Industry news
Date: Jun 17, 2013
June 17, 2013: Japan Exchange plans infrastructure bourse; LSE to launch electronic swaps trading venue; Bid to relaunch synthetic CDO unravels
The operator of the Tokyo Stock Exchange plans to open a new exchange in a couple of years that will focus on raising capital to rebuild national infrastructure. The London Stock Exchange plans to open a new electronic swaps trading venue. Two big banks set up a sales effort for some notorious CDO products, but fail to get the sale done as investors back away. In First Read today, take a look at the new MarketsWiki.tv interview: Jack Schwager, the Market Wizards author, talks about hedge fund managers and how the CTA space has changed, what’s happened to managed futures since its breakout year in 2008 and his opinion of just how much growth is left for CTA sector.
First Read
Jack Schwager on Market Wizards and How the CTA Space is Changing
MarketsWiki.tv
Jack Schwager is a well-known name in the financial market community today, as author of trading classics such as: Market Wizards in 1989, The New Market Wizards in 1992 and Stock Market Wizards in 2001. He’s added to the series in May 2012, with Hedge Fund Market Wizards, and more recently released book Market Sense and Nonsense, where he explores investment models and the theories of how markets work.
He spoke with JLN editor-in-chief Jim Kharouf about hedge fund managers and how the CTA space has changed, what’s happened to managed futures since its breakout year in 2008 and his opinion of just how much growth is left for CTA sector.
Schwager, who is currently a co-portfolio manager at ADM Investor Services, helps manage ADM’s Diversified Strategies Fund, a portfolio of futures and FX managed accounts. The fund combines both system and discretionary managers that use technical and fundamental strategies.
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How CBOE’s new boss differs from the old boss
By Lynne Marek – Crain’s
Edward Tilly, who took over as CEO of CBOE Holdings Inc. last month, has had a vastly different career path than his predecessor, Bill Brodsky. While few expect him to make major changes in the company’s direction, there could be day-to-day differences, particularly in how he handles the newly sensitive topic of regulation.
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***** Ed Tilly is no Bill Brodsky or John Lothian for that matter. But he is one very good CEO and a terrific communicator.
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Nasdaq targets fixed income growth
William Mitting – FOW
Two years ago, cross-border mega mergers between exchanges were all the rage. Following the failure of most proposed deals in the face of competition concerns and thinly veiled protectionism, cash rich exchanges with an appetite for acquisitive growth have altered course. In today’s market, an exchange deal is more likely to be strategic, targeting a new service or asset class rather than economies of scale or global reach.
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***** I would swap fixed income growth for variable income growth.
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Rigged Benchmark Probes Proliferating From Singapore to London
Bloomberg
The probe of Libor manipulation is proving to be the tip of the iceberg as inquiries into assets from derivatives to foreign exchange show that if there’s a chance to rig benchmark rates in world markets, someone is usually willing to try.
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****** I am waiting for news that the trucking market is rigged.
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IntercontinentalExchange Sets Daily Record for Combined Agriculture and Financial Product Set; New Daily Record for ICE Russell 1000 Growth Index
IntercontinentalExchange, a leading operator of global markets and clearing houses, today reported a record daily volume in agriculture and financial contracts traded on ICE Futures U.S. of 889,193 contracts on June 13. The previous daily volume record was 851,852 on June 12, 2012.
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***** I love the smell of record volume in the morning. It smells like victory.
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Leading derivatives industry executive to head Celoxica’s new business development in the US
Celoxica, a leading provider of ultra low latency market data, order entry and pre-trade risk solutions for automated trading firms and brokers, today announced the hire of Diane Saucier, to head its business development in the US.
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***** You just knew that someone as capable, talented, respected and connected as Diane Saucier would land on her feet well. Congrats Diane on the new job.
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Derivatives Are Weapons Of Slow Economic Destruction: Study
Mark Gongloff – Huffington Post
We have learned, painfully, of the damage derivatives can do to an economy in a financial crisis. But derivatives are hurting the economy even on its best days, according to a new study.
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***** I have a lifetime of experience that tells me this study and headline is a bunch of baloney.
