August 05 2015

 elb2PLY: As we race to pixel, BAML announces it has joined GMEX which is counting down the hours to its launch August 7th… On a much sadder note, it is the second anniversary of our devoted coverage of the NSEL crisis (EI August 05 2013). The section sadly plods on – a testament to the dysfunction of the Indian legal-political-regulatory blob until a solution has been found to this festering fiasco which does so much to undermine confidence in a nation which really can be “Incredible India” if only markets are free and legal process is coherently delivered. Meanwhile CFTC Commissioner Dan Gallagher rightly excoriates the Dodd Frank fiasco  as the black Edsel of Markets. He will be richly missed as the Commissioner for the constituency of commonsense. Chris Giancarlo at CFTC seems to be taking up Dan’s cudgels judging from his remarks today too…

Elsewhere multiple stories, including disappointing Ozzie crowdfunding regs, an ongoing trust deficit amidst “Institutional Liquidity Pools” and much more, happy scrolling:

Public Markets

LSE H1 2015 Results

LSE

vs H1 2014: Revenue up 90% to £1,164.9 million (H1 2014: £611.5 million), total income up 83% to £1,208.7 million (H1 2014: £661.2 million), adjusted operating profit up 27% at £366.1 million (H1 2014: £ 288.8 million), operating profit of £239.4 million (H1 2014: £205.7 million); profit after tax of £165.1 million (H1 2014 £136.0 million), adjusted EPS up 14% at 65.5 pence (H1 2014: 57.3 pence); basic EPS of 43.4 pence (H1 2014: 40.5 pence)

PLY: Numbers slightly ahead of expectations. The interesting aspect is how LSE leverage may be tumbling over the next 18 months… Will Xavier repay shareholders or do more deals? The LSE remains a potential predator.

MOEX Q2 2015 Results

MondoVisione

vs Q2 2014: total operating income RUB 10.18 bln ($161.8 mln), up 50.7%, EBITDA RUB 7.95 bln ($126 mln) up 66.4%, EBITDA margin 78.1%, vs 75.3%, net profit RUB 6.0 bln ($95.3 mln) up 72.8%; EPS RUB 2.70 up 71.0%.

PLY: While sanctions hurt both east and west, the MOEX continues to impress.

Lending Club Q2 2015 Results

PRNewswire

vs Q2 2014: loan originations $1.91 bln, up 90%, operating revenue $96.1 mln, up 98%, adjusted EBITDA $13.4 mln, compared to $4.0 mln, GAAP net loss $4.1 mln, compared to a net loss of $9.2 mln.

Lending Club Rapid Expansion Plans Undimmed (subscription)

Ben McLannahan – Financial Times

Lending Club has posted another quarter of rapid growth, with CEO Renaud Laplanche signalling an imminent expansion into new lines such as car loans and mortgages in his quest to “transform the entire banking industry.”

FXCM Sets September 21 Vote At Special Shareholders Meeting To Approve 1:10 Reverse Stock Split

LeapRate

Reverse stock split plan reported last month.

Read our Premium FX – CHF Crisis – Brief and FXCM Stakes Sales Brief.

In A Game Of Trust, ITG Begins Rebuilding Quickly (subscription)

Financial News

ITG CEO Bob Gasser was replaced by board member Jarrett Lilien, after last week’s news that ITG could be fined $20 million. More on this in our Premium service: “ITG, Dark Fines & a Coalition for Change.

PLY: Hmmm, does this imply that unless you replace the CEO (possibly General Counsel and / or Chairman too), you are not sufficiently penitent? Certainly the arrival of Luminex strikes me as a clear signal that in the US the “Institutional Liquidity Pools” have not entirely convinced their traditional buy side user base to trust them again… However the market currently seems somewhat fragmented by those who trust (or at least use) the large pools and those seeking alternatives…

‘Pete The Greek’ Will Not Face Libor Action (subscription)

Caroline Binham – Financial Times

Panagiotis Koutsogiannis, known as “Pete the Greek” by UBS traders — including Tom Hayes, who was found guilty of Libor manipulation this week — was suspected by FCA of dishonesty and could have faced a ban from the City if any wrongdoing were proved.

