February 20 2015

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PLY: Interesting day as DB1 could have a ‘through-Bahn” to Shanghai and BGC looks close to an agreed deal with GFI. In a varied day there is even mention of weather futures…

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.

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SEE Link Project Brief
Greater Mekong Subregion Exchanges Project
ASEAN Exchanges Project
Bulgarian SE Sale
ICE – SMX Deal
DFM – ADX Merger
BATS – Direct Edge Merger

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Public Markets

BGC Nears Deal To Buy Brokerage Firm GFI (subscription)
Liz Hoffman – Wall Street Journal

BGC said it has “actively engaged” in takeover discussions with GFI and expects to reach a friendly deal to acquire the company for $6.10 a share, or about $778 million. A deal would come weeks after GFI shareholders rejected a lower-priced sale to exchange operator CME.

BGC Partners press release here.

Read our Premium brief: BGC – CME – GFI Brief.

DB1 Sees Deal Soon With SSE
Reuters

DB1 aims to conclude a wide-ranging cooperation agreement with the Shanghai SE (SSE) soon, completing a key element to its Asian expansion plans, Deputy CEO Andreas Preuss said.

The deal would give Chinese investors direct access to the German and European financial markets, while German-Chinese financial market infrastructure would be strengthened to build cooperation between the two countries and aid the internationalisation of China’s currency, the renminbi.

PLY: Sounds like a plan for “The through-Bahn…” to go with HKEx’s “through train.” Very interesting.

DB1 Sees Decision In U.S. Clearstream Suit Soon
Reuters

DB1 expects a decision soon in a U.S. legal battle involving its Clearstream subsidiary and had set aside 4.5 million euros ($5.13 million) in legal provisions at end-2014 in anticipation of possible fines or settlements, company officials said at a media briefing on Thursday.

Jeffrey Tessler, board member and head of the Clearstream division, said the subsidiary was a third party to the U.S. civil suit, not a direct target.

DB1 Edges Toward Start-up Market For Crowd-Funded Era
Reuters

DB1 is taking fresh steps to help start-up companies find potential investors, while stopping short of forming a full, entry-level market that could repeat the failures of the dot-com era.

After prodding by the federal government, the stock exchange operator said on Thursday it was exploring ways to expand the access of young technology companies to capital markets by creating a pre-market platform that can connect them with deep-pocketed investors.

Germany is home to some of the world’s most conservative investors, with polls consistently showing all but a small fraction shunning ownership of equities. Around 39% of investments are kept in savings and checking accounts.

PLY: An interesting potential return to small cap equities which when the dotcom crash festered no executive would support at board level for fear of carrying the can with Germany’s then somewhat irate shareholder caste who had taken the plunge during the dotcom bubble.

March Date Set For Gold Fix Switch (subscription)
Ese Erheriene – Wall Street Journal

The deadline for the gold fix to enter the digital age is nearing.

LBMA on Thursday said that the gold benchmark will be set via an electronic platform managed by ICE Benchmark Administration (IBA) beginning on March 20 (previously announced here).

The new LBMA Gold Price will be set twice daily–at 1030 GMT and 1500 GMT– in dollars, euros and sterling. It will replace the current private telephone conference between a group of four banks, the remnants of a cozy system that has existed since 1919.

ICE press release here.

IBA won the process tender for the gold fix last November.

If OTC Derivative Clearing Dispute Resolves, Could Volume & Liquidity Greatly Increase?
Gregg Wirth – Traders Magazine

PLY: Answer is clearly of course it will, as I have been explaining to clients for years, even when many others could not see how obviously likely this outcome is.

A Year After “Flash Boys”, HFT Lives On
Jeffrey Kutler – Institutional Investor

Private Markets

EBRD Promotes Innovation In Local Capital Markets Of Macedonia – €110,000 To Strengthen Regulatory Framework And Modernise Supervisory Standards Of Securities Exchange Commission
MondoVisione

Bitcoin Hack Report Suggests Inside Job (subscription)
Ben McLannahan – Financial Times

A group of hackers investigating the collapse of Mt Gox, the Tokyo-based bitcoin exchange, has lent weight to the idea that it was an inside job, publishing a report detailing the activities of an automated bot that appeared to game the fragile system by buying hundreds of thousands of coins with fake money.

The report by WizSec, a five-man security consulting firm, provides the clearest account yet of what could have happened at Mt Gox, which went bust almost a year ago saying it had lost track of 850,000 coins then worth almost $500m.

Bitcoin Hacks: Why Exchanges Don’t Insure Bitcoin Deposits
Kyle Torpey – Inside Bitcoins

With all of the bitcoin exchange hacks that take place on a regular basis, one has to wonder why certain consumer protections have not been put into place at the largest exchanges in the world. Traders will continue to use centralized exchanges that don’t offer any kind of insurance for bitcoin deposits because those traders want to have instant access to the trading engine for buy and sell orders.

