April 02 2015


Patent court cases ongoing, although TT may have suffered a setback after years of er, lively, litigation. NASDAQ claims Q1 lead in US IPOs, Gain completes City Index acquisition. HKEx pledges to defend investors buying Chinese stock via ‘through train.’ Resolution creeping forward with NSEL? Perhaps it is just a spirit of Easter optimism on our part.

Speaking of which, it’s time for the Exchange Invest team to enjoy a well-earned day or two of repose, so we won’t publish tomorrow: Good Friday, and Easter Monday. Due to the wonders of globalisation we will also have a one day hiatus in production on April 13th so the Romanian team can enjoy their Orthodox Easter Monday break.

If you’re missing some pith then Subscribe to Exchange Invest Premium and catch up on what you have missed… Or, on a contiguous topic, something to ponder across the long weekend: If you know anybody who has an idea or a startup which could benefit from some mentoring, here’s a thought. As you may know, I co founded a startup group (“Mission ToRun”) in Poland a while back and we run special startup events according to our grassroots methodology for developing growth/jobs in Poland & elsewhere. Our next Mission ToRun Business Clinic is April 18th. All startups/ideas are welcome. If you can’t make it to Torun, startups can still sign up via Google Hangouts to benefit from 15 minute sessions with subject experts/mentors/investors and entrepreneurs. Mission ToRun Business Clinic Sign-up is here.

In other publications, my latest RT Op-Edge column discussed: All Fools Day – But who are the eurozone April fools? while right back in the Exchange Invest realm, I have been pondering the latest market infrastructure bubble in my monthly column for Trading Places.

Meanwhile back in the Exchange Invest world, yesterday I added the Premium post Sometimes You Need A Plumber discussing Open Access clearing.

NB I have had some emails from various folk in recent days saying they cannot access EI Premium – this tends to arise most frequently when you have not paid your subscription renewal. If for any reason you have not received a renewal invoice, apologies in advance: please email me and we will send one out asap! We also have a third payment gateway coming in this week although that, alas could involve a higher VAT rate but it may help those bamboozled by Paypal’s reticence to deliver credit card payments easily. Thanks so far to all those who have renewed their Subs and indeed our new subscribers too – you all help keep this daily afloat free of charge as well as benefitting from the extra insights.

Meanwhile, our Premium Briefs keeping you abreast of various industry issues are updated daily when news arises. All topics covered can be found on our dedicated Briefs page via Exchange Invest Premium. The latest include:

NSEL Scandal Brief – Main File
NSEL scandal – FTIL Group – Board and Management Changes Brief – Part 1 and Part 2
FXCM Sales Brief
BGC / GFI: Post Merger Disposals
Rise of Africa – Part 1Part 2Part 3Part 4Part 5
The Bond Platforms Rush – Part 1Part 2
ICE – NYSE Euronext Deal – Part 1Part 2Part 3

Our Premium service is a unique source of industry analysis – insight in a low latency environment if you like. Can you afford not to be a subscriber? $120 per user/year helps keep Exchange Invest daily Free. Subscribe here or reply to this email and I will invoice you forthwith.

Public Markets

Nasdaq Leads U.S. Exchanges For IPOs In 2015

2015 Highlights

Initial Public Offerings*** 27
Upgrades from Over-the-Counter 9
ETF, Structured Products, Reverse Mergers & Other Listings 4
Transfers to Nasdaq from Competing Exchanges 2

*Previously dual-listed, Towers Watson voluntarily single-listed on Nasdaq as of March 13, 2015
**Data source: Nasdaq, FactSet, EDGAR Online
***Includes the following capital raising events as priced between January 1, 2015 and March 31, 2015: IPO, REIT, SPAC, BDC, Foreign Exchange Dual Listing, Best Effort and Spin-offs

PLY: The extent of data being shown to back up the NASDAQ release suggests just how deadly serious this competition has become – no headline mention of money raised, so presumably NYSE raised more? Anyway, a good start to the year for NASDAQ and a great start for the Stockholm SE and the Scandinavian region.

GAIN Capital Completes Acquisition Of City Index

GAIN Capital announced it has completed the acquisition of City Index. Earlier this month Gain Capital received the shareholder approval for the deal. Details of the deal, as reported last November: value $118m (£73.9m), Gain to pay $20m in cash, $60m in convertible bonds and 5.3m-worth of the US group’s shares.

