Posts by Johanes

AUSTRALIAN CURRENCY BAND October 16, 2012: By Johanes L. Sitanggang The performance of AUD/USD and AUD/JPY interior the AUD currency band remains to confirm that both USD- and JPY-based fund managers are still holding their investment in AUD currency and AUD-denominated interest bearing securities. Their trading activity has been strongly to defend the AUD/USD and AUD/JPY at their central currency bands. The slower capital outflow from AUD currency and AUD-denominated interest bearing securities have impacted the performance of global currency band, AUD currency band in particular. Unless AUD/USD and AUD/JPY to be under pressured down to their previous or new lower currency bands then the turning points (disequilibrium-equilibrium exchange rates (EERs)) for the AUD-positive and negative pairs will not be measurable. Accordingly, the AUD-negative pairs (EUR/AUD and GBP/AUD) remains to be corrected to upward direction and the AUD-positive pairs (AUD/CHF, AUD/CAD, AUD/NZD, to include AUD/USD and AUD/JPY) remains to be corrected to downward direction. And, unless the measured equal lowest average traded weighted rates for AUD-positive pairs equal to the measured equal highest average traded weighted rates for AUD-negative pairs, then any trading positions on AUD-pairs to be at moderate to high risk. The performance of AUD currency band may pressure RBA to cut the rate for another 0.25 % during the next meeting to manage the performance of AUD currency band to manage the inflation band. The rate cutting will also to slower the Australian economic slowdown and to defend the continuing elevated unemployment rate. Beside, the current performance of the Australian currency band is indicating that the equilibrium internal rate of return of the Australian dynamic stochastic general equilibrium is imbalance. However, should the AUD/USD and AUD/JPY to be under pressure by the global fund managers before the next RBA's meeting, then RBA may not necessary to undertake rate cutting until the AUD pairs to be stabilized at their measured equilibrium exchange rates (EERs-disequilibrium). Short positions on AUD/USD remains active to target their previous lower currency band at overnight rollover fee risk (swab).

Both AUD/USD and AUD/JPY remains strongly defended at their central currency bands during this week. These pairs are expected to be under pressure by this weekend of by next week to resume AUD-positive pairs to move to downward direction and the AUD-negative pairs to move to upward direction to establish their new lower and upper currency bands. Unless the AUD-positive pairs (AUD/USD, AUD/CHF, AUD/JPY, AUD/CAD and AUD/NZD) to be stabilized at their new lower currency bands and the AUD-negative pairs (EUR/AUD and GBP/AUD) to be stabilized at their new upper currency bands, their turning points (equilibrium exchange rates - EERs) can not be measured for long and short market entry rates. I am still holding short AUD/USD positions at overnight rollover fee risk (swab) to target the previous lower currency band estimated at 0.9600/0.9700.

GLOBAL INTEREST RATE EQUILIBRIUM STRUCTURE October 8, 2012: By Johanes L. Sitanggang The RBA rate cutting for 0.25 % in October 2, 2012 to lower the interest rate down to the level of 3.25 % does not change the global interest rate equilibrium structure. The AUD remains the highest interest rate currency amongst the major currencies. However, the rate cutting has been tightening the interest rate differentials that ultimately to change and affect the major inter-currencies capital outflow and inflow. The current interest rate differentials however remain to place the AUD, NZD and CAD as the high interest rate and followed by EUR and GBD as the moderate and USD, JPY and CHF as the low interest rates. Interest rate differential based capital outflow and inflow analysis interior the global equilibrium currency band remains to confirm that AUD, NZD and CAD currency bands performance will be the determinant for the EUR, GBP, USD, JPY and CHF currency band’s projection. And the combined performances of the AUD, NZD, CAD, EUR and GBP currency bands are the determinant for the USD, JPY and CHF currency band’s projection. Accordingly, the AUD, NZD and CAD currency band’s performance will continue to lead the FX market movements and followed by the EUR and GBP whilst USD, JPY and CHF are the followers. As a result, AUD currency band performance will continue to be the strongest and the most consistent and in harmony for their movements from disequilibrium to equilibrium as well as from equilibrium to disequilibrium and followed by the NZD and CAD currency bands indentified by using Brownian motion process theory. Consequently, EUR and GBP currency band performance will not and will never to move in harmony from disequilibrium to equilibrium or from equilibrium to disequilibrium. Or, the EUR and GBP currency pairs will move to upward or downward directions at the same time against the equilibrium theory. The USD, JPY and CHF currency band performance is depending to the performance of AUD, NZD, CAD, EUR and GBP. In summary, trading the AUD-, NZD- and CAD-currency pairs offer the lowest risk and moderate risk for USD-, JPY- and CHF-currency pairs. Trading the EUR- and GBP-currency pairs is at high risk.

