics.
jlne.ws/UTXpot
SEC Reins In Ratings Firm
JEANNETTE NEUMANN – WSJ
The U.S. Securities and Exchange Commission barred Egan-Jones Ratings Co. from issuing ratings on certain bonds, an unprecedented step by the regulator and a setback for a small credit-rating firm with a history of courting controversy.
jlne.ws/UTXqsC
Italy’s banks lobby head resigns on derivatives scandal
Dow Jones Newswires
Giuseppe Mussari, head of Italy’s banks lobby ABI, resigned late Tuesday following a media report that under his helm back in 2009 Banca Monte dei Paschi di Siena carried out a derivative transaction likely to cost the bank E220m ($293m) in losses, to be posted in 2012 accounts.
jlne.ws/UTXpou
Peregrine’s Wasendorf Stole $215 Million, U.S. Says
Phil Milford – Bloomberg
Russell Wasendorf Sr., the founder of now-bankrupt Peregrine Financial Group Inc., stole more than $215 million from the commodity firm’s customers, U.S. prosecutors said.
jlne.ws/UTXpow
JPMorgan CEO Hits Back at Regulators in Davos
CNBC
JPMorgan Chase CEO Jamie Dimon has hit back at global regulators, telling CNBC in Davos that some of the new rules had made things more complicated and that many of the problems had still not been fixed.
jlne.ws/UTXpEO
At Davos, Is the Party Over?
ANDREW ROSS SORKIN – NYTimes.com
In previous years, the Friday night of the World Economic Forum was always filled with big dinners and blow-out parties. This Friday, however, the operative slogan could be “No dinner. No parties.”
jlne.ws/UTXpEP
Analysts take bullish stance on interdealer brokers
Tim Cave – Financial News
The world’s largest interdealer brokers are for set for a turnaround in fortunes, analysts have predicted, following a period that Icap chief executive Michael Spencer recently described as the “toughest” he could remember.
jlne.ws/UTXpEU
Regulatory
Martinez to head SEC’s unit that sorts tips, complaints
Washington Post
Vincent L. Martinez will head the influential unit that sorts through the hundreds of thousands of tips and complaints submitted to the Securities and Exchange Commission each year, the agency announced Tuesday.
jlne.ws/UTXpEX
Vincente Martinez Named Chief Of SEC’s Office Of Market Intelligence
Press Release
The Securities and Exchange Commission today announced that Vincente L. Martinez has been named Chief of the Enforcement Division’s Office of Market Intelligence, which collects and evaluates thousands of tips, complaints, and referrals that come into the SEC each year.
jlne.ws/UTXpF1
Bank Splits Should Be Paired With Shadow Bank Curbs, Koenig Says
Bloomberg
Germany’s top markets regulator said a plan to split bank trading and deposit-taking activities would need to be paired with other measures to supervise global financial activities.
jlne.ws/UTXqJ5
ESMA Sets Out Its 2013 CRA Work Programme
The European Securities and Markets Authority (ESMA) has published its 2013 CRA Supervision and Policy Work Plan.
jlne.ws/UTXqJ6
Statement Concerning Publication By IOSCO On January 21, 2012 Of The Final Report On “Suitability Requirements With Respect To The Distribution Of Complex Financial Products.” By Commissioners Troy A. Paredes And Daniel M. Gallagher, U.S. Securities And E
jlne.ws/UTXpVk
Opening Remarks At Investor Advisory Committee Meeting By Chairman Elisse Walter, U.S. Securities And Exchange Commission
jlne.ws/UTXpVn
Exchanges & Trading Facilities
LSE Group enters tech partnership with Lima Stock Exchange
Automated Trader
London Stock Exchange Group has entered into a technology partnership with Bolsa de Valores de Lima. MillenniumIT, a wholly-owned subsidiary of London Stock Exchange Group will provide trading and Smart Order Routing technology to Peru’s markets via its trading platform, Millennium Exchange and Millennium SOR.
jlne.ws/UTXqJ7
BM&FBOVESPA Launches New Interest Rate Derivatives
BM&FBOVESPA is to launch new interest rate derivatives on March 1. The first is a futures contract referenced to the average rate of one-day repurchase agreements, backed by federal securities.
jlne.ws/UTXpVr
CME Group to Conduct Industry Outreach on Expanded CBOT Grain and Oilseed Hours
Press Release
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it will begin the process of conducting outreach to customers, producer groups and other market participants on expanded CBOT grain and oilseed trading hours.
jlne.ws/UTXpVs
The unconventional ways of IntercontinentalExchange
Crain’s
When the New York Stock Exchange was scooped up a few days before Christmas by Atlanta upstart IntercontinentalExchange, the sale was seen globally as a symbolic blow to New York’s claim as the world’s financial capital, and locally as putting pressure on ICE rival CME Group.
jlne.ws/VQphuG
5000th Session On The Warsaw Stock Exchange
jlne.ws/UTXpVA
Direct Edge Market Data Notice #13-01: Edge Routed Liquidity Report Update
jlne.ws/UTXpVB
Hedge Funds & Managed Futures
Calpers Buy-Hold Rule Recoups $95 Billion Recession Loss
Bloomberg
The California Public Employees’ Retirement System is poised to top a record $260 billion in assets, the market value it held before the global financial crisis wiped out more than a third of its wealth, by sticking with a strategy of buy-and-hold.
