April 10 2014

elb2MCX bids are in for FTIL’s stake, China news on RMB futures (Taiwan) and possible HK-Mainland linkages while DFM denies being in merger talks with ADX. Alternext Amsterdam to be euthanised while CME outage shows how weak the legacy floor is. Second small outage causes in Bombay bourse while Unicredit’s Jean-Pierre Mustier fires a shot across the bows of CCP…

A busy day and an early EI today as I have a hectic meeting schedule…happy scrolling!

Meanwhile, the latest five posts on Premium are:

The Dark Pool Kiss of Death

Homer Simpson & The Supermodel Buffet – A Guide To Clearing In The New Era

The Ring Cycle

FTIL MCX Round-Up

Buying A Stake In MCX – A Guide For The Perplexed

(To join the Exchange Invest Inner Circle and glean more detail than we can fit into this free daily Exchange Invest then please Subscribe Here, it’s only $120 per user/annum – it also helps keeps the wheels turning for this free daily newsletter!).

Public Markets

MCX Decides Not To Issue Preferential Shares
Sunil B.S. – Livemint

The board of MCX on Wednesday decided not to go ahead with a preferential allotment of shares, a move that had aroused the ire of its parent FTIL, which is in the process of cutting its stake in MCX.

PLY: A sensible move by MCX at this stage, forcibly diluting FTIL would only taise a huge amount of legal uncertainty on an already tricky situation.

FTIL Receives Non-Binding Bids For Its Stake
The Economic Times

FTIL is learnt to have received non-binding bids for its stake in MCX from around a dozen domestic and international companies like BSE, Kotak, Warburg Pincus, Deutsche Borse, CME and the like.

PLY: Max 5% can be bought by the foreign bourses and 24% is for sale. Agreements may be tricky to reach by month’s end.

China Plans To Connect Shanghai And HK Bourses, Li Says
Kana Nishizawa – Bloomberg

China plans to connect the stock exchanges of Hong Kong and Shanghai as part of efforts to expand the nation’s markets, Premier Li Keqiang said. Stocks with a primary listing in Shanghai are worth $1.94 trillion, compared with $3.56 trillion for Hong Kong, data compiled by Bloomberg show.

HK Finance Minister Says Cross-Border Stock Investment Scheme “Would Take Months”
Reuters

Hong Kong’s finance minister said on Thursday it would take months to implement a cross-border stock investment scheme that could allow investors to buy mainland-listed stocks via the Hong Kong stock exchange and vice versa for Chinese bourses.

John Tsang was speaking after Chinese Premier Li Keqiang said at an investment forum on the southern island of Hainan that Beijing would promote a new round of opening up to the overseas market, which would include a Hong Kong-Shanghai stock investment scheme.

DFM Company Disclosure On Reuters Report About Potential Merger Between DFM And ADX
MondoVisione

With reference to the above mentioned subject, we would like to inform you that DFM is not involved in any of the discussions that had been taking place by the representatives of the governments of Dubai and Abu Dhabi or it is party to any negotiations.

PLY: Interesting denial…

Euronext To Wind Down Alternext Amsterdam
NYSE Euronext

Euronext announced that, following a strategic review, it will wind down Alternext Amsterdam by the end of the year, or as soon as possible thereafter. Since its creation in 2006 four companies have listed on Alternext Amsterdam and more than fifty have listed on Euronext Amsterdam. Market participants in Amsterdam have demonstrated a clear preference for the regulated Euronext market.

CME Trading Outage Exposes Weakened Trading Floor
Tom Polansek – Reuters

Open-outcry traders sprang into action during an electronic trading halt in CME agricultural markets on Tuesday, but a better solution to the outage would have been to close the pits down too, traders and investors said a day later. The outage confirmed that open-outcry traders can no longer shoulder an unexpected flood of orders following a years-long exodus from the pits, traders and brokers said on Wednesday.

PLY: So it is too small to be the main market and can’t function as a back-up resource…it is truly time to say farewell to the floor across the CME Group.

UniCredit’s Mustier ‘Frightened’ By CCP Capital Levels (subscription)
Lukas Becker & Cecile Sourbes – Risk

UniCredit’s head of corporate and investment banking is “frightened” by the low capital levels at CCPs such as Eurex and LCH.Clearnet and has suggested that users should either provide unlimited contingent funding for CCPs or that clearing should not be run for profit at all.

PLY: Capital is a big issue. At the same time CCPs controlled by bankers won’t help. Thirdly the first mega-danger to address in the system is the over-leverage of banks…which would, in itself help alleviate any pressure on CCPs. There is a big debate here, resolving it with docile entities controlled by the sell side are not a solution.

Algo Tagging: Where’s The Logic In That?
banking technology

When the requirement brought about by the German HFT act to tag algorithms comes into force this month, market participants may well feel hamstrung by the complexity of the regime…some might wonder whether this requirement goes one step too far.

CFTC’s Divisions Of Market Oversight & Swap Dealer & Intermediary Oversight Provide Conditional No-Action Relief With Respect To Swaps Trading On Multilateral Trading Facilities Overseen By Authorities Designated By European Union Member States
MondoVisione

CFTC Divisions of Market Oversight (DMO) and Swap Dealer and Intermediary Oversight (DSIO) today announced the joint issuance of CFTC No-Action Letter No. 14-46 (No-Action Letter 14-46), replacing CFTC No-Action Letter No. 14-16 (No-Action Letter 14-16), which DMO and DSIO issued on February 12, 2014.

U.S. Lawmaker Wades Into Aluminum Warehousing Controversy
Douwe Miedema – Reuters

A U.S. congressman has urged the U.S. commodity regulator to take a tougher stance on LME as it struggles to resolve a years-long controversy over inflated prices and distorted supplies of aluminum.

