February 23 2016

elb2In the Blockchain gold rush (“Revenge of the Y2K retainer-eating zombies”), too many are still clearly struggling to work out which part of the body has the bra clasp attached to it. (Actually identifying & unhooking said piece of intricate engineering is still many sprint-fumbles away in the project timetable – besides don’t tell them yet…but it’s been distributed…let’s see how long it takes them to work it out). Thus I salute a fellow ‘pithmeister,’ Clearmatics CEO Robert Sams who can actually explain Blockchain while working on it. This gem has made my day in an excellent IB Times article:

“What does a smart contract mean to you? If it’s just server-run automation of some contractual obligations, then the technologies run by clearing houses have been doing smart contracts for decades. For that matter, so have vending machines.”

Cue collateral damage amongst the clueless bandwagon jumpers (BWJs – hey this discussion needs an acronym) who say “oh it’s complicated you need an expert” and then inexpertly intermediate themselves. Actually that is probably wrong, the BWJs are already at their whiteboards scripting a CCP vending machine, “dispenses soft drink collateral without a waterfall” as a marketing slogan….

Thanks to all the readers noting that the Exchange Invest coherent ledger with a no nonsense approach to Blockchain balderdash is paying dividends – and in answer to various organisers, no, I am not speaking at your Blockchain conference unless you are paying. Time is money on or off the distributed ledger.

In other news, IEX, the venue some vested interests claim nobody wants, just turned out to be the second most popular alternative platform in the USA last week. That ought to help the SEC see the light in this case, as opposed to endorsing some dank & dark corridors down which orders fear to tread for fear of low latency mugging.

For those who seek light at the end of the unbundling tunnel comes a useful app to asses & validate the spend while, as we race to pixel, news drops into my inbox of an excellent deal to make the superb SMARTS system even more of an engine for compliance, surveillance & all-round marketplace above-boardery.

Public Markets

IEX Now No. 2 Private U.S. Stock-Trading Venue

John McCrank – Reuters

When it began, IEX averaged just over a million shares per day. In the week beginning Feb. 1, IEX executed slightly under 600 million shares, up from just over 512 million the prior week, according to FINRA.

That made IEX the second-largest ATS, out of 37, surpassing Credit Suisse, with just over 566 million shares, down from around 621 million the week before. UBS held the No. 1 spot, with nearly 746 million shares.

PLY: Brilliant statistics and plaudits all round to Brad Katsuyama and the IEX team for making what is a hugely elegant point via significant volume.. For a market that apparently has some form of brutal flaw (if we are to take the word of some hugely conflicted self-interested parties into consideration), IEX appears rather spectacularly popular methinks.

Thus the IEX story now reads: “From nothing to one of the biggest markets for stock in the US in little more than what seems the blink of an eye, IEX…” – and complete according to whether exchange regulation follows or not. Imagine how that sentence ends if the SEC blinks.

 

Tired of Boogeymen Portrayals, Speed Traders Take to NYSE Floor

Annie Massa – Bloomberg

Automated traders have an image problem. What better way to address it than to set up shop in one of the most iconic spots in global finance: the floor of NYSE.

PLY: Bloomberg whitewashes the HFT industry without much examining the vast differences in how some go about certain strategies as opposed to others. Low latency deadlines clearly don’t allow for thoughtful reflection, alas.

 

Chinese Investors Welcome New Regulator, Await New Regulations

Pete Sweeney & Ryan Woo – Reuters

China’s new securities regulator Liu Shiyu, a former central banker, has a tough job on his hands…

PLY: The limitations of government intervention seemingly still not understood by the blob, expect a lot of “don’t just sit there, do something” edicts to flow while the populus demands one more bubble…

Private Markets

Serbia, Slovenia Stock Exchanges To Join Regional Platform

Reuters

Serbia and Slovenia’s stock exchanges will join SEE Link, an EBRD-supported regional network for trading securities that will help to integrate domestic stock markets which was started by the Bulgarian, Macedonian and Croatian stock exchanges.

QV Premium: SEE Link Project Brief.

PLY: A good move, clearly Slovenia being acquired by Zagreb makes it obvious that it would join while Serbia is in desperate need of liquidity but at the same time, the government still needs to help encourage the stock market to function on all fronts.

 

A2X Makes Headway In Exchange Licence Bid

Phakamisa Ndzamela – BDlive

A2X, a stock exchange licence applicant, has become the third South African company to have its application elevated to public comment stage by the Financial Services Board (FSB), following 4 Africa Exchange and ZARX.

