February 12 2016

elb2TMX results profoundly disappointing. BATS flip flops on IEX as quis custodiet ipsos custodes data argument breaks out between incumbent exchanges and the sell side. Interesting NASDAQ Blockchain announcement from the world’s most efficient nation, Estonia. Encouraging news for Cambridge (England, not Mass) as CME foundation makes welcome grant to research alternative finance.

Meanwhile in Bigworld, Governor Chris Christie finds the campaign a bridge too far while Carly Fiorina alas won’t get the chance to run something arguably even more dysfunctional than her experience of the HP board…

Public Markets

TMX Q4 2015 Results


vs Q4 2014: revenue CAD 177.1 mln (USD 127.4 mln), down 3%, income from operations CAD 52.3 mln (USD 37.6 mln), down 22%, loss CAD 159 mln (USD 114.3), compared with net income of CAD 41.1 mln in Q4 2014.

PLY: The “transformation” meets “challenge” mantra cannot hide the fact that TMX needs help. Is the Eccleston transformation plausible, too little too late or en route to renaissance? We must hope it is the latter as once again the TSX and related cash markets prove more cyclical commodity plays than broad equity markets.

TMR Q4 2015 Results


vs Q4 2015 (IFRS Financial Measures): revenues USD 3.14 bln, down 2%, operating profit USD 503 mln, down 62%.

vs Q4 (Non-IFRS Financial Measures):  revenues USD 3.14 bln, up 2%, adjusted EBITDA USD 895 mln, up 16%.

PLY: Not much to wildly excite in the TMR results either alas.

Thomson Reuters To Auction IP & Science Business (subscription)

Matthew Garrahan – Financial Times

Intellectual property and science business up for sale in an auction that analysts say could fetch $3bn, as it focuses more on financial information products and services.


Exchanges Object to Brokers Gaining More Stock-Market Oversight

Annie Massa – Bloomberg

Only exchanges should be voting members on committees that govern things including market-data feeds and volatility safeguards called limit-up/limit-down, according to a Feb. 10 letter sent by NYSE, Nasdaq, CBOE, Chicago SE, ISE and OCC to Jeb Hensarling, a Texas Republican who is chairman of the House Financial Services Committee, and Maxine Waters, a California Democrat who is a ranking member.

Their request stands out for two reasons: market-data feeds are lightning rods of anger for brokers and investors, who argue exchanges are charging too much for them. Also, one of the biggest U.S. stock market operators — Bats — is notably absent from the list of firms that signed the letter. Bats has argued that market-data feeds do need oversight from firms other than exchanges.


`Flash Boys’ Market Loses Support From Bats

Annie Massa – Bloomberg

Bats withdrew support for the upstart venue’s bid, saying in a letter to regulators on Thursday that IEX made “gross misrepresentations” about the operations of competitors. IEX’s actions “call into question the applicant’s professional judgment,” Bats said in the letter to the SEC.

PLY: Heated arguments as BATS flip flop on IEX. Has the banker HFT shareholder tail wagged the management dog? Or did finally a sense of simpering injustice work its way through the BATS machine following that career ending CNBC interview for William O’Brien? Meanwhile, IEX CEO Brad Katsuyama has noted:

“It is clear that any exchange that prioritizes and sells speed will seek to block a new entrant that is creating a level playing field. When you compare the broad support that IEX has received to the narrow interests of exchanges and certain high-speed traders, it has never been more obvious why true competition is needed in the U.S. stock market.”


From February’s Trading Places: New Twist In The Debate Over HFT – Huw Jones


Batting for the HFT fraternity must be one of life’s increasingly stressful jobs as regulators rein in the “Flash Boys”.

PLY: Aquis banning HFT has caused some interesting discussion, here is a considered piece from the excellent Huw Jones discussing recent events on both sides of the Atlantic.


Shenzhen-Hong Kong Stock Connect Set To Be Delayed For Longer Due To Market Volatility (subscription)

Enoch Yiu – SCMP

The plan to connect HKEx and Shenzhen SE looks set to be delayed until at least H2 of this year, due to current market volatility.


