December 10 2014

elb2

Some may express shock that the rabidly left wing anti-enterprise French Finance Minister is banging on about an FTT to destroy Europe’s markets but it all fits with the usual game – push until you get what you want, all in the name of European unity. Lending Club has encouraging interest for its IPO. Elsewhere, it’s a quiet day for news overall but some useful nuggets to ‘pithify:’ all against a background of a mid-term inspired backlash to the Dodd Frank steamroller in the US. Interesting times, happy scrolling:

Public Markets

BGC Extends Tender Offer To Acquire GFI Group – Satisfies Regulatory Closing Condition
MondoVisione

BGC Partners announced that it has extended the expiration date of its tender offer to acquire all of the outstanding shares of GFI Group it does not currently own for $5.25 per share in cash.

BGC Partners responded last week to the announcement by CME & GFI Group regarding their proposed transaction.

Lessons For Hong Kong’s HKEx In Singapore’s Winning Streak (subscription)
William Barkshire – South China Morning Post

PLY: Clearly Bill is still active in Honkers, despite HKMEX’s decline last year. Interesting to see how he has taken a clear line that SGX is leading HKEx on innovation whereas the home market in each island appears eager to kick the local monopolist. Neither extreme is right but there is a good argument to be made for proper innovation. Alas, however, innovation is one of the most abused words by the exchange ‘linearists’ (and don’t even start me on legacy bankers or vendors) and here indeed pretty much every exchange could benefit from some more, and clearer, radical thinking.

HKEx Explains Daily Quota Balance Calculations & Turnover Under Shanghai-Hong Kong Stock Connect
HKEx

In response to media enquiries about the daily quota balance under Shanghai-Hong Kong Stock Connect going above the daily quota, HKEx wishes to explain how the quota balance is calculated.

SGX Unaware Of Reason For ‘Unusual’ Trading In Own Shares
Reuters

Over 8 million SGX shares had changed hands during the day, more than four times the 200-day daily average of 1.5 million. Its share price climbed 3.4% to close at S$7.60, its highest since August 2013.

PLY: Perhaps somebody else sees the optionality in SGX as opposed to just the dark…or was it Bill Berkshire’s stirring comments in the South China Morning Post (see above)?

Banks Set For Swaps-Rule Win In Broader Deal To Fund Government
Silla Brush & Cheyenne Hopkins – Bloomberg

Wall Street is poised to win a big victory in its lobbying campaign against the Dodd-Frank Act as lawmakers move to repeal a derivatives rule as part of a bill to fund the government.

Congress will vote this week on a bill that lets JPMorgan Chase, Citigroup and other lenders keep swaps trading in units with federal backstops. House and Senate negotiators agreed yesterday to give the break along with funding increases for CFTC and SEC.

France Seeks To Keep EU ‘Robin Hood Tax’ Plan Despite Missed Deadline
Robin Emmott & Ingrid Melander – Reuters

PLY: A classic European fudge, the self-imposed deadline being missed, those desperate to further add to the red tape of the EU’s dysfunctional machinery simply insist on keeping talking – presumably until the EU collapses or 1000 years of empire elapses (whichever is the sooner). Readers are advised to spend the Festive season sharpening their stakes to be prepared to skewer this hideous proposal as soon as it raises its ugly head in the New Year.

FAO: Latest comments on the subject here, here and here.

Private Markets

MCX-SX Complies With SEBI’s Conditions
MondoVisione

Board of Directors of MCX-SX issued shares to new investors post conversion of warrants. The exchange has also complied with main conditions imposed by SEBI. Net-worth of the exchange now stands comfortably above the regulatory minimum.

PLY: MCX-SX is saved, apparently with Mr Jignesh Shah no longer even a passenger in the journey.

BSE Must Act As Catalyst For Wealth, Job Creation: Chauhan
Moneycontrol

BSE CEO Ashish Kumar Chauhan interviewed as part of CNBC’s Indian affiliate celebrating their 15th anniversary.

