April 28 2015


First up:

SAVE THE DATE: My focussed event about the Future of Finance, Young Markets will take place in Warsaw, Poland, on September 17th. More details to follow…

Meanwhile for those exchanges which survive the next few turbulent, litigious weeks, Wondrous milestones are ahead for Exchange Invest – with our 500th Anniversary and 2nd anniversary all falling into the same week in the middle of next month. Before then, may I just ask those of you not currently in a commercial relationship with our offices to consider support by Sponsorship or Premium Subscription?

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Today in Exchange Invest, JPX results, LME warehouse discussions, OverStock provides some more detail on its exchange-CSD via Blockchain concept through SEC filing. London Gold: Bullion Association engages EY to discuss the future. ICE relaunch CDS futures with Eris methodology & Markit underlying while Eris eyes Swaptions. And much more…

Meanwhile, New Premium posts include:

Nope-n Access – The Incumbents Strike Back
NLX On Life Support

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Flash Crash & Hound of Hounslow – Brief NEW!
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A Taste Of HFT Scandal Brief – Part 1, Part 2, Part 3, Part 4, Part 5, Part 6
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Public Markets

JPX Financial Results For Y/E March 31, 2015

FY2014 Highlights (IFRS)

Operating revenue 106,167 mil yen (USD 892 mln), down 9% y/y (FY 2015 forecast 100,000, down 6%)
Net Income 34,427 mil yen (USD 289 mln), up 15% y/y (FY2015 forecast 33,000, down 4%)
EBITDA 65,743 mil yen (USD 552 mln), down 4% y/y

Last month JPX announced a revised Consolidated Earnings Forecast for the Fiscal Year from April 1, 2014 to March 31, 2015

Operating revenue 105,500 mln yen (USD 880 mln) (previous forecast 101,000 mln yen), up 4.5%
Net income 30,500 mln yen (USD 254 mln) (previous forecast 26,500 mln yen), up 15.1%

PLY: NIkkei 20,000 clearly hasn’t helped JPX…

JPX: Update Of Medium-Term Management Plan For FY2013 To FY2015

Rusal Battles With LME On Aluminium Price (subscription)
Neil Hume & David Sheppard – Financial Times

Rusal, the world’s largest aluminium producer, has reignited its war of words with LME, saying the LME has allowed financial speculators to distort prices.

CEO Vladislav Soloviev said the price of aluminium traded on LME has been depressed by as much as 30% by the actions of “money-market players”.

LME Moves To Cut Warehouse Queues Faster
Pratima Desai – Reuters

New measures to increase the amount of metal withdrawn from warehouses, relative to material brought in, will help to reduce queues faster at LME registered warehouses.

Read our Premium LME – Rusal Trial Brief.

SEC Takes Different Harmony Approach
Mike Kentz – Reuters

While CFTC remains embroiled in tense negotiations with European regulators regarding the reach of Dodd-Frank derivatives rules outside the US, SEC has remained above the fray by taking a starkly different approach to derivatives rulemaking.

The agency has moved considerably slower – it issued its first substantive Dodd-Frank rulemaking in January of this year, compared with the CFTC passing its first rules in 2011.

The CFTC’s faster pace has provoked the ire of European regulators, who say a lack of consultation with agencies outside the US has led to a fragmentation of derivatives trading across borders. The relationship is on the mend, but the two sides still disagree regarding the acceptance of each other’s clearing frameworks.

FAO: EU & US aim for a deal in May on derivatives clearing, as reported yesterday.

PLY: I am not sure the pace of regulation was entirely the issue but the perceived abrasive nature of Gary Gensler in office was a massive starting point for the current chaos. The EU has not behaved perfectly but let’s face it with all these bureaucratic egos in one room, somebody needed to be diplomatic – that didn’t happen and hence the mess akin to a Laurel & Hardy movie aftermath.

LSE Expands Mentoring Scheme Across Europe (subscription)
Kate Burgess – Financial Times

LSE is expanding its reach into Europe with the launch of an EU-wide programme to hothouse entrepreneurs and fast-track small private companies.

It is the latest attempt by the LSE to boost small and medium-sized enterprises. Over the past three years it has signed up close to 260 companies in Italy and the UK to take part in a two-year course of networking and mentoring events and classes, its so-called Elite Programme.

LSE press release here.