GLOBAL INTEREST RATE EQUILIBRIUM STRUCTURE

High Risk Investment Warning Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor or the nearest central banks if you have any doubts. Do not invest unless you are prepared to risk !!!

For more information, please contacts: Yeni Widayanti Rahayu, Malang, Indonesia E-mail:[email protected] Ridwan Agus Mulyono, Tangerang, Indonesia E-mail:[email protected] Hadi Winardi, Surabaya, Indonesia E-mail:[email protected] Bobby Tanex, Bitung, Indonesia E-mail:[email protected] I.I Tioliani, Sidoardjo, Indonesia E-mail:[email protected] Monika Widjaya, Bandung, Indonesia E-mail:[email protected] Yudi Setiawan, Kediri, Indonesia E-mail:[email protected] Gerda Sianipar, Jakarta, Indonesia E-mail:[email protected] Octo Kusuma, Bandung, Indonesia E-mail:[email protected] Meiliana Koesnadi, Surabaya, Indonesia E-mail:[email protected] Juliawati Sentosa, Surabaya, Indonesia E-mail:[email protected] Tito Pardede, Jakarta, Indonesia E-mail:[email protected] Rini Suhargo, Lumajang, Indonesia E-mail:[email protected] Teddy Hans Jauwerissa, Surabaya, Indonesia E-mail:[email protected] Ariawan Adiputra, Bali, Indonesia E-mail:[email protected] For additional information, please contact FXCM LTD UK at [email protected], [email protected], [email protected], [email protected]

