Industry news

May 22, 2013: Hong Kong Police Probe Mercantile Exchange at SFC Request; ICE-NYSE Deal Formally Notified to EU for Merger Examination; European energy exchanges compete for Turkish growth

Police in Hong Kong are taking a closer look at potential financial irregularities at the recently-shuttered Hong Kong Mercantile Exchange. The ICE-NYSE merger has formally been submitted to the EU for testing and, they hope, approval. ICE Endex and the European Energy Exchange face off over an expanding market in Turkey.

First Read

CME Plans to Cut Board Size
JACOB BUNGE – WSJ.com
The chairman of CME Group Inc. said the exchange operator plans further cuts to a 30-member board that is twice as large as its closest U.S. rivals.
jlne.ws/10lCqf2

***** The CME board will be cut from 30 over-sized egos down to 20 humble, grateful souls.

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Orc appoints Jeremie Bacon to lead Americas operations
Orc, a leading provider of technology and services for the global financial industry, today announced Jeremie Bacon as the new Regional President of Orc Americas. He succeeds Marty Leamy and will be based in Orc’s Chicago office. Bacon is a seasoned financial services and B2B software executive, experienced in strategic organization building, sales and marketing as well as professional services. Prior to joining Orc, Bacon co-founded Backstop Solutions Group, a Chicago based firm that provides investor relations and hedge fund portfolio management software. Bacon also spent time at Goldman Sachs, where he worked in the institutional equity sales division.
(via email)
***** Jessica Titlebaum’s new boss, or so he thinks.

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ICE Futures Europe Sets Daily Volume Record in Coal Options
IntercontinentalExchange, a leading operator of global markets and clearing houses, today announced that ICE Futures Europe reached a daily volume record of 9,075 contracts in ICE Coal options on May 21, 2013. The previous volume record was 7,200 contracts on December 4, 2012.
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***** ICE Coal, get it while its hot.

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MGEX Breaks AJC Daily Options Volume Record
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), reached a new daily record for Apple Juice Concentrate (AJC) options volume during yesterday’s trading session.
jlne.ws/10lCpI0

***** Must be the height of the kid soccer season.

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OCC Takes Silver At The FCS Portfolio Awards In The Best Annual Report Category
OCC announced today that its 2011 annual report took Silver (the only award given) in the Best Annual Report category at the 2013 FCS Portfolio Awards presented by the Financial Communications Society in New York City on May 16, 2013.
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***** You have to watch the OCC around the silver, I guess.

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Instant Bloomberg not going to fade away yet
Andrew Edgecliffe-Johnson and Tracy Alloway in New York and Philip Stafford in London – FT.com
If a single function can be said to justify the $20,000 annual cost of a Bloomberg terminal, it is probably Instant Bloomberg, which the company accurately describes as “the dominant chat tool used by the global financial community”.
jlne.ws/10lCpI6

***** One of the things that the Bloomberg controversy is about is that reporters could look to see if someone had logged in lately, which might be an indication they left the firm. I have the same type of information with my newsletter when I get bounce notices after someone’s email has been deleted.

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Gensler Recusal Faulted in CFTC Watchdog’s MF Global Report
Bloomberg
Chairman Gary Gensler’s recusal from the U.S. Commodity Futures Trading Commission’s investigation into the collapse of MF Global Holdings Ltd. was unnecessary and wasn’t required by ethics rules, according to the agency’s internal watchdog.
jlne.ws/10lCqfa

***** There are ethics rules, and their are individual ethics. There is not one a one-size-fits-all ethical ten foot pole. Mr. Gensler had every right to recuse himself, even if the rules said he did not have to. And he was very good at not answering any MFG questions. I know I tried and tried.