Read our Premium Exchange Deals Brief.

Europe Loses A Stock Market Even As Oslo Bors Plans A Dark Pool
John Detrixhe & Will Hadfield – Bloomberg

As discussed yesterday, Oslo Bors is closing a trading venue that failed to gain traction after European regulatory changes spurred competition.

PLY: An interesting case of how Oslo Bors VPS Holding ASA bought Burgundy and the banks who sold it all then moved their trading to BATS and elsewhere. Hmmm.

Anyway, as I mentioned yesterday the options for Burgundy are vast… Meanwhile their Millennium powered dark pool is nearly ready too. Interesting times in Norway.

ESMA Launches Centralised Data Projects For Mifir And EMIR

ESMA launched two major projects at the request of a number of National Competent Authorities (NCAs) who have delegated the following tasks to ESMA.

PLY: Not sure ESMA can really cope with the workload given their budget straitjacket while this comment intrigues me: “The Trade Repositories Project will provide ESMA and 27 NCAs with immediate access…” if only because last time I looked there were 28 EU members: is one “NA” not competent or is there a cross-border co-operation which clips my mind? (True, maybe in socialist Europe somebody just gave up on markets altogether …qv my latest RT column: All Fools Day – But who are the eurozone April fools?).

HKEx Tells Investors It Will Defend Them In China
Eduard Gismatullin – Bloomberg

HKEx said it will help international investors defend their ownership rights should problems arise amid concerns about Chinese legal protections for shareholders. The bourse amended its clearing rules last month, committing to provide certificates of ownership to investors who bought shares through Hong Kong’s exchange link with Shanghai. HKEx said it would also help investors prove their ownership of mainland stocks.

PLY: Clearly this is advocacy of the “maintaining the chips up” school of operation as if the “chips are down” then clearly HK will have already lost the argument.

Read our Premium briefs: HKEx – SSE – Stock Connect Part 1,Part 2,Part 3

ICE Benchmark Administration Completes Transition To New ISDAFIX Calculation Methodology; Benchmark Renamed ICE Swap Rate
Business Wire

Following its announcement earlier this year, ICE announced that ICE Benchmark Administration (IBA) has completed the transition to a new calculation methodology for ISDAFIX, the global benchmark for interest rate swaps, which has been renamed ICE Swap Rate, effective April 1, 2015.

EI reported on April 30th that IBA was appointed as the new administrator of ISDAFIX. On September 5th Barclays, Bank of America, Citigroup and 10 other banks were accused in a lawsuit of conspiring to manipulate ISDAfix.

ISDA Publishes New Derivatives Principles Calling For Changes To SEFs
Elliott Holley – Banking Technology
ISDA Outlines Path Forward For Centralized Execution Of Swaps

ISDA has published a set of derivatives trading principles, as part of an effort to get regulators around the world to harmonise their efforts at derivatives market standardisation. The principles include a call for greater flexibility on US SEFs.

ISDA’s paper, Path Forward for Centralized Execution of Swaps, discusses concerns about the potential for divergences in different jurisdictions.

FAO: Read our Premium post On Bonds & SEFs and PLY’s monthly column for Trading Places.

Private Markets

KRX Seeks Nod From Europe
Kim Jae-won – Korea Times

Korea Exchange (KRX) is seeking to be officially recognized by the European Commission (EC) as a CCP. European counterparties account for about 8% of the derivatives market in Korea.

Myanmar Opens Online Exchange; Move Set To Benefit Indian Importers
The Hindu Business Line

Myanmar, one of the largest exporters of pulses to India, has opened its first online commodity exchange Multi Commodity Exchange (MICEx).

The exchange, which will be open 23×7,is promoted by Pearl Group and has partnered with SLCM, the wholly-owned subsidiary of Indian company Sohanlal Commodity Management, an accredited preferred warehouse service provider for tur, urad dals and other agro commodities by the exchange.

Earlier this week Myanmar’s Deputy Finance Minister, Maung Thein, announced that the OTC Myanmar Securities Exchange Centre (MSEC) will be replaced with the Yangon SE in October 2015. Yangon SE Joint Venture Co. is being developed in partnership with two Japanese firms, the Daiwa Institute of Research (30.25%) and JPX (18.75%).

