February 11 2014

elb2

A big day for acronyms, SEFs, TRs and all things EMIR ahead of tomorrow. It’s ICE results today and then we have commodity concerns, FINRA fiddling with tribunals and the SEC moving to remove exchanges’ SRO functions. Of course there are a few exchange glitches while Mt Gox shakes up Bitcoin but it’s another adolescent growing pain…

Public Markets

ICE Earnings Preview
Trefis
ICE Results To Give Glimpse At Company’s Global Blueprint
Bloomberg

ICE is scheduled to announce its Q4 results today. Profit rose 13% in 2013. These are the first numbers since the NYSE acquisition closed.

SEC Majority Wants To Review Exchanges’ Special Status
Bloomberg

A majority of the five-member SEC wants the agency to review whether stock exchanges should continue to have regulatory roles that include overseeing members who may run competing venues.

Advocates of such a review say the special status creates benefits and burdens for exchanges such as ICE’s NYSE: They must compete with venues that don’t have to follow as many rules while also having a level of authority over brokers that operate the competing trading systems.

PLY: A level playing field for incumbent exchanges and competing platforms would be welcome. However, are regulators seeking a genuine solution or merely hoping they can divert more funding for the regulatory system? Interesting to see bipartisan support which hopefully means the regulator has a plan to provide better regulation from a third party source? Certainly Dan Gallagher gets the plot of what SEC must do.

Glitch Forces ASX Into Temporary Halt
Sydney Morning Herald

On a day when major companies reported important financial results, trading stopped at 2.15pm on Tuesday and resumed again at 2.45pm due to a market data problem.

EU Rules To Light Up Derivatives Markets Set For Shaky Start
Reuters
EMIR Reporting Deadline Causes Alarm Among Commodity Traders (subscription)
Risk

PLY: It’s D-Day of sorts tomorrow as TR rules kick in. Expect a shaky start and some time before the rules actually demonstrate their efficiency gains, and indeed whatever bumps in the carpet may emerge…

CME Plans IRS Future Aimed At European Market
Reuters

As EI reported yesterday, CME said it will launch new IRS futures contracts targeted at the European market.

Nomura and Societe Generale are among firms planning to serve as market markers for the new product, according to CME.

Known Unknowns: Preparing For SEF-Traded FX Options
banking technology

“With respect to transactions involving swaps subject to the clearing requirement … counterparties shall … execute the transaction on a board of trade designated as a contract market … or execute the transaction on a SEF.”

With these words, the Dodd-Frank Act launched a new acronym into the alphabet soup of modern capital markets.

Deadlines have been pushed back, and pushed back again. FX traders watched in relief from the side-lines before it was confirmed that FX options and NDFs were to be classed as swaps by the CFTC and subject to the new demands for exchange trading.

And now, after three years of furious wrangling, SEFs are finally here.

Trevor Spanner Q&A: LME ‘Well Placed’ For Post-Trade Push (subscription)
Financial News

Trevor Spanner, the head of post-trade services at LME, talks to FN about this week’s launch of a derivatives reporting service and plans for the exchange’s new clearing house.

As EI reported yesterday, LME will on Wednesday launch LMEwire a derivatives reporting service that will enable members to comply with a key trade reporting deadline under incoming EMIR.

Regulatory Implementations For Borsa Italiana, MTS And EuroTLX Markets: Migration To T+2
MondoVisione

On 6 October 2014 regulated markets and MTFs organized and managed by Borsa Italiana, EuroTLX and MTS (for Italian markets only) will move from T+3 to T+2, in line with upcoming EU regulations.

UnaVista TR Customers Go Live Ahead Of Schedule
MondoVisione

UnaVista TR’s customers begin full trade reporting ahead of EMIR go-live on 12 February 2014 covering all asset classes for both exchange traded and OTC derivatives across EEA.

Private Markets

DirectEdge Recovers After Early Messaging Snafu
Traders Magazine

BATS Global Market’s Direct Edge EDGX Exchange recovered Monday morning following an earlier reported messaging glitch. The exchange followed up at 8:50 EST that all its systems had recovered and were operating normally.

BSE Increases Companies Annual Listing Fee
The Hindu Business Line

Bombay SE has increased its annual listing fee from the next financial year, with the hike being 29 per cent for the largest companies.

Pakistan Exchange To Probe Data Leak After Staff Members Removed
Businessweek

Pakistan’s Karachi SE formed a team to investigate possible data leaks and removed some employees for acting inappropriately.

Nepal – Sebon Plans Separate Exchange Market Operator
ekantipur

A proposed act on commodity exchange has envisioned forming a separate exchange market operator for the sector similar to the Nepal SE (Nepse). Apart from empowering the Securities Board of Nepal (Sebon) as the main regulatory body, it has mentioned setting the standard of the commodities traded and maintaining the necessary infrastructure including warehouses.

