December 17 2013

elb2

NYSE wins the US IPO race for 2013, NASDAQ bond plans developing while battling Facebook lawsuit. CFTC goes extraterritorial as German Banks try to bash FTT in face of de facto socialist government. Norway to tax Bitcoin, FTIL shares jump without explanation – is Jignesh ‘fit and proper?’ CDS expansion at LCH, interesting LSE ETF development, ADX lists sovereign debt, Canadian oil trading at CME, Volcker rule musings.and more, scroll on:

Public Markets

NYSE: Clear Winner On 2013 IPOs (subscription)
Wall Street Journal

Could it be a Facebook curse?

Tech IPOs have been at the center of the battle between NYSE and Nasdaq for listings. And for the first time in more than 15 years the NYSE has come out on top.

25 tech and Internet companies went public on the NYSE in 2013, edging out Nasdaq, which had 23, according to Dealogic – the cherry on top of what overall was a strong year for the NYSE in garnering listings.

NYSE landed 119 IPOs beating Nasdaq’s 102, according to IPO research firm Renaissance Capital.

Both exchanges have been fighting hard for listings but in recent years the NYSE has been pushing hard into Nasdaq’s turf to become the exchange of choice for up and coming tech companies.

PLY: One swallow doesn’t make a summer. Plaudits to NYSE on a successful IPO year but at the same time, NASDAQ’s dominance of tech IPOs has been so crushing for the past 15 years that even a fraction of mean reversion may occur from time to time.

Nasdaq OMX Treasuries Dark Pool Will Revitalise Bond Trading
Banking Technology

Electronic fixed income trading, one of the last major asset classes traded by humans, could take a big step forward when a new Nasdaq OMX dark pool trading venue goes live next year.

PLY: Reported on EI December 11th, this is a good move for NASDAQ and could really create huge value from the eSpeed assets they purchased earlier this year.

Nasdaq Fails To Win Dismissal Of Facebook IPO Lawsuit
4-traders

A federal judge has rejected Nasdaq OMX’s bid to dismiss lawsuits by investors who accused the exchange operator of botching Facebook’s $16 billion IPO.

Nasdaq had argued its SRO status gave it immunity from claims it broke securities laws and was negligent in executing orders to buy and sell Facebook shares on May 18, 2012, the first day of trading.

In a 97-page decision, U.S. District Judge Robert Sweet in Manhattan agreed that SRO status gave Nasdaq immunity from some claims, including the decision not to halt the IPO.

But he rejected Nasdaq’s effort to dismiss claims over the design and testing of its systems, including that it allegedly knew its advertised “on-time, on-target and ready-to-launch” had not undergone the “stress tests” needed to ensure it was up to handling trading in Facebook.

CFTC Poised To Expand Reach Overseas (subscription)
Wall Street Journal

CFTC is moving to force overseas financial firms to comply with certain U.S. rules, a move likely to stoke criticism the U.S. is bidding to become the de facto global financial regulator.

CFTC is preparing to say that multiple rules developed by the EU and five other jurisdictions governing so-called swaps aren’t strict enough, clearing the way for the CFTC to impose its regulations.

PLY: The extra-territorial ambitions of the CFTC surmise a certain frustrating arrogance at the core of the current US government’s Imperial swagger. Not only does Obama-land know better than its citizens what they ought to do but indeed they even know better than the rest of the world’s regulators. That is a tad high-handed and is not going to help market participants at any level to make better, more accessible, more cost effective markets as the regulatory burden is already soaring (and as I have previously noted, no agency can anyway actually afford the reach they are ascribing themselves in this land grab for global influence).

German Banks Try To Torpedo Transaction Taxes
Spiegel

German banking associations have sent letters to the European Commission urging it to forbid the FTTs imposed by France and Italy. Insiders believe the letters are an attempt by the banking lobby to block a planned EU-wide financial transaction tax.

PLY: With Germany having inadvertently lurched left with its latest grand coalition disproving the concept that Mrs Merkel won in any other than a personal employment capacity, the battle is on between the forces of freedom against an EU blinded by desire for its own revenue streams and profoundly ignorant of how much capital markets are already being damaged by the stupidity of FTTs which even contradict what Professor Tobin himself ever advocated.

Private Markets

Bohai Commodity Exchange Launches Online Yuan Trading Platform In Hong Kong (subscription)
South China Morning Post

Bohai Commodity Exchange, the only mainland exchange allowed to do cross-border yuan trading, launched a platform in Hong Kong on Monday – its first step in expanding internationally.

Yan Dongsheng, board chairman of the exchange, told South China Morning Post that its online trading platform would allow Hong Kong and foreign investors who join the bourse to make yuan settlements.

