February 25 2015


SGX CEO Magnus Bocker to step down at contract end (June) following significant speculation. Euronext completes first year of independence a very very different animal to the former shambles housed under the value destructive Duncan Niederauer era of NYSE. Healthy improvement at WSE. WSJ discusses GFI bid in a manner likely to incite class action? The old lady gets digital: Bank of England endorses HFT. New owner finalised for America’s NSX. Back in the people sphere, as anticipated, Chris Concannon succeeds Joe Ratterman as BATS CEO as latter is (re-)elevated to Chairman.

Oh and there is more, a lot more, happy scrolling…

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ICE – NYSE Euronext Deal Brief – Part 1
ICE – NYSE Euronext Deal Brief – Part 2
MILA Exchanges
SEE Link Project
Greater Mekong Subregion Exchanges Project
ASEAN Exchanges Project

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Public Markets

Euronext 2014 Financial Results

Third party annual revenue increased by +9.0% on an adjusted basis to €458.5 million (FY 2013 adjusted: €420.5m) or +18.6% on a reported basis, driven by sustained listing activity and strong revenues from cash trading and from market data businesses throughout the year. This revenue includes €36 million from the derivatives clearing contract with LCH.Clearnet which came into force on 1 April 2014 (adjusted clearing revenue for 2013: €33.8 million).

As a result of this strong activity combined with a reduced cost base, the EBITDA margin increased strongly in 2014 to 45.8% compared to 41.5% in 2013 adjusted and reported. In 2013 this number included €95 million of ICE transitional revenue and other income while these revenues were limited to €34 million this year.

Full year 2014 operating profit before exceptional items was €208.8 million, a 7.6% increase compared to last year on an adjusted basis.

PLY: For something which was born from the vacuum which passed as NYSE’s group management, Euronext clearly seems to be on the right path for the first time in years. Costs being reduced, revenues increasing and customer focus being praised by the end users… It’s good to see the business back… well… as a business. More please!

WSE 2014 Financial Results

Record-high sales revenue of PLN 317.6 mln (USD 86.7 mln), up 11.9% YoY. The operating profit increased by 14.1% to PLN 135.4 mln (USD 37 mln). The net profit decreased moderately YoY PLN 112.3 mln (USD 30.7 mln) in 2014 v. PLN 113.5 mln (USD 37.5 mln) in 2013.

PLY: A pity to see Y/Y net numbers slightly decreasing although last year involved a CEO change and time spent dodging the Viennese merger bullet which would have been a blight on the still barely adolescent markets of the New Europe. Nevertheless, in such a volatile developing environment clearly bad decisions or just pure indecision means GPW’s position is not assured although Warsaw leads the field between the Oder and Moscow by a long margin. Here’s hoping it can continue. I remain a fan of the Warsaw Exchange and its many successes since Wieslaw Rozlucki refounded it in the early days post-Communism.

Where Did That Extra 10 Cents Go In The GFI Buyout? (subscription)
Ronald Barusch – Wall Street Journal

Shareholders of GFI Group who sell their shares into BGC Partners’ now “friendly” tender offer can be forgiven for thinking the check they get in about a week is a little light–to the tune of an aggregate around $13 million. They will get the $6.10 per share BGC is currently offering in its tender offer. But last month, BGC was willing to pay $6.20 for a similar deal. The GFI board, in the midst of questionable governance judgments, let that go to continue pursuing a $5.85-per-share deal with CME, under which Michael Gooch, GFI’s Executive Chairman, and Colin Heffron, GFI’s CEO, were to buy GFI’s interdealer brokerage business.

PLY: This may prove to be the most expensive dime in market infrastructure history whether corporately or privately for the management in situ at the time.

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

BAP Sees PDS Sale To PSE Soon
Business World Online

The Bankers Association of the Philippines (BAP) could sell its stake in the Philippine Dealing System Holdings Corp. (PDS) to Philippine SE (PSE) “within the next three months”, which will pave the way for the long-delayed combination of the country’s equity and bond markets.

PLY: In the draft notes, I see Florin has added “The Brazilians should take lessons from these guys – the true masters of soap opera.” I am minded to agree. At this rate London Heathrow might even get a third runway before the PSE acquires the local bond exchange.

Read our Premium brief: PSE – PDEx Merger Brief

Stock Connect Short-Selling Branded Restrictive
Asian Investor

Read our Premium briefs: HKEx – SSE – Stock Connect BriefPart 1Part 2, Part 3.

