Industry news

June 13, 2013: NYSE Euronext has ETF plan approved; House passes bill that would exempt foreign trades; Nasdaq appoints Tom Wittman to head its U.S. stock market

The SEC allows NYSE Euronext to allow ETF managers to pay market makers in order to improve liquidity. The US House of Representatives passes a bill that would exempt offshore trading from Federal oversight. Nasdaq OMX appoints a new head to run its US stock exchanges.

First Read

Giancarlo Said to Be Vetted for Republican CFTC Commissioner Job
Silla Brush & Robert Schmidt – Bloomberg
J. Christopher Giancarlo, executive vice president at interdealer broker GFI Group Inc. (GFIG), is the top candidate for a Republican appointment this year to the U.S. Commodity Futures Trading Commission, according to three people briefed on the matter.
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***** This would be a huge move towards recognizing the changing nature of the CFTC’s mandate. Chris Giancarlo would be a great addition to the CFTC as a commissioner.

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Eurex Exchange Completes Migration To New, State-Of-The-Art Trading Architecture
Eurex Exchange has been operating since Monday, 10 June, entirely on Deutsche Börse Group’s global trading architecture. The fixed-income derivatives segment, including highly liquid Euro-Bund, Euro-Bobl and Euro-Schatz futures, was the last to migrate from the previously used system. The new platform meets the needs of Eurex Exchange participants in terms of enhanced performance, efficiency and capacity, more connection options and improved functionality, while maintaining the high stability and availability that traders are used to.
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***** This could be a competitive landscape shifter.

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LSE names Isda chairman as non-exec
Philip Stafford – FT.com
The London Stock Exchange has appointed two non-executive directors as it continues to refresh its board. Stephen O’Connor, the new chairman of the International Swaps and Derivatives Association, and Stuart Lewis, head of risk at Deutsche Bank, join with immediate effect.
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***** Is there a board refresh button? Or, do you have to hit “Control, Alt, Delete?”

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Traders Pay for an Early Peek at Key Data
BRODY MULLINS, MICHAEL ROTHFELD,TOM MCGINTY and JENNY STRASBURG – WSJ.com
On the morning of March 15, stocks stumbled on news that a key reading of consumer confidence was unexpectedly low. One group of investors already knew that. They got the University of Michigan’s consumer report two seconds before everyone else.
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***** Private data can be sold to anyone.

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Justin Llewellyn-Jones of Fidessa Talks ISVs, Regulation & Technology
MarketsWiki.tv

Justin Llewellyn-Jones, chief operating officer of Fidessa, thinks globally and well, acts globally too. Llewellyn-Jones spoke with JLN editor-in-chief Jim Kharouf about how Fidessa is adapting to the new global marketplace and the demand for multi-asset class platforms and networks.

Watch the video »

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China draws commodity trading battle lines
Suzi Ring – Financial News
Hong Kong Exchanges and Clearing’s plan to co-list commodities contracts on mainland Chinese exchanges, outlined in recent weeks, has fired the starting gun in a battle for a significant share of China’s nascent commodities futures market.
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***** Let the fireworks begin.

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Hedge fund lobby group CEO to step down
Reuters via Yahoo! Finance
The chief executive of hedge fund lobby the Alternative Investment Management Association, Andrew Baker, will step down at the end of 2013, AIMA said on Wednesday.
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*****Just one of the hedge fund lobby groups.

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What are Chicago’s financial exchanges selling at Blackhawks games?
BRUCE BLYTHE – Chicago Grid
Hockey fans are used to watching their favorite teams skate and stick-handle inside a ring of corporate logos. At the United Center, brand-building on the sideboards extends beyond fast food, insurance and light beer to another arena that’s long been part of the city’s identity: trading. The city’s two major exchange companies, CME Group and the Chicago Board Options Exchange, advertise rink side along the likes of McDonald’s and Dunkin’ Donuts.
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***** Winning baby, they are selling winning. Except at Wrigley Field, there they sell baseball as it should be seen.

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WILD Panel on Forensic Accounting
Wednesday, June 20, 4 pm; McGladrey, One South Wacker Drive, Chicago
The derivatives industry has been challenged by wide-reaching bankruptcies and fraudulent behavior. With a panel of accounting experts, WILD explores fraud in the industry, how forensic accounting works to recover lost money and solutions that may ultimately restore customer confidence. Please join us for this unique and interactive discussion followed by an intimate networking reception. Experts will share their personal experiences in detecting fraud and provide insight into career opportunities in the forensic accounting space. This event will be chaired by Jim Kharouf, from John J. Lothian & Company and feature panelists Christen Morand of Ernst & Young as well as John Hague of McGladrey. Please watch this video to preview what topics will be covered on June 20th.

