February 06 2015

elb2

PLY: ICE and CME deliver encouraging results while FTIL slumps into loss, as LSE confirms it will sell Russell Asset Management arm. CME floor closure reaction, ‘through train” filling up. Is ICE considering more emphasis on block trading? Jeff Sprecher has been clearly the most interesting man in the quarterly call charts this time around while there are stories on everything from energy via research payments to Uganda and more, happy scrolling…

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) updated daily when news arises. All briefs can be found on our dedicated Briefs page on the Exchange Invest Premium website.

Latest briefs include:

HKEx – SSE – Stock Connect Brief Part 1
AFET TFEX Merger Brief
NSEL-FTIL Merger
IEX India Sale
Virtu Financial IPO

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

ICE Q4 2014 Financial Results
ICE

Highlights Q4 2014

Total revenues, less transaction-based expenses: $800 mln, compared to $536 mln in Q4 2013 (up 49%)
Net income (loss): $294 mln, compared to ($170 mln) in Q4 2013
Basic EPS: $2.56, compared to ($1.85) in Q4 2013

Highlights Full Year 2014

Total revenues, less transaction-based expenses:$3,092 mln, compared to 1,598 in 2013 (up 93%)
Net income (loss): $1,016 mln, compared to $270 mln in 2013
Basic EPS: $8.60, compared to $3.24 in 2013

CME Q4 2014 Financial Results
CME

Highlights Q4 2014

Total revenues: $841.1 mln, compared to 687.0 mln in Q4 2013 (up 22.4%)
Net income: $306.5 mln, compared to 193.1 in Q4 2013
Basic EPS: $0.91, compared to $0.58 in Q4 2013

Highlights Full Year 2014

Total revenues: $3,112.5 mln, compared to $2,936.3 (up 6%)
Net income: $1,127.1 mln, compared to $976.8 mln in 2013
Basic EPS: $3.37, compared to $2.94

FTIL Financial Results
Moneycontrol

Financial Technologies has reported a net loss of Rs 4.8 crore (USD 777k) during October-December quarter compared to profit of Rs 34.5 crore (USD 5.82 mln) in the year-ago period.

Total income from operations more than halved to Rs 35.5 crore (USD 5.75 mln) in December quarter from Rs 81.8 crore (USD 13.8 mln) in same quarter last fiscal.

PLY: It appears as if the heart has been torn from FTIL…

ICE Commits To NYSE For At Least 2 Years (subscription)
Philip Stafford & Gregory Meyer – Financial Times
ICE Profit Tops Forecasts, CEO Touts NYSE’s Potential
John McCrank – Reuters

“If that business is a drag on us and we can’t use it to grow earnings, then it’s completely insignificant, and unlike a lot of people in the exchange space, you have seen us shed businesses,” Sprecher said.

A Top Rival Of Dark Pools Concedes They Do Have A Purpose
Annabelle Ju – Bloomberg

“It’s good that the market is trying to solve for a highly meritorious dark pool solution,” Sprecher said during a conference call with analysts Thursday. “We’re making real progress, I think, in trying to forge consensus around what might be a better structure for everybody. And a part of that is the ability for large institutional investors to be able to match trades and not move the market.”

PLY: Story touts that ICE acknowledged the power of competitors providing Institutional Liquidity Pools. I would see it as a massive challenger to the incumbents as clearly ICE will provide a solution to help their clients and right now Luminex has left the thinly spread Liquidnet looking vulnerable, amongst others…

LSE Looks To Sell Russell Asset Management Business
Chad Bray – NY Times

“A sale process of the business will now commence.”

LSE press release here.

Read our daily updated Premium brief: LSE – Frank Russell Deal Brief.

PLY: Hat tip to Peter Lenardos of RBC for leading the field in predicting the announcement was imminent. Meanwhile, I retain a fascination for how this will play out as now Russell is being torn apart precisely against the longstanding wishes of CEO Len Brennan…

Alpari Faces Break-Up As KPMG Fails To Find Buyers (subscription)
Philip Stafford – Financial Times

The administrators of Alpari’s UK business have begun the break-up of the retail foreign exchange broker after giving up on attempts to sell the business as a whole.

KPMG, which was appointed as special administrator to the assets after it collapsed in mid-January, confirmed on Thursday that it had sold Alpari UK’s intellectual property back to Andrey Dashin, the company’s founder and main shareholder.