They can trade on any of 70 commodities, ranging from petrol, iron ore and rubber to bird’s nest, agricultural products and Chinese medicines.

‘Bitcoin Isn’t Real Money’: Norwegian Govt Refuses To Recognise Digital Currency
Daily Mail

PLY: The frontline of innovation is invariably highly Balkanised between the progressives and the agents of reaction. Norway is cautious about fully recognising BTC so some media regard it as a great leap backwards, as opposed to noting that Germany has, the US has and indeed, in not recognising it as a currency, the Norwegians have given it capital gains status. Any status is progress and saying ‘oh it’s not money but we will still tax it’ strikes me as catnip for the cryptocurrency revolution.

Special Section: FTI, NSEL, India at the Crossroads

PLY: It’s Tuesday so time for the weekly default from NSEL’s repayment mechanism. Meanwhile, MCX is up 2% while clearly some news (a sale? a leak that Jignesh et al are indeed ‘fit and proper?”) is presumably driving the FTIL price as it has soared 10% in today’s session.

Remarkably there are no stories as we close for press today on the topic for the first time since it began in August but tomorrow we presume SEBI will launch a third investigation into how the market knows insider information pertaining to FTIL before it is officially released…

Technology

ECX To Launch Online Trade Operations
allafrica.com

The Ethiopian Government is implementing the online trade project in collaboration with Investment Climate Facility for Africa (ICF) which will introduce online trading, and establishing Remote Trading Centers in key locations across Ethiopia.

PLY: Another step forward for the coffee-based exchange first created by Eleni Gabre-Madhin.

IEX Group Deploys Redline Trading Solutions
digitaljournal.com

Redline Trading Solutions today announced that IEX, the first ATS owned by buy-side investors, is using Redline’s ultra-low latency InRush™ 3 Accelerated Ticker Plant on its new trading venue for reliable, timely and accurate market data.

PLY: IEX retains an interesting model, on my ‘watch list’ for new markets.

Products

LCH.Clearnet Expands CDS Clearing Service
money.msn.com

LCH.Clearnet, the clearing house majority owned by LSE, has expanded CDS clearing. A further 187 single-name CDS are now eligible for clearing through CDSClear, giving it the largest European CDS portfolio of any clearinghouse globally.

CME Unveils New Oil Futures Contract To Tackle Canadian Discount Woes
Reuters

CME will launch its first Canadian light sweet oil futures contract on Monday in the latest attempt to help producers limit the price misery caused by overcrowded pipelines.

Edmonton Sweet futures contract will give producers, refiners and speculators in the Canadian oil patch the opportunity to lock in light oil prices up to four years in advance and hedge their exposure to wild price swings.

Canadian crude tends to trade at a hefty discount to the West Texas Intermediate benchmark because a lack of space on export pipelines to the United States means crude shipments get bottlenecked in Alberta.

PLY: It is fascinating how, thanks to Shale and arguably a longstanding reticence to upgrade key infrastructure, the north American oil market has become quite inefficient in many respects as the vast increase in volumes has caused bottlenecks from Cushing all the way across the region.

Big-Name Dealers Back LSE & BlackRock ETF Push (subscription)
Financial News

LSE has secured the backing of a raft of influential dealers and market-makers for a new type of ETF, as efforts to improve liquidity in Europe’s fragmented ETF market gather pace.

Bank of America Merrill Lynch, Barclays, Citigroup, Susquehanna and Goldenberg Hehmeyer have commenced market making for a new ETF segment the LSE launched today in conjunction with BlackRock, according to market notices.

PLY: A very interesting development by LSE. Currently cross border European ETFs or their component stocks can settle into different CSDs hence reducing cost benefits seen in the USA. Now the iShares Eurostoxx 50 ex-financials Ucits ETF is blazing a trail by being settled at Euroclear Bank to unify the settlement process across an international structure.

CBOE Bets On Volatility Trading For 2014
Traders Magazine

CBOE sees opportunity in volatility and aims to drive further growth in volatility trading in 2014 by introducing more new products and expanding extended-hour product offerings.

ADX To Introduce Sovereign Debt Listings
thenational.ae

Abu Dhabi Securities Exchange will soon welcome its first sovereign debt listings as it seeks to encourage more bond trading in the capital.

The market regulator has approved a secondary listing of bonds issued by Abu Dhabi’s Department of Finance (DoF). The two tranches, worth US$1.5 billion each, have their primary listing in London with maturities in 2014 and 2019.

PLY: Two hefty tranches to begin with on ADX, sharing a joint listing with London.