IEX Chief Strategy Officer: Our ‘Magic Shoebox’ Doesn’t Make Us Anti-HFT (subscription)
Timothy Bourgaize Murray – Waters Technology

Ronan Ryan, chief strategy officer at aspiring dark pool IEX, gave one of the more colorful keynotes in recent years at Waters USA conference in New York.

PLY: The year ends with IEX having burst onto the scene with a fascinating plan, then riding a wave of hype which through no fault of their own involved the slightly hyperbolic twists of Mr Lewis’ pen. Nevertheless IEX have achieved something that few can manage in such a short time – a position in the “new establishment” of the venues which matter in a competitive world.

Tradition’s Trad-X hits 25,000 Trade Milestone As Total Volumes Exceed $1 Trillion
Andrew Saks-McLeod – Leap Rate

Since the start of September 2014, Trad-X USD on-SEF volumes have seen a sharp increase. From the start of September to end of November, Trad-X executed more than 4,700 IRS trades, worth a notional value in excess of USD 540 billion.

PLY: We’re not big into volumes per se but like to drop in to SEF-world every so often, particularly as I suspect a platform cull will be upon us early next year. The fight for relevance and hence survival is currently more key than being market leader per se.

Special Section: FTI, NSEL, India at the Crossroads

PLY: No sooner does FTIL droop than it jumps back 4% while MCX is flat.

Technology

BME To Open New London PoP (subscription)
Giulia Lasagni – Waters Technology

BME is to open a third point of access in London through its technology subsidiary Visual Trader, to allow investors to connect to its electronic equity and derivatives markets with a latency of 11.3 milliseconds (20% better than previously), located at Equinix in Slough.

PLY: Call me old fashioned but why can’t BME be sufficiently sales oriented to actually have some permanent representation in London? Client focus would be better than the current strategy of latency reduction and endeavouring to pour tar from the ramparts over competitors, (regardless of EU regulations against silo siege warfare), no?

Liquidnet Ramps Up Its Global Trade Execution, Advisory & Analytics Capabilities – Launches Execution & Quantitative Services Group (Eqs)
MondoVisione

The Financial Advisers Of The Future May Well Be Robots
FOX31

Previous discussions on robo advisors here and here.

PLY: Entirely unsurprising. One of the more ludicrous caveats in recent financial history, even beyond ‘we need floor traders’ has been the notion that a generally self-interested commission hogging intermediary who got paid for the first umpteen months of your pension/annuity/whatever (thus further reducing client compounding benefit) was somehow an intermediation which benefitted the client or humankind in general.

Products

LSE Presses Europe To Open Derivatives Trading (subscription)
Philip Stafford – Financial Times

The head of LSE has called on European regulators to stand by their plans to allow investors greater choice in trading derivatives as policy makers finalise their technical rules.

PLY: Open access as proposed by the EU in that last minute rearguard action sponsored by the London banking lobby aided by LSE, is a farce. Nothing useful will come of it and only cost and complexity will be added to. The notion as apparently stated that “the key test of European willingness to embrace reforms” is open access to clearing could only be stated by somebody who needs to get out and smell the coffee. Worryingly this article attributes that comment to Xavier Rolet.

The EU would be wise to simply cut MIFID II up, in whole or part.

Lack Of Consistency In Regulating Active ETFs (subscription)
Deborah Fuhr – Financial News

PLY: La Fuhr, long a doyenne of the ETF business examines trans-Atlantic differences…

Shanghai, HK Plan ‘Gold Connect’
Wang Fan – Ecns

Shanghai & Hong Kong are planning to launch a “Gold Connect” as early as March next year, according to the president of Hong Kong’s gold exchange society.

PLY: Good move.

India Should Establish Its Own Gold Exchange
Bullion Desk

India should consider establishing its own gold exchange and in turn create a domestic pricing structure for gold derived from the London fix, the World Gold Council suggested.

PLY: The WGC remains one industry body which seriously thinks about ways to make its product better traded and more popular at every level of the demand/supply chain. An Indian exchange is a great idea – the one problem is of course that thorny issue, the backward and increasingly discredited Indian regulatory system, including daft shareholder restrictions.

