December 15 2015

elb2Richard Sandor’s American Futures Exchange launches successfully (hooray!), Otto Naegeli becomes perhaps the first proper exchange ‘adult’ ever elected to the board of Bucharest SE (likewise!) while Blockchain startup SETL appoints Sir David Walker as Chairman, (hope he doesn’t bring Barclays’ magnetism for getting fined with him). Could India step back from the brink of perverting corporate law in the quest to ‘get’ Jignesh Shah? Luminex makes progress, CME internationalizes with EUREX-style licensing while according to some, the year ahead in competition looks the same as it has for several years (shurely shome mishtake)…

Public Markets

ICE Completes Acquisition Of Interactive Data Corporation


ICE completed its previously announced $5.2 billion acquisition of Interactive Data Corporation, a leading provider of financial market data, analytics and related trading solutions. Interactive Data is now a wholly-owned subsidiary of ICE, having been acquired from Silver Lake and Warburg Pincus for approximately $3.65 billion in cash and approximately 6.47 million shares of ICE common stock, which were valued at $1.55 billion on October 23, 2015, based on the 10-day trailing volume-weighted average price of the ICE common stock as of that date. Based on the 10-day trailing volume-weighted average as of December 10, 2015, the 6.47 million shares have an approximate value of $1.67 billion. ICE previously announced that it had issued $2.5 billion in senior notes relating to the cash portion of the transaction. QV Premium:  Exchange Deals Brief 1.

PLY: The final tombstone in an accelerated series brought to you by the ICE deal machine. In my petrol-headed hobby which I occasionally indulge when I can escape the office, I’ve been looking for a reclusive owner of an old Porsche for longer than it took ICE to negotiate and complete the purchase of IDC – oh and as noted yesterday, Trayport too. Once again ICE is top of the class in decision / execution & delivery.


CME Eyes China, India In Hunt For Higher-Margin Derivatives

Eduard Gismatullin  – Bloomberg

CME’s business outside the U.S. enjoys better profit margins than its domestic operations. The firm’s international assets generated 32% of revenue in Q3, but only accounted for some 25% of volumes from electronic trading. One of the first higher-margin products will be futures on the CSI 300 Index, a benchmark of the biggest companies listed on either the Shanghai or Shenzhen stock exchanges. CME plans to offer the contracts to investors outside China through its partnership with China Securities Index Co. CME is also close to reaching an agreement with the Shanghai Gold Exchange that would allow CME to list its gold contract in mainland China. The Shanghai Gold Exchange would then list its benchmark for the precious metal in the U.S. In India, CME is examining a joint venture to offer grain and energy futures in either Mumbai or Gujarat. CME signed a MoU with MCX in July as a precursor to gaining access to the firm’s clients.

PLY: Similar to the EUREX strategy, product licensing for overseas investors.


EU To Allow U.S.-Style Derivatives Option To Secure Transatlantic Deal

Huw Jones – Reuters

EU Moves To End Longstanding Derivatives Clearing Spat With US (subscription)

Philip Stafford – Financial Times

EU regulators have proposed U.S.-style flexibility in how rules making derivatives safer are applied in a bid to reach a long-delayed transatlantic deal on supervising the $552 trillion sector. ESMA said on Monday it was proposing to broaden the bloc’s rules clearing houses.

A transatlantic deal has stumbled over a key difference whereby the United States requires only a one-day “liquidation period” for margin or cash to back trades. The EU requires a two-day period, a difference critics say ties up far more capital.

ESMA said it was proposing that both systems could be used in the EU, a step that would make it possible for the bloc to recognize U.S. rules as being “equivalent” in terms of strictness to the bloc’s system.

PLY: There is a long march to equivalence on many levels with many markets requiring the ESMA seal of approval to ensure they are allowed in…and indeed that the EU is not locked out…of many fast growing markets.

European regulators are formally considering allowing a US-style clearing regime in an effort to harmonise global derivatives rules and end a longstanding dispute with American officials.

Phil Stafford notes: ESMA is consulting the market about formally amending legislation agreed more than three years ago, according to a document posted on the regulator’s website on Monday.


2016: The Year Of Competition? (subscription)

Luke Jeffs – FOW

NLX and Curve look set to present stiff competition to the incumbents Ice and Eurex – NLX in Q1 when the margining service, LCH Spider, goes live and Curve in Q2 when it is set to launch.

PLY: Isn’t this just the same end of year article from 2012, 2013, 2014 and probably to be reprised at the end of 2016?


Warrants Issue: Metropolitan SE Plans Out-Of-Court Deal With MCX

The Hindu Business Line

Metropolitan Stock Exchange (formerly MCX Stock Exchange) is planning an out-of-court settlement to end the court battle with the MCX, which has sued the stock exchange in the High Court for extinguishing its warrants in the stock exchange.

QV Premium: Exchange Deals Brief 2.


Purisima Urges PSE To Link Up With Asean

The Standard

Philippine Finance Secretary Cesar Purisima urged the Philippine SE (PSE) to finally join the Asean trading link after several years of delay. QV Premium: ASEAN Exchanges Project Brief.