Is Algo Trading Over Or Under-Regulated?
Mobis Philipose – Livemint

Two years have passed since Sebi issued a contentious discussion paper on co-location facilities offered by stock exchanges, but there’s no news yet of any new regulations on this front. In fact, Sebi has largely been silent on algorithmic trading for some time now.

PLY: For once SEBI keeping quiet about something it presumably does not clearly understand. Another mature reflection from Mobis Philipose.

Private Markets

London Gold Trade Probably Won’t Move to Exchange, LBMA Says
Eddie Van Der Walt – Bloomberg
LBMA Review To Consider Creation Of London Gold Trading Exchange

Bullion trading in London isn’t likely to move to an exchange because it would increase costs and reduce liquidity, according to the industry’s trade association.

London Bullion Market Association (LBMA) has commissioned Ernst & Young to conduct a study and prepare recommendations on how to develop the market, including looking at moving OTC to an exchange. While such a change is unlikely, there may be more regular transaction reporting and a return of publishing gold forward offered rates and the forward curve, said Ruth Crowell, the LBMA’s CEO.

PLY: Given how everything else ever to hit an exchange has enjoyed lower transaction costs, the LBMA assertion is just weird…as they signed a six figure cheque to EY to assess ways to make the market move forward.

LBMA announcement here.

FAO: Earlier this month EI reported about World Gold Council talking with half a dozen banks to explore the idea of creating a gold exchange in London.

Abu Dhabi Rolls Out Red Carpet For Market Makers, May Outweigh Dubai

The two main stock exchanges in the UAE are trying to attract market makers but some industry professionals say Abu Dhabi is offering more generous financial terms and more liberal rules than Dubai, suggesting it may have more success.

Read our Premium brief: DFM – ADX Merger

Australia Launches First Multi-Currency Bitcoin Exchange – Independent Reserve

Overstock Files To Offer Stock That Works Like Bitcoin

Overstock.com is one step closer to offering a new kind of stock intended to remake the stock market in much the same way the bitcoin digital currency remade our money system.

On Friday, the Salt Lake City-based online retailer filed a prospectus with SEC that indicates it may issue up to $500 million in stock or other securities using technology akin to the online software system that underpins bitcoin. “We may decide to offer securities as digital securities…the ownership and transfer of which are recorded on a cryptographically-secured distributed ledger system using technology similar to (or the same as) the distributed ledger technology used for trading digital currencies,” the filing reads.

PLY: Fascinating stuff which threatens a shake-up not merely in exchange trading but particularly CSDs, of which I have some thoughts.

Bitcoin Company Circle Raising New Cash
Dan Primack – Fortune

Circle Financial, the bitcoin wallet startup led by Brightcove founder Jeremy Allaire, is in the midst of raising around $40 million at a pre-money valuation of approximately $200 million.

Dividend News

JPX: Changes To Basic Policy On Profit Distribution

JPX adopts a dividend policy with a target payout ratio of about 60% * tied to business performance.

Dividend Forecast for 2nd Quarter and End of Fiscal Year Ending March 2016

Fiscal Year Ending Mar. 2016 [Forecast] Q2 – 36.0, Year-end – 37.0, Annual 73.0
Fiscal Year Ended Mar. 2015 [Actual] Q2 – 18.0, Year-end – 32.0 (scheduled), Annual 50.0 (scheduled).

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX up 1%, FTIL down 1%, FTIL challenging Ketan Shah complaint with gusto:

NSEL Investor Seeks Transfer Of Case To Mumbai EOW
Business Standard

Ketan Shah, an individual NSEL investor and a complainant, has urged the Mumbai Police Commissioner to transfer the case from the MIDC (Maharashtra Industrial Development Corporation) police to the Economic Offences Wing (EOW).

Ketan Shah’s Complaint Based On PwC Report Is Baseless, Highly Motivated: FTIL
The Economic Times

FTIL has termed investor Ketan Shah’s complaint alleging diversion of Rs 900 crore (USD 142 mln) by the company and its promoter Jignesh Shah and others from MCX as “baseless” and “highly motivated”.

Read our Premium NSEL-FTIL Merger Brief and NSEL Scandal Brief – Main File.


Russian Exchange Leaks Source Code Amid Bitcoin Crackdown
Yessi Bello Perez – CoinDesk

A defunct Russian bitcoin exchange has released its source code to the bitcoin community amid the country’s perceived crackdown on digital currency.

