February 04 2016

elb2Ezubo clearly looks like the biggest ponzi scheme nobody out west has ever heard of, while questions arise about the price received by FTIL for their DGCX shares. CBOE results flat while Aquis bans HFT. LBMA to issue tender today for an electronic platform according to FT…and there’s more, happy scrolling:

Public Markets

CBOE Q4 2015 Results

CBOE

Q4 2015 Financial Highlights

GAAP Operating Revenue down 6% to $156.0m; Adjusted Operating Revenue down 8% to $154.0m; GAAP Net Income up 2% to $50.2m; Diluted EPS up 5% to $0.61; Adjusted Net Income down 9% to $48.9 Million; Adjusted Diluted EPS down 8% to $0.59.

Full-Year 2015 Financial Highlights

GAAP Operating Revenue up 3% to $634.5m; Adjusted Operating Revenue up 2% to $632.5m; GAAP Net Income up 8% to $204.1m; Diluted EPS up 11% to $2.46; Adjusted Net Income up 2% to $198.9m; Adjusted Diluted EPS up 5% to $2.40.

 

FTIL-DGCX Deal Valuation Sparks Investor Concern

Jayshree P. Upadhyay & Ankit Doshi – Livemint

The transaction, announced last week, was done at a valuation of around $40 million, which means FTIL received $11 million for its 27.3% stake.

PLY: This is a curious tale and the sale of the DGCX stake looks like the bargain of the century for the buyer. It raises a lot more questions than it answers, though, some of them pondered by Hirander Misra of GMEX and myself in this story…

 

This Upstart Market Hopes To Grow With `Flash Boys’ Strategy

John Detrixhe – Bloomberg

Aquis Exchange Bans ‘Predatory’ High-Speed Trading (subscription)

Philip Stafford – Financial Times

Aquis Exchange told users on Wednesday it would bar traders who used predatory tactics to move prices and take advantage of orders placed by investors. The rule, which the London-based start-up said in a circular would apply from Monday, aims to clamp down on “momentum ignition strategies”, by which traders try to kick-start rapid price movement. In one strategy a series of rapid-fire buy or sell orders are initiated and then cancelled. Some techniques are part of legitimate trading but others are illegal.

PLY: Not heard much from Aquis of late but the “all you can eat” model is still with us.

 

Citadel Makes Push For Seats On NYSE Floor (subscription)

Bradley Hope – Wall Street Journal

The market-making arm of hedge fund Citadel is in talks to buy the seats on the floor of NYSE owned by KCG Holdings.

PLY: Thus continuing the ongoing HFT takeover of the old floor, what an intriguing cycle that marks?

 

SEC: NYSE’s July 8 Halt Pushed Trading To Other Exchanges

Reuters

 

TMX Eyes Further Compression Of ‘Maker-Taker’

Markets Media

TMX may again narrow the differential in pricing between market participants who provide bid-ask quotes, and those participants who trade off the quotes.

PLY: The worry on Bay Street seems to be that TMX is fiddling as opposed to deploying a big picture strategy to deal with competition which has just been further extended to include NASDAQ after their acquisition of Chi-X Canada.

 

London ‘Flash Crash’ Accused Trader To Fight U.S. Extradition

Michael Holden – Reuters

Trader Navinder Singh Sarao To Fight Extradition In London Court (subscription)

Financial Times

QV Premium: Flash Crash & Hound of Hounslow – Brief and The Kennel – Premium discussion of the “Hound of Hounslow”.

 

MOEX Registers More Than 95k Individual Investment Accounts

Mike Fox – LeapRate

Among MOEX members, Sberbank (25, 670), Finam (23,755) and BCS (15,133) opened the most IIAs, MOEX data shows. Individuals have a choice of 80 companies when looking to open an IIA.

Private Markets

London Gold Market Wrestles Over Future (subscription)

Financial Times

PLY: LBMA tender apparently imminent, will be interesting to read.

 

NCDEX Tightens Physical Delivery Norms

Business Standard

The Know Your Depositor (KYD) documentation process at the time of accepting deposits will now include declaration by depositor conceding he is the sole beneficiary of deposited goods.

Dividend

CME declared a Q1 dividend of $0.60, a 20% increase from the prior rate of $0.50. The dividend is payable March 28, 2016, record date March 10, 2016.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Flat day for MCX while FTIL is up 2% despite media reports questioning the price achieved for the DGCX stake.

NSEL Scam: Bombay HC Orders NSEL Borrower To Pay Rs 157 Cr ($23 mln)

Business Standard

Aastha Minmet and Juggernaut Projects ordered to pay Rs 12.5 cr ($1.84 mln) and Rs 145 cr ($21.4 mln) respectively.