GENERAL TERMS AND CONDITIONS OF PAMM 1601077265 Description: The global investors may participate to invest into a PAMM in small, medium to large size of investments. The percent allocation management module (PAMM) is a technical solution provided to global investors and allowing them to have their accounts managed by a trader appointed by them on the basis of a limited trading power of attorney. PAMM solution allows the trader on one trading platform to manage simultaneously unlimited quantity of managed accounts. Managed accounts can be funded in different currencies and deposited with different institutions. Depending on the size of the deposit each managed account has its own ratio in PAMM. Total sum of all ratios under one PAMM account is always equal to 100%. Trader’s activity results (trades, profit & loss) are allocated between managed accounts according to ratio. PAMM trading has no difference in comparison with self trader platforms, all 3 types are available. There are several functions of PAMM, a possibility to add and/or remove funds and accounts without interrupting trading activity; ability to manage through one trading platform unlimited quantity of multi currency accounts; choice of base currency for the trader’s platform; immediate trade allocation between managed accounts; performance fee calculation functionality; ability to block trading facilities for particular managed accounts; interactive functionality to accept/decline new managed accounts. Lets assume that there are 3 managed accounts under trader’s management: USD account with deposit of $ 100.000 and ratio 9,3%; EUR account with deposit of ? 400.000 and ratio 49,5%; GBP account with deposit of £ 300.000 and ratio 41,2%; Depending on funded amounts different ratios are applied for managed account (for ratio calculation all amounts are converted in USD equivalent based on market rate). In case if, for example, Trader/Money Manager decides to buy/long 10 mio EURUSD, PAMM allocates the order between managed accounts according to its ratio. Each managed account has its own part of position and corresponding profit & loss. In current example first managed account will get position long 930.000 EUR/USD, second - long 4.950.000 EUR/USD and third – long 4.120.000 EUR/USD. Resulting profit & loss will be automatically calculated for each account depending on market prices. PAMM ID: 1601077265 PAMM Broker: Forex Capital Markets LTD Nothern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom Tel: + 0808 234 8789 UK Residents + 1 212 897 7660 US and International Fax: + 0800 014 8154 UK Residents + 1 212 897 7669 US and International E-mail:[email protected] http://www.fxcm.co.uk PAMM/Money Manager: Johanes L. Sitanggang PAMM Administrator: Forex Capital Markets LTD Nothern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom Tel: + 0808 234 8789 UK Residents + 1 212 897 7660 US and International Fax: + 0800 014 8154 UK Residents + 1 212 897 7669 US and International E-mail:[email protected] http://www.fxcm.com Custodian Banks: USD Deposits Bank: BANK OF AMERICA, N.A. 150 Broadway, New York, NY 10038, United States ABA: 026009593 SWIFT Code: BOFAUS3N Beneficiary: Forex Capital Markets Ltd. Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom Beneficiary Account #: 483024234411 REF: Client’s Name and Account Number (Account Number to be provided on account opening application) EUR Deposits Bank: HSBC BANK PLC 8 Canada Square, London E14 5HQ, United Kingdom Sort Code: 40-05-15 SWIFT Code: MIDLGB22 IBAN: GB70MIDL40051558617374 Beneficiary: Forex Capital Markets Ltd. Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom Beneficiary Account #: 58617374 REF: Client’s Name and Account Number (Account Number to be provided on account opening application) JPY Deposits Bank: BARCLAYS BANK PLC 155 Bishopsgate London EC2M 3XA England SWIFT Code: BARCGB22 IBAN: GB10BARC20675962676433 Sort Code: 206759 Beneficiary: Forex Capital Markets LTD Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom Account #: 62676433 REF: Client’s Name and Account Number (Account Number to be provided on account opening application) GBP Deposits Bank: HSBC BANK PLC 20 Eastcheap (Eastcheap Branch), London EC3M 1ED, United Kingdom Sort Code: 40-02-31 SWIFT Code: MIDLGB22 IBAN: GB11MIDL40023181336045 Beneficiary: Forex Capital Markets Ltd. Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom Beneficiary Account #: 81336045 REF: Client’s Name and Account Number (Account Number to be provided on account opening application) CAD Deposits Bank: HSBC BANK PLC 8 Canada Square, London E14 5HQ, United Kingdom Sort Code: 40-05-15 SWIFT Code: MIDLGB22 IBAN: GB35MIDL40051571060194 Beneficiary: Forex Capital Markets LTD Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom Beneficiary Account #: 71060194 REF: Client’s Name and Account Number (Account Number to be provided on account opening application) CHF Deposits Bank: BANK OF AMERICA N.A. Bank Code: (Clearing nummer) 89113 SWIFT Code: BOFAGB3SSWI IBAN: CH6508726000030783016 Beneficiary: Forex Capital Markets Ltd. Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom Beneficiary Account #: 30783016 REF: Client’s Name and Account Number (Account Number to be provided on account opening application) NZD Deposits Bank: HSBC BANK PLC 8 Canada Square, London E14 5HQ, United Kingdom Sort Code: 40-05-15 SWIFT Code: MIDLGB22 IBAN: GB26MIDL40051568292073 Beneficiary: Forex Capital Markets Ltd. Beneficiary Address: Northern & Shell Building, 10 Lower Thames Street, 8th Floor, London EC3R 6AD, United Kingdom Beneficiary Account #: 68292073 REF: Client’s Name and Account Number (Account Number to be provided on account opening application) Account Opening Link: https://secure4.fxcorporate.com/fxtr/?ib=JOHANES_SITANGGANG Methodology and Strategy: Equilibrium Trading Interior the Time Series Interest Rate Differential Based Exchange Rate Targets and Currency Band Target of Fund: $ 100,000,000 (One Hundred Million United State Dollar) Minimum Investment: $ 1,000 (One Thousand United States Dollar) or the equivalent in EUR, JPY, GBP, CAD, CHF, NZD, subject to change overtime to $ 10,000 Target of Return: 60.00 % to 200.00 % quarterly Maximum Total Risk Assumed: 30.00 % quarterly based high watermark Profit Sharing: 35/65, quarterly based high watermark Profit Drawdown: 100.00 % Reinvestment: Allowed Principal Drawdown: 30 days prior written notice

