December 30 2013

elb2I hope you had a fantastic Christmas. If you have been switched off for the festive period to date, this is a digest edition to tide you into next year!

Interesting to see EUREX investing into TAIFEX to extend their existing j.v.s while

Issue 161 therefore brings us to an end of 2013 (barring any amazing events between today and tomorrow) while we return with another digest on Friday 3rd.

In the meantime, on behalf of myself and all the DV Advisors / Exchange Invest team we wish you and yours a very Happy, Peaceful and Prosperous New Year!

Now for a long scroll to get you up to date with the week’s news: – enjoy!

Public Markets

TAIFEX Gets International Boost With Eurex Shareholding
Forex Magnates

Yuanta Financial Holdings states that it will sell 12.92 million shares to Eurex Zurich AG at a value in excess of $42 mln, pending regulatory confirmation, taking EUREX up to the maximum permitted threshold of 5% holding.

Jeff Sprecher On ICE And NYSE Euronext’s Powerful Combination (Video)
NYSE Euronext

Jeff Sprecher talks about his vision for the combined company.

Nasdaq To Compensate Firms On December 31 For Botched Facebook IPO
Reuters

Nasdaq OMX will compensate firms on December 31 for qualifying claims related to Facebook botched May 2012 IPO, up to $41.6 mln (£25.2 mln).

NYSE Proposes ‘Kill Switch’ To Help Catch Trading Errors
Business Recorder

NYSE has filed a plan with regulators to offer firms a “kill switch” that could cut off trading if precept levels were breached.

NYSE Delays Order Imbalance Data Fees Again (subscription)
waters technology

NYSE Technologies has delayed the introduction of new fees for order imbalance data from parent NYSE Euronext’s NYSE and NYSE MKT marketplaces for a second time.

Rusal Launches Legal Action Against LME Warehouse Rules
Reuters

The world’s biggest aluminium producer Rusal has begun legal action aimed at having LME overturn planned reforms to its warehousing policy, worried about further falls in the price of its metal.

LME Must Seize The Initiative To Get Mainland China Access
South China Morning Post

Strenuous efforts by Beijing to push homegrown commodity exchanges into the international arena don’t bode well for the likes of LME, which is struggling to get any meaningful access to the mainland market.

SGX Swapped Rights To LME Monthly Futures For Access In Hong Kong (subscription)
Metal Bulletin

SGX gave up its exclusive right to LME-based monthly futures contracts in Asia as part of its recent co-operation deal with HKEx, sources told Metal Bulletin.

CFTC Grants SGX Derivatives Clearing Ltd. Registration As A DCO
CFTC

CFTC issued an Order granting Singapore Exchange Derivatives Clearing Limited (SGX-DC) registration as a derivatives clearing organization pursuant to Section 5b of the Commodity Exchange Act.

Osaka Securities Exchange Change In Trade Name
MondoVisione

Osaka Securities Exchange hereby announce that the exchange plans to change its trade name to Osaka Exchange, Inc. in March 2014 (on the same day of the derivatives markets integration)

MICEX SE Listing Rules To Come Into Effect
MondoVisione

The Listing Rules of MICEX SE (part of the Moscow Exchange Group) are to come into effect on 6 January.

Improving FX Market’s Order Book Quality On The Moscow Exchange
MondoVisione

From 20th January 2014, Moscow Exchange is introducing a minimum 25 RUB commission on orders under 50 lots on the FX Market.

Private Markets

NSE Acquires 45% Stake In CAMS
Business Standard

NSE’s strategic investment arm has picked up 45 per cent stake in mutual fund back-office service provider Computer Age Management Services (CAMS) Pvt Ltd.

Private equity player Advent International, which had sold its entire stake to NSE. HDFC, HDFC Bank and Acsys Software India Pvt Ltd, has also sold a portion of its stake to the NSE subsidiary.

NCDEX, Karnataka Govt Joint Venture To Modernise APMC Markets
The Hindu

NCDEX said it has signed an agreement with the Karnataka government to form a joint venture company to modernise APMC markets in the state by bringing in electronic auctions.

QCB Announces Setting Up Of Qatar Central Securities Depository Company
The Peninsula

Qatar Central Bank (QCB) has announced the establishment of the Qatar Central Securities Depository QCSD (a private QSC) to start its work as of next Thursday, January 2, 2014.

