August 14 2014

elb2So farewell then London Silver Fix – tomorrow it returns under new management (CME/Thomson Reuters) while elsewhere today, discussion of Boat, LME CCP, LME COT, MCX results, Barclays Index sale, Indian brokers under pressure, first FIX API for Bitcoin, through train and other vendor news etc…

Mid-summer means two things, In the old analogue world it was holidays – speaking of which we’re taking the day off tomorrow…on a weighted population basis most of the known world is not uber-work focussed from Europe to India (Happy Independence Day!) and beyond, so we hope you’ll not mind us having a day to ourselves – first one since Memorial Day if my memory serves me correctly.

On a second note, summer also means upgrades and it seems a gremlin at our server provider caused some people to have headaches logging in to Premium content this week – we have held off new publishing while it is sorted and it looks to be cured now – profuse apologies to anybody inconvenienced and thanks to our existing and new subscribers, I appreciate your support for Exchange Invest.

Public Markets

MCX India Q1 Financial Results
MCX

Highlights (30th June 2014)

Total income from operations Rs. 51.59 crore (USD 8.45 mln), down 59% YoY
Net profit Rs. 23.4 crore (USD 3.83 mln), down 61% YoY
EPS Rs. 4.62 (USD 0.07)

FTIL Q1 Financial Results
FTIL

Highlights (30th June 2014)

Total income from operations Rs. 44.26 crore (USD 7.24 mln), down 57%
Net profit Rs.128.25 crore (USD 21 mln), up 58%
EPS Rs. 27.83 (USD 0.45)

PLY: With the original founder in jail and an ongoing commodity market crisis, in many ways these numbers are remarkable…depends on whether you take the long view I suppose.

Markit Q2 Financial Results
Markit

Highlights Q2 2014

Revenue $264.6 mln, up 11%
Adjusted EBITDA $120 mln, 7.7%
Adjusted Earnings $ 68.3 mln, down 3.5%
Adjusted Earnings per share, diluted $ 0.37, down 9.8%

Highlights H1 2014

Revenue $ 524 mln, up 12.5%
Adjusted EBITDA $236.7 mln, up 17.1%
Adjusted Earnings $ 141.2 mln, up 19.4%
Adjusted EPS, diluted $ 0.78, up 14.7%

PLY: Encouraging debut public company numbers from Markit who look to be busy:

Bloomberg, Markit Separately Look To Buy Barclays’s Index Unit (subscription)
Telis Demos & Katy Burne – Wall Street Journal

Rival financial data providers Bloomberg and Markit are separately looking at acquiring the fixed-income index unit of Barclays, operator of a widely used benchmark for fixed income portfolio managers that is up for sale, according to people familiar with the matter.

PLY: We have reached $1 billion apparently demonstrating either or both of the top of a very large bond bubble and / or indexing remaining a wondrous asset…

Barclays Index Unit Said To Draw Offers From Nasdaq, CME
Matthew Monks and Sam Mamudi – Bloomberg

BARC’s index business drew offers from Nasdaq OMX, Bloomberg LP, and CME.

The Index Portfolio and Risk Solutions, or IPRS, unit, which manages indexes including the U.S. Aggregate Bond Index, could fetch about $1 billion, one of the people said, asking not to be identified because the matter isn’t public. The first-round bids were due at the end of June, the people said, and the process hasn’t yet advanced to a second round.

FAO: Some recent index industry moves, reported by EI:

July 01 Thomson Reuters Acquires UBS Convertible Indexes
June 26th LSE bought Frank Russell Company from Northwestern Mutual
June 25th McGraw-Hill Financial and CME are interested in acquiring Barclays’ index business and merging it with S&P Dow Jones Indices.
June 24th Bloomberg took control of UBS’s leading commodity index.

LME’s New COT Report; A Beginner’s Guide: Andy Home
Andy Home – Reuters

When LME consulted with its industrial users on what it should do about long load-out queues at some of its warehouses, the only point of general agreement in a polarized response was that it should improve transparency.

Producers, consumers and industry groups were united in their call for the exchange to issue more information about who is doing what on the LME, something equivalent to the long-established Commitment of Traders Report (COTR) covering U.S. exchange trading.

