August 26 2014

elb2MOEX reports improved profits despite a volatile geopolitical environment. ASX CEO embracing self-interested protectionism at every turn, Tel Aviv to trade Monday to Friday, lots of Indian news on multiple fronts (with a High Court bombshell for NSEL investors), SGX reduces lot size, Bitcoin news aplenty, Prague power exchange develops cross-border ambitions, as ASEAN co-operation inches up. Bitcoin Foundation to be established in Bangladesh – has a neat synergy to it if you recall the history of Grameen…

Keep up with the NLX story and more with a Premium sub at just $120 per annum for each user (You can subscribe here). Recent stories on NLX alone include the latest quest to find out if they really have any business as well as the following stories you may have missed:

Latest: NLX: Plus Ca Change?
NLX: The Butterfly (In)Effect,
NLX: Big Data: Easy to Find?,
NLX: Missed Opportunity,
NLX: Measuring Up the Coffin?

Public Markets

Moscow Exchange Results Q2 2014
Mondo Visione

Highlights

Operating income RUB 6.75 bln (USD 186 mln), up 7.1%
Operating expenses RUB 2.36 bln (USD 65 mln), up 9.1%
EBITDA RUB 5.08 bln (USD 140 mln), up 11.8%
Net Profit RUB 3.47 bln (USD 96 mln), up 5.2%
EPS RUB 1.58 (Pence 4), up 6.0%

CBI Files Fresh Case Against FTIL, MCX-SX, SEBI Members
Moneycontrol

CBI has filed a fresh FIR (investigation file) against FTIL, MCX-SX, and Sebi members Vishakha More, Rajesh Dangeti, SV Muralidhar Rao, former SEBI member JN Gupta and Jignesh Shah.

This development is significant because apart from the fact that the CBI has named these individuals, it has let off former Sebi chairman CB Bhave and KM Abraham, who had previously come under the CBI scanner.
EI reported yesterday that the CBI has decided to close a case against former SEBI chairman C B Bhave and KM Abraham, but suggested internal action.

ASX Chief Pleads For More Protectionism (subscription)
Andrew White – Australian

The newest director on the Business Council of Australia board, Elmer Funke Kupper, has hit out at claims the peak body’s call to foster globally competitive industries amounted to “picking winners’’, and called for the government to prioritise reforms.

PLY: Aha! Now we know, EFK, used to be a McKinsey consultant! I hadn’t realised this but it explains a lot! Meanwhile, the Australian government would be best advised to ignore anything he says and just develop competition – after all look at where the dogged pursuit of national champions has left France.

In EFK’s own words, as he hoists his own petard: “Why wouldn’t we, as an absolute minimum, make sure that we make the absolute most of those sectors, because the opportunity for growth and wealth creation is enormous just by getting those right?’”

– Indeed, so why don’t we deregulate the Victorian monopoly of the ASX entirely to allow full and free competition in all Australian markets large and small as opposed to being dictated to by the edifice of protectionism which is crumbling anywhere the likes of Chi-X or LCH.Clearnet have been given even the most grudging of footholds? The message of protectionism from Mr Kupper is a distasteful blight on the face of free markets and an ugly corporate coda against Australia’s dynamic economy.

SGX To Cut Board Lot Size From Jan 19 Next Year
Anita Gabriel – Business Times

That’s when retail investors will be able to start buying securities listed on the SGX in smaller lots of 100 units from 1,000 units currently.

PLY: A cynic might add that this means HFT can trade smaller clips too?

FMC Gaining From Finance Ministry Oversight
Shyamal Banerjee – Livemint

While the long wait for the amendment of the Forward Contract (Regulation) Act, or (FCRA), continues, the finance ministry has proposed new rules that will give the FMC more powers over intermediaries in the commodity derivatives market.

Does this mean the amendment to the FCRA could entail another long wait, and that the government prefers small, manageable changes to the existing Act? Not quite.

PLY: Sadly after so many failings and endless regulatory creep from Indian agencies over the years, I fear only a massive reform can help India regulate and develop the markets it requires to fulfill its potential.

Private Markets

MCX-SX Case: CAG Finds Accounts Clean In Supplementary Audit (subscription)
Economic Times

Private bourse MCX-SX claimed that public accounts watchdog Comptroller and Auditor General of India has not made any adverse comments or observations on the auditors report in the supplementary audit, which negates any wrongdoings in the accounts for FY’14.