PLY: Given NEPSE already runs COMDAQ software, presumably the vendor would be the ideal solution for a commodity market too, given their considerable experience in multiple commodities markets world-wide.

Bitcoin Is Under Siege
CNN Money

Right now, Bitcoin is a hard sell for people who are accustomed to old-fashioned cash or credit.

The stateless, digital currency can’t shake off the image that it’s unstable, unproven and largely still an experiment. Recent news doesn’t help.

PLY: In other words, it’s just like being on the internet in 1995-97 when the media was happily telling us it would never catch on. Now the self-same linear thinkers use the internet to tell us the next wave of innovation won’t work either.

Bitcoin Plunges After Marketplace Indefinitely Halts Withdrawals
Reuters

PLY: “Magic: The Gathering Online Exchange” as Mt Gox was originally called when it traded game cards has long been a potential problem for cryptocurrency infrastructure. Those who have done their DD claim it is badly engineered and simply cannot cope with the volume it receives (up to 14% of daily volume in BTC). It has been further hampered by run ins with the US government et al. Reading the BTC bulletin boards overnight there appears to be relief amongst the most devoted advocates of cryptocurrency as many have long suggested Mt Gox was unsustainable in the long term (as indeed I have mentioned in passing previously). This is a macro structural change, not the end of the world – but that won’t stop the media continuing to propagate the government/central banker line.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX is off 4% and FTIL 3% as FTIL fights back against the MCX voting freeze discussed yesterday.

FTIL Moves HC Against MCX’s Voting-Rights Freeze
Business Standard

FTIL is likely to approach the Bombay High Court again on Monday against the decision of the MCX board.Apparently damning evidence has appeared about manipulation by former NSEL CEO Anjani Sinha and others.

Sinha Made Entries On MCX, IBMA Books
Business Standard

Emails tracked by the forensic auditors of NSEL showed accounting entries were made on the books of FTIL’s group companies such as MCX and IBMA, an exchange subsidiary, to fit the requirements of the exchange. These were by Anjani Sinha, the then CEO of NSEL, and executed by other senior staff of the exchange.

While the trail suggested these were authorised by the board/promoters that had control of MCX and NSEL, the audit found several internal documents that showed the NSEL board continued to have significant control over Sinha and NSEL.

PLY: Could be a major smoking gun that convinces the High Court that certain parties are indeed not ‘fit and proper’ to run markets.

Technology

Misys Acquires IND Group
Automated Trader

Misys, has completed its acquisition of IND Group, a provider of online and mobile banking, personal finance management and payments solutions.

ISE Launches “Done-Away” Order Management In PrecISE Trade
The Options Insider

ISE announced the launch of “done-away” order management in PrecISE Trade, ISE and ISE Gemini’s front-end order and execution management system.

Through ‘done-away’ order management, it provides ISE and ISE Gemini members with fully consolidated order and execution management, regardless of execution method or destination. This free enhancement is the latest addition to PrecISE Trade’s suite of OMS features for PrecISE users.

OptionsCity Tabs Interxion For Expanded Exchange Hosting In London
Forex Magnates

OptionsCity, a multi-asset trading and options provider, announced its selection of Interxion in an effort to expand and better coordinate its hosting capabilities in London by utilizing its European-oriented cloud and carrier-neutral colocation services.

ITRS Launches Solution For Real-Time Market Data Integrity
MondoVisione

ITRS Group Ltd, the leading global provider of performance monitoring and management technology, has announced today the launch of its highly flexible analytic framework for data integrity, Geneos Market Data Monitor or MDM.

SunGard Launches Asset Arena Data Connect
Automated Trader

SunGard has launched Asset Arena Data Connect a fully automated order processing and control solution for hedge fund managers, private equity firms and fund administrators.

Asset Arena Data Connect aims to help firms manage incoming and outgoing alternative investment data as well as scheduling and monitoring of data processing – increasing straight-through-processing (STP) and transparency.

Products

ICE Wipes SMX Contracts Ahead Of Asian Launch (subscription)
FOW Intelligence

ICE has de-listed all contracts on SMX, paving the way for a new batch of commodity and financial contracts on its newly acquired Asian platform.

PLY: Unsurprising, ICE wants the infrastructure not the struggling markets of SMX as it seeks to pivot into Asia with its cost effective acquisition.

Career Paths

Borse Berlin – Constituent Meeting of the Exchange Council

For the term of office from 2014 to 2016

Prof. Dr. Jörg Franke (Tradegate) has been confirmed as chairman.

Serge Demolière (Berliner Sparkasse) will once more serve as deputy chairman.

