February 09 2016

elb2Great post match analysis of the SFO’s shamefully inept and vastly expensive non-prosecution of the second LIBOR case as the third is delayed. ICAP-TNT easing its way along the deal front awaiting permissions while the White House wants to double the CFTC & SEC budgets – as the end of a dismal presidency marks yet more spend spend spend.

In Bigworld we’re inching towards the New Hampshire primaries and I note one Republican frontrunner, Ted Cruz, is roundly criticised in the media for having annoyed all his fellow senators. Hmmm, sounds like a badge of honour to me.

A new Premium post today discusses the rather rude state of health in volumes last year as evidenced by the WFE’s volume report – that said, valuations seem to be a tad rocky so far this year which may yet have a volume impact of course…

Happy scrolling:

Public Markets

ICAP – Trading Statement

ICAP

For the period from 1 October 2015 to 31 December 2015

Group revenue from continuing businesses for Q3 to 31 December 2015 was 5% lower than the same period last year on a constant currency and on a reported basis.

The transaction to merge the global hybrid voice broking business with Tullett Prebon is proceeding as expected and it is anticipated that it will take place during 2016. Currently both companies are in the process of obtaining regulatory and competition approval from various authorities. The Circular will be issued in March 2016 followed by a shareholder vote.

PLY: Everything hinges on the ICAP-TNT deal currently which makes a fascinating prospect for both entities…

 

BVB Q4 2015 Results

BVB

vs Q4 2014: operating revenue Lei 5.16 mln (USD 1.28 mln), down 37%, operating profit Lei 1.38 mln (USD 0.34 mln), down 40%, profit for the period Lei 2.21 mln (USD 0.55 mln), down 12%.

PLY: Disappointing numbers, albeit BvB is somewhat of a seasonal business as Romania’s capital market struggles with emerging from a kindergarten stage in the hopes of achieving greater maturity.

 

LSE Finalises Launch Date For Midday Auctions (subscription)

Tim Cave – Financial News

LSE has set March 21 as the start date for its new midday auction for UK equities – an initiative that will mark a significant change to European market structure but has been subject to delays since it was first devised.

 

HKEx Should Consider Fund Platform (subscription)

Enoch Yiu – SCMP

While brokers have strongly demanded HKEx launch a platform to trade fund products, it is obviously not a priority for the local bourse.

 

UK Delays Libor Trial Of Former Barclays Traders

Kirstin Ridley – Reuters

The Serious Fraud Office (SFO) said on Monday that the trial, which had been scheduled to begin on February 15, might be delayed until mid-April after Barclays provided “further material” that the agency might need to review.

PLY: With its reputation in tatters and a great deal of public money squandered…naturally no sackings apparent either, this is the heart of the blob where responsibility is something you expect of those you take to court apparently. SFO has problems and indeed the aftermath of its recent disaster is writ large here (worth reading):

How Six Brokers Walked Free After Unraveling of U.K. Libor Case

Liam Vaughan – Bloomberg

The first signs of trouble for prosecutors came about three weeks into the trial. Their witness was a government investigator called to lay out details of the probe into the alleged rigging of a key interest rate by a group of brokers who faced up to 20 years in prison.

But as the investigator went through a calendar his agency had compiled listing days the rates had allegedly been manipulated, his team admitted they had some of the dates wrong. Waving the schedule as he spoke, defense lawyer Philip Hackett asked if the prosecution was “making this up as they go along.”

PLY: Lovely crisp Bloomberg writing makes the quotations stand out. Will John Ewan ever recover from his cross examination being termed “like interviewing a clairvoyant?” The SFO is an “utter shambles” opined one defence counsel, shortly before the jury agreed. “Unprincipled and cynical” is the sort of remark meanwhile that ought to be the epitaph of some careers in law enforcement.

Perhaps mot juste of the trial though falls to Noel Cryan, on taking Hayes’ brokerage but not acting on his alleged attempts to rig LIBOR: “It’s called broking Mr. Chawla,” he told the defence counsel.