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How much power did the CFTC Give to SEFs and DCMs?
Daniel Parker – FOW
As additional final rules are promulgated throughout the globe, an emerging trend for financial market regulators is to transfer, allocate and defer significant implementation discretion to financial market utilities and other relevant transaction infrastructures. For instance, on May 16, 2013, in a landmark ruling decided in a public forum, the U.S. Commodities Futures Trading Commission (CFTC) voted, by a margin of 3-2, to implement, among other rules, the final “made available to trade” (MAT) rule.
jlne.ws/10lCqfb

***** There is also the made available to trade, opening only, or MATOO. And the made available to trade, fill or kill.

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The inner circle
Kara Scannell – FT.com
The most powerful legal fraternity on Wall Street congregated last year at Capitale, a lower Manhattan ballroom that was once the headquarters of the Bowery Savings Bank. As a winter rain fell, federal judges, top regulators, titans of the defence bar and highly paid corporate counsels gathered to honour an institution that helped make them what they are today.
jlne.ws/10lCpYo

***** Pure power.

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Commodities traders acquire power stations
Javier Blas, Commodities Editor – FT.com
The Swiss-based commodities traders are expanding into assets, buying or leasing anything from refineries to pipelines and terminals. Now Vitol, the largest oil trader, has bought a power station, signalling the return of the independent trading houses to the power generation sector. The acquisition suggests the return of the independent trading houses to the power stations sector, roughly 10 years after the collapse of the US electricity trading industry, which included names such as Enron, Dynergy, Mirant and Williams.
jlne.ws/10lCqfd

***** Pure power station.

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MarketsWiki

MarketsWiki Page of the Day
Judd A. Gregg
jlne.ws/10KbF2O

MarketsWiki Recent Updates

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Jock Percy; Kenneth E. Bentsen, Jr.; Judd A. Gregg; Stephanie Hammer; Katherine Murray; Stanley Young

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Hong Kong Exchanges and Clearing Ltd; Bloomberg; Securities Industry and Financial Markets Association; OptionMonster Holdings, Inc.

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Lead Stories

Hong Kong Police Probe Mercantile Exchange at SFC Request
Bloomberg
Police began probing the Hong Kong Mercantile Exchange Ltd. at the request of the Securities and Futures Commission, which said it found “serious” suspected financial irregularities at the shuttered commodities market.
jlne.ws/10lCqvt

ICE-NYSE Deal Formally Notified to EU for Merger Examination
Bloomberg
IntercontinentalExchange Inc. formally sought European Union approval for its plans to buy NYSE Euronext 15 months after regulators blocked Deutsche Boerse AG’s acquisition of the New York Stock Exchange operator.
jlne.ws/10lCpYt

European energy exchanges compete for Turkish growth
Reuters
European energy exchanges ICE Endex and EEX are competing for a slice of Turkey’s booming power market as the country prepares to open its first electricity exchange, executives from the companies said on Tuesday.
jlne.ws/10lCpYw

ICE Joins CME Warning of Splits in Global Derivatives Rules
Silla Brush – Bloomberg
Top executives of the two largest U.S. derivatives exchanges say regulators must take further steps to align Dodd-Frank Act rules with those of foreign counterparts to avoid oversight splits that could harm markets.
jlne.ws/10lCqvu

WSE gets tough with New Connect
Jan Cienski | beyondbrics
The Warsaw Stock Exchange is tightening the screws on its often-unruly younger sibling, the New Connect alternative market for small companies, by halting trading in 14 companies that failed to file their quarterly reports on time.
jlne.ws/10lCqvv

HKEx preparing to launch CES 120 derivative
Global Times
Hong Kong Exchanges and Clearing Limited (HKEx), one of the world’s largest exchange operators by market value, plans to soon introduce a new stock index-linked derivative product, CES China 120 Index (CES 120) futures, amid ongoing efforts to enhance financial cooperation between the mainland and Hong Kong, the exchange announced Monday.
jlne.ws/10lCpYz

It’s Back: Shadow Banking Hits Post-Crisis Highs
CNBC
What Warren Buffett once called “financial weapons of mass destruction” are firing again, with securitization and shadow banking at post-financial crisis highs. Analysts say it’s both a threat to regulation and a sign that the economy is recovering.
jlne.ws/10lCpYD

Dimon’s Pyrrhic Victory
AGNES T. CRANE and ANTONY CURRIE – NYTimes.com
The Pyrrhic victory Tuesday for Jamie Dimon is a defeat for corporate governance. Just over two-thirds of JPMorgan Chase shareholders voted to keep him as both chairman and chief executive at the bank’s annual meeting in Tampa, Fla., on Tuesday. And Mr. Dimon and the board had to devote a considerable amount of time to preserving his titles rather than running America’s largest bank by assets. The episode perfectly illustrates the common sense behind separating the two roles.
jlne.ws/10lCqvA

