First Read
Creative Juice: Sir Ken Robinson and FIA Boca 2015
Doug Ashburn – JLN
At each year’s FIA Boca conference, a certain topic, issue or person becomes “the thing everyone talks about.” It may be an impending rule, a disruptive new technology, or an outlandish comment made at the exchange leader panel. Two years ago it was then-CFTC chairman Gary Gensler displaying his dance moves after planting a rumor he would be up for another stint as head of the regulator. In 2007 it was the envelopes slid under the hotel room doors of Charlie Carey and Bernie Dan announcing ICE‘s competing bid for the CBOT.
This year it was last Wednesday’s luncheon keynote by creativity expert Sir Ken Robinson. Robinson, whose lecture, “How Schools Kill Creativity” is the most popular TED Talk of all time, offered up 20 minutes of the most thought-provoking, intelligent and laugh-out-loud funny commentary ever on display at a Boca conference.
From Wednesday on, at every meeting or social engagement I attended, the name Sir Ken Robinson was dropped at some point, and it was as though each person received a personally gift-wrapped message.
Read the rest of the commentary at JohnLothianNews.com
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Azul Partners Announces New Chief Marketing Officer
Azul Partners, parent company to Spend Matters, the largest online source of procurement-focused research, commentary and technology coverage and MetalMiner™, the leading resource for metal buyers and purchasing professionals, announced that recognized commodity market expert John Conolly joined the company as Chief Marketing Officer. Conolly will drive global communication and marketing strategies for the entire Spend Matters Network.
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***DA: Congratulations and best wishes to John as the next chapter in his career is written. He certainly left his mark at CME Group
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The Life of SCI: John Rapa Looks at the SEC’s Reg SCI
JohnLothianNews.com
After several high-profile market disturbances, from the 2010 “flash crash” to the Knight Capital algorithmic meltdown in 2012, the SEC considered a new set of rules to tighten up system compliance and integrity. The rules, known collectively as “Reg SCI” became effective in February 2015. John Rapa, president and CEO of Tellefsen & Company and a 30-year veteran consultant to exchange market structure, walks us through the new rules and what they mean for exchanges, dark pools and market participants.
Watch the video »
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What Your N.C.A.A. Brackets Teach About Investing and Bias
NY Times
The main draw of the N.C.A.A. men’s basketball tournament begins Thursday, and the New York Times bracket is a fun way to test your predictions in a system that, like financial markets and most forms of sports betting, rewards you for taking an against-the-grain pick that proves accurate.
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**JK – A friend’s wife won the pool one year picking teams with her favorite colors. She was not invited back.
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Fragmented European landscape and comparison with the US
European Central Bank
jlne.ws/1AJ7TcU
***** Nice map comparing European and US clearing.
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Asia among top five most funded regions in fintech
DealStreetAsia
Asia joined the world’s most funded regions for the fintech industry in 2014, with startups in this space raising total of $797 million, a report said. This growth was triggered mainly by fintech investments in China, and on a global level, fintech startups have raised about $6.8 billion during this period, according to data compiled by Life.SREDA, a venture capital firm headed in Russia.
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**JK – I also had the pleasure of hearing Barchart’s Eero Pikat speak about the Chicago FinTech Event in April, on Chicago radio yesterday.
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Jury clears ex-NFL player Gault of purposely defrauding investors
BY SARAH N. LYNCH, Reuters
A California jury on Wednesday cleared former Chicago Bears wide receiver Willie Gault of intentionally defrauding investors in a scheme to inflate the price of stock in the heart-monitoring device company Heart Tronics.
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**JK – His heart was racing.
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Lead Stories
CFTC suspends deadline on brokers’ margin
Gregory Meyer in New York, FT
The main US futures regulator has indefinitely suspended a plank of customer protections passed in response to the catastrophic collapse of MF Global, reflecting the agency’s flexibility under a new chairman.
jlne.ws/19C46aW
**JK – Nice to avoid expiry. For a complete summary, see the rule page in MarketsReformWiki
London Metal Exchange ends ties with LCH.Clearnet
Henry Sanderson and Philip Stafford FT
The London Metal Exchange, the world’s largest industrial metals exchange, has ended all its ties with its former clearing house LCH.Clearnet by selling its outstanding 2 per cent stake to Borsa Istanbul.
jlne.ws/1x3ISNk
**JK – This is kind of like “Gravity” with clearinghouses.
Top Wall Street Lawyer Slams Regulatory Environment; Rodgin Cohen calls environment ‘confrontational and skeptical’
By JUSTIN BAER, WSJ
One of Wall Street’s top lawyers says strains between banks and regulators have never been greater.