Icap Calls For New Whistle-Blower Protection (subscription)
James Rundle & Sarah Krouse – Financial News

Icap has called for firms that report suspicious activity on the part of others in the fixed income, currency and commodity markets to be protected under an institutional-level whistle-blowing mechanism.

Dark Pool & HFT: BoE Says High-Speed Trading Helps Markets
M Rochan – International Business Times

HFT may not be all that bad for the markets, according to a Bank of England (BoE) report. Electronic trading makes stock markets more efficient by allowing them to react more quickly to incoming information, the Bank of England working paper concluded.

BoE Says Markets Review May Include New Regulation
Huw Jones – Reuters

A British review of conduct in currency, fixed income and commodity markets won’t impose uniform remedies but may introduce new rules:

BoE Warns Of ‘More Intrusive’ Regulation (subscription)
Philip Stafford – Financial Times

UK authorities may introduce “more intrusive” regulation to police markets if asset managers and corporations are unable to shop around for alternatives to counterparties they felt were engaged in abusive market behaviour, a senior BoE official will warn on Wednesday.

From Darkness Cometh Light? Some Early Messages From The Fair And Effective Markets Review Consultation Responses – Speech By Andrew Hauser, Director Of Markets Strategy, Bank Of England, And Head Of The Fair And Effective Markets Review Secretariat At AFME’s 10th Annual European Market Liquidity Conference, London

PLY: Proof in title alone that clarity and simplicity eludes the bureaucracy.

Private Markets

National Stock Exchange Holdings Inc. Completes Acquisition Of National Stock Exchange, Inc.

National Stock Exchange Holdings Inc. (Holdings) announced that it has completed its acquisition of National Stock Exchange, Inc., (NSX) a national securities exchange

Read our Premium brief: Exchange Deals Brief.

SGE Chairman: India Will Become SGE’s Largest Partner
Torgny Persson, Vincent Tie & Koos Jansen – Bullion Star

Shanghai Gold Exchange (SGE) Chairman Xu Luode presents the SGE’s international ambitions.

Pakistan – Demutualization Plan: There’s No Need For LSE, ISE: Finance Secretary
Sohail Sarfraz – Business Recorder

Secretary Finance Dr Waqar Masood has said that stock exchanges are moving towards integration under a demutualization plan, as all investors should have the facility to trade through a single exchange, ie, Karachi Stock Exchange (KSE).

PLY: Without competition in the market environment, how can Pakistan fail to be more innovative as a developing economy? With 180 million people inhabiting the 36th largest nation on Earth, clearly a one size fits all exchange is ideal. (Seriously, it remains a tragedy to see nations stifled by such government ignorance).

New European Carbon Exchange Bets On Revival Of Spot Trading
Kelley Hamrick – Ecosystem Marketplace

The European Environmental Markets, a new spot trading platform for European Union Emissions Trading System participants, is betting the problems that have plagued the granddaddy of carbon trading programs are a thing of the past. CEO Adrian Rimmer hopes the launch of the new platform marks a new wave of investing and interest in the European market.

PLY: With the head of the IPCC finally resigning, the east of the US blanketed under snow once more and a welter of academic research demonstrating that global warming doesn’t exist… Here comes another platform to create a spot market in the EU, a space vacated after Bluenext disappeared amidst a welter of allegations which mostly involved rather untoward shuffling of money in, let us say, contentious directions. Here’s a new player, the EEM, to revive what ended up as the toxic spill of environmental markets.

Italian Borders Successfully Coupled – A Further Significant Step Towards An Integrated European Power Market

The Italian Borders Market Coupling has successfully launched. The Italian-Austrian, Italian-French and Italian-Slovenian borders have been coupled with the Multi-Regional Coupling (MRC), thus linking the majority of EU power markets – from Finland to Portugal and Slovenia.

PLY: An excellent initiative is delivered, La Ronde electrique est arrivé.

EU Reforms Boost European Carbon Market (subscription)
Christian Oliver – Financial Times

European parliamentarians made a significant step towards repairing the EU’s ailing carbon market on Tuesday, setting a 2018 start date for a key reform that should help the price of allowances recover from rock-bottom levels.

PLY: Fudges, backroom deals, weak compromises – a typical EU botch up which we can expect to have all manner of unforeseen consequences and probably won’t work. It looks like a market structure with a puppeteer behind the scenes manipulating the price in true blob hypocrisy. As ever, MEPs delude themselves into thinking they have fixed something – clearly Brussels dictionaries have a page interpolated with “fixed” having the same meaning as “agreed.” QV Greece: Purgatory Postponed my latest Op-Edge column.