CME Group Inc. (CME), owner of the world’s biggest futures exchange, plans a derivatives market in London by the middle of 2013, setting up in competition with Eurex and Liffe, the largest venues. CME will start with currency futures for all of the G-7 nations, Phupinder Gill, the company’s chief executive officer said in an interview today. The new exchange, to be called CME Europe, will be led by Robert Ray as chief executive officer. CME Globex will be the electronic trading system for the new London exchange and CME Clearing Europe will process the transactions. Chicago-based CME plans to file with the U.K. securities regulator this week as the first step in the process. Ten years after going public, CME Group has become the most valuable exchange operator in the world, capitalizing on the higher profitability of derivatives while the value of equity trading has declined. The company controls 98 percent of the U.S. futures market and gets more than 20 percent of its business outside U.S. trading hours. It opened a London-based clearinghouse, CME Clearing Europe, last year. “CME is looking to expand globally at a time when the over-the-counter derivatives markets are seeing considerable reform” via new U.S. and European regulations, Richard Perrott, exchange analyst at Berenberg Bank, said today. “Expanding into Europe ahead of these changes makes sense given that close to half of global OTC activity occurs in London.” The new exchange represents competition for Liffe and Eurex, whose owners, NYSE Euronext (NYX) and Deutsche Boerse AG (DB1), had their plan to merge blocked by European antitrust authorities in February. Merger Delay CME has been working on the project for about two years. It was delayed while NYSE Euronext and Deutsche Boerse held merger talks, according to people familiar with the situation who also revealed plans for the new exchange. Regulators scrutinizing the NYSE-Deutsche Boerse deal were focused on whether sufficient competition in derivatives existed in Europe and whether CME might become “a significant player” there. CME was also sidetracked by the bidding war for the London Metal Exchange because acquiring the venue would have given it a European exchange to build on, the people said. As CME was unsuccessful in its LME bid, it decided to forge ahead with the project, the people said. Regulatory Environment “It’s not the regulatory environment for ourselves, but the regulatory environment for our clients,” Gill said today in an interview. “There are particular clients that are comfortable doing business in one jurisdiction,” he added. Eurex is Europe’s largest derivatives exchange and London- based Liffe is second. Intercontinental Exchange Inc., the second-largest U.S. futures market, owns ICE Futures Europe exchange in London. Trading at ICE Futures Europe exchange set a second-quarter record. “We have the deepest liquidity pool with about $140 billion traded a day in notional FX,” Gill said. “And we have a potential client base that don’t trade it for various reasons. We are doing it to meet their needs and we are wanted to have an initial focus.” The exchange expects it to take about six months to gain approval from the U.K.’s Financial Services Authority, he said. During the year it spent fighting for its deal, NYSE argued that its greatest competitor in derivatives is CME, not Deutsche Boerse. It cited an 89 percent membership overlap between CME and Liffe and rivalry in trading Euribor and Eurodollar futures. CME last year offered Euribor futures and options on its electronic trading platform, pitting itself directly against Liffe, which dominates the market for co-called short-term interest rate products. “Would we invest in a new exchange based in Europe?” Andrew Lamb, chief executive officer of CME Clearing Europe, said in a January interview. “Yes, but based on tangible client demand.”

Canadian derivatives investors will be allowed to process trades through new global clearinghouses that are being created to curb the risk of another financial squeeze, the country’s central bank said. The Bank of Canada said improvements in the new trading systems are sufficient to protect financial markets, according to a statement from Ottawa today. Canada has also developed a domestic clearinghouse. A global overhaul of rules governing derivatives contracts mandates the use of central counterparties by derivatives traders. Regulators have sought tougher rules for over-the- counter derivatives since the collapse in 2008 of Lehman Brothers Holdings Inc. and the rescue of American International Group Inc. (AIG), two of the largest traders of credit-default swaps. “Canadian authorities are committed to clearing standardized over-the-counter derivative contracts, subject to appropriate exemptions, through central counterparties, CCPs,” the Bank of Canada said. “Canadian authorities judge that global CCPs will provide a safe, robust and resilient environment for clearing OTC derivatives.”

October 1, 2012

The primary market mover continuously under regulatory review.