jlne.ws/1FEgSBY
**JK – This is the gravity of the situation.
Look Into the Future With Goldman: Uber, Genomics and Bitcoin
By GREGORY ZUCKERMAN, WSJ
What key innovations could lead to big opportunities and serious challenges for investors and companies in the years ahead? Goldman Sachs Group Inc.GS +0.92% convened a symposium with over 350 investors and corporations on Tuesday to find some answers. Among the most likely innovation to emerge as disruptors: Car sharing and autonomous automobiles, the Internet on the factory floor, genomic testing, cancer immunotherapy and digital payments.
jlne.ws/1B4mRtt
The U.K. Plans to Regulate Bitcoin Exchanges
By ANNA IRRERA, WSJ
The U.K. government is to regulate digital currency exchanges for the first time, in a bid to support innovation in the nascent technology while preventing criminal use.
jlne.ws/1xieoHU
Citigroup sues ex-Goldman partners’ firm over Swiss franc losses
BY NATE RAYMOND AND LAUREN TARA LACAPRA, Reuters
Citigroup Inc has sued a Connecticut firm founded by two former Goldman Sachs partners for $25 million over losses incurred during the unexpected surge in the Swiss franc in January.
jlne.ws/1B4l6fO
Exclusive: Canada regulator probing TransCanada over safety allegations
BY MIKE DE SOUZA, Reuters
Canada’s energy regulator is investigating up to a dozen new allegations of natural gas pipeline safety-code violations at TransCanada Corp (TRP.TO), according to documents reviewed by Reuters.
jlne.ws/1AJaUtO
SEC Shifts Focus to Ratings Firms, Fund Valuations As Crisis-Era Cases Fade
By ARUNA VISWANATHA, WSJ
As U.S. securities regulators turn their attention away from the financial crisis, they’re looking more closely at credit rating firms and fund valuation issues, the top enforcer at the Securities and Exchange Commission will tell lawmakers on Thursday.
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Regulatory
Banks Win 9-Month Swap Margin Rules Delay From Basel Group
Bloomberg Business
Banks won a delay in the introduction of minimum global rules on the collateral needed to back trades in the $691 trillion market for swaps and other over-the-counter derivatives. International regulators said the date for beginning to phase in the measures would be September 2016 compared with previous plans for a December 2015 start. The rules were approved in 2013 to ensure lenders have sufficient safeguards in place when a trading partner defaults.
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Regulators must remain vigilant in supervising clearinghouses
Reuters
Last month the board of the International Organization of Securities Commissions (IOSCO) met in Seoul to discuss a number of agenda items, including safeguards for central counterparties, or CCPs. IOSCO – as the name suggests – is the international forum and standard setter for market regulators such as the Commodity Futures Trading Commission (CFTC), upon which I serve, the Securities Exchange Commission, as well as comparable regulators around the globe.
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In boon for bitcoin, UK to regulate digital currency exchanges
Reuters
Britain took a significant step towards becoming a global bitcoin hub on Wednesday as the government announced it would regulate digital currencies for the first time by applying anti-money laundering rules to exchanges.
jlne.ws/18J1bMF
Canadian Securities Administrators Remind Investors to Check Registration
AMF
In the time it takes you to read this headline, you can check to see if the person who is selling you stocks, bonds, mutual funds or other securities is registered. March 18, 2015 is Check Registration Day, and the Canadian Securities Administrators (CSA) are encouraging investors nationwide to help protect themselves from investment fraud by first checking to see whether the individual or firm offering them an investment or advice is registered to do so.
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Hong Kong Regulator Open to Shareholding Structure Change Post Alibaba
WSJ
Hong Kong’s securities regulator hinted it is open to easing the city’s longstanding aversion to different shareholding structures, over a year after it lost out to New York on hosting e-commerce giant Alibaba Group Holding Ltd.BABA +0.11%’s record IPO.
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Iosco delays controversial collateral rules
By James Rundle, Financial News
Rules that would see banks forced to post higher levels of collateral on certain derivative trades have been pushed back by almost a year, amid complaints over their complexity.
