First Read
Big Picture: Sandor Says Look Beyond US For Air And Water Markets
JohnLothianNews.com
Richard Sandor is one of the pioneers in financial derivatives and the environmental markets world as founder of the Chicago Climate Exchange. Now with his second book, Sustainable Investing And Environmental Markets, Sandor says this asset class has come a long way over the past 12 years but has a long way to go from here.
“I think we’ve made enormous progress,” he says. “You wouldn’t necessarily believe it was true because of the lack of federal action in the the United States. But I think that would be naive. In fact, you have proposals pending by the EPA that suggest there may be cap-and-trade.”
Watch the video »
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Standing Tall
Jim Kharouf – JLN
The non-profit group A Leg To Stand On held an event at Trading Technologies in Chicago last night, at its uber-cool Tech Tap space. What’s better than a bar at work with bands of industry professionals that will play for the ALTSO event this fall in New York and Chicago? The event raised over $2,000 and industry favorites such as Ray McKenzie, Matt Scharpf, Chuck Mackie and Jim McNulty also played short sets.
There are many worthy charities our industry supports and this is one of them. Providing prosthetic limbs and corrective surgeries for kids in developing countries truly is changing lives. We hope to see you at the Rocktoberfest events in New York on October 15th and Chicago October 22nd.
Also, in case you missed it, please send in a laugh to Kim Taylor at www.laughforkim.com.
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CME Group suspends two gold futures traders for allegedly spoofing
Reuters
CME Group Inc on Thursday suspended two traders from its markets for allegedly colluding to enter orders repeatedly with no intention of trading, a strategy that has been fingered as a key contributor to the 2010 Wall Street flash crash.
jlne.ws/1AnoOlu
**JK: Not a bright spot.
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Bond Traders’ Crazy Solution for Nonexistent Problem
By Mark Gilbert, Bloomberg
Lots of smart people are worrying about the next bond market meltdown. Government regulation and intervention, you see, have sapped what is known as liquidity; because the big banks have to keep more cash on their balance sheets, they’re less willing/able (take your pick) to commit capital to trading. That could make it harder, so the nervous argument goes, for investors to sell when they need to. And that, in turn, could massively amplify price swings.
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***DA: If one were to just look at world equity markets, one would think the financial recovery has gone swimmingly well. Look more closely and one can see the duct tape and baling wire.
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Finra CEO Rick Ketchum backs off data collection plan; Regulator says worry over security of customer information warrants reexamination
By Mark Schoeff Jr., Investment Week
Finra is putting the brakes on its proposal for a massive data-collection system over concerns about the security of customer information, the organization’s chief executive is expected to tell Congress on Friday.
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**JK: Let’s just give it all to Amazon and Google and be done with it.
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Global Equity Markets Seminar – Baruch College – June 15-17, London
Through state of the art interactive trading simulations, graphics-aided lectures, and two industry-expert panel discussions, GEMS provides critical, in depth, hands-on exposure to the latest developments in the securities trading industry. Hosted by Deutsche Börse Group and the Bombay Stock Exchange in cooperation with Zicklin School of Business, Baruch College, CUNY
jlne.ws/1dAmoew
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Finance pledges millions to Nepal relief efforts
By Graeme Kerr, Financial News
Relief charities have praised the finance industry for its generosity as appeals to help victims of the Nepal earthquake look set to raise millions of pounds from the City of London.
jlne.ws/1EI9Yv7
***DA: The generosity that flows through this industry never ceases to amaze me. If you would still like to help, Futures For Kids has drained its coffers recently to help the victims of the Nepal disaster. Read below, click the link and pitch in.
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FFK Day, May 15 – Let’s Get the Industry Involved
Futures for Kids is pleased to announce that the first “FFK Day” will take place on Friday, 15 May 2015. This is, in effect, a “Children in Need” type day for those in the futures/derivatives industry.
We’d would like as many brokerage firms, trading companies, exchanges, clearinghouses, IT vendors, specialist fund managers, consultancies, etc as possible to take part. And we’re encouraging senior executives right through to junior staff to participate.