jlne.ws/UTXqbO
Galena Energy Hedge Fund Chief Claude Lixi Said to Leave Firm
Bloomberg
Claude Lixi, the head of Galena Asset Management Ltd.’s energy hedge fund, left the London-based company, according to two people with direct knowledge of the departure.
jlne.ws/UTXqZD
Morgan Creek’s Yusko out as CIO of Endowment Fund
Reuters via Yahoo! Finance
Hedge fund investor Mark Yusko, who once headed the University of North Carolina’s endowment fund, has stepped down as investment chief of his $3.5 billion joint-venture Endowment Fund, a source familiar with the matter said on Tuesday.
jlne.ws/UTXqZF
BlueGold manager Andurand plans new $500 million oil fund
Reuters via Yahoo! Finance
Pierre Andurand, manager of BlueGold hedge fund who called the peak of the oil market before the financial crisis then closed after heavy losses in 2011, said on Tuesday he will start an energy fund in London next month that aims to raise at least $500 million (315 million pounds) in capital.
jlne.ws/UTXqbV
David Tepper: I’d Rather Work At McDonald’s Than Work On The Sell-Side
Business Insider
Legendary hedge fund manager David Tepper is on Bloomber TV with Stephanie Ruhle today talking global macro and everything else under the sun.
jlne.ws/UTXrfV
Firms Keep Stockpiles of ‘Foreign’ Cash in U.S.
KATE LINEBAUGH – WSJ.com
There’s a funny thing about the estimated $1.7 trillion that American companies say they have indefinitely invested overseas: A lot of it is actually sitting right here at home.
jlne.ws/UTXrfW
S&P Capital IQ Teams With Clearwater Analytics To Provide Fixed Income Pricing And Reference Data To Financial Professionals Globally Through Secure, Web-Based Investment Accounting Solution
jlne.ws/UTXqc3
Banks & Brokers
Deutsche Bank Agrees to Settle Energy Trading Inquiry
MARK SCOTT – NYTimes.com
Deutsche Bank has agreed to a settlement with the Federal Energy Regulatory Commission over charges that the bank manipulated California’s energy markets in 2010.
jlne.ws/UTXqc6
Jain Calls With JPMorgan’s Dimon to Allow Banks to Fail
Bloomberg
Regulators and banks should develop a system allowing lenders to go bust without damaging the world economy to help restore public trust in the industry, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said.
jlne.ws/UTXt7v
RBS poised to name co-heads of markets unit
Ben Wright – Financial News
Following press reports over the weekend that the Royal Bank of Scotland is planning to split its investment banking division in two, Financial News can reveal that the markets business will be run by two co-heads who will report directly to Stephen Hester, the group chief executive.
jlne.ws/UTXt7w
TD Ameritrade Gathers a Record $16 Billion in Net New Client Assets
Business Wire via Yahoo! Finance
TD Ameritrade Holding Corporation has released results for the first quarter of fiscal 2013.
jlne.ws/UTXt7C
UBS appoints private banker as investment bank operating chief
Reuters via Yahoo! News
ZURICH – UBS named private banker Andre Cronje operating head of its investment bank, which is shutting vast swaths of its fixed income division.
jlne.ws/UTXrwA
UBS Launches Global Family Office in the Americas, Completes Strategic Global Expansion Initiative
Business Wire via Yahoo! Finance
UBS today announced the expansion of its Global Family Office to the Americas region, completing the firm’s implementation of a strategy to extend its GFO business to serve clientele across Europe, Asia and the Americas.
jlne.ws/UTXrwE
Barclays Said to Close Brazil Research Unit and Cut Jobs
Bloomberg
Barclays Plc , Britain’s second- largest bank, is closing its Brazil research unit and cutting staff there amid a global restructuring, two people with direct knowledge of the matter said.
jlne.ws/UTXrMV
Barclays U.K. Staff on Notice for Job Cuts
FOX Business
Barclays PLC Tuesday put its U.K. investment banking staff on notice for potential job cuts as it prepares to restructure the bank to adapt to new regulations and a tougher business climate.
jlne.ws/UTXrMW
Lazard Appoints Jesse Bhattal as Senior Advisor
Business Wire via Yahoo! Finance
Lazard Ltd today announced that Jesse Bhattal has been appointed as a Senior Advisor, effective immediately. Mr. Bhattal will advise senior management regarding clients and strategic initiatives internationally, with a focus on the Asia-Pacific region.
jlne.ws/UTXrMZ
Indexes & Products
ETF Securities makes Swiss commodities push
Suzi Ring – Financial News
ETF Securities hopes to attract high-net worth investors looking to invest in commodities in Switzerland with the listing of 28 new exchange-traded products on the Six Swiss Exchange.
