February 04 2015


PLY: Today’s daily Exchange Invest fizzes with the sort of data which apparently the Brussels airport wifi network cannot handle – sorry for the delay, I had to reach Warsaw to get some stable access!

ICAP takes on a high-handed EU (hooray!), ratings agencies discover that whatever they do they can’t please all the people… while the question of the day concerns just who is or isn’t included in Market Abuse regimes? BATS gets a bit hypey-shouty to wrestle the initiative back on US equity reform from NYSE, and in Europe, trade a one lot in futures and you’re the equivalent of a block trader, apparently…

Elsewhere, I am delighted to have contributed a brief opinion piece to the SFOA (“An Intangible Community” Swiss Derivatives Review – Issue 56, January 2015 page 6). Anybody associated with Burgenstock from start to peak to trough and then into the rebuilding phase initiated by Otto Naegeli as Chairman may find it interesting. I wish Dan Day-Robinson well in his efforts to revive the association.

Meanwhile, in Premium Posts, there are several new Premium Briefs to remind you of various issues in the industry (and don’t forget others such as the BGC-CME-GFI deal file) are updated daily when news arises. Recent briefs include:

IEX India Sale
Virtu Financial IPO
Index Companies Deals
Barclays Index Unit Sale
NY AG – Barclays Dark Pool
FX – CHF Crisis

Our Premium service is on a roll – can you afford not to be a subscriber? $120 per user/year and it helps keep EI Free. Subscribe here or email and I will invoice you forthwith.

Public Markets

TMX Q4 Financial Results

Revenue of $182.7 million, up 1% from Q4/13
Diluted EPS of 76 cents in Q4/14, versus 77 cents per share in Q4/13
Adjusted diluted EPS of 93 cents in Q4/14, versus 96 cents per share in Q4/13
Adjusted diluted EPS of 93 cents excludes:
– 13 cents per share of amortization of intangibles related to acquisitions
– 4 cents per share charge related to Maple transaction and integration costs.

PLY: TMX remains largely flat in the eye of a commodity market hiatus / storm – depending on which markets you consider from metals to energy.

GMEX Group Takes A Stake In ALTX Africa Group – Equity Stake Taken As ALTX Uganda Starts UAT And Sets Launch Target By 1 May 2015

GMEX announced that it has acquired a 25% stake through its GMEX Technologies subsidiary in the Mauritius-based ALTX Africa Group Ltd (ALTX). ALTX wholly owns ALT-Xchange Ltd (ALTX Uganda) and ALT-X Clearing Ltd (ALTX Clearing). ALTX is also in discussions with other strategic partners with a view to syndicating additional equity stakes to further drive its growth strategy.

PLY: Busy times for GMEX: Last week GMEX acquired a strategic stake, in the UK based post-trade software firm Avenir Technology Limited.

BATS Formally Files Market Structure Petition with SEC; Issues Industry Call-to-Action To Drive Regulatory Reform

BATS formally filed a petition for rulemaking on market structure reform with SEC and issued a call-to-action to the industry, urging participants to engage in a constructive dialogue to improve the already healthy U.S. equity market for all investors.

The petition was filed on January 21st and published to the SEC’s website January 29th. In an open letter to the industry in early January, BATS CEO Joe Ratterman and President Chris Concannon announced the company’s proposal to drive regulatory reform that would primarily:

-Reduce potentially excessive incentives to provide liquidity in the most active securities.
-Empower institutional and retail investors by providing them more – and better quality – information regarding the manner in which their orders are handled.

PLY: Hmmm. I have to admit I wasn’t wildly over excited by BATS proposal to start with and now that the hypemasters have got to this release, I am not exactly clear who the sell side, er, BATS board (oh, hold on, I think they’re the same thing) are really up to here. To describe the concept as their driving change is about as accurate as saying I drove my plane this morning because I was in a front row seat. BATS risk harming the merit in what they have already proposed. It was understandable they wanted to hold off on their follow up to the NYSE proposals due to the festive season but this release suggests a shotgun solution as opposed to cogitation. True, other US exchanges also have press offices whose releases are hype occasioned with the odd outbreak of useful data but I had expected more of BATS.

Read our Premium post: Rome Wasn’t Burnt in A Day – The US Stock Market Debate

Dark-Pool Trade Size Doubles In Europe As Venues Hunt Blocks
John Detrixhe – Bloomberg

Even before new regulations revamp trading in 2017, Europe’s private stock markets are already returning to their original purpose: handling big trades.

