April 10 2015

elb2Phillyfin reaches compromise with ITG on board. Interesting BATS CEO letter. Jefferies sells Bache, scoops some FXCM assets. Not even Nikkei 20000 can slow HK momentum to be 3rd biggest stock bourse as rude health of ‘through train’ continues although LME is delayed with US FBOT approval, warehouse worries cited.

Lots more snippets, enjoy the scroll and also the end of Passover and a Very Happy Orthodox Easter – on which note, we’re not publishing Monday as some of our number observe the holiday.

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:

India – NSE Sales Brief NEW!
EU CMU Brief
EU FTT Brief Part 1Part 2 
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

FXCM Sells Faros Trading To Jefferies For An Undisclosed Sum
Maria Nikolova – LeapRate

Leucadia owned Jefferies is purchasing Faros Trading, the institutional fx brokerage subsidiary of FXCM Inc. FXCM is selling the business for an undisclosed sum less than two years after its purchase.

Earlier this year Jefferies offered a $300 mln loan to FXCM to continue operations after the CHF crisis.

On April 2nd FXCM paid additional $54 mln owed to Leucadia – FXCM press release here.

QV our Premium FX – CHF Crisis – Brief and FXCM Stakes Sales Brief

PLY: A handy little nugget is sold to Jefferies after they propped up FXCM who have so far responded with asset sales and indeed new management contracts to enhance revenue to the C-suite if they are forced from FXCM office.

Jefferies Exits Commodities Brokerage With Bache Book Sale
Reuters

Jefferies said it will sell most of its Bache unit’s commodities and financial derivatives accounts to Societe Generale, ending the investment bank’s four-year foray into the competitive brokerage business.

Terms of which were not disclosed and it is expected to close by the end of Q2.

You can review the latest Soc Gen deals by checking our Premium Exchange Deals Brief.

Rush Of Buyers Leaves HKEx Ready For China Inflows
Eduard Gismatullin & Rob Urban – Bloomberg

HKEx said its systems have plenty of capacity to handle greater inflows from mainland China, including an impending trading connection with the Shenzhen bourse, even after a week of intense volume.

PLY: A great week for HKEx as the “through train” proves its potential and all systems are go.

HKEx CEO Li Says To Increase Stock Connect Quota
Reuters

HKEx expects it will “substantially increase” quotas for the stock connect program between HKEx CEO Charles Li said on Friday.

The exchange could boost the current quotas, which cap how much mainland investors can buy Hong Kong stocks and vice versa under the trading link, by more than 20 or 30%, Li said at a media briefing in Hong Kong.

Li did not give a precise date for when the quotas would be raised.

Hong Kong Poised To Overtake Japan As World’s No. 3 Stock Market
Yuji Nakamura & Toshiro Hasegawa – Bloomberg

Hong Kong is set to overtake Japan as the world’s third-largest stock market, spurred on by surging Chinese demand for shares in the former British colony.

HKEx CEO Charles Li Live & Direct – Latest Charles Li Direct: New Records For Stock Connect, And New Questions For Southbound Trading
MondoVisione

See also our Premium briefs: HKEx – SSE – Stock Connect Part 1,Part 2,Part 3 and HKEx – SZSE Stock Connect.

CFTC Defers LME’s Application, Cites Warehouse Delays (subscription)
Tatyana Shumsky – Wall Street Journal

LME applied in August 2012 to become a foreign board of trade in the U.S. CFTC, in a letter dated March 24, said it is deferring its review of LME’s application while it continues to monitor the exchange’s progress in reforming its storage network.

PLY: I always worry when I see such delays against Foreign BOT applications that we have slipped back into the days of the Born Chairmanship.

A Letter From BATS CEO Chris Concannon
MondoVisione
BATS Says Some Stocks Shouldn’t Trade On Its Exchanges (subscription)
Bradley Hope – Wall Street Journal

Chris Concannon, newly appointed CEO and President of BATS, said the company was planning to file a new proposal to SEC that would require thinly-traded stocks to trade only at the exchange where they are publicly listed.

That would mean more than 500 stocks would trade only on the exchanges operated by NYSE and Nasdaq out of roughly 8000 US listings.

PLY: Simplicity is good. This is indeed why the US stock market is a dog’s dinner. Alas the canine repast was of course cooked in the SEC kitchen and served by various administrations, none of whom seemed to appreciate that just baking the pie a bit more didn’t help make it more edible.

