August 20 2014

elb2EU swap reform to be brought forward for buyside? SIX results in. Various post OTC updates. News on ICAP exchange and ongoing MCX/FTIL shuffles, Indian and African exchange deregulation and other updates etc…

There’s also a new Premium post on that thorny topic, NLX, the market which doesn’t appear to live up to its own hype. As today’s piece notes, I am left wondering just how many degrees of separation there are between the Payment for Order Flow scheme the FCA so disliked in cash markets recently compared with NLX paying participants to trade in instruments which are effectively immobile and riskless. This is another handy value add to our daily free output and I exhort you to support the free daily Exchange Invest and catch up with all our groundbreaking NLX analysis which has led the public domain discussion on this unprofitable venture.

Premium subs cost only $120 per annum for each user and keeps this daily newsletter free (You can subscribe here). Recent stories on NLX alone include:

NEW: NLX: Plus Ca Change?

Must Read: NLX: The Butterfly (In)Effect,
NLX: Big Data: Easy to Find?,
NLX: Missed Opportunity,
NLX: Measuring Up the Coffin?

Public Markets

MCX Prepares Ground For Complete FTIL Exit
Sharleen D’Souza – Business Standard

MCX has decided to ask NSDL to unfreeze 5% stake of its erstwhile promoter FTIL in preparation for a complete exit by Jignesh Shah’s IT vendor and exchange promoter.

FTIL’s 20% stake had a lock-in since the March 2012 MCX IPO. Because of the lock-in, the depository, cannot transfer shares.

EI reported on August 19th that MCX has decided to ask market regulator SEBI to relax the 2% lock-in cap on its promoter FTIL.

Calls Mount For Quicker Start To EU Swap Clearing (subscription)
Anish Puaar – Financial News

The start date for buyside clearing of swaps in Europe should be brought forward to prevent “serious operational and financial issues”, according to market practitioners.

Under proposals from ESMA, buyside firms will be given a phase-in period that runs into 2016 before they need to start clearing – around 18 months after the rules are finalised later this year.

ESMA Publishes Responses Received To First Consultation Paper On Clearing Obligation
Mondo Visione

The responses received to the Consultation paper on Clearing Obligation no1 IRS are available here.

CFTC Staff Issues Time-Limited, Conditional No-Action Relief Regarding Documentation Of Confirmations Of Uncleared Swap Transactions
Mondo Visione

No-action letter provides SEFs time-limited, conditional relief from certain data reporting and recordkeeping requirements in relation to confirmations required for uncleared swap transactions The no-action relief provided will expire at midnight (EDT) on September 30, 2015.

CFTC Staff Issues No-Action Letter For CCIL
Mondo Visione

CFTC, Division of Clearing and Risk (DCR) recently issued a time-limited no-action letter stating that DCR will not recommend that the Commission take enforcement action against CCIL for failing to register as a derivatives clearing organization (DCO) pursuant to Section 5b(a) of the Commodity Exchange Act (CEA).

Shanghai-HK Stock Link To Accelerate China’s Reforms
Xinhua

The Shanghai – Hong Kong ‘through train’ link will speed up reforms of China’s stock markets, making them more attractive to investors at home and abroad, according to analysts.

The Shanghai-Hong Kong Stock Connect was announced in April. Early this month, Shanghai officials met the Hong Kong brokers to discuss “through train”. On August 11th the first trial of the Shanghai-Hong Kong Stock Connect took place in the mainland, with 11 Hong Kong-listed firms taking part ahead of the intended launch October 13.

CEO Believes Growth In Rest Of Continent Provides Good Opportunities For JSE
How We Made It In Africa

JSE has always towered over other bourses in Africa. According to a report by Deutsche Bank, JSE in 2012 represented no fewer than 38% of all listed companies in the region.

Nicky Newton-King, CEO of the JSE, says growth in the rest of the continent provides good opportunities for the South African bourse.

Nick Goodway: A New AIM For Icap’s Michael Spencer?
Nick Goodway – London Evening Standard

It is now well over two years since Michael Spencer’s broking giant Icap took over the very junior stock market plus markets, which it renamed ISDX.

Since then, not too much has happened. There is a flashier, more interactive website. Patrick Birley, formerly of the LSE and NYSE Euronext, became chief executive in April.

PLY: Speculation on the exciting world of small cap markets in London with exchange veteran Patrick Birley running ICAP ISDX and mention of talk with Social Stock exchange boss Tomas Carruthers as well as speculation on the positioning of GLG which added vim with the appointment of AIM and Plus markets founder CEO Simon Brickles as a non exec in January. Interesting times for small cap markets.

Private Markets

SIX H1 2014 Results
Mondo Visione

Operating income CHF 881.0 mln (USD 968.33), up 18.0% to
EBIT CHF 151.0 mln (USD 165.97), up 29.5%
Group net profit amounted to CHF 130.7 mln (USD 143.66) (+40.4%)

PLY: Despite the giddy Swiss Franc, good results from SIX.

SME Platforms On BSE, NSE See Success
Ashish Rukhaiyar – Livemint

A two-year-old experiment by BSE and NSE to help smaller companies raise capital on separate platforms has met with some success,.

