February 01 2016

elb2IEX goes full frontal on the ‘pay for speed’ marketplaces offering low latency co location…  SFOA moves on: changes name to reflect a new zeitgeist pursuing opportunities as the continental European association endorsing new product, markets and indeed attentive to the Commodities roots of the original SCFOA, as it was. Good move by ICDA supremo Dan Day-Robinson: the “International Commodities & Derivatives Association” name & its acronym “ICDA” have grown on me. As a former SFOA board member, I wish the association every success as it continues to rise phoenix-like following some dismal management in what has now been consigned to association ancient history. I look forward to the ICDA Blockchain conference in London during April too.

Today I am in sunny Malta and look forward to meeting some EI readers at my FinTech presentation this afternoon organised by JCI in the offices of FDI agency Enterprise Malta.

Public Markets

Barclays, Credit Suisse Agree To Dark Pools Settlements

Keri Geiger & Sam Mamudi – Bloomberg

Barclays and Credit Suisse agreed to settle allegations by New York’s top cop and SEC (press release) that they misled investors on how they managed their private trading platforms.

Barclays will pay $70 million, split evenly between the two enforcers, the largest fine levied on a dark pool operator. Credit Suisse will pay $84.3 million ($24.3 million to SEC for disgorgement & interest, with the remainder shared evenly between the two authorities).

PLY: A costly lack of disclosure leads to some serious systematic internalisation of penalties by big banks.


For Departing Nasdaq CFO Lee Shavel, Next Stop Is ITG Board

Annie Massa – Bloomberg

ITG made the announcement just hours after Nasdaq said he would leave on March 31.

PLY: Interesting news.


IEX Debate Escalates With Public Knock To NYSE’s Systems

Annie Massa – Bloomberg

In a letter to the public, IEX’s head of markets and sales, Don Bollerman, accused NYSE of operating a system that privileges customers willing to cough up the most cash. Exchange groups including NYSE have said that if IEX becomes a registered exchange, its 350 millionths-of-a-second “speed bump” on incoming and outgoing orders could harm the $22 trillion U.S. stock market. But NYSE effectively has a speed bump of its own, Bollerman wrote in the letter posted Sunday on IEX’s website.

PLY: This was always the plausible argument to advance in the face of a New York exchange establishment which has inelegantly sought to keep competition out while striving to avoid the latency issues pre-existing in their own models.


SEC Offends NYSE, Nasdaq

Andrew Ackerman – Wall Street Journal – Moneybeat

NYSE & NASDAQ are so upset the SEC didn’t offer either of them a seat on the agency’s Equity Market Structure Advisory Committee that they have spurned offers by the panel to participate in policy deliberations held by its members behind closed doors…

PLY: Clearly there is a point where you risk ‘cutting off your nose to spite your face’ as the old Irish maxim goes but up front, the SEC creating an (equities) market structure committee which didn’t invite the major US exchanges was, at best, bizarre.


Clearing House Push Created Systemic Risk (subscription)

John Dizard – Financial Times

Market illiquidity seems to be metastasising into more dangerous form.

PLY: Another bump in the carpet tracked down and ascribed to political haste for simplicity in a complex world.


LCH.Clearnet Receives Recognition As A Clearing House In Singapore By MAS


PLY: Good news for LCH but clearly ICE are already a fully operative CCP & exchange in the city state.


SGX – A Convenient Scapegoat

R Sivanithy – Business Times

Top officials from SGX met with a sizeable group of trading reps (TRs) last week and by all accounts, it was a feisty affair.

PLY: Mature commentary from R Sivanithy who notes the fact that SGX seem to be held responsible for every problem in the marketplace when bigworld factors seem to be somewhat responsible…


SFOA Changes Name To The International Commodities & Derivatives Association (ICDA)


PLY: I wish ICDA every success and applaud their endeavours to create a Continental focal point for commodities, derivatives & new products.