Italy Considers ‘Generational Handoffs’ for Jobs
CHRISTOPHER EMSDEN – WSJ.com
Italy is considering allowing older workers to reduce their work hours while mentoring younger employees as a way to bring down youth unemployment, which is a growing scourge across Europe.
jlne.ws/10lCsU5

Regulatory

Finra Considering Rule to Require More Dark Pool Data Disclosure
Bloomberg
A Wall Street regulator is considering new rules to shine light on dark trading after the largest U.S. dark pool operator stopped sharing data on the volume of its trades.
jlne.ws/10lCqvE

FIA Testifies At House Agriculture Committee Hearing On CFTC
Walt Lukken, the President and Chief Executive Officer of the Futures Industry Association, is scheduled to testify today before the House Agriculture Committee at a hearing titled “The Future of the Commodity Futures Trading Commission: Market Perspectives.”
jlne.ws/10lCsUc

Trading Scenarios Posed By CFTC Commissioner O’Malia At The May 16, 2013 Open Meeting During The Presentation On Anti-Disruptive Practices Authority – Interpretive Guidance And Policy Statement
jlne.ws/10lCqvH

The Important Role Of Immigrants In Our Economy By SEC Commissioner Luis A. Aguilar Remarks At The 2013 Annual Gala Georgia Hispanic Chamber Of Commerce, Atlanta, Georgia
jlne.ws/10lCsUh

Remarks by Richard Ketchum From the FINRA Annual Conference
jlne.ws/10lCsUi

The The Autorité des Marchés Financiers publishes a recommendation on pro forma financial information
jlne.ws/10lCqvI

Finansinspektionen – Swedish Financial Supervisory Authority – Decision Concerning Interest Rate And Risk Weight Floors
jlne.ws/10lCqLY

Survey: Review Of The European System Of Financial Supervision
jlne.ws/10lCqLZ

Exchanges & Trading Facilities

CBOE Holdings Files Additional Definitive Materials With Respect To 2013 Annual Meeting
In particular, the additional definitive materials note that Douglas H. Shulman has withdrawn his candidacy for election to the company’s Board of Directors at the 2013 Annual Meeting of Stockholders. Mr. Shulman was standing for election as a new director to serve until the 2014 Annual Meeting of Stockholders.
jlne.ws/14OcLik

NYSE Euronext To Reinforce The Role Of The Capital Markets As A Financing Source For Portuguese Companies
jlne.ws/10lCqM6

A snapshot of Australian investors: 2012 Australian Share Ownership Study
jlne.ws/10lCtaA

Top 20 Largest Consolidated Short Position Report – May 15, 2013
jlne.ws/10lCtaG

Moscow Exchange Starts Trading The First Ever Russian Mortgage Certificates
jlne.ws/10lCtaJ

MIAX Options Holiday Schedule – Memorial Day
jlne.ws/10lCqM9

MIAX – Attributable Orders Available Wednesday, May 29
jlne.ws/10lCtaM

Direct Edge Trading Notice #13-19: Introducing EdgeRisk Ports
jlne.ws/10lCtaP

Hedge Funds & Managed Futures

Prosecutors’ subpoena of SAC’s Cohen puzzles defense lawyers
Reuters via Yahoo! News
By Matthew Goldstein NEW YORK – The decision by prosecutors to compel Steven A. Cohen to testify before a federal grand jury about allegations of insider trading at his $15 billion hedge fund is leaving many criminal defense lawyers scratching their heads.
jlne.ws/10lCqMe

Nomura and Reservoir-backed hedge fund shuts down
Harriet Agnew – Financial News
Occitan Capital Partners, a hedge fund that was set up by former traders from Nomura and asset manager Boussard & Gavaudan, is shutting down after two years of performance losses, according to four people familiar with the situation.
jlne.ws/10lCr2s

Morgan Creek to Acquire Signet Capital Management
WILLIAM ALDEN – NYTimes.com
The investment firm Morgan Creek Capital Management announced on Tuesday that it had agreed to acquire the alternative funds business of Signet Capital Management.
jlne.ws/10lCr2x