How you take part is, of course, up to you. From donating a percentage of your revenues from the day to organising a simple “dress down” day, any kind of activity would be most welcome.
Click here to learn more.
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MarketsWiki
MarketsWiki Page of the Day
MarketsWiki Recent Updates
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Veronica Augustsson; Ben Bernanke
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Lead Stories
CME speaks out on new Nasdaq energy threat
Futures & Options World
The CME Group has spoken out for the first time about the threat of Nasdaq’s planned energy futures, claiming the Nasdaq Futures Exchange is not sufficiently different from what the CME already does to be sure of success. Derek Sammann, head of commodities and options products at the CME Group, said NFX is the latest in a long list of exchanges that have tried to move in on CME’s core markets.
jlne.ws/1dAgERP
Global bank regulators call for more risk controls around algo trading
Reuters
Banks need to put in place more stringent standards around algorithmic trading to help reduce risks to the financial system as trading becomes more electronic and increasingly complex, a group made up of global regulators said on Thursday. Most trading firms are highly automated and use pre-programmed instructions, known as algorithmic trading strategies, to make lightning-fast decisions on which securities to buy and sell, with little human intervention. Banks regularly use algorithmic trading strategies and have high-frequency trading firms as clients.
jlne.ws/1Q6DLkZ
Big Banks Use Loophole to Avoid Ban
WSJ
Big banks are using a little-known loophole to avoid triggering a Securities and Exchange Commission ban on selling certain lucrative products to clients in the wake of enforcement actions. Deutsche Bank AG last week was able to avoid the threat of a ban on selling stakes in hedge funds by tucking specific language into an $800 million agreement it reached with a different regulator—the Commodity Futures Trading Commission—to resolve an interest-rate-rigging probe.
jlne.ws/1GKsAdq
SEC Asleep At The Switch Overseeing Finra, Charges Congressional Watchdog
TED KNUTSON, Financial Advisor
The Securities and Exchange Commission is asleep at the switch overseeing the Financial Industry Regulatory Authority, said the investigative arm of Congress, the General Accountability Office, on Thursday.
jlne.ws/1bJninA
Healthy liquidity diet needed to survive future financial shocks
Gillian Tett, FT
What are the big risks to the stability of western financial markets today? This week I posed that question to powerful finance industry professionals at the Milken Institute global conference in Los Angeles.
jlne.ws/1c1Nfzy
Greek Default for Dummies: Your Questions Answered on Creditors
Bloomberg Business
Greece has to come up with about 4 billion euros ($4.5 billion) by the end of May for debt payments. Then there’s the 1.5 billion-euro monthly tab for salaries and pensions. As Prime Minister Alexis Tsipras’s government in Athens haggles over the details of its reforms and leans on its banks to keep buying Treasury bills, the question inevitably looms: what happens if the cash runs out?
jlne.ws/1Q6unxU
The real message from the ‘Flash Crash’ arrest
Tim Quast, founder and president of Modern Networks IR
Until last week it had become capital-markets haute couture to mock Michael Lewis here a year past his seminal fast-trading tome “Flash Boys.”
Trading community TABB Forum advertised this headline: “Dear Michael Lewis: If You Don’t Understand Something, Please Ask for Assistance.” CNBC’s Bob Pisani, in a piece called “Michael Lewis’ ‘Flash Boys’ one year on,” compared those decrying market structure to paranoid political conspiracists.
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The flash crash trader Navinder Singh Sarao returns to London cell ahead of extradition fight
by Caitlin Morrison, City AM
The trader was returned to Wandsworth Prison after a hearing yesterday
The legal team of flash crash trader Navinder Singh Sarao is aiming to appoint a QC to work on his upcoming extradition case, a member of his legal team said at Westminster Magistrates’ Court yesterday.
