December 05 2014

elb2Eris licences its swap futures to ICE in a fascinating, and potentially game changing, move for all parties concerned and the marketplace too… Today is punctuated by interesting insights in the front and the CCP end of things alongside news of MCX-SX, ICAP combining EBS & Brokertec while EU FTT is unlikely to be agreed by year end deadline but clearly is not yet dead.

Meanwhile, it’s a day so replete with “MOUs” I feel more like a cattle farmer than the pith provider of Exchange Invest… Hmmm, maybe we ought to buy an office cow bell and ring it every time we hear of another exchange-related MOU, a sort of existential tribute to the bikesheds of Burgenstock and its botch ups of years gone by (et al).

Finally thanks to the eternally charismatic Lee Hodgkinson and Euronext for generously hosting a select group last evening at the excellent London air Ambulance gala in Canary Wharf, London – a magnificent soiree for a great cause delivering salvation from the heavens via their privately funded hybrid helicopter emergency medical service. Plaudits too to the (anonymous now – but not for long) bidders who spent $50,000 dollars to secure themselves a mention in the next James Bond book – presumably they will be immortalised as suave card players at Blades or somesuch splendidly Bondian scenario…

Public Markets

Betfair Interim Results For The Six Months Ended 31 October 2014
Betfair

H1 FY15 Highlights

Revenue GBP 237.6 mln, up 26%
EBITDA GBP 73.9 mln, up 51%
Operating profit GBP 59.9 mln, up 82%
Profit before tax GBP 67.3 mln, up 112%
EPS 55.0p

PLY: Good results albeit suggesting an ongoing away from being a pure exchange to a continuation of the dual track exchange and more traditional ‘sportsbook’ style betting franchise.

MCX Invites Bids To Sell Stake In MCX-SX, MCX-SX Clearing Corp
Livemint

MCX has initiated the process to sell its stake in MCX-SX and MCX-SX Clearing Corp., which it collectively values at Rs.137.58 crore (USD 22.2 mln). MCX holds 27.2 million equity shares—representing a little under 5% stake—and 634.2 million warrants of MCX-SX, along with 6.5 million equity shares of MCX-SX Clearing Corp.

PLY: Offers within the next 10 days apparently…

MCX-SX Rushes To Convert Warrants Into Equity
Anirudh Laskar & Ashish Rukhaiyar – Livemint

With days to go to comply with the net worth norm stipulated by the capital market regulator, MCX-SX is in negotiations with its new investors to convert recently purchased warrants into equity. While renewing MCX-SX’s licence on 15 September, SEBI set a three month deadline for the exchange to clearly establish that it had the required net worth of Rs.100 crore (USD 16.16 mln).

ICAP To Combine EBS & BrokerTec Businesses
MondoVisione

PLY: I had always presumed this to be an inevitability, in the fullness of time…

Barclays Hid Traders’ Role After Questions: Schneiderman
Bob Van Voris & Jef Feeley – Bloomberg

Barclays asked that a federal judge in New York handle claims it hid the role of high-frequency traders in its dark pool, saying the evidence in the case is “incredibly complex” and includes millions of trading records. NY AG Eric Schneiderman sued Barclays in state court in June.

FTT Delay ‘99% Certain’ (subscription)
Tim Cave – Financial News

The 11 European countries attempting to introduce a FTT are now highly unlikely to implement the levy at the start of January 2016 as planned.

FAO: Latest discussions on the subject- earlier this week.

PLY: “FTT Dead” is the only language I will understand to ensure European markets are free.

JPX, SGX To Collaborate On New Derivatives
Reuters
JPX & SGX Advance With New Partnership
MondoVisione

PLY: JPX co-operation has plainly come a long way since a Japanese Minister came close to a Khrushchev shoe banging on the table when SIMEX retained a NIKKEI Dow 225 future as the Japanese stock market was plummeting…

SGX CEO Starts Sixth Year By Saying Sorry
Jonathan Burgos & Sterling Wong – Bloomberg
More Than Words Needed To Reassure SGX Investors
Yasmine Yahya – Straits Times

PLY: After a Wednesday to forget, the knives have continued to sharpen for Magnus all week but he seems to be clinging on for now…perhaps being helped by the fact that a fair whack of his opponents are rather feral in their opposition?