jlne.ws/UTXrN6
FTSE Wins Asia Asset Management ‘ETF Index Provider Of The Year’ Award
jlne.ws/UTXrNb
Technology
PNT Financial Chooses Orc Trader For Orc’s Growing FX Capabilities
Orc, a leading provider of technology and services for the global financial industry, today announced that PNT Financial, a global trading firm, has decided to use Orc Trader to take advantage of opportunities in the FX and currency markets.
jlne.ws/UTXtob
Options Names Danny Moore as New Chief Operating Officer
Business Wire via Yahoo! Finance
Options, provider of the Options PIPE Private Financial Cloud services platform for the exchange, banking, trading and investment communities, today announced that former NYSE Euronext executive Danny Moore has been appointed as the firm’s new Chief Operating Officer.
jlne.ws/UTXtoh
InfoReach Enhances Electronic Trading Platform Risk Controls – Configurable, Real-Time Risk Checks Protect Against Trading Risk Across Markets, At Multiple Levels
jlne.ws/UTXtEx
CMA Choose TMX Atrium For Exchange Connectivity
jlne.ws/UTXtEB
Thomson Reuters Unveils Virtual Global Markets Forum with Key Influencers at Davos
Thomson Reuters has recently launched the world’s first 24-hour, global, cross-asset chat community for financial markets professionals. The Global Markets Forum is accessed through the Company’s flagship messaging system, Thomson Reuters Messenger, which is available either via the Company’s next-generation desktop Thomson Reuters Eikon or as a standalone service to the financial community.
jlne.ws/UTXs3A
NASDAQ OMX NLX Selects Equinix
Business Wire via Yahoo! Finance
Equinix, Inc. , the global interconnection and data center company, has been selected by NASDAQ OMX NLX to host the new market from Equinix’s London, Slough LD4/LD5 International Business Exchange data center campus.
jlne.ws/UTXs3I
Agency for the Cooperation of – Markets Data – FT.com
NASDAQ OMX has been selected to deliver its SMARTS Integrity market surveillance system to the Agency for the Cooperation of Energy Regulators (ACER), a central EU institution in the creation of a Single Energy Market to the benefit of all EU consumers, to monitor the European wholesale gas and electricity markets covering both spot trading and derivative markets across Europe in accordance with the obligations under the REMIT legislation.
jlne.ws/UTXtEJ
Enforcement
SEC: Egan-Jones And Founder Sean Egan Agree To 18-Month Bars From Rating Asset-Backed And Government Securities Issuers As NRSRO
The Securities and Exchange Commission today announced that Egan-Jones Ratings Company (EJR) and its president Sean Egan have agreed to settle charges that they made willful and material misstatements and omissions when registering with the SEC to become a Nationally Recognized Statistical Rating Organization (NRSRO) for asset-backed securities and government securities.
jlne.ws/UTXtEL
Goldman Sachs Jury Seeks Ex-Dragon President’s Testimony
Bloomberg
A jury deliberating whether Goldman Sachs Group Inc. was negligent in helping arrange the $580 million sale of speech-recognition pioneer Dragon Systems Inc. asked to review statements from a former Dragon president who testified for the bank.
jlne.ws/UTXsk5
ASIC: Susquehanna Pacific Pty Ltd Pays $25,000 Infringement Notice Penalty
jlne.ws/UTXskb
Environmental & Energy
State Department delays Keystone pipeline decision
Reuters
The Obama administration has delayed a decision on TransCanada Corp’s rerouted Keystone XL oil pipeline until after March, even though Nebraska’s governor on Tuesday approved a plan for part of the line running through his state.
jlne.ws/XVDNRv
**RKB – Official says Q1 decision deadline can’t be met.
Keystone XL pipeline gets OK from Nebraska governor. Is Obama next?
The Christian Science Monitor
Keystone XL pipeline’s new route was approved by Nebraska Gov. Dave Heineman Tuesday. The decision comes after a study concluded that construction of the Keystone XL pipeline would have “minimal environmental impacts.” The final decision will fall on President Obama.
jlne.ws/Wr3VT6
**RKB – Coverage continues in Natural Gas section.
AP Interview: UN chief wants action on climate
AP
U.N. Secretary-General Ban Ki-moon says his top hopes for 2013 are to reach a new agreement on climate change and to urgently end the increasingly deadly and divisive war in Syria.
jlne.ws/URCm5R
Asia-Pacific
Hong Kong hit over plan to protect corporate data
Rahul Jacob – Financial Times
A prominent corporate governance activist in Hong Kong has criticized a government plan that would enable companies to conceal the identity cards of directors on the local companies’ registry website.
jlne.ws/UTXtV3
Taiwan Futures Exchange Monthly Newsletter – January 2013
jlne.ws/UTXske
Frontier Markets
Record Volumes In Dubai Mercantile Exchange Settlement Window
The total number of trades in the settlement window on the Dubai Mercantile Exchange (DME) reached a new record today. 2,618 contracts were traded in the window on 22 January 2013 beating the previous high of 2,545, set on 15 November 2012.
jlne.ws/UTXtV8
Mercantile exchange futures trading
The Nation
Pakistan Mercantile Exchange has published the first of its kind Urdu Dictionary on Futures Trading in Pakistan.
jlne.ws/UTXsAv