February 13 2015

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PLY: BGC scents victory in the battle for GFI, while Lance Uggla steers Markit towards bank index businesses. Software tools aforethought amongst ICE and JPX to name but two… All Shanghai bonds to be traded via a CCP as ITG looks at a forex dark pool while CFTC study questions the legality of the HFT ping… FESE De La Vega prize is now open…

Meanwhile, our Premium service, has 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 via Exchange Invest Premium.

Latest briefs include:

DFM – ADX Merger Brief
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

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Public Markets

BGC Optimistic On GFI Deal (subscription)
James Rundle – Financial News

The CEO of BGC Partners has said that he believes its hostile bid for rival GFI Partners is set to succeed, ahead of a February 19 deadline.

PLY: The BGC bid must feel like Chinese water torture to Mickey Gooch, despite the fact that even in defeat he stands to make a small fortune but the loss of control is likely to be a blow… Read our Premium brief: BGC – CME – GFI.

Markit In Talks Over Index Units (subscription)
Sarah Krouse – Financial News

Markit CEO Lance Uggla is bullish on acquisition prospects for his firm in 2015 with a particular eye on index operations that large banks are looking to shed.

Read our Premium brief: Index Companies Deals Brief.

PLY: Markit has a war chest and banks have assets which sit on balance sheets perused by CFOs endlessly muttering mantras like “CRD IV” and “Basel III” – a lot of stuff could be for sale, given Markit’s close links to banks (several remain Markit shareholders), there could be significant scope for deals.

ICE’s Sprecher Sees SuperDerivatives Acquisition As Serving Key Growth Area
Renee Caruthers – FierceFinanceIT

Jeff Sprecher on the acquisition of SuperDerivatives last year:

“We have just put the sail of our sailboat into the winds of a massive trend, which is the consumption of more data and more use of indices as the benchmark transactions.”

He said the SuperDerivatives acquisition not only helped fill out ICE’s data set with additional data in fx and IRS, the SuperDerivatives platform will also be a useful vehicle for distributing new data products. The company is working on repackaging and enhancing its data offerings for distribution through the SuperDerivatives Web-based desktop.

PLY: As a push to wrap data in a value additive package, as opposed to just pushing prices back to those who made them at an extended clip, the Super Derivatives acquisition has always made enormous sense to help grow ICE revenues…

JPX Eyes Data Business Push (subscription)
Philip Stafford – Financial Times

Japan’s main exchanges operator plans to build a corporate information business to diversify its revenues while its desire to press into commodities markets remains frustrated by political deadlock.

India – FMC Urges Finance Ministry To Reduce CTT
Ram Sahgal – The Economic Times

FMC urged the finance ministry to remove or reduce the commodity transaction tax (CTT) in the forthcoming budget because it has severely hit trade volume in the decade-old commodity futures market.

PLY: If anybody were listening in the regressive European group keen on an FTT, they would note how the CTT damaged India.

Euroclear & Peru In Landmark Agreement To Develop International Link
MondoVisione

PLY: Another useful Euroclear link, this time from the Belgian lowlands to the Andean heights of Peru.

Private Markets

CFTC’s Division Of Market Oversight Extends Conditional Time-Limited No-Action Relief To Australian-Based Trading Platform Yieldbroker Pty Limited
MondoVisione

Autorité des Marchés Financiers: Virtual Currency ATMs And Trading Platforms Must Be Authorized
MondoVisione

In Québec, businesses operating a virtual currency automated teller machine or a platform for trading virtual currency must obtain a licence issued by the Autorité des marchés financiers (the “AMF”) pursuant to the Money-Services Businesses Act (the “Act”).

Special Section: FTI, NSEL, India at the Crossroads

PLY: FTIL flat, MCX up 2%.