MCX-SX Cancels FTIL’s Warrants (subscription)
Economic Times

MCX has extinguished the warrants held by FTIL in it and transferred Rs 5,600 crore ($933 mln), the non-refundable interest free deposit of warrants, to its capital reserves.

EI reported on July 8th that as of March 31, 2014, MCX held a total of 37.98%, assuming 63.41 crore warrants are converted into underlying shares. FTIL held 33.86% (4.99% equity, plus underlying shares assuming full conversion of warrants) in MCX-SX.

PLY: Value expunged as a direct result of the NSEL fiasco and subsequent FMC ‘fit & proper’ ruling.

Korean Bitcoin Startup Korbit Nets $3 Mln In Series A Funding
Jon Southurst – Coin Desk

Korbit has announced a $3mln Series A funding round, led by Softbank’s VC arm Softbank Ventures Korea and including Pantera Capital and BAM Ventures, as well as investors and funds previously associated with the company; Barry Silbert’s Bitcoin Opportunity Corp, Tim Draper, Pietro Dova and Strong Ventures.

Second Asia Structured Product Multi-Dealer Platform To Launch (subscription)
Justin Lee – Risk

Competition in the Asian structured product multi-dealer platform arena is set to increase with Swiss bank Vontobel planning to launch a platform in Asia similar to its Deritrade offering in Europe. Vontobel’s multi-dealer platform has been in operation for two years and has five active product providers including itself, Deutsche Bank, Morgan Stanley, Societe Generale and UBS.

TASE Eyes Change To Monday-Friday Trade
Reuters

The board of Tel Aviv Stock Exchange (TASE) supports shifting the bourse’s trading week to Monday to Friday (TASE has traditionally been Sunday-Thursday) to align itself more with global markets, the TASE said on Monday, as it seeks ways to boost trading volumes and attract more listings.

PLY: Shabbat issues have been tricky for TASE for some time – there was no appreciable interest on Sundays from the rest of the world and most significant US data clusters on a Friday when TASE is closed. The move also makes life easier for TASE to gain inclusion in global indices such as MSCI…

Chamber Of Digital Commerce To Form Fund For Pro-Bitcoin Politicians
Stan Higgins – Coin Desk

The CDC has revealed that it intends to form a PAC to help further the interests of the bitcoin industry in Washington, DC. The government affairs office, led by bitcoin advocate Perianne Boring, first filed with the FEC this month to create its committee.

Bangladesh Get Its Own Bitcoin Foundation
Carlo Caraluzzo – Coin Telegraph

PLY: From the home of Muhammad Yunus and the birth of microbanking, there is a particular synergy to Bangladesh establishing a Bitcoin foundation.

Mark Karpeles Avoids Bitcoin, Launches Web Hosting Service
Nermin Hajdarbegovic – Coin Desk

Mark Karpeles, the disgraced CEO of defunct bitcoin exchange Mt Gox, has launched a new web hosting service dubbed Forever.net and is registered under both Karpeles’ name and that of Tibanne, the parent company of Mt Gox.

Dividend News

Scrip Dividend Scheme In Relation To The Interim Dividend For The Year Ending 31 December 2014
HKEx

The Interim Dividend will be payable in cash with a scrip alternative under which eligible Shareholders may elect to receive the Interim Dividend wholly or partly in the form of New Shares instead of in cash. In addition, Shareholders have the right to choose to receive new Shares instead of cash for all future dividends to be paid by HKEx.

Special Section: FTI, NSEL, India at the Crossroads

PLY: In a move for common sense (something neither judiciary nor regulators practice often enough) various parties have been jolted by the High Court releasing Jignesh on bail remarking that the no smoke without fire audit trail means some investors may have been either lacking in due diligence skills or simply trading in hope more than logical expectation. MCX shares are flat while FTIL has given back most of its gains yesterday, down 3%.

HC bail Order Jolts Investors
Rajesh Bhayani – Business Standard

Observes Investors are actually traders, along with brokers knowingly participated in illegal activities on the exchange.

FTIL Stake In MCX: SEBI Eases Lock-In Norm
Business Line

Capital market regulator SEBI has granted FTIL exemption from the mandatory lock-in of 2% stake in MCX.

The lock-in is lifted only to pave the way for FTIL to meet the commodity market regulator, FMC’s revised norms that do not permit a tainted entity to hold stake in the commodity exchange.

