EFTA01454195

mobile Email (Embedded image moved to file: pic05678.gif) Forwarded by Tazia Smith/db/dbcom on 05/12/2014 04:31 PM From: Tazia Smith/db/dbcom To: [email protected], Cc: Vinit Sahni/db/==, Nav Guata/db/ Morris, vahe stepanian/db/ Date: 05/12/2014 09:40 Am Subject: copper - positive momentum from china cap mkts reform Good morning Jeffrey - Your copper option is 5300,000 bid (-$31,250 p/l), vs. ref of 6883. This is up from $239,583 as of Friday. Research and desk commentary is below. Bid as of 9:20am 5/12, 3m spot ref 6883, $240/mt. This compares to mid of $252/mt with 0 vol, $240 represents 0.6% vol (0.75% standard, tightened it). Vega on the option Vega = 520.27/mt. Source: DB Commodities Trading, 5/12/14 As you know, China announced its New National Nine Rules" (in contrast to the earlier "National Nine Rules" issued in 2004), which outline meaningful changes to increase open-ness in Capital markets out of China on 5/9. DB research summary below, bottomline takeaway: "under such endeavor, china capital markets will be much more diverse, structured and transparent in the future, and will a) mobilize massive private savings; b) encourage inward portfolio flows; and c) lift market sentiment and valuation." From matt's team: "Copper is a popular choice for use as collateral in financing trades. Now China is proposing that local governments would be able to issue bonds rather than rely on, among other things, using copper as collateral for financing trades. Indeed it is expected that use of SPVs will be come increasingly difficult. This should be bearish for copper after the regulation is passed. meanwhile, we think that before the regulation is passed, people are trying to secure as much copper-backed financing as they can, which has resulted in a scramble for copper, and a spike in price. I would further qualify and say that the news announcement has not resulted in a scramble for physical copper yet, but an expectation for the scramble, which itself is sufficient to spike up the price. " (Embedded image moved to file: pic12986.gif) Forwarded by Tazia smith/db/dbcom on 05/12/2014 09:22 AM From: Amy Tan/db To: Date: 05/12/2014 06:08 AM Subject: DB China unveils agenda for comprehensive capital market reform Paul CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0112171 CONFIDENTIAL SDNY_GM_00258355 EFTA01454195