August 12 2016


Good news in the parish as the 3 major US exchanges unite to make markets better. Meanwhile BATS picks up Javelin…Breaking just as we close for pixel, is news that Plato Partnership is apparently moving their supreme Soviet to Dublin with more news soon (I know until LIS most people had forgotten they existed) – h/t The Trade

It’s that point where midsummer is upon us and next week we will have a daily news hiatus. The staff need a break and apart from Monday being a pan European holiday, the week looks quiet, so we won’t publish a full Exchange Invest daily newsletter until the following Monday. I am around for calls in the meanwhile.

The good news as we break for summer is the first appearance of our latest sponsor. The good folks of NASDAQ who will be promoting their wares across the year and are supporting Exchange Invest, the industry daily. Thank you.

The CEE CMU Capital Markets awards are coming up mid-September (see banner to the left). The first summit for CMU in CEE takes place on the same day, chaired by me – can you afford not to be there? Rates are very attractive: from €295 for the summit, to €595 for the Gala & Summit together. Email me or follow this link HERE to sign up.

Public Markets

Bats To Buy Javelin SEF


Bats (press release) would acquire Javelin SEF LLC, a swaps exchange (check our SEFs page on the Exchange Invest website), for an undisclosed sum to enhance its FX trading operations.

Bats said the deal would help speed up its plans to begin offering trading of non-deliverable forwards (NDFs) for the FX market.

PLY: Ends a fascinating week for BATS which in Europe has electrified the block market with the BATS BIDS LIS tie-up (see also Premium: BATS BIDS: New Kids on The Block In Europe). Now BATS enhances its FX market presence following its January 2015 $365 million purchase of Hotspot from KCG Holdings.

QV Premium: Exchange Deals Brief – M&As.


BM&FBOVESPA Q2 2016 Results


vs Q2 2015: net revenues R$ 574.5m (USD 183m), up 3.6%, net loss R$114.4m (USD 36m), compared to a net income of R$318m. Q2 2016 earnings were impacted by extraordinary items mainly related to total divestment from CME Group shares and expenses related to the proposed business combination with Cetip.

PLY: Difficult to discern at first glance the precise state of play given the Cetip takeover and the return of capital from the CME investment.


Oslo Børs VPS Holding Q2 2016 Results


vs Q2 2015: revenue NOK 236m (USD 29m), flat, EBIT 107m (USD 13m), down 3.7%


Euronext Preps Block Trading Plan Ahead Of Mifid II (subscription)

Samuel Agini – Financial News

Euronext is set to launch a new service to attract more large equity trades without falling foul of Europe’s incoming Mifid II rules, in a move that follows hot on the heels of a similar initiative by Bats Europe.

QV Premium: BATS BIDS: New Kids on The Block In Europe.

PLY: The competition in blocks now can only suggest prices are going to decline – that does not portend good news for the cash cow incumbents Liquidnet or ITG.


U.S. Stock Exchanges Harmonize Rules To Prevent Market Chaos

John McCrank – Reuters

Exchange Groups Work Together to Strengthen U.S. Equity Markets


The three major exchange groups, Bats Global Markets, Nasdaq and NYSE have worked together to harmonize key functions of the U.S. equity markets to increase resiliency during times of extreme volatility.

In the coming weeks the exchanges will file with SEC a set of exchange rules as well an update to the National Market System Plan to Address Extraordinary Market Volatility (LULD Plan).  The LULD Plan was approved on a pilot basis by the SEC in 2012 and is designed to prevent trades in individual securities outside of specified price bands (LULD Bands).   

The exchanges’ goals are focused on four key areas:

  • Eliminating the time periods where securities could trade without LULD Bands in place;
  • Reducing the number of Trading Pauses;
  • Standardization of primary exchange automated re-openings following a Trading Pause; and,
  • Elimination of Clearly Erroneous Execution (CEE) rules when LULD Bands are in effect.

PLY: Good: a coherent approach by the dominant exchanges to seek a better market. I could make an awful pun about the dangers of being LULD into a false sense of security but I won’t.


CSRC Creates Special Work Team for Planned Shenzhen Stock Connect

Liu Caiping – Caixin

China’s securities regulator has created a special task group to guide and coordinate policy making and technical operating issues for the long planned Shenzhen-Hong Kong stock connect that will more closely link the Chinese stock market with foreign investors.

Yesterday Charles Li, HKEX CEO, declared HK-SZSE Stock Connect is ‘Imminent’.

QV Premium: HKEx – SZSE Stock Connect.


Voice Brokers Make A City Comeback (subscription)

Philip Stafford – Financial Times

So much for the long-predicted demise of voice brokers at the hands of ever more sophisticated technology.

In recent months, interdealer brokers BGC Partners and Tullett Prebon have been scooping up hundreds of brokers and both companies are looking at hiring more teams. Even Citadel, the US electronic market maker, has recruited several specialist voice brokers to supplement its push into the European swaps market.

The voice business, as it is known, is one of the City of London’s strengths. While they are global in nature, both Tullett and BGC have some of the largest interdealer brokerage floors in the UK capital and expect to base their operations there even after Britain leaves the EU.

PLY: Er, yes but given that TNT just made it clear they were buying first a CME software licence for swaps IT then a GMEx licence for forex options IT.

Yip there’s a market space for some bespoke tailoring but TNT and BGC each creating a shag-ghetto is surely indicative that there is a massive broker cull coming. I wonder will PETA (or presumably PETB – the broker equivalent) picket the offices of John Phizackerley soon? Certainly they will need big placards.