European Policymakers Seek To Reshape Bundled Debt Market
Huw Jones – Reuters

European policymakers are drawing up plans to revive the market for repackaged debt in a bid to lure investors back to a sector that was at the heart of the worst financial crisis in a generation.

Private Markets

IEX Gains Momentum As Upstart Stock Market Tops Some Incumbents
Joseph Ciolli – Bloomberg

IEX, handled 23.9 million shares yesterday, up 27 percent from the daily average in March. While IEX accounts for less than 1 percent of total U.S. volume, the five-month-old platform has more trading than four of the 13 American exchanges, including IntercontinentalExchange Group Inc.’s NYSE MKT.

Swiss Exchange Owner SIX To Reorganise Clearing Operations (subscription)
Philip Stafford – Financial Times

A long-term plan by SIX Group to remodel its clearing business is set to come into effect.

BSE Trading System Snag Delays Orders For Second Day
Santanu Chakraborty – Businessweek

Indian stock trading on BSE’s exchange was delayed by a software glitch for the second time this week. Order execution was affected for about 5 minutes after trading began at 9:15 a.m. in Mumbai. Trades were delayed by 4 minutes on April 7 when the BSE started the new platform to increase speed.

Bitcoin Exchange To Launch Anonymous Trading Venue (subscription)
Anna Irrera – Financial News

New London-based bitcoin exchange Coinfloor will launch anonymous OTC trading as it seeks to attract institutional investors to the virtual currency.

Special Section: FTI, NSEL, India at the Crossroads

PLY: The MCX bids (discussed above) are the only topic on the agenda today with FTIL up 2% and MCX flat.

Technology

JSE Set To Launch High Tech Colocation Centre
Automated Trader

JSE’s Colocation centre, which will allow JSE clients to place their trading equipment in the JSE data centre and enable faster access to all JSE markets, is set to launch in May this year. Colocation will provide clients with a network latency of approximately 100 microseconds compared to the existing 2400 microseconds it takes for clients who are in Sandton (business district where the JSE is situated).

ICAP Deploys Perseus LiquidPath For LATAM Connectivity
Automated Trader

Perseus Telecom, the provider of connectivity, High Precision Time and Market-to-Market networks, has announced that Icap has become a customer accessing the LiquidPath network in Brazil and Latin America.

Products

Eurex And Taifex To Launch Cross-Listed CNH Derivatives (subscription)
Xiao Wang – Risk

Taiwan Futures Exchange (Taifex) and Frankfurt-based Eurex are looking to expand their existing co-operation agreements by launching exchange-traded offshore renminbi futures, according to Shih Chuan Tsai, Taipei-based senior EVP at Taifex, the third exchange to do so after HKEx and CME.

ICE Proposes Extending Gasoil Contract Beyond January 2015
Reuters

ICE on Wednesday proposed extending the gasoil futures contract beyond its planned termination date of January 2015 but changing the specification to a lower sulphur content in February of 10 parts per million of sulphur from the current 1000 ppm.

Indexes

UBS Hands Commodity Index To Bloomberg (subscription)
Financial Times

Move comes ahead of July deadline to tighten benchmark oversight.

MCX-SX Announces Launch Of Its Bank Index, ‘SXBANK’
MondoVisione

SXBANK, designed to measure the performance of the Indian banking sector, comprises of 10 most liquid and large capitalized banking stocks, as classified by ICB – the leading global Industry Classification System from FTSE. This is the first sectoral index, developed for the Indian banking sector, that has a cap on the weight of the individual stocks, thereby making the index more evenly distributed without skewness.

Financial Calendar

This month

Interactive Brokers Q1 Financial Results
SGX Q3 results for FY2014
NASDAQ OMX’s Q1 2014 Financial Results
Record date HKEx $1.72 final dividend
Launch of CME Europe
Sibex – Sibiu SE AGM
Thomson Reuters Q1 2014 earnings

New announcement

ITG Q1 2014 financial results on Thursday, May 1, 2014

ITG press release here.

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

Share Notes

ICE General Counsel Johnathan H. Short sold 4,225 shares Monday, April 7th at an average price of $196.46 (bargain $830,043.50). He now owns 13,314 shares. All ICE insider stock transactions are chronicled on this specific page.

Analyst Notes

Citigroup Cut Their Price Objective On CME From $78.00 To $74.00
NASDAQ OMX Downgraded By Bank of America From “Buy” To “Neutral”
CBOE Upgraded By Bank of America From “Neutral” To “Buy”
TMX Upgraded By National Bank Financial From “Underperform” To “Sector Perform” – C$56.00 Price Target
Citigroup Lowered Their Price Target On Charles Schwab From $28.00 To $27.00

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.

Crowdfunding

Indiegogo’s Plans For Global Crowdfunding Domination
CNBC

In 2009, pioneering crowdfunder Indiegogo came very close to closing up. The three co-founders were out of money. They’d been turned down by 90 VCs, and in the words of Slava Rubin, CEO, “There was not a significant amount of evidence that we were doing a good job.”

Translation: Hardly anybody was coming to the site.

Five years later, the company has funded more than 200,000 campaigns and is launching a major global expansion and new website.

PLY: Perseverance is paying off for Indiegogo, good work!

Other stories

ISDA Publishes Research Note Analyzing Impact Of MAT Regulation On Market Fragmentation
MondoVisione

ISDA published a new Research Note at its 29th Annual General Meeting in Munich focusing on the effects of the Made-Available-to-Trade (MAT) regulation and its potential impact on market fragmentation.

ISDA Publishes Research Papers On The Value Of OTC Derivatives
MondoVisione

ISDA published two new research papers at its 29th Annual General Meeting in Munich that highlight the value of the over-the-counter (OTC) derivatives market.

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