Bank Of Ghana And Ghana SE Merge Depositories
Ghana Broadcasting Corporation

The Central Securities Depository Ghana (CSD) and the GSE Securities Depository Company Limited (GSD) have merged into a single entity.

Kochi Will Lose Its Stock Exchange In New Year
The Hindu Business Line

Even as Kochi is riding high on a rising metro image, one of its prestigious possessions — the Cochin SE — is walking into the twilight.

CISX Relaunches Under New Name
BBC

Historical concerns about the structure of the CISX should be left behind in its relaunch, according to its chairman. The relaunch includes a rebranding and a splitting of the company into two.

John Moulton said by having the regulatory and commercial aspects of the business separated it would avoid future conflicts of interest.

The companies will be named as the Channel Islands Securities Exchange and the Channel Islands Securities Exchange Authority.

PLY: Interesting business CISX with considerable potential, as do so many small island exchanges in a world of opportunity, we wish Mr Moulton’s new developments every success.

Bank Accounts Of IEM Frozen In Connection With Cheating Case: NCDEX
The Economic Times

The city police has frozen bank accounts of the Indian Exchange of Metals (IEM) in connection with a cheating case filed against it by online multi-commodity exchange NCDEX.

Bitcoin Trading Exchange Coinsetter Files To Raise $1.5 Mln
Bloomberg

Bitcoin trading platform Coinsetter Inc., filed to raise $1.5 million as venture capitalists flock to companies tied to the digital currency.

Bitcoin Exchanges Suspended In India After Reserve Bank Warning
msn

The Reserve Bank of India thinks virtual currency Bitcoin can’t be trusted. As a result, several Indian Bitcoin exchanges – such as INRBTC – have suspended operations. They even posted notes on their websites, calling for legal guidelines. Some local media outlets also reported government-ordered raids throughout India on Bitcoin exchanges.

PLY: Like China, the Indian Rupee does not float and hence it is unsurprising that the heavy hand of Indian bureaucracy would take a first step to try to ban BTC – that said western observers may have expected the new Central Bank Governor to be somewhat more enlightened that the old line bureaucrats.

Singapore Govt Decides Not To Interfere With Bitcoin
Mashable

The Monetary Authority of Singapore (MAS), the country’s central bank, has decided not to intervene on whether businesses can accept Bitcoin as a means of transacting goods and services.

PLY: MAS demonstrating a pragmatic process in favour of trade once again.

WPCS Announces Public Beta Release Of BTX Bitcoin Trading Platform (subscription)
Wall Street Journal

WPCS International Incorporated announced that its wholly-owned subsidiary, BTX Trader, LLC has released a beta version of its Windows-based trading platform that is now available to the public at www.btxtrader.com.

Special Section: FTI, NSEL, India at the Crossroads

PLY: NSEL had a slightly less worse default than usual last week as can be seen below while MCX shares are up around 1% on the week and FTIL circa 6%. Big issues arising include the new MCX-SX CEO announcement being imminent, the difficulty in selling the FTIL stakes in the time periods being requested by the powers that be…

The NSEL repayment tally of shame remains:

(N.B. Anticipated weekly repayment is Rs 174.72 crore, roughly USD 28,000,000)

Week 1: Rs 92.73 crore (USD 14.37 mln) paid
Week 2: Rs 12.05 crore (USD 1.79 mln) paid
Week 3:Rs 15.37 crore (USD 2.29 mln) paid
Week 4: Rs 7.77 crore (USD 1.21 mln) paid
Week 5: Rs 8.57 crore (USD 1.35 mln) paid
Week 6: Rs 11.45 crore (USD 1.82 mln) paid
Week 7: no payout – bank accounts frozen
Week 8: Rs. 2.85 crore (USD 457.9 k) paid
Week 9: Rs. 28.34 crore (USD 4.58 mln) paid
Week 10: Rs. 30 lakh (USD 49k) paid
Week 11: Rs. 29.05 crore (USD 4.72 mln) paid
Week 12: Rs. 11 crore (USD 1.77 mln) paid
Week 13: no payout
Week 14: Rs. 6.1 crore (USD 976.7k) paid
Week 15: Rs. 9 crore (USD 1.44 mln) paid
Week 16: Rs. 9 crore (USD 1.44 mln) paid
Week 17: Rs. 9 crore (USD 1.46 mln) paid
Week 18: Rs. 11.5 crore (USD 1.85 mln) paid
Week 19: Rs 12.64 crore (USD 2.04 mln) paid

