August 06 2013

elb2 We await ICE results today.

Meanwhile India is kicking off further as Jignesh Shah faces the fight of his business career as our special section outlines. Regulators have now suspended the remaining “e shares” on NSEL and FT shares have reverted to tailspin mode, down almost 20% at the time of writing, following yesterday’s short covering rally. MCX on the other hand is again essentially locked limit down: -10%.

Elsewhere in EI there is news from across the globe from dark pools and of course SEF issues et al plus a perfectly sized board!

Meanwhile, the Australian general election campaign will take place September 6th although sadly voters won’t get the choice of replacing the ASX management.

Once the world leader in demutualisation, ASX, has fallen by the wayside in recent years, a shadow of a promising dream now merely a fig-leaf behind totalitarian monopolistic aspirations. Against a background of global competition this looks anachronistic, to put it mildly.

It’s somewhat tragic to see a one time revolutionary fall to the forces of reactionary counterinsurgency. Nowadays a regressive anti-competitive silo, ASX is a cautionary tale of vision replaced by myopia and dismally dull figures who made concrete mixing look thrilling. Recent ASX CEO remarks in the AFR (sadly behind a paywall) confirm the monolith’s earnest belief in a divine right to a domestic monopoly with the ludicrous extension that this will help Australia compete overseas. Hideously complacent thinking like this is bad enough with the Australian cricket team but with a core engine of capitalism it is unacceptable.

Government may swing back September 6th from the ghastly incumbent Labour regime to the centre right Liberals whose pro-business agenda will hopefully extend to being pro-revolution pro market competition and anti-tired monopolies.

Public Markets

ICE & Leading Credit Market Players Establish ICE Swap Trade

ICE Swap Trade, (CDS execution facility) has announced supporters ahead of likely Q3 launch.

Citi, Morgan Stanley, Societe Generale and UBS plan to provide firm pricing on a platform fostering a transparent marketplace, satisfying U.S. & EU regulatory requirements, offering index & single name CDS across North American + European corporates & sovereigns with a choice of trading cleared / bilateral contracts. Functionality will include request for quote (RFQ) and central limit order book.

NYSE Lands Libor Amid Regulatory Turf War
Euromoney Magazine

PLY: A typically measured Euromoney piece on LIBOR et al…

Morgan Stanley Sees The End Of LME Warehouse Trades (subscription)
The Wall Street Journal

Two things have allowed massive amounts of metal to build up in London Metal Exchange-licensed warehouses: low interest rates and the exchange’s warehouse rules. Both factors are on their way out, Morgan Stanley said in an analyst note Monday…

PLY: …An analysts note which the cynical might add came in the wake of a Washington banker barbecue grilling from angry Senators.

T+2: Moscow’s “Biggest Move In 20 Years”
banking technology

PLY: Here’s my problem with old ways of doing stuff, they end up permeating the world. Moscow used to have T+0 but the west couldn’t cope so not they have to go backwards to be international. What’s Russian for “D’oh!”?

New Options Exchange Gemini Opens
The Street

The 12th US options exchange ISE Gemini opened yesterday with six listings (DIS, DOW, GG, NTAP, NVDA, TXN).

PLY: It’s on: Maket Taker meets traditional fee-based pricing side by side on ISE and its Gemini sibling.

CFTC Holds Up GFI’s Futures Exchange Application (subscription)
Wall Street Journal

CFTC has delayed GFI Group Inc.’s (GFIG) bid to register as a futures exchange, citing the broker’s “materially incomplete” application.

EEX: German Capacity Power Market Should Be Last Resort

The German power market is flexible enough to secure the nation’s power without the introduction of a mechanism that steers the availability of generation capacity.

PLY: I am not an expert on German power but capacity markets where utilities get fixed prices for guaranteeing power are being introduced in Britain and given the innate shambles of UK energy policy based on crackpot hippy theories, EEX sound sensible here for Germany, even if their emphasis on horribly inefficient wind turbines is tediously blighting neighbouring Poland etc too. At the same time shuttering all Germany’s nuclear power stations is a demonstration of the sheer spinelessness of the Chancellor as she desperately tries to cling to power, instead of er, governing.

Private Markets

Borsa Istanbul Embarks On Significant Changes
Futures & Options World

PLY: The excellent Roger Aitken has quoted yours truly in his succinct surmise of the challenges facing the newly created Borsa Istanbul (BIST)

Upstart US Exchange Plots European Foray (subscription)
Financial News

Eris Exchange, a start-up US derivatives platform backed by large trading firms, has held discussions with a number of European exchanges and clearing houses about launching its products in the region.

ICAC Under Fire As Barry Cheung Corruption Allegations Go Uninvestigated
South China Morning Post

The Independent Commission Against Corruption has drawn flak for refusing to look into allegations against former Urban Renewal Authority chairman & HKMEx founder Barry Cheung Chun-yuen.


Asset Control Acquired By Marlin Equity Partners

Data management software vendor, Asset Control, has been acquired by Marlin Equity Partners. The deal will enable Asset Control to invest in its products and strategic initiatives, while maintaining best practices in implementation and support for its global client base.


