August 13 2014

elb2Mid-summer but still worth a scroll. Tom Kloet to stay a little while longer at TMX while his successor is employed. Various Indian stake shuffles as Betfair Australia is bought out by Jamie Packer. Sino-HK through train appears stuck in a siding awaiting various sets of points being changed. Bitcoin reaches India, ESMA launch 4 year plan, HFT blah blah, CCP similar, etc…

Public Markets

Corporation Bank Divests 1.77% Stake In MCX
NDTV Profit

MCX on Monday said Corporation Bank has divested its entire 1.77% stake in the bourse.

The commodity bourse also said that its nominated shareholder director ceased to exist on the company’s board.

FTIL Appoints Investment Banker To Sell Stake In IEX
Economic Times

FTIL said it plans to exit from exchanges businesses and has appointed investment bankers to sell its stake in IEX as mandated by regulator CERC by September.

EI reported yesterday that TPG Capital, General Atlantic, PE Kedaara Capital Eye Stake In IEX.
EI also reported on August 11th that Rakesh Jhunjhunwala is rumoured to have bought 4% of IEX.
On July 22nd FTIL appointed Axis Capital to look for a buyer for the 24.89% stake in IEX.

Crown Buys Rest Of Betfair For $10m
James Thomson – Sydney Morning Herald

James Packer’s Crown Resorts has paid $10 million to buy out the 50% of online betting outfit Betfair Australiasia it didn’t already own from Britain’s Betfair Group. The deal was flagged by Fairfax Media in March. Betfair Australasia was set up in 2004 as a 50/50 joint venture between Crown and Betfair, but has struggled to turn a profit, losing money in six out of its seven years in operation.

PLY: It is interesting that Betfair has struggled in Australia given the interest in sports and wagering but also a relatively narrow private sector outside of casinos. Equally the Packer family have a good track record of turning around underperforming gambling companies, like, well, Crown Casino for starters!

Shanghai-HK Meeting On Through Train Deadlocked (subscription)
Jeanny Yu – South China Morning Post

Two hours of meetings between officials from the Shanghai SE and Hong Kong brokers ended without any significant breakthrough yesterday, according to people who took part in the closed-door discussions.

Crucial issues of trade settlement and tax rules that must be worked out before an anticipated launch in October of a scheme to link trading on the two exchanges remain outstanding.

The Shanghai-Hong Kong Stock Connect, or “through train” scheme to allow retail investors to trade shares across the border, subject to a quota, was announced in April.

PLY: The blocks are significant but hopefully common sense will prevail as a blocked through train is not going to work at all and that will defeat the whole purpose.

TMX CEO Pushes Planned Retirement To End Of October (subscription)
Judy McKinnon – Wall Street Journal

TMX said Tuesday that Tom Kloet has agreed to remain as CEO of Canada’s flagship exchange operator until the end of October instead of retiring at the end of this month, as planned.

TMX said its board continues to search for a replacement for Mr. Kloet, who announced in March that he would retire after six years at the helm of the exchange operator.

See also our Premium post: 2014 – A Year of Unprecedented Executive Change?

PLY: I hope Tom enjoys the fall/autumn in Toronto once again…

Debate Over HFT On IEX Muddied By Trade Counting (subscription)
Bradley Hope – Wall Street Journal

IEX start-up trading venue operator that promises to protect investors from predatory trading activity, has found itself at the center of a fierce debate about just how much of the trading in its dark pool is done by HFT. With IEX expected to file its application to become a full-fledged stock exchange with SEC sometime in the next week, the stakes in the back-and-forth are higher than usual. However, looking closer at the details, it does appear to be a somewhat misleading debate.

EI reported on July 7th that IEX is mulling public exchange status.

PLY: A debate on predatory HFT to which I will return in our Premium service next week, as this week I am on a mix of holiday and safari of London startups for my Polish startup group Mission ToRun.

ESMA Plots Four-Year Plan (subscription)
Anish Puaar – Financial News

Europe’s top securities market regulator is planning a four-year strategy, as it continues to grapple with ever-increasing responsibilities under the post-crisis reform agenda.

As part of its goal to create a plan for 2016-2020, ESMA has launched a call for tender on its website for a firm to help with the development and final drafting, estimated to cost €60,000.

LME Will Consult On Way To Protect Premium Contract From Queues (subscription)
MetalBulletin

LME has come up with a mechanism designed to protect users of its planned premiums contracts from warehouse queues and is gearing to consult members, according to documents seen by Metal Bulletin.