By the way, Phillip, delightful English but your phrase “Their confidence is born of their markets’ idiosyncrasies” probably surmises things elegantly but it does suggest there remains somewhat of a chasm between the bourgeois qualities of the FT and the IDB community’s more, how might one put it, earthy, approach to language. Then again IDBs are not known for singing the Marseillaise with their croissants before a rousing “Ode to Joy” chorus either unlike the alleged behaviour of the Brussels Bugle.


Virtu Never Loses (Well, Almost Never)

Matthew Leising – Bloomberg

In the history of electronic trading, no company has been as successful as this paradigm-changing market maker, which operates in more venues than it has employees.

PLY: Hmmm, in terms of that benchmark, Exchange Invest operate in a ratio of over 100 venues per employee…


Sebi Asks Commodity Bourses To Conduct Members’ System Audit

Business Standard

To bring stability and integrity in the securities market, Sebi directed all commodity derivatives exchanges to conduct annual system audit of their trading members and monitor the same.

PLY: SEBI are on the right track here. It is interesting that they are pointing the audit responsibility to the exchanges whereas, as I understand it, after months of heated debate, the EU exchanges have managed to turn responsibility for at least algo testing back on to the firms themselves. If the exchanges need help, instead of Ghostbusters, I would suggest they call Traderserve.

Private Markets

BSE Gets Approval To Establish International Exchange At GIFT

Business Standard

It will provide a platform for global securities listed on the international exchanges such as NYSE, LSE, NASDAQ.

PLY: Very interesting, a country club being built in GIFT City which further enhances the multiple potential for the soon to be listed BSE, following on from their excellent results this week.

QV Premium: India – GIFT Exchanges Brief.


BSE Head Sees Tighter Algo Trading Rules As Boon For Markets

Abhirup Roy & Rafael Nam – Reuters

“Well-designed forward looking regulations create better trust,” Ashishkumar Chauhan, CEO of BSE, said in an interview.

PLY: Somewhere on my blotter – a further sign I won’t be at the beach with bucket and spade next week – is the possibility of a response to this SEBI call…


Saudi Arabia’s CMA: Board Of Resolution Adopting Amended Rules For QFFI’s Investing In Listed Securities


Mentioned yesterday.


MIAX Options – New Complex Order Rules Pending SEC Approval


MIAX filed SR_MIAX_2016_26 to adopt new rules to govern the trading of Complex Orders on MIAX.


Broker-Dealer TradeZero Launches First ‘Dark Pool’ For Bitcoin

Gertrude Chavez-Dreyfuss – Reuters

TradeZero, a Bahamas-based online broker-dealer, has launched the world’s first “dark pool” exchange for bitcoin to enable institutional investors to execute large trades.

PLY: I am really not sure what purpose this will serve – sounds like a groovy idea but in practice unclear it will have sufficient demand.


Bitfinex Offers 5% Bounty for Information on $70m Bitcoin Hack

Avi Mizrahi – Finance Magnates

Do you know who stole over 100,000 Bitcoins from Bitfinex? You could earn $3.5 million for turning him in.

Bitcoin Traders Made 700% Returns Before Losing Millions in Hack Attack

Yuji Nakamura & Lulu Yilun Chen – Bloomberg

“The returns were really great,” Tian said. “Bitfinex was quite innovative and among the first to come out with products including margin lending.”

PLY: The Bitcoin margin trading business is a fascinating sideshow, with a lot of money being made on lending to traders…this may now be at risk on this and other platforms it seems.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL both flat to slightly softer.


Beyond Blockchain: Icap’s Euclid On The Future Of Fintech (subscription)



Why Financial Markets Want To Travel ‘Light’

Jinoy Jose P – The Hindu Business Line


Ethereum Scaling Advances With ‘First’ Off-Blockchain Payments


A team of ethereum developers has successfully completed what they say is the first off-blockchain transaction on the decentralized application network.

Sent from Copenhagen, Denmark, to Mumbai, India, the test saw the developers behind micropayments project Raiden send ether via clients operated by members in those cities last week. While small in scale, ethereum developers more broadly see the proof-of-concept as a key technical step toward solving one of the pressing issues facing not only the network, but all public blockchains.


ICE Clear Credit Surpasses $100 Billion in Client Cleared Single Name CDS for 2016


ICE Clear Credit launched client clearing for single name CDS in June 2013. Since launch, the number of clients actively clearing these instruments has grown consistently and is now over 100, with 90% of client volume occurring since the start of 2015. Year to date, over $100 billion notional in single name CDS has been cleared at ICE Clear Credit, compared with $33.3 billion for the full year of 2015, an increase of 200%.


The Battle For Control Of London’s $5tn Gold Market (subscription)

Financial Times

With competition rising from China, London’s market is at a pivotal point in its history.

WGC LME has fired the starting pistol as LBMA still struggles to get its concepts in order, clearly.


Nigerian SE Revises Bond Listing & Trading Fees



TASE’s New Indices – Starting February 2017 – In Addition, Proposal To Cancel December 2016 Indices Update In Will Be Discussed By TASE’s Board


TASE Pencils in February for New Indices Launch

Rosemary Barnes – Finance Magnates

Tel Aviv SE (TASE) has announced the launch date of its new indices and the proposed cancellation of December 2016 indices update.

Financial Calendar

17.08 – NZX Q2 2016 Results

New! – 18.08 – ASX Full-Year Results For FY16

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

Other stories

OCC On Leverage Ratio & Impact On Listed Options Industry – By John Fennell, OCC EVP Risk Management



Dubai to Become Second Middle East Clearing Hub for China’s Yuan

Finance Magnates

QV Premium: China Capital Markets Transformation Brief – Main File

Okay that’s all for this week, bucket and spade packing happening around the office now, have a great week…



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