August 07 2014

elb2Euronext results tick up, various Bitcoin developments as cryptocurrency incrementally improves its position, CME apparently still interested in MCX stake (although FTIL has not much left now to sell…besides CME can only buy 5% anyway). HFT and regulatory stories as well as previews and various machinations as it looks as if a lot of folk are in hot water as the temperature heats up over resolving the NSEL crisis one year on…

Meanwhile, a friendly reminder: if you like the free stuff and want to support us building out the industry platform for markets, please join our top tier, it’s only $120 per annum and keeps this daily newsletter free (You can subscribe here). Recent stories include:

New: Has CME Europe Chosen the Right Man?

CME GFI & the New IDB Paradigm

NLX: Measuring Up the Coffin?

FTIL: The Divestment of MCX

The Democratisation of Swaps aka The Citadel Inverse Repo Breakthrough

…more interesting insights will be following soon…

Public Markets

Euronext Q2 2014 Financial Results
Euronext

Third party quarterly revenue increased by +5.2% on an adjusted basis to €116.3 million (Q2 2013 adjusted: €110.6m), or +16.9% on a reported basis (Q2 2013 reported: €99.5m)

Quarterly operational expenses excluding depreciation and amortization under tight control, decreasing by -8.5% compared to Q2 2013 adjusted 1 (increase by +0.4% compared to Q2 2013 reported).

PLY: Euronext announce improving results with an apparent clear endeavour to keep costs under control. An encouraging first set of numbers in the wake of their IPO recently – the company has rallied strongly this morning albeit to 17.90 Euros which remains below the 20 Euro IPO price.

CME Eyeing Stake In MCX
Rajesh Bhayani – Business Standard

CME is eyeing a stake in MCX. As an overseas entity, CME can pick up to 5% stake in an Indian exchange and it is said to be negotiating for FTIL’s 5% stake in MCX.

Recently in MCX deals: Rakesh Jhunjhunwala bought 2% of MCX from FTIL on July 9th and on July 16th he bought another 490k (0.96%) shares of MCX. Kotak Mahindra Bank bought a 15% stake in MCX from FTIL for Rs.459 crore ($76.1 million) on 20 July. CME were long rumoured to be looking at a stake here, here and in our Premium post FTIL: The Divestment of MCX.

ICE Earnings Preview: Higher Transaction Rates To Offset Slump In Volumes
Trefis Team

ICE is scheduled to reported its Q2 results on August 7. ICE witnessed a surge in its net revenues in the March quarter, with much of the growth coming from the NYSE Euronext acquisition last year. The contribution of the NYSE Euronext businesses led to a 150% inorganic increase in trade-based revenues.

NYSE Order Revamp Seen Worsening Conflicts That Sprecher Decried
Sam Mamudi – Businessweek

NYSE, whose owner has been at the head of efforts to improve U.S. equity markets, is asking regulators for permission to alter order types in a way that is drawing criticism on Wall Street. At issue is a proposal to modify the way brokers are permitted to deploy a particular instruction to trade stocks known as an intermarket sweep order. Under plans disclosed to NYSE customers on Wednesday, the exchange would allow such orders to rest on the venue and in some cases qualify for rebates when another broker trades against it.

HKEx CEO Says Tax, Rights Problems On Shanghai Stock Connection To Be Resolved
Reuters

Lingering tax and rights problems related to the opening of reciprocal stock exchange access between Hong Kong and Shanghai will be resolved before the October launch of the programme, HKEx. CEO Charles Li said at a press conference on Wednesday.

HKEx Says LME Fees To Rise In 2015; Q2 Profit Up
Lawrence White & Michelle Price – Reuters

HKEx will raise fees on LME from Jan. 1 2015 as it battles costs from its acquisition of LME and absorbs the London exchange’s rising legal expenses.

HKEx will announce the fee increase in Q4 of this year, CEO Charles Li said at a press conference after HKEx reported a rise in Q2 earnings.

EI reported HKEx H1 Financial Results on August 6th.

SEBI Signs MoU With 27 European Regulators
Mondo Visione

SEBI and securities market regulators of 27 member of EU / EEA signed bilateral MoU concerning consultation, cooperation and the exchange of information related to the supervision of AIFMs. The bilateral MoUs were signed on July 28, 2014.

Private Markets

UCX Promoter’s Fit-And-Proper Status Under Threat
Rajesh Bhayani – Business Standard

As discussed yesterday, in yet another such case of the fit-and proper status of the promoter of a commodity exchange being under threat, promoters of 16-month-old UCX are alleged to have siphoned funds.

UCX is promoted by Commex Technologies CEO Ketan Sheth, who owns a 40% stake in the exchange.

Thomson Reuters Adds Bitcoin Pricing To Eikon
Finextra

Thomson Reuters says bitcoin/ USD prices from the BitStamp exchange have been added to Eikon “in response to strong customer demand”. It follows a move by Bloomberg to add Bitcoin pricing and market news to its Professional terminal service in April.

PLY: The market is deciding, governments may be unsure or cracking down but the smart money is clearly endorsing Bitcoin.

Bitcoin Foundation Seeks More Time To Address Virtual Currency Rules
Sydney Ember – Deal Book

Big-name Bitcoin supporters are stepping up the pressure on New York State’s top financial regulator to extend the comment period for the state’s new virtual currency rules. On Tuesday, the Bitcoin Foundation sent a letter to Benjamin M. Lawsky, New York State’s superintendent of financial services, asking for up to six months to provide feedback on the proposed regulations, and a minimum of 45 additional days.