Private Markets

NSE Bypasses Sebi, Writes To Finance Ministry On Listing Stand-Off

Jayshree P. Upadhyay – Livemint

PLY: Sensible move by NSE to seek to move the dialogue forward as clearly SEBI has acute difficulties in dealing with this situation, which restricts Indian free market development.


Nepse Told To Name 2 More Clearing Banks

Kathmandu Post

The Securities Board of Nepal (Sebon) has asked the Nepal SE (Nepse) to establish two more clearing banks in addition to the existing single clearer: Global IME Bank, following requests from brokers.


Observers: Yangon SE Weak On Corporate Governance Rules

Catherine Trautwein  – Myanmar Times

Industry observers say the Yangon bourse has not gone far enough on provisions for transparency.

Dividend News

Nasdaq declared a regular quarterly dividend of $0.25 payable on March 28, 2016, record date March 14, 2016.  

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX up 1.6%, FTIL down 3%, I am still pondering that DGCX sale news from Friday…


Osaka Exchange: Go-Live Date Of Next Generation Derivatives Trading System (Next J-GATE)


Next J-GATE Go-Live Date: July 19, 2016.


CBOE To Start Tech Upgrade In Q3 – COO (subscription)



Blythe Masters & JPMorgan Trial Blockchain Project (subscription)

Ben McLannahan – Financial Times

JPMorgan Chase has begun a trial project using blockchain as it seeks to lead banking-industry efforts to cut the cost & hassle of trading.


Europe’s Exchanges Vie For Dominance Of Wind Power Futures


Nasdaq Commodities launched German wind power futures products in December linked to a wind index which calculates wind strength. EEX has also spotted the potential and will launch its own German/Austrian wind power futures this spring.


JSE Launches Beef Futures

Namibia Economist

With a national count of 13 million cattle with about 2.2 million butchered annually the Johannesburg SE (JSE) launched this week the Beef Futures as a commodity for chilled beef carcasses.


CME Studies Circuit Breakers For Volatile Cattle Markets



CME Gears Up For Renminbi Futures Demand

EJ Insight

CME is hastening the launch of offshore renminbi futures and striving to improve the product liquidity to meet the demand of investors for effective hedging instruments.


HKEX Launches Real-Time Price Information Of Selected Futures Contracts On HKEX Website



FX Last Look Needs More Transparency

Markets Media

PLY: I disagree. “Last Look” is a ludicrous system which makes financial markets look very very dubious indeed.


BSE Tweaks Norms For Classifying Stocks In 3 New Groups

The Hindu Business Line

Bombay SE will bring in changes to parameters for determining the classification of securities exclusively listed on its platform for three new sub-groups — XC, XD and XT — from February 1.


‘Seismic’ Shock Awaits Bond Liquidity (subscription)

Financial Times

Fund managers want EU regulators to water down trading rules.


ICE Launches U.S. Treasury Index Family


Interactive Data will become the new benchmark index provider for four of BlackRock’s iShares U.S. Treasury ETFs: iShares 1-3 Year Treasury Bond ETF (SHY), iShares 3-7 Year Treasury Bond ETF (IEI), iShares 7-10 Year Treasury Bond ETF (IEF) and iShares 20+ Year Treasury Bond ETF (TLT). Known as the ICE U.S. Treasury Bond Index SeriesTM, the indices will be operated by Interactive Data beginning in Q2 2016.


ESMA Updates CRR Standard On Main Indices & Recognised Exchanges


Career Paths

Bloomberg reports that Lee Shavel, whose plan to retire as Nasdaq’s CFO was announced last week, has joined the board of ITG. ITG made the announcement just hours after Nasdaq said he would on March 31 leave the job he’s held since 2011.

FOW reports that LME is set to appoint former head of business development at Marex Spectron ProTrader Anthony Payne.