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Regulatory
Regulatory burdens top adviser business concerns; Advisers also worry about attracting new clients in the future, survey shows
By Liz Skinner, Investment Week
Compliance with evolving rules around fiduciary duty, advertising and cybersecurity top the list of risks that financial advisers worry will hurt their businesses in the future.
jlne.ws/1HXqCb2
FSC says futures transaction tax should remain
Taipei Times
The Financial Supervisory Commission (FSC) yesterday said it would urge the Cabinet to maintain the futures transaction tax at 0.002 percent, even as the preferential tax rate is about to expire.
jlne.ws/1GAyCL4
Big Banks Use Loophole to Avoid Ban
By ARUNA VISWANATHA,WSJ
Big banks are using a little-known loophole to avoid triggering a Securities and Exchange Commission ban on selling certain lucrative products to clients in the wake of enforcement actions.
Big banks are using a little-known loophole to avoid triggering a Securities and Exchange Commission ban on selling certain lucrative products to clients in the wake of enforcement actions.
jlne.ws/1GKsAdq
CFTC Approves Proposed Rulemaking to Amend the Trade Option Exemption by Reducing Certain Reporting and Recordkeeping Requirements for End-Users
CFTC
The U.S. Commodity Futures Trading Commission (Commission) today approved for public comment a proposed rulemaking that would reduce reporting and recordkeeping requirements for trade option counterparties that are neither swap dealers nor major swap participants (Non-SD/MSPs), including commercial end-users that transact in trade options in connection with their businesses. The unanimous vote was conducted via seriatim. The proposed rulemaking will be open for public comment for 30 days after publication in the Federal Register.
jlne.ws/1GLmF7W
Self-Regulatory Organization (SRO) Rulemaking and National Market System (NMS) Plans
SEC
jlne.ws/1eCTnOv
FINRA, FINRA Foundation and First Nations Issue Joint Investor Alert, New Money Coming Into Indian Country: Plan for the Long Term
FINRA
The Financial Industry Regulatory Authority (FINRA), the FINRA Investor Education Foundation and First Nations Development Institute (First Nations) have issued a joint Investor Alert called New Money Coming Into Indian Country: Plan for the Long Term. Over the past five years, Indian Country lawsuit settlements totaling more than $3 billion have been reached. This Alert provides recipients and potential recipients of settlement and other new money with helpful tips to help them confidently manage their finances, as well as avoid financial fraud.
jlne.ws/1bkV4it
Update on Stronger Super regime
ASIC
ASIC today provided an update on aspects of the Stronger Super regime.
The start date for portfolio holdings disclosure reporting and choice product dashboard requirements will be deferred until 1 July 2016 to allow the Federal Government further time to consult on the detail of the requirements. These requirements were due to start on 1 July 2015.
jlne.ws/1JFtrj9
Exchanges & Trading Facilities
ICE Benchmark Administration Publishes Feedback Statement on LIBOR Evolution Position Paper
MarketWatch
Intercontinental Exchange, the leading global network of exchanges and clearing houses, has published a feedback statement on the responses received to the ICE Benchmark Administration (IBA) position paper on the evolution and enhancement of ICE LIBOR.
jlne.ws/1Q6uyJA
CME’s Profit Rises on Higher Trading Volumes; Exchange operator’s results beat Wall Street estimates
By LISA BEILFUSS, WSJ
CME Group Inc., the world’s largest futures-market operator, said its first-quarter profit rose 24%, helped by higher trading volumes.
jlne.ws/1KzzVOk
Chi-X Canada Wins Regulator Approval for Closing Auction
by Eric Lam, Bloomberg
Chi-X Canada ATS Ltd. is opening a new front in its battle for trading volume with TMX Group Ltd., operator of the country’s largest exchange.
jlne.ws/1IuWd4C
Euronext directors quit to launch research venue
The Trade
Two former Euronext directors have launched an independent research platform specialising in European research. James Woodley, the former head of investment funds and Pedro Fernandes, the former head of European exchange traded and structure products quit NYSE Euronext at the end of last year.
jlne.ws/1JFvwvE
End users give pre-launch boost to GMEX swap future
IFRAsia
A new breed of hybrid product that brings over-the-counter interest rate swap economics into the more capital efficient world of listed derivatives is set to go live at the end of July and is already generating support from end users. Start-up exchange, GMEX, is currently putting the finishing touches to its euro-denominated Interest Rate Swap Index Average Constant Maturity Futures contract, which received UK FCA approval in December.
