February 12 2014

elb2

ICE results out, warns of regulatory excess, expects Euronext IPO Q2. Swap, SEF and TR news as deadlines loom (or are delayed!) while in a remarkable twist in the NSEL soap opera, the Indian government may yet seek to take control of vendor FTIL!

Interesting overlapping news from elsewhere: the Australian government is seeking a big privatisation push which ought to both help the ASX as well as reducing the size of government as 100 billion dollars of assets look to be on the pathway to sale.

It’s issue 190 today of Exchange Invest – the 200 milestone is in sight! Happy scrolling:

Public Markets

ICE Q4 & Full 2013 Results
ICE

“Our strategy around here has never been to run the business for market share and bragging rights.
– Jeff Sprecher

For Q4 ended December 31, 2013, consolidated net loss attributable to ICE was $176 million on consolidated revenues, less transaction-based expenses, of $612 million. On a GAAP basis, diluted loss per share was $1.83. Q4 results include approximately seven weeks of combined (NYSE) results.

Certain items were included in ICE’s operating results that are not indicative of our business performance for Q4 of 2013. Excluding the non-core items mentioned below, net of tax, Q4 2013 adjusted net income attributable to ICE was $192 million and adjusted diluted EPS were $2.00. Adjusted figures exclude:

Acquisition-related transaction and integration costs of $131 million, relating to the NYSE Euronext acquisition.
A $190 million impairment expense primarily due to the impact of the devaluation of the Brazilian reais on ICE’s investment in Cetip which was made in July 2011.
A $51 million pre-payment expense associated with $400 million in senior notes repaid.
A $4 million net tax impact related to the aforementioned items and certain foreign tax law changes.

PLY: An interim statement as we await results of organisational blitzkrieg across the former NYSE empire to turn it into a more focussed business with 1/3rd headcount reduction expected and many moves to Atlanta away from more expensive New York etc. Note too that LIFFE US is de facto dead with its contracts moved to London.

ICE Warns Of Trading Flight Away From Europe (subscription)
Financial Times

ICE, facing uncertain rules in Europe, has warned it could steer business elsewhere if regulators make radical changes to the structure of the futures market.

ICE last year acquired London-based Liffe, Europe’s second-largest derivatives exchange. European regulators have agreed to open access to trading and clearing futures, endangering ICE’s lucrative exchange business model, known as a “vertical silo”.

Jeff Sprecher told analysts and investors on Tuesday that the company has “a lot of flexibility to follow our customers where they go”.

PLY: A welcome first salvo against pending regulatory excess. Optionality to move clearing to the US, Europe or Singapore gives ICE a clear opportunity to develop its business at the furthest remove from unwelcome compliance burdens.

NYSE Is Still No. 1, But Not By Much (subscription)
Wall Street Journal
ICE Will Move Liffe US Contracts To London – Sprecher (subscription)
FOW Intelligence

Bucharest SE Q4 & Full 2013 Results
BVB

BVB reported a preliminary operating profit of RON 8.4 mln (USD 2.56 mln) for the full year, by 106% above the 2012 figure, on higher sales.

Preliminary sales revenues were RON 24.3 mln (USD 7.4 mln), up 40% in year on year terms, on the back of 14% higher trading revenues on the main market, excepting public offers, and a 388% increase in revenues from public offers.

PLY: Good results: A rising index coupled with early successes by ‘new’ CEO Ludwik Sobolewski drove better results for BvB although it remains a hugely underdeveloped marketplace.

Deutsche Börse Buys Minority Stake In Bondcube
Deutsche Borse

DB has purchase a stake in Bondcube Ltd, the innovative new fixed income trading system, for a low sum in the single digit millions (GBP).

Bondcube is a London and Boston based electronic bond platform which links dealers and customers in a single marketplace in order to boost the liquidity of the global bond markets. The firm uses tried and tested trading protocols from other markets, such as equities, to optimize liquidity discovery. As a result Bondcube is ideal for large, market sensitive bond orders that have now reverted to execution via telephone.

PLY: A good move by DB, as the bond market becomes a key future battleground for liquid block trading.

Results Of MOEX EGM
MOEX

MOEXs shareholders held an absentee EGM on 10 February.

US Regulators Delay ‘Packaged Trade’ Rules (subscription)
Financial Times

About half of the $500tn global IRS market has been granted a three-month reprieve from trading on new electronic venues after US regulators admitted the rules needed more work.