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SIFMA Statement On The Revised Implementation Date for Non-Cleared Derivatives Margin Rules
MondoVisione
SIFMA today released the following statement from Kenneth E. Bentsen, Jr., president and CEO, after the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) announced a revised implementation date for margin requirements for non-centrally cleared derivatives:
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FinCEN issues an advisory on the FATF-identified jurisdictions with AML/CFT deficiencies
NFA
On March 16, 2015, the Financial Crimes Enforcement Network (FinCEN) issued an advisory announcing that the Financial Action Task Force (FATF) had updated its list of jurisdictions with strategic AML/CFT deficiencies. NFA Member FCMs and IBs should review this advisory to ensure that their AML programs have the most current information on FATF-identified jurisdictions with AML/CFT deficiencies and revise their AML programs accordingly. A copy of the advisory is available on FinCEN’s website.
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Change is the only constant
Posted by Anne Plested, Fidessa Blog
The unbundling of payment for research is a top concern for the industry. There seems to be general acceptance that, one way or another, Europe is set on the soft dollar research market becoming a hard dollar one by January 2017. Despite calls for more clarity and the recent publication of the FCA discussion paper on the regime, opinion remains divided as to how the use of CSAs can evolve to survive as a payment mechanism. There’s no denying widespread change is already underway, in roughly the same direction of travel as MiFID II.
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Exchanges & Trading Facilities
Eurex Exchange’s MSCI news – March 2015
Eurex
There’s a lot going on in MSCI futures and options at Eurex Exchange. This article sums up the most important developments in February!
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MAC Swaps – Any Progress?
Clarus Financial Technology
We get asked often about the most recent MAC swap activity. So lets look at some data. We are assisted by the Clarus SDRView Researcher service, which enriches all the swap data to mark-up the subtypes (eg MAC, IMM, Spot start, etc) and packages (curve, butterfly, compression, etc). Below is a snapshot of the most recent weeks data across all package types.
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NN Group N.V. lists EUR 600 million senior unsecured bond on Euronext
Euronext
Euronext announces the corporate bond listing by NN Group N.V. on its Amsterdam market.
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Hedge Funds & Managed Futures
Robert Shiller Doesn’t Fear A Global Reckoning in Bond Market
By GEOFFREY ROGOW, WSJ
Some of the biggest names in finance have tipped this week’s meeting of the Federal Reserve as a possible turning point in the bond market and potentially the beginning of a global reckoning.
jlne.ws/1H2jrf8
Investment Firm Buys Stake in Activist Hedge Fund Jana Partners
By ALEXANDRA STEVENSON, NY Times
The private equity unit of Neuberger Berman Group has bought a stake in the activist hedge fund Jana Partners, underscoring the growing popularity of investors who rattle the boards of corporate America.
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Banks & Brokers
Thomson Reuters February FX volumes fall 10 pct from last month
Reuters
Daily foreign exchange volumes on currency platforms run by Thomson Reuters fell back to $355 billion last month from $398 billion in January, the company said in a statement on Wednesday.
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Citigroup, Barclays Close to Settling Forex Lawsuit With Private Investors; Two banks expected to pay as much as a combined $800 million to settle lawsuit
By CHRISTINA REXRODE and CHIARA ALBANESE, WSJ
Citigroup Inc. and Barclays PLC are expected to pay as much as $800 million combined to settle a lawsuit with investors who say the banks manipulated foreign-exchange rates, according to people close to the situation.
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Citigroup cut CEO Corbat’s pay by 10 pct in 2014
Reuters
Citigroup Inc cut its chief executive Michael Corbat’s annual compensation by 10.3 percent in 2014, citing high legal expenses and the company’s failure to win regulatory approval for its capital plan last year.
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Citigroup says willing to give up Argentine bond appeal if stay issued
Reuters
Citigroup Inc said Wednesday that it was willing to forgo appealing an order blocking it from processing interest payments on Argentine bonds if it can get more time to exit its custody business in the South American country.
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Clearing & Settlement
Banks pool efforts to know their customer and avoid crisis
Sydney Morning Herald
Global banks are working together to cut the costs of keeping tabs on who their clients are and who they are trading with in an effort to avoid another credit crunch. Paula Arthus, chief executive of Omgeo, a global company owned by the US market post-trade utility, the Depository Trust and Clearing Corporation (DTCC), said banks are working together to store data to avoid another credit crunch like the one that followed the global financial crisis and collapse of Lehman Brothers in September 2008.
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Equivalence in European and US clearing rules
COOConnect
The European regulator, ESMA (the European Securities and Markets Authority), has so far deemed the rules and their regulatory outcome around central clearing to be equivalent to its own standards in Japan, Singapore, Australia and Hong Kong, with the frameworks in Canada, Mexico and India expected to follow shortly. The big name missing from this list is the US.
