December 18 2015

elb2PLY: From OCC’s dividend & fee cuts through Aesthetic Integration’s deserved UBS FinTech award, it’s a great end to the year as IDC sellers place their ICE stock and Euronext get a welcome capital fillip in the Dutch courts. Budapest gets a new CEO too. Lots happening to end the week…and indeed (extreme events notwithstanding), this is the final Exchange Invest of 2015. I have pithed every day in the year for free and now it’s time with the holiday lull to have a little time away from the newsletter. Still available for client calls but given this is all provided for free, I doubt anybody can grumble at a break which will take us to Monday January 4th…

On behalf of myself and Florin et al I wish you all a very Happy Christmas and a Peaceful & Prosperous New Year. In particular, thanks to everybody who has interacted commercially with Exchange Invest in the past year – without you this would cost me a lot more to deliver free in your inboxes daily. It’s interesting delivering the exchange industry daily newsletter but commercial interaction is a rather useful element in the mix. Thanks to all those who have supported with funding this calendar year.

If you get bored meanwhile, don’t forget my white paper “Towards A Real Time Market” something to read if you are missing Exchange Invest!

Have fun, here’s the pith, it’s worth your final scroll of the year, I promise:

Public Markets

ICE Placement Of Shares In Secondary Offering

ICE

ICE announced that the sale by the selling stockholders of all 5,669,002 shares of ICE’s common stock that were part of the underwritten secondary offering announced by ICE on December 16, 2015 has been completed, subject to settlement. This offering was announced by ICE on December 16 with regard to the intent by certain selling stockholders to offer for sale in an underwritten secondary offering 5,669,002 shares of ICE’s common stock pursuant to ICE’s shelf registration statement filed with SEC. Credit Suisse was selected as the underwriter for the offering. The shares offered in the secondary offering were originally issued to the selling stockholders in connection with the acquisition of Interactive Data Holdings Corporation. ICE did not sell any shares and will not receive any proceeds from this offering.

QV Premium: Exchange Deals Brief.

 

Alpiq Holding Divests Its Stake In EEX

Reuters

Alpiq has transferred to EEX the 4.5% stake in EEX. Terms not disclosed. QV Premium: Exchange Deals Brief 2.

 

CMA Not To Refer Anticipated Betfair & Paddy Power Merger To Phase 2 Investigation

Reuters

Betfair Expects Merger With Paddy Power To Complete During Q1 2016

Reuters

PLY: Good news for both parties. Creates a wagering giant, albeit further diluting the original ‘pure’ exchange concept of Betfair… QV Premium: Exchange Deals Brief.

 

Dutch Court Sides With Euronext In Row With Govt Over Equity

Reuters

Euronext Capital Requirements Lifted by District Court of Rotterdam

Euronext

The District Court of Rotterdam, The Netherlands, rendered its verdict in the appeal procedure between Euronext N.V. and Euronext Amsterdam N.V. against the Dutch Minister of Finance, substantially ruling in favour of Euronext. The court has ruled that the new capital requirements imposed in the June 2014 license no longer apply and that the applicable license is the one of March 2014.

Euronext was protesting requirements that it hold 250 million euros ($271.5 million) in equity and maintain positive tangible equity through 2017.

The Netherlands’ Finance Ministry had imposed the requirements at the time of Euronext’s listing in 2014, saying they were in accordance with Dutch law, as Euronext’s parent company is incorporated in the Netherlands. Euronext said the requirements prevent it from carrying out acquisitions and create an unequal playing field as they do not apply to other European exchanges.

PLY: Peter Lenardos of RBC hit the mot juste button elegantly noting in a client missive that Christmas had come early for Euronext. I am glad to see legal sense prevail.

 

An Interim Year – Our Columnist Patrick L Young Looks Back At Some Notable Points To Ponder As We Exit The Year 2015…

Patrick L Young – MondoVisione

 

Battle Of The Bund II At A Cinema Near You Soon

Huw Jones – MondoVisione

Earthquakes don’t happen often in the world of derivatives but people still speak in awe about how the Bund contract shifted from London to Frankfurt — and perhaps with relief too for some exchanges as nothing similar has been seen since. Academics have long pontificated why LIFFE lost out to DB1, pointing to Frankfurt’s electronic trading with European reach to grab participants who funnelled orders through brokers wearing colourful jackets in a trading pit. H1 2016 should see at least two attempts at pulling off a similar coup.