NSEL Defaults 19th Time; Pays Rs 12.64 Cr (USD 2.04 Mln) Against Rs 174.72 Cr (USD 28.2 Mln)
The Economic Times

NSEL paid about Rs 12.64 crore (USD 2.04 mln) against the scheduled payment amount of Rs 174.72 crore (USD 28.2 mln), defaulting for the 19th straight time.

With today’s pay-out, NSEL has so far settled about Rs 276.14 crore (USD 44.7 mln) against about Rs 5,600 crore (USD 906 mln) dues to 13,000 investors.

MCX Falls After Board Asks Promoter FTIL To Cut Stake As Per FMC Order
Business Standard

PLY: MCX board have asked FTIL to reduce their stake from 26% to under 2% in a month – ‘optimistic’ sounds like an understatement.. FTIL are expected to challenge this in court.

Two Ahmedabad Bourses Executives Anil Mishra, Dilip Bhatia Contenders For MCX Top Post
The Economic Times

Heads of two Ahmedabad-based exchanges have emerged the front runners to take up the top job at the crisis-hit MCX and the new managing director and CEO is expected to take charge as early as next week.

PLY: Report notes heavy lobbying by banks, brokers and regulators – none of that sounds encouraging to a sound meritocratic decision for the sort of independent choice required to really rebuild MCX-SX. Hopefully the candidate will be capable.

MCX Shortlists 3 For MD Post; Decision On Thursday
Business Standard

The selection committee consisting of some of the board members, including the representative of State Bank of India, the former CMD of Bank of Baroda, a representative from Corporation Bank and others had called about 15 candidates for the interview, on Thursday and Friday last week.

NSEL Plea: Bombay HC Refuses To Appoint Court Commissioner
The Financial Express

The Bombay High Court refused to appoint a court commissioner on a plea made by scam-hit NSEL as Rs 80 crore (USD 12.88 mln) was expected to come in from the borrowers in the next few months.

NSEL Asks Banks To Disburse Rs 11 (USD 1.77 Mln) Cr Received From Mohan India
The Economic Times

Crisis-ridden NSEL asked banks to disburse Rs 11 crore (USD 1.77 mln), the amount it has received from Mohan India as per the settlement agreement.

MCX Scouts For New Anchor Investor
Business Standard

The board of MCX has decided to bring in a new anchor investor — a move that could curtail the influence of the promoter, Jignesh Shah-promoted FTIL.

The new investor could be brought in even before the courts take a call on the FMC’s fit-and-proper order, if the plan is executed. Now, FTIL is the anchor investor in MCX.

FTIL Responds To Show Cause Notice, Says Decision On Fit-&-Proper Tag Be Put On Hold
The Financial Express

FTIL, in its reply to the show cause notice issued by the capital market regulator questioning its fit-&-proper tag, has said the matter is ‘sub judice’ and so a final decision on the matter should be put on hold for the time-being.

Investors File Complaint With ED, SEBI Against NSEL Brokers
The Economic Times

A group of NSEL investors has filed a complaint with the Mumbai police, Enforcement Directorate and SEBI alleging that several brokers had lured clients to invest in NSEL’s paired contracts by “financing them to the extent of 60% to 90% at lower rate of interest”.

Regulatory Action Likely Against NSEL Audit Firms
Business Standard

After passing the ‘fit and proper’ order against NSEL-promoter FTIL, FMC plans to move against audit firms and consultants associated with NSEL.

PLY: Unsurprising, clearly the audit firms like so many others in this food chain have a great many questions to answer about their behaviour.

Split Among NSEL Investors
Business Standard

A split has developed among the aggrieved investors and brokers of the “now defunct” NSEL, ailing arm of FTIL.