U.K. Serious Fraud Office Plans More Libor Charges In the Fall (subscription)

Giles Turner & David Enrich – Wall Street Journal

Few Traders Are Likely To Be Deterred By Verdict On Tom Hayes (subscription)

Frank Partnoy – Financial Times

Financial fraud is not like murder as transactions can appear morally ambiguous.

Benchmark Reform Struggles To Build A Beachhead (subscription)

Financial News

Tom Hayes’ heavy prison sentence is a win for the SFO but elsewhere regulators remain frustrated at the pace of banks’ benchmark reform programmes.

Q&A: Pimco And The SEC’s Bond ETF Probe (subscription)

Michael Mackenzie & Dan McCrum – Financial Times

Why is the regulator considering action against the investment management company, as rumoured yesterday?

ESMA Advises Commission On Implementation Of CSD Regulation

MondoVisione

Private Markets

Overstock Unveils Blockchain Trading Platform at Nasdaq Event

Pete Rizzo – CoinDesk

Patrick Byrne, CEO of US online retailer Overstock.com, unveiled   (pronounced tee-zero) at the headquarters of Nasdaq. Overstock’s long awaited blockchain-based private and public equities trading platform first announced in 2014.

FAO: In May EI reported that Overstock is eyeing bitcoin-like stock and bought a 25% stake in a regulated trading company PRO Securities (an ATS), last autumn.

Exclusive Interview With EGX

Marcopolis

Symbiont Issues Securities On The Bitcoin Blockchain To Usher Capital Markets Into The Blockchain Era

Giulio Prisco – Bitcoin Magazine

Symbiont has issued the first Smart Securities on the Bitcoin blockchain. Symbiont’s live platform allows institutions and investors to issue, manage, trade, clear, settle and transfer a range of financial instruments more efficiently on decentralized and distributed peer-to-peer financial networks that are cryptographically secured.

Symbiont press release here.

In June Symbiont raised $1.25 mln from Duncan Niederauer, former CEO of NYSE Euronext, and Matt Andresen, former trading head at hedge fund Citadel and now co-CEO of Headlands Technologies.

Australia Takes First Step Toward Bitcoin As Currency

Ariel Bogle – Mashable

A Senate Economics References Committee review considering digital currencies in Australia has recommended they should be treated like any other currency for the purposes of the Goods and Services Tax (GST).

Release of the government report,Digital currency—game changer or bit player.”

PLY: Hooray, at least beyond the narrowly insular approach to capital raising whether with ASX or in ASIC, there is yet some intelligent innovative spirit in the Australian blob…

Dividend News

LSEG Directors have declared an interim dividend of 10.8 pence, an increase of 11.4% (9.7 pence for H1 2014). To be paid on 22 September 2015 to shareholders on the register on 28 August 2015.

Special Section: FTI, NSEL, India at the Crossroads

PLY: A sad anniversary – no news, no progress, just a festering mess in the Indian market infrastructure. MCX and FTIL both up around 1.5%.

Technology

Nasdaq’s Second Error Of Day Hobbled Service Dark Pools Use

Sam Mamudi – Bloomberg

A Nasdaq service that some dark pools need in order to function broke down twice Tuesday, hobbling part of the U.S. stock market. The first outage in the Nasdaq TRF lasted from the start of trading at 9:30 a.m. through 9:42 a.m. New York time, the second was from about 12:57 p.m. to 1:35 p.m.

The Master Chef: Lou Eccleston Aims To Transform TMX Into A Tech Solutions Provider

Dan DeFrancesco – Waters Technology

Lou Eccleston has been CEO of TMX for less than a year, but he is already implementing a series of changes to transform it into more than just the owner of exchanges.

PLY: Could be good, could be NYSE Technologies Mark 2 – the proof of the pudding will be in the eating, clearly.