EI reported on August 6th that LME published its first COTR.

PLY: Useful and saves me the effort of doing one from scratch!

LME Clear Receives Settlement Finality Designation
Mondo Visione

LME Clear, the new clearing house for LME market, has received a designation order made by the Bank of England under the Financial Markets and Insolvency (Settlement Finality) Regulations 1999.

MCX Writes To SEBI Clarifying Stance On MCX-SX Stake Sale
Financial Express

MCX has written a letter to SEBI explaining why it should not be needed to divest its holding in MCX and MCX-SX clearing corporation.

Five Answers From BVB CEO – Ludvik Sobolewski
Gabriela Maracineanu – Bursa

Bucharest SE CEO Ludwik Sobolewski answered a number of five questions addressed by the BURSA newspaper, on behalf of its readers. We will not comment on the answers.

Please make up your own opinion on whether they demonstrate respect for the readers or not.

PLY: An interesting blurb by Bursa, useful questions, answers worth reading.

Private Markets

Boat Charts Its Course For New Waters (subscription)
Anish Puaar – Financial News

Boat, the trade reporting service acquired by Swedish technology vendor Cinnober last month, is to expand beyond its traditional equity reporting model. According to CEO Jamie Khurshid, Boat is exploring ways to help its customers comply with new rules under the revised Mifid II that cover the reporting of bond trades and limits on dark pool trading.

EI reported yesterday that Boat clients are moving to Cinnober.

PLY: I am wondering if some who jumped immediately to BXTR on the closure announcement of BOAT by Markit now regret making the move – it will be interesting to see how Cinnober develop this important utility.

NSE Asks Brokers To Obtain Client Details By August 19
Economic Times

Leading bourse National SE (NSE) has directed its members to obtain mobile number and email address of their clients by August 19.

Angola’s Stock Exchange Scheduled To Open In November
Macauhub

Angola’s stock and debt exchange (Bolsa de Dívida e Valores de Angola – Bodiva) is scheduled to open in late Novembe with the exchange will initially trading public debt then from 2015 corporate debt.

EI reported on October 18th 2013 that Angola approved the laws to regulate stock and debts markets.

SuperDerivatives Goes Live With Exotic Options Trading Venue
Farah Khalique – Euromoney

SuperDerivatives has gone live with a new trading platform to trade exotic foreign-exchange options electronically, and plans to expand the number of tradable asset classes from metals and FX to include oil, equity derivatives, credit and interest rates. The derivatives specialist has ambitious plans to modernize the way exotic FX options are TRADED on its new platform, SDeX, but is the market ready to trade such complex structures electronically?

The Great Bitcoin Divide
Michael Terpin – Forbes

Michael Terpin is the co-founder of BitAngels, the world’s first angel network for digital currency startups.

Midsummer is a time for young love, lightning storms and states sticking their nose into cryptocurrency regulation. Last July, as the price of bitcoin hovered around $70, California subpoenaed the Bitcoin Foundation, a nonprofit that exists to update the protocol and promote Bitcoin’s importance, to prove that it did not require a money transmitter license (despite the fact that it never transmitted money; it accepts dues, like any other professional trade organization). That controversy kept the price of bitcoin low all summer, but was forgotten as California never even responded to the Foundation’s well-crafted response.

VC Funding Boosts Global Growth For Berlin-Based Bitcoin Startup
Forbes

In another boost for Europe’s burgeoning bitcoin business sector, P2P bitcoin lending platform Bitbond has secured its seed funding round, led by European early-stage VC Point Nine Capital.

CEO of BillPay Nelson Holzner also contributed to the €200,000 ($267,000) funding round as an angel investor.

Dividend News

FTIL’s BoD declared first interim dividend of Rs. 2/- per share (i.e. 100%) and the payment of first interim dividend shall be made on September 05, 2014.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX is flat, FTIL up 2% ahead of the Indian holiday tomorrow.