HKEx To Discontinue Trading Of Its Three-Year Exchange Fund Note Futures
HKEx

HKEx is discontinuing trading in its Three-Year Exchange Fund Note (EFN) Futures because the Hong Kong Monetary Authority will stop issuing Three-Year EFNs from January 2015.

Javelin SEF Launches Anonymous Central Limit Order Book For MAC Swaps
PRNewswire

Javelin SEF announced that it has launched an anonymous Central Limit Order Book (CLOB) for Market Agreed Coupon (MAC) swaps clearable on both LCH.Clearnet and CME. MAC swaps have gained in popularity since they were created by SIFMA and ISDA over a year ago and are the fastest growing product in the IRS asset class.

EPEX SPOT: Successful Launch Of 15-Minute Intraday Call Auction In Germany
MondoVisione

Career Paths

Liquidnet announced the launch of Execution & Quantitative Services (EQS), a global group headed up by Rob Laible, ably assisted by Scott Kartinen as Head of Algo Development and Roberto Malamut as Head of Quantitative Research as well as Amar Vaidya who will help build out Liquidnet’s suite of algorithms and further enhance SOR strategies for Liquidnet’s members.

HKEx: Listing Nominating Committee Extends Application Period For Listing Committee Candidates
MondoVisione

PLY: Tempting…but at barely 10,000 Euros a year in remuneration, I can’t justify the concomitant flight costs.

Financial Calendar

Today

Record date CME $0.47 Q4 dividend

Friday

Record date NASDAQ OMX $0.15 quarterly dividend
Interactive Brokers Q3 $0.10 dividend payment

New announcement

CME Q4 2014 Financial Results – Tuesday, February 3, 2015

CME press release here.

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

Share Notes

Interactive Brokers Chairman Earl H. Nemser sold 4,395 shares Friday, December 5th at an average price of $27.70 (bargain $121,741.50). Mr. Nemser’s regular sales are chronicled on this specific page.

Crowdfunding

Lending Club IPO Rides Easy Money Wave (subscription)
Tracy Alloway – Financial Times

After months of anticipation, the investor roadshow for Lending Club’s IPO began on the first day of December. Five hours later, it was already a roaring success.

Seeking to tap new investors for at least $650m, the world’s biggest P2P lender found it had received pledges for the full amount in less time than it takes to fly from Wall Street to Silicon Valley.

PLY: Arguably unfortunate time metaphor. I mean don’t they realise that particular coast to coast segment provided perhaps the most expensive flight leg ever flown by a US exchange executive? …and that was scheduled, I hasten to add.

Other stories

CFTC Chairman Massad To Testify Before U.S. Senate Agriculture, Nutrition & Forestry Committee
MondoVisione
Opening Statement Of Chairman Tim Massad Before The CFTC Agriculture Advisory Committee Meeting
MondoVisione
Opening Statement Of Commissioner J. Christopher Giancarlo Before The Meeting Of The CFTC Agricultural Advisory Committee
MondoVisione
Opening Statement Of Commissioner Mark Wetjen Before The CFTC Agriculture Advisory Committee Meeting
MondoVisione
Opening Statement Of Commissioner Sharon Y. Bowen Before The CFTC Agricultural Advisory Committee Meeting
MondoVisione

Variable Cost Of Financing And Reduction In Prime Broker Relationships Spawns Need For Buy-Side Benchmarking And Surveillance, Says TABB Research
MondoVisione

Metronomes Turn Real-Time Stock Market Trading Into Sound (Video)
Fast Company

Creative studio Varvara & Mar’s installation “Speed of Markets” consists of metronomes that speed up or slow down according to the number of trades happening in stock markets around the world. “For us volume is an interesting figure to play with, since it is an indicator for a liquidity in the market,” the artists write on their website. Each of the seven metronomes interpret data from a different market, including the NYSE, NASDAQ, JPX, Euronext, LSE, HKEx, and DB1.

PLY: Hmmm, it is hardly Christmas carols but it has a certain melody…

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