Tullett To Cut Jobs Even As Revenues From Crude Oil Trading Rise (subscription)

Philip Stafford – Financial Times

Tullett would cut 7.5% of staff, or roughly 70 people, from its trading divisions in Europe and North America. That was up from an earlier forecast of a 5% cut in November.

PLY: It’s the classic restructure play at TNT, especially when they have the ICAP voice brokers added into the structure: aka reduce headcount, keep revenue as healthy as possible and watch returns mount as CEO John Phizackerley bolsters his reputation in the ‘turnaround.’

trend reports that Recepmyrat Nurymov has been appointed deputy chairman of the State Commodity and Raw Materials Exchange of Turkmenistan, a body of regulation of export-import operations.

Evercore is expanding its investment banking offering in London through the formation of a new dedicated European equity capital markets advisory capability.  The ECM Advisory team will be led by Jim Renwick who will join in February as a Senior MD in its London office. Mr. Renwick was most recently Chairman of Corporate Broking & UK ECM at Barclays.

Andrew Bailey Faces Big Task As FCA CEO (subscription)

Chris Finney – Financial News

What a start. You accept one of the biggest jobs in UK financial services, and six days later the House of Commons is debating a no confidence motion on the institution you have just agreed to run.

PLY: Sounds perfect to me. Take the hint from the UK MPs and use it as grounds to restructure FCA… It strikes me George Osborne didn’t want an insider as FCA CEO after dispensing with Martin Wheatley and that suggests he wants a shakeup…

Financial Calendar

02.02 – SEC Equity Market Structure Advisory Committee Meetingagenda.

03.02 – CBOE Q4 2015 Results

04.02 – ICE Q4 2015 Results

04.02 – ITG Q4 2015 Results

04.02 – SGX 5 cents interim dividend payment date

05.02 – CME Q4 2015 Results

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

Share Notes

NZX: Issue Of Shares On SuperLife Acquisition


NZX issued 4,132,232 shares at $1.21 per share as deferred consideration to the vendors for the acquisition of SuperLife. The acquisition was completed in January 2015 for an initial consideration of $20 million. An additional $5 million of deferred consideration, to be paid in NZX shares at an issue price of $1.21 per share was payable if funds under management (FUM) exceeded $1.207 billion for a period of 12 consecutive months following completion. This condition was satisfied in January 2016 so these shares have now been issued.

Analyst Notes

NASDAQ OMX “Neutral” Rating Reaffirmed By Bank of America – $62.00 Target Price

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


China Calls Lending Platform Ezubo a $7.6 Billion Ponzi Scheme (subscription)

Chuin-Wei Yap – Wall Street Journal

Chinese authorities accused an online financing platform of bilking mostly small investors of more than 50 billion yuan ($7.6 billion) through a Ponzi scheme—the latest allegation of fraud against a loosely regulated part of China’s financial-products market.

PLY: The ugly side of what was apparently marketplace stealing… Analysis from industry experts Wangdaizhijia (NB in Chinese!) suggested in December that a third of some 3700 online lending sites in China are “problematic.” Apparently even before the Ezubo problem arose, 1157 platforms with a total of over 8 billion Yuan ($1.24 billion at the time) had defaulted/been shut down/or just run off with client money…

Other stories

WFE Full Year Statistics Show 2015 Global Equity Trading Volumes Rise 55% As Volatility Boosts Activity



Margin Calls A Fresh Threat For China’s Battered Stock Markets

Samuel Shen & Nathaniel Taplin – Reuters

China Equities Absorb Third Of All Trade (subscription)

Financial Times

Retail investors’ dealings sent global volumes up 55%.


Bats Warns `Brexit’ May Spur London Exodus

John Detrixhe – Bloomberg

Bats warned in a filing that a “Brexit” could damage the London business climate enough to drive some or all the company’s operations out of the U.K.

PLY: A risk statement is plausible, it does not say that BATS expect it to be a problem, just that it is a risk – kinetic risk as it were.

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