Technology

Nasdaq Wins Australian Equities Clearing Deal (subscription)

Philip Stafford – Financial Times

ASX has signed a deal for Nasdaq, the US operator, to upgrade the Sydney group’s equities clearing platform and will roll out the project as it tries to create a workable system for settlement.

PLY: ASX talks Blockchain while inelegantly ignoring the distributed word before ledger, as befits a monopolist.

 

IPC Systems Completes Acquisition Of Etrali Trading Solutions

MondoVisione

PLY: Interesting deal which, although I see a future for turrets and related products, does have an air of merging blacksmiths in the face of the automobile as Philip McBride Johnson memorably commented about the state of futures exchanges in the open outcry mutualised era when the Capital Market Revolution broke out.

 

Euroclear Sees Seven Steps To Bring Blockchain To Capital Markets

Pete Rizzo – CoinDesk

Post-trade settlement specialist Euroclear has co-authored a new report on how blockchain and distributed ledger technology can be adapted for capital markets.

PLY: The problem with Euroclear is that with its rather slow management approach to innovation this could be the T+forever Blockchain solution. QV Also my paper from last year “Towards A Real-Time World Market.

Products

CME To Again List New Live Cattle Futures, Options Contracts

Reuters

CME plans to resume the listing schedule for live cattle futures and options contracts, effective Feb. 18, posting the June 2017 live cattle f&o that was originally scheduled to be listed on January 4.

 

Barclays Agrees To Offload Derivatives Contracts To JPMorgan

Stephen Morris – Bloomberg

Barclays agreed to transfer a portfolio of derivatives contracts (mainly IRSs) to JPMorgan Chase, as the U.K.’s second-largest bank speeds up the sale of unwanted assets to reduce its capital requirements.

 

Risky Derivatives Trades Face Higher Costs (subscription)

Financial Times

 

Interactive Data to Provide Measurement of Fixed-Income Trade Best Execution & Transaction Cost Analysis for AllianceBernstein

ICE

Interactive Data, will work with AllianceBernstein L.P. (AB) to help the firm evaluate its trade execution quality and perform transaction cost analysis (TCA). The work will be done across various mutual funds and separately managed portfolios using Interactive Data’s Best Execution (Best Ex) service.

PLY: Interesting win for the IDC franchise in TCA…

 

Tradeweb Launches U.S. ETF Trading Platform – Expands Established European Marketplace For OTC ETF Trading

MondoVisione

PLY: Competition in ETFs is almost at the fever pitch of US single name equity options….

 

Bursa Malaysia Enables Web–Based System For Fixed Income Instruments

MondoVisione

Indexes

DB1 Launches New XDAXDAX Index

DB1

…Enables customers to use just one index as an underlying for their products that are linked to the performance of DAX before, during or after Xetra trading hours (as opposed to both DAX & XDAX previously).

Career Paths

ITG announced the promotion of seven new MDs: Kathryn Birn, James Cochrane, Alex Goldstein, Tim Love, Jon Moleshead, Shimon Rozenzweig, Erin Stanton.

SEC named Jane Jarcho as Deputy Director of National Exam Program.

Finance Magnates reports that Elliptic, the blockchain intelligence and security firm, revealed the members of its new board of advisors: David Harris, Martine Niejadlik, Richard Brown and Nadav Rosenberg.

David Harris served as CEO of the CBOE Stock Exchange, as well as Chairman & CEO of the National SE. Martine Niejadlik handled AML and regulation as CCO at Coinbase, and before that ran risk management teams at PayPal, eBay and Amazon, and was a lead developer of the FICO score.

Richard G. Brown is currently Head of Technology at R3CEV. Prior to R3CEV, Richard was the Executive Architect for Industry Innovation and Business Development for IBM’s Banking and Financial Markets business in the UK. Richard has been an advisor to Elliptic since 2013.

Nadav Rosenberg was MD of Europe Operations at Taboola.com, and a senior executive and Regional Director Groupon UK & IR.

Bloomberg reports that Morgan Stanley named Steve Zamsky COO of its fixed-income & commodities business. He replaces Steve D’Antonio, who retired after almost three decades at Morgan Stanley.

Financial Calendar

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

New! 16.02 – ISE Mercury Launch

New! 11.02 – ASX H1 Results for FY16

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

Crowdfunding

China’s Biggest Ponzi Scheme Shows Rot in Internet Financing

Bloomberg

Almost overnight, Ding Ning and Zhang Min struck it rich with the hot new thing in Chinese finance. In 18 short months, they transformed an old-line industrial company into an Internet phenomenon through the seeming magic of P2P lending.

It was all a lie — a vast Ponzi scheme that appears to have been orchestrated by the Bernie Madoffs of China.

PLY: Bernie Madoff may even look a touch lacklustre against Ezubo, picking up on the story we have already been discussing this week. One P2P platform which was a pure ponzi it seems, bilking some 900,000 people out of $7.6 billion…

 

 

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