February 11 2015

elb2

Thanks to Peter Gomber and all the Frankfurt e-finance lab team for a terrific event yesterday. A concentrated symposium with several terrific speakers including ESMA’s Rodrigo Buenaventura and three interesting panels. My HFT panellists excelled in their vigorous debate: Rob Boardman of ITG, Christoph Hock of Union Investment, FIA EPTA Chairman Remco Lenterman of IMC and Professor Albert Menkveld of VU University, Amsterdam. Thank you one and all.

Today in Exchange Invest, surprising timing as Ibrahim Turhan steps down as Istanbul CEO to enter (electoral) politics, ICAP on target with cost cuts, optimistic Dodd Frank reform may yet be at hand, ConvergEx at risk after former CEO “settles” and cooperates with SEC?

Meanwhile, in Premium Posts, there are several new Premium Briefs to remind you of various issues in the industry 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 – SZSE Stock Connect
HKEx – SSE – Stock Connect Brief Part 1, Part 2 and Part 3
AFET TFEX Merger
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

BM&FBOVESPA Q4 2014 Results
MondoVisione

Total revenue grew 13.4% versus Q4 2013, reflecting higher volumes in both the derivatives and equities markets, particularly in October and November due to the election-related volatility;

Adjusted expenses reached R$174.9 million (usd 61.8 MLN) in Q4 2014, up 3.8% compared to Q4 2013; for 2014, adjusted expenses grew 2.9%, significantly below accumulated inflation in the period;

R$185.9 million (USD 65.6 mln) in dividends, totaling 80% of Q4 2014 GAAP net income;

BVB Posts 25% Higher Profit
Andrei Chirileasa – Romania Insider

Bucharest SE (BVB) increased turnover 11% in 2014, to EUR 6.04 million. Net profit increased 25%, to EUR 2.68 million.

The operator’s revenues were positively impacted by a higher volume of transactions. The value of share trading on the BVB went up by 14% last year compared to 2013, to almost EUR 3 billion.

BVB Q4 results here.

PLY: The EUR 444 million IPO of state-owned electricity distributor Electrica gave a fillip to results as BvB gradually moves from a rampant underperformer to a more credible entity under CEO Ludwik Sobolewski.

ICAP CEO Says Firm Cut 400 Jobs In Broker Unit To Save Costs
Richard Partington – Bloomberg

Michael Spencer: “There is manifestly ongoing excess capacity globally.”

ICAP Says US Swaps Rule Changes More Likely (subscription)
Philip Stafford – Financial Times

A recent changing of the guard at the main US derivatives regulator should give new impetus to ICAP’s efforts to amend post-financial crisis swaps reforms, Michael Spencer, CEO of the interdealer broker said Tuesday.

ICAP, which operates the biggest US swaps trading venue from London rather than the US, has been a prominent critic of parts of the new rules and has backed a recent plan to rewrite part of the US Dodd-Frank financial reform act.

PLY: Good progress on reducing costs at ICAP allied with an increasing element of optimism that the US regulators are gradually edging towards a slightly less prescriptive reworking of Dodd Frank…

DB1 Faces Renewed U.S. Battle Over Iran Dealings
Andreas Kroner – Reuters

Deutsche Boerse (DB1) faces a renewed legal battle in the US over dealings by its Clearstream subsidiary with the central bank of Iran, U.S. court documents show.

Hundreds of U.S. plaintiffs are seeking access to $1.7 billion (1 billion pounds) in assets belonging to Iran’s central bank, Bank Markazi, and held by Clearstream, owned by DB1, in Luxembourg, the documents show.

PLY: I sympathise with both the bereaved plaintiffs and DB1 here as the coals are raked over once again, this time as US plaintiffs try to access Iranian funds locked in Europe via aggressively extraterritorial US laws.

CME Pit Closure Sparks Member Buyout Call (subscription)
Gregory Meyer – Financial Times
As CME Closes Its Trading Pits, What’s A Seat Worth?
Lynne Marek – Crain’s Chicago Business

CME may be closing more than half its trading pits in Chicago and New York, but the value of a “seat” at its main exchange is near its highest level in five years.

Meanwhile, the demise of futures trading pits in Chicago and New York has triggered debate over exchange membership, a privilege some now view as a burden in an era of electronic markets.

A membership gave traders and brokers access to the once-bustling trading floors of CME. CME last week announced it was closing most open-outcry futures trading, abandoning a tradition dating to the 19th century.

PLY: The B share issue remains a problem insofar as how CME has also endeavoured to reform the board in recent times. There is no super-simple answer but finding a means to flatten the CME Group access structure in the longer term makes sense to compete with the likes of DB1 and ICE.