PLY: Challenger MTFs to incumbent interest rate futures products remain a touch akin to the view of some emerging markets, like, say Romania, or Brazil. As sceptics say, they’re the future and they always will be. Maybe this time it’s different but I remain rather unconvinced.

 

Swaps CCPs Hope To Slash Capital Via Margin Change (subscription)

Luke Clancy – Risk

Four derivatives clearing houses (CME, Eurex, ICE, LCH.Clearnet) are seeking legal opinions regarding whether the daily payment of variation margin can be treated as the settlement of a cleared swap contract, a step that could translate into big capital savings for bank members of CCPs.

 

Revitalizing TSX Venture Exchange: Canada’s Public Venture Market

TMX

TMX Readying For Showdown With Nasdaq For Canadian Unicorns

Ari Altstedter – Bloomberg

TMX wants more tech firms on its venue for small companies, TSX Venture Exchange, with the goal of attracting companies from Silicon Valley and Canada’s technology hubs. TMX is cutting administrative and compliance costs and combating the perception the Venture Exchange is only for natural-resource firms.

PLY: I am big fan of SME exchanges but sceptical that right now TMX has the fluidity and flexibility in management approach.

 

Trade Execution Innovation Still Needed Even If MiFID II Is Delayed

John White, Bloomberg Tradebook – Markets Media

The race to innovate and create liquidity-providing solutions for the issues raised by MiFID II will remain vital even when the proposed delay to MiFID II’s implementation is confirmed.

 

Forex Investors Ready To Bid Farewell To ‘Last Look’ Abuses (subscription)

Philip Stafford – Financial Times

Investors who use the forex markets are putting pressure on banks and market makers to justify one of its most common — and potentially abusive — practices.

PLY: Good riddance to ‘Last Look.”

 

New Link To Georgia Extends Clearstream’s Coverage To The Caucasus

DB1

The Bank of Georgia will act as local custodian & cash correspondent bank

 

MCX To Ban Members Not Registered With SEBI

The Hindu Business Line

MCX will ban members who are not SEBI registration compliant from December 22. The last day for registration was set by the regulator at December 28.

 

Sebi To Chalk Out Exit Route For Commodity Exchanges

Reena Zachariah & Ram Sahgal – The Economic Times

Sebi will soon spell out exit route for commodity exchanges. The move will pave the way for closure of defunct ones to apply for voluntary exits. At present, there are 12 commodities exchanges, of which six are nationalised, while the rest is regional.  If an exchange is not working for a year or has annual trading turnover on its platform of less than Rs 1,000 crore (USD 150m) will be asked to wind-up.

QV Premium: Indian Exchanges Shutdown – Brief.

 

CFTC Staff Issues Advisory Reminding Swap Dealers & Major Swap Participants of their Reporting Obligations as Required by Commission Regulations

CFTC

 

ESMA Extends Consultation On The European Single Electronic Format (ESEF)

MondoVisione

 

ESMA Publishes Final Report On Mifid Ii Guidelines On Assessment & Knowledge Of Competence

MondoVisione

 

OCC Declares Clearing Member Refund And Dividend For 2015 And Reduction Of Fees Under Approved Capital Plan Special Refund For 2015 Also Declared

MondoVisione

PLY: Impressive cuts & delivery of the plan so far from Craig Donohue and his team at OCC.

Private Markets

SBI To Divest In NSE

Zeenews

State Bank of India is keen to offload its stake in the National SE (NSE) as part of a focus on core activities. The bank has a 15% stake in NSE and the market value is estimated at nearly $1 billion.

 

New BSE CEO Eyes More Listings

Budapest Business Journal

Budapest SE (BSE) is in need of more listings, however, the problem is on the supply and not the demand side, new BSE CEO Richárd Végh said in an interview.

PLY: Sorry to see Zsolt Katona not being appointed CEO but delighted that there is an eagerness to revitalise the Hungarian capital market.

 

Fanya Exchange Founder Missing In China (subscription)

Lucy Hornby – Financial Times

The founder of the troubled Fanya Metals Exchange, who has been pursued across China by angry investors, has disappeared and is presumed detained by authorities.

 

Is The TASE Era Over?

Eran Azran – Haaretz

The year 2015 will be remembered as another low point in the number of companies that joined the Tel Aviv SE (TASE). Last year only two companies, Oron and Vitania, held IPOs, raising the total to just nine in three years.

PLY: TASE is grappling to find its role within “startup nation.”

 

Thai Bourse Rolls Out 2016 Plan To Build New S-Curve For Quality Growth

MondoVisione

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX flat, FTIL down 3% after the recent rally.

