First Read
Bits & Pieces
By John J. Lothian
Jim Kharouf and RJ Roxas have done a terrific job of taking the FinTech Exchange Chicago 2015 video we shot, combining the event’s lightning round of speakers in a new format for John Lothian News.
Jim had discovered the Sway multimedia tool from Microsoft and used this to tell the story of this sold out Chicago fintech event organized by Barchart.com. You can see the presentation below. I suggest you click on the link to see the whole layout and design on Sway.com to get the full effect.
I love Jim’s drive to innovate and find new ways to tell stories better. Having all these videos, text and graphics in one presentation is very effective.
Meanwhile, I voted yes for the changes to the NFA Articles of Incorporation and urge other NFA member firms to do likewise.
We would like to welcome PDQ ATS as a new sponsor of JLN Financials. PDQ (a double entendre that stands for Procedure Derived Quotes) is an equity trading venue that offers a unique execution technique, a pause for a few milliseconds while liquidity aggregates. Kind of like a broker shouting “what’s here now?” but with today’s execution speed.
My Chicago singer songwriter nephew Andrew Lothian is looking to mix, master and print his debut LP paid for with a kickstarter-like campaign. Here are the details about the album and his fundraising campaign. If you are a Chicagoan, you may have heard Andrew play at a downtown Potbelly’s.
This weekend Jim Kharouf, Doug Ashburn, Colin Ashburn and I are off to London for IDX next week. We will be editing JLN from there, with help from Jeff Bergstrom, Sarah Rudolph and Spencer Doar working from Chicago.
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Banks Curtail Employee Use of Voice Mail; Voice mail is viewed as an expensive vestige of a bygone era
By EMILY GLAZER and DANIEL HUANG, WSJ
Some on Wall Street are hanging up on voice mail. Under pressure to cut costs and eliminate waste, large lenders including J.P. Morgan Chase & Co., Citigroup Inc. and Bank of America Corp., are either eliminating or considering paring back a service once seen as essential to bank workers as calculators and business cards, said people familiar with the banks.
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***DA: If you want to get hold of me, call my mobile. If you don’t have my mobile, there’s probably a reason.
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Get Smart: LSE Looking To Smart Beta
Doug Ashburn – JLN
The word “smart” has been drilled into the marketing lexicon for so long it is sometimes hard to tell what is and isn’t actually, well, smart. Smart phones, smart cars, smart watches and even a smarter planet. The investment world has seen its own branding with so-called smart beta, which was examined in depth by FTSE Russell in May, the first time the LSE’s FTSE index division put its names together with Frank Russell since the exchange purchased the US index and asset manager last year. Five years ago, LSE bought out Pearson’s share of FTSE to gain full control of Britain’s flagship index line.
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FinTech Chicago Gets Democratic
JohnLothianNews.com
Today’s financial technology dialog is often about a word you don’t usually associate with it – democracy – bringing software, data, reporting, testing and trading to the masses. And it’s not just one size for everyone – its customizable too. At the FinTech Exchange 2015 Chicago event, 13 firm executives spoke during its lightning round. So John Lothian News took the best of two hours of presentations and condensed into 3 minutes. Here’s how some of those firms are democratizing and customizing technology for all of us.
Watch the video »
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Women run just 2% of fund management assets in the US
Chris Newlands, FT
Women run just 2 per cent of fund management assets in the US and are much more likely to become doctors, lawyers or accountants than portfolio managers, according to new findings from Morningstar.
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***DA: Ironic when compared to the household sector, where estates over $5 million are about half and half men vs. women and, in general, household financial decisions are controlled by women about two-thirds of the time.
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Jamie Dimon Becomes Billionaire Ushering in Era of the Megabank
Bloomberg Business
Jamie Dimon, who helped assemble Citigroup Inc. and then improved on the experiment with JPMorgan Chase & Co., is responsible for two of the biggest banks the world has ever seen. His life’s work also made him rich.
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***DA: It’s from all those lazy shareholders rubber-stamping his compensation packages all these years.
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MarketsWiki
MarketsWiki Page of the Day
Livevol
MarketsWiki Recent Updates
People
Julie Menacho; Dominique Cerutti?; Andrei Kirilenko; Andrea Hotter; Scott Kenik?