A2X CEO Kevin Brady said most of the applications related to bringing issuers on the over-the-counter market into the regulatory net whereas A2X had a different model, based on the European MTF model.

A2X is led by Mr Brady, a former MD of securities at Investec; Gary Clarke, a former JSE company secretary; and Neal Lawrence, who was head of information technology at UBS and an IT principal at Absa Capital.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX down 1%, FTIL down 2.5%.

Technology

Nasdaq & Digital Reasoning Establish Exclusive Alliance to Deliver Holistic Next Generation Surveillance & Monitoring Technology

Nasdaq

PLY: Great concept announced as we race to pixel: SMARTS, the brainchild of Professor Mike Aitken which was acquired by NASDAQ in 2010, will be enhanced through this exclusive partnership with the brainiacs of Digital Reasoning from Nashville, to deliver a holistic electronic communications & surveillance solution. Brilliant in so many ways – and not just accelerating latency identity of criminal intents behind trading activity but also the ability to deliver fewer false positives in the battle against malfeasance. An excellent deal with NASDAQ investing in the ongoing Digital Reasoning series D round targeting $18.6 million on top of circa $34 million already raised from shareholders including Credit Suisse & Goldman Sachs. Exciting times for Valerie Bannert-Thurner and her NASDAQ Risk & Surveillance team.

 

Eurex Trading Suspended Due to Tech Issues

Waters Technology

First reported on EUREX website 11:09 a.m. CET Eurex T7 system experiencing technical issues…trading instrument state opening auction at 12:45 p.m. and trading instrument state continuous at 12:50 p.m.

 

DB1 & Vienna SE Extend Trading Technology Agreement

MondoVisione

Vienna SE will continue to use DB1’s trading technology. Both exchanges extended their contract by a further six years, at least until 2021. The co-operation partners of Vienna SE will also use DB1’s trading infrastructure.

PLY: DB1 doing well in terms of renewals, confirming Vienna a week after Dublin…

 

Frost Consulting Launches Valuation & Budgeting Software For Investment Research Ahead Of MiFID II

MondoVisione

PLY: Brilliant idea from Neil Scarth’s consultancy – a piece of software which helps manage & value investment research before the great unbundle hits the MIFID-sphere.

 

JPMorgan Quietly Tests ‘Blockchain’ With 2,200 Clients (subscription)

Emily Glazer – Wall Street Journal

J.P. Morgan is quietly testing Blockchain technology on U.S. dollar transfers between London and Tokyo, part of an effort to boost its spending to deal with emerging threats from Silicon Valley.

PLY: Testing so “quietly” that the Wall Street Journal is broadcasting the news? Well at least the data protocols are distributing I suppose… Interesting place to try as I would presume a lot of such transfers are just internalised and then settled daily between the two branches?

 

International Securities Regulators Commit to Blockchain Research Effort

Stan Higgins – CoinDesk

PLY: Blockchain remains on the agenda everywhere. However distribution of elucidation is not broadly available outside a few ledger domain experts & now the BWJ (“Bandwagon Jumpers” – keep up at the back!) vendors of ignorance will be eagerly distributing their myopia amongst the regulators… #Worrying.

Products

HKEx To Offer Yuan Currency Futures, Gold Contract

Eduard Gismatullin – Bloomberg

The futures contracts will cover the Chinese currency’s exchange rates against the yen, euro, Indonesian rupiah and Malaysian ringgit. A yuan-denominated gold contract is also in the works.

 

EBS BrokerTec Sees Further Growth In eFix Matching

Finextra

EBS BrokerTec launched 12 new daily WMR fixes through the eFix Matching solution, with plans to provide electronic execution for all 24 hourly WMR fixes by the end of Q1 2016.

 

Ethereum-Inspired Clearmatics To Save OTC Markets From Eternal Darkness

Ian Allison – IBT

London-based Clearmatics, which uses a distributed ledger system inspired by Ethereum, is focused on bringing efficiency and transparency to OTC securities markets.

PLY: Quote of the day:

“”What does a smart contract mean to you? If it’s just server-run automation of some contractual obligations, then the technologies run by clearing houses have been doing smart contracts for decades. For that matter, so have vending machines”.”

You might not agree with it all (and of course the Blockchain BWJs will be eagerly making notes to catch up with the information herein) but this is well worth reading.

Indexes

EU’s Foreign Benchmark Equivalence Rules Under Fire (subscription)

Catherine Contiguglia – Risk

Market participants fear Europe’s proposed process for approving third-country indexes could be as drawn-out and politicised as its clearing house recognition framework, and could block EU entities from using common international benchmarks such as the S&P 500.