A group of around 20 people claiming to be “true representatives” of NSEL investors have formed a separate body, the NSEL Investors’ Action Group (NIAG). It is headed by Ketan Shah, representative of two NSEL investors, Tarun Amarchand Jain HUF and Ashish Seth HUF.

The NSEL Investors’ Forum (NIF) has claimed to have succeeded in its effort through separate complaints to the regulator, FMC, to Economic Affairs Secretary Arvind Mayaram and through several protests at NSEL and FTIL offices.

FMC To Strengthen Commodity Exchange Boards To Stop Irregularities
The Economic Times

Tightening corporate governance norms for commodity exchanges following the NSEL payment crisis, regulator FMC on Friday asked their boards to scrutinise all major business decisions, as also financial powers of CEOs and transactions involving promoters and top management personnel.

SEBI Gets Power To Search And Seizure Any Premises
moneylife

Market regulator SEBI on Tuesday said its Board has approved norms to exercise new powers of search and seizure, investor refund, settlement proceedings and money-pooling.

NSEL Scam Derailed Commodity Market In 2013
The Financial Express

Commodity futures market’s dream run came to a halt in 2013 as NSEL crisis and imposition of transaction tax on non-farm items hampered the growth of business, with turnover estimated to dip by 30 per cent.

Technology

Technology A Tiger Everyone Is Riding: NSE Chief
mydigitalfc.com

Top exchange NSE’s chief Chitra Ramkrishna feels that any new products and systems should not be at the cost of technology-related risks.

“Technology is a tiger that everyone is riding. You have no choice. You have to move ahead and continuously benchmark your technology, otherwise you will become irrelevant.

But, benchmarking the technology would not just enforce speed, performance and functionality. It also brings in certain risks. Everyone in exchange business across the world is actually on a high gear on risk mitigation.”

Philippine SE Launches New Disclosure Engine
philstar.com

The operator of the country’s sole stock exchange has launched its new disclosure engine that allows faster dissemination of corporate announcements.

The Philippine Stock Exchange Electronic Disclosure Generation Technology (PSE EDGE) is part of efforts to make the local bourse more competitive and “all corporate disclosures and announcements of listed companies from Dec. 27 onwards will be accessible through the PSE EDGE website at http://edge.pse.com.ph.

NCDEX To Settle All Commodity Contracts Through COMTRACK
The Economic Times

NCDEX will settle all contracts in commodities traded on its platform using its indigenously designed and developed commodity accounting system – COMTRACK.

LSE Develops Framework For Market Makers
The News

Lahore SE has initiated work on devising a framework to appoint liquidity suppliers and takers, who are known as market makers.

Moscow Exchange: Changes In Displaying Market Data From Classica And Standard In Vendors Terminals From February 17, 2014
MondoVisione

Moscow Exchange reminds that after migration to a new format of the Stock market data dissemination (more details at http://moex.com/n4346) from February 17, 2014:

Products

NASDAQ OMX Clears First Buy-Side Client IRS
Nasdaq

NASDAQ OMX Clearing, on the 23rd, announced its first buy-side client cleared IRS between SEB and Nektar Fund.

Shanghai Starts Simulated Trade In Equity Options
Ecns

Shanghai SE started simulated trading in equity options Thursday morning, part of a drive by regulators to expand investors’ risk-hedging options.

Complex Forex Options Not Ready For Prime Time
Business Recorder

Trading forex options on registered US platforms is a long-awaited step in making derivatives markets more transparent, but so far it has failed to take off. Rules became effective in October that required these trades to move to SEFs.

However, there is no established clearing-house for these trades, and with the additional paperwork and legal requirements needed to trade on SEFs, many market players are electing to stick with trading the old-fashioned way, by telephone or on bank platforms.

CFTC rules require FX options and non-deliverable forwards traded between US entities to be executed on a SEF, the designated trading platform for regulated derivatives. However, that requirement will not fully be in effect until these FX products can be cleared. At the moment, there is no entity that can clear FX options.

PLY: Lots of issues here but also one big fat opportunity…

Indexes

FTSE Mondo Visione Exchanges Index Closes At Its Highest Since May 2008
MondoVisione

PLY: End November data shows a significant upswing in the index…

Career Paths

Paul Hilgers is to become Optiver‘s global CEO.