The exchange, which made the announcement via the Bitcoin Talk forum and Reddit, says it is seeking to help the global bitcoin market evolve by allowing other companies to integrate its software.

Its three founders had self-funded the platform’s year-long production process, spending approximately $100,000 to reach an alpha version.


ICE Relaunches Credit Swap Futures (subscription)
Katy Burne – Wall Street Journal

Proponents of futures contracts that mimic swaps are pushing the hybrid instruments, despite traders’ slower-than-expected acceptance, in a bet that a regulatory overhaul of complex financial instruments will boost the appeal of the “swap futures.”

ICE has relaunched its credit swap futures two years after their debut flopped and prompted the Atlanta exchange operator to delist the contract in favor of redesigning it.

PLY: The new products deploy the Eris Exchange methodology which Eris licensed to ICE in December last year, using Markit / iTraxx indexes.

Eris Eyes Swaptions Among Next Product (subscription)
Cian Burke – FOW

FAO: CME is poised to launch a swaptions clearing service – previous comments here and here.

Thai & Indonesian Rubber Producers To Boycott Singapore Commodity Exchange
Rubber World

Thai and Indonesian rubber producers are being hailed for a joint plan to halt deliveries to the Singapore Commodity Exchange (Sicom) in a bid to raise prices of the commodity. Aat Pisanwanich, director of the University of the Thai Chamber of Commerce’s Center for International Trade Studies, called the plan a step in the right direction, saying rubber prices had been manipulated by not only Sicom but also the Tokyo Commodity Exchange and the Shanghai Futures Exchange. The joint effort will kick off next month, and to make it more powerful, Mr Aat suggested rubber producers in Cambodia, Laos, Myanmar and Vietnam be asked to join.

FAO: Thailand, Indonesia and Malaysia are planning to set up a regional rubber exchange. The International Tripartite Rubber Council (ITRC) meeting, held in November last year in Kuala Lumpur, decided to make the exchange operational in 18 months after a joint feasibility study carried out by Global agriculture consultancy LMC International.

In March EI reported that SGX is also in early talks to be part of the planned regional rubber exchange.

Euclidean Cuts Deal With Bloomberg For US options (subscription)
Luke Jeffs – FOW

Tech start-up Euclidean Trading has cut a deal with Bloomberg where the data vendor is making available to its clients Euclidean’s US interest rate options.

Assets Invested In The Global ETF/ETP Industry Are Set To Surpass Assets Invested In The Global Hedge Fund Industry In Q2

According to ETFGI…


JPX: TOPIX Approved By Taiwan Stock Exchange Fo Listing Of TOPIX Etfs In Taiwan

Career Paths

Chairman of Colombo Stock Exchange Vajira Kulatilakey has been elected Chairman of South Asian Federation of Exchanges (SAFE) (reported here) while the Chairman of Chittagong Stock Exchange, Dr. Muhammad Abdul Mazid, has been elected Senior Vice Chairman of SAFE.

Chitra Ramkrishna: I Am Not A Merchant Banker Or An Advisor. I Am A Catalyst
Sourav Majumdar & Pravin Palande – Forbes India

In a wide-ranging interview, NSE CEO Chitra Ramkrishna talks about the changing trends in the market, the role of technology and getting new firms into the ambit of the exchange.

JPX: Candidates For Directors, Executive Officers

Financial Calendar

MOEX AGM – Tuesday
SIBEX AGM – Tuesday
BGC Partners’ & GFI Group’s Q1 2015 Financial Results – Wednesday
CME Q1 2015 Financial Results – Thursday

New announcement

LSE and Shares Magazine will host the second Stock Market Show, a major private investor conference and exhibition – September 12th 2015 – press release here.

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


Robo-Adviser InvestYourWay Turns To Crowdfunding (subscription)
Financial News

Online investment manager backed by Bats Chi-X Europe CEO is raising capital to fund a hiring and marketing push in the coming months.

InvestYourWay Uses Crowd Funding To Fuel Growth – Over 7% Average Performance Across Client Accounts Since Going Live

Other stories

Statement Of CFTC Commissioner J. Christopher Giancarlo On The Commodity Futures Trading Commission’s Recent Steps To Improve Its Swaps Trading Regulations

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