CFTC Says Alleged Spoofer’s Trading Leads to New Complaints

Janan Hanna & Brian Louis – Bloomberg

CFTC asked a federal judge in Chicago to let it expand its probe of Oystacher and his firm, 3Red Trading LLC, after receiving complaints about his trades of Ten Year T-Note Treasury Futures. The CFTC is seeking to limit Oystacher’s trading while it sues him over claims he manipulated market prices by placing and canceling orders without intending to complete them.


Sebi Puts Rider For Commodity Derivative Reforms

Dilip Kumar Jha – Business Standard

Asks comexes to strengthen risk management before introducing options and allowing banks, Mutual Funds to trade.

Private Markets

MSE To Assist Small Businesses

Joseph Portelli – Chairman of MSE – Times of Malta

Malta SE (MSE) will soon be rolling out Prospects, a new capital markets platform geared towards offering a cost-effective admissions solution to SMEs looking to raise between €3-5 million in capital.

PLY: An excellent OpEd by MSE Chairman Joe Portelli outlining his new Prospects SME market. With Malta taking the EU rotating Presidency in H1 2017, it’s good to see the Maltese exchange leading the charge to help small businesses get funded. (QV that excellent NASDAQ CMU paper yesterday too, reviewed in Premium).


Ethereum Price Rise Being Led By Bitcoin Flight


Ethereum has been the “wonder” of the cryptocurrency world for a second week in a row. As the Bitcoin blocksize debate has caused disunity and discord amongst the bitcoin community, a fair amount of BTC money is flooding across into ETH.

Dividend News

TMX declared a dividend of $0.40, payment date March 11, 2016, record date February 26, 2016.

TMR board approved $0.02 annual dividend increase to $1.36.

Oslo Bors dividend NOK 4.15, record date May 18, 2016, payment date May 26, 2016.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL off 3% as the government edges towards a decision on the possible defenestration of the corporate code through forcibly merging NSEL into FTIL. The encouraging news is the government pushing on action via SEBI against defaulting brokers and immediate auctions of non-encumbered properties – hooray!

NSEL Crisis: Govt Asks Sebi To Act Against Defaulting Brokers

The Economic Times

Government has decided on immediate auction of non-encumbered properties while urging Sebi to take action against defaulting brokers.

Decision On NSEL-FTIL Draft Merger Order By February 15

The Hindu Business Line

The Ministry of Corporate Affairs is likely to take a call on the draft order to merge NSEL with FTIL, by the end of this week.

QV Premium: NSEL Scandal Brief – Part 16 and NSEL-FTIL Merger Brief.


Nasdaq’s Blockchain Technology To Transform Estonia’s e-Residency Shareholder Participation


Estonia’s e-Residency platform will be facilitating a blockchain-based e-voting service to allow shareholders of companies listed on Nasdaq’s Tallinn SE to vote in shareholder meetings.

PLY: Groovy. For those who like their government efficient, Estonia fits the bill. Debt/GDP is 10% and you can do most government interaction online. So it’s a 21st century nation while the neighbours (e.g. Poland) are still pondering the after effects of Copernicus; or they’re Russia, still brooding about the end of the USSR. Good move by NASDAQ to exploit their ownership of Estonia’s equity monopoly with this deal. While a lot of Blockchain startups appear to exude a whiff of hype seeking cash, NASDAQ keeps on distributing the good news. Oh and, again, if you missed it, they produced a cracking CMU white paper yesterday – see my review in Premium.


BBVA Increases Fintech Fund to $250 Mln


BBVA Spins Out Fintech Investment Arm (subscription)

Anna Irrera – Financial News

BBVA is spinning out its fintech venturing business and moving to a new strategy for backing such companies.


ASX CEO Says Monopoly Irrelevant With Blockchain

Shaun Drummond – SMH

ASX CEO Elmer Funke Kupper says an overdue decision on its clearing monopoly will be irrelevant if it replaces its settlement systems with the blockchain.