London salesman exits Och-Ziff
Harriet Agnew – Financial News
A London-based salesman at Och-Ziff Capital Management has left the firm, two months after the $35.6bn alternatives manager announced its head of European investing was stepping down after 15 years.
jlne.ws/10lCr2y

Leading Asset Owners And Managers Talk Sustainability In New FTSE4Good Sir Mervyn Pedelty Award Article
Unilever was honoured in December as the first recipient of the Sir Mervyn Pedelty award, confirming the consumer products group’s standing as a corporate leader in sustainability. The award, in memory of the inspiring first chairman of the FTSE4Good Policy Committee, Sir Mervyn, recognises the major sustainability achievements constituent companies have made. Out of the approximately 2,400 companies assessed for the FTSE4Good ESG Ratings, eight sector leaders that achieved improvements over time were identified. In addition to Unilever, three companies were highly commended – Go-Ahead, Intel and Diageo.
jlne.ws/10lCr2A

Former Deutsche Bank Commodities Head Silbert Starts New Company
Bloomberg
Former Deutsche Bank AG executives led by commodities chief David Silbert are starting an energy and metals company backed by private-equity energy firm Riverstone Holdings LLC.
jlne.ws/10lCr2C

Deal Professor: Buffett, With His Magic Touch, May Be Irreplaceable
New York Times
Warren Buffett is a skilled deal maker, but who will negotiate such favorable deals for Berkshire Hathaway after he is gone?
jlne.ws/10lCr2F

Gold’s Fall Stings Texas Universities’ Endowment
GREGORY ZUCKERMAN – WSJ.com
Gold’s slump has saddled the second-largest U.S. college endowment with more than $300 million in paper losses. But the swoon hasn’t shaken the faith of Bruce Zimmerman, who since 2007 has been chief executive of University of Texas Investment Management Co.
jlne.ws/10lCr2G

Thomson Reuters Wins Inside Market Data And Inside Reference Data Awards 2013 – Financial & Risk Business Recognised Across Four Categories As Voted On By Market Participants
jlne.ws/10lCtre

Amaranth Hit Death Spiral as Sycophants, Fools Cavorted
Bloomberg
In Sept. 2006, Greenwich, Connecticut-based hedge fund Amaranth Advisors LLC collapsed after losing more than $6 billion in the natural-gas futures market. In “Hedge Hogs,” Barbara T. Dreyfuss tells the story of the math-whiz traders whose risky dance with deregulation led to the collapse.
jlne.ws/10lCtri

World’s Richest Hedge Fund Managers & Traders
Forbes
jlne.ws/10lCtrj

Banks & Brokers

Dimon clings to JPMorgan chairman title, after fight
Reuters via Yahoo! News
By David Henry TAMPA, Florida – Jamie Dimon, chairman and chief executive of JPMorgan Chase & Co took an unusual step to fight off investors seeking more oversight of his activities – he hinted he might quit. And it worked.
jlne.ws/10lCtrk

JPMorgan Directors Glance: How shareholders voted
Associated Press via Yahoo! Finance
Shareholders at JPMorgan Chase voted to let Jamie Dimon, the chairman and CEO of the nation’s largest bank, keep both his jobs Tuesday.
jlne.ws/10lCr2K

Deutsche Bank Seeks to Avoid Law Suits With Board Changes
Bloomberg
Deutsche Bank AG , continental Europe’s biggest bank, is asking investors to replace three non-bankers supervising its executives with finance and legal experts after litigation-related costs eroded profit last year.
jlne.ws/10lCrj1

Trading Executive Shane Swanson Rejoins Citigroup
Dow Jones
Shane Swanson, an executive who helped build Citigroup Inc.’s equity-trading business before starting a high-frequency trading firm, has rejoined the bank.
jlne.ws/10lCrj2

UBS Must Face Ex-CMBS Strategist’s Whistle-Blower Lawsuit
Bloomberg
UBS AG must face a whistle-blower lawsuit by a former commercial mortgage-backed securities strategist who claims he was terminated for telling supervisors he was being pressured to publish misleading reports.
jlne.ws/10lCrj3

