February 06 2014


Euronext management exodus building even before pre-IPO sale, LME warehouses changes, Trans-Atlantic (temporary?) swap deal edging closer before imminent deadline alongside lots of other swap news. Duffy & Gil contracts extended by CME, New CEO at Trading Technologies and a welter of jobs news as new BATS structure fills out (and much more). Vast swathes of news, a super Bitcoin article, a brilliant debt crowdfund, various tech deals and so much to read, I’ll stop here and let you get scrolling, welcome to Wednesday’s Exchange Invest:

Public Markets

Euronext’s Roland Bellegarde Said To Plan Departure Before IPO

PLY: That the FESE board duo of Roland Bellegarde and Mark MacGann (FESE VP) are reputed to be on their way out of Euronext is not surprising in and of itself although the timing is earlier than many would have thought. I wish both well as they make the transition out of Euronext and perhaps away from the exchange industry.

U.S. Said Near Deal With EU On Reprieve For Swap-Trading Rules

U.S. and EU officials are nearing a deal to grant EU swap-trading platforms a reprieve from Dodd-Frank Act rules set to take effect next week, according to two people with knowledge of the negotiations.

PLY: A nail-biter: the deal may be only temporary and the February 15th deadline is almost upon us.

ICAP Hit By Rule Changes To US Swaps Market (subscription)
Financial Times

Michael Spencer, CEO, acknowledged it was “a slower December than we anticipated” as bank deleveraging and the potential impact of new US rules for swaps trading hit its global broking business.

EI published yesterday the ICAP Interim Management Statement.

PLY: ICAP continue to be buffeted by short term concerns on regulation. Michael Spencer notes the key point of recent activity thus:

“The market in interest rate swaps is still predominantly voice brokered but it’s not where we see it in the longer run.”

Naturally ICAP will be judged on how much of the SEF flow it gains..

Prop Traders Slam CME Over New Data Fees (subscription)
FOW Intelligence

Prop traders have railed against the CME’s plan to introduce market data fees, arguing the exchange’s tariffs could see firms stop using the Merc or quit trading altogether.

PLY: There is a bad taste left by these moves that the exchange is gouging customers compared to its competitors. No exchange can afford to burn goodwill.

Nasdaq CEO Sees SEC Approval For Private Market

Nasdaq OMX anticipates final approval for NASDAQ Private Market this month and hopes to open the venue in early March: CEO Bob Greifeld.

Nasdaq OMX Cuts Funding For Projects Such As NLX (subscription)
FOW Intelligence

Nasdaq OMX has cut the funding behind projects including NLX this year, according to the group’s latest quarterly statement.

PLY: Looks as if the investment pool is going down to circa $35-50 million from $50-60 million.

LME Takes Steps To Reform Warehousing (subscription)
Wall Street Journal

LME is taking fresh steps (including an Oliver Wyman review) in an effort to reform controversial warehousing practices after consumers complained about logjams driving up access costs.

LME Boosts Policing Powers Against Warehouse Metal Waits

LME will have “enhanced powers” to examine wait times and to impose additional load-out requirements on warehouses that paid incentives to attract metal and create backlogs, it said in a notice to members today.

LME press release here.

ASX Managed Fund Service Gets Go-Ahead
Financial Standard

The ASX’s mFund Settlement Service (mFund), formally known as AQUA II, has cleared the final regulatory hurdle and is provisionally set to launch at the beginning of Q2.

ASX press release here.

CFTC Issues Order Of Registration For NZX Limited

CFTC issued NZX an Order of Registration to permit NZX to provide direct access, subject to the terms and conditions specified in the Order, to its identified members or other participants located in the U.S.

Regulators Again May Clip Volcker (subscription)
Wall Street Journal

U.S. regulators are again weighing whether to ease the impact of the “Volcker rule,” this time on the $300 billion market for CLOs (Collateralised Loan Obligations) to U.S. companies.