 

White House: Budget Request Will Include Doubling SEC, CFTC Funding by 2021 (subscription)

Andrew Ackerman – Wall Street Journal

The Obama administration will call on lawmakers to double the budgets of the top U.S. market cops over the next several years, the White House announced Monday, a push almost certain to encounter opposition from the Republican-controlled Congress.

PLY: Great idea, if only to give the regulators a chance to implement all the rules in the Parliamentary ether. The difficulty is that the magic money tree is a bit sparse after 8 years of the chronic spendthrift basketballer in chief.

 

Sebi Wants To Regulate Warehouse Service Providers

Anirudh Laskar – Livemint

Move a part of efforts by the capital markets watchdog to keep an eye on all aspects of the commodity market.

PLY: For once, I actually think SEBI might be on to a sensible move – the problem however is this is SEBI and hence they cannot regulate a paper bag without ensuring it closes at both ends thus rendering it somewhat economically unproductive….

Private Markets

CFTC Exemption Allows Korea Exchange Members To Deal Directly With U.S. Customers

LeapRate

CFTC announcement.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Both MCX and FTIL drop over 1% today.

Technology

Xignite Closes $20M Series C Funding Round Led By QUICK Corp. Strategic Round To Help Fuel Fintech Growth In Asia & Europe

MondoVisione

PLY: Interesting business Xignite, must catch up with them in greater depth, been a bit out of touch of late.

 

Fintech Corporate Finance Boutiques Merge – Novitas Partners & FTCL Become NovitasFTCL

MondoVisione

Products

CME Delists 2019 Soymeal Contracts, Reviews Specifications

Reuters

CME on Monday said it was delisting all three of its 2019 soymeal futures contracts as the exchange conducts customer outreach ahead of potential changes in the contract specifications.

 

RBI May Roll Out Interest Rate Options

The Hindu Business Line

Reserve Bank of India is proposing to introduce interest rate options so that all domestic entities, including banks, having underlying interest rate risk can hedge their risk on this count.

 

Philippine – SEC Mulling Introduction Of Hedging Products

Krista A. M. Montealegre – Business World Online

 

Interactive Brokers Launches “Adaptive” Trading Algorithm

Maria Nikolova – LeapRate

 

Smart Beta Products Risk Misleading Investors (subscription)

Andreas Utermann – Financial Times

One of the more successful innovations in recent years has been the introduction of “smart beta” products, with smart-beta investments garnering more than $150bn in new asset flows since 2013.

Fund Managers Ready For ‘Smart Beta’ Wars (subscription)

Robin Wigglesworth – Financial Times

The legacy buy side fights back…

Career Paths

LiquidityBook, a leading provider of buy- & sell-side, OMS & FIX trading solutions, appointed Sean Sullivan as Chief Revenue Officer.

FOW reports that JP Morgan’s global head of agency clearing and collateral management, Emily Portney, has left the investment bank.

Financial Calendar

10.02 – BGC Partners Q4 2015 Results

11.02 – TMX Q4 2015 Results

11.02 – ASX H1 Results for FY16

New! 16.02 – ISE Mercury Launch

New! 11.02 – ASX H1 Results for FY16

New! 16.05 – ICAP results for the year ended 31 March 2016

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

Analyst Notes

Peter Lenardos from RBC Capital Reiterated A “Sell” On CME – $86 Price Target.

RBC Capital on 5 February had ICE target price cut to $261.00 – “Sector Perform” Rating

PLY: I note that RBC now has a sell on CME and a “Sector Perform” on ICE… is it a case that the “Golden Cross” is between those with less momentum than might be found lower in the pyramid of exchanges? If so…where, I wonder?  

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

Crowdfunding

Investec Australia Purchases 20% of Equity Crowdfunding Platform Equitise

JD Alois – Crowdfund insider

Investec Australia, a publicly traded company, announced today that it had purchased a 20% stake in the equity crowdfunding platform making it the single largest shareholder behind the Equitise co-founders. Investec was joined in the funding round by H2 Ventures and Tank Stream Ventures.

Other stories

ESMA Assesses Turkish Laws & Regulations On Prospectuses

MondoVisione

 

A Conversation With SEC Chairman Mary Jo White: Keynote Session, 43rd Annual Securities Regulation Institute, San Diego, California, Jan. 26, 2016

MondoVisione

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