CFTC said late on Monday that “packaged trades” would not have to be traded on the new marketplaces, known as SEFs until May 15.

PLY: It is good to see the government agencies admitting they are not prepared but unfortunate that there was no foresight to delay these packaged trade rules (for multiple component trades) sooner.

SEFs Divide OTC Derivatives Market, Asia Still Bystander
The Asset

US and European regulations that aim to make OTC derivatives market safer have fragmented market liquidity and driven up cost for end users, ISDA reports. Meanwhile, Asia is concerned about the regulation’s timing.

Could SEF Aggregation Be The Next Big Thing In Swaps?
Wall Street & Technology

With SEF trading becoming mandatory on Feb. 15 for certain IRS and continues to evolve, industry watchers are waiting to see if SEF aggregation will emerge to help the buy side connect with multiple SEFs.

LSE Ready For EMIR Reporting Deadline (subscription)
FOW Intelligence

LSE has become the first exchange group to state its clients’ readiness for the controversial European trade reporting rules that take effect today.

Aluminum Lines Still Trouble LME
MarketWatch

Top executives at Rusal, the world’s largest producer of aluminum, and Novelis, which buys huge quantities to make sheet metal for beverage cans, cars, buildings and electronics, say lines are actually growing in two critical delivery locations despite LME reducing overall delays.

Nasdaq OMX Says Will Push Further Into German Power Forwards
Reuters

Oslo-based exchange Nasdaq OMX Commodities will further raise its share of financial German power trading this year after making inroads in 2013, its president said on Tuesday.

CME Executives’ Salaries Unchanged In Revised Contracts
Reuters

The salaries of CME’s top two executives remain unchanged under employment contracts the exchange operator extended last week, regulatory documents filed on Tuesday show.

The annual base salary of CME President and Executive Chairman Terry Duffy, 55, stayed at $1.25 million. CEO Phupinder Gill, 53, kept his base salary of $1 million.

Powernext Becomes A Regulated Market
MondoVisione

Anticipating the evolution of the regulatory framework, Powernext has carried out in 2013 all the necessary steps in order to become a Regulated Market.

Bulgaria To Facilitate Listing On the Stock Exchange – Deputy PM
Novinite

Deputy PM Daniela Bobeva has said that the government is working on a package of measures aimed at facilitating the listing on the Bulgarian SE (BSE).

PLY: With the Bulgarian government hoping to privatise its DB-powered exchange (and the CSD) in the near future, clearly any move to encourage listing will be both good for the economy and the value of the bourse itself.

Corzine Fails To Win Dismissal Of MF Global Customers’ Lawsuit
Reuters

A federal judge on Tuesday allowed a lawsuit to move forward seeking to hold former MF Global CEO Jon Corzine and other executives responsible for the brokerage’s collapse.

District Judge Victor Marrero said that it was reasonable to infer someone “did something wrong to set in motion such an extraordinary chain of events causing such extensive harm to so many people and interests.”

But the judge also called the litigation “wasteful and rancorous” and chastised the parties for failing to come together to resolve the matter “in a just and efficient way.”

Private Markets

NSX Wants Taker-Maker Pricing Schedule
Traders Magazine

Late Monday afternoon the operators of the National SE (NSX) notified its members of the exchange’s intention to adopt a taker-maker price fee schedule for all securities priced above a dollar starting February 18, pending regulatory approval by SEC.

The new schedule will be identical to the current CBOE SE (CBSX) schedule, according to Bill Karsh, a special advisor at the NSX.

PLY: The NSX now under CBOE ownership is presumably targeting market share with this pricing plan.

Newedge Debuts ‘Indirect Clearing’ Service (subscription)
Financial Times

Newedge has debuted a clearing service in Europe that aims to solve one of the trickiest problems emerging from incoming clearing rules – providing access to mandated clearing for small institutions.

PLY: So-called “indirect clearing” of OTC derivatives, aims to attract business from regional banks, savings institutions and small corporations who can’t justify acquiring full clearing memberships. Interesting move.

No Evidence Of Illegal Data Leakage At KSE
The News

Karachi SE (KSE) MD Nadeem Naqvi discussed a recent report that KSE staff may have profited from unauthorised access to real time trading data.