A year ago, there was a kerfuffle about the representation of B share owners, coverage included this Premium post: CME Board: B Grade Reforms.

LCH ‘Disappointed’ By Esma’s FX Clearing Decision (subscription)
James Rundle – Financial News

The chief executive of LCH.Clearnet’s specialist fx clearing house has criticised the decision by European regulators to abandon clearing for certain types of FX trades.

PLY: From a bandwidth perspective, the issue is understandable. Post the demise of forex credibility in the wake of the SNB dislocation, the need for full reform of forex to create a genuine market has never been greater. Problem is, ESMA have neither time nor money to consider it.

SGX On Track For Minimum Trading Price Introduction
MondoVisione

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL both up circa 1%.

Technology

NCDEX To Adapt New Trading Platform In 2016
Samir Shah – The Economic Times

NCDEX said it has selected MillenniumIT as its partner to scale up its trading and surveillance system for futures and forwards segments, which will be adapted by Q1 2016 calendar year.

Press release here.

DB1 Connects Commodities Traders With New Platform
Banking Technology

Deutsche Börse (DB1) has signed a trio of commodities trading entities to use its new M7 trading platform, developed as part of a complete renewal of its trading infrastructure.

Singapore-based regulated futures exchange Cleartrade Exchange (CLTX), London-based Freight Investor Services Ltd., a broker of freight and commodity derivatives, and Norexeco ASA, a commodities exchange for pulp and paper based in Norway, will start to use M7 in the next few months.

DB1 press release here.

PLY: Er, Given that DB1 owns Cleartrade, does this press release reach a new nadir in the desperate exchange hype machine? DB1 can do better than this. Besides what about an exciting discussion of how they open sourced the code to BSE and the Indians then all but rewrote the system to improve it within a matter of months?

Products

Deutsche Börse Market Data + Services To Offer Global Reporting Solution For Energy Market
DB1

Deutsche Börse Market Data + Services plans to introduce a strategic global regulatory reporting application for the energy market, a solution as required under the EU Regulation on wholesale energy market integrity and transparency (REMIT), which will come into effect in 2015.

EEX To Launch Wind Power Futures As Renewables Output Grows
Vera Eckert – Reuters

EEX plans to introduce wind power futures contracts, allowing clients to speculate on prices in an increasingly important area of the energy market.

EEX Designs The Energy Market 2.0
MondoVisione

Career Paths

BIST CEO Resigns, Plans To Run In Elections
Turkish Press

Ibrahim Turan, head of Borsa Istanbul (BIST), resigned in order to run in the June parliamentary elections, BIST officials said Tuesday.

According to the Turkish constitution, Feb. 10 is the deadline for civil servants to step down in order to be allowed to run in the elections with the elections scheduled for June 7.

PLY: I was never entirely convinced Ibrahim Turhan was comfortable as BIST CEO despite the company moving forward under his watch. He was always seen as close to the ruling party and so it is not an enormous surprise, albeit the timing is interesting coming as BIST is endeavouring to close a funding round pre-IPO with the public listing itself looming… I wish Ibrahim every success in the future in his new career.

FOW reports that Frank Ammerlaan, Euronext’s Head of Sales for Benelux, Germany and CEE, left the company.

Financial Calendar

Today

BGC Partners’ Q4 And Full Year 2014 Financial Results
Thomson Reuters Full-Year And Q4 2014 Earnings
Markit Q4 & Full Year 2014 Financial Results

Tomorrow

Record Date MarketAxess $0.20 Quarterly Dividend

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

Share Notes

NASDAQ OMX EVP Bradley J. Peterson sold 13,981 shares Monday, February 9th at an average price of $48.87 (bargain $683,251.47). He now owns 23,063 shares.

CME insider Hilda Harris Piell sold 1,600 shares Friday, February 6th at an average price of $94.00 (bargain $150,400.00). She now directly owns 20,136 shares.

Analyst Notes

ICE Price Target Upped By Barclays From $253.00 To $256.00 – “Overweight” Rating
Argus Lifted Their Target Price On CME From $95.00 To $106.00 – “Buy” Rating

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

SEC Charges CEO Of ConvergEx In “Fraudulent Scheme”
Mark Melin – ValueWalk

CEO of global investment firm and HFT dark pool operator, ConvergEx Group, has settled with SEC, agreeing to pay more than $783,000 and admit wrongdoing in a case involving employees under his control misleading customers regarding trading costs in what the SEC termed a “Fraudulent Scheme.”

SEC press release here.

PLY: Given that Craig Lax is cooperating with authorities, it will be interesting to see if ConvergEx can survive this – after all Pipeline burst over lesser accusations. Meanwhile the stakes arguably just became more acute for Barclays in its ongoing battles with the US authorities…

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