But Mr Funke Kupper said the need for clearing would largely disappear with a blockchain distributed ledger, as would the need to hold about $250 million in capital to cover failed trades.

“If you could settle the entire market real time there would be no need for clearing,” he said at the company’s half-year results on Thursday. However, because there will always be traders in time zones well behind Australia, there will never be a true real-time settlement system. QV Premium: ASX Monopoly – Brief – Part 3.

PLY: I think the most worrying issue is that the ASX has become irrelevant to a competitive Australian marketplace, leaving the capital markets / financial centre status of this great Commonwealth trailing as the monopolist does everything to shroud the marketplace in its reactionary cloak and keep eking out monopoly rent.


Deutsche Börse Working on Blockchain Prototypes

Daniel Palmer – CoinDesk

PLY: Blockchain: It’s the new black.

Sri Lanka CSE Calls Proposals For CCP Suppliers


Colombo SE is calling for RFIs inviting potential suppliers for the CCP system to be implement in early 2017.

PLY: Will Colombo make the great leap forward to real time?


P2P Lending Platform Bondora Opens API


Bondora has made its API publicly available in Europe for both retail & institutional investors.


ASX Eyes 2017 For First Precious Futures Launch (subscription)

Luke Jeffs – FOW

ASX will launch gold futures with the Perth Mint in 2017.

PLY: As previously discussed here.


NCDEX Looks To Relaunch Castor Seed Contracts

Business Standard


ICE Endex Results Of Gas Storage Auction



Treasury Market’s $220 Billion Black Box Lures Citadel, Virtu

Matthew Leising & Alexandra Scaggs – Bloomberg

Citadel Securities in November broke into a $220-billion-a-day segment… Computerized market maker Virtu Financial also is poised to enter a planned “all-to-all” venue that mimics exchange methodologies.

PLY: It’s the age of the exchange – even if some legacy players can’t see the wood for the trees.


FX Is Shrinking

Anirban Nag & Jamie McGeever – Reuters

Industry figures show the number of traders employed in Europe at the top 10 fx banks is down 30% over the last three years. Figures from the BoE and New York Federal Reserve last month showed that trading volume has fallen to its lowest level in three years.

The days when close to $6 trillion changed hands on an average day may never return…

PLY: Nope – the $6 trillion days will soon appear a tiny quantity but first we need transparent markets run via platforms and then forex will take off into a brave new world…


CBOE Releases Study On Russell 2000 Options-Based Benchmark Indexes



Methodology Of The Moscow Exchange Indices Calculation To Take Effect


Career Paths

ITG Canada recruited John Wassenaar as Trader & Hedge Fund Salesman.

IMF Executive Board Statement On The Managing Director’s Selection


Financial Calendar

New! 16.02 – ISE Mercury Launch

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

New! 23.02 – CFTC’s Technology Advisory Committee Meeting

New! 25.02 – CFTC’s Energy & Environmental Markets Advisory Committee

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

Share Notes

Oslo Børs VPS Holding bought 10,001 of its own shares at NOK 84.50. Oslo Børs VPS Holding has simultaneously sold 10,001 of its own shares at NOK 84.50 to employees in the group. New holding is 7,297 shares.

Analyst Notes

TMX Price Target Lowered By CIBC From C$58.50 To C$50.00 – “Sector Performer” Rating

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


Two Equity Crowdfunding Mergers In One Day

Credit Today

10 February saw equity crowdfunding platform Growthdeck merge with Scottish crowdfunder Squareknot, followed later in the day by the merger of equity crowdfunding platform InvestingZone with SME financial adviser Acceleris Capital.

Other stories

CME Foundation Grants $1 Million to Support the Study of Alternative Finance by the University of Cambridge Judge Business School


PLY: What an excellent idea! CME Foundation announces its largest ex-US grant to analyse crowdfunding, P2P lending et al. This sector is vital for the world – and acutely important to Europe’s declining economy. After a remarkable, challenging week for markets week Exchange Invest ends on a very happy note thanks to the CME Foundation’s foresight.

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