Companies, Organizations and Groups
Social Market Analytics, Inc.?; Deutsche Börse Group; Livevol
Products
Realized volatility
Statistics
63.634,153 pages viewed, 8,194 articles, 192,080 edits
MarketsWiki Statistics
Lead Stories
London’s financial centre will grow if Britain stays in EU-study
By Matt Scuffham, Reuters
London’s financial district will grow its economic output by more than a third and employ 10 percent more people over the next decade if threats including a possible British exit from the European Union don’t materialise, according to a study.
jlne.ws/1HJyeKV
Elizabeth Warren Calls S.E.C. Chief’s Tenure ‘Disappointing’
By MATTHEW GOLDSTEIN, NY Times
Senator Elizabeth Warren, the Massachusetts Democrat who has taken on Wall Street banks and the issue of income inequality, is now going after Mary Jo White, the chairwoman of the Securities and Exchange Commission.
jlne.ws/1SU7kZi
BoE said “no decision” on ICE’s Emir approval
Futures & Options World
The Bank of England has chosen not to approve London-based ICE Clear Europe to operate under new European rules amid fears the authorisation would hamper ICE in its battle with US rivals, leaving the ICE clearing house as the last major European player that has not been approved.
jlne.ws/1Gkefrm
CBOE acquires Livevol trading tools enterprise
By LYNNE MAREK, Crain’s Chicago Business
Chicago Board Options Exchange parent CBOE Holdings agreed to buy San Francisco-based Livevol, a company that provides technology tools for professional, commercial and retail traders.
jlne.ws/1HJyKsh
Wall Street bemoans bond market liquidity squeeze
By Sarah Krouse, WSJ
Bond market liquidity concerns bubbled up at a Wall Street investor conference Tuesday, with a handful of executives pointing fingers at regulators for post-crisis changes in bond market structure.
jlne.ws/1RIeXR2
City of London Could See 39,000 New Jobs by 2025, Report Says
Bloomberg Business
The City of London could see 39,000 jobs created over the next decade if economic and regulatory conditions remain favorable, said a local government body that oversees Britain’s main financial district.
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Lawmaker’s Love Fest With CFTC Chief Dissolves in Split on Bill
Silla Brush, Bloomberg
The honeymoon is over for the top U.S. derivatives regulator. Timothy Massad, the head of the Commodity Futures Trading Commission, was showered with praise for the past year by Representative K. Michael Conaway, the Texas Republican who leads the House committee overseeing the agency. Conaway said he was “tickled” by Massad, who was “doing a great job” as the new “sheriff” of the $700 trillion swaps market.
In recent weeks, the relationship hit a snag, with Conaway sending a flurry of private letters to Massad demanding information and documents about the agency’s work, according to people with knowledge of the matter
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Libor trial: Sacked Tom Hayes kept £2.2m bonus
Telegraph
A banker was allowed to keep a £2.2m bonus after threatening to blow the whistle on senior managers at Citigroup after he was sacked for rigging Libor, a court has heard.
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Regulatory
SEC Eyes Broadened ‘Clawback’ Restrictions; Firms whose financial statements contain errors may have to revoke some executives’ pay
By ANDREW ACKERMAN, WSJ
U.S. companies whose financial statements contain errors may soon have to “claw back” some of their top executives’ compensation as a result.
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Global regulators concerned over banks’ own capital risk models
Reuters
Banks should not depend on internal models for assessing the size of their capital buffers, a trio of global regulators said on Tuesday. “Supervisors should be cautious against over-reliance on internal models for credit risk management and regulatory capital,” the Joint Forum said in a statement.
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Sen. Elizabeth Warren Sharply Criticizes SEC Chairman in Letter; SEC Chairman Mary Jo White: Warren’s ‘Mischaracterization’ Unfortunate
By ANDREW ACKERMAN
Sen. Elizabeth Warren isn’t pleased with Wall Street’s top cop.
The Massachusetts Democrat on Tuesday sharply criticized Mary Jo White, saying her tenure as chairman of the Securities and Exchange Commission has been “extremely disappointing” and that she appeared to have broken promises made to lawmakers during her confirmation hearings in early 2013.
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Regulator Finds Deficiencies in 11 Audits Done by Deloitte & Touche; Deficient audits represent 21% of the audits and partial audits reviewed by the PCAOB
By MICHAEL RAPOPORT
The government’s audit regulator found deficiencies in 11 audits conducted by Deloitte & Touche LLP in its latest annual inspection of the Big Four accounting firm.
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AMF Excellence Program – Eight New Scholarships Granted
AMF
The Autorité des marchés financiers (the “AMF”) recently announced the names of the eight recipients chosen in connection with applications submitted by September 30, 2014 for scholarships under its Excellence Program This link will open in a new window, which promotes the advancement of knowledge in all areas associated with the AMF’s mission.