BLOOMBERG JULY 7., 2012: OTC DERIVATIVE MARKET Banks may have to meet minimum collateral rules for over-the-counter derivatives trades that aren’t centrally cleared as part of a push by global regulators to make the market safer. The Basel Committee on Banking Supervision yesterday published a draft of the standards, which it said would prevent companies from exploiting rule differences between nations. The paper sets out a partial list of assets that can count as collateral, including gold and some equities. “International consistency with regard to margin requirements and their implementation is crucial,” the Basel group said in an e-mailed statement. The measures, which are being published for public comment, would apply to trades involving financial-services companies and large businesses in other industries that trade these securities. European Union and U.S. regulators are struggling to align rules for the $648 trillion market for OTC derivatives, which became a target for tougher oversight after the 2008 collapse of Lehman Brothers Holdings Inc. The Basel committee has already issued rules that would more than triple the capital banks must hold to protect against losses. The draft document’s approach to margin standards “would lower the risk of financial entities, promote clearing and help avoid regulatory arbitrage,” Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission, said in a separate statement yesterday. Crippling Markets Banks warn that inconsistencies in rule-making and overlapping requirements may increase costs and give foreign competitors an advantage. Lenders also say that making collateral rules too tough risks crippling markets by forcing traders to set aside the bulk of their high-quality assets. Under today’s proposal, regulators would allow companies to use a range of instruments as collateral, including cash, government debt, “high-quality corporate and covered bonds,” gold and equities listed on “major” stock exchanges. Extending the list of eligible collateral beyond “the most-liquid, highest-quality assets” reduces the risk of the rules damaging markets, according to the draft. The Basel committee will carry out a study on the plan’s impact. The proposal gives a standard list of losses imposed on investors that should be applied to these securities, while still leaving traders scope to use internal models instead. The International Swaps and Derivatives Association estimates that $3.6 trillion of collateral was in circulation in the uncleared OTC derivatives market at the end of 2011, an increase of 24 percent from the previous year. The rise was attributed to developments including downgrades of banks by credit-ratings companies, the euro-area debt crisis and a decline in interest rates. Margin Rules The Basel committee, which drafted the paper in collaboration with the International Organization of Securities Commissions, will seek comment until Sept. 28. Basel rules have no legal force and must be implemented by nations before they can take effect. According to the proposal, both parties to a trade should post so-called initial and variation margins. Initial margin is collateral posted at the beginning of a trade. Variation margin may be exchanged daily to offset risk from incremental price movements. The Basel group is weighing possible exemptions to the rule for smaller transactions, though its members are split over how such a threshold should be “designed and calibrated,” according to the draft. ‘Broad Consensus’ The Group of 20 nations called in 2009 for trades in standard types of OTC derivatives to take place through clearinghouses as part of an effort to make the market simpler and more robust. The G-20 then agreed in 2011 to set margin requirements for transactions that take place away from central clearing to boost the resilience of the financial system. Today’s plans would also force firms to ring-fence and not re-use collateral so that it wouldn’t be lost to the company that posts it if a trader goes bankrupt. There is a “broad consensus” among regulators that “the re-use of initial margin should be prohibited,” the committee said. Still, the U.S. Securities and Exchange Commission believes it should be allowed “in very limited circumstances.” “The dealers are just going to squeal if that right gets taken away from them,” Christian A. Johnson, a University of Utah law professor, said yesterday in a telephone interview. “It’ll put tremendous pressure on dealers. It just exponentially raises the amount of collateral they’ll have to have.” Foreign Exchange The proposal on margins covers non-cleared credit, interest rate, commodity and foreign-exchange derivatives. In the U.S., the Treasury Department proposed an exemption for foreign- exchange swaps and forwards from most of the Dodd-Frank Act’s clearing and trading rules. The Treasury said there was less counterparty and settlement risk in foreign-exchange contracts than other types of derivatives. “It is unclear whether these characteristics fully offset the need for margin requirements,” the Basel committee said in its report. The committee is seeking comment on whether to allow an exemption for foreign-exchange contracts, such as those with durations of less than a month or a year. The Basel committee, which is headquartered at the Bank for International Settlements, brings together banking regulators from 27 nations including the U.S., U.K. and China. Madrid-based IOSCO brings together national market regulators from more than 100 countries to coordinate rules and share information.

NEW ZEALAND CURRENCY BAND OCTOBER 6, 2012: JOHANES L. SITANGGANG Much turbulence experienced by the New Zealand currency band, the second the highest interest rate but the smallest size of economy amongst the major currencies. However, despite of excessive volatility was experienced, the New Zealand currency band continues to perform consistently although most of the measured stop losses were broken (NZD/JPY and GBP/NZD) in term of spikes and resumed quickly to the equilibrium state. The New Zealand currency band is moving from disequilibrium to disequilibrium trading zones. The NZD-pegged derivatives continue to move by following the equilibrium state and leaving the Dodd Franc Act behind for Washington DC’s policy makers. The NZD-negative pairs (EUR/NZD and GBP/NZD) will continue to move to upward direction to visit their estimated upper currency bands (1.6500 and 2.0500). The NZD-positive pairs, NZD/CHF has broken its central currency band (0.7600) and will continue to move to downward direction down to the level of 0.7100. Both NZD/USD and NZD/JPY are moving from their near upper currency bands to central currency bands and will continue to their lower currency bands and they represent the most feasible to target but at very high swab costs (overnight rollover fees). Although EUR/NZD and GBP/NZD remains feasible, their swab costs are larger than NZD/USD and NZD/JPY. However, NZD/USD and NZD/JPY will remains at excessive volatility in the market, thus stop loss shall be placed larger than measurable rates to anticipate possible spikes. The current performance of New Zealand currency band has confirmed the continuing capital outflow inline to global equilibrium. The band is moving forward and meeting the central bankers and largest market players’ expectations.