ICS Delivers Exchange System To AHCX

The new AHL Commodities Exchange Ltd. (AHCX) has opened in Malawi using exchange technology provided by InterContinental Systems (ICS).

PLY: More from ICS and now we have contact details so hopefully we will find out more about this vendor which was new even to seasoned experts from Nepal!

Mt. Gox Using Akamai Distributed Server Technology
TechWeek Europe

Mt. Gox, the largest BitCoin exchange in the world, has started hosting its services using the Akamai distributed computing network to improve security and performance as well as moving to an entirely self-hosted model.

Special Section: FTI, NSEL, India at the Crossroads

PLY: The crisis continues. After a reasonable, if understandably defensive performance by FTI CEO Jignesh Shah yesterday at a press conference (video here), FTI shares were rallying but MCX stayed (new) limit down -10%. Today, regulators have banned the retail commodity certificate e-share trading that remained on NSEL and the crisis continues. MCX has, at the time of writing, fallen its now customary 10% limit while FTI is off its lows but also down -19% on the day, following yesterday’s volatile short covering rally. Several useful stories today:

India Bans NSEL e-Shares

PLY: Market jitters gave way once again to freefall when the news came that the NSEL is now bereft of anything to trade.

India – The Men Who Saw It Coming
Business Standard

K M Abraham saw it coming.

PLY: Victors write history and the relationship between SEBI and FTI/Jignesh Shah has long been problematic. Was it clear that SEBI always did the right thing for markets? Well, frankly no. Did Shah always play with a straight bat…well a lot of people say he didn’t. Was MCX an incredible revolutionary: absolutely! …and in so doing made a huge positive impact on India’s economy and agriculture in particular.

Fit and Proper: Did The Bourse Push Its Luck?
The Economic Times

PLY: Wilson Mizner’s maxim “Always be nice to people on the way up; because you’ll meet the same people on the way down” has kept appearing in my inbox for the past few days as a volley of feedback on Jignesh Shah reveals him to be, er, not exactly popular, and not overly respected….

NYSE meanwhile, thanks to the Rupee’s dive really have a horrible position in US dollars on their hands. According to our man in the back room with the pocket calculator, they were endeavouring to sell their shares for around 46 million USD last month and pulled the offer (once again) citing no interest. Having paid 56 million for the shares they are now nursing an outright loss in the region of 41 million dollars. Last month they might have garnered a small paper profit in local currency at least…


Schwab Plans Money-market-like ETFs

Charles Schwab Investment Management, the 5th largest US money fund manager, plans to launch a trio of money-market-like ETFS as fee waivers and regulation weigh on traditional money market funds.

GBOT Launches Silver Spot CFD Contract

Mauritius: Global Board of Trade (GBOT), the first international multi‐asset bourse from Mauritius launched a SILVER SPOT CFD contract July 29, 2013, following Africa’s first CFDs on GBOT 3 months earlier.

PLY: REM: GBOT is part of the FTI empire.

Career Paths

Seyran Sargsyan Joins NASDAQ OMX Armenia Board

Seyran Sargsyan has been appointed as a member of the NASDAQ OMX Armenia Supervisory Board.

PLY: At last a board to champion! We applaud NASDAQ OMX Armenia for not only having a Supervisory Board of 5: smaller than the waiting staff at some exchange boards we could mention. It’s also a very good quality line up. Henri Bergstrom has always struck me as an ideal Chairman while Riga SE/depositary veteran Indars Ascuks is an ideal exchange/csd expert alongside a trio of NEDs.

Betfair Appoints Zillah Byng-Maddick NED

Betfair Group has appointed former Trader Media Group CFO Zillah Byng-Maddick as a non-executive director.

PLY: Incidentally “Trader Media” is the UK publisher of “Auto Trader” where in olden times people used to read newsprint advertising magazines to buy cars.

ITG Expands High Touch Trading Team

ITG has added 3 hires: Rob Cohen, a 28-year equity market veteran and Brian Fenske with 9 years experience, both specialising in the TMT sector along with Tommy Labenz, 17-years experience (consumer sector).

Financial Calendar

IntercontinentalExchange, Inc. will release Q2 financial results today

Analyst Notes

Goldman Sachs Downgrades CBOE from “Buy” to “Neutral” – $49.00 price target
Betfair “Buy” rating restated by equities researchers at Citigroup Inc. – GBX 975 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.


’Stock Exchange’ For Crowdfunding?

A new online stock exchange, Seederella, seeks to aggregate trading for crowdfunding sources into a single venue.

PLY: Seederella is Kayak for crowdfunding. Previously I have seen similar propositions on the prediction markets (never funded I believe) and generally speaking aggregators may be useful but the problem surely arises in the charges? If Seederella can add no additional fees then it is a fascinating prospect. If it’s an add-on cost that may make it hard to justify its existence…

Other stories

New Rules To Monitor Australian Dark Pool Transparency

Dark pools & HFT will be subject to new market rules, as the government looks to improve transparency.

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