Technology

Markit Eyes Exchanges For Chat Tool (subscription)
Tim Cave – Financial News

Markit is in talks about adding stock exchanges and clearing houses to the growing number of large financial institutions backing its fledgling messaging network. The London-based data group launched its Markit Collaboration Services messaging initiative last October in partnership with Thomson Reuters and nine banks including JP Morgan, Goldman Sachs, Barclays and Citigroup. Earlier this month US investment bank Jefferies became the latest big-name to confirm it will join the network, which allows employees from partner organisations to chat with each other and share information regardless of their underlying messaging platform.

Andrew Eisen, head of collaboration services at Markit, said the group was now in discussions with “exchanges, clearing houses, vendors and other brokers” about joining the network.

PLY: The race to create the Bloomberg messaging killer is alive and well.

EI reported on August 4th that Wall Street firms led by Goldmans are close to buying a stake in instant messaging startup Perzo.

HKEx Launches The Application Service Provider Programme
Mondo Visione

HKEx has established a framework to support Application Service Providers (ASPs). ASPs play a vital role in HKEx’s market ecosystem by providing services to EPs and connecting investors to HKEx’s markets through EPs.

Five Hong Kong Brokers Spearhead Fidessa’s ‘China Connect’ Link
George Tchetvertakov – Forexmagnates

Fidessa has announced that five Hong Kong-based brokers will be the first participants in the through train to China. The brokers cited so far are ICBC International Securities Limited and Standard Chartered Securities (HK), with more likely to follow once the link is tested and launched later this year.

Traiana Launches Enhanced Cross-Asset Matching Engine – Post-Trade Securities Network Volume Surges By Over 1000% In Past 12 Months
Mondo Visione

Harmony Securities is available across various products, including cash equities, equity swaps, corporate and government bonds, municipal bonds and treasury bills, and has been designed to meet industry processing requirements as well as forthcoming regulatory changes, such as T+2 settlement.

Coinsetter Launches API For FIX Connectivity
Finextra

Coinsetter, Wall Street’s low latency bitcoin exchange and ECN, today announced the release of its institutional FIX API – the first BTC business to launch a FIX API.

Products

FMC Allows MCX To Discontinue Potato Futures
Economic Times

Leading commodity bourse MCX has been allowed to discontinue potato futures contracts expiring in the current and next month with immediate effect, according to the regulator FMC, a per a pending MCX request.

NCDEX To Launch Forward Contracts For Maize, Sugar
Sharleen D’Souza – Business Standard

India’s second largest commodity futures trading platform NCDEX, is to launch forward contracts in maize and sugar next week.

EI reported on August 11th new membership category by NCDEX for the soon-to-be launched forwards segment on its national level electronic platform.

Career Paths

Following yesterday‘s divestment MCX announced that Corporation Bank has withdrawn its nomination of P. Paramasivam as a Shareholder Director on the Board of the Company.

Moneycontrol reported, MCX informed BSE that FMC has nominated Ms. Pravin Tripathi, as an Independent NED on the Board of the Company for a period upto March 31, 2017.

In conversation: Eleni Gabre-Madhin
Tadias

With her new company, Eleni Gabre-Madhin aims to take the commodity exchange momentum that started with the Ethiopian Commodity Exchange, to the rest of Africa.

Financial Calendar

Today

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.

Share Notes

Interactive Brokers Group SVP Milan Galik sold 1800 shares Monday, August 11th at an average price of $23.22 (bargain $41,796.00). He now owns 743,717 shares. Mr. Galik’s regular sales are chronicled on this specific page.

MarketAxess Holdings Director David G. Gomach sold 5,000 shares Tuesday, August 12th at an average price of $56.52 (bargain $282,600.00). He now owns 1,604 shares.

Other stories

Tech, Compliance Costs Push Brokers To Exit Door
Ashish Rukhaiyar – Livemint

India’s stock markets continue to witness the exodus of brokers and sub-brokers despite rising turnover and higher stock prices, as cutting-edge technologies and costlier compliance drive many smaller firms out of business.

According to the latest monthly bulletin from Sebi, 203 brokers and 4,540 sub-brokers have closed shop since January while the benchmark S&P BSE Sensex gained 20% during the period. There has been a marginal fall in the number of registered brokers in the equity derivatives segment as well.

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