RSVP: Events@womeninlistedderivatives.org
COST: $10 – Pay Here: jlne.ws/11J63uc

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MarketsWiki

MarketsWiki Page of the Day
Stephen Hester
jlne.ws/qltGYH

MarketsWiki Recent Updates

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Justin Llewellyn-Jones; Jeff Borchardt; Stephen Hester; Jay Spencer; Billy Hult; Lee Olesky; Mike Wilkins; John Yoo

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London Metal Exchange; Osaka Securities Exchange Co.; TMX Group Inc.

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Lead Stories

NYSE Euronext has ETF plan approved
Chris Flood – FT.com
US regulators have approved plans to improve the liquidity of the US exchange traded funds market. The Securities and Exchange Commission has agreed that NYSE Euronext, the exchange operator, can allow ETF managers to pay market makers in order to encourage them to offer competitive price quotes for US listed exchange traded funds and products.
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House passes bill that would exempt foreign trades
Marcy Gordon – AP
he House passed legislation Wednesday that would exempt the trading of derivatives from federal oversight if it occurs outside the United States. A bipartisan group of lawmakers supported the carve-out on a 301-124 vote.
jlne.ws/140gwAB

Nasdaq appoints Tom Wittman to head its U.S. stock market
Reuters via Yahoo! News
NEW YORK – Nasdaq OMX Group has appointed Tom Wittman to head the No. 2 U.S. stock market as part of a broader management shift aimed at better aligning its products across the equities, options and futures asset classes.
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EU Urges U.K. to Probe Currency Rigging in Libor’s Wake
Ambereen Choudhury, Gavin Finch & Liam Vaughan – Bloomberg
Britain should investigate the manipulation of currency rates, European Union officials said after Bloomberg News revealed that traders have been rigging foreign-exchange benchmarks for more than a decade.
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FORMER MERRILL LYNCH CEO JOHN THAIN: The Financial Crisis Can ‘Absolutely’ Happen Again
Business Insider
“If anything, too big to fail is a bigger problem because the biggest financial institutions are more concentrated today than they were. Dodd Frank did not solve too big to fail,” Thain told Bloomberg TV.
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ASX takeover more likely under new government: report
Business Spectator
A capital raising worth more than half a billion dollars by ASX Ltd has fuelled specualtion the market operator may be considering an international takeover or merger offers after the federal election, The Australian Financial Review reports.
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Regulators Question Banks on Business Lending Risks
SHAYNDI RAICE AND MICHAEL R. CRITTENDEN – WSJ.com
U.S. regulators are grilling banks over lending standards and warning them about mounting risks in business loans. Lending to companies has been a bright spot for banks searching for revenue amid slow economic growth and historically low interest rates. But regulators worry that banks have sweetened loan terms too much, which could put them in jeopardy if corporate borrowers can’t repay.
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Yellen overwhelming favorite to replace Bernanke at Fed: Reuters poll
Reuters via Yahoo! News
By Pedro Nicolaci da Costa WASHINGTON – Janet Yellen, the Federal Reserve’s powerful vice chair, is by far the most likely candidate to replace Ben Bernanke when his second term at the helm of the U.S. central bank ends early next year, according to a Reuters poll of economists.
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“Tapering” From Currency-Wars To Interest-Rate-Wars
Zero Hedge
“The opposite of currency wars is not necessarily currency peace; it can easily be interest rate wars,” is the warning Citi’s Steve Englander sends in a note toda, as EM and DM bond yields have relatively exploded in recent weeks. The backing up of yields represents an increase in risk premium, so this will likely have negative effects on asset markets and the wealth effect abroad as well.
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Regulatory

SEC Chair Mary Jo White’s first big test
CNN Money
Appointing Robert Rice as SEC counsel could have a chilling effect on the regulator’s whistleblower program.
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ASIC refines rules on access to EDR schemes for small business borrowers
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ASIC welcomes audit firm plans to improve quality
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[Japan] “Working Group on the Provision of Insurance Products and Services, etc.” of the Financial System Council
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Taking the Time To Get It Right: The Cross-Border Regulatory Framework – Keynote Address By Commissioner Scott D. O’Malia Before OpRisk Europe Conference, London, England
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Exchanges & Trading Facilities