AUSTRALIAN CURRENCY BAND OCTOBER 6, 2012: JOHANES L. SITANGGANG Australian currency band are moving forward from their equilibrium to disequilibrium trading zones and represents the most consistent and strongest performance in the market. The AUD-positive pairs consistently to move to downward direction and by opposite the AUD-negative pairs consistently to move to upward direction – by ignoring the newly enforced Dodd Franc Act in Washington, DC for policy makers. Australian-pegged derivatives continue to spur while the major pair to move behind the derivatives. AUD/CAD already broken the previous lower currency band (1.000) together with AUD/NZD (1.2500) and will continue to move to downward direction. AUD/CHF will also break the previous lower currency band (0.9400). Both the negative pairs, EUR/AUD and GBP/AUD already near their previous upper currency bands (1.2800 and 1.5900) and will continue to move to upward direction. Following the RBA rate cutting on October 2, 2012 as forecasted, the both AUD/USD and AUD/JPY moved to downward direction to follow other AUD-positive pairs and both presently defended at their central currency bands (1.0100 and 79.50). These pairs however will continue to move to downward direction by breaking their central currency bands down to their lower currency bands (previously 0.9650 and 75.50) and leaving these two pairs remains attractive to short to target the remainder disequilibrium trading zone but at very high swab costs (overnight rollover fee). How high the EUR/AUD and GBP/AUD will move to upward direction and how low AUD/CAD, AUD/NZD, AUD/CHF as well as AUD/USD and AUD/JPY could be measured when the lowest ATWR for AUD-positive pairs equals to the measured the highest ATWR for AUD-negative pairs, and represent their equilibrium exchange rate (EERs) as well as the turning points and market entry decision making tools to long AUD-positive pairs and at the same time to short AUD-negative pairs. The current performance of Australian currency band is indicating for RBA not to cut the rate further so long USD and JPY-based fund managers continue to liquidate their holding positions from AUD currency and AUD-denominated interest bearing securities to avoid possible excessive capital outflow that may impact the Australian economic dynamic stochastic general equilibrium. RBA’s minute of meeting stated that “Interest rates for borrowers have for some months been a little below their medium-term averages. There are tentative signs of this starting to have some of the expected effects, though the impact of monetary policy changes takes some time to work through the economy. However, credit growth has softened of late and the exchange rate has remained higher than might have been expected, given the observed decline in export prices and the weaker global outlook”. It is appropriate for RBA to hold the rate and to look further on the performance of AUD/USD and AUD/JPY. RBA however may need to cut the interest rate for another 0.25 % during the next meeting during the time AUD-positive pairs to move to upward direction and the AUD-negative pairs to move to downward direction to slower the AUD appreciation by the major currencies to maintain the Australian economic equilibrium internal rate of return and keeping the capital inflow at slower mobility to keep inflationary pressure remains at band. So far, Australian currency band is moving forward inline to global equilibrium expectation by allowing the capital inflow and outflow to move in harmony and meeting the central bankers and largest market players’ expectation.

AUSTRALIAN CURRENCY BAND

correction, not market intervention but market sterilization. correction, not ECB and GBP's efforts but ECB and BOE's efforts.

CAPITAL OUTFLOW WILL RESUME TO WEAKEN NEW ZEALAND DOLLAR IN THE CAPITAL MARKET October 5: By Johanes L. Sitanggang NZD-currency and NZD-denominated interest bearing securities are the second target for investment amongst the major currencies by the carry- and the macro-traders to look for profits from the NZD appreciation plus the yields. After printing about 1000 PIPs during the 3rd quarter of 2012, the CHF-carry traders started to liquidate their investment from NZD-currency and NZD-interest bearing securities for profit. Similarly, after printing about 750 PIPs during the same period, JPY-carry traders started to liquidate their investment from the same currency. They are followed by the macro-traders. Global fund managers however are in difficult time to shift their assets from NZD currency and NZD-denominated interest bearing securities. This result the slower liquidation activity and consequently to cause the weakening of NZD is slower than expected in the capital market in favor of RBNZ. Although significant investment made by the NZD-based global fund managers into EUR and GBP currencies and their denominated interest bearing securities, the outflow remains smaller than inflow and on hold quantitatively. If this condition to be prolonged, NZD will remains strong until CHF and JPY carry traders and theUSD macro-traders undertake large liquidation from New Zealand and to shift their funds into their home currencies. In the past, RBNZ allowed their currency to be over-valued in the market for almost 20 % from its fundamental price (equilibrium exchange rate) and market sterilization to be undertaken by RBNZ only after advised by the IMF for RBNZ to commit for maintaining the global equilibrium for global price stability. In today's economic and financial crisis, RBNZ is expected not to repeat the same. The prolonged NZD to be strengthened in the capital market will increase the inflationary pressure and destabilize the New Zealand's dynamic stochastic general equilibrium. In medium to long-term this will jeopardize the New Zeland economy and may put RBNZ at a very costly market sterilization cost to equalize the economic input and output potentials. Accordingly, RBNZ and the dealers shall undertake soft-market intervention at very lowest cost of operation and to be followed by largest market participants. This effort will resume the NZD to be weakened in the capital market and to maintain the NZD currency band at pre-determined economic exchanger rate target zone and to harmonize the capital inflow and outflow interior their currency band for maintaining global equilibrium. This effort should be undertaken shortly which will be supportive to the effort undertaken by RBA for their rate cutting and further to support the ECB and GBP's efforts.