Citigroup Endorses Revamp Of U.S. Stock Exchange Trading Fees
Doni Bloomfield – Bloomberg

Citigroup told regulators they could steer more stock trading to public exchanges by making it more affordable.

The bank suggested the U.S. SEC cut the highest amount that can be levied to trade by at least two-thirds, according to a letter from Daniel Keegan, head of Americas equities at Citigroup. Most exchanges charge the maximum, 30 cents per 100 shares, leading traders to favor lower-cost dark pools, he wrote. His statement aligns Citigroup, which runs alternative trading platforms, with two of the biggest exchange operators.

PLY: Hmmm, so it costs 30 cents per 100 shares to use an exchange and this is “too expensive” according to Citigroup. Can we speculate on what Citigroup charges its customers for say the equivalent sized trade, not just in equities but, say, bonds?

Private Markets

Brokers Write To Sebi For Refunds From MCX-SX
Jayshree P Upadhyay & Sachin P Mampatta – Business Standard

Stockbrokers, who paid a deposit to become members of MCX equity segment, are asking the bourse to return their money, even as volumes in the segment have completely dried up.

Creditor Extension Delays Mt. Gox Investigation By 6 Months
Jon Southurst – CoinDesk

The Japanese bankruptcy trustee handling the Mt. Gox case has announced a six-month extension for creditors to register claims. Nobuaki Kobayashi’s decision also means there will be an additional six months before any formal investigation into the bankrupt exchange is completed.

Bitcoin Foundation Selects BitGo Enterprise As Financial Management Platform
Tanaya Macheel – Coin Desk

Bitcoin Foundation announced that it will use BitGo’s Enterprise product to better manage its financial operations. Having the Bitcoin Foundation as a customer represents increased momentum and acceptance for the multi-signature wallet provider, CEO and co-founder Will O’Brien told CoinDesk.

Unocoin Raises $250k In A First for Indian Bitcoin Exchange
Coinsetter

Unocoin, one of the first Bitcoin exchanges in India, has raised $250,000 through Bitcoin Opportunity Corp, run by Barry Silbert of Second Market and an active player in the Bitcoin space. This would be a first for an Indian Bitcoin exchange and merchant processor, especially since there has been quite a bit of uncertainty around Bitcoin regulation in India.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Speculation on stake sales is mostly focussed on IEX this week with both FTIL and MCX down around 1%. Haven’t heard anything about Jignesh for days but at least he know is in custody with some new former clients for company within the judicial system:

NSEL Scam: Six Borrowers To Remain In Policy Custody
Sharleen D’Souza – Business Standard

The seven borrowers, who were arrested on Monday by Economic Offences Wing of Mumbai Police, were presented in Maharashtra Protection of Investors Deposit Court and one of the seven borrowers has been given ten days judicial custody while the other six are in police custody.

Prashant Ramesh Boruga of Metkor Alloys & Industries has been sent to judicial custody while Kailash Baburam Agrawal of ARK Imports, Narayan Nageshwar Roy of NCS Sugars, Ghanta Kameshwar Rao of Spin Cot Textiles, BVH Prasad of Juggernaut which is under Aastha Group, Chandramohan Premchand Singhal and Varun Gururaj Gupta of Vimladevi Agrotech will be in police custody.

NSEL Scam: Borrower Denied Bail
Abhijit Sathe – MumbaiMirror

A sessions court on Tuesday rejected the anticipatory bail plea of Mohit Agrawal of Aastha Minmet, one of the borrowers in the NSEL scam. The court, however, allowed the anticipatory bail plea of his wife Shilpa.

Another Maharashtra Protection of Interest of Depositors (MPID) court, on the other hand, granted police custody to six out of seven NSEL borrowers arrested on Monday, sending the seventh one into judicial custody on the grounds that the commodities he purchased through NSEL existed in his godowns.

Technology

Thomson Reuters Releases “Big Data In Capital Markets” Survey Results – Most Capital Markets Firms Do Not Have A Big Data Strategy – Early Days For Data Management As A Business Function
Mondo Visione

Thomson Reuters has published the results of a commissioned survey ‘Big Data in Capital Markets: At the Start of the Journey,’ prepared by Aite Group to assess the implementation of big data strategy among financial services firms.

PLY: Hmmm, the worrying thing is does Thomson Reuters have a cohesive big data strategy, other than asking other people about it?

