August 31 2015

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 UK Bank holiday today so if you’re ringing London, they are stuck in a traffic jam in the rain. Steamy situation for Sungard as BNY Mellon still cannot value its assets, causing headaches throughout the fund manager value chain (and this, after a bare discombobulation – imagine what a major dislocation would do!). Media and traders largely still bewildered by last week’s mini storm while ICE in discussions with exchange users about patent fees will likely generate more thoughts in weeks to come. Happy scrolling…

Meanwhile, don’t forget those upcoming ‘can’t miss’ events: my Young Markets, if you want to be ahead of the curve in the future of finance on September 17th in Warsaw and a week later, it’s a return to the beauty of Lac Leman, the Burgenstock conference in Geneva with Crossfire to kick the main day off on the 23rd. Register Here.

Public Markets

Plus500 Updates On Planned AIM Trading Cancellation
Maria Nikolova – LeapRate

Plus500 says that the intended Cancellation which, subject to completion of the Merger, will take place no earlier than 7:00 a.m. on September 28, 2015.

Read our Premium Plus500 Turmoil & Deal – Brief – Part 2.

Flash Crash’ Trader’s Request To Delay Hearing Is Turned Down (subscription)
Jane Croft – Financial Times

Navinder Singh Sarao will have his extradition case heard next month.

Read our Premium Flash Crash & Hound of Hounslow – Brief.

NYSE Draws Users’ Ire With Fee Increases, Patent Charge Proposal
Sam Mamudi & Matthew Leising – Bloomberg

ICE and some of the world’s biggest derivatives markets, is setting up a clash with customers with its plan to generate income by licensing patents and boosting market-data fees.

The company has asked its biggest customers what they’re willing to pay for licenses to trading-technology patents it bought a year ago. ICE proposed to one company that it would waive the licensing fee if it directed stock transactions to NYSE, which has seen its share of the equities business dwindle, instead of rival exchanges.

PLY: It is always interesting to see market users kick back against the idea of paying for things and when it comes to information, users prove remarkably recalcitrant to pay in many cases. Here ICE have thought the situation through (the users, alas, clearly didn’t…plus ca change…). Thus ICE bought the patents and now intend to extract a return from the purchase. I was never a big fan of the patented trading approach when TT first upped the ante a decade or more back. However that status quo remains and ICE having mapped out a strategy, are in discussions with clients. Yip, I happen to worry about data prices being excessive, at least for simple feeds. Then again I think a lot of sell side fees for trading are outrageously expensive pro rata to exchange equivalent services. At the same time, somebody has to pay the extra costs associated with HFT-related and other value add feeds. A developing discussion, clearly.

Market Tumult Shows Cracks In The Armour (subscription)
Nicole Bullock & Joe Rennison – Financial Times

PLY: The biggest worry remains that the teenage scribblers and, more worrying still, a generation of traders, seem to think last week was a period of outrageous volatility when it was, by historical standards, a storm in a large – but hardly one of those Starbucks venti ‘drums’ –  teacup. You get the impression that when seeing a fairly average day in Italian BTP futures during the early 1990’s they would burst into tears.

ETF Providers Question US Trading Limit Rules (subscription)
Joe Rennison & Nicole Bullock – Financial Times

Providers of ETFs reeling from the market turmoil this week are calling for a reassessment of stock market risk controls, which they say prevented accurate pricing of ETFs.

PLY: Perhaps the issue ought to be considering whether ETFs may be better served by some form of auction back-up when markets are volatile? Perhaps hourly auctions to consolidate trading at the time when the markets have a chance to catch up with a potential cornucopia of stock in distressed (extreme / limit move) situations. ETFs were conceived as a simple, accessible, transparent tool for long-term investors. Is therefore low latency quotation at all times strictly necessary?

China Asks Brokerages To Boost Market & Buy Back Shares
Bloomberg

CSRC asked brokerages to step up their support for share prices by contributing 100 billion yuan ($15.7 billion) to the nation’s market rescue fund and increasing stock buybacks.

PLY: China strikes me as doubling down on the double down while pressurising everybody to buy, and it will all neatly deflect and delay the crisis until it has reached truly stultifying propositions.

Private Markets

MMTC Keen To Sell Its Stake In Indian Commodity Exchange
NDTV

State-owned MMTC is looking for investors to sell its 26% stake in the commodity bourse Indian Commodity Exchange (ICEX), which wound up its operations towards the end of 2013.

PLY: “Metals & Minerals Trading Corporation of India” is the 500 lb gorilla trading arm of Indian government.