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Future Money Focus: Robert Sams, Clearmatics
Finextra
An ex-hedge fund manager who spent a decade trading interest rate derivatives is now jumping headfirst into the world of blockchain technology with his newest venture, Clearmatics, a clearing and settlement technology for financial OTC markets based on a distributed ledger.
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Indexes & Products
China A-shares may be included in MSCI EM index by end-2015 – HSBC
Reuters
“We forecast that the A-share market cap will increase to $10 trln by 2020, with foreign ownership rising to 10 pct,” HSBC says in a report
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MSCI Introduces Diversified Multi-Factor Indexes
Business Wire
Research has shown that stocks reflecting certain factors have, over time, provided a higher return than the overall market. MSCI Diversified Multi-Factor Indexes use Barra risk tools to construct indexes that track the performance of four of these factors – Value, Momentum, Quality and Low Size – while keeping risk at the level of an underlying parent index. These indexes can be used by institutional investors looking to construct diversified portfolios that are exposed to multiple factors.
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BlackRock’s New Breed of Exchange-Traded Bond Fund Prizes Stability Over Swagger
NYTimes.com
You will not see Scott Radell on CNBC. Nor does he inhabit a jaw-dropping mansion. While he may not live the life of a swaggering bond market pro, Mr. Radell, a bond manager at the fund giant BlackRock, is challenging a strategy that has rewarded some of his flashier peers: the pursuit of high-risk, high-return investments.
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Study: Is There a Better Small-Cap Index?
Financial Planning
If your clients are seeking small-cap domestic stock exposure via an index fund, chances are you are looking at portfolio based on the Russell 2000 index, which dominates the category. But a new study by S&P Dow Jones Indices says your clients will profit more from buying a fund tracking S&P’s own SmallCap 600 index.
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PowerShares Drops Research Affiliates, Adds Russell, on Nine ‘Smart-Beta’ ETFs
Barrons
Nine PowerShares “smart-beta” exchange-traded funds will transition to indexes created by Russell Investments from Research Affiliates after the latter firm curtails publication of the index family.
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Brave new world for the Dow as Apple joins?
CNBC
Apple solidified its Wall Street leadership by officially joining the Dow Jones industrial average after the close on Wednesday. The iPhone maker replaced AT&T in the 30-stock index as Visa had a 4-for-1 stock split.
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BlackRock’s New Breed of Exchange-Traded Bond Fund Prizes Stability Over Swagger
By LANDON THOMAS Jr., NY Times
You will not see Scott Radell on CNBC. Nor does he inhabit a jaw-dropping mansion.
jlne.ws/1x3EYEq
Technology
How a Fintech Startup Built the Bloomberg for Social Media Analytics and Is Beating the S&P 500
Virtual-Strategy Magazine
HedgeChatter, a global leader in social media analytics for the stock market, releases its next web platform allowing investors and traders to find stock opportunities in real-time before Wall Street.
jlne.ws/1I1insY
CNN, Financial Times unveil online-ad deal to challenge Google
Crain’s New York Business
CNN International, the Financial Times, the Guardian and Reuters formed an alliance allowing advertisers to buy ad space directly from the media companies, challenging Google Inc., Facebook Inc. and Microsoft Corp.’s control over digital advertising.
jlne.ws/1I1izIS
‘Evo’ admins make off with $12M in bitcoins after closing site
By James Covert, NY Post
Dude — this is the biggest bitcoin bummer since Silk Road was taken down 21 months ago.
jlne.ws/1B4pqeN
Nearly 40 percent of iPhone owners interested in Apple Watch: poll
BY ALEXEI ORESKOVIC, Reuters
About 40 percent of adult Apple iPhone owners in the United States are interested in buying the company’s new Apple Watch, according to a new Reuters/Ipsos poll.
jlne.ws/1H2iS4V
Virtual Reality: Promising but Posing Challenges;Many of the software makers are small, independent developers
By SARAH E. NEEDLE-MAN, WSJ
Lucas Unger was excited to reach the next level of “The Gallery: Six Elements,” a virtual-reality videogame his parents are developing. But the eight-year-old had a problem. He wasn’t tall enough in real life to pull a lever in the virtual world.
jlne.ws/1H5fsBT
Thomson Reuters Launches Copper Data Service
Waterstechnology.com
The new service enables users to analyze copper prices against global production, by company or by individual mine. Thomson Reuters will this month launch a new service dubbed GFMS Mine Economics (Copper) as part of its GFMS Mine Economics Package, to provide users of its Eikon desktop terminal with production analysis for 87 copper mines in 23 countries.