Editorial: Tread Carefully In A Minefield


JSE evidently feels that SA’s policy makers are not sufficiently alert to the real damage that chaos in the capital markets can do, and it’s surely right. We trust that the statement it issued at the weekend to emphasise the effects on ordinary South Africans of the declines in the rand and the equity and bond markets will be heard in the right quarters.

Private Markets

Luminex Gets Noticed

Rick Baert – P&I

Luminex Trading & Analytics CEO Jonathan A. Clark said the Boston-based trading venue, which started operations Nov. 3 with about 60 participants, now has nearly 100 clients with more being sought.

Other sources said the block-trading market targeted by Luminex always will remain small compared with overall U.S. trading volume, but the impact on institutional trading in how large blocks are moved will be big — and other dark pools will take notice. QV Premium: Luminex – Crazy Name, Crazy Development?


American Financial Exchange (AFX) Announces Results Of Its First Day Of Trading & Future Plans


PLY: Richard Sandor’s latest endeavour seeks to improve bank financing and help America’s Main Street reconnect at an individual and corporate level with funding markets which have often proven tricky to access, if not downright impossible in recent times, exacerbated by the QE phenomenon. It’s a great idea and I look forward to hearing many more tales of success.

Special Section: FTI, NSEL, India at the Crossroads

PLY: The FTIL stock is up another nearly 9% after High Court pressure to resolve the blob’s suicidal attempt to destroy company law. MCX is up 1.5%.

FTIL’ Stock Up On HC Directive

Business Standard

Madras HC ordered Company Law Board to take a final decision in three months on FTIL’s merger with its subsidiary NSEL.


FTIL-NSEL Merger: Bad In Law & Policy?

Sanjay Asher – The Financial Express

QV Premium: NSEL-FTIL Merger Brief and NSEL Scandal Brief – Part 16.


Sebi Links Commodity Trade Data With Its Surveillance Systems

The Economic Times

For better surveillance of commodities derivatives market, regulator Sebi has integrated trading data flow from various commodity exchanges to its own integrated surveillance and intelligence systems.


MOEX: New Binary Protocol For Derivatives Market



EEX Exchange Council Approves Introduction Of Further Energy Turnaround Products – Wind Power Futures In The Pipeline


Career Paths

Bloomberg reports that blockchain startup SETL has appointed Sir David Walker, the Chairman of Barclays until April this year, as its own Chairman. He previously chaired Morgan Stanley International and worked as executive director at BoE. SETL has also enlisted Moelis’s Caroline Silver, a banker who advised on the sale of NYSE Euronext and LME, to raise funds for the company.  SETL also appointed Professor Philip Bond as head of their Cryptography and Cyber Security committee. SETL’s COO Peter Randall was CEO of Chi-X Europe.

BVB’s Shareholders Elect New Board After 10-Hour Meeting

Andrei Chirileasa – Romania Insider

Bucharest SE (BVB) will have a new board of governors starting January 2016. The shareholders’ meeting took about ten hours, due to technical problems with the automatic vote counting system.

Five of the nine current board members were re-elected, including the board’s President Lucian Anghel, who will be BVB’s President for another four years. The other four re-elected members are Valerian Ionescu, Octavian Molnar, Robert Pana, and Dan Paul.

The four new board members are Gabriel Marica, Cristian Micu, Radu Toia, and Otto Naegeli.

PLY: Congratulations to Otto Naegeli (nominated by EBRD) who is the most experienced exchange figure ever to grace an exchange board in Romania. I hope he can make a difference for the BvB which continues to inch forward under CEO Ludwik Sobolewski.

Board of Supervisors of ESMA has appointed a new Chairman for its Market Integrity Standing Committee: Giuseppe Vegas, Chairman of CONSOB (Italy), appointed for a period of two years commencing on 10 December 2015.

Financial Calendar

15.12 – Thomson Reuters $0.335 quarterly dividend payment

16.12 – Record date ICE $0.75 dividend

16.12 – CFTC – Open Commission Meeting (press release)

18.12 – CBOE $0.23 quarterly cash dividend payment

New! 25.01.2016 – ESMA Open Hearing For Validation And Review Of CRA Methodologies (press release)

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

Analyst Notes

CME Price Target Hosited By Barclays From $98.00 To $99.00

NASDAQ OMX Price Objective Lifted By Barclays From $64.00 To $67.00 – “Overweight” Rating

CME’s Strategic Alliances Impress, Competition A Drag


CME boasts effective capital deployment, modest capital position, and a diverse derivative product line. Moreover, new product launches, strategic alliances and a global presence support the company’s growth.

Efforts to expand and cross sell through strategic alliances, acquisitions, new product initiatives and global presence should drive growth for the company. The expected long-term earnings growth is currently pegged at 11.10%.

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

Other stories

EU Rules Demand Transparent Research Fees (subscription)

Jim Brunsden & Philip Stafford – Financial Times

Asset managers will be forced to be transparent about how much of a client’s money goes on buying broker research, under tough new EU standards aimed at tackling conflicts of interest.


European Commission: Speech By Commissioner Jonathan Hill At CRR Review Conference, DG FISMA – The Impact Of The CRR & CRD IV On Bank Financing Of The Economy



ESMA & EBA Report On Investment Firms


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