August 13 2015

 elb2It may be summer, there may be a heatwave in many parts but the deal flow is HUGE and the news fascinating today. No more pith from me, just scroll, trust me you risk exposure at the water cooler if you don’t:

Public Markets

FIS To Acquire SunGard

MondoVisione

FIS Buys SunGard For $9.1bn (subscription)

Ben McLannahan – Financial Times

As a result of last last week’s exclusive negotiations, Fidelity National Information Services (“FIS”) is buying SunGard Data Systems for $9.1bn in a mixture of cash and stock, allowing its private equity owners to offload one of the signature deals of the pre-crisis buyout boom.

The merged FIS entity will have $9.2bn in annual revenues from selling software and services.

PLY: The planned SunGard IPO ends up in a trade sale as some had long predicted. More info in Premium SunGard IPO Preps & Final Deal Brief & Exchange Deals Brief. It strikes me the problem remains that Sungard is a big slow moving beast of many old code systems at a time when modernity in fintech is all the rage. As a legacy vendor, much of this business feels much more 1990’s than web2.0…or whatever web we’re on now…

For the 7 PE firms which owned Sungard (Silver Lake, KKR & Co., Bain Capital, Blackstone Group, TPG Capital, Goldman Sachs Capital Partners & Providence Equity Partners) there was presumably a handy bond/dividend profit on the way through although the capital account looks weaker. Sungard Availability Services is still with the PE firms. When split last April a $2 billion sale price could not be achieved for that unit. Presuming that deal can be done now…bear in mind Sungard was acquired for $11.4 billion in 2005…there is still a clear capital loss for the 7 PE firms.

JPMorgan Cuts Stake In Plus500 To 7.96%

Maria Nikolova – LeapRate

Sold 604,810 shares in the UK CFD broker, reducing its stake from 8.49% to 7.96%.

Read in Premium our Exchange Deals Brief.

PLY: The Plus 500 share price remains stubbornly shy (nearly 30 pence) of the 400 pence takeover bid..

ITG Completes Settlement With SEC

ITG

ITG Pays $20m Fine To Settle ‘Secret Trading Desk’ Claims (subscription)

Nicole Bullock & Gina Chon – Financial Times

SEC on Wednesday announced (press release here) the fine, which ITG last month had warned was coming.

PLY: The auction war heats up for SEC fines – it’s just a case of when not if we see “any advance on $20 million…” Doubt that cheers anybody up at Credit Suisse or Barclays who may now feel as if they are locked into a sort of inverse Dutch option – whoever hits the ‘Pay fine’ button may find themselves paying less than the next guy given the strong uptrend.

Hedge Fund AQR Fires Trading Head Linked To ITG Probe (subscription)

Bradley Hope – Wall Street Journal

Hitesh Mittal had been head of trading at the $136 billion hedge fund since 2012.

Read our Premium post: “ITG, Dark Fines & A Coalition for Change.

NLX Market Notice

GLOBE NEWSWIRE

NLX invites participants of the NLX market to submit tenders for DMM status in NLX’s STIR and LTIR futures, and TED spreads to supplement the current DMM scheme.

Read our Premium NLX Brief.

PLY: Bring your own wings.

Presentation By HKEx CEO Charles Li & Group CFO Paul Kennedy On 2015 Interim Results Announcement

MondoVisione

HKEx 2015 Interim Results – announced yesterday.

HKEx: Great Red Hope (subscription)

Financial Times

A play on China’s modernisation looked attractive six months ago — less so today

PLY: In other words, having been wrong the first time round about “through train’ the media are still determined to double up on the trade. China will go through cycles – probably faster than the west – and the ‘through train’ has already proven its worth.

Flash Crash Suit By Regulator On Hold As Extradition Sought

Janan Hanna – Bloomberg

U.S. District Judge Andrea Wood on Wednesday granted a request by federal prosecutors to delay the exchange of evidence in the lawsuit for four months to avoid damaging the criminal case. Wood agreed, saying “it would be in the interest of justice to stay this matter.” Such requests in parallel criminal and civil cases are common and usually granted.

Read our Premium The Kennel – Premium discussion of the “Hound of Hounslow”.

PLY: As arrogant hubris is now apparently a serious misdemeanour (qv a certain US fine against Barclays in recent months), the hound of Hounslow is clearly viewed as guilty in a financial trial a tad worthy of Kafka. Currently the hound is kept in his kennel until he can prove the rather unfathomable: “unless Sarao can prove he doesn’t have access to undisclosed funds, the risk of him fleeing is too high.” Presumably he gets extra brownie points if he ‘dobs’ in a few witches along the way?