SocGen’s Russian Unit Said to Cut Hundreds of Jobs in Moscow
Bloomberg
Societe Generale SA ’s Russian consumer-banking unit, OAO Rosbank , is cutting hundreds of back office jobs as it continues cost-reduction efforts, two people with knowledge of the matter said.
jlne.ws/10lCrj4

Banks Must Adapt To The Growth Of Fixed Income Electronic Trading To Retain Customer Flow
A new piece of research from GreySpark Partners, a London-based capital markets consultancy, published today examines the state of electronic trading in fixed income markets for bonds, CDS and IRS.
jlne.ws/10lCrj7

Lloyds Sees No Need to Raise Equity Following PRA Call
Bloomberg
Lloyds Banking Group Plc , Britain’s second-largest state-owned lender, said it doesn’t need to raise additional equity to help plug a 25 billion-pound capital shortfall among the country’s banks.
jlne.ws/10lCrj9

TradeStation Wins “Best in Show” in the Financial Communications Society (FCS) Awards Ceremony in New York
jlne.ws/10lCrzy

Clearing & Settlement

BME: REGIS-TR And National Settlement Depository (NSD) To Intensify Cooperation On The Mutual Exchange Of Information
REGIS-TR, the European Trade Repository owned by Clearstream (Deutsche Börse Group) and Iberclear (BME), and National Settlement Depository (NSD), the Russian Central Securities Depository, have signed a Memorandum of Understanding (MOU) to intensify their cooperation on the mutual exchange of information. The MOU addresses the development of communication channels and a cooperative relationship for the purpose of supporting and advancing the development of both organisations’ repository systems.
jlne.ws/10lCrzC

Indexes & Products

FTSE Licenses Four Indices To Vanguard For New ETFs – FTSE Indices To Expand Range Of Vanguard ETFs – Europe, Asia Pac, Japan And All-World Indices Chosen
jlne.ws/10lCtHT

STOXX Introduces Equal Weight Version For China A 50 Index
jlne.ws/10lCrzG

Technology

Numerix Leading Hedge Insurance Solution Enhanced for Breakthrough Performance Optimization
Numerix, the leading provider of cross-asset analytics for derivatives valuations and risk management today announced new functionality and innovation now available in Numerix Leading Hedge, an enterprise solution for the risk management, product design, pricing, scenario generation and hedging of large blocks of Insurance guarantees.
jlne.ws/10lCtYf

S&P Capital IQ’s Real Time Solutions Extends QuantLINK Low Latency And Co-Location Hosting Services Into HKEx Datacenter
jlne.ws/10lCtYg

Temasek Acquires Stake In Markit
jlne.ws/10lCrzL

Azul Systems Teams-Up With Rapid Addition To Deliver Low Latency, Jitter-Free Trading Engines
jlne.ws/10lCrQ1

Enforcement

DealBook: Brokerage Firm to Pay $7.5 Million Fine to Regulators
New York Times
LPL Financial will settle accusations that it made misstatements and failed to supervise its brokers’ communications properly.
jlne.ws/10lCrQ2

Fallen Goldman Director Appeals for a New Trial – NYTimes.com
PETER LATTMAN
It was perhaps the most critical piece of evidence in the trial of Rajat K. Gupta, a former Goldman Sachs director found guilty last year of leaking the bank’s boardroom discussions to his hedge fund friend. On Tuesday, a lawyer for Mr. Gupta argued that a federal appeals court should overturn his client’s conviction and grant a new trial because the verdict was tainted by the erroneous admission of that statement and other wiretapped conversations.
jlne.ws/10lCrQ3

Environmental & Energy

China reveals details of first carbon trading scheme
Financial Times
Operating details of China’s first pilot carbon-trading scheme, in Shenzhen, have been released as it gets ready to launch next month, and as the country prepares to roll out seven pilot schemes by 2014.
jlne.ws/16LLQID

**RKB — More details: The Shenzhen Carbon Exchange, the smallest of the seven in terms of total emissions, announced on Tuesday that its trading scheme would cover 635 industrial and construction companies, accounting for 38 per cent of Shenzhen’s total emissions in 2010. The exchange will launch on June 18.

