February 12 2015

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Cinnober scoops a vendor breakthrough with ASX while it’s results central today… BIST buys 2% of LCH.Clearnet in a fascinating development…and much more. Happy scrolling…

Meanwhile, in our Premium service, 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:

BATS – Direct Edge Merger Brief
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

ASX H2 Results To 31 December 2014
ASX

Profit after tax $198.6 million, up 4.7%
Revenues $348.7 million, up 5.9%
Interest and dividend income $34.4 million, up 0.3%
Operating expenses $81.4 million, up 5.4%
Depreciation and amortisation $18.6 million, up 14.0%

EPS 102.7 cents, up 4.5%
Interim dividend 92.3 cents per share fully franked, up 4.6%
90% payout ratio

Capital expenditure $13.0 million
Lower capitalisation rate of technology expenses in first half – expected to increase in second half

Full presentation here.

BGC Partners’ Q4 & FY 2014 Financial Results
BGC Partners

Q4 Results Highlights

Revenues for distributable earnings $515.5 mln, up 19.1%
GAAP net income (loss) for fully diluted shares ($18.7) mln, compared to $5.9 mln in Q4 2013

Full Year Results Highlights

Revenues for distributable earnings $1,841.5 mln, up 4.1%
GAAP net income (loss) for fully diluted shares $5.7 mln, down 94.1%

Thomson Reuters FY & Q4 2014 Earnings
MondoVisione

Revenues grew 1% for the full year and Q4, before currency
Organic revenue flat for the full year and up 1% in Q4
Financial & Risk net sales were positive for both the full year and Q4
First year of positive net sales since 2008
Adjusted EBITDA increased 8% for the full year and was up 30% for Q4
The margin for the full year was 26.3% vs. 24.5% in the prior year
Underlying operating profit increased 14% for the full year and was up 65% for Q4
The margin for the full year was 17.0% vs. 15.0% in the prior year
Full-year adjusted EPS was $1.85 vs. $1.54 in 2013 and Q4 adjusted EPS was $0.43 vs. $0.21 in the prior-year period
Excluding charges from both periods, adjusted EPS was $2.00 for the full year and $0.53 for Q4
Foreign currency had a $0.02 negative impact on adjusted EPS for the full year and Q4

Markit Q4 & Full Year 2014 Financial Results
Finextra

Revenue for Q4 2014 increased 11.3% to $271.4 million, on a constant currency basis up 12.4% comprising organic revenue growth of 8.9% and acquisition related revenue growth of 3.5%

Revenue for the full year 2014 increased 12.4% to $1.065 billion, on a constant currency basis up 10.9% comprising organic revenue growth of 7.8% and acquisition related revenue growth of 3.1%

Adjusted EBITDA grew 15.0% to $124.7 million for Q4 2014, and grew 15.9% to $488.2 million for the full year 2014

Adjusted EBITDA margin was 46.3% for Q4 and 46.0% for the full year 2014

Adjusted EPS, diluted was $0.37 for Q4 2014, and up 7.1% to $1.51 for the full year 2014

Funke Kupper Calls For ASX Ownership Cap To Be Scrapped
James Eyers – Sydney Morning Herald

Elmer Funke Kupper has urged the federal government to scrap the ASX’s 15% ownership cap, as recommended by the financial system inquiry. Removing the cap would better define the process for any potential ASX merger and reflect the reality that global exchanges will continue to consolidate, the ASX boss said.

PLY: I could not agree more with Elmer Funke Kupper here. Artificial shareholding caps impede competitive free markets.

BIST Head Takes London Step Before Resignation
Hülya Güler – Hurriyet Daily News

Borsa Istanbul (BIST) head İbrahim Turhan resigned from his position on Feb. 10 to become a candidate in the June parliamentary elections, although he had previously refuted the claims about his possible resignation.

“I will continue to head BIST to complete the IPO (read our Premium brief: BIST IPO Brief) of the stock exchange. I do not plan to stand as an MP candidate in the June elections. I do not know if something will happen outside of my plans,” he said on Feb. 8.

He, however, resigned from his position on Feb. 10 (reported yesterday), the last official day to resign from official posts to stand as a candidate.

His last move was to acquire 2% of the stakes in the London Clearing House (LCH. Clearnet), sources said.

The transaction is expected to be launched soon, according to sources.

PLY: A fascinating deal…a modest hedge against ITL NDF business etc, and/or a prelude to a cross-border clearing agreement akin to BM&F Bovespa/CME? Interesting optionality.

First Tell Us What’s Wrong With Stock Market, SEC Official Says
Sam Mamudi & Annabelle Ju – Bloomberg

Critics should better frame what’s wrong with the U.S. stock market before offering solutions to fix it, according to a senior official at SEC.

That so many proposals have been proffered in the last two months by exchanges trying to revamp trading shows there’s no clear idea of what they’re trying to solve, Gregg Berman, one of the SEC’s top advisers on electronic markets, said Tuesday at an Investment Company Institute conference in New York.