In a good letter, Chris Concannon endeavours to discuss markets lucidly and credibly. However, the item which has garnered the headlines, the notion of mandated execution on 1 exchange for smaller stocks while attractive to the eye, quickly appears more like a photoshopped Kardashian on closer examination. First up the Stockholm syndrome even of the upstart exchanges like BATS is clearly evident in their supplicancy to the SEC which is after all the unapologetic agent of the crisis. This defeats a new regulatory thrust in so many ways. If I find more time, I will explain further in Premium later.

Analysis: “Its Crazy” Banks Don’t Have Insight Into Their Derivatives Risk
Mark Melin – ValueWalk

PLY: Another delve into the bank’s raison d’etre: hypocrisy. (If you answered ‘lending money” or “financing trade,” or – are you serious? – “serving clients” – go to the back of the class immediately). Actually the question ought to be: “Is it entirely rational that banks conceal all data while regulators seem to edge towards giving the banks dangerous precedents like ill-conceived open access clearing rules?”

The answer is of course a resounding yes if you fancy being a bank non-executive director / highly paid (compliance) advisor, after you give up being a regulator.

Read our Premium posts: Sometimes You Need A Plumber, Open Clearing: A Paradismal Shift By LCH and Homer Simpson & The Supermodel Buffet – aka a Guide to Clearing in the New Era

India – Commexes’ Turnover Dips By 39% In FY’15 Due To CTT
The Economic Times

The turnover of Indian commodity exchanges dropped 39% last fiscal due to higher transaction costs and decline in prices of bullion and metals.

Private Markets

Thailand Allows Foreign Firms To List On SET
Reuters

Thailand’s securities regulator said on Thursday it will allow foreign firms to launch IPOs in the country and list on the Stock Exchange of Thailand (SET), effective immediately.

The change is part of a plan to promote Thailand as a centre of fundraising for companies in neighbouring countries such as Cambodia, Laos, Myanmar and Vietnam as well as in the Chinese southwestern province of Yunnan.

Read our Premium: Greater Mekong Subregion Exchanges Project Brief and ASEAN Exchanges Project Brief.

TWSE To Introduce New Measures Encouraging Stock Trades
Want China Times

Taiwan SE (TWSE) said Wednesday that several new measures devised to spur a higher trading volume are scheduled to kick off in June.

The measure expected to have the biggest impact will be raising maximum daily upward and downward stock price fluctuations from the current 7%, in place for 25 years, to 10%.

Sri Lanka’s Colombo SE Increases Listing Fees
Lanka Business Online

CSE has obtained the necessary approval from SEC with regard to the amendment of section 11 of its listing rules. The directive has been effective from 06 April 2015.

Africa May Leapfrog Traditional Banking
Travis Patron – The Cointelegraph

Leapfrogging is described as a theory of economic development, which skips inferior or obsolete technologies in order to move directly to advanced ones. Take, for example, phone coverage in African countries. Landlines and grids for household use were never fully developed because, by the time Africa came into market view, mobile phones were the new paradigm of telecommunications and hence, the entire infrastructure for household landlines was leapfrogged by cellular technology.

Similarly, Bitcoin technology could leapfrog the banking infrastructure of western economies and go directly to a new financial paradigm and serve the needs of the vast number of the unbanked in these regions. All that would be required on behalf of the citizens is a mobile device with internet connectivity.

PLY: If you are currently imprisoned by a deposit taking financial institution in the west (particularly that third world regressive frontier of banking: Britain) it it is difficult to follow why this headline suggests “may” when “will” is blindingly obvious. Of course the Blockchain will merely accelerate this process too.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX pops up 2.5%, FTIL flat. Twitter sphere glowing with loathing of Jignesh Shah and associates, blob apparently incapable of resolution, plus ca change…

Technology

Euronext Trading Glitch Rolls Into Thursday (subscription)
Luke Jeffs – FOW

Previous comment yesterday.

Products

ASX Launches emsTradepoint-linked New Zealand Gas Futures
ASX

ASX & Transpower’s emsTradepoint announced the launch of ASX New Zealand gas futures.

emsTradepoint’s indices will be used as the reference price for ASX’s new monthly and quarterly gas futures.

REGIS-TR Exceeds 3 Billion Reports
DB1

Number of reports tripled since October 2014. The daily average of reports processed by REGIS-TR since its start is 10.3 million. The total number of clients with signed contracts stands at 900 – onboarding continues.

Osaka Exchange: Introducing A Fee Discount Campaign In Connection With The Introduction Of Weekly Options
MondoVisione

ETFs Listed In Europe Celebrate Their 15th Anniversary On April 11th According To ETFGI
MondoVisione

Career Paths

LME announced the appointment of Andrew Dodsworth as Head of Market Operations. Andrew will lead an expanded Market Operations function, which has been designed to provide a robust, comprehensive and high quality operational service to all of the LME’s customers.