Volcker Rule Unity Is Implementation Aim Of Regulator Group

U.S. regulators implementing Volcker Rule curbs on banks’ trading have formed an interagency group to coordinate their efforts and reduce chances for companies to play for advantage by exploiting differences.

Euronext Fund Service To Launch In France
NYSE Euronext

Euronext to exploit a French decree authorising active open-end funds to be admitted to trading on regulated markets or MTFs.

SIBEX – HELEX Collaboration

Press release on the Signing of Cooperation Agreement here.

PLY: As expected Helex to provide CCP and Greek platform to replace Trayport.

Private Markets

JSE Pushes Non-Core Services
Jamaica Gleaner

Robin Levy, deputy GM of Jamaica SE, says the organisation is pushing to increase earnings from non-core activities to at least 30 per cent of total revenues with trustee and corporate services etc.

Mongolia Pins Hopes On New Laws To Breathe Life Into Stock Market
business new europe

“Liquidity is just not there,” Altai Khangai, the MSE’s CEO, told bne in an interview a few days before tendering his resignation. “Although Mongolia has been on the radar screen of international investors for quite some time, they weren’t able to enter the market due to lack of custodians, proper market legislation and infrastructure.”

Mauritania Mulls National Stock Exchange

Mauritania has long sought its own stock exchange. But after influential business leaders from across the region visited Nouakchott last month for the country’s first-ever investment conference, the project could finally get under way.

Apple Yanks World’s Most Popular Bitcoin Wallet From App Store

Apple has removed the world’s most popular bitcoin wallet, the Blockchain App from its App Store without providing any explanation. There are more than 1 million Blockchain users worldwide.

PLY: I think Apple is playing the whole cryptocurrency development wrongly but they always have an issue with not being the controlling backbone of whatever they deliver which surely is more old tech than new tech?

Bitcoin Is Far More Than A Currency For Speculators (subscription)
Financial Times

Bitcoin is being forced to grow up fast. The arrest last week on money laundering charges of Charlie Shrem, a leading Bitcoin champion, coincided with a regulatory hearing in New York to consider what on earth it is – a virtual currency, speculative asset or a means of exchange?

The best answer is the last…

PLY: Mature analysis from the sagely Mr Gapper who remains a wise voice at the FT. As he notes discussing the views of the NY state financial services superintendent:

“Mr Lawsky is right to create a legal order for virtual transactions, rather than trying to stamp on Bitcoin, as some governments are starting to do. It would be feasible to push Bitcoin and similar initiatives underground but it would also be a wasted opportunity.”

Dividend News

CME declared a Q1 dividend of $0.47 per share, payable March 25, 2014, to shareholders of record as of March 10, 2014. This represents a 4 percent increase from the prior dividend of $0.45 per share.

CBOE declared a quarterly cash dividend of $0.18 per share of common stock payable on March 21, 2014, to stockholders of record at the close of business on February 28, 2014.

Special Section: FTI, NSEL, India at the Crossroads

PLY: FTIL and MCX shares are flat on a day of granular updates.

FMC To Decide On NSEL E-Series Payments
The Economic Times

FMC today said it will soon take a call on allowing investors to realise their funds in e-series contracts that were offered on the crisis-hit NSEL.

MCX Board Meet On Feb 7 To Discuss FTIL’s Stake Cut

Investor Files Complaint Against NSEL, Mohan India With EOW

One of the aggrieved investors of crisis-hit NSEL, Pankaj Saraf, has filed a complaint with Mumbai police’s EOW against the commodities bourse and one of its prominent borrowers, Mohan India group, alleging non-payment of instalments.

NSEL Investors Ask EOW To Not Release Assets Of Mohan India
Business Standard


Final Countdown To EMIR Underway
banking technology

A week before the final reporting deadline for the European Commission’s EMIR regulation, tech firms are making a last push to get OTC trade reporting up and running.