Bitcoin Exchanges Halt Withdrawals After ‘Massive’ DDoS Attack
International Business Times

Bitstamp bitcoin exchange has temporarily halted its users from withdrawing bitcoins, as it is targeted by a “massive and concerted” cyber attack.

A DDoS (distributed denial of service) attack is being felt across the bitcoin landscape, with a number of exchanges affected by what is known as the cryptocurrency ‘transaction malleability problem’, first discovered in 2011 and flagged up by the Mt Gox exchange earlier this week.

PLY: There is a weakness in the clearing infrastructure which can leave an hour gap before BTC transactions are fully confirmed. Another growing pain for the blockchain.

Israel Aims To Become Bitcoin Hotspot
International Business Times

Israel could well be the next big bitcoin hotspot. At least two dozen startups have surfaced in Israel over the past year. At the Bitcoin Embassy in Tel Aviv, an open-source community, developers are looking to build a new trading system based on the digital currency.

PLY: Financial centres which endorse cryptocurrency fastest will build a remarkable competitive advantage in the development of money and payments.

NY Planning For Virtual Currencies
Reuters

NY’s financial regulator on Tuesday revealed new details on how the state plans to govern virtual currencies such as bitcoin.

PLY: Benjamin Lawsky, superintendent of NY’s Department of Financial Services appears to be proposing logical incremental regulation which can only help New York become a Bitcoin haven in the face of ongoing cynicism from bureaucrats with less foresight.

Canada Says Will Keep Closer Track Of Bitcoin, Virtual Currencies
Reuters

Canada will toughen rules targeting money laundering and terrorist financing to keep a closer eye on the use of Bitcoin and other virtual currencies, the government revealed in the federal budget on Tuesday.

Dividend News

ICE announced a $0.65 per share dividend for Q1 2014. The dividend is payable on March 31, 2014 to shareholders of record as of March 17, 2014.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX is up 1% while FTIL is up nearly 5% while there is a threat by government to take over FTIL…! Meanwhile NSEL chalks up a 26th consecutive default and looks likely to finish the process in just over a month having never made a full scheduled payment…

The NSEL repayment tally of shame remains: (N.B. Anticipated weekly repayment is Rs 174.72 crore, roughly USD 28,000,000)

Week 1: Rs 92.73 crore (USD 14.37 mln) paid
Week 2: Rs 12.05 crore (USD 1.79 mln) paid
Week 3:Rs 15.37 crore (USD 2.29 mln) paid
Week 4: Rs 7.77 crore (USD 1.21 mln) paid
Week 5: Rs 8.57 crore (USD 1.35 mln) paid
Week 6: Rs 11.45 crore (USD 1.82 mln) paid
Week 7: no payout – bank accounts frozen
Week 8: Rs. 2.85 crore (USD 457.9 k) paid
Week 9: Rs. 28.34 crore (USD 4.58 mln) paid
Week 10: Rs. 30 lakh (USD 49k) paid
Week 11: Rs. 29.05 crore (USD 4.72 mln) paid
Week 12: Rs. 11 crore (USD 1.77 mln) paid
Week 13: no payout
Week 14: Rs. 6.1 crore (USD 976.7k) paid
Week 15: Rs. 9 crore (USD 1.44 mln) paid
Week 16: Rs. 9 crore (USD 1.44 mln) paid
Week 17: Rs. 9 crore (USD 1.46 mln) paid
Week 18: Rs. 11.5 crore (USD 1.85 mln) paid
Week 19: Rs 12.64 crore (USD 2.04 mln) paid
Week 20: Rs 21 crore (USD 3.37 mln) paid
Week 21: Rs 2.45 crore (USD 394k) paid
Week 22: Rs 3.24 crore ( USD 526k) paid
Week 23: Rs 4.5 crore ( USD 726 k) paid
Week 24: Rs 2 crore ( USD 322 k) paid
Week 25: Rs 8.62 crore (USD 1.38 mln) paid

Week 26: Rs 1.05 crore (USD 169k) paid defaults 26th time – see NSEL announcement here.

Bails Of Anjani Sinha, Two Others Rejected
Livemint

A Mumbai court on Tuesday rejected bail for Anjani Sinha, former CEO of NSEL, Jai Bahukhandi former assistant VP of warehousing at NSEL and Amit Mukherjee a former assistant VP of business development.