High-Frequency Electronic Broker-dealer Trading System Patents Available From ICAP Patent Brokerage

PRWEB

ICAP Patent Brokerage announces for sale a patent portfolio disclosing a trading system which takes advantage of the role of broker-dealers and other intermediaries in trades, with a priority date of 1999. This IP package is available from Wall Corporation.

FCA In Fintech Talks With Overseas Regulators (subscription)

Financial News

Regulator hopes inking agreements with other watchdogs will help UK fintech companies expand abroad

PLY: Encouraging as UK regulators have been fairly unique in Europe in encouraging new companies, while many others are so difficult to deal with, their innovators have gone to London, in mind, body or just body corporate.

Products

CME Lifts Force Majeure For All Illinois River Grain Terminals

Reuters

Giancarlo Slams Progress On Swaps Rules (subscription)

Cian Burke – FOW

Statement Of Commissioner J. Christopher Giancarlo

CFTC

Six Month Progress Report on CFTC Swaps Trading Rules: Incomplete Action and Fragmented Markets

Commissioner Christopher Giancarlo of CFTC has slammed his colleagues for failing to address the underlying problems with the US swap trading rules and to implement changes he proposed six-months previously.

PLY: Chris Giancarlo is rapidly establishing himself as the voice of reason somewhat akin to the role Dan Gallagher has been reprising at the SEC, of whom scroll forth for the pithiest remarks of the day…

Financial Calendar

This week:

Aug 05 2015

ICE Q2 2015 Results

TMX Q2 2015 Results

Aug 06 2015

BVB H1 2015 Results

FXCM Q2 2015 Results

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

Share Notes

Thomas A.J. Frank, CIO of Interactive Brokers, sold 13,006 shares on Jul 31, 2015, $41.28 per share (bargain $530,875.31).

Check our NEW Share Notes section in EI Premium.

Analyst Notes

Liberum Reconfirms “Hold” Rating On Tullett Prebon – GBX 362 Target Price

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

Crowdfunding

Australia – Govt Plans Disappoint Crowdfunding Body

AAP

New draft guidelines issued by Treasury include increasing the amount companies are allowed to raise through crowdfunding to $5 million, but leave open the issue of how to increase access for small proprietary companies. These businesses are limited to 50 non-employee shareholders and are unable to engage in capital raising that requires a disclosure document. Matt Pinter, head of the Crowd Funding Institute of Australia, said a regime based on public companies made little sense given equity crowdfunding is designed to foster innovation and boost small businesses.

PLY: One of those, the politicians believe in capitalism but they have never actually done much entrepreneurial problems – at least I suppose they aren’t all ‘trustafarians’ like the British government. However that is a smack in the face for Australian enterprise in the digital age.

Other stories

Dodd-Frank At Five: A Capital Markets Swan Song, SEC Commissioner Daniel M. Gallagher, U.S. Chamber of Commerce, Washington, D.C., Aug. 4, 2015

MondoVisione

PLY: Perhaps his last public speech as a Commissioner. Dan Gallagher is in blistering form attacking a status quo which is simply dire.

“If the SEC seems political nowadays, it is because of Dodd-Frank. Not only is it an incredibly ideological piece of legislation ill-suited to an independent agency explicitly constituted in a manner designed to ensure a bipartisan — or non-partisan — approach to regulation[3] — but it is also largely just a series of ill-formed mandates that need to be interpreted and implemented to have any practical effect. In passing Dodd-Frank, Congress delivered a message to the Commission similar to that of Henry Ford concerning the aesthetics of the Model T: “Any customer can have a car painted any color he wants so long as it is black.”

 

Dodd-Frank established the SEC as the scrivener for a hundred Congressional mandates stemming from one side of the political spectrum. Is it any wonder that since its passage, these mandates — ambrosia to members of one party, anathema to those of the other — have drawn out the different philosophies of the Commissioners? Is it any wonder that Commissioners from the party devoted to free market ideals chafe at being mandated to paint Congress’s Model T — or, more appropriately, their Edsel?”

Brutal and tragically true. The SEC will be much the same.

ASIC Releases Enforcement Report For H1 2015

MondoVisione

 

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