Quadriserv Selects Cinnober To Provide Equity Repo Solution For US

Quadriserv is broadening its long-term relationship with Cinnober in a new equity repo initiative for the US market. Cinnober is currently a major technology supplier to Quadriserv’s AQS securities lending platform.

Institutional Adoption of Electronic Fixed Income Trading Systems Is Poised For Growth, Here’s Why
Wall Street & Technology

Last year was a year where the various players within the corporate bond electronic trading industry rolled out exciting new products aimed to address the needs of both the buy and sell side.

PLY: The rise of electronic trading in fixed income by the buy side will probably only be curtailed if there is a bond market crisis. Otherwise it ought to be a given that this is going to happen.

Instinet Introduces New MAKE Algorithm
Automated Trader

MAKE is a strategy for passive side trading, giving institutional traders access to the same type of advanced liquidity providing tactics used by market makers. MAKE sizes and distributes child orders at multiple price levels and across destinations, controlling adverse and negative selection while reducing exposure to signaling, gaming, and predatory techniques.

PLY: Interesting stuff as both Instinet and ITG have been active of late releasing new functionality.

Markit Adds EMIR To Trade Reporting Solution
Automated Trader

MarkitSERV is reporting OTC derivative trades for customers subject to EMIR, launching ahead of the February 12th compliance date, in order to facilitate the loading of historical trades into a trade repository.

Markit Taps Koscom For CDS Data Distribution In Korea
The Asset

Markit will distribute its CDS data in Korea via Koscom, a financial solutions provider which operates an extensive terminal network in the North Asian country.

Clearstream & VPS Norway To Cooperate On Norwegian Collateral Management Solution

Norwegian CSD to explore using Clearstream’s Liquidity Hub GO (Global Outsourcing) service as a White-labelled solution.

Safe haven: Why Managed Services Are A Natural Fit For An Evolving Financial Industry
Wall Street & Technology

A recent whitepaper by TABB Group has predicted that by 2016, 50 percent of financial institutions will be using managed services to outsource the management of their IT infrastructure.

In addition, the Technology Services Industry Association’s (TSIA) annual survey states that spending for managed services continues to rise at a double-digit rate.

Fidessa Explores Rise Of Futures Algos
FTSE Global Markets

Fidessa has published a report written by TABB Group, “Algos in Futures Markets: Shifting into High Gear.”

Career Paths

CME has extended the contracts of its top two executives, Terry Duffy and Phupinder Gill.

Duffy, 55, will remain executive chairman and president through the end of 2017, CME said in a statement. His prior contract was due to expire at the end of 2015.

Gill, 53, will remain CEO through the end of 2016. His prior contract ran through the end of this year.

CME press release here.

PLY: Gil clearly deserves an extension to be able to make his plans work. However, I know various investors are concerned that Terry Duffy is already perilously close to being past his sell by date. The Chairman needs to demonstrate he has a vision and is ahead of the curve.

Roland Bellegarde, Group EVP at NYSE Euronext may leave as soon as next month while Mark MacGann, SVP, head of European government affairs & public advocacy, also plans to leave Euronext, three people familiar with the matter said.

PLY: Both men are also on the board of FESE, MacGann as VP. Overall utterly unsurprising news although the likely timing is earlier than many expected.

BATS has revealed its new executive team post Direct Edge merger.

As previously announced Joe Ratterman remains CEO of BATS and former Direct Edge CEO William O’Brien becomes president.

Joining them on the executive committee are: Bryan Harkins, Mark Hemsley, Chris Isaacson, Tami Schademann, Brian Schell and Eric Swanson.