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Trading Faster Than The Speed Of Reality
TechCrunch
At 1:07 p.m. on April 23, a hijacked AP Twitter account falsely reported an attack on the White House. Seconds later, major US stock indexes started to fall. They were down 1 percent by the time the tweet was publicly identified as bogus three minutes later. And in another three minutes, the markets had recovered to pre-tweet levels.
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***** The speed of your reality depends on a lot of things you never see.
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The bad-weather scale of regulation
Chris Newlands – FT.com
Tsunamis, tidal waves and avalanches – regulation is dampening the spirits of fund management professionals so much that they have started referring to impending rule changes, which they believe to be excessive and onerous, in units of bad weather.
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***** All I know is there is a derecho coming from East to West directly from Washington, DC.
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FINRA director in U.S. resigns after old theft indictment surfaces
Reuters
A regional director for the securities industry’s self-regulatory agency resigned several weeks after the organization received a letter revealing the official had pleaded guilty two decades ago to charitable bingo fraud.
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***** BINGO!!!!
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Compliance Advice on SEC’s Market Access Rule from Julie Dixon of Titan Regulation
MarketsWiki.tv
SEC Rule 15c3-5 (“Market Access Rule”), finalized in November 2010, is the commission’s response to the May 6, 2010 “flash crash” in which the U.S. equity market plunged nearly ten percent in a matter of minutes, then quickly rebounded. Compliance with the rule, which places risk management controls on any broker-dealer that offers direct trading access, has been required since November 2011, yet firms still have lingering questions about the adequacy of their self-policing programs. Julie Dixon, managing principal at Titan Regulation, discusses the origins of the Market Access Rule and how it affects buy side firms and their trading activity. She also offers advice on how hedge funds and broker-dealers can be sure their programs are compliant, and what a firm may expect during a regulatory audit of its risk systems.
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MarketsWiki
MarketsWiki Page of the Day
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Lead Stories
Japan Exchange plans infrastructure bourse: report
Market Watch
Japan Exchange Group Inc., operator of the Tokyo Stock Exchange, will create a new market, possibly in fiscal 2015, to attract private capital to upgrade or replace infrastructure built during Japan’s postwar boom, the Nikkei reports.
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LSE to launch electronic swaps trading venue
Philip Stafford – FT.com
The London Stock Exchange Group will launch an electronic platform for swaps in Europe, pushing it further into fixed-income trading as the industry prepares to meet a global push to reform derivatives markets.
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Bid to relaunch synthetic CDO unravels
Tracy Alloway, Tom Braithwaite and Dan McCrum in New York – FT.com
An attempt by two big Wall Street banks to revive notorious credit boom-era securities blamed for exacerbating the global financial crisis has failed after investors balked at buying some of the derivatives on offer.
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Societe Generale to launch dark pool in US
Michelle Price – Financial News
Societe Generale is planning to launch its European dark pool in the US in response to growing demand for dark liquidity among its US client base, according to two individuals familiar with the move.
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Nasdaq OMX NLX Achieves Low Latency and Rising Trade Volumes in Start-up Phase
Sarah Underwood | Low-Latency.com
Nasdaq OMX NLX opened for business on the last day of May, offering a market for European short-term and long-term interest rate derivatives designed to provide ease of access, efficiency and the flexibility to respond to customer demands and list new products rapidly. Fast forward a couple of weeks and Charlotte Crosswell, CEO of NLX, says trading volumes are building, trades are being filled in 100 to 200 microseconds, and NLX is considering new developments.
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JOBS Act 2.0
Clarke Camper – Inside the Beltway
Building on the bipartisan success of last year’s JOBS Act, some House members plan to introduce “JOBS Act 2.0″ legislation that aims to increase investor interest in startup businesses and “make it easier for small companies and entrepreneurs to raise capital,” reports POLITICO.
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In Countrywide Case, Watchdogs Without Any Bark
GRETCHEN MORGENSON – NYTimes.com
FOR the last two weeks, a justice in New York State Supreme Court has heard testimony in one of the most pivotal cases of the financial crisis. But the case, being heard by Justice Barbara R. Kapnick, extends far beyond the impact of the settlement on Bank of America’s balance sheet.
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European Union Divided Before G-8 Meeting
New York Times
Meeting before the Group of 8 summit, European Union members could not muster a united front over issues like the economy and protecting culture.
