Analysts: Glencore-Bunge merger makes sense | Buy side: Moving euro clearing would raise costs | LSEG's Rolet warns EU on euro clearing
May 26, 2017
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Analysts: Glencore-Bunge merger makes sense
Combining Glencore and Bunge is logical, analysts say, particularly because Bunge CEO Soren Schroder recently said the industry needs consolidation.
Financial Times (tiered subscription model) (5/25) 
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Buy side: Moving euro clearing would raise costs
Forcing clearing of euro-denominated contracts into the EU from London would increase costs for trading euro-denominated interest-rate swaps, buy-side executives say. "Fracturing clearing swap liquidity would be expensive in both margin and capital costs," said Ricky Maloney of Old Mutual Global Investors.
The Trade (UK) (5/25) 
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LSEG's Rolet warns EU on euro clearing
London Stock Exchange Group CEO Xavier Rolet is warning EU authorities about systemic risk that could result from forcing clearing of euro-denominated derivatives out of the UK after Brexit.
City A.M. (London) (5/25),  Bloomberg (5/25),  The Times (London) (tiered subscription model) (5/26) 
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Regulatory Roundup
Market calls for more clarity on ETD reporting rule
A European Commission proposal to simplify reporting on exchange-traded derivatives under the European Market Infrastructure Regulation has not been sufficiently explained, some market participants say. In its recent EMIR review, the commission said the current dual-sided reporting status will be changed so only central clearing counterparties need to report ETD trades, but this gives rise to a number of questions and gray areas, they contend.
Risk (subscription required) (5/25) 
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Industry Developments
VIX may be vulnerable to manipulation, researchers say
Traders may be attempting to manipulate the Chicago Board Options Exchange's Volatility Index by moving around Standard & Poor's 500 index options prices, according to University of Texas at Austin researchers. "This market is fairly unique because you've got a very liquid market that's settling based on the price of a less liquid options market," said John Griffin, one of the researchers.
The Wall Street Journal (tiered subscription model) (5/25) 
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GMEX to take 5% stake in Indian exchange, clearinghouse
London exchange-technology provider GMEX Group is acquiring a 5% stake in Metropolitan Stock Exchange of India and unit Metropolitan Clearing Corporation of India. "We see good opportunity in bringing innovative products on the MSE platform as successful development of new products has not happened in India in the equity, debt and interest-rate futures market for many years now," said GMEX Chairman and CEO Hirander Misra.
LiveMint (India)/Press Trust of India (5/25),  The Economic Times (India) (5/26) 
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Analysis: Industry shifts away from athletes toward Ph.D.s
Banks and brokers used to recruit college athletes because they were seen as able to handle risk taking and had the right temperament. In the 1990s, however, the industry started to move away from athletes and toward Ph.D.s, who could understand the growing derivatives market.
The Wall Street Journal (tiered subscription model) (5/25) 
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Financial Technology
Liquidnet CEO Merrin discusses AI, blockchain
Liquidnet CEO Seth Merrin says his mission to make markets more efficient continues as the firm explores artificial intelligence and blockchain technology. "Most blockchain companies will not succeed, but I believe blockchain is a wonderful technology and architecture," Merrin says.
The Trade (UK) (5/25) 
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UK, Hong Kong form fintech innovation partnership
The UK's Financial Conduct Authority and Hong Kong's Securities and Futures Commission have launched a partnership to encourage financial-services innovations. The agreement will also foster information exchange, experience sharing and a regulatory referral system.
Finance Magnates (5/25) 
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Commodities and Managed Futures
Gold group pushes code of conduct
The London Bullion Market Association will require its 140-plus members to commit to a code of conduct, which Chairman Paul Fisher says will "build greater trust, consistency and transparency throughout the market." Members who don't comply within 12 months risk membership suspension or withdrawal.
Reuters (5/25) 
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FIA News
June 13: The Current State of RegTech
Join the FIA Market Technology Division on June 13 in Chicago for the Annual Meeting and The Current State of RegTech. The goal of regtech is to utilize technology to help businesses comply with regulations both efficiently and inexpensively. During this panel discussion, we will hear from some of the leading companies in regtech, as well as the exchanges and regulators who oversee regulation. Learn more and register!
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SmartBrief will not publish Monday
In observance of Memorial Day in the US, SmartBrief will not publish Monday. Publication will resume Tuesday.
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