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Summary of April 2015 Activities at TOCOM
TOCOM
The Tokyo Commodity Exchange announced today that average daily trading volume for April 2015 was 88,382 contracts, down 0.8% from March 2015. On a year-on-year basis, it gained 19.4%. The Oil market, as well as the Agricultural Product & Sugar market, saw major increases in volume; Crude Oil was up 24.8% to 15,463 contracts and total Oil market volume was up 16.3% to 25,281 contracts. Corn volume rose 13.8% to 2,645 contracts, Soybean was up 322.3% to 1,220 contracts and the Agricultural Product & Sugar market was up a total of 149.6%. However, trading in other products fell. Gold, which is TOCOM”s most actively traded product, saw volume fall 13.2% to 29,935 contracts, which lead the overall decrease in exchange volume.
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Security enhancements for the access to Eurex Exchange’s T7 GUI infrastructure via leased line connections
Eurex
Access to Eurex Exchange’s T7 trading architecture via the Eurex ETI interface, Eurex FIX interface and the Eurex Trader GUI via an internet connection (optional) is currently secured via an automatic network validation mechanism which ensures that participants access the system from authorised IP networks and/or IP addresses only.
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Hedge Funds & Managed Futures
Wall Street’s Latest Craze Meets Small Short in New Derivatives
by Tracy Alloway, Matt Scully, Bloomberg
It began with a seemingly wacky idea to reinvent banking as we know it. But no one is scoffing at peer-to-peer lending anymore — least of all, Wall Street.
jlne.ws/1AoRfPU
Two Major Asset Managers Discuss How Bond Investors Should Deal With Duration; Big investors ponder ‘duration’ plays
by Tracy Alloway, Bloomberg
Duration: d(y)o?or??SH(?)n/ Noun — The time in which something continues. Also, the sensitivity of a bond’s price to changes in its yield.
It’s no secret that bond investors seeking discernible returns have had a hard time of late. With yields on a large swath of government debt hovering near zero – or even less – the temptation is to move into ever riskier securities to generate some (any!) sort of return. Investing in bonds with a longer-duration can also help boost returns, since investors are typically compensated for bearing the extra risk of long-term inflation or eventual interest rate rises, both of which would tend to erode the yield generated by the investments.
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Bond Distortions Heighten Allure of Europe’s Hybrid Debt Markets
by Katie Linsell, Bloomberg
The appeal of risky debt is deepening in Europe, even as credit quality slides and compensation shrinks.
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Banks & Brokers
Ex-BAML contingent grows at HFT
By Tim Clare, Financial News
One of Europe’s largest high-speed trading firms has hired an executive from Bank of America Merrill Lynch’s markets division to run its compliance function, making him the third former employee from the US bank to join in a senior role.
jlne.ws/1GLpAxz
UBS equity trading chief heads to Jefferies
By Matt Turner and Tim Cave, Financial News
The European head of cash equity trading at UBS has left and is set to join a number of former colleagues at Jefferies, in the latest of several changes at the top of banks’ equities businesses in Europe in recent months.
jlne.ws/1I2L4Jq
Goldman Sachs, Like Others on the Street, Dips a Toe in Bitcoin
WSJ
If you haven’t heard it yet, Wall Street’s interest has been piqued by bitcoin. Today’s news, that Goldman Sachs Group Inc. was a co-lead investor in a $50 million funding round for bitcoin-services firm Circle Internet Financial, is only the latest in a string of stories about Wall Street and bitcoin. It’s clear interest about the digital currency is increasing on the Street.
jlne.ws/1dAoxqw
The Real Reason HSBC Holdings plc Will Return To Hong Kong
Yahoo Finance UK
Directors at HSBC (LSE: HSBA) (NYSE: HSBC.US) stirred up a hornets nest by unveiling a review of its headquarters’ location, with Hong Kong seen as the most likely alternative destination. The Hong Kong Monetary Authority made receptive noises, and HSBC’s shares rose over 3% as the move was welcomed by Asian investors. According to some rumours HSBC’s UK bank might be spun off to assist the relocation, which would cut taxes and heavy regulatory costs.