MCA Looking At Legal Provisions To Take Over FTIL
The Financial Express

In a setback to Jignesh Shah and his FTIL, the ministry of corporate affairs (MCA) is pursuing legal provisions to take control of FTIL and could, in the extreme, shut it down for deliberate bungling in its subsidiary NSEL.

PLY: This is a potentially nuclear option, another remarkable development in this truly GUBU process!

FTIL’s Next SEBI Hearing Pushed To March?
Business Standard

SEBI has adjourned a hearing of FTIL to next month pending Bombay High Court (HC) decision on a matter related to the company’s ‘fit & proper’ status to operate an exchange.

Technology

TMX Selects ULLINK For Pre-Trade Risk Management
Automated Trader

TMX has selected ULLINK to provide a pre-trade risk management and connectivity solution for its equity trading customers.

CloudMargin Connects With Unavista For EMIR Compliant Trade Reporting
hedgeweek

Derivatives collateral management cloud technology provider CloudMargin has connected with Unavista, part of LSEG, to offer EMIR compliant trade reporting.

CheetahFIX & LSE Connect To JSE
Automated Trader

CheetahFIX has announced a collaboration with LSE, and the connection of the CheetahFIX Orb Network and FIX Network LSEHub, enabling the extension of LSE services and products to the burgeoning African electronic trading community.

Avoid Single Software Vendor: SEBI
Business Standard

SEBI has asked big broking houses to reduce dependence on a single software vendor to avoid trade disruptions.

PLY: A logical best practice for large brokers in India methinks.

INET – NASDAQ OMX Nordic Order Routing: Enhancements To Strategy “DNGY”
NASDAQ OMX

NASDAQ OMX Nordic offers easy access to trading Nordic shares at external venues by means of the NASDAQ OMX Nordic Smart Order Router.

Binary.com Adopts icCube Technology For Real-Time Data Streaming
MondoVisione

Binary.com, one of the UK’s leading fixed-odds trading provider is pleased to announce the implementation of icCube’s server Online Analytical Processing (OLAP) across its business, providing it with real time data streaming that is second to none.

High-Speed Stock Traders Turn To Laser Beams (subscription)
Wall Street Journal

As high-speed stock traders push to trade ever faster, their newest move involves harnessing a technology that U.S. military jets use to communicate as they soar across the sky: lasers.

Products

EEX To Launch Italian Power Futures, Spanish Trade Registration
Platts

EEX will launch Italian power futures for trading on its platform from April, as well as offering the registration of Spanish baseload power future trades from March.

Indexes

S&P Dow Jones Introduces New South African Index Suite
ETF Strategy

S&P Dow Jones Indices, a leading provider of indices to the ETF industry, has introduced a suite of nine new indices covering the South African equity market.

Launch Of VIX Futures Timely, But Weekly Expiry A Concern: Traders
The Financial Express

Although traders consider the much-awaited launch of futures contracts on volatility index (India VIX) on NSE as a welcome move, they seem disappointed with the weekly expiry of the soon-to-be-launched product.

EI reported onFebruary 10th that NSE will launch futures contracts on India VIX.

Career Paths

EBS, ICAP’s market-leading electronic FX business, announced that Darryl Hooker has joined the EBS Executive Management Team, effective immediately. Darryl is appointed Head of Strategic Currency Initiatives and will report to Gil Mandelzis, EBS’s CEO.

SEC announced that Michael F. Maloney has been named the new chief accountant in the SEC’s Division of Enforcement.

Sabine Lautenschläger was appointed vice-chairman of the newly-created supervisory board of ECB.

Liquidnet announced the appointment of Oliver Hauer as Sales Director, Germany, in its London-based EMEA team. He will report directly to Tony Booth, Head of Sales for Liquidnet Europe.

EDHEC-Risk Institute announced that two new members have joined its international advisory board.

The two new members are as follows:

Mr Brad Holzberger, Chief Investment Officer, QSuper
Mr Yuan Zhou, Chief Strategy Officer, China Investment Corporation (CIC)

Financial Calendar

Today
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.

Analyst Notes

Goldman Sachs Upgraded Its Rating For ICAP From ‘Sell’ To ‘Neutral’
CIBC Lifted Their Price Target On TMX From C$48.00 To C$50.00 – “Market Weight” 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

CFTC Requests Public Comment On A Petition Submitted By LCH.Clearnet For An Amendment To Its Orders Of Registration As A DCO
MondoVisione

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