Career Paths

HKEx and LME announce the formation of the Board of LME Clear, the LME’s self-clearing platform currently in development. LME Clear is on track to launch, as planned, on 22 September 2014.

The Board will be comprised of five Independent Non-Executive Directors and four Executive Board members.

The Independent Non-Executive Directors will be:

Richard Thornhill, Chairman;
John Harrison;
Marye Humphery;
Nat le Roux;
Marco Strimer.

The Executive Directors will be:

Trevor Spanner, CEO of LME Clear;
Gerald Greiner, HKEx Head of Global Clearing;
Garry Jones, CEO of LME and Co-Head of Global Markets at HKEx;
Romnesh Lamba, HKEx Co-Head of Global Markets.

The Board became effective on 16 December 2013.

PLY: The appointment of Marco Strimer as an INED is particularly encouraging for this venture given his pivotal role in creating the innovative Six X-Clear CCP in Switzerland.

TMX Group’s head communications and marketing executive, Ronald Alepian, is leaving the company to take on the top communications job at CA Technologies Inc. in New York.

CFTC announced that the members of the Commission have unanimously elected Commissioner Mark P. Wetjen to serve as Acting Chairman upon the end of Chairman Gary Gensler’s service while Sayee Srinivasan has been named Acting Chief Economist.

Equity crowdfunding site RockThePost has announced Drew Butler, previously from Tumblr, as their new CTO.

Financial Calendar

Friday

CBOE Q4 $0.18 dividend payment

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

Share Notes

ICAP PLC CEO, Global Broking David Casterton sold 25,195 shares at a price of GBP 4.255902 (bargain GBP 107 227). He now owns 262,969 shares in the company.

Crowdfunding

Crowdtilt Raises $23M To Take Crowdfunding Web-Wide
Wall Street Journal

A startup that wants to let people run crowdfunding campaigns wherever and however they want to online, Crowdtilt Inc., raised $23 million in Series B venture funding led by Andreessen Horowitz, and joined by SV Angel and Sean Parker, said co-founder and CEO James Beshara.

Crowdtilt, a graduate of the Y Combinator accelerator, has been in a rapid growth spurt following the launch of its mobile app, API and Crowdhoster tools.

The company started out with a focus on group payments.

Other stories

Volcker Rule Blame Game Begins
Bloomberg

It turns out that a good-sized chunk of Zions Bancorp’s earnings existed only in its executives’ minds. For this nugget of knowledge, we can thank the Volcker rule. Or at least that’s what the bank is blaming for its newfound losses.

The Salt Lake City-based lender today said it would record a significant charge to earnings to write down a bunch of collateralized debt obligations that it won’t be allowed to hold once the Volcker rule — designed to prevent banks from gambling with federally insured deposits — takes effect. The size has yet to be determined. However, if the charge were based on Sept. 30 prices, Zions said it would have been about $387 million. Zions hasn’t earned that much in a fiscal year since 2007.

PLY: Volcker may yet strip many enterprises of essential underpinnings in the balance sheet which have to be sold off at distressed prices where they have used the accounting loophole of “held to maturity” status to avoid simple “mark to market.”

RBC To Partly Spinoff Proprietary Trading Units
zacks.com

Due to regulatory pressure, Royal Bank of Canada is contemplating spinning off its Global Arbitrage Trading unit. The unit deals in proprietary trading business and operates as a part of RBC Capital Markets. Notably, RBC Capital Markets is U.S.-based investment banking arm of Royal Bank of Canada.

Don’t Expect Eye-Popping Fines For Volcker Rule Violations
dealbook.nytimes.com

PLY: Essentially the Volcker rule is so substantial that it will take time for banks to comply and it will be a while before grey areas can be sorted through in a vast panoply of instructions. Hence fines may be a last resort while banks already carry a huge charge for investing in the regulatory compliance process.

Hellenic Exchanges S.A. Information Document Availability
MondoVisione

This Information Document contains all information concerning the changes in the activity of the Company, due to the merger by absorption of its 100% non-listed subsidiary “ATHENS EXCHANGE S.A.” and the spin-off of the CSD business, the Registry and Settlement services that are being provided, as well as the management of the Dematerialized Securities System, which were performed by the Company, acting as Central Depository

The abovementioned Information Document is available to investors starting today 16.12.2013 at the website of the Company (www.helex.gr) and Athens Exchange (www.athex.gr).

Clayton Williams Energy, Inc. To Transfer Exchange Listing To NYSE From NASDAQ
businesswire.com

Clayton Williams Energy, Inc. announced its intention to transfer the listing of its shares of common stock from NASDAQ to NYSE, trading on the NYSE under the same symbol “CWEI” from December 30, 2013.

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