ITG announced that it has reached an agreement with shareholders Philadelphia Financial Management and Voce Capital Management and added a new independent member to its BoD, Jarrett Lilien, former President & CEO of E*TRADE Financial. ITG has further agreed to conduct a search for a second additional independent board member, with input from Philadelphia Financial and Voce Capital.

PLY: A good result for both parties as PhillyFin get representation and input on a further board member. ITG has many good points and its performance in Europe for instance has been impressive in recent years.

Last month the Coalition for ITG Shareholder Value, a group led by Philadelphia Financial Management and Voce Capital Management, sent a letter to the BoD of ITG, responding to the Board’s announcements and the Board’s public disclosure of the Coalition’s director nomination notice.

(The Coalition owns 2,194,545 shares of ITG or approximately 6.4% of the shares outstanding, making it ITG’s third-largest shareholder).

The Coalition’s independent nominees for election to ITG’s Board at the 2015 annual meeting were:

Lon Gorman, who previously served as Vice Chairman of Charles Schwab, a member of the BoD of Nasdaq and Chairman of NYFIX.

R. Jarrett Lilien, who currently serves as a member of the BoD of Wisdomtree Investments and is the former President & COO, and interim CEO, of E*Trade Financial.

James S. Pak, who is currently a consultant to companies in the financial technology sector and is the former MD at Chi-X Global, Tradeweb and Instinet, where he had broad product and business development responsibilities; the former Head of Market Structure Investments at Citigroup Global Markets; and previously a member of the BoD at BATS Trading and Level ATS.

Niklaus Santschi has decided to leave SIX in order to pursue a new professional direction. He was placed in charge of the business area Payment Services in October 2011. Dr Urs Rüegsegger, Group CEO SIX, will lead Payment Services on an interim basis.

PLY: An interesting upheaval within SIX, the payment services beat is not precisely our domain but it appears to be a sudden move given the tone of the press release…

SEC announced that Marc Wyatt will serve as Acting Director of the agency’s Office of Compliance Inspections and Examinations (OCIE). He succeeds Andrew Bowden, who announced that he will be leaving the SEC to rejoin the private sector at the end of April.

MV reports that Martin Andersson is leaving his post as Director General of Finansinspektionen (FI) to become a partner with the consultancy firm Oliver Wyman.

ESMA Vacancy Notice – Officer – Legal Profile (Deadline: 10/05/2015)
MondoVisione

For further information and to apply, please see the vacancy page.

Financial Calendar

New announcements

Nasdaq Q1 2015 Financial Results – April 23, 2015 – press release here.
BGC Partners’ & GFI Group’s Q1 2015 Financial Results – April 29, 2015 – press release here.

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

Crowdfunding

Prosper Wins Big Bank Backing For P2P Lending
Finextra

US P2P lender Prosper has scored a £165 million financing round led by Credit Suisse and supported by a clutch of top banks. The Series D financing included participation by JPMorgan Asset Management, USAA subsidiary SunTrust Banks and BBVA Ventures alongside a host of more conventional private equity firms.

The latest round values the online lending business at $1.9 billion and demonstrates considerable growing interest and confidence in the sector by some of the world’s biggest banks.

PLY: A stunning round as the big banks seek to endorse P2P to their advantage.

Securities Commission Malaysia Invites Submissions From Prospective Equity Crowdfunding Operators
MondoVisione

The Securities Commission Malaysia (SC) announced that operators interested in establishing and operating an equity crowdfunding (ECF) or Shariah-compliant ECF platform can now submit their application to the Securities Commission Malaysia.

PLY: Over on my Polish platform HanzaTrade, we’re crowdfunding for an addictive mobile game this month – Back it here.

Other stories

Japan Mulls Probes Of Firms, Brokers After Controversial Listings
Reuters

Japan’s securities watchdog is considering probes of some companies and brokers involved in share offerings, concerned about controversial listings amid a stock market boom, a senior person involved in the process said.

Opening Remarks To The Investor Advisory Committee – SEC Chairman Mary Jo White, April 9, 2015
MondoVisione

Hong Kong Housewife Cheers Stocks As Workers Trade At Lunch
Alfred Liu – Bloomberg

“Things are getting quite exciting,” said Chow Man, a 68-year-old housewife who favors Chinese banks and infrastructure stocks and says she has as much as HK$200,000 ($25,000) in play. “It’s becoming like a hobby for a lot of mainland investors to trade stocks now. That’s why more of them are taking opportunities in Hong Kong.”

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