ICE proposal discussed here.
BATS proposal here.

PLY: A healthy comment from SEC insofar as it leaves SEC open to acknowledging that the likes of Reg NMS are not perfect…

CFTC Reviews Retail Forex-Trading Rules Following FXCM Debacle (subscription)
Andrew Ackerman – Wall Street Journal

CFTC is considering ways to boost its oversight of fx dealers catering to mom-and-pop retail investors in light of a trading debacle that nearly collapsed broker FXCM last month, the agency’s chairman said Wednesday.

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

PLY: Good. The sooner the leveraged betting shops of forex are closed or co-opted into a sensible investor framework, the better. Oh and don’t forget to sort out the ridiculous repricing issue…

Deutsche Börse Presents Policy Paper On A European CMU
Deutsche Börse

Deutsche Börse Group supports efforts to create a Capital Markets Union (CMU). To this end, the company presented in Brussels a policy paper entitled “Principles of a European CMU.”

Previous mentions and discussions on the CMU topic here, here, here and here.

Singapore Decides Against Swaps Trading Switch (subscription)
Philip Stafford – Financial Times

Singapore has decided against forcing more swaps trading on to regulated electronic trading platforms, putting it at odds with the US and Europe on implementing derivatives market reforms.

The Monetary Authority of Singapore, the central bank and financial markets regulator, decided on Wednesday that move was unnecessary “for now” but did not rule out a change at a later date.

PLY: Further clear evidence that MAS will take moves in its best interests which may help fuel regulatory arbitrage as I have long argued…

Private Markets

BATS Chi-X Europe Dark Lit Sweep Order Type Now On CXE Nordic Market
FTSE Global Markets

Further to the recent launch of the Dark Lit Sweep order type for securities on the BXE order book, BATS Chi-X Europe says it will extend the availability of the order type in the Nordic markets (Stockholm, Copenhagen, Helsinki and Oslo) on CXE, effective Friday February 20th.

SET Likely To Go Solo On Spot Gold
Nuntawun Polkuamdee – Bangkok Post

Stock Exchange of Thailand (SET) is likely to establish the planned spot gold exchange alone after rejecting a proposal that the Gold Traders Association (GTA) hold the lion’s share.

The GTA had proposed holding a 70% stake and offered the SET 30%. However, talks between the two parties will continue, Mr Jitti said.

Previous mentions here and here.

Hong Kong Lawmakers Urge Ban On Bitcoin As Scam Victims Turn To Police
Michelle Price & Lizzie Ko – Reuters

Hong Kong lawmakers on Wednesday urged authorities to ban bitcoin as more than 25 people flocked to police headquarters to complain over a scam involving the digital currency that media estimate could have duped investors of up to $387 million (253 million pounds).

The government should clamp down on bitcoin, said lawmakers Leung Yiu-chung and James To, who accompanied the complainants, among them Nepalese and mainland Chinese, as well as Hong Kong citizens.

PLY: A classic scam which induces the political class to ban the medium and not address the fraud. This appears to have been a pure play fraud – had they done this in HKD would the same lawmakers now propose abandoning the Hong Kong currency in favour of the dollar? Ah the wondrously juvenile nature of politics…

Dividend News

Thomson Reuters approved a $0.02 per share annualized increase in the dividend to $1.34 per share. A quarterly dividend of $0.335 per share is payable on March 16, 2015 to common shareholders of record as of February 23, 2015. This dividend increase marks the 22nd consecutive annual dividend increase by the company.

Special Section: FTI, NSEL, India at the Crossroads

PLY: FTIL up 1%, FTIL flat as we hear of a liquidation at last:

Maharashtra Govt To Liquidate Property Of NSEL
Kanchan Srivastava – dna India

Maharashtra government plans to liquidate the property of the defaulters in the NSEL case to settle the claims of investors. The move not only aims to give justice to the affected people who lost money but also aims to boost the confidence of the small investors to improve the image of the state.

PLY: Strike One for Maharashtra which with first mover advantage looks somewhat golden at a time when the rest of India looks leaden footed, at best.

Technology

ASX Plans Upgrade With Cinnober Technology
John Detrixhe & Eduard Gismatullin – Bloomberg

ASX has selected Stockholm-based Cinnober Financial Technology to run its equity and derivatives trading, it said in a statement Thursday. Cinnober’s systems will replace a stock-trading platform provided by Nasdaq and a futures venue developed in-house by ASX. The upgrade will take place over the next 18 to 24 months.

Cinnober press release here.
ASX press release here.

PLY: A big shift away from NASDAQ systems in many respects as the original options market went electronic with OM (I think it was even before OMX…), well, last century. Plaudits to Cinnover on another highly significant breakthrough.