jlne.ws/1Q6GKtH
Clearing & Settlement
ESMA grants equivalence to 10 APAC CCPs
COOConnect
The European Securities and Markets Authority (ESMA) has granted equivalence to 10 Asia-Pacific (APAC) central counterparty clearing houses (CCPs), thereby allowing third country CCPs to provide clearing services to EU clearing members and trading venues.
jlne.ws/1dAgdqO
FIA Global voices concerns about CCP risk
Global Investor Magazine
FIA Global has recommended a number of processes for assessing and managing risks that arise from clearing through central counterparties (CCP). The derivatives trade organisation’s position paper is written from the perspective of clearing members, and addresses the risks that CCPs bring to clearing members, their clients, and the market more generally.
jlne.ws/1dAgh9U
Indexes & Products
Why U.S. stocks are near highs even as fund investors flee
MarketWatch
Thanks to stubborn fund managers and record corporate buybacks, U.S. stocks remain near all-time highs even as money continues to trickle out of U.S. shares and into international equities.
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3 reasons investors still buy actively-managed funds
MarketWatch
As has been widely reported in the financial media, 2014 was one of the worst years in recent memory for active managers.
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Technology
FinTech Rising: How to create synergies with financial institutions (webinar)
VentureBeat Digital technologies and mobile apps are changing the face of financial services — it’s not an overstatement to say the industry is undergoing a major digital transformation. By 2018, U.S. investment in fintech is projected to reach $4.7 billion, and certainly shows no sign of slowing down.
jlne.ws/1Q6EXFc
Innovate with caution: why start-ups should be wary of bank-led hubs
AFR.com
When new Sydney financial technology hub Stone & Chalk opens at full capacity in June, its backers – banks and accountants – will be the ones popping the champagne. More than 330 entrepreneurs from 120 fintech start-ups have already signed up, showing that this hub is fulfilling a need. But emerging fintech companies should approach this type of bank-led incubator with caution after concerning comments from a key backer of Stone & Chalk.
jlne.ws/1Q6FaIq
Yahoo’s Other Challenge: Retaining Acquired Talent; Tech giant works to keep the new blood it got in buying 52 startups
By DOUGLAS MACMILLAN
A few times a year, Yahoo Inc. organizes dinners for the entrepreneurs who sold their startups to the Internet company and still work there.
jlne.ws/1JFuhwn
Artificial-Intelligence Experts Are in High Demand; Tech firms, universities stock research centers amid push in hot area of computer science
By AMIR MIZROCH
When the University of Washington’s computer-science department wanted to poach artificial-intelligence expert Carlos Guestrin from Carnegie Mellon, it turned to Amazon.com Inc.
jlne.ws/1OLwGt4
Enforcement
Look Out Wall Street: There’s a New White-Collar Cop in Brooklyn
Bloomberg Business
Winston Paes would like white-collar criminals to know they have a new foe in the New York U.S. Attorney’s Office. The one in Brooklyn, not Manhattan.
jlne.ws/1JFsFmq
CFTC Charges North Carolina Resident Barry C. Taylor and His Companies with Commodity Pool Fraud in a Multi-Million Dollar Fraudulent Forex Scheme and with Registration Violations
CFTC
The U.S. Commodity Futures Trading Commission (CFTC) filed a civil enforcement Complaint against Barry C. Taylor of Franklin, North Carolina, charging him with operating a multi-million dollar fraudulent scheme through his firms, OTC Investments LLC and Forex Currency Trade Advisors, LLC (collectively, Defendants). On April 22, 2015, Judge Martin Reidinger of the U.S. District Court for the Western District of North Carolina, Asheville Division entered an emergency restraining Order freezing Defendants’ assets and prohibiting the destruction or concealment of their books and records. None of the Defendants has ever been registered with the CFTC, as is required.