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Exchanges & Trading Facilities
Nasdaq NFX Data Will be Available on the Bloomberg Professional Service
NASDAQ.com
Nasdaq announced today that Nasdaq Futures, Inc. (NFX) real-time market data will be available via the Bloomberg Professional service and the B-PIPE service, following the official launch of the NFX platform in mid-2015. NFX is the exchange group’s U.S.-based designated contract market (DCM), offering futures and options on key energy benchmarks, which includes oil, natural gas and U.S. power.
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New York Stock Exchange appoints Stacey Cunningham COO
Reuters
Intercontinental Exchange Inc’s New York Stock Exchange unit said on Tuesday it appointed Stacey Cunningham as chief operating officer (COO) of the NYSE Group.
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CBOE Holdings to Acquire Data and Analytics Platforms of Livevol, Inc.
CBOE
Deal Will Expand and Diversify CBOE Holdings’ Market Data Services and Trading Analytics Offerings
CBOE Holdings, Inc. (NASDAQ: CBOE) announced today that it has entered into a definitive agreement to acquire the market data services and trading analytics platforms of Livevol, Inc., a leading provider of equity and index options technology and market data services to professional and retail traders. The acquisition, which has been approved by the board of directors of both CBOE Holdings, Inc. and Livevol, Inc., is expected to close by June 30, 2015. Financial terms of the deal were not disclosed.
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CME Group Executive Chairman and President and Chief Financial Officer to Present at Sandler O’Neill Conference
CME Group
CME Group announced today that Executive Chairman and President Terry Duffy and Chief Financial Officer John Pietrowicz will present at the Sandler O’Neill 2015 Global Exchange and Brokerage Conference, in New York, at Le Parker Meridien, on Thursday, June 4, 2015, at 3:00 p.m. (Eastern Time).
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CME OTC IRS USD Valuation Curves – June 8, 2015
CME Group
As part of our continuing efforts to ensure a prudent risk management process for all products, CME Clearing will be incorporating CME-specific swap observations in the end of day USD valuation curves in our Production environment on Monday, June 8, 2015. This change was originally announced on May 13, 2015 and has been available in our testing environment since June 1, 2015.
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http://jlne.ws/1ANq9HM
Intercontinental Exchange Sets August 5 for Second Quarter 2015 Earnings Announcement
ICE
Intercontinental Exchange (NYSE: ICE), the leading global network of exchanges and clearing houses, will announce second quarter 2015 financial results on Wednesday, August 5, 2015. An earnings press release will be issued prior to the earnings conference call, which will begin at 8:30 a.m. ET.
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SGX’s derivatives and commodities activities grow in May
SGX
Singapore Exchange (SGX) reported growth in derivatives and commodities activities in May from a year earlier but securities trading declined.
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Euronext announces monthly trading volumes for May 2015
Euronext
Euronext, the leading exchange in the Eurozone, today announced trading volumes for May 2015.
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Hedge Funds & Managed Futures
Companies’ Borrowing Spree Darkens Stock Market Future
Bloomberg Business
A dark shadow is lurking behind the happy façade of rising stock prices. U.S. companies are borrowing money faster than they’re earning it — and they’re doing it at the quickest pace since the aftermath of the financial crisis. Instead of deploying the debt to build factories, hire new workers or expand product lines, companies are funneling more of their money to shareholders or using it to fund deals.
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Pimco said flagship Total Return fund had $2.7 bln net outflows in May
Reuters
The Pimco Total Return Fund, the Newport Beach, California firm’s flagship fund, had $2.7 billion of net outflows in May, compared with $5.6 billion of withdrawals the previous month, Pimco said on Tuesday.
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Asset managers’ push into bonds prompts regulatory scrutiny
David Oakley in London and Barney Jopson in Washington, FT
One word goes a long way to explaining why regulators are now focusing on big asset managers as they try to make the financial system safer: bonds.
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Banks & Brokers
ICAP Weighs Treasurys-Trading Controls; Turbulent government-bond markets are prompting one large brokerage firm to consider installing circuit breakers
By KATY BURNE, WSJ
Turbulent government-bond markets are prompting one large brokerage firm to take a cue from the stock-trading world and consider installing circuit breakers.
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Citigroup Hires Deutsche Bank’s Hayashi for Japan Markets
Bloomberg Business
Citigroup Inc., the third-largest U.S. bank by assets, hired Kuniyoshi Hayashi from Deutsche Bank AG to head its Japanese markets and securities division. Hayashi will join Citigroup Global Markets Japan Inc. on Aug. 11 as a managing director and head of markets and securities services, according to a memo obtained by Bloomberg.