Tanzania Readies Rules To Open Stock Market To Foreigners
Alawi Masare & Eric Ombok – Bloomberg

Tanzania is studying proposals by the country’s stock market regulator to scrap limits on foreign share ownership.

Earlier this week EI reported that Tanzania is discussing the merger of its bourses.

BlinkTrade Opens New Bitcoin Markets In Venezuela, West Africa
Tanaya Macheel – CoinDesk

BlinkTrade’s Rodrigo Souza explains his company’s software provision to help develop new Bitcoin markets.

Bitcoin Is Barter For Individuals, Taxable For business: ATO
Leon Spencer – Zdnet

The Australian Taxation Office (ATO) released its guidance on the taxation treatment of Bitcoin and other crypto-currencies, timed to coincide with the lodgement of Australians’ 2013-2014 income tax returns.

PLY : An interesting third way proxy. Not a likely long term solution but will it help Bitcoin in the meanwhile? Hmmmm. Good for battlers, bad for business is my initial take.

How Cryptoagency Is Building Bitcoin’s Better Business Bureau
Danny Bradbury – CoinDesk

Now, a cryptocurrency ratings agency is hoping to quantify the community’s view of various bitcoin businesses. Cryptoagency.org will use a reputation system to reflect a company’s quality.

PLY: Interesting.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Both MCX and FTIL are off 1%, as the most excitement overnight appeared to be in the Twittersphere between myself (@FrontierFinance) and a series of NSEL interested parties.

FMC Wants NSEL To Be Merged With FTIL, Latter’s Management Changed
Rajesh Bhayani – Business Standard

If the government accepts the recommendations of FMC, FTIL promoter Jignesh Shah, who recently lost the country’s largest commodity exchange, MCX, might lose control of his flagship firm as well.

EI reported on August 18th that the commodity market regulator has told the government that NSEL should be merged with FTIL.

PLY: Still a really bad idea. FTIL Must pay for its failings but forced merger creates a ghastly precedent given the ability of regulators to over-reach, especially in the sub-continent. (Catch the ongoing conversation on Twitter @FrontierFinance).

Technology

The New Partner In OTC Regulatory Compliance
Stephanie Hammer – Automated Trader

PLY: Data centres are the new “plastics.”

Products

Investors Dine On Fresh Menu Of Credit Derivatives (subscription)
Tracy Alloway & Michael Mackenzie – Financial Times

In March of last year, Kyle Bass, founder of the hedge fund Hayman Capital Management, made a startling proclamation: aggressive young bankers in Japan were pushing complex over-the-counter derivatives similar to those that rapidly soured during the financial crisis of 2008…

Indexes

FTSE Group Launches Ex Russia Indices
Mondo Visione

In response to Client demand following recent US and EU sanctions, FTSE has launched a set of new FTSE ex Russia indices.

Career Paths

Bloomberg reported that Anthony Warner, CEO of ICAP Singapore unit, resigned after 25 years with the broker and will leave at the end of this month.

Reuters reported that MarketAxess Holdings hired David Wright, former Co-Head of Credit Sales at RBS as Head Of Investor & Dealer client Sales in Europe and a Member Of Management Team in London.

Union Bank of India has withdrawn its nomination of Mr. K. N. Reghunathan as a Shareholder Director of MCX. Accordingly, Mr. K. N. Reghunathan ceases to be a Director of the Company.

Religare reported that MCX has appointed R. Amalorpavanathan Chief GM NABARD as an Additional Director on the board.

Financial Calendar

Thursday

ASX 2014 Full-Year Results
Record date MarketAxess $0.16 quarterly cash dividend
Record date Thomson Reuters $0.33 quarterly dividend

Friday

Record date HKEx $1.83 interim dividend
Record date TMX $0.40 quarterly dividend
Record date BGC Partners $0.12 quarterly dividend
Record date Fidessa 13.1p interim dividend

Share Notes

Interactive Brokers Group SVP Milan Galik sold 1800 shares Friday, August 15th at an average price of $23.41 (bargain $42,138.00). He now owns 740,117 shares. Mr. Galik’s regular sales are chronicled on this specific page.

Crowdfunding

The Investor’s Guide To Real Estate Crowdfunding
Nav Athwal – Forbes

With the passage of the JOBS Act in late 2012, crowdfunding has caught fire and is being used to raise money for everything from startups to small businesses. In fact, in 2013 alone, crowdfunding, which includes debt, equity, rewards and donation based crowdfunding, is responsible for approximately $5 billion worth of capital raised.

Other stories

DTCC/SWIFT Ranks First In TABB Group’s New Comprehensive Global Quarterly Ranking Of LEI Infrastructures
Automated Trader

TABB has announced that it has initiated an exclusive comprehensiveness global quarterly ranking of the 14 legal entity identifier (LEI) providers across the world’s FINANCIAL centres based on data validity and size. For the second quarter of 2014, DTCC/SWIFT ranks first in the inaugural TABB Group ranking with a total comprehensiveness score of 97%.

Govt Reiterates Need To Phase Out APMCs
Dilip Kumar Jha – Business Standard

The Union government has reiterated the need to phase out the system of Agricultural Produce Marketing Committees (APMCs).

PLY: Pushing out the collectives ought to help usher in proper marketplaces for spot commodities – a sound move by a government I hope will deregulate with gusto.

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