Thomson Reuters Introduces New Buy-Side Focused App To Its Financial Markets Desktop Thomson Reuters Eikon
Mondo Visione

Thomson Reuters announced the launch of Watchlist Pulse, a new buy-side focused application for its flagship financial market desktop, Thomson Reuters Eikon. Watchlist Pulse allows portfolio managers, analysts, and traders to quickly monitor and review significant activities impacting companies in their portfolios and coverage lists, giving unparalleled insight into stock performances and trends.

Options Integrates Markit Message-Interoperability Tech Into Core Platform
Finextra

Options, the leading private financial cloud provider for the global capital markets industry, announced that it has integrated Markit’s Collaboration Services network with its Core platform.

Chinese Bitcoin Farms: From Scuzzy To Sci-Fi
Darren Pauli – The Register

Somewhere in very rural northeast China lies a dusty and dirty factory where the deafening roar of machinery leaks from an armada of Bitcoin mining rigs.

Heat is blasted out of the vents in the crude concrete citadel from dozens of fans that whip up a torrent to cool 2500 Bitcoin rigs slaving away at algorithms to earn their owners the much sought after crypto-currency.

Previous discussions on the topic in EI here and here.

Products

CME To Launch Eurodollar Bundle Futures & Options
Mondo Visione

The new contracts are expected to launch September 22nd subject to CFTC approval and will complement the existing suite of Eurodollar contracts and Eurodollar Packs and Bundles. Introduced in 1994, the Eurodollar Bundle enables the simultaneous sale or purchase of one each of a series of consecutive Eurodollar contracts, leaving the user with a strip of individual Eurodollar futures positions.

Eurex Onboards New Members For FX Futures Despite Summer Slowdown In Activity
Adil Siddiqui – Forex Magnates

Eurex exchange’s new FX contracts have managed to cause a stir among market participants as their advanced features attract new member firms. The contracts were launched on the 7th of July and offer users unique risk management capabilities. The move comes on the back of increasing interest in listed instruments in light of FX related scandals. In addition, exchange traded currency futures are increasing their foothold in the overall volumes rankings, according to industry reports.

Chinese Options “Could Launch This Month”
William Mitting – FOW

ETF options could be launched in China as soon as this month as the country gears up for the full launch of options trading, a leading lawyer has said.

China is undergoing a widespread reform of its financial markets as it seeks to build Shanghai as a global financial centre and develop its capital markets.

Career Paths

TMX initially announced that its CEO, Thomas A. Kloet, was retiring from the company effective August 31, 2014. A new announcement states that Mr. Kloet has entered into an agreement to remain in the role of CEO until October 31, 2014. The BoD of TMX is actively engaged in the search for TMX’s next CEO.

See also our Premium post: 2014 – A Year of Unprecedented Executive Change?

MV reports that Robert J. Keyes, a Senior Officer in the New York Regional Office, will retire at the end of this month following 22 years of federal service, including the past 18 at the SEC.

MB reported that LME ring-dealing member INTL FCStone has appointed renowned institutional investor Edward J Grzybowski as Director. Grzybowski has served as CIO of TIAA-CREF and chaired the investment management committee for TIAA and CREF.

EBS, ICAP‘s market-leading electronic FX business, announced that Simon Winn has joined as Head of Sales Asia Pacific, based in Hong Kong. Simon will be responsible for driving new business in Asia Pacific across the expanding EBS product suite and for increasing EBS’s footprint in the region. He will report to Gerard Varjacques, Global Head of Sales.

Financial Calendar

Today

MCX India Q1 Financial Results
FTIL Q1 Financial Results
Markit Q2 Financial Results

Tomorrow

SIBEX H1 2014 Financial Results

Friday

MOEX RUB 2.38 dividend payment

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

Crowdfunding

How Kickstarter Turned Into The Venture Capitalist’s Best Friend
Joshua Brustein – Business Week

It turns out that people who are good at raising money through crowdfunding campaigns are also pretty good at raising money from venture capitalists.

Hardware projects that have raised at least $100,000 through Kickstarter or Indiegogo have gone on to raise $321 million from venture capitalists, according to a report published on Monday by research firm CB Insights. About 9% of the 443 projects that reach the $100,000 threshold on the crowdfunding platforms have raised venture capital, too.

Other stories

China IPO Fever Turns Stock Market Into Winning Lottery
Lu Jianxin & Pete Sweeney – Reuters

China’s new equity listings are once again plagued by rampant speculation even as regulators limit the amount stocks can “pop” on the first day of trade and curb other unfair practices.

The casino-like atmosphere of the stock market highlights the complex task authorities have in weeding out speculation and nurturing mature investment behaviour. CSRC has said it wants to let the market have a “decisive” role in pricing new issues in future.

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