Read our Premium brief: FX – CHF Crisis – Brief.

HKEx Sees Shanghai Trading Link Quota Filled By End-Q1
Michelle Price & Michelle Chen – Reuters

Hong Kong’s stock exchange has told investors it expects them to hit the limit of shares they can buy via its trading link with Shanghai by the end of March, a development that will pressure China to lift the quota to prevent the scheme grinding to a near halt.

A quick decision to raise or even remove the 300 billion yuan ($48 billion) aggregate limit on purchases of Shanghai shares through the Hong Kong-Shanghai Stock Connect scheme would represent a major vote of confidence for the pilot programme.

However, Beijing may be torn between a desire to further open up its capital markets and concerns that opening the flood gates to more short-term investors, who have dominated the scheme’s early trade flows, will increase market volatility.

Read our Premium brief: HKEx – SSE – Stock Connect Brief Part 1

PLY: In other words, HK media’s apparent obsession with the link failing has proven to be total piffle as the link is already heading towards capacity usage…

Nasdaq’s Dark Pool Eyes Block Trading (subscription)
Anna Irrera & Tim Cave – Financial News

Nasdaq is in talks to develop measures to attract more block trading to its Nordic dark pool, spurred by regulatory efforts to limit the amount of dark trading in smaller orders.

LME Stands Strong As Bastion Of Outcry Trading
Eric Onstad – Reuters

LME plans to hold fast as the last bastion of open outcry trading, even after CME said (reported yesterday) it would shut almost all its open-outcry futures pits by July 2.

PLY: Pit versus ring makes for significantly different economics.

CME Cuts Ties To 19th Century By Shutting Once-Chaotic Pits
Matthew Leising – Bloomberg

Marty Greenberg spent 20 years flailing his arms and shouting buy and sell orders in the silver pit at the Commodity Exchange in New York. After retiring, he joined a club that included famed Miami Dolphins quarterback Dan Marino.

One day Greenberg asked Marino if he missed suiting up for the NFL. Marino turned the question around and asked if Greenberg missed trading in the raucous open-outcry pits.

“Only every day,” Greenberg replied, he said in an interview.

CME’s Duffy: Markets Evolve (Video)
CNBC

CME will close most of its open out-cry futures trading in Chicago. Executive chairman and president Terry Duffy explains the decision.

PLY: CME finally biting the bullet on broader pit closure remains a sensible and welcome business decision.

EU Push On Dealing Commissions Meets Resistance (subscription)
Philip Stafford – Financial Times

New European rules on dealing commissions aim to cut prices and improve transparency for investors, but brokers are warning they threaten to tighten the tap on liquidity in equity and fixed income markets.

A review of Mifid, the continent’s flagship markets legislation, has proposed cleaner divisions between payments for trading and those for research across all asset markets.

PLY: The sheer complexity of bundled commissions makes me suspicious there must be a more elegant way forward, particularly given the cost of institutional equity dealing in many parts… Besides, can placing orders in order to pay brokers for commission be viewed as clearly above the board when it comes to assessing best execution? I am highly sceptical.

FIA Releases SEF Tracker Report For November & December 2014
MondoVisione

FIA published the latest issue of FIA SEF Tracker, a periodic report on trading activity taking place on SEFs, updating to include all 2014 data.

Private Markets

ALT-Xchange – Uganda’s Second Bourse Opts For Bonds, Derivatives Over Stocks
Fred Ojambo – Bloomberg

ALT-Xchange Ltd. will initially favor the development of Ugandan government debt and derivatives trading over equity offerings as it establishes a second bourse in the East African nation that may start operations by May.

Earlier this week GMEX announced it 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).

The State Of Bitcoin In Poland: Friendly Or Hostile?
Drew Cordell – Crypto Coins News

Confusion as some banks have closed accounts while other businesses seem to be unaffected.

New EU Legislation On VAT Could Be Bad News For Bitcoin
Aaron van Wirdum – CoinDesk

Although it seems to have largely gone unnoticed, the European Union introduced new VAT laws on 1st January this year.

As a consequence of this legislation, companies selling electronic goods or services to customers within the EU are now legally required to record the country of residence of their customers, which – according to some – spells bad news for bitcoin.

The new legislation was put in place to make sure that VAT is actually paid in countries where the products in question are consumed, as is the purpose of these kinds of taxes.

