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Two realities are affecting exchanges. One is that trading commodities and derivatives is a $600 trillion business worldwide and is more profitable than trading in corporate shares. This shows in the value of ICE and NYSE in the stock market. In April 2011 ICE was valued at $1.5 billion less than NYSE, in Dec 2012 ICE was valued at $4 billion more that NYSE as it makes its bid to merge with NYSE. The other is that the Dodd-Frank financial system overhaul in the U.S. after the 2008 financial crisis has created a new model for derivatives trading providing advantages to regulated electronic exchanges and clearinghouses that handle derivatives trades with transparency. Jeffrey Sprecher, CEO of ICE, the IntercontinentalExchange, which handles derivatives trading through its clearinghouse operations, says: "For the past decade, our solutions made our markets increasingly electronic and increasingly clear. Today, financial reform is imposing that vision on many markets through a rule-making process." Bart Chilton, a member of the CFTC which regulates derivatives trading says Dodd-Frank legislation supports the business model of derivatives exchanges. This is especially true for Mr Sprecher and ICE. Sprecher has a good relationship with regulators with whom he talks directly, and is supportive of CFTC efforts to close loopholes as he is confident he can make money as long as the rules are clear. His confidence stems from his model which is technology based from day one, with its own clearinghouse and technology based transparency of the ICE data vault, information it shares with regulators. Sprecher stumbled upon this opportunity. He is an executive in the power industry. Working on developing power plants Sprecher found it was difficult for power firms to hedge investments in energy with financial contracts because there was no well organized, clear and transparent market for such contracts. This he set out to do by buying a little know exchange in Atlanta for buying and selling electricity, later getting the the backing of BP, and investment banks such as Goldman Sachs and Morgan Stanley, to form ICE in 2000. Banks liked the idea of a having an organized clear place to buy and sell derivatives in oil and other commodities, and having an alternative to the Chicago Mercantile Exchange in futures trading. Swaps trading under Dodd Frank supervision is converting to old style futures contracts where there is less competition for ICE's futures trading creating new opportunity. ICE setup its own clearinghouse, and acquired the Clearing Corporation, which was the base for a derivative called credit-default swap. To make derivatives trading transparent and reduce systemic risk Dodd-Frank legislation required exchanges to provide information to data warehouses which would then share the information with regulators. ICE setup its own data warehouse to do this called ICE Trade Vault. Dood-Frank rules envisioned the formation of clearinghouses and exchange such a ICE to provide a clear process, transparency and reduce systemic risk in derivatives trading. ICE under Sprecher by making this vision its own and using technology has created new opportunity. ...

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NYT reporter Chivers reports from Marea, Syria, on the use of cluster bombs on civilians by the Assad regime.

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Deutsche Bank's image takes a hit in a criminal investigation of alleged tax fraud at Deutsche Bank involving cross border trading of carbon emissions certificates by traders. Co-CEO Jurgen Fitschen called the Governor of Hesse to protest a raid by 500 German police officers and investigators of the headquarters of Deutsche Bank in Frankfurt. The officers arrested some executives and confiscated data. Fitschen and co-CEO Jain were in a supervisory role for the trading and not directly involved. Fitschen signed a tax declaration that is part of the case. Over 20 Deutsche Bank executives are under investigation in the case. Because Fitschen was also being examined in the case this is being viewed in Germany as placing himself ''above the law," by interfering in a criminal investigation. Christopher Frank, head of the German Association of Judges, a senior prosecutor in Freiburg, said in an interview: "Its disturbing that a bank executive believes he can influence the independence of the judiciary through a phone call...This shows a fundamental misunderstanding of the principle of separation of powers."...

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Mark Branson is a 44 year old citizen of Britain, who is head of the division in charge of supervising banks at the Swiss Financial Markets Supervisory Authority, Finma. He headed the UBS bank operations in Japan at the time when traders there were engaging in manipulating the LIBOR rate. This has raised questions in the Swiss parliament about the integrity of the Swiss regulator.

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U.S., UK and Swiss regulators charged UBS AG with conspiracy to rig the London Interbank Offered Rate or LIBOR. LIBOR is the interest rate at which large banks lend to each other and is determined from daily reports made by 16 banks to the British Banking Association, giving the rate at which the bank borrows from its peer banks. This rate helps determine the rate for trillions of dollars in securities, home and auto loans, swaps and derivatives. A tiny movement in LIBOR can affect trading profits, and it influences perceptions of a bank's health particularly in a crisis such as the 2008 financial crisis. Every day a 16 bank panel reports this rate to British financial authorites. UBS took full responsibilty and pleaded guilty to criminal fraud. UBS settled the charges for $1.5 billion. Barclays PLC, a UK bank, settled charges for LIBOR manipulation in mid 2012 for $450 million, ending in the departure of the bank chairman and CEO. Britain's regulator the Financial Services Authority, FSA, says in its report that rigging the rate was "routine and widespread" at UBS in order to increase trading profits, done with the knowledge of senior managers, and included cash awards or trading opportunities to employees at other banks to participate in manipulating the LIBOR rate. During one period of 18 months UBS paid 15000 British pounds to a firm of outside brokers every 3 months. FSA says LIBOR and versions of it are "at risk of being improperly influenced " between Jan. 2005-2010. What this means is other large settlements with other banks can be expected. Fannie Mae and Freddie Mac may have lost $3 billon from this manipulation of LIBOR, according to an internal report from the inspector general of the Federal housing Finance Agency, which also says Fannie and Freddie should sue the banks responsible. The whole issue of LIBOR came to light after an article was published in the WSJ, April 16, 2012, and a WSJ study on LIBOR using credit default insurance to track LIBOR rates, on May 29, 2012....

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Carolyn Chen, a professor at Northwestern University, who heads the Asian-American Studies program, says efforts to cap enrollment at Ivy League schools such as Harvard and Yale are similiar to efforts to cap Jewish enrollment in an earlier period. Asian Americans make up 5.6% of the population in the U.S. but are now 12-18% of the students at Ivy League schools. Asian-Americans make up 40-70% of students at top public high schools such as Stuyvesant and Bronx Science in New York City, Lowell in San Francisco and Thomas Jefferson in Alexandria, Va. which are merit focussed. These Asian students try to get into Ivy League schools. Yale has a student population that is 58% white and 18% Asian American. The question she poses is whether white and Asian American applications should be viewed through lens such as "individuality," and "uniqueness," on grounds that a wide range of talents should be encouraged, and if this puts Asian Americans at a disadvantage with white applicants.

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The Gallois Report and France's efforts to improve competitiveness under the Hollande administration.

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Foreign investors make up only 7% of Russia's domestic bond market compared to 30% for similiarly rated Mexico. Russia is rated BBB by Standard & Poor's. Moody's Investors Services rating is one notch higher. The yield on Russia's 10 year government bond is about 7%, compared to 4.35% for Italy and 1.8% for U.S. Treasurys. Russia's deputy finance minister, Alexei Moiseyev, says he hopes changes will raise the foreign holdings to about 33%. Martin Gilman, a former IMF representative to Russia in 1998, and now a professor at Moscow's Higher School of Economics, says rates will go higher because of appreciation in the ruble and large monetary easing in Europe and the U.S. The situation has changed completely from the 1998 Russian default on debt payments of $160 billion. The IMF estimate is for overall debt to be about 11% of GDP by the end of 2014.