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Regulatory
EU outlines fines for rigging benchmarks
Suzi Ring and Anish Puaar – Financial News
The European Commission is preparing “draconian” financial penalties for firms and individuals that rig the “critical” benchmarks that shape the world’s financial system.
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Directors to be liable for breaches of pay policy
Alison Smith, Chief Corporate Correspondent – FT.com
Directors who serve on remuneration committees will be personally liable for overpayments that fall outside a company’s pay policy under the new “say on pay” regime that comes into force in October.
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SEC: Amelia Cottrell Named Associate Regional Director For Enforcement In New York Office
The Securities and Exchange Commission today announced the promotion of Amelia A. Cottrell to Associate Regional Director for Enforcement in the agency’s New York Regional Office.
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Remarks At The DirectWomen Board Institute By SEC Commissioner Elisse B. Walter
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ASIC to update and consolidate electronic prospectus guidance
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EIOPA publishes report on handling insurance contracts with long-term guarantees under solvency II
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Exchanges & Trading Facilities
Swap futures up, but Eris takes long-term view
The Trade
A mild boost to swap futures volumes on Eris Exchange since Monday’s OTC derivatives clearing deadline for buy-side firms is minor compared to long-term expectations, the venue said. Trading on Monday, Tuesday and Wednesday on Eris Exchanged netted 7,320 contracts building on last week’s record full-week volume of 14,291 contracts, according to the venue’s own figures.
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London Metal Exchange: LME lists Taiwanese port as new delivery location
The London Metal Exchange (LME) has approved Kaohsiung, Taiwan as a good delivery point for primary aluminium, aluminium alloy, copper, lead, nickel, tin and zinc. This will be the LME’s ninth location in Asia.
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London Stock Exchange launches London Investor Show 2013
London Stock Exchange today announced that the London Investor Show – the UK’s largest private investor conference – will return to the Olympia exhibition centre on Friday 25 October 2013.
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Performance Of Dairy Derivatives Segment Grew Further In Hsignificant Increase In Eurex’s Dairy Derivatives Trading Volume/ Eurex Exchange Reinforces Market Leadership In European Dairy Futures
The international derivatives market Eurex Exchange has seen a significant increase in trading activities in its dairy derivatives segment since the beginning of the year. The total 2012 volume was recently exceeded; more than 980 contracts have been traded year-to-date (2012: 908 contracts). The contract volume traded in 2013 so far is equivalent to a nominal volume of around 4,900 tonnes of goods.
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Raptor Trading Connects To TMX Atrium Community In North America
TMX Atrium, provider of smarter infrastructure solutions for the financial community, today announced that Raptor Trading Inc., (Raptor) has connected to TMX Atrium in Toronto to take advantage of low latency access to Canadian exchange market data.
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Moscow Exchange Launches Trading In A Futures Contract On USD/UAH Currency Pair
On June 14, 2013 the Moscow Exchange started trading on a USD/UAH futures contract on the Derivatives Market.
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Moscow Exchange: New List Of Securities For Calculation Of The Zero-Coupon Yield Curve In Government Bonds Takes Effect
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TOM MTF Statistics Week 24 2013
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Hedge Funds & Managed Futures
Temasek paves the way for London-based European hub
Vivek Ahuja – Financial News
Temasek, the triple A-rated S$198bn ($161bn) Singapore investment company, has paved the way to set up a London office, which could act as a hub for its fast-growing portfolio of European investments.
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Hedge Funds Cut Gold Bets as Paulson’s Loss Widens: Commodities
Bloomberg
Hedge funds cut wagers on a gold rally for the first time in three weeks on mounting speculation central banks will curb record stimulus and as this year’s slump in bullion spurred losses for billionaire John Paulson.
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Bolton to step down at Fidelity China fund
Josh Noble in Hong Kong – FT.com
Anthony Bolton is to retire from running the Fidelity China Special Situations investment trust, ending a difficult three years for one of the UK’s most successful fund managers.
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Louis Dreyfus appoints new chief
Javier Blas, Commodities Editor – FT.com
Serge Schoen is set to retire as chief executive of Louis Dreyfus Commodities later this month after eight years in the post, during which he boosted the profitability of the privately owned agricultural commodities trading house.