Data and brokerage industry veteran Tim Dennis has joined SunGard as MD of the vendor’s data validation and reconciliation business.

Changes in investors/shareholders

Oman-India Joint Investment Fund To Raise Stake In NCDEX To 10%
Muscat Daily

Indian brokerage firm Jaypee Capital Services has got permission from the Indian regulator, FMC, to sell its 5.3 per cent stake in NCDEX to the Oman-India Joint Investment Fund.

Announced deal reported on Nov 19th

Financial Calendar

Tomorrow

ICE aggregate $75 million dividend payment

Friday

Record date 6.60p ICAP interim dividend
Record date CBOE special cash dividend of $0.50

SGX Q2 results FY2014 22 January 2014.

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

Share Notes

Interactive Brokers Group SVP Milan Galik sold another 3,000 shares Friday, December 27th at an average price of $24.50 (bargain $73,500.00). He now owns 724,604 shares. Mr Galik’s regular sales are chronicled on this specific page.

Following his sale of 11,867 shares Friday, November 22nd at an average price of $24.21 (bargain $287,300.07) reported on November 27th, the sale of 12,117 shares Tuesday, November 26th at an average price of $24.28 (bargain $294,200.76) reported November 28th, the sale of 14,303 shares Thursday, December 5th at an average price of $24.56 (bargain $351,281.68) reported December 9th, the sale of 15,237 shares Wednesday, December 11th at an average price of $24.16 (bargain $368,125.92) reported December 16th, the sale of 13,376 shares Friday, December 13th at an average price of $24.45 (bargain $327,043.20) reported December 18th and the sale of 15,094 shares Thursday, December 19th at an average price of $24.28 (bargain $366,482.32) reported December 23rd Interactive Brokers Chairman Earl Nemser sold another 11,125 shares Thursday, December 26th at an average price of $24.61 (bargain $273,786.25).

GFI Group COO Ronald Daniel Levi sold 52,309 shares Monday, December 23rd at an average price of $3.92 (bargain $205,051.28) and 71,377 shares Thursday, December 26th at an average price of $3.89 (bargain $277,656.53). He now owns 708,827 shares.

Analyst Notes

Why Did Tudor Buy ICE?
Market Realist

Tudor has around $13.6 billion in assets under management. The investment strategies of the Tudor Group include, among others, discretionary global macro, quantitative global macro (managed futures), discretionary equity long/short, quantitative equity market neutral and growth equity.

Tudor acquired a small position (0.56%) in ICE.

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

New Regulations Could Lead To Big Crowdfunding Future
Herald Scotland

The continuing pressure for banks to improve their lending to small businesses could help make 2014 a take-off year for crowdfunding

Australian Crowdfunding Platform Pozible Enters Singapore And Malaysia
Yahoo News

After helping 5,000 projects raise AU$16 mln (US $14.2 mln) in the last three years, Australian crowdfunding platform Pozible is finally entering the Singapore and Malaysia market.

Other stories

End Of Year Report Card: Trading And Technology (subscription)
Financial News

Financial News looks back at a busy year for the trading and technology industry, which has seen increased trading volumes and a number of mergers, most notably ICE’s $11 bln acquisition of NYSE Euronext. But it has also been hit by regulatory headwinds this year.

SEC Charges Instinet For Ignoring Red Flags In Soft Dollar Scheme
Newsroom America

SEC announced sanctions against a New York-based brokerage firm for ignoring red flags and paying more than $400,000 in soft dollars for expenses that an investment adviser had not properly disclosed to clients.

Instinet agreed to pay more than $800,000 to settle the SEC’s charges.

American Bankers Association To File Lawsuit On Volcker Rule TruPS Provisions
MondoVisione

ABA has announced its intent to shortly file a lawsuit challenging the Volcker Rule’s trust preferred securities (TruPS) provisions, seeking emergency relief.

European Regulators Seek Prop Trading Ban For Large Banks
Reuters

The European Commission plans to ban proprietary trading at large banks and may force lenders to ring fence all trading activities deemed a threat to financial stability, Sueddeutsche Zeitung said in its Saturday edition.

Remarks Of CFTC Chairman Gary Gensler At Farewell Event
MondoVisione

John F. Kennedy once said: “Let the public service be a proud and lively career.”

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