NSEL Pursued Illegal Contracts Sans Any Risk Mgmt In Place, Says FMC
dna India

NSEL allowed defaulting companies to trade without margin money and even gave corporate guarantees to banks for financing them, FMC told dna…

“Therefore, it is the responsibility of NSEL to take all possible measures against the defaulters in terms of its bye-laws and business rules. As a supervisory authority, the Commission has taken a series of initiatives to activate the machinery of NSEL to effect expeditious recovery,”

Technology

First Derivatives Raising £15.3M To Accelerate Big Data Plans
Ron Finberg – Forex Magnates

First Derivatives’ expansion of “big data” services to enter new markets with the launch of Delta Marketing Cloud followed stake increase in Kx Systems (reported October 2014).

Now First Derivatives will raise £15.3 million in a secondary placement of 1,177,003 shares at £13 per share undertaken by Charles Stanley Securities and Goodbody, with shares sold to new and existing institutional investors.

Barclays To Launch Fintech Accelerator Program In New York
Automated Trader

The Barclays Accelerator, powered by Techstars, will open in New York in July 2015. Ten companies will participate in thirteen weeks of intensive networking, mentoring and development.

Products

China Clearing House To Expand Net Clearing Trial To Help Develop Bond Market
Reuters

The Shanghai Clearing House will adopt the CCP clearing mechanism on a trial basis for all bond and repurchase transactions in the Shanghai-based interbank bond market starting March 30.

Earlier this week China announced that it is studying the possibility of launching a scheme linking the onshore and offshore bond markets.

Read our Premium Briefs: HKEx – SSE – Stock Connect Brief Part 1, Part 2 and Part 3.

ITG Plans FX Dark Pool Launch (subscription)
Sarah Krouse – Financial News

Investment Technology Group (ITG) is planning to launch a new fx dark pool by the end of the year, anticipating a structural shift in the currencies market and institutional demand for a venue that keeps buyer and seller identities private.

PLY: An intelligent idea which ought to combine with ITG’s many core skills. As I won’t tire of remarking, the forex market needs enormous reform – and yet it will be much faster to change than, say the Bond market where many new entrants are in danger of pinning their trust in judicious measures of hope as opposed to logical judgement.

India – Hurdles Ahead For Common Clearing Of Commodities
Rajesh Bhayani – Business Standard

The department of economic affairs had proposed setting up of a Common Clearing Corporation for all national commodity exchanges. An industry official said, “There are inherent risks in the one common clearing corporation for all exchanges because any problem that occurs in the clearing of one of the member exchange could affect the industry as a whole and potentially cause systemic risk.”

PLY: Entrenched monopoly statist thinking. Alas in their pausing to govern in many respects (while anticipating victories to deliver an upper house majority) the BJP government of Mr Modi looks dangerously exposed as the reforms are not remotely appearing urgently enough. These sorts of daft centralising moves make no sense for India to develop a dynamic competitive economy and the fact they are even being discussed demonstrates the inherent waste of government money which political / regulatory classes are prone to effect.

Career Paths

SharesPost announced that founder Greg Brogger will rejoin the company as CEO, effective immediately. Mr. Brogger founded SharesPost in January 2009 and served as its CEO until March 2013. He spent the last 18 months building and successfully launching the NASDAQ Private Market, a joint venture between SharesPost and NASDAQ.

FOW reports that Euronext hired David Meederink as a senior product developer in Amsterdam, reporting to Adam Rose.

SEC announced that Pamela C. Dyson has been appointed as the SEC’s Chief Information Officer (CIO) in charge of overseeing the agency’s information technology functions.

Maasland Steps Down From KCG Role (subscription)
Tim Cave – Financial News

Albert Maasland, a senior UK executive at KCG Holdings, and a former European CEO of the group’s legacy Knight Capital business, is stepping down to take on a non-executive role with the broker.

Coquest, one of the largest introducing brokers in the U.S. derivatives markets, announced that G. Maxwell Eagye will join the firm as a MD to further develop Coquest’s managed futures and brokerage businesses. Press release here.

Charles Schwab Seeks New CFO
Jed Horowitz – Reuters

Charles Schwab is searching for a new CFO to replace Joe Martinetto, who will switch to a different role later this year, CEO Walt Bettinger said Thursday.