OCTOBER 4: A PLAN FOR PAMM ESTABLISHMENT WITH CITIBANK N.A A negotiation is underway with CITIBANK N.A for establishing a PAMM in early 2013 for global commercialization of the new model and strategy of equilibrium trading strategy. CITIBANK NA will be acting as the PAMM Broker as well as PAMM Administrator. For that purpose, CITIBANK N.A is monitoring the performance of the PAMM 1601077265 which will be useful reference for improvement on the terms and conditions of the PAMM. Tentatively, the fund at inception will be made at $ 1,000,000 to commence the commercial operation. A minimum investment per investor not lesser than $ 100,000 or the equivalent in other currencies. The PAMM is proposed to be set at lower reward to risk ratio expectation when compared to PAMM 1601077265. Target of fund will be established after detailed evaluation of the targetd market segments. The PAMM will be negotiated to be marketed jointly by the established team together with Citibank's global network in 160 countries. A familiarization of the CITIBANK's software, CitiFX Pro Trader, powered by Saxo Bank, is underway and setting to January 2013 at which month the PAMM to be commenced for commercial operation. Partnership with largest banks, such as CITIBANK is one of the most appropriate method for global commercialization of the methodology and strategy to reach the global investment community by empowering the Citibank's global networks. Johanes L. Sitanggang

EQUILIBRIUM TRADING STRATEGY IN PRACTICE Equilibrium trading strategy (ETS) is to long the currency pairs from their measured equilibrium exchange rate (EERs) to target their measured equilibrium interest rate (EIRs). Or, the opposite direction from their measured EIRs to their measured EERs. The EERs also called "disequilibrium" and EIRs also called "equilibrium". The measured volatility between the EERs and EIRs is called "exchange rate target zone". EERs also known as exchange rate at fundamental and EIRs also known as exchange rate at interest rate. EIRs also called as "clear rate" or "clearing rate" by market participants. Many models and equations have been introduced for the measurement of EERs and EIRs. Most of the models fail due to the lack of the baseline for the measurement. The introduced currency band theory provides an improvement for the measurement of EERs and EIRs but remains at very high tolerance due to the currency pairs are dynamics. Applying the models and equations introduced on interest rate differential currency band is too complicated and may not appropriate for less educated economists. And, further the central bank's apply and practice different models of currency bands. A new model of "time series interest rate differential based exchange rate targets and currency band" introduced and tested. This model provide more accurate data for the measuremet of EERs and EIRs. The model also provide justification and rationalization for the measurement of EERs or EIRs for selected currency pairs are inter-related and inter-dependant to other. Accordingly, the currency band to be grouped into AUD-, NZD-, EUR-, GBP-, USD-, JPY-, CHF- and CAD-currency bands. These bands are inter-related and inter-dependant to each other by their currency pairs. For example, the relationship between AUD-, USD- and GBP-currency bands is represented by the presence of AUD/USD and GBP/USD in USD-currency band, and the presence of GBP/AUD in both AUD and GBP currency bands. Since currency bands are inter-related and inter-dependant to each other, then their performance could be monitored continuously by using "global currency band". Thus, the new model is comprising (1) global currency band - global equilibrium, (2) AUD currency band, (3) NZD currency band, (4) EUR currency band, (5) GBP currency band, (6) USD currency band, (7) JPY currency band, (8) CHF currency band, and (9) CAD currency band. All currency pairs (inter-related and inter-dependant) move in harmony and disharmony interior their each currency band and identified by using Brownian motion process. These currency bands provide real time information which currency/currency pairs are being manipulated, under priced, over priced, under market sterilization, under market intervention, and so on. As well as to determine to whether the currency pairs of targeted currency bands are being moved from "disequilibrium to equilibrium" or the opposite direction from "equilibrium to disequilibrium". These currency bands further to indicate and to confirm the capital inflow and outflow as the result of investment and liquidation activities by the market participants. The equations developed and tested for the measurement of the EERs and EIRs as the market entry and exit rates decision making tools. Both EERs and EIRs are subject to be maintained by central banks by applying and practicing market sterilization together with their dealers. In the case they are under attack and not defendable (out of band), then central bank may undertake market intervention individually, unilaterally or in coordinated effort by communicating to each other, the inter-central bank's communications. Trading Practice: Trading the targeted currency pairs (long/short) from their measured EERs to target their measured EIRs is at overnight rollover fee risk free, subject to market interest rate. This is similar to carry trading practice and such trading position become commendable to hold for two source of profits, the appreciation of the purchased currency plus their interest rate differential. The time required by a currency pair to move from EERs to EIRs could be 30 days to 90 days or more. Thus, when the trading is entered from EERs to EIRs then the positions could be hold without the risk for overnight rollover fee (swab). When the trade is being undertaken from EERs to EIRs, one of the indicator in account will be the "equity" always larger then "balance". Trading the targeted currency pairs (long/short) from their measured EIRs to target their measured EERs is subject to overnight rollover fee (swab), and subject to market interest rate. And, the time required by the currency pair to move from EIRs to EERs could be 30 days to 90 days or more. Thus, holding the trading position is subject to continuously to be charged for overnight rollover fee (swab). And, therefore, one of the appropriate practice is to enter and exit the market in multiple times or similar to technical trading approach, but however, consistent direction of trading. When trade is being undertaken from EIRs to EERs, one of the indicator in account will be mixed performance of equity and balance. Stop loss generally to be placed below or above the EERs and EIRs and represent the strongest levels as the EERs and EIRs are subject to central bank's market sterilization to maintain the currency pairs to move within their established and measured exchange rate target zones. Overtime, the stop loss to be adjusted for break-even and to protect floating profit to allow for compounding. The two accounts that displayed in this www.myfxbook.com are managed by using this new model and strategy. Commercial cooperation is open for discussion directly with the principal researcher and developer, Johanes L. Sitanggang