Glitch Delays Price Updates On NSE
Business Standard

Stock price updates on the National SE (NSE) were affected during the first hour of trading on Wednesday due to technical glitches in the system.

Brokers said that the leased line of the exchange through which the data is carried from the broker to the exchange experienced a slowdown causing interruptions in the regular updates of stock prices.

Products

CME To Launch EU Wheat Futures By End-April
Valerie Parent & Gus Trompiz – Reuters

CME will launch a EU wheat contract by the end of April, a draft document showed, confirming the world’s largest futures exchange is well advanced with its plan to challenge Euronext’s regional supremacy.

The Chicago-based group had announced last June it was considering a rival contract to Euronext (ENX)’s Paris-based wheat futures, and sources said in December it was pursuing plans with the support of some grain handlers.

Earlier this month ENX announced it will launch a new wheat futures contract in March in response to urgent calls for it to adopt higher quality standards for grain traded on its Paris-based market.

CME Sees Savings Opportunity In Electronic Options Shift
Tom Polansek – Reuters

CME has been working to provide traders with technology for electronic options transactions, a top executive said on Wednesday, raising expectations that more open-outcry pits will eventually close.

Traders are uncertain about the future of most options pits after CME said last week that it would save $10 million per year by shutting nearly all its futures pits and two options pits by July 2. The total cost to run the trading floors is about $50 million annually.

Icap Confirms Launch Contracts In SGX Deal (subscription)
Alice Attwood – FOW

Icap’s fx business, EBS, has confirmed the currency derivatives contracts that it will initially launch in its partnership with SGX: INR/USD, KRW/USD, USD/CNH, CNY/USD and USD/SGD.

PLY: Interesting, watch this space.

EEX Sees Growth In Italian Gas & Power Trading
Vera Eckert & Nina Chestney -Reuters

European Energy Exchange (EEX) expects Italy’s energy trading market to flourish and plans to launch gas contracts there as more companies shift from bi-lateral supply deals to market alternatives, its CEO said on Wednesday.

EEX, continental Europe’s biggest energy bourse, launched Italian electricity contracts last April to compete with those offered by Borsa Italiana.

NMCE Gets FMC Nod To Launch Forward Contracts
Business Standard

FMC said it has given approval to the National Multi Commodity Exchange (NMCE) to launch forward trading contracts in 17 commodities.

Career Paths

BGC Finance Chief Sadler To Step Down Amid Battle Over GFI
Steven Dickson – Bloomberg

BGC Partners said CFO Graham Sadler will step down.

The search for a replacement will begin immediately, and Sadler will stay until one is found, New York-based BGC said Wednesday in a statement.

Today’s Zaman reports that Borsa İstanbul (BİST) Deputy President Hüseyin Zafer has been appointed acting head of BİST following the resignation of BİST President İbrahim Turhan (reported yesterday) in order to run for Parliament in the upcoming elections. Zafer has been working at BİST since May 2013 and has been the deputy president and CFO of BİST.

Reuters reports that Andrew Coyne, CEO of Icap’s Traiana, has left the organisation to pursue other opportunities, according to a source close to the firm. Nick Solinger, former head of product strategy and marketing at the ICAP-owned firm, will rejoin the firm after having left to pursue other opportunities less than a month ago. Solinger had been with the firm more than a decade prior to his departure last month and led the team that launched the firm’s flagship trading network, Harmony.

Reuters reports that SGX’s Lawrence Wong will relocate to China and continue to head the listings business. The exchange has established a wholly foreign-owned enterprise in China and will set up branches in Shanghai and Beijing, in addition to its current representative office in Beijing. SGX press release here.

SEC announced that Heather Seidel has been named Chief Counsel for the SEC’s Division of Trading and Markets. Ms. Seidel, an Associate Director in the division’s Office of Market Supervision, will begin her new role immediately.

FINRA announced that Erozan Kurtas will join the organization as Head of Advanced Data Analytics and SVP. Mr. Kurtas, who will report to Chairman and CEO Richard Ketchum and EVP for Regulatory Operations Susan Axelrod, will start at FINRA on February 23.

MCX Might Announce Its New MD On Friday
Rajesh Bhayani – Business Standard

Balasubramaniam V, presently chief business officer at BSE, is said to be the frontrunner. He was co-founder of Marketplace Technologies, a front-end technology platform, promoted six years earlier by Ashish Chavan, now MD of BSE. He later sold this technology to BSE.

MCX has been without an MD since May 2014, after Manoj Vaish left.

Financial Calendar

Today

Record Date MarketAxess $0.20 Quarterly Dividend

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

Analyst Notes

Betfair “Hold” Rating Reiterated By Deutsche Bank – GBX 1,499 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.

Other stories

Testimony Of CFTC Chairman Timothy G. Massad Before The U.S. House Appropriations Committee, Subcommittee On Agriculture, Rural Development, Food And Drug Administration And Related Agencies, Washington, DC
MondoVisione

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