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Clearing & Settlement
Revisiting the “specified derivatives” rulebook for Canadian investment funds – an old idea whose time has come
Canadian Structured Finance Law
As previously reported, staff of the Ontario Securities Commission (OSC) has issued welcome guidance in the absence of clearly articulated restrictions on the re-hypothecation of collateral supporting specified derivatives transactions in portfolios of prospectus-qualified investment funds.
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NACHA approves same-day ACH
Banking Exchange
The voting membership of NACHA—The Electronic Payments Association approved a same-day ACH rule that claims to offer “a ubiquitous same-day capability for virtually any ACH transaction.”
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Indexes & Products
MSCI to Announce 2015 Market Classification Review
MarketWatch
MSCI Inc., a leading provider of research-based indexes and analytics, will be releasing the results of its Annual Market Classification Review on June 9, 2015. The announcement will be posted shortly after 5:00 pm Eastern Daylight Time/11:00 pm Central European Summer Time (CEST) at https://www.msci.com/market-classification.
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Vanguard adds Chinese equities to its emerging markets ETF
The Globe and Mail
Vanguard Investments Canada Inc. is looking to expand into the Asian market with the addition of onshore Chinese equities in its ETF offering. Onshore Chinese equities, also known as China A-shares, are China-based companies that trade on Chinese stock exchanges, such as the Shanghai Stock Exchange and the Shenzhen Stock Exchange.
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Trackers warily eye MSCI’s A-share result
FT.com
It is not quite like waiting for white smoke over the Vatican but, for anyone investing in emerging markets, it comes close. Next Tuesday, we will find out the results of the latest reshuffle of the MSCI Emerging Markets index and so will know whether Chinese A-shares have been added.
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Who’s in charge of your investments – Captain Kirk or Mr. Spock?
Indexology: S&P Dow Jones Indices
I have a confession – earning the market return minus expenses does not feel very enticing. Reasonably well-run index funds will do just that, and probably land within the 2nd or 3rd performance quartile year in and year out. But is that the best I can do? Where’s the satisfaction? My inner Captain Kirk wants an investment that will crush the market. On the other hand, my inner Spock guides me to observe empirical data and apply logic. And Mr. Spock is telling me that if I want to compound returns effectively over time, which is the only way I know of to grow wealth, indexing is my friend. Here’s why.
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Technology
Synchronoss Technologies explores sale worth over $2 bln -WSJ
Reuters
Software maker Synchronoss Technologies Inc is working with financial advisor Qatalyst Partners LP on a possible sale that could be valued at more than $2 billion, The Wall Street Journal reported on Tuesday, citing people familiar with the matter.
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City financier to chair ‘big data’ research centre
Clive Cookson, Science Editor, FT
Britain’s £80m big data research centre will be led by Howard Covington, a former City financier.
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Cathay United Bank adopts Numerix Treasurer
Finextra
Numerix announces a successful implementation of Numerix Treasurer by Cathay United Bank, one of the largest commercial banks in Taiwan. Driven by stronger corporate demand, the structured product market in Taiwan has grown significantly making Treasury Marketing Units (TMU) one of the most important departments within banks.
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AcadiaSoft upgrades platform for OTC derivatives
Finextra
AcadiaSoft, Inc. today announced the launch of MarginSphere 2, the latest version of its industry-leading electronic margining platform for OTC derivatives.
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Calypso Introduces Bank-in-a-Box for Capital Markets
PR Newswire
Calypso Technology, Inc., the standard for treasury and capital markets software, has developed an industrialized blueprint for reducing complexity and cost in banks. The Calypso Bank-in-a-Box solution is a complete, auditable target operating model for capital markets with pre-figured business processes and operating manuals. With it, banks can focus more on revenue and less on technology.
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Enforcement
SEC Charges Investment Adviser With Defrauding Retired Teachers
SEC.gov
The SEC alleges that Phil Donnahue Williamson conducted a Ponzi scheme with money he raised for the Sterling Investment Fund, which purportedly invested in mortgages and properties in Florida and Georgia. Many of Williamson’s investors were public sector retirees such as teachers and law enforcement officers who sought safe investments for their retirement savings. Williamson assured investors there was no risk involved and they would receive annual returns of 8 to 12 percent. But rather than invest their money as promised, he used the majority of fund assets to pay his personal expenses and make supposed returns to investors. Williamson created fictitious valuations that were sent to investors.