jlne.ws/1bJlsTR
Federal Court Orders California Residents Christopher Valois and Cynthia Wong and Their Companies to Pay over $1.1 Million for Fraud and Registration Violations
CFTC
The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Cormac J. Carney of the U.S. District Court for the Central District of California entered an Order of Default Judgment against Defendants Christopher Valois and Cynthia Wong, both residents of Irvine, California, and their companies, Bertram Trade LLC and Churchhill Commodities Trading LLC. The Order requires the Defendants jointly to pay restitution of $448,371 and a $700,000 civil monetary penalty. The Order also imposes permanent trading and registration bans against them.
jlne.ws/1GLmKZk
U.S. SEC reviewing efforts by some companies to thwart whistleblower awards
BY SARAH N. LYNCH, Reuters
The U.S. Securities and Exchange Commission is looking into whether some companies are trying to force employees to sign agreements to forgo receiving whistleblower awards from the government to be eligible for severance pay, SEC Chair Mary Jo White said Thursday.
jlne.ws/1JFvRyh
Environmental & Energy
One in six species faces extinction from climate change
The Telegraph
Global temperature rise of four degrees Celsius could spell disaster for a huge number of species around the world
jlne.ws/1I2KCe4
Church of England blacklists coal and tar sands investments
Pilita Clark, Environment Correspondent, FT
The Church of England, one of the world’s wealthiest religious institutions, has decided to blacklist coal and tar sands investments, in a striking victory for campaigners seeking to make fossil fuels as unpopular as tobacco.
jlne.ws/1DOR2XS
US and Japan miss Green Climate Fund deadline
BusinessGreen
The US and Japan have missed a UN deadline to confirm billions of dollars for a new fund designed to help developing nations tackle global warming.
jlne.ws/1zj1nPb
Asia-Pacific
Taiwan stock market held back by conservatism
WantChinaTimes.com
Taiwan stocks have gradually warmed up, hitting the benchmark 10,000 points for two consecutive days with the share prices marking a 15-year high, but most stock investors are indifferent, with turnover reaching only NT$130 billion (US$4.2 billion), claimed to be the coldest 10,000-point performance.
jlne.ws/1DH36Jq
The young and restless driving China’s stock market higher
afr.com
If there was any doubt about what is driving China’s share market rally, it was cleared up by the latest brokerage data released this week.
jlne.ws/1dAqG5J
Frontier Markets
Firms Focus on Frontier Opportunities, Study Shows
WSJ
Frontier markets are generating considerable interest among corporations, even as companies’ overall investment focus appears to be shifting toward more technologically advanced developed markets and away from larger emerging economies.
jlne.ws/1Q6HPBS
Securities and Exchange Board of India Notices
SEBI
Attachment Proceeding No. 1062 in Certificate No.291 of 2014 -Order in Respect of Shri Govind Das Biyani.
Adjudication Order in respect of Ms. Anju Innani In the matter of M/s. Apollo Finvest (India) Limited
Product Labeling in Mutual Funds
Stress Testing of Liquid Fund and Money Market Mutual Fund Schemes
jlne.ws/12kCz9E
Sebi tweaks mutual fund norms; Wants stress tests for liquid and money market funds, changes product labelling rules
Business Standard
The Securities and Exchange Board of India (Sebi) on Thursday changed the regulations on risk management for certain debt mutual funds. It also changed the way MF products are to be labelled, through a separate circular on its website.
jlne.ws/1Q6su4d
Rushing to Stake a Claim on the Market Frontier
NYTimes.com
Stock markets in big emerging-market countries like China, Brazil and Russia have been sagging. But the returns have been splendid for their oft-overshadowed smaller siblings — frontier markets like Kazakhstan, Kenya and Kuwait.
jlne.ws/1dArPdm
Frontier Markets: Myanmar Rising
NASDAQ.com
Over the last few months, I’ve written positive articles about Myanmar and I strongly feel that in the not too distant future it will become accessible to the U.S. investor.
jlne.ws/1dArUxF
READ MORE: John Lothian Newsletter: CME speaks out on new Nasdaq energy threat; Global bank regulators call for more risk controls around algo trading; Big Banks Use Loophole to Avoid Ban.