December 02 2013

elb2FTT delays, FTIL results down, ICE euthanises NYPC, a rather damning report into NSEL, index wars, power delays and more…

Public Markets

FTIL Q2 Net Profit Drops Over 61 %
ndtv.com

FTIL posted an over 61 per cent drop in standalone net profit at Rs. 27.01 crore (USD 4.32 mln) in Q2 after making a provision for its investment in embattled subsidiary NSEL.

Full results here.

PLY: Results which place in some context that FTIL is in huge problems if the NSEL liabilities spiral for Jignesh Shah and his empire.

ICE And DTCC Set For Clearing Venture (subscription)
Financial Times
ICE To Move Liffe US Interest-Rate Futures Clearing To ICE Europe
Wall Street Journal

ICE press release here.

PLY: Closing NYPC is unsurprising but the move to seek a means to cooperate in big ‘OTC’/SEF clearing is an interesting development.

Stock Exchanges Wage War Over Index Rights (subscription)
Financial News

PLY: Article 30 of MIFIR could revolutionise European index trading if it permits open licensing of indices as proposed (although index providers may obfuscate by delivering complex/expensive contracts to potential competitors).

EU FTT Faces More Delays (subscription)
Wall Street Journal

PLY: While the scribbler end of the media reported Angela Merkel triumphing in the German elections I have always been clear it was a defeat. The new German government has a greater socialist tinge including various mandates against capitalism including FTT. Ironically even France and Italy appear to be shying away from the worst ravages of this dangerous initiative and Luxembourg’s new government is explicitly against.

The worry is that just as the Euro has so far been held together with duct tape through scant regard for law so too an FTT will be bludgeoned through.

That Berlin wants ftt on forex amply demonstrates how far removed the political class are from the real world of business, let alone finance.

China Unveils IPO Guidelines Ahead Of Expected New-Offering Flood (subscription)
Wall Street Journal

China moved closer to ending a 13-month moratorium on initial public offerings, releasing guidelines on fundamental changes to the way companies will raise funds in the country’s stock market.

At the same time, China unveiled rules that will allow listed companies to issue preferred shares, offering firms—especially banks—a fresh channel for funding to shore up their capital bases.

Deutsche Börse And Bank Of China Announce Strategic Cooperation
MondoVisione

PLY: DB seek access to offshore RMB market.

Private Markets

Changes To Fees On Oslo Børs, Oslo Axess And Nordic ABM
allaboutshipping.co.uk

Changes to fees for Issuers of securities listed on Oslo Børs, Oslo Axess and Nordic ABM.

After Ahmedabad SE, Regional Exchanges Face The Axe
dnaindia.com

Vadodara SE (VSE) and Saurashtra Kutch SE (SKSE) are also slated to shut down like the Ahmedabad SE by March 31, 2014. This is part of the exit route planned by SEBI for the regional stock exchanges (RSE).

PLY: Enforced closing of regional exchanges may yet come to haunt SEBI if/when Indian markets develop sufficiently to again encourage regional SME or similar markets across the vast and highly divergent economy of India.

MCX-SX Opens 4 New Service Centres
The Hindu Business Line

MCX SX has launched investor service centres in Ahmedabad, Hyderabad, Indore and Kanpur in order to facilitate faster resolution of investor complaints. Currently, it has service centres in Mumbai, Delhi, Kolkata and Chennai.

CSE Awaiting SEBI Nod To Resume C-Star Trading
Business Standard

Calcutta SE is awaiting market regulator SEBI’s approval to join the BSE promoted clearing corporation that would facilitate the resumption of credit in C-Star, the fully computerised on-line trading system.

Mt. Gox Boosts Security With One-Time Password Card
Finextra

Bitcoin exchange Mt. Gox has moved to address security concerns by introducing a physical one-time password (OTP) generating card for users who pay $39.99 for the battery-powered card.

Princeton Professor Building A Bitcoin-Inspired Prediction Market
theverge.com

Ed Felten has done a lot of work on Bitcoin. His latest project looks to step beyond mere currency, applying the principles of Bitcoin to the broader spread of information through the world. In a blog post, the Princeton professor announced a project to build a prediction market based on the anonymous and self-arbitrating principles of Bitcoin.

Nine Bitcoin Alternatives For Future Currency Investments
The Guardian

Bitcoin’s recent meteoric rise in value to over $1,000 has shone the spotlight on alternative currencies, but bitcoin is not the only new digital currency vying for relevancy in 2013.

Like bitcoins most of these currencies are mined by computers solving hard mathematical problems.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX & FTIL shares are down about 1% in the wake of an unsurprisingly damning report into the conduct of NSEL.

‘NSEL, Board Violated Rules; Failed To Act Against Defaulters’
businesstoday.intoday.in

The corporate affairs ministry has found that the beleaguered NSEL and its Board not only violated multiple regulations but did not take action against repeated defaults which resulted in scam at the bourse.

Ministry Probe Finds Corporate Governance Lapses
The Financial Express

An inspection by the Corporate Affairs Ministry has found that NSEL’s board failed to perform their duties towards shareholders in violation of regulations.