FCA Secures High Court Judgment Awarding Injunction & Over £7 Million In Penalties Against 5 Defendants For Market Abuse

MondoVisione

High Court Backs FCA’s Demand For £7.5m Fine

Peter Walker – FT Adviser

The High Court held that FCA is entitled to permanent injunctions and penalties totalling £7.5m against Szabolcs Banya, Gyorgy Szabolcs Brad, Tamas Pornye and companies Da Vinci Invest and Mineworld for committing market abuse.

PLY: The worry is the cash amount is being paraded as a trophy, as opposed to a sound ‘justice has been done’ message…

JPX Head Puts Priority On Trust, Stability

Tomoki Matsubara & Yomiuri Shimbun – Japan Times

“We always tell ourselves to work so our system will never stop functioning,” JPX CEO Akira Kiyota.

Trading Firms Ramp Up Response To Mifid II (subscription)

Financial News

ICE Trade Vault Europe Approved By ACER

Finextra

The Agency for the Cooperation of Energy Regulators (ACER) has approved ICE Trade Vault Europe as a Registered Reporting Mechanism (RRM) meeting European wholesale energy market reporting requirements.

Private Markets

Scandal-Hit Exchange Sees Dominance Under Threat in Chile

Eduardo Thomson – Bloomberg

A Chilean court will soon decide whether to weaken the Santiago stock exchange’s near-monopoly on trading.

The way it works now, brokers at Bolsa de Comercio de Santiago — which controls 98% of stock trading in the $203 billion market — are compelled to keep their orders exclusive to that exchange for three minutes. Only then can they shop them at rival markets like Bolsa Electronica de Chile and Bolsa de Valparaiso — and they still usually don’t.

In May BM&FBovespa paid 6.6 billion pesos ($10.8 mln) for an additional 6% share in Bolsa de Comercio de Santiago, pushing its stake to 8%. QV our Premium MILA Exchanges Brief and BMF&Bovespa Monopoly – Brief.

PLY: Fertiliser share manipulation has been amongst the recent issues on the Chilean bourse. Point to ponder. Do ASX officials think of this 3 minute order resting period and wonder: “why didn’t we think of that?”

Pakistan – Market Crash 2008 Pinned On SECP Ex-Chairman, KSE Brokers

Israr Khan – The News

The global meltdown was not the only reason behind the 2008 stock market crash, the ‘inaction’ of the Securities & Exchange Commission of Pakistan (SECP) and the then chairman ‘unilaterally’ handling the situation, placing a floor on the prices of listed securities led to the crisis. These were the findings of the commission to investigate the market crash of 2008. The commission was formed in 2012, and had been dormant until January 2015.

All Preps For Yangon SE In Place By Next Month

Khine Kyaw – The Nation

Maung Maung Thein, deputy finance minister & SEC Chairman, said that more than 80% of the preparations for YSX have been completed. The electronic systems to be used in the exchange should be ready 2 or 3 months before the official launch.

Read our Premium ASEAN Exchanges Project Brief.

The ‘Great Bitcoin Exodus’ Has Totally Changed New York’s Bitcoin Ecosystem

Michael del Castillo – NY Business Journal

New York’s bitcoin startups have been clearing out since the August 8 deadline to submit applications for special licenses came and went. The burden, it turns out, concerning both capital required and time invested, wasn’t worth the potential benefits.

FAO: More about Lawsky’s BitLicense release here.

PLY: An object lesson in the digital age. Major financial centres like New York are far from immune from a mass walkout if they get their regulatory framework wrong.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX up 2%, FTIL down 2%

Probe FTIL’s Role In NSEL Scam Within 12 Weeks, Bombay HC Orders Sebi

Ashish Rukhaiyar – Livemint

NSEL Investor Petitions: Sebi Probing FTIL, Promoters

Business Standard

The Bombay high court has directed Sebi to look into demands for a probe into the role of FTIL in the payment fraud at NSEL within 12 weeks’ time.

PLY: Petitioners gain a possible step forward as a judge orders SEBI to respond to their complaints and investigate. An outbreak of resolution would be clearly welcome and could give SEBI a much needed credibility boost, ahead of the FMC merger. The 12 week limit has an “if possible” get out close incidentally.

Read our Premium NSEL Scandal Brief – Part 16.

Technology

MOEX Derivatives Trading Interruption

Maria Nikolova – LeapRate

Telecom Glitch Halts MOEX Data, Trading (subscription)

Waters Technology

Outage lasted nearly half an hour: Wednesday Aug 12, from 11:23 (MSK) to 11:50 (MSK). The underlying cause of the outage was malfunctioning telecommunication equipment.