Myanmar Delays Launching Stock Exchange To Make Way For Election
Xinhua News Agency

The planned Yangon SE (YEX) was originally scheduled to debut in October but will now launch after the general election set for Nov. 8. The stock exchange will be operated by the Myanmar Economic Bank in partnership with JPX (owns 18.75%) and Daiwa Securities Group (owns 30.25%).

Read our Premium ASEAN Exchanges Project Brief.

QE Inks Deal With BIST
The Peninsula

Qatar Exchange (QE) and BIST signed a MoU aiming to formalise cooperation.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX up nearly 1%, FTIL (er, sorry: 63 Moons Technologies is down nearly 1%.

Technology

BNY Mellon Races to Fix Pricing Glitches Before Markets Open Monday (subscription)
Kirsten Grind & Timothy Puko – Wall Street Journal

BNY Mellon Aims To Fix Pricing Breakdown By End Of Monday
Christian Baumgaertel – Bloomberg

More than 100 executives worked throughout the weekend to correct issues.

BNY Mellon’s CEO warned clients that his firm might not be able to solve all pricing problems caused by a computer glitch before markets open Monday, the latest delay in an unprecedented outage that has frustrated investors and prevented nearly 50 fund companies from providing accurate values for their holdings. The technology, provided by SunGard Data Systems, should be able to provide asset values for Friday by early Monday. Net asset values for Monday should be available by the end of the day or early Tuesday.

PLY: This may be the tipping point where it finally became clear that the legacy vendors had deep problems delivering their systems…and bear in mind Sungard’s software looks youthful compared to the ghastly stuff behind a lot of global payments, like Swift where rumours still abound that they have blueprints signed off by Charles Babbage himself for delivery of early versions…

Tokyo SE: Date For Renewal Of Arrowhead
MondoVisione

Tokyo SE will start production operations of arrowhead after renewal on September 24, 2015, as previously scheduled.

Bitcoin Technology Piques Interest On Wall St.
Nathaniel Popper – NY Times

PLY: Glossy pics of newly resident New Yorker Fredrik Voss as the NYT tries to get the general readership up to some speed on blockchain in financial markets applications…

Products

JSE Launches JSE Eris IRS Futures
MondoVisione

JSE & Eris Exchange announced a swap futures licensing partnership in April.

PLY: The Eris revolution continues all over the world….

BSE Increases Lot-Size Of Foreign Index Derivatives Contracts
The Economic Times

BSE has decided to revise upwards market lot sizes of equity derivatives contracts based on foreign indices — FTSE/JSE Top 40, iBovespa, Micex and Hang Seng.

PLY: An ongoing upwards revision flowing from SEBI’s high-handed approach to constrain exchanges from sizing contracts which might appeal to a broad swathe of retail investors…

Platts Launches China Oil Analytics Platform
MondoVisione

Indexes

Osaka Exchange: Initiatives To Promote JPX-Nikkei 400 Futures
MondoVisione

Career Paths

Finance Magnates reports that Zopa COO Jaidev Janardana is being promoted to CEO with Andrew Giles becoming Executive Chairman.

Sharon Bowles, former MEP for South East England, was made a member of the British House of Lords in the latest intake of the British (unelected) upper chamber of Parliament. She became a non-executive of the LSE, a few months after standing down as an MEP and Chair of the Econ Committee ahead of the last European Parliamentary elections in 2014.

Financial Calendar

01.09.2015 – Record date Interactive Brokers $0.10 quarterly dividend

02.09.2015 – Record date NZX 3.0 cents interim dividend

04.09.2015 – Record date CBOE $0.23 dividend

04.09.2015 – TMX $0.40 dividend payment

04.09.2015 – BGC Partners’ BoD $0.14 quarterly dividend payment

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

Share Notes

Interactive Brokers insider Thomas A.J. Frank sold 12,753 shares Thursday, August 27th at $38.25 (bargain $487,802.25).

Analyst Notes

Evercore ISI Lifted Price Objective On CME From $101.00 To $104.00 – “Buy” Rating

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

Crowdfunding

Romania – The Chance of Prompt Payers To Escape Bank Captivity (Romanian Version)
Cristian Hostiuc – Ziarul Financiar

P2P lending is coming to Romania. Two Romanian entrepreneurs, Ioan Cora and Marius Bălăceanu, operating from Silicon Valley, said they have discussed with the Romanian National Bank and they can legally launch operations.

Other stories

Nigerian SE (NSE) Achieves ISO 27001:2013 Certification
MondoVisione

IIROC Releases Annual Report For 2014-2015
MondoVisione

ASIC’s Corporate Plan 2015–16 To 2018-19 & Focus For 2015-16
MondoVisione

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