PLY: Again worrying wasteful behaviour from an entity which is an index of failure on the broad scale…

Career Paths

Livemint reports that Metropolitan SE, formerly known as MCX SE (MCX-SX), appointed Udai Kumar as full-time MD & CEO.

FN reports that Richard Balarkas, former CEO of Instinet Europe between 2008 and 2012, joined the board of BATS February 3.

PLY: Interesting, does that signal an end to Richard Balarkas’ ambitions to run another venue, or is it merely an interim stopping off point?

The Malaysian Insider reports that Bursa Malaysia has appointed Kuok Wee Kiat as a new Director to the Board of Directors of its subsidiaries, Bursa Malaysia Securities and its clearing house, Bursa Malaysia Securities Clearing Sdn.

FOW reports that Matthew Tagliani, a former executive director in CME‘s equity team, has joined European ETP provider, Source UK Services, as a MD.

Bloomberg reports that speed trader XTX Markets has hired Goldman Sachs director Jigar Patel to head its electronic commodities business.

MOEX will hold its AGM in late April 2016. The agenda will include the election of a new Supervisory Board comprising 12 directors.

Supervisory Board’s Nomination & Remuneration Committee has recommended that shareholders nominate and elect the following candidates to the Board:

Mikhail Bratanov, Head of Societe Generale Securities Services in Russia and CIS, Head of Securities Services Department at Rosbank, independent director.

Wang Yuan, independent director.

Sean Glodek, Member of the Executive Board of Russian Direct Investment Fund, NED.

Andrey Golikov, Deputy Chairman of the Supervisory Board, MOEX, NED.

Valery Goreglyad, Chief Auditor, Bank of Russia, NED.

Yury Denisov, Deputy Chairman of the Supervisory Board, National Clearing Center, NED.

Bella Zlatkis, Deputy Chairman of the Management Board, Sberbank, NED.

Anatoly Karachinsky, President, IBS Group, independent director.

Alexey Kudrin, Chairman of the Supervisory Board, MOEX, NED.

Duncan Paterson, independent director.

Rainer Riess, independent director.

Alexander Afanasiev, CEO, Executive Board Chairman, MOEX.

Of the 12 candidates recommended, five are considered independent in accordance with MOEX listing rules and the current Corporate Governance Code.

Duncan Paterson, independent director, has been recommended for nomination to the Supervisory Board for the first time. Other candidates are current Board members.

PLY: Duncan Paterson is also Chairman of GH Financials while it appears Niki Beattie is standing down from the MOEX board. It is not clear if Paterson is intended to directly replace Niki insofar as being the representative of the EBRD.

JPX, Tokyo SE, & Osaka Exchange decided on new executive officers, changes in titles of executive officers, and areas of responsibility under the new executive structure at their respective board of directors meetings, effective on April 1, 2016.

JPX, New Executive Officers: Hironaga Miyama, Atsushi Tabata.

Tokyo SE, New Executive Officers: Hiroyasu Ichimoto, Katsumi Ao, Atsushi Tabata

Retiring Executive Officer:  Senior Executive Officer Moriyuki Iwanaga (remains as JPX Senior Executive Officer)

Executive Officers with New Titles:  EVP Kiyoyuki Tsuchimoto, EVP Masaki Shizuka, Senior Executive Officer Yasuyuki Konuma.

Osaka Exchange, New Executive Officer: Atsushi Tabata

JPX Regulation, New Candidate for Standing Auditor: Shosaku Shimomura, effective after approval at the general meeting of members to be held on June, 2016

(Retiring Standing Auditor: Taro Takeda)

Financial Calendar

23.02 – CFTC’s Technology Advisory Committee Meeting

24.02 – NZX Preliminary 2015 Full Year Results

25.02 – WSE Annual Report 2015

25.02 – CFTC’s Energy & Environmental Markets Advisory Committee

26.02 – Record date TMX $0.40 dividend

New! – 03.03 – CFTC Public Roundtable Regarding the Residual Interest Deadline

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

Crowdfunding

LendInvest Expands Into Scotland

JD Alois – Crowdfund Insider

Other stories

‘London Whale’ Breaks Silence (subscription)

Lucy McNulty & Gregory Zuckerman – Wall Street Journal

 

IOSCO Plays Key Role In Responding To Global Securities Markets’ Challenges

MondoVisione

 

SIFMA Joins U.S. & EU Entities Urging TTIP To Include Full Coverage Of Financial Services To Address Market Fragmentation

MondoVisione

PLY: Signed by 13 organisations, pretty much all of which represent bankers alone…

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