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Environmental & Energy
Private sector must pay more into $100bn global climate fund, says report
By Fiona Harvey – The Guardian
The global target of directing $100bn to poor countries to help them cope with climate change is likely to be missed unless private sector finance is ramped up significantly, a new analysis has found.
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Japan commits to 26 per cent cut in carbon emissions
BusinessGreen
Japanese Prime Minister Shinzo Abe has announced plans to cut the country’s greenhouse gas emissions 26 per cent by 2030 against 2013 levels, hailing the move as an “ambitious target” in line with those made by other industrialised economies.
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Three quarters of business leaders reckon climate impacts threaten bottom line
BusinessGreen
Board-level executives are broadly aware of the significant risks and opportunities climate change presents for their businesses, but are still struggling to translate this awareness into a coherent programme to manage the risks and seize the opportunities.
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How Would a Low-Carbon Economy Work?
By Eric Marx – ClimateWire
What would a green financial system that encourages net zero greenhouse gas emissions look like?
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Opec meets big oil in an altered landscape
Anjli Raval, Neil Hume and David Sheppard, FT
When the oil industry descends on Vienna this week it will survey a market transformed by Opec’s historic decision six months ago not to lower output to prop up falling prices.
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Warnings over oil debt are getting louder
Banks have been cutting exposure to the industry and conversations about borrowing will get tougher
Identify this very large industry: it has about $2.5tn of debt outstanding, a good chunk of which is considered junk by the credit rating agencies. About half the debt is American, and about half the $2.5tn is owed to banks in the form of loans. Oh, and the price for the industry’s main product has fallen by more than a third in the past 12 months.
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Asia-Pacific
Hong Kong Has New Boom-to-Bust Stock Mystery: Digital Domain
Bloomberg Business
Digital Domain Holdings Ltd. became the latest Hong Kong stock to tumble after surging more than 500 percent in a matter of months, following declines in Hanergy Thin Film Power Group Ltd. and Goldin Financial Holdings Ltd.
jlne.ws/1FtW0Ke
Who Cares About China’s Economy When Stocks Are Rising This Much
Bloomberg Business
When Sean Taylor looks at China’s soaring stock prices, he sees a market more disconnected from economic fundamentals than at any other time in a two-decade career. His advice to investors? Keep buying.
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Chinese Flock to Hong Kong for Stocks They Could Buy at Home
Bloomberg Business
Stephen Qin, a 28-year-old office worker in northern China, traveled 1,000 miles and set up an account in Hong Kong to trade Chinese stocks he could have bought at home. The money of thousands of mainland investors is doing a similar round trip, flowing into brokerages in Hong Kong and then returning to China via share purchases through the city’s stock connect with Shanghai.
jlne.ws/1FtWfVR
HKFE Announces Margin Rates for Adjusted CK Hutchison Futures Contracts
HKEx
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HKFE Announces Margin Rates for Adjusted Henderson Land Futures Contracts
HKEx
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HKEx Launches Innovative New WeChat Account Packed with Real Time Stock Connect Trading Information
HKEx
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Frontier Markets
London Stock Exchange plc: FTSE Russell and Johannesburg Stock Exchange Announce ESG Partnership
FTSE Russell, the global index provider, has announced it is working with Johannesburg Stock Exchange (“JSE”), Africa’s largest exchange, to develop a new environmental, social and governance (ESG) index series.
jlne.ws/1SVu23p
RBI looking to deepen the financial markets with new products
The Economic Times
The Reserve Bank of India is looking to deepen the financial markets with new products and liberalise some of the existing rules to accommodate more overseas investors.
jlne.ws/1GkejHB
DGCX Launches 4 new Products
DGCX
DGCX to list two new unique Indian contracts – India Gold Quanto Futures and Indian Rupee Quanto Futures
Exchange to introduce Mini Polypropylene Futures contract
Existing Plastics Futures contract to be upsized
Further diversifying its product suite, the Dubai Gold and Commodities Exchange (DGCX) today announced that it will launch three new unique contracts – India Gold Quanto Futures, Indian Rupee Quanto Futures and Mini Dubai Polypropylene Futures. The Exchange will also upsize its existing Plastics Futures. The new contracts will go live on Friday, June 5
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READ MORE: John Lothian Newsletter: London’s financial centre will grow if Britain stays in EU; Elizabeth Warren Calls S.E.C. Chief’s Tenure ‘Disappointing’; BoE said “no decision” on ICE’s Emir approval.