Other Members

Eduard Garé – ING Bank N. V.
Dr. Marcel Lähn – BHF-Bank
Friedrich Munsberg – Dexia Deutsche Kommunalbank
Catherine Nini – Bourse Direct SA
Willy van Stappen – ProCapital SA
Wolf-Herbert Weiffenbach – IKB Deutsche Industriebank
Bernward Höving – Mittelbrandenburgische Sparkasse Potsdam
James Donald Kaye – Merrill Lynch International
Thomas Posowatz – mwb fairtrade Wertpapierhandelsbank
Dieter Silmen – Baader Bank
Kee-Meng Tan – KCG Europe
Philip Yarrow – Winterflood Securities
Wolfgang Reuter – Deutsche Bahn Finance
Andreas Segal – GSW Immobilien
Dr. Malte Diesselhorst – Deutsche Schutzvereinigung für Wertpapierbesitz (DSW)
Prof. Dr. Ulrich Burgard – Otto-von-Guericke-Universität Magdeburg

PLY: Congratulations to DTB founder and former CEO Jorg Franke on his extended mandate Chairing Borse Berlin.

Bahrain Bourse said on Monday that its CEO, Fouad Abdul Rahman Rashid, will retire in March after 11 years in the role.

ICAP Patent Brokerage appointed Mark Thomann to lead the trademark and brand brokerage business unit.

WallachBeth hired Thejas Nalval as director, ETF and Portfolio Strategy.

Ellyn Coyne joined KCG as a senior ETF sales representative.

Northill Capital, a London-based asset manager, hired Ravi Thakur as head of Americas distribution.

Bay Crest Partners, an agency-only institutional brokerage, hired Kumaran Vijayakumar in the newly- created role of president.

Paris-headquartered vendor BI-SAM has appointed Richard Irons to lead the company’s business development and account-management activities in Europe.

As executive director for Europe, he will be based in BI-SAM’s London office.

Prior to joining BI-SAM, Irons was sales director for NYSE Technologies, and has held senior positions within the sales and client relationship department with Bloomberg, SunGard Global Trading, and Thomson Reuters.

Financial Calendar

Today
ICE Q4 and full year 2013 results

Tomorrow
BGC Partners Q4 2013 results
EMIR Deadline
Thomson Reuters Q4 2013 results

Thursday
ASX 2014 half-year results
Record date MarketAxess $0.16 quarterly dividend
MCX Q3 results

Friday
Financial Technologies Q3 results

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

Share Notes

CME Director C Odom II sold 2,000 shares Thursday, February 6th at an average price of $73.59 (bargain $147,180.00). He now owns 6,003 shares. Mr. Odom’s regular sales are chronicled on this specific page.

Interactive Brokers Group Chairman Earl Nemser sold 15,011 shares Thursday, February 6th at an average price of $21.23 (bargain $318,683.53). Mr. Nemser’s regular sales are chronicled on this specific page.

Analyst Notes

CBOE “Neutral” Rating Restated By Zacks – $56.00 Price Objective
CBOE Target Price Lifted By Credit Suisse From $42.00 To $48.00
CBOE “Market Perform” Rating Reiterated At BMO Capital Markets
CBOE “Neutral” Rating Restated At Bank of America $55.00 Price Objective
Zacks Reissued Neutral Rating On NASDAQ OMX – $40.00 Price Target

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.

Crowdfunding

P2P Lenders Install Investor Speed Bumps (subscription)
Financial Times

Big investors take lion’s share of loans meant for individual borrowers.

Other stories

EU Moves To Curb Speculation On Futures
Farmers Guardian

PLY: Ignore the fact that UK agri-media may not be right up with the latest incarnation of Britain’s acronymous regulator. The simple fact is the farmers and buyers see a fundamental flaw in the daft populist rhetoric expounded by my fellow Ulster-born Arlene MacCarthy. I like Arlene but here her actions were cynically political in the run up to the EU elections, propagating a left-wing myth that food prices can be centrally controlled and that all open markets promote speculative price rises when the truth is inconsistent with socialist dogma.

CFTC Announces Measures To Promote Trading On SEFs
MondoVisione

CFTC announced measures to promote trading on SEFs and support an orderly transition to mandatory trading of swaps, which begins for certain IRSs on February 15, 2014.

Statement Of CFTC Commissioner Scott D.O’Malia here.

Regulator Plans Purge Of Wall Street Arbitrators
Reuters

Wall Street veterans would no longer be allowed to act as arbitrators in many legal disputes between investors and their brokerages under a proposal that a U.S. regulator will present to its board on Thursday, a person familiar with the matter said.

FINRA want to exclude former bankers and brokers but also others, such as lawyers who worked on behalf of brokerages, even for brief periods in their careers.

PLY: I am underwhelmed that we will then have clearly independent panels which consist of adjudicators with no industry expertise. Doubtless I am not alone in spotting a key flaw to this plan.

Former Madoff Aides Get Their Day In Court
Reuters

With prosecutors expected to wrap up their case on Monday, the defendants’ lawyers will try to convince a federal jury that their clients were completely in the dark, unaware that they were propping up an unprecedented fraud.

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