The average size of trades on European dark pools doubled to 11,403 euros ($13,050) in December from a low of 5,652 euros in May 2012, according to Fidessa. The number of shares per trade rose 50% to 1,161 over that period.

PLY: Hmmm, the intriguing issue is that Liquidnet Europe has, so far as I recall, been easily averaging a million Euro plus trade size and more during the past year. Indeed, the idea that an average of $13,500 amounts to ‘handling big trades’ in and of itself raises a lot of questions. Not to say, ridicule – trade one lot of many mini futures and you are no longer a ‘one lot charlie’ but the equivalent of a European equity block trading titan. Seriously?

Icap Fights Back At EU, But At What Cost?
James Moore – The Independent

How on earth has Icap managed to take the moral high ground after the Libor-fixing scandal? Ask the EU. Europe’s competition watchdogs want to fine (reported yesterday) the company something less than £10m for, allegedly, being part of a cartel that conspired to fix interest rates.

But Icap’s Michael Spencer is willing to spend money challenging the fine to prove a point, namely that while his people might have broken the rules, their grubby little gang wasn’t a cartel (as defined by the rules). He believes that the EU is overreaching itself and he might be right.

But taking the moral high ground (if that’s what Icap is doing) is a risky move, and not just financially. Every time the case is mentioned it will cast the shadow of immoral Libor fixing over Mr Spencer’s beloved business.

PLY: Rather a straw man argument I feel. It’s a bit like having some staff found shoplifting and an overactive prosecutor reckons he can charge the company with murder. Eventually you have to stand up to this behaviour and I don’t believe it will do ICAP’s reputation long-term damage to be seen to stand up for itself. In an age of pipsqueaks, pygmies and pathetic linearists (ahem) running too many businesses, I thoroughly applaud Michael Spencer for standing up to the EU blob with what is an unacceptable charge. Then again Spencer is an entrepreneur amongst ‘place men’ of course so he probably feels more strongly about right, wrong and his company, than the salary monkeys. Otherwise we will end up in an era where we get aggressive prosecutorial responses akin to the US judiciary which makes a mockery of life, liberty and the pursuit of happiness.

Meanwhile for those who think I am overly hard on the EU, apparently yesterday one of the EU’s Presidents was holding hands with the marvellously telegenic but utterly economically incoherent looney left PM of Greece… Fair enough the Athenian was at least elected democratically but given the propensity to posture as opposed to promoting prosperity…

LME Rings The Changes (subscription)
Henry Sanderson & Neil Hume – Financial Times

Garry Jones says the aim is to bring LME into the electronic era without losing its distinctive history…

Credit Suisse Exits U.S. Retail Market-Making Business
John McCrank – Reuters

Exiting by end of Q1 after failing to gain enough scale to justify continuing.

Zagreb & Ljubljana Stock Exchanges Continue Cooperation

Private Markets

ADX Introduces Market Making To Calm Volatility
Hadeel al Sayegh – The National

National Bank of Abu Dhabi’s market making business, at a paid-up capital of Dh30 million, will cover four stocks (Aldar, FGB, Waha Capital and Abu Dhabi Commercial Bank).

We’re Talking To 2-3 Financial Institutions For Fund-Raising: Saurabh Sarkar
Sachin P Mampatta & Sneha Padiyath – Business Standard

MCX MD / CEO Saurabh Sarkar spoke about his plans after receiving SEBI permission to launch new contracts (reported here).

Dividend News

TMX declared a dividend of $0.40 on each common share outstanding, payable March 6, 2015 to shareholders of record at the close of business on February 20, 2015 (press release here).

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX & FTIL flat.


SET’s Online Trading Program Crashes During Feb 3rd Morning Session
The Nation

The Stock Exchange of Thailand (SET)’s online trading program “Settrade” experienced a failure Tuesday, Feb 3rd, in the morning session after the update of database software, causing brokerages to complain of volume losses.

The online trading program of Settrade Dot Com Co, an SET subsidiary, failed to execute trading orders at 10am yesterday before returning to normal at 11.54am.

Coinsetter Adds Algo Strategies To Bitcoin Trading With Tradewave

Tradewave, the community-based Bitcoin trading platform that allows anyone to trade algorithmic strategies, has added fully integrated support for Coinsetter’s exchange.