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Enforcement
Hong Kong tribunal hears short-sell manipulation claims
Reuters
The head of a U.S. research firm engaged in market manipulation by spreading false or misleading information on Hong Kong-listed Chinese property developer Evergrande Real Estate Group, Hong Kong’s securities watchdog alleged during the first day of a hearing on Wednesday.
jlne.ws/1I1j85o
AMF charges Sylvie Hunter with illegal practice
AMF
The Autorité des marchés financiers (the “AMF”) has launched a penal proceeding in the judicial district of Terrebonne against Sylvie Hunter, whom it claims acted illegally as a securities adviser without being registered as such.
jlne.ws/18KAwPG
B.C. Residents For Market Manipulation
MondoVisione
A British Columbia Securities Commission panel has fined five B.C. residents who were found to have perpetrated a market manipulation that led to a misleading appearance of trading activity in, or an artificial price for, shares in a company listed on the TSX Venture Exchange (TSX-V). The panel also permanently banned them from B.C.’s capital markets.
jlne.ws/1EuuXxs
Environmental & Energy
Business leaders back low-carbon Energy Union
BusinessGreen
Alstom, EDF, GSK and Heathrow Airport are among 22 major business calling on EU members to deliver a “low-carbon, resilient and affordable” energy system.
jlne.ws/1H1gBqU
EU carbon market emissions fell 3.7 percent in 2014: analysts
Reuters
Emissions capped by Europe’s carbon market fell 3.7 percent in 2014, driven by higher output from renewable power producers and lower electricity consumption, analysts at Thomson Reuters Point Carbon said on Wednesday.
jlne.ws/1Extzwz
More than 10,000 people call on Dutch pension fund to divest from fossil fuels
By Emma Howard – The Guardian
More than 10,000 people have called on the fifth largest pension fund in the world to divest from oil, coal and gas. Members of the Dutch pension fund ABP handed over a petition to the fund’s managers on Tuesday asking them to remove fossil fuel company holdings from its $360bn (£250bn) portfolio.
jlne.ws/1I16djY
Singapore introduces commercial solar tariff to reduce fossil fuel reliance
By Jane Xie – Reuters
Singapore is taking steps to reduce its almost total reliance on fossil fuels in power generation by offering commercial customers the city-state’s first dual solar and conventional electricity contract.
jlne.ws/1GsWodx
Asia-Pacific
As Chinese Shares Rise, Hong Kong IPOs Pick Up
WSJ
The Shanghai market isn’t easily accessible to most outside funds, despite efforts by Beijing to open it up. Hong Kong, a favorite listing venue for Chinese companies, though, is open to all investors, and bankers say interest in deals is mounting here.
jlne.ws/1DCexI8
US needs a counter-strategy in Asia
The Straits Times
The ongoing rivalry between the United States and China in Asia took a surprising turn when Britain decided last week to join the China-backed Asian Infrastructure Investment Bank (AIIB) as a founding member. This was by no means a trivial matter. What could be at stake is no less than America’s decades-long leadership in Asia, as China woos not only its immediate neighbours, but also leading Western powers.
jlne.ws/1DCeRXs
Frontier Markets
ABN AMRO Bank NV to re-enter India;Key driver is financing Gem & Jewellery business
Abhijit Lele, Business Standard
European banking outfit ABN Amro Bank is re-entering India to set up shop for predominantly financing Gem and Jewellery industry.
jlne.ws/18KBfjP
USA concerned about ruble-yuan currency pair trade at Moscow Stock Exchange
Pravda.Ru
The Moscow Stock Exchange started futures trading on the yuan-ruble currency pair, the press service of the exchange said. “The beginning of the new futures trading is based on the significant growth in yuan trading volume on the Moscow Stock Exchange, increase in the share of yuan-ruble foreign exchange operations on the Russian foreign exchange market and the formation of basic demand for hedging operations of foreign trade contracts between Russia and China,” a message from the stock exchange said.
jlne.ws/1GtyHlc
Miscellaneous
Bloomberg’s EIC shuffles management to ‘unite’ news factions
By Keith J. Kelly, NY Post
Bloomberg’s new Editor-in-Chief John Micklethwait has unleashed a sweeping overhaul of the editorial hierarchy at the business news provider in a bid to unify the newsroom and eliminate the company’s notorious fiefdoms.
jlne.ws/195kSOz
READ MORE: John Lothian Newsletter: CFTC suspends deadline on brokers’ margin; London Metal Exchange ends ties with LCH.Clearnet; Top Wall Street Lawyer Slams Regulatory Environment.