Statement by Glenn Stevens, Governor: Monetary Policy Decision At its meeting today, the Board decided to lower the cash rate by 25 basis points to 3.25 per cent, effective 3 October 2012. The outlook for growth in the world economy has softened over recent months, with estimates for global GDP being edged down, and risks to the outlook still seen to be on the downside. Economic activity in Europe is contracting, while growth in the United States remains modest. Growth in China has also slowed, and uncertainty about near-term prospects is greater than it was some months ago. Around Asia generally, growth is being dampened by the more moderate Chinese expansion and the weakness in Europe. Key commodity prices for Australia remain significantly lower than earlier in the year, even though some have regained some ground in recent weeks. The terms of trade have declined by over 10 per cent since the peak last year and will probably decline further, though they are likely to remain historically high. Financial markets have responded positively over the past few months to signs of progress in addressing Europe's financial problems, but expectations for further progress remain high. Low appetite for risk has seen long-term interest rates faced by highly rated sovereigns, including Australia, remain at exceptionally low levels. Nonetheless, capital markets remain open to corporations and well-rated banks, and Australian banks have had no difficulty accessing funding, including on an unsecured basis. Share markets have generally risen over recent months. In Australia, most indicators available for this meeting suggest that growth has been running close to trend, led by very large increases in capital spending in the resources sector. Consumption growth was quite firm in the first half of 2012, though some of that strength was temporary. Investment in dwellings has remained subdued, though there have been some tentative signs of improvement, while non-residential building investment has also remained weak. Looking ahead, the peak in resource investment is likely to occur next year, and may be at a lower level than earlier expected. As this peak approaches it will be important that the forecast strengthening in some other components of demand starts to occur. Labour market data have shown moderate employment growth and the rate of unemployment has thus far remained low. The Bank's assessment, though, is that the labour market has generally softened somewhat in recent months. Inflation has been low, with underlying measures near 2 per cent over the year to June, and headline CPI inflation lower than that. The introduction of the carbon price is affecting consumer prices in the current quarter, and this will continue over the next couple of quarters. Moderate labour market conditions should work to contain pressure on labour costs in sectors other than those directly affected by the current strength in resources. This and some continuing improvement in productivity performance will be needed to keep inflation low as the effects of the earlier exchange rate appreciation wane. The Bank's assessment remains, at this point, that inflation will be consistent with the target over the next one to two years. Interest rates for borrowers have for some months been a little below their medium-term averages. There are tentative signs of this starting to have some of the expected effects, though the impact of monetary policy changes takes some time to work through the economy. However, credit growth has softened of late and the exchange rate has remained higher than might have been expected, given the observed decline in export prices and the weaker global outlook. At today's meeting, the Board judged that, on the back of international developments, the growth outlook for next year looked a little weaker, while inflation was expected to be consistent with the target. The Board therefore decided that it was appropriate for the stance of monetary policy to be a little more accommodative.