CBOE pays $6m to SEC for policing failure
Arash Massoudi and Kara Scannell in New York and Neil Munshi in Chicago – FT.com
The CBOE has agreed to pay US regulators $6m to settle charges that its inadequate market policing resulted in numerous failings including an instance where it actively interfered with a regulatory investigation.
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CME to Launch European Futures – Analyst Blog
Zacks
Chicago-based exchange company CME Group Inc. ( CME ) announced an agreement to introduce European futures market. To realize this maneuver, the company has commenced a program to test the platform’s trading systems with prospective clients.
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BM&FBOVESPA Has Record Number Of Trades In The BM&F Segment
BM&FBOVESPA had an all-time record of 209,974 trades in the BM&F segment yesterday. The previous record was 199,867 trades, on May 22, 2013.
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NASDAQ OMX Smart Order Routing Enables Single Point Of Entry For All Nordic Equities
NASDAQ OMX Nordic, part of the NASDAQ OMX Group, Inc. announced today that it has introduced the latest addition to its smart order routing offering, making NASDAQ OMX Nordic the only trading platform to offer trading in all shares in all five Nordic countries.
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[CBOE] Restrictions on Transactions in Excel Maritime Carriers Ltd. (EXM)
jlne.ws/140gzMC

NYSE Euronext welcomes BioAmber to its European and U.S. markets
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Gigamon Celebrates Initial Public Offering and First Day of Trading on the New York Stock Exchange
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Exercise Of Ibovespa Options Generates BRL 7.66 Billion Financial Volume On BM&FBOVESPA
jlne.ws/140gzMK

TSX And TSXV Trading List Leaders By Volume And By Value – May 2013
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Hellenic Exchanges S.A. – 1st Repetitive General Meeting Of HELEX
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Hedge Funds & Managed Futures

Brevan Howard Currency Trader Luke Ding Said to Leave Hedge Fund
Bloomberg
Luke Ding, who managed a currency hedge fund at Brevan Howard Asset Management LLP, is leaving the firm, according to a person with knowledge of the matter.
jlne.ws/140gybv

Rival hedge funds hope to feast on SAC Capital redemptions
Reuters via Yahoo! News
By Svea Herbst-Bayliss and Katya Wachtel BOSTON/NEW YORK – A long list of rival hedge funds is eager to tap the billions in outside money that Steven A. Cohen’s SAC Capital Advisors is expected to return to investors by year-end.
jlne.ws/140gzMO

Currency partner among Brevan Howard trader exits
Harriet Agnew and Katie Martin
The lead manager of Brevan Howard Asset Management’s $500m-plus currency fund is one of a number of traders who is leaving Europe’s largest hedge fund manager because of disappointing fund performance, a person with direct knowledge of the situation said today.
jlne.ws/140gzMP

From U.S. Prosecutor’s Office to Hedge Fund P.R.
New York Times
Ellen Davis, a spokeswoman for the United States attorney’s office in Manhattan, is leaving to join Sard Verbinnen, a public relations group that represents Steven A. Cohen’s hedge fund, reports Reuters.
jlne.ws/140gybw

Mariner Hires Ex-Citigroup’s Van Dooijeweert for Fund
Bloomberg
Mariner Investment Group LLC, the $10 billion hedge-fund firm founded by William Michaelcheck, hired former Citigroup Inc. trader Peter van Dooijeweert to run a global equity volatility strategy.
jlne.ws/140gyby

Italy’s mass affluent make an LTRO killing
David Carnevali – Financial News
The Italian asset management industry is celebrating its best start to the year in a decade, as domestic investors shrug off the country’s continuing economic woes.
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Commodity Hedge Funds Said by FAO Finding Profits Harder to Make
Bloomberg
Commodity hedge funds are finding it harder to make a profit partly because fees and other charges “soured customers,” the Food & Agriculture Organization said.
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Subscription begins for a Metalcorp Group B.V. bond
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Banks & Brokers

RBS CEO Stephen Hester to Step Down After Almost Five Years
Gavin Finch & Howard Mustoe – Bloomberg
Royal Bank of Scotland Group Plc, Britain’s biggest government-owned bank, unexpectedly said Chief Executive Officer Stephen Hester will step down at the end of 2013 as the U.K. prepares for a possible share sale.
jlne.ws/140gyrY