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Hedge Fund Manager Browder: If I Get Assassinated…
CNBC
Bill Browder, chief executive and founder of Hermitage Capital Markets, told CNBC the Russian government is “apoplectic” over sanctions imposed on Russian officials that he has campaigned for, and if he gets assassinated, “everyone would know who did it.”
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RPMI signals new line for hedge fund strategy
Mark Cobley – Financial News
The manager of the £19bn Railways Pension Scheme has terminated two of its three funds of hedge funds managers as its in-house team takes more control over the way assets are allocated.
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Warren Buffett’s Mentor Was A Crappy Hedge Fund Manager
Business Insider
Jack Bogle, the outspoken godfather of index funds and passive investing strategies, didn’t approve of a recent Wall Street Journal article defending hedge funds.
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Guggenheim Hires Goldman’s Tom Stein for Capital Markets Group
Bloomberg
Guggenheim Partners LLC, the debt manager with more than $180 billion in assets, hired Goldman Sachs Group Inc.’s co-head of U.S. leveraged finance capital markets Tom Stein.
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CFTC Commitments Of Traders Reports Update
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Banks & Brokers
Bank of England Advertises for Finance Director to Replace Jones
Bloomberg
The Bank of England advertised in the Sunday Times newspaper today for a finance director to replace Warwick Jones, who retires at the end of this month.
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Stockbrokers eye joint outsourcing
Vanessa Kortekaas – FT.com
Several rival stockbrokers are planning to meet to discuss jointly outsourcing parts of their back offices and ways to compete better with the bulge-bracket banks in an unprecedented sign of co-operation. The discussions among a handful of City brokers are also a reflection of the difficult climate they are operating in, amid rising regulatory costs and fewer corporate transactions to advise on.
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GFI ForexMatch and GFI Direct Receive Profit and Loss Annual Readers’ Choice Awards
GFI Group Inc., a leading provider of wholesale brokerage, electronic execution and trading support products for global financial markets, today announced that its electronic market for FX products GFI ForexMatch was voted Best Emerging Market Platform and Best FX Options Matching and that its RFQ trading protocol GFI Direct was chosen as Best FX Options Request for Stream by Profit and Loss magazine readers.
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Exclusive: Deutsche Bank ‘horribly undercapitalized’ – U.S. regulator
Reuters via Yahoo! News
By Emily Stephenson and Douwe Miedema WASHINGTON – A top U.S. banking regulator called Deutsche Bank’s capital levels “horrible” and said it is the worst on a list of global banks based on one measurement of leverage ratios.
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JPMorgan to Spin Out Its Private Equity Unit
New York Times
JPMorgan’s last remaining private equity unit, One Equity Partners, will be spun out into a separate company and raise its next fund as an independent firm.
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Barclays seeks up to 700 staff for new Dallas technology hub
Reuters via Yahoo! Finance
Barclays is aiming to recruit up to 700 technology staff in the next 18 months at a new center in the United States that will develop applications for investment banking and consumer banking.
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Blankfein Met With SEC’s White Two Days After Money Funds Vote
Bloomberg
Goldman Sachs Group Inc. Chief Executive Officer Lloyd C. Blankfein met this month with the top U.S. securities regulator to discuss issues including the Volcker rule and regulations for money-market mutual funds.
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EBS proposes Aggregation Best Practices and Partner Programme to enhance transparency and integrity in the FX Market
EBS, ICAP’s market-leading electronic FX business, today announces its proposals for introducing Best Practices to Aggregation for the FX Market coupled with the EBS Certified Aggregation Partner Programme.
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Schwab Reports Monthly Activity Highlights
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Clearing & Settlement
JP Morgan joins forces with LSE for CSD launch
Sophie Baker – Financial News
JP Morgan is teaming up with the London Stock Exchange Group as part of its move to launch a central securities depository, according to three individuals familiar with the plans.
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APG explores swap futures to cut cost of central clearing
IPE
APG is studying the possibility of using swap futures – a derivative instrument under development in the US – as a means of cutting the cost of initial margins in central clearing.
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Indexes & Products
How to Play Middle East’s New EM Status With ETFs
Benzinga
Earlier this week, index provider MSCI (NYSE: MSCI ) announced its annual market reclassification and the news can be broken down three ways. There was some surprise, though arguably not much, and subsequent fallout for the relevant ETFs after Greece was demoted to emerging markets status and it was revealed that Egypt could be bumped down to frontier status in the future.