Dividend News

CME declared a Q3 dividend of $0.47 per share, payable September 25, 2014, to shareholders of record as of September 10, 2014.

CME press release here.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Renewed speculation that CME is interested in an MCX stake is pushing the price of both MCX (up 3.5%) and FTIL (+2%).

EOW Set To Close In On Brokers Involved In NSEL Scam
Divyesh Nair – DNA

Almost after a year into the investigation of the NSEL scam, EOW is all set to close in on the brokers who allegedly encouraged the investors to invest in NSEL. EOW, in the supplementary chargesheet filed against the main accused in the case Jignesh Shah, is said to have made references about the role played by the brokers in the scam.

PLY: As predicted a year ago, it was difficult to see the brokers being entirely the innocent parties in all cases given the nature of the product structuring…

NSEL Scam: Once United, Investors Divide Into 2 Groups, Differ Over Probe
Divyesh Nair – DNA

Even as the EOW of the Mumbai Police makes headway in its investigation in the NSEL scam, the investors who, until a few months back, were united in their fight to recover their money have now divided.

Around 15,000 big and small investors have been divided into two factions and are said to be having differences over the investigation done by the sleuths. The group had been fighting as one under the banner of NSEL Investors Forum. But a few months ago, several of them left and formed NSEL Investors Action Group.

NSEL Scam: HC Allows Investors To Make Submissions On Jignesh Shah’s Bail Plea
Economic Times

The Bombay High Court today allowed a group of investors to make written submissions on the charge sheet filed against MCX promoter Jignesh Shah in the Rs 5,000 crore National Spot Exchange Ltd (NSEL) scam.

Hearing Shah’s bail petition, Justice Abhay Thipsay asked the investors, who had intervened during the proceedings, to file their response by August 8.

The ‘Largest Investor’ In NSEL Who Exited Unscathed
N Sundaresha Subramanian – Business Standard

Last year, just before NSEL scam broke out, a large investor with inside information, allegedly close to Jignesh Shah, head of the promoter company, quietly sold off investments worth several hundred crores. While, around 13,000 other investors in the exchange remained oblivious of what was to hit them.

The said investor, a corporate group, is being probed by the Mumbai Police’s economic offences wing (EOW). It had, as mentioned, significant exposure to NSEL but exited its positions just before the scam erupted on July 31, 2013.

Technology

UK Fintech Given Osborne Blessing (subscription)
Anna Irrera – Financial News

UK Chancellor’s Speech At The Launch Of The New Trade Body For FinTech, ‘Innovate Finance’
Mondo Visione

Speaking on Wednesday at the launch event of at Level 39, Canary Wharfs Group’s accelerator for fintech startups, George Osborne said the government is committed to making the UK a global centre for financial innovation.

He said the exciting thing about “combining new technology and a free market is that no one in this room – certainly not me – can predict exactly how these new forms of banking will develop”.

Sapient Global Markets Supports EMIR Collateral And Valuation Reporting Through CMRS Enhancements – Provides A Single System For Collating Collateral And Valuation Data And Reporting To DTCC, REGIS-TR And UnaVista
Mondo Visione

Sapient Global Markets, a division of Sapient, and a leading global provider of business technology and consulting services for the capital and commodity markets, announced further enhancements to its Compliance Management and Reporting System (CMRS) to support collateral and valuation reporting.

Products

EEX Trade Registration For Futures On The Brent 901 Formula
FTSE Global Markets

EEX will expand its offer of standardised energy and related products with oil products. Together with its clearing house, European Commodity Clearing (ECC), EEX is planning to introduce a Trade Registration Service for futures on the Brent 901 formula on September 8th.

ICAP, MTS Offer Benchmark Euro Zone Repo Index
Emelia Sithole-Matarise & Huw Jones – Reuters

ICAP and MTS have introduced a daily benchmark index to track borrowing costs in the euro zone repo market, a major source of secured short-term funding in the region.

The move is part of ICAP’s broader push into benchmarks by tapping its pool of market data as the world’s biggest broker of transactions between banks.

CME To Conduct Industry Outreach On CME Livestock Hours
PR Newswire

CME announced it will begin the process of conducting broad outreach to customers, producer groups and other market participants to review existing CME livestock trading hours on CME Globex.

Financial Calendar

Today

ICE Q2 2014 financial Results
TMX Q2 Financial Results
MarketAxess $0.16 quarterly cash dividend payment

New announcement

FTIL Q1 Financial Results – August 13, 2014

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

Analyst Notes

TMX “Sector Perform” Rating Restated By National Bank Financial – C$63.00 Price Target on the stock, Up From C$60.00.

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.

Other stories

Qatar Emir Issues Law Raising Foreign Ownership Limits For Stocks
Reuters

Qatar’s Emir has issued a law providing for foreign investors to own up to 49% of listed Qatari companies, part of reforms to expand the stock market and develop the country’s financial industry, the official QNA said.

FAO: They have their own EMIR, albeit of the more traditional kind….

How One Whistleblower Turned The Tables On High-Frequency Traders
Scott Patterson – Wall Street Journal

A once esoteric corner of the stock market “order types” has taken center stage the past few years in the debate about the health of the market, the role of high-speed traders in it and how stock exchanges interact with clients.

…But few realized how complicated, and how problematic, they had become until a former high-speed trader, Haim Bodek, decided to blow the whistle to regulators in 2011.

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