RBS Chairman: New CEO Is Right Thing for Bank
CNBC
Chairman of Royal Bank of Scotland, Sir Philip Hampton said CEO Stephen Hester’s departure was not a result of a falling out with finance minister George Osborne, but time for him to move on as he had not so many “years ahead of him”.
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Hester’s Departure From RBS ‘Plain Stupid’
CNBC
Stephen Hester’s departure as the CEO of U.K.-taxpayer owned Royal Bank of Scotland has surprised London’s financial sector.
jlne.ws/140gys5

Hester’s departure gives clues to future shape of UK banking
Philip Augar – FT.com
The departure of RBS chief Stephen Hester is not the beginning of the end of Britain’s banking reconstruction – but it is the end of the beginning. The news begins a seven-day period that will see the UK’s Parliamentary banking standards commission publish its report (expected any day) and the initial response to it by George Osborne, chancellor of the exchequer, at the City’s showpiece Mansion House dinner next Wednesday.
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DealBook: Executive Covets Goldman Seat Where a Friend Snugly Sits
New York Times
Gary D. Cohn has long been considered the man who will be the next C.E.O. of Goldman Sachs; the problem is the current chief isn’t ready to leave.
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JPMorgan Hires Goldman’s Sharma for Insurance Bond Post
Bloomberg
JPMorgan Chase & Co.’s asset- management unit hired Prashant Sharma as head of international fixed-income investments for insurance clients.
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Morgan Stanley’s Gorman Seeks Higher Fixed-Income Trade Returns
Bloomberg
Morgan Stanley has a plan to boost return on equity in fixed-income trading above its cost of equity after four of the five units failed to meet that metric last year, Chief Executive Officer James Gorman said.
jlne.ws/140gysa

Lenders pull banking facilities from small financial groups
Brooke Masters, Chief Regulation Correspondent – FT.com
Dozens of small financial groups, including providers of pre-paid cards and online payment services, are losing their banking facilities as high street lenders attempt to reduce the risk of money-laundering.
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Concept Capital Markets, LLC hires Jay Davis, opens office in San Francisco
Concept Capital Markets, LLC is pleased to announce that it has hired John M. “Jay” Davis III as Senior Vice President, Client Service in our Prime Brokerage Services group. Mr. Davis brings to Concept twenty years of brokerage experience, a deep knowledge of brokerage operations and risk control, and a solid reputation for providing exceptional client service to hedge fund managers as a prime brokerage account manager.
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Goldman Sachs HQ Is Worth $176 Million Less Now Than It Was Last Year
Business Insider
In the eyes of city assessors, the so-called market value of Goldman Sachs’ headquarters in Battery Park City has dropped by $176 million, or 26.7 percent, to $511.7 million — the sharpest reduction of any Manhattan office building this year.
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Clearing & Settlement

Traiana expands Harmony ClientLink into cash equities and fixed income
Traiana, the leading provider of post-trade and risk solutions, today announces that it has expanded Harmony ClientLink’s cross-asset capability to the equities and fixed income markets with a number of leading brokers. As a result, Harmony ClientLink now offers the most comprehensive cross-asset straight through processing (STP) and allocation platform for banks, brokers and buy-side firms.
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OCC Tells Banks to Start Planning Safe Phase-out of Swaps Trades
Bloomberg
U.S. regulators released letters telling JPMorgan Chase & Co., Bank of America Corp. and other banks to safely shed derivatives, granting them two more years to wall off such trades from units that get federal backing.
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Indexes & Products

FTSE RAFI Index Series Exceeds $5bn In ETF-Linked AUM
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Technology

SunGard Showcases Key Trends Driving Smarter Operations, Agile Growth and Optimized Risk and Compliance for Financial Services
Agile Growth – Firms are seeking strategies that will boost business agility and lay the foundation for future revenue growth. This is driving three trends: 1- improving productivity and multi-channel capability to deliver better client service; 2- adoption of technologies and processes that help firms to be more nimble and innovative; and 3- a need to find new revenue sources in new geographies and products.
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eFront Strengthens its Management Team on the Heels of a High-Growth 2012
eFront, a leading software provider of financial solutions for managing alternative investments, is pleased to announce the addition of two new executives to its management team as well as an independent, non-executive director.
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Enforcement