Dhaka SE Starts Trading After Two-Hour Delay Due To Technical Glitch

bdnews24

The floor opened at 12:10pm instead of the regular 10am on Wednesday. Trading hours were extended until 4:10pm instead of the regular 2:30pm closure.

PLY: Human error to blame on this one apparently with an adjustment to working practice already in place to avoid a recurrence.

Markit To Acquire CoreOne Technologies For $200 million

Automated Trader

Markit has agreed to acquire CoreOne Technologies, a provider of regulatory reporting, index management, data management and prime brokerage services.

PLY: Interesting move towards prime brokerage service provision by Markit.

CSC Eyes Electronic Trading Outsourcing With Fixnetix Deal (subscription)

Philip Stafford – Financial Times

The deal was announced late on Tuesday. Financial terms were not disclosed but are believed to be worth about $30 a Fixnetix share, according to two people familiar with the talks. That would give the UK group a valuation of just over $100m.

PLY: A turnaround for Fixnetix which saw a stake sold by ICE last year for just 200 Pounds ($310). Readers would be premature to think this somehow validates the ‘billion dollar brain-less’ NYSE Tech strategy. The swallow summer index remains a valid benchmark.

Develop DIY Algorithms—Safely

TradeTalk

Recently The Wall Street Journal published an article titled “Algorithmic Trading: The Play-at-Home Version” highlighting the growth of a new crop of DIY tools that allow retail traders to easily automate their trading strategies. The users quoted in the article expressed excitement about having the ability to quickly build and deploy their own strategies, but they lamented that unforeseen issues in their algorithms led to sizable losses.

Since 1994, TT has been building tools to allow professional derivatives traders to automate their strategies. It’s encouraging to see the DIY algo programming trend start to migrate to retail traders, but the potential for loss with some of these systems is a detriment. To that end, allow me to point out a few differences between our approach and the others.

PLY: Very well worth reading this thoughtful article – and note the 1994 origins of tools which reminds us how the WSJ’s summer story about it all being shiny and new in algo-ville is tosh (I know I wrote some algos before 1994 as I had been practising before starting in web commerce that year…).

Lending Club Launches Open Integration

PRNewswire

…allowing online advisors & broker-dealers to offer LC investments quickly and easily to their client bases, using a suite of API services that integrate directly into their websites. It provides the same functionality that currently exists on Lendingclub.com, including money movement, investing, reinvesting, real-time reporting of cash and holdings, and tax reporting.

PLY: Cool.

Products

ICE Extends European Bond Futures Hours To Tap Asia (subscription)

Cian Burke – FOW

ICE is planning to extend trading hours for German, Italian, Spanish and Swiss bond futures from Sep 1.

EBS BrokerTec Launches BrokerTec European Government Bonds Data Product

ICAP

Career Paths

Portware, global provider of multi-asset trade automation solutions powered by AI, appointed FX industry veteran Christopher Matsko as Head of FX Trading Services.

Calcutta SE Begins Search For New MD & CEO

Business Standard

Currently under suspension, the exchange  is on the path of transformation.

PLY: Calcutta has long been on the cusp of transformation, e.g. when City of London Mayor John Stuttard was lauding its push forward on his visit in 2007. Hopefully the transition will continue this time…

Financial Calendar

New announcement – ASX Full-Year FY15 Results – Thursday 20 August 2015

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

Share Notes

Interactive Brokers CFO Paul Jonathan Brody sold 646 shares at $42.63 (bargain $27,541.86).

Fidessa insider John Hamer bought 1,132 shares Wednesday, August 12th at GBX 1,897 (bargain £21,474.04).

Check our Share Notes page in Premium.

Analyst Notes

Morgan Stanley Lifted Target Price On Tullett Prebon From GBX 270 To GBX 433 – “Equal Weight” Rating

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

Other stories

Goldman Sachs To Give Out ‘Secret Sauce’ On Trading (subscription)

Financial News

Bank to offer clients access to more of its in-house tools, such as high-powered databases that analyse markets and manage risk.

PLY: Fascinating, the equivalent of customer cars from Ferrari or Mercedes being sold to the second and third tier teams in Formula One racing.

FIA Releases SEF Tracker Report For May

FIA

…shows volume trends from January 2014 to May 2015 for interest rate, credit default & forex products etc.

EEX, EPEX SPOT, Gaspoint Nordic & Powernext Publish Common FAQ Document On REMIT Data Services Agreement

MondoVisione

Gary Katz President & CEO Of ISE To Appear Before U.S. Department Of Labor To Discuss The Proposed Conflict Of Interest Rule

MondoVisione

 

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