Prospects, Challenges Of W’African Stock Exchange
This Day Live

Eromosele Abiodun writes that African financial markets could benefit from further regional integration of stock exchanges despite mounting challenges.

‘Take Up Alternative Financial Instruments’
Kalonde Nyati – Zambia Daily Mail

Bond and Derivatives Exchange (BaDEx) Zambia says the uptake of alternative financial instruments such as derivatives in the country still remain low…

Read our Premium Rise of Africa Brief – Part 5

Sebi Permits OTC Exchange of India To Exit From Stock Markets
The Economic Times

Sebi has allowed OTC Exchange of India (OTCEI) to exit as a bourse from the nation’s securities markets.

FAO: Recently SEBI allowed Jaipur (reported here), Cochin, Bangalore and Ludhiana bourses (reported here) to exit the exchange business.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX up 5%, FTIL flat, things are happening although I hesitate to suggest they are necessarily progressing towards resolution. This week’s Casablanca mention is clearly that readers will be “shocked!” “shocked!” to hear that Jignesh Shah is amongst those mentioned in the NSEL case charge sheet…

Enforcement Directorate Files Charge Sheet In NSEL Scam Case
The Indian Express
Enforcement Directorate Names Jignesh Shah, Joseph Massey In NSEL Case Chargesheet
The Economic Times

The Enforcement Directorate (ED) on Wednesday filed its charge sheet against 68 persons including the directors of NSEL, its key officials and the officials of defaulting companies in the fraud at the commodity spot exchange.

FTIL founder Jignesh Shah, MCX-SX’s Joseph Massey and former NSEL CEO Anjani Sinha are among 68 accused named in the Enforcement Directorate (ED) chargesheet in the NSEL case.

Officials said in the over 20,000-page prosecution complaint, the agency has chronicled how the Rs 5,600 crore (USD 900 mln) payment crisis scam was perpetrated.

Bombay HC Allows Collecting Info On Outstanding From NSEL Investors
Business Standard

The high court on Wednesday ruled the functions of a committee set up to recover money from NSEL defaulters included collection and verification of information on amounts payable by NSEL to its non-defaulting members, as well as amounts payable by non-defaulting members to their clients on account of transactions on NSEL.

Get The Money, Not FTIL
The Financial Express

Whether Jignesh Shah is guilty of abetting the NSEL fraud or innocent, as he claims, is something the courts will decide. While that could take a long time given India’s judicial system, instead of pursuing FTIL it is important to first focus on getting NSEL’s 13,000-odd trading clients back the R5,600 crore (USD 900 mln) they are owed by 25 other trading clients.

PLY: A precise, incisive and powerfully argued, excellent editorial. The blob may have a process against Jignesh Shah but stop the moronic process of destroying Indian corporate structure and get on with just collecting the money to repay those who are owed – then let the court system decide on the guilt of Jignesh Shah or whoever they may feel there is decent evidence to try…but first clear the debts through restitution, auctions and confiscation.


SGX Completes Investigations Into Nov 5 Trading Disruption
Channel NewsAsia

The Singapore Exchange Board Committee of Inquiry (BCOI) has completed investigations into the massive Nov 5, 2014 trading disruption on the SGX.

SGX suffered two major trading disruptions in the last two months of 2014. The first incident, on Nov 5, took place because the exchange’s backup power supply failed to kick in, halting trade in stocks and derivatives for around three hours.

The second, on Dec 3, stemmed from a faulty software update that resulted in a three-and-a-half-hour delay to the start of stock market trading.

PLY: Hopefully the publication will see the light of day, and relatively soon, so we can all better understand what went wrong on November 5th.


Euronext To Offer Wheat Spread Trading To Boost New Contract

Euronext’s No. 3 premium wheat contract, touted as a response to problems caused by a rain-hit harvest last year, launched a month ago will now benefit from an Inter-Commodity Spread (ICS) facility with the older No. 2 contract that is a price benchmark in Europe.

CME said last week it could not confirm if it would launch a EU wheat contract, as it cannot guarantee sufficient deliverable capacity. CME had been planning to launch its EU wheat futures by the end of April (as reported here).