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Thai Bourse Announces SET Indices Semi-Annual Review
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Quarterly Changes To The NASDAQ Golden Dragon China Index
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Changes To The NASDAQ Internet Index
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Semi-Annual Changes To The NASDAQ OMX ABA Community Bank Index
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Annual Changes To The NASDAQ OMX Global Automobile Index
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Annual Changes To The NASDAQ OMX US Water Index
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Annual Changes To The NASDAQ OMX Global Water Index
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Quarterly Changes To The NASDAQ Q-50 Index
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Technology
GuavaTech, Inc. Announces CBOE Futures Exchange Hosting and Connectivity Access at London LD4 Co-Location Facility
GuavaTech, Inc., a leading managed service provider specializing in customized IT solutions for proprietary trading firms, investment banks, hedge funds, broker/dealers, and FCMs, today announced that it will begin offering proximity hosting and ultra-low latency connectivity solutions for CBOE Futures Exchange (CFE) at the LD4 data center located in London, UK.
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Amendments to the terms and conditions relating to Orc Group Holding AB’s (formerly Cidron Delfi Intressenter AB)secured notes of up to EUR 60 million
As has previously been announced, on 27 November 2012 Orc Group AB’s parent company, Orc Group Holding AB issued five-year notes in the total aggregate amount of EUR 60 million with a fixed annual coupon of 8.5 per cent paid semi-annually.
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Blueshift Data Protection Launches Data Backup Services In Singapore Leveraging KVH’s Hosting Service
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Datawatch Announces Agreement To Acquire Panopticon To Deliver Real-time Big Data Visual Discovery Solutions
Datawatch Corporation, the leading global provider of information optimization solutions, has agreed to acquire Panopticon Software AB, a privately held Swedish company specializing in the delivery of real-time visual data discovery solutions.
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Enforcement
U.K. Bank Fines on Risk Management Failures Rose Sevenfold
Bloomberg
The U.K. markets watchdog increased fines for risk management failings by more than seven times last year, according to a report by the Chartered Institute of Internal Auditors.
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Singapore Punishes 20 Banks in Benchmark Rate Review
CNBC
Singapore’s central bank censured a record 20 banks on Friday after it found more than 100 traders in the city state tried to rig key borrowing and currency rates.
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[Canada] Dealing representative agrees to sanctions for illegally distributing securities
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[Canada] Securities regulator alleges fraud and making false statements to an investigator
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Environmental & Energy
EU carbon market rescue may scrape by next week, prospects shaky
Reuters
A European Commission plan to revive Europe’s carbon market appears headed for a setback that would keep emissions prices depressed for years, although it may scrape approval in a European Parliament committee next week.
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China to launch pilot carbon market in Shenzhen
FT.com
China’s economic growth has come on the back of unparalleled coal use, unbreathable air and the unenviable title of being the world’s biggest greenhouse gas emitter.
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**RKB –From the article: “At the moment we know 635 companies will be covered by the Shenzhen scheme,” said Hongliang Chai of Thomson Reuters Point Carbon, a consultancy, pointing out that their combined emissions add up to just over a third of all Shenzhen’s emissions in 2010. “But we don’t officially know exactly which companies will be covered.
Future points to carbon trading
China Daily (English edition)
As the world’s largest energy consumer, China is stepping up its efforts to cut greenhouse gas emissions by rolling out a series of experimental pilot programs.
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Frontier Markets
Qatar Exchange Organizes London Forum To Encourage Investments In Qatari Listed Companies
Qatar Exchange (QE), in collaboration with HSBC, last week closed a two-day forum in London that aims to support the further development and practice of QE’s listed companies’ investor relations.
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Islamic finance in Tunisia could reach 25-40 pct share -study
Reuters via Yahoo! News
By Bernardo Vizcaino DUBAI – Tunisia’s fledgling Islamic finance industry could take a 25 to 40 percent share of the country’s financial sector in five years’ time if necessary rules, consumer education and private investment plans materialise, a Thomson Reuters study found.
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Malawi Stock Exchange Weekly Trading Report – 14th June, 2013
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