Bondcube Granted European Regulatory Approval – U.K. Financial Conduct Authority (FCA) Approval Passported To 31 Countries
MondoVisione

DB1 bought a minority stake in Bondcube in February this year.

GCSA Capital: The CCP Underwriter (subscription)
Risk

A consortium of 20 insurers is offering to cover CCP tail risk, and its chairman, David Hardy, believes the cost of clearing could be reduced as a result.

PLY: Both cost and enhanced sanctity of the end of the waterfall appeal in the GCSA offering.

Clearstream & BNP Paribas Securities Services Team Up For TARGET2-Securities
Deutsche Borse

TriOptima & DTCC Go Live With Data Connectivity In Europe To Reconcile OTC Derivatives Repository Data
MondoVisione

REGIS-TR To Become A Registered Reporting Mechanism (RRM) In The European Wholesale Energy Market
Deutsche Borse

REGIS-TR applies to the EU Agency for the Cooperation of Energy Regulators (ACER) to become a Registered Reporting Mechanism (RRM) for wholesale energy market integrity and transparency (REMIT).

ESMA & ASIC Sign MoU On Trade Repository Data
MondoVisione

ESMA and ASIC have concluded a MoU on access to data held in European trade repositories . The MoU is effective as of 26 November 2014.

ESMA To Cooperate With Regional Regulators On Australian CCPs
MondoVisione

Private Markets

BATS Faces Record SEC Fine Over Direct Edge’s Actions (subscription)
Scott Patterson – Wall Street Journal

A three-year investigation into allegedly unfair treatment of investors by stock exchanges could result in the largest fine ever levied against a stock exchange, perhaps circa $12 million to $13 million beating the NASDAQ Facebook levy of $10 million.

LuxSE & Industrial & Commercial Bank Of China Sign MoU
MondoVisione

Clearing Body Of NSE Sets Aside ₹624 cr (USD 100.9 Mln) To Meet Default Risk Obligation
Raghavendra Rao – The Hindu Business Line

The clearing corporations of the BSE, NSE and MCX-SX have earmarked the core settlement guarantee fund (SGF) for December at ₹129.1 crore (USD 20.8 mln), ₹624 crore (USD 100.9 mln) and ₹22.76 crore (USD 3.67 mln), respectively.

CISX Bounces Back From Scandal (subscription)
Vanessa Houlder – Financial Times

PLY: I am not sure the bounce is clear yet but CISX has long had a strong franchise from doing slightly off the run transactions.

Proposed US Law Calls For Five-Year Moratorium On Bitcoin Regulation
Stan Higgins – CoinDesk

HR 5777, a new bill submitted to Congress by US Representative Steve Stockman (R-TX), calls for a five-year moratorium on digital currency regulation within the US.

PLY: Why limit such a moratorium to just Bitcoin I ask.

Dividend News

Betfair interim dividend up 50% to 9.0 pence per share, £200m return of capital to shareholders.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX flat, FTIL flat too…

NSEL: Investors Ask Bombay HC Judge To Recuse Himself
Khushboo Narayan – Livemint

Investors, in a letter to Justice V.M. Kanade, say his son had earlier appeared for a NSEL defaulter and ‘there is an obvious likelihood of a bias’.

NSEL: ED Attaches Rs14.22 Crore (USD 2.3 Mln) Assets Of Defaulting Firm
Livemint

The Enforcement Directorate (ED) has attached assets worth Rs.14.22 crore (USD 2.3 mln) of a M/s N K Protein, accused in the NSEL scam case. “

Technology

Transcendent Group & Nasdaq’s BWise To Partner In the Nordics
Nasdaq

Nasdaq’s BWise, a global leader in enterprise Governance, Risk Management and Compliance (eGRC), announced a new strategic partnership with Transcendent Group, a premier GRC advisor, to jointly serve enterprise customers in the Nordic region.