High energy prices for industry occupy officials at EU summit
Financial Times
The portion of Wednesday’s EU summit that will be devoted to energy policy could be boiled down to a single, eye-popping chart that has been making the rounds in Brussels over the last week.
jlne.ws/10k5rI9

**RKB — Prices in Europe are now 37% higher than those in the US, and almost 20% higher than those in Japan.

NASDAQ OMX Commodities Launches German Power Initiative – Significant Market Interest Evident From New Liquidity Providers, Brokers And Market Makers
The German Power Initiative, aimed at making the German power market more transparent, liquid and cost effective, continues to receive strong market support. To date, 10 liquidity providers, 3 brokers and 1 market maker have signed on, since NASDAQ OMX Commodities invited members to participate in March.
jlne.ws/10lCrQ6

Asia-Pacific

ITG launches dark pool trading in Singapore
Anish Puaar – Financial NEws
Agency broker ITG has added Singaporean equities to its suite of anonymous trading tools called POSIT, joining a small group of firms that offer so called “dark pool” trading in the country.
jlne.ws/10lCtYr

‘Black’ rainstorn in Hong Kong to delay market open
FXstreet.com
The Hong Kong stock market will suffer delays on its opening today after authorities issued a “black” rainstorm warning, the highest level, Bloomberg reports.
jlne.ws/10lCueH

Dumb money returns to Japan
James Mackintosh – FT.com
The dumb money is returning to Japan, in a big way. Mutual and exchange traded funds investing in Japanese shares attracted record inflows last week. So far this year almost as much money has gone into Japanese mutual funds as in the best two full years of the last decade.
jlne.ws/10lCueK

Osaka Securities Exchange: Reasons behind System Failure and Measures, etc. to Prevent Recurrence
Osaka Securities Exchange Co., Ltd. hereby notify you of the reasons for the occurrence of the failure in J-GATE (derivatives trading system) on March 4, 2013 and our response. Please refer to the following file for more details.
jlne.ws/10lCueO

Thai Alternative Bourse’s Firms Record Profit Growth At 54 Pct In Q1
Q1 Net Profits Of Market For Alternative Investment (Mai)-Listed Firms Up 54.34 Pct Y-O-Y To THB 1.98 Billion (Approx.USD 68.27 Million) – Gross Profit Margins Increased 23.01 Pct Y-O-Y
jlne.ws/10lCrQi

Thai Bourse Joins Maybank Kim Eng Securities In Opportunity Day In Chiang Mai On May 31
The Stock Exchange of Thailand (SET) has joined Maybank Kim Eng Securities (Thailand) plc (MBKET) in the first Opportunity Day, in Chiang Mai, when top management of listed companies will meet directly with regional investors on Friday, May 31 at Centara Duangtawan Hotel from 9:00 a.m. to 4:00 p.m.
jlne.ws/10lCueW

An Empirical Analysis Of 2012 Annual Reports Of Listed Companies On Shenzhen Stock Exchange’s Multi-tiered Capital Market
jlne.ws/10lCs6z

HKEx: Trading In Securities And Derivatives Markets Will Resume At 1:00 pm After Cancellation Of Black Rainstorm Warning
jlne.ws/10lCs6K

Shenzhen Stock Exchange Market Bulletin 20 May 2013
jlne.ws/10lCuvc

HKEx Securities And Derivatives Markets Delay Open Due To Black Rainstorm Warning
jlne.ws/10lCs6P

Hong Kong’s Securities and Futures Appeals Tribunal Allows Review For Ex-Deutsche Trader Over Trading Of HSBC Shares
jlne.ws/10lCuvh

Frontier Markets

RTS Realtime Systems To Open Data Center In Dubai – Newest Hub In Global Trading Network To Offer Co-Location To DGCX
RTS Realtime Systems Group (RTS), a leading global trading solutions provider, today announced plans to open its newest data center in Dubai, the first Middle East site in its global data center network.
jlne.ws/10lCuvj

Global Fund Managers To Converge On Malaysia To Access Asean’s Multinational Marketplace
jlne.ws/10lCuvn

Tehran Stock Exchange Monthly Bulletin April 2013
jlne.ws/10lCuvp