Bombay HC Forms Panel To Sell Assets Of Defaulters
Khushboo Narayan – Livemint

The Bombay High Court (HC) on Monday formed a committee chaired by retired high court judge V.C. Daga to sell the attached assets of the 22 borrowers who have defaulted in the fraud at NSEL. The court was hearing a representative suit, or class action suit, filed by Modern India Ltd against NSEL and its promoters.

EI reported on August 18th that brokers played a major role in NSEL scam according to the fraud squad, and on August 7th that the Bombay HC allowed a group of investors to make written submissions on the charge sheet filed against MCX promoter Jignesh Shah.

PLY: The faster we see asset sales the better – India needs to start clearing its myriad frauds up much faster than has been the traditional lengthy lag.

HC Questions Applicability Of MPID Act In NSEL Case
Rajesh Bhayani – Smart Investor

While granting a bail to Jignesh Shah, group CEO and Chairman of FTIL in the case of NSEL fiasco Justice Thipsay of Bombay High Court said that those who are calling themselves as investors are actually traders and court went to the extent of saying that even questioned applicability of Maharashtra Protection of Interests of Depositors (MPID) Act in the NSEL case. These observations of high court could have a far reaching impact on the way cases and investigations in the NSEL Rs.5600 crore ($933 mln) fiasco are going on. Court said that transactions in question were not genuine transactions of sale or purchase was well known to the so-called buyers also, who now choose to describe themselves as ‘investors’. Court call them traders rather than calling them investors who were putting money just to get safe and high returns without bothering for legalities of trades. The court observed that these investors and even brokers, who have knowledge of commercial market, were aware about illegality of the trades.

PLY: The High Court has rather blown the issue open with this opinion but it is hardly surprising if you were reading our coverage this past year!

Technology

MIAX Price Improvement Mechanism Rollout Is Complete
Market Watch

MIAX Options Exchange completed the rollout of the MIAX Price Improvement Mechanism (PRIME), which began on August 8, 2014.

Products

Prague Power Bourse To Offer Romanian, Polish Futures Contracts
Reuters Africa

PXE will launch Polish and Romanian futures contracts on Sept. 1. The financially-settled month, quarter and year contracts will cover baseload & peakload hours and add to similar offerings for Czech, Slovak and Hungarian futures, the Prague-based exchange’s CEO David Kucera said.

PLY: The relatively modest dimensions of the nations in much of CEE / SEE makes more cross border trading a given and here there remain considerable opportunities…

Indexes

NASDAQ OMX Announces Launch of Nine New Indexes Effective Monday, September 8, 2014
NASDAQ

Career Paths

Warsaw Stock Exchange (WSE) reported that the Extraordinary General Meeting of the WSE on 25 August 2014 appointed Mr Waldemar Maj to the Exchange Supervisory Board.

WSE press release here.

MV reported that Christopher J. Kirkpatrick was named Secretary of the CFTC. He will lead CFTC’s Office of the Secretariat and play a key role in the preservation and management of the Commission’s records.

Money Management reported that the former Chair of ASIC, Tony D’Aloisio will take on the role of Chair with listed financial services technology provider IRESS.

Waters reported that EPFR Global has hired data industry vet Larry Joyce (former Sales Director at Thomson Reuters), as Sales Director.

Financial Calendar

Friday

Record date CBOE $0.21 quarterly dividend
Record date Interactive Brokers $0.10 quarterly dividend

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

Analyst Notes

CBOE Upgraded By Raymond James To “Outperform”.

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

All Analysts, Banks and Brokers are welcome to contribute to this section.

Crowdfunding

Crowdfunding Continues To Expand In China
Crowdfund Insider

Recent reports have stated that China generated 188 mln yuan (over $30 mln USD) from January to June. This was the result of 1,423 crowdfunding campaigns, mostly pure equity.

Other stories

Facilitating Cross-Border Offers Of Collective Investment Schemes In ASEAN To Retail Investors
Mondo Visione

The Monetary Authority of Singapore (MAS), SC Malaysia, and, SEC Thailand launched the ASEAN CIS Framework to facilitate cross-border offers of CIS to retail investors.

EI reported on Jul 22nd that Thailand SEC allowed listing of foreign firms and on Jun 10th that Bursa Malaysia is targeting new products and retail growth to stay ahead as ASEAN’s multinational marketplace.

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