Products

ICE & Eris Exchange Announce Global Swap Futures Licensing Agreement
BusinessWire
ICE To Join Europe Swap Futures Battle (subscription)
Philip Stafford – Financial Times

ICE and Eris Exchange announced a multi-year license agreement for ICE exchanges to list futures and options based on the Eris Methodology, Eris’ patent-pending product design for constructing swap futures in a capital-efficient manner.

Under the agreement ICE is licensing the rights to list European and U.S. CDS futures and European interest rate futures based on the Eris Methodology.

PLY: Eris maintains its excellent momentum and ICE steals a march on the competition by licensing the one swap platform which has had good traction to date. Plaudits to both parties – whether the market prefers bespoke to off the peg remains to be seen but this is another good move for Eris on the strong trajectory it has achieved to date…

LME – Launch Of LBMA Platinum & Palladium Prices
LME

LME has successfully launched LMEbullion, a custom-built electronic solution to provide reference prices for the platinum and palladium markets.

PLY: Plaudits to LME on a successful rollout.

Indexes

SGX Expands Access Into Southeast Asia With New Index Futures
MondoVisione

SGX announced the expansion of its Southeast Asian equity derivatives suite with the introduction of the SGX MSCI Malaysia Index Futures contract.

Career Paths

WSJ reports that ICAP is combining EBS and BrokerTec, expanding the role of Gil Mandelzis, head of EBS, and unseating BrokerTec’s CEO, Seth Johnson, from that role. The platforms will continue to operate separately. EBS’s current development chief, Richard Kerschner, was named interim CEO of BrokerTec.

LCH.Clearnet Group has appointed two new senior executives, with Michael Davie becoming group COO and Martin Pluves taking up the role of CCP CEO. The new roles will become effective from 1 January.

Lending Club announced that it is welcoming Simon Williams, former head of Citigroup’s Global Consumer Group risk management, back to the Lending Club BoD. Williams originally joined the Lending Club board in 2010 and had stepped down in 2011 to lead HSBC’s retail wealth management business globally.

Novus, a NY-based portfolio analytics platform for investment managers and investors, announced that John Trammell has joined the company as MD in its New York office.

The government decided to renew its confidence in Martin Andersson, who will stay on as Director General of Finansinspektionen (FI)Swedish Financial Supervisory Authority.

Financial Calendar

Today

TMX $0.40 Q4 dividend payment
Record date LSEG 9.7 pence interim dividend

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

Share Notes

Interactive Brokers Chairman Earl H. Nemser sold 4,358 shares Wednesday, December 3rd at an average price of $27.39 (bargain $119,365.62). Mr. Nemser’s regular sales are chronicled on this specific page.

Analyst Notes

Credit Suisse Boosted Their Price Target On ICE From $220.00 To $225.00 – “Outperform” Rating
Barclays Reaffirmed Their “Overweight’ Rating On ICAP – GBX 465 Price Objective
Tullett Prebon “Overweight” Rating Restated By HSBC – GBX 320 Price Target

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

Australian P2P Lender SocietyOne Closes New Funding Round
Finextra

SocietyOne, Australia’s first and largest P2P lender, announced the successful completion of a Series B capital raise with a consortium of eminent Australian investors, made up of Consolidated Press Holdings (CPH), News Corp Australia and Australian Capital Equity.

P2P Lender Landbay Completes First Institutional Funding Round
Finextra

Landbay, the low risk P2P lending platform focused on the UK buy-to-let mortgage market, has completed its first institutional funding round.

The company has raised £1.5 million (USD$2.35 million) which was led by an investment partner introduced by the alternatives investment manager Omni Partners LLP. Participation in the round also included an asset management company and an angel investor. This new funding will assist with Landbay’s next phase of growth.

Other stories

CCP Risk Management Recovery & Resolution, An LCH.Clearnet White Paper
MondoVisione

LCH.Clearnet welcomes the work underway at national, EU and international level to improve transparency of CCPs’ risk management policies and procedures and further strengthen their resilience.

CFTC Announces Agenda For Upcoming Agricultural Advisory Committee Meeting
CFTC

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