Earlier this week China-based Digital currency exchange BTER announced that it has lost 7,170 bitcoins, or roughly $1.75 million at press time, in an apparent hack on its cold wallet system.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL flat.

Technology

Cinnober’s Australian Trading System Win Reinforces Swedish Tech Prowess
Roger Aitken – Forbes

ASX’s decision to select Cinnober to provide a major upgrade to the exchange’s trading architecture (reported here) – to replace an equities system from Nasdaq and an in-house derivatives platform with a common, multi-currency, multi-asset class solution – certainly cements the Swedish vendor’s reputation for cutting-edge exchange IT. But they’ve been blazing a trail globally for more than a few years now.

NYSE Begins ‘Integrated’ Feed Tests (subscription)
Waters Technology

NYSE made its testing environment for the NYSE and NYSE MKT (formally Amex) Integrated Feeds available from Feb. 19 to enable customers to ensure that their feed handlers are fully aligned to the feeds’ specifications. The datafeeds, which are scheduled to launch in the second quarter of this year, subject to approval from the US Securities Exchange Commission, combine NYSE and NYSE MKT data with data from other NYSE data services

Products

LME Eyes H2 2015 For Ferrous Launch (subscription)
Alice Attwood – FOW

LME has said it plans to launch cash-settled ferrous metals products including scrap and rebar contracts.

ICAP Global Broking Derivatives Data Included In Supplement No.46 Of The 2006 ISDA Definitions
ICAP

ICAP announced that its Global Broking price displays for CHF IRS, CHF single currency basis swaps and EONIA versus EURIBOR (EUR/EUR) basis swaps have been added to Supplement No.46 of the 2006 ISDA Definitions.

Trade Futures, Save The Planet
Mark Gilbert – Bloomberg View

With the world finally recognizing the need to do more to ameliorate the effects of energy production on climate change, financial markets can make a valuable contribution to the shift toward renewable sources. In the same way that the derivatives markets help farmers manage crop prices, futures contracts can help power producers offset the vagaries of the weather.

Career Paths

California Public Employees’ Retirement System (CalPERS) Board of Administration has elected the following chairmen and vice chairmen of key board committees:

Investment Committee – Henry Jones, Chairman; Bill Slaton, Vice Chairman

Other Investment Committee members are Michael Bilbrey, John Chiang, Richard Costigan, Rob Feckner, Richard Gillihan, Dana Hollinger, JJ Jelincic, Ron Lind, Priya Mathur, Theresa Taylor, and Betty Yee.

Pension and Health Benefits Committee – Priya Mathur, Chairman; Michael Bilbrey, Vice Chairman

Other Pension and Health Benefits Committee members are John Chiang, Rob Feckner, Richard Gillihan, JJ Jelincic, Henry Jones, Theresa Taylor and Betty Yee.

Finance and Administration Committee – Richard Costigan, Chairman; Dana Hollinger, Vice Chairman

Other Finance and Administration Committee members are Richard Gillihan, JJ Jelincic, Henry Jones, Bill Slaton and Betty Yee.

Board Governance Committee – Bill Slaton, Chairman; Richard Costigan, Vice Chairman

Other Board Governance Committee members are Michael Bilbrey, Rob Feckner, Dana Hollinger, Henry Jones and Ron Lind.

The Performance, Compensation and Talent Management and Risk and Audit Committees did not meet in February. They will choose their chairs and vice chairs at their March meetings.

Financial Calendar

Today

Record date TMX $0.40 dividend

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

Share Notes

NASDAQ OMX EVP Anna M. Ewing sold 20,028 shares Wednesday, February 18th at an average price of $49.74 (bargain $996,192.72). She now owns 64,541 shares. Mrs. Ewing’s regular sales are chronicled on this specific page.

Analyst Notes

LSE “Neutral” Rating Reiterated By Goldman Sachs – GBX 2,640 Target Price

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.

Crowdfunding

Final Canadian Crowdfunding Rules Could Be Published By Summer
Barbara Shecter – Financial Post

The Ontario Securities Commission said regulators in several jurisdictions are in the midst of reviewing comment letters received in response to crowdfunding rules proposed last year.

The next step is either final rules or a second comment period, if required.

Other stories

Opening Statement At The Proxy Voting Roundtable, SEC Commissioner Daniel M. Gallagher
MondoVisione
“Ensuring The Proxy Process Works For Shareholders” Speech By SEC Commissioner Luis A. Aguilar
MondoVisione

UK FCA To Investigate Competition In Investment And Corporate Banking Services Following Review Of Wholesale Markets
MondoVisione

FCA announced plans to launch its first wholesale market study into investment and corporate banking to assess whether competition in the sector is working properly.

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