NSEL First Violated Rules In April 2012
Livemint

The ministry of consumer affairs was aware as early as in April last year that NSEL had violated conditions of the exemption it was given from operation of the Forward Contracts (Regulations) Act, 1952 (FCRA).

Shah, Massey Allowed Paired Contracts On NSEL: RoC Interim Report
Business Standard

The registrar of companies (RoC) has found the controversial paired trade contracts were first permitted by the board of NSEL in 2009, illegally.

The contracts, which included two legs, the first settled on the third day (T+2) and the reverse a month later (T+25, T+36, etc), are at the centre of the NSEL crisis.

PLY: Uncomfortable reading for exchange / regulators alike but will there be a crackdown and if so will punishment be meted out on all wrong doers or just one side of the equation?

Enforcement Directorate Attaches Rs.75-Crore (USD 12 Mln) Assets
ndtv.com

The Enforcement Directorate (ED) has attached an estimated Rs. 75-crore (USD 12 mln) assets of a borrower company (Mohan) and its associates in connection with money laundering probe in the NSEL scam case.

EOW’s NSEL Catch Worth Rs 2,066 Cr (USD 331.2 Mln)
The Financial Express

The Economic Offences Wing (EOW) of the Mumbai Police has pegged the preliminary valuation of the seized properties of the 26 defaulters in NSEL at R 2066.41 crore (USD 331.2 mln). The seized assets include 173 immovable properties, shares and investments worth R 6.5 crore (USD 1.04 mln) and 15 vehicles.

PLY: Still short of the amount required to ensure no losses but nonetheless progress.

Govt Probe Report Seeks Relief For NSEL Investors
hindustantimes.com

An interim government probe report has recommended immediate relief for the beleaguered investors of NSEL, setting the ground for a potential winding down or a takeover of the default-hit commodities stock exchange in a government-supervised exercise to protect thousands of investors.

FTIL Likely To Sell More Of Its Assets
Business Standard

FTIL, which last week sold its SMX for $150 million, is understood to be looking for buyers for more of its ventures — global exchanges, as well as domestic subsidiaries. Some deals could be sealed in the current financial year itself.

PLY: DGCX is clearly a key asset. As the 31% has a lot more tangible value than the now merged African ventures Bourse Africa/GBOT which are largely inactive. Yet somebody keen to accelerate development of a pan African entity may yet find it interesting. The MCX-SX stake must also be reduced soon to allow for the latest restrictive shareholder mandate from government.

3 NSEL Investors File Winding Up Petition Against FT
Business Standard

Three investors of the NSEL are understood to have filed a winding up petition against the Financial Technologies in the Bombay High Court. These investors have exposure of Rs 225 crore (USD 36.06 mln) together.

PLY: As well as seeking the winding up of NSEL, a direct attack on FTIL.

Technology

TOCOM, CME To Connect Systems
the-japan-news.com

TOCOM will make a formal decision at a board meeting in mid-December to link the trading system of TOCOM, which offers precious metal, oil and grain futures trading services, to CME Globex.

Products

Nasdaq Plots European Swap Futures (subscription)
Financial News

Nasdaq OMX is consulting with the market about launching swap futures in Europe that offer a cheaper, exchange-traded alternative to popular OTC derivatives, potentially opening another front in its battle with Eurex.

PLY: NLX appears to have had a volume fillip of late too.

Javelin SEF Streamlines Its IRS MAT Submission Citing Operational Readiness Concerns
Javelin

Javelin SEF announced today that it has amended its Made Available to Trade submission (“MAT Submission”) of IRS to CFTC.

Based on feedback Javelin received from a broad group of institutional buy-side firms, Javelin has streamlined its MAT submission to the CFTC to include only benchmark Dollar and Euro swaps along with certain IMM swaps.

Career Paths

As part of the plans to transition the clearing of interest rate futures listed on NYSE Liffe U.S. from New York Portfolio Clearing to ICE Clear Europe, Lynn MartinCEO of NYSE Liffe U.S. will serve as the CEO of NYPC through the transition and wind down period.

Sri Lanka Seeks Manager For Central Counterparty Project
lankabusinessonline.com

Sri Lanka is seeking a manager and consultant to establish a central counterparty for financial transactions, which is expected to minimize credit risks in settling financial transactions.

Financial Calendar

Today

Record date NZX 1.5 cents Q3 dividend

Tomorrow

Betfair results for the six months to the end of October
MCX Rs. 7 interim dividend payment

This week

Record date LSEG interim dividend of 10.1 pence
TMX $0.40 dividend payment

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

Analyst Notes

Charles Schwab “Neutral” Rating Restated By Zacks – $26.00 Price Target
Betfair “Buy” Rating Restated At Panmure Gordon – GBX 1,317 Target Price

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.

Other stories

LSE Identifies “1000 Companies To Inspire Britain”
MondoVisione

LSE launched a landmark research report ‘1000 Companies to Inspire Britain’.

EU Power Network Integration Seen Delayed Again
Bloomberg

The biggest changes to Europe’s energy market since it was liberalized in the 1990s probably will miss a third deadline as the second target date passed.

Network and exchange operators likely won’t meet the Feb. 4 goal to join up day-ahead power trading in 15 nations from the U.K. to Finland.

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