EFTA Document EFTA01461229

From: Tazia Smith Sent: 12/19/2013 10:39:08 AM To: [email protected] CC: Paul Morris ; Vahe Stepanian Subject: your short yen position presently +$24k (spot ref 104.30) (C) Classification: Confidential Good Morning Jeffrey - Posting you that your 101 strike USDJPY zero-cost triple one touch position is presently —524k bid. Post Fed and then yen sell-off, DB FX Research reiterates expectations of USDJPY at 115 at end-2014. The commentary below is actually on expectations for asset flows from forthcoming investment tax exemptions in Japan beginning in January. I thought you might find the quick comment of interest. We'd reiterate a view that matches yours: bearish yen, bullish Japanese equities (buy on dips). You saw a basket of single-names we highlighted in our email yesterday. Best Regards, Tazia Forwarded by Tazia Smith on 12/19,2013 10 20 AM --- From "Taisuke Tanaka. Deutsche Securities Inc." To Tazia Sm' Date 12/18/2013 12:36 AM Subioct DEutsche JApan View on FX - DB, yen-bear, talks on NISA Deutsche Securities Inc. - Fixed Income Research DEutsche JApan View on FX - DB, yen-bear, talks on NISA 18 December 2913 (1 pager 117 Ft) Download the complete report Reason we have not stressed NISA's yen depreciation impact The Japanese version of the Individual Savings Account system, known as NISA, will come into force in January. Tax exemptions will be granted to new investments of up to $1 m per year for a maximum of five years, thus allowing for as much as ¥5m per person. Market participants have frequently expressed an expectation that this money will flow to the stock markets and foreign securities, buoying share prices and sending the yen downward. However, we have not put much emphasis on this point despite our consistent bearishness on the yen. Let us consider a simple calculation. Banks and securities brokers have competed fiercely to attract NISA accounts, and applications for 3.58m accounts had been received as of 1 October. The government expects this to grow to 15m accounts and ¥25tm (¥1.67m per person) in the seven years to 2020. Let us assume that relatively active investors open 5m accounts worth ¥4tm (compared to maximum possible ¥5trn) next year. Recent individual investor flows suggest that they prefer domestic stocks to foreign securities. If 25% of the NISA funds are allotted to foreign securities such as investment trusts, it will come to ¥1tm. This includes switching from other foreign securities. If half is new money, the total would be ¥500bn or a monthly average of over ¥40bn. It would be inappropriate to CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0 123136 CONFIDENTIAL SDNY_GM_00269320 EFTA01461229