Fund manager linked to Petters is guilty of fraud, could get 25 years
Pioneer Press
James Fry, the last criminal defendant with ties to Tom Petters’ $3.5 billion Ponzi scheme, was found guilty Wednesday on 12 counts of fraud.
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SEC Announces More Charges in Massive Kickback Scheme to Secure Business of Venezuelan Bank
The Securities and Exchange Commission today charged the former head of the Miami office at brokerage firm Direct Access Partners (DAP) for his role in a massive kickback scheme to secure the bond trading business of a state-owned Venezuelan bank.
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CFTC Files Enforcement Action against Arizona Resident for Issuing False Account Statements and Operating as an Unregistered Commodity Pool Operator
The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a civil complaint against Thomas L. Hampton, an Arizona resident. The CFTC’s complaint charges Hampton with acting as an unregistered commodity pool operator (CPO) and issuing false account statements in violation of the Commodity Exchange Act.
jlne.ws/140gyIJ

Otkritie fraud trial opens in London
Richard Partington – Financial News
The trial of three former Otkritie Capital traders accused of defrauding the Russian investment bank of $183m, has opened in London.
jlne.ws/140gyIL

FINRA, SEC Warn Investors: Don’t Trade on Pump-And-Dump Stock Emails—6/12/13
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New Zealand’s Financial Markets Authority: Charges Laid Today Against David Ross
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Environmental & Energy

EU Parties’ Negotiators in Draft CO2 Deal, Seeber Says
Bloomberg
Climate negotiators from political groups in the European Parliament’s environment committee reached a tentative compromise on a fix for the world’s biggest carbon market, according to a European Union lawmaker.
jlne.ws/13CTFvP

**RKB — From the article: Today, we found a compromise mainly between EPP, Socialists and Democrats, and Alliance of Liberals and Democrats for Europe, which is heavily improving the original proposal of the European Commission. Support from the three parties would ensure a majority in favor of the compromise agreement.”

Europe must cut emissions 55 per cent by 2030 to tackle carbon credit glut
Business Green
The European Commission should aim to cut greenhouse gas emissions 55 per cent against 1990 levels by 2030 if it is to tackle the glut of allowances that has undermined the price of carbon in its flagship emissions trading scheme (ETS).
jlne.ws/13FRwOB

China gets tough on carbon
Nature
China, responsible for about one-quarter of the world’s carbon dioxide emissions, has ambitious goals to reduce them — but has been unwilling to set absolute targets for fear of slowing economic growth. There are now signs that its position is changing.
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**RKB — Interesting when you consider that a scientific journal offers this sum of market plans. An optimistic top to this article but more cautionary analysis about China’s efforts toward the bottom.

Asia-Pacific

Hong Kong, HKEx Chief Executive Charles Li Live And Direct: Latest Charles Li Direct
With only two weeks to go until the launch of LME Week Asia in Hong Kong, HKEx chief executive Charles Li discusses what has been driving trading volumes on the metal exchange in the latest post on Charles Li Direct.
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Building A Multi-Tiered Capital Market Serving The Upgraded Chinese Economy – Speech By Song Liping, President And CEO Of Shenzhen Stock Exchange
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Thai Bourse Market Report For May 2013
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Frontier Markets

Emerging Markets From Brazil to India Act to Stem Capital Flight
Bloomberg
Emerging markets from Brazil to India took steps to stem an outflow of capital as concern mounts that developed nations are approaching the beginning of the end of an era pumping unprecedented liquidity.
jlne.ws/140gAAg

MSCI ruling setback to Tel Aviv exchange
John Reed in Jerusalem – FT.com
MSCI will not include Israel in its Europe index, dealing a setback to the Tel Aviv Stock Exchange, which had lobbied to be included to help it remain in portfolio investors’ sights as it battles to overcome falling liquidity.
jlne.ws/140gAAj

Qatar Exchange Welcomes MSCI Decision to Upgrade Qatar
Qatar Exchange welcomed the decision of the MSCI to upgrade the Qatari market from a Frontier Market to Emerging Market, describing this decision as a positive step towards the development of Qatar Exchange and milestone that will attract further foreign investments to the Qatari stock market.
jlne.ws/140gAAn

Mitsubishi Corp Becomes DME Member
jlne.ws/140gyZh

Tehran Stock Exchange Holds AGM
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Tehran Stock Exchange Members On-Line Trading Activities
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