Former “DE” COO Harkins will serve as EVP and head of U.S. Markets, reporting to O’Brien based in NYC. Hemsley remains CEO of BATS Chi-X Europe based in London reporting to Ratterman. Isaacson was named EVP and global CIO, overseeing all technology matters for the company. A co-founder of BATS, he and will be based in Kansas City, reporting to Ratterman. Meanwhile another co-founder, Schademann, named EVP and chief regulatory officer will be based in Kansas City, reporting to O’Brien. Schell was named EVP and CFO, based in Kansas City, Swanson was named EVP and General Counsel, based in NY with both reporting to Ratterman. Also joining the senior executive team are: Anthony Barchetto, SVP of business development; Bryan Christian, SVP of U.S. sales; Kevin Carrai, VP of connectivity and member services; and Jim Gorman, VP of communications. Continuing on the BATS senior team are: Ken Conklin, SVP of business development and marketing; Joe Bracco, SVP of institutional and strategic relations; Jeromee Johnson, VP of U.S. Options Market Development; and Randy Williams, SVP of communications and IR.

BATS Global Markets press release here.

LSE has hired a former ICAP and UK Treasury official, Hannah Gurga, as head of regulatory strategy.

Baltic Exchange has appointed Chris Jones as its new Asia-Pacific director, to be based at its Singapore office. Jones is an experienced shipbroker formerly director of sales & purchase with ICAP Shipping Singapore. He will replace Philip Williams who retires from the role in April.

Trading Technologies announced that Rick Lane, who has served as CTO since March 2012, has been named CEO effective immediately. Harris Brumfield, majority owner and CEO for the past 11 years, remains with the company as Chairman of the Board.

PLY: The end of an era for the remarkable TT organisation as majority owner Harris Brumfield elevates himself to Chairman. It has often been controversial but his business has always been central to the “Capital Market Revolution!” process.

Mark Beeston, former head of post-trade services at ICAP, has founded a new venture in London aimed at helping financial technology start-ups and firms looking to invest in these growth ventures.

PLY: An interesting move, we wish Mark every success and look forward to hearing more about his new venture.

Having recently joined from Thomson Reuters, Martin Haines is the Singapore country head at the new office opened by First Derivatives.

Misys appointed Scot Spear as its new regional sales director for Middle East and Africa.

Grant Thornton made a new addition to their corporate finance team in the South West. Nic Ross joins the firm from Royal Bank of Scotland. Prior to this, Nic spent over two years working in Bahrain, initially at the Bahrain Financial Exchange.

Financial Calendar

6.60p ICAP interim dividend payment
CBOE Q4 2013 results
Record date Charles Schwab $0.06 quarterly dividend

Next week – new announcement
ASX will release its 2014 half-year results on Thursday, 13 February 2014.

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


World’s Biggest P2P Loan Of £4.15m Helps Developer Turn Croydon Office Block Into Flats
Your Local Guardian

A property developer has taken crowdfunding a step further by taking on the world’s biggest peer to peer loan of £4.15m to turn a Croydon office block into flats.

PLY: Inspired Asset Management (IAM) blaze a trail in debt crowdfunding for property which has enormous potential.

IOSCO Issues Report On Risks And Benefits Of Financial Return Crowd-Funding

The IOSCO report is entitled Crowd-funding: An Infant Industry Growing Fast and reflects staff views.

Other stories

CFTC Announces Agenda For Upcoming Global Markets Advisory Committee Meeting

Wednesday, February 12, 2014 at CFTC’s headquarters in Washington, D.C. from 2 p.m. to 5 p.m.

Testimony Of CFTC Acting Chairman Mark Wetjen Before The U.S. House Committee On Financial Services On The Volcker Rule

Congress directed the CFTC to implement Section 619 of Dodd-Frank, aka the Volcker ‘prop trading’ rule.

Wall Street Regulator Revives Plan For Broker Disclosure Link

FINRA will present a retooled plan to its board February 13th designed to make it easier for investors to research the backgrounds of brokerage firms and brokers “BrokerCheck.”

CFTC’s Division Of Swap Dealer & Intermediary Oversight Provides Additional Guidance To FCMs & Depositories Regarding Procedures For New Filing

CFTC’s Division of Swap Dealer and Intermediary Oversight (DSIO) issued a notice to provide market participants with additional guidance regarding the procedures for submitting notices and reports required under new and amended regulations adopted November 1, 2013.

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