PLY: The new EU VAT laws are a curse on enterprise and need to be reviewed immediately to stop business seeping outside of Europe on multiple levels..

Dividend News

ICE announced a $0.65 per share dividend for Q1 2015. The dividend is payable on March 31, 2015 to shareholders of record as of March 17, 2015. The ex-dividend date will be March 13, 2015.

Special Section: FTI, NSEL, India at the Crossroads

PLYL MCX is flat while FTIL has fallen 2% on the back of its reported losses.

FTIL-NSEL Merger: Corporate Ministry To Appoint Independent Body For Valuation
Rajat Arora – The Economic Times

NSEL: Will Properties Of 24 Defaulting Firms Be Liquidated?
dna India

FMC has recommended the merger of NSEL with its holding company FTIL, even at the risk of lifting the corporate veil, but is it showing enough enthusiasm in getting 24 defaulting companies to liquidate properties and pay back 13,000 trading clients of NSEL remains to be seen.

PLY: A sad but fair point – the corporate merger panacea with huge potential impacts upon the future of Indian corporate governance is being pushed while defaulters’ assets have yet to be liquidated. This is ludicrous. Alas.

Read our daily updated Premium brief: NSEL-FTIL Merger Brief.

Technology

SIX Selects UnaVista For Trade Repository Solution (subscription)
Marina Daras – Waters Technology

SIX has announced it will establish a central trade repository for derivative transactions in Switzerland using the reporting technology of LSEG UnaVista platform.

Euroclear Finland Unveils New Fixed Income Platform – Infinity
MondoVisione

Euroclear Finland, the Finnish CSD, is replacing its entire securities processing infrastructure progressively, in three releases. As of 2 February 2015, the first release of the new CSD system named ‘Infinity’ was successfully launched. Infinity brings Finnish market one step closer to TARGET2-Securities (T2S).

Products

Euronext Launches New Wheat Futures To Speed Up Quality Changes
Valerie Parent & Gus Trompiz – Reuters

BGC Partners Introduces Indian Rupee NDF On BGC Trader Platform
Andrew Saks-McLeod – LeapRate

Earlier this year Icap’s fx business EBS launched the first electronic OTC, end of month (EOM) NDF contract in Indian Rupees with a fixed date contract replicating the structure of a future, aligned with INR futures dates.

Career Paths

LSE appointed Mark Hoban MP to the LSE Board as a NED, with immediate effect.

PLY: The last politician added was of course former MEP Sharon Bowles who joined the board within months of stepping down from the ECON Committee and the EuroParliament during the autumn of last year. Now Mark Hoban has joined the board even before officially retiring as an MP at the forthcoming May General Election in the UK.

Reuters reports that Germany has promoted insurance supervisor Felix Hufeld to head financial watchdog Bafin and reshape the agency after ECB took charge of banking supervision last year.

Hufeld was CEO for Central Europe at insurance broker Marsh from 2001 to 2010 and previously held senior positions at Dresdner Bank, The Boston Consulting Group and a private equity firm.

PLY: Interesting to see how Hufeld had a career outside Bafin as generally the German civil service system tends to prefer career bureaucrats.

ICAP announced that Todd Creek, President of ICAP Energy and Commodities, has been appointed by CFTC to its Energy and Environmental Markets Advisory Committee (EEMAC). Todd is an Associate Member appointed by CFTC Commissioner J. Christopher Giancarlo and approved by the Commission, effective immediately.

Financial Calendar

Today

CBOE Q4 2014 Financial Results
ICAP 6.6p interim dividend payment

New announcement

ASX half-year results for FY15 – Thursday 12 February 2015

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

Share Notes

Charles Schwab major shareholder Charles R. Schwab sold 722,391 shares Tuesday, February 3rd at an average price of $27.33 (bargain $19,742,946.03). He now owns 115,132 shares. Mr. Schwab’s regular sales are chronicled on this specific page.

Analyst Notes

Standard & Poor’s Ratings Services said that it has revised the CreditWatch implications on its ‘B’ counterparty credit rating on GFI Group to “developing” from “negative”

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.

Other stories

Ten Considerations For The European Internal Energy Market – European Power Exchange Publishes Position Paper
MondoVisione

The European Power Exchange EPEX SPOT has published a Policy Paper entitled “Advocacy for an Integrated and Competitive Electricity Market in Europe”. The paper outlines ten considerations by EPEX SPOT that would support and facilitate the integration of the European power market.

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