Previous comments on the topic here, here and here.

CFTC Charges Kraft Foods Group, Inc. & Mondelēz Global LLC With Manipulation Of Wheat Futures & Cash Wheat Prices

PLY: I have already used my daily quota of Casablanca quotations.

Euronext To Launch Post-Quota Dairy Commodity Futures

Euronext will launch three dairy commodity futures contracts within two weeks of the March 31st abolition of the EU milk quota.

TMX Announces TMX Security Risk Ratings

TMX announced the introduction of TMX Security Risk Ratings, a new reference data product designed to support Canadian investment firms in conducting client suitability assessments, an Investment Industry Regulatory Organization of Canada (IIROC) requirement.

Bond Traders Find Answer To Broken Market: Switch To Currencies
Lisa Abramowicz – Bloomberg

The evidence is compelling: Average daily trading in global foreign-exchange markets rose to a record at the end of 2014, while turnover in U.S. Treasuries and investment-grade corporate bonds fell, according to survey measures compiled by JPMorgan.

PLY: Is it a case of abandoning bonds because the market is broken or just a case of: bonds are at the top of a massive bubble and yields are compressed while forex is in the midst of a massive currency war? Not convinced the platform argument holds water here although there is clearly a problem with bond trading as the old bank model is broken and has been further harmed by new regulations.

QV our Premium posts: The Bond Bubble and On Bonds & SEFs and our Premium briefs:The Bond Platforms Rush BriefPart 1 and Part 2

Career Paths

Stephan Meier will assume responsibility for Media Relations at SIX as of 1 April 2015.

PLY: Congratulations to Stephan.

WSJ reports that Citadel Securities hired Simon Holmes in Europe, as it looks to build its presence in off-exchange traded markets. Mr. Holmes joined Wednesday from ICAP, where he was COO of ICAP’s electronic IRS trading platform in the U.S., i-Swap. Mr. Holmes assumes the role of COO for Citadel Securities’ fixed-income business, based in London.

Alberta Securities Commission (ASC) announced that the Lieutenant Governor in Council has appointed Kathryn (Kate) Chisholm, Q.C., ICD.D a member of the ASC for a three-year term commencing April 1, 2015.

Financial Calendar

This week

ICE $0.65 Q1 2015 dividend payment

New announcement

MOEX AGM – 28 April 2015

All forthcoming exchange / investment related events are now listed in our Events page.

Analyst Notes

LSE “Hold” Rating Reissued By Numis Securities – GBX 2,300 Target Price

A full table of current analysis can be found on our Analyst Ratings page which is updated daily.

All Analysts, Banks and Brokers are welcome to contribute to this section.


P2P FX Platforms Come Of Age (subscription)
Aliya Ram – Financial Times

P2P fx platforms are looking to eclipse existing retail currency services in the UK during the next decade, according to the sector.

P2P foreign exchange websites take away the middleman from currency conversion by offering customers mid-market or crowdsourced rates and charging a flat commission rate of about 0.5% a transaction. Banks typically charge a margin of 1-5% on mid-market rates, plus a transaction fee.

The idea has already caught on in the UK where the biggest P2P money transfer service, TransferWise, is running a “stop hidden fees” campaign.

PLY: For those with any form of cross border footprint, individual or corporate, TransferWise has been a Godsend compared to the sluggish, thuggish and rubbish services offered by banks previously.

Other stories

Why This Tech Firm May Have To Hit The Reset Button On Its Patent-Suit Strategy
Lynne Marek – Crain’s Chicago Business

To protect its software sales, Trading Technologies International for years has sued companies that infringed on its 500 some patents, but last week that strategy hit a snag.

A federal judge issued an order staying the Chicago financial trading software maker’s crusade against infringers in seven cases while the U.S. Patent and Trademark Office undertakes a broad review of patent claims. The Trading Technologies lawsuits were first filed in 2010 and consolidated the following year in a case before Judge Virginia Kendall in U.S. District Court for Northern Illinois.

PLY: I must admit to having long viewed with a very wary eye the patent wars as they escalated to what seemed more vendor protectionism to competitive advantage than actually delivering a better market and direct competitive improvement from vendors overall.

Happy Easter!

This site is protected by Comment SPAM Wiper.