ASX Chief’s Job At Hand Amid Talks He May Be Next ANZ Chief
Stephen Johnson – Herald Sun

The ASX CEO has downplayed speculation he might be named the next CEO at ANZ.

Elmer Funke Kupper says his focus is on his role running the stock exchange.

According to market speculation, ANZ directors have begun searching for a successor to high-profile CEO Mike Smith, who stepped into the post more than seven years ago.

Speaking as he released ASX’s H1 results on Thursday, EFK downplayed rumours he could head the banking heavyweight.

“I can only smile when I read that in the paper,” he said.

“What I’m excited about is what we’re doing here and nothing else.”

PLY: It has to be said that as ASX CEOs tend to be passengers to the prevailing linear mantras of cost cutting and protectionism, a change of ASX CEO probably doesn’t do much anything to the business. The impact of such a CEO on ANZ could be more significant of course.

Financial Calendar

Next week

SEC Advisory Committee on Small and Emerging Companies – public meeting by conference telephone call
ESMA open hearing in Paris on the issues set out in its Consultation Paper on MiFID II/MiFIR published in December 2014
SEC roundtable to explore ways to improve the proxy voting process – see agenda here.
NZX 2014 full year financial results
Record date TMX $0.40 dividend

New announcement

CFTC announced that the Energy and Environmental Markets Advisory Committee (EEMAC) will hold a public meeting on February 26, 2015 from 10:00 am to 4:00 pm at the Commission’s Washington, D.C. headquarters at 1155 21st Street, NW, Washington, DC 20581.

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

Share Notes

CME Chairman Terrence A. Duffy sold 30,875 shares Wednesday, February 11th at an average price of $94.55 (bargain $2,919,231.25). He now owns 111,124 shares.

Other stories

Study By CFTC Official Questions Legality Of HFT Practice
Eric Garcia – MarketWatch

An official at CFTC has authored a study questioning the legality of a common practice by HFT firms.

The study, written by Greg Scopino, who works in the Division of Swap Dealer and Intermediary Oversight for the CFTC, argues that the activity of high-speed pinging — the action of entering small marketable orders to learn about larger hidden orders in dark pools — might be a violation of the Commodity Exchange Act.

PLY: Interesting…

Canadian Securities Regulators Seek Comment On Derivatives Rule Relating To Mandatory Central Counterparty Clearing
MondoVisione

ASIC Amends Rules On Trade Reporting Obligations For OTC Derivatives Following Industry Consultation
MondoVisione

Testimony Of CFTC Chairman Timothy G. Massad Before The U.S. House Committee On Agriculture, Washington, DC
MondoVisione

FESE – De la Vega Prize 2015: Competition is open!
FESE

The Federation of European Securities Exchanges (FESE) will award the Josseph de la Vega Prize 2015 for an outstanding research paper related to the securities markets in Europe.

Papers about current developments in European securities markets are particularly welcome. The paper may refer to any of the following topics:

European financial markets, including but not limited to:

Capital Markets Union, Financing for SMEs through the Capital Markets
Primary Markets (IPOs and listing, public bonds)
Secondary Markets (liquidity, transparency, efficiency)
The Growth in the Size of Capital Markets
Access of Different Types of Investors to Capital Markets
Impact of Market Microstructure on Issuers and/or Investors
Benchmarks and Market Indicators
Market Data and Price Formation
Fairness, Safety and Integrity of Markets

The winner(s) will be awarded the prize at the gala dinner of the FESE Convention 2015, which will take place on Wednesday, 17th June 2015 in Oslo in the presence of high-level officials and industry representatives from around the world. In addition, the winner(s) will be invited to attend the FESE Convention 2015 on Thursday, 18th June in Oslo.

The prize maximum amount awarded will be EUR 5,000.

The deadline for the submission of papers is Sunday, 19th April 2015, before midnight (CET).

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