OpenBondX Brings Innovative Electronic Trading Capabilities To Fixed Income
Tom Groenfeldt – Forbes

Alistair Brown thinks conditions in the corporate bond market are ripe for change so he’s launching OpenBondX which brings some equities style trading to fixed income.

Liquidnet Set For H1 Fixed Income Launch (subscription)
Anna Irrera – Financial News

Liquidnet expanded into fixed income markets by acquiring Vega-Chi in March 2014.

PLY: I remain hugely uncomfortable at the broad range of platforms believing they can change fixed income when they face vast numbers of challengers and the significant likelihood of a massive bond bear market.

Bond Buyers Escape Wall Street To Computerized Shadows To Trade
Lisa Abramowicz – Bloomberg

Average daily volume in U.S. fixed-income ETFs, for instance, surged 45% last year, according to data compiled by Societe Generale. And investors are increasingly gravitating toward electronic platforms where they can trade among themselves, without dealers as middlemen.

Read our Premium post: On Bonds & SEFs

TAIFEX Plans To Launch RMB Forex Futures In 2015
Andrew Saks-McLeod – LeapRate

PEGAS To Enhance Geographical Offer With NBP, ZEE & PSV Contracts – Launch Of New Contracts On 26 March


SGX MSCI Malaysia Index Futures Poised For Launch

Career Paths

Trading Technologies announced the appointment of Brian Mehta to the position of Chief Marketing Officer. Mehta is responsible for advancing the company’s brand, managing new product launches and leading all public outreach. He is a member of the executive team, where he reports directly to CEO Rick Lane. Mehta joins TT from Motorola Mobility, where he served as head of North America Marketing.

SEC announced that David Grim has been named as Acting Director of the Division of Investment Management. He replaces Norm Champ, the division’s former director, who left the SEC at the end of January.

Ontario Securities Commission (OSC) Chairman Howard I. Wetston, Q.C., announced the following appointments to the OSC. The Commissioners will each serve a two-year term effective January 28, 2015:

William Furlong, MBA is a senior banking executive with more than 20 years of experience in Canadian and international capital markets with expertise in asset-backed securitization, structured derivatives and the governance of trading businesses.

Janet Leiper, LL.M., C.S. brings more than 25 years of legal and regulatory experience as an adjudicator, prosecutor and defence counsel. She recently completed an appointment as Integrity Commissioner for the City of Toronto.

Timothy Moseley, LL.B, MBA was most recently SVP and Chief Compliance Officer of the Canadian Imperial Bank of Commerce. He has over 20 years of experience in securities litigation, including civil and regulatory proceedings.

Financial Calendar


ICE Q4 2014 Financial Results
CME Q4 2014 Financial Results


CBOE Q4 2014 Financial Results
ICAP 6.6p interim dividend payment

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


Marketplace Lender SoFi Secures $200 Million In Series D Funding

Social Finance, Inc. (SoFi), a leader in marketplace lending, today announces $200 million in Series D funding led by Third Point Ventures and affiliates of Third Point LLC, with Wellington Management Company LLP, Institutional Venture Partners and existing investors also participating in the round.

Goldman Sachs served as sole placement agent to the company on the financing.

Other stories

McGraw Hill Financial & S&P Ratings Reach Settlements With DOJ, Attorneys General Of 19 States & District Of Columbia & With CalPERS

Under the terms of the settlement, which is not subject to court approval, McGraw Hill will pay $687.5 million to the DOJ and $687.5 million to the States and District of Columbia.

In addition, McGraw Hill reached a separate settlement with the California Public Employees’ Retirement System (“CalPERS”) to resolve its claims against the Company regarding ratings on three structured investment vehicles. Under this settlement, the Company will pay CalPERS $125 million. This settlement is not subject to judicial approval.

PLY: The history of ratings agencies for the past decade can be minimally surmised as “damned if they do, damned if they don’t.”

ESMA Advises Commission On Implementation Of New Market Abuse Regime
Five Takeaways From EU’s Market Abuse Rulebook (subscription)
James Rundle & Tim Cave – Financial News

European regulators have finalised new rules to clamp down on insider trading and other forms of market abuse, which will take much tougher approaches to electronic trading, sponsored access and benchmark manipulation.

PLY: Which raises the zillion, er, currency unit (not wishing to cast aspersions on anybody) question – how far do Market Abuse Regulations impact governments and particularly central banks?

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