Technology

Financial Industry Looks To Automated Reasoning

Markets Media

Aesthetic Integration, the startup that won the UBS Future of Finance challenge this month, is working with several large financial institutions on formally verifying critical components of their trading infrastructure as algorithms and systems have become increasingly complex.

PLY: I am delighted to see that Young Markets alumni, Grant Passmore and Denis Ignatovich won the UBS FinTech award but then again not altogether surprised either – theirs is a magnificent concept that could do great things for better markets the world over.

 

Nigerian SE Launches The Broker Oversight & Supervision System (‘’X- BOSS’’)

MondoVisione

 

Tech & Banking Giants Ditch Bitcoin For Their Own Blockchain

Cade Metz – Wired

R3 Consortium Numbers Swell; FS Giants Join Linux Foundation Distributed Ledger Project

Finextra

The R3-led blockchain consortium is to close applications to new member banks as 12 more financial institutions sign up and will instead concentrate its efforts on recruiting non-banks to the coalition.

BMO Financial Group, Danske Bank, Intesa Sanpaolo, Natixis, Nomura, Northern Trust, OP Financial Group, Banco Santander, Scotiabank, Sumitomo Mitsui Banking Corporation, U.S. Bancorp and Westpac Banking Corporation are the most recent banks to join the consortium tasked with designing and applying distributed ledger technologies to global financial markets.

Elsewhere, R3 has joined IBM, Intel, Swift and Cisco as well as the London Stock Exchange Group and big-name banks JPMorgan, Wells Fargo, and State Street on an effort led by the Linux Foundation dubbed the Open Ledger Project. The open source initiative aims to apply the principles of the blockchain to trading in stocks and other asset classes in global financial markets.

The FN Guide To Blockchain Consortia (subscription)

Anna Irrera – Financial News

Another day, another blockchain consortium. It’s getting hard to keep up.

PLY: Good point by Anna Irrera. Perhaps they ought to distribute the committees…

Products

FT Explainer: Currency Trading Algorithms (subscription)

Financial Times

Algos are being designed to carry out ever more complex functions.

Indexes

JPX: Launch Of S&P/JPX Risk Control Index (5%, 10% And 15%)

MondoVisione

 

The KRX And KAB Agreed To Joint-Develop Real Estate-Based Financial Product Investment Index

MondoVisione

Career Paths

BBJ reports that Márton Nagy, the deputy-governor of the National Bank of Hungary, was elected Chairman of the Budapest SE at a general meeting of shareholders. MNB Director Richárd Végh, responsible for capital markets and market oversight, will be the CEO of the Budapest SE, as of January 1.

PLY: I wish the new Chairman & CEO every success. It is not clear what is the fate of Zsolt Katona who ran the exchange previously but I sincerely hope all is well in his world, he has done much to keep Budapest SE on the map during the challenging period of Viennese ownership.

WSJ reports that Joanna Perkins, Libor oversight chief, was forced out of her post after a disagreement with Ice Benchmark Administration over greater independence from the company that runs the process. Joanna Perkins, a financial lawyer who has advised regulators, left the committee in July.

The following representatives of the European energy sector will join the Supervisory Board of EPEX SPOT:

Mag. Thomas Karall, CFO of Austrian Power Grid,

Chris Peeters, CEO of Elia Group, and

Dr. Jörg Spicker, Head of Market Operations and Member of the Executive Board of Swissgrid.

They join:

Dr. Hans-Jürgen Brick, MD Commercial at Amprion,

Ulf Heitmüller, Director Business Unit Trading of EnBW Energie Baden-Württemberg and Member of the Supervisory Board of EEX,

Dr. Jürgen Kroneberg, Lawyer and Chairman of the Supervisory Board of EEX;

Mel Kroon, CEO of TenneT Holding,

Dr. Egbert Laege, CEO of Powernext and Member of the Executive Board of EEX,

Peter Reitz, CEO of EEX and ECC,

Hans E. Schweickardt, Member of the Supervisory Board of Polenergia Holding,

Jonas Törnquist, Head of Economics and Regulation at EDF,

Jean Verseille, Director of European Affairs at RTE.

FINRA named a new Public Governor – Charles I. Plosser, former President of the Federal Reserve Bank of Philadelphia – to its Board of Governors.

Financial Calendar

New! 18.05.2016 – CME 2016 Annual Meeting of Shareholders (press release)

New! 29.02 – 02.03.2016 – CBOE Annual Risk Management Conference (press release)

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

 

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