EGX: New Development In OTC Market

PLY: Unlisted securities market segment now electronic.

Bucks To Bitcoin: Top Exchange Platform Fees Compared
Yessi Bello Perez – CoinDesk

After compiling the data on the fees of seven platforms, we put together this comparative chart showing the fees typically incurred by a $1,000 transaction.

Dividend News

ENX – a €0.84 per share dividend will be proposed for approval at the AGM on 6 May 2015, representing a 50% payout ratio on net profit.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX up 6% as optimism remains around the new management while FTIL is down 1%.

FTIL Appeals To Shareholders To Oppose NSEL Merger Draft Order
Ashish Rukhaiyar – Livemint

In a letter sent to BSE, FTIL chairman Venkat Chary said that all shareholders are entitled to “object to the forced amalgamation of NSEL with your company (FTIL) by exercising your right of opposition under Section 396 of the Companies Act, 1956.”

PLY: And they are quite right too. This is the worst of all possible solutions to a mess which the Indian bureaucracy appears unwilling, or incapable, of resolving.

Read our Premium brief: NSEL-FTIL Merger Brief.

FTIL Appeal Adjourned
Business Standard

The Securities Appellate Tribunal will hear next month FTIL’s appeal to SEBI (adjourned to March 19th).

Restrain NSEL From Collating Client Data, Investor Group Tells Panel
Ashish Rukhaiyar – Livemint

A bitter battle is brewing between NSEL and a group of investors involved in the payments crisis at the exchange with the latter requesting the high court committee (HCC) to restrain the bourse from activities related to collecting client data.

Gujarat HC Refuses To Intervene In NSEL’s Multi-Crore Scam
Times of India

Gujarat high court has refused to intervene in the NSEL scam involving NK Proteins, who is the largest defaulter. The HC has refused to entertain the petitions challenging the Mumbai police’s notices for attachment of properties in Gujarat.

PLY: “In stasis, resolution?” could become a motto for Indian courts…


CFTC Provides Notice Of The Reopened Comment Period For Its Rulemaking Proposals On Position Limits For Physical Commodity Derivatives & Aggregation

Nasdaq Nordic Introduces Company Fact Sheet, Powered By Morningstar

Nasdaq announced that it has selected Morningstar, to produce fact sheets for its listed companies in the Nordics and Baltics. Through this initiative investors are given access to key financial data for the more than 800 companies traded on Nasdaq’s Nordic and Baltic markets.

PLY: A useful starting proxy in English which can only help investors discover some intriguing SME and mid cap properties listed in the Scandinavian markets and particularly the Baltics.

MarketAxess Debuts EU Bond Tapes (subscription)
Tim Cave – Financial News

MarketAxess has begun providing the first intra-day trade tapes for European bonds in anticipation of new EU rules forcing greater transparency on the fixed income markets.

PLY: Very interesting and good work by marketAxess to try to deliver a unified view of pricing where all around lies fragmentation.

Full Of Eastern Promise As Japan, Hong Kong & China Seek To Attract Western FX Business
Andrew Saks-McLeod – LeapRate

In the wake of European market turmoil, exchanges and venues in Japan, China and Hong Kong, with the backing of global regulators, are busily adding products to their ranges which aim to attract European, Middle Eastern and American retail and institutional traders to increasingly strong markets.

Wells Fargo Expands Metals Business With London Desk
Silvia Antonioli – Reuters

Wells Fargo Securities will open a metals desk in London in a push into the sector as other larger players have bowed out due to regulatory pressures and thinning margins, sources said.

Jordan Capital Market Development Flash

Jordan Securities Commission has issued a new amendment for the trading directives in Amman SE.

Career Paths

BATS Global Markets Names Chris Concannon CEO; Joe Ratterman Becomes Chairman
BATS Global Markets

BATS Global Markets announced that President Chris Concannon will be appointed to the additional role of CEO, effective March 31, 2015. Joe Ratterman will now assume the role of chairman of the BATS board, replacing Paul Atkins. Mr. Ratterman, who led BATS as CEO for the past eight years, will remain closely involved at the company going forward, while also facilitating Mr. Concannon’s leadership transition. A respected industry expert, Mr. Ratterman will continue to represent BATS, and the industry’s diverse participants broadly, as a member of the SEC Equity Market Structure Advisory Committee.

Previous comment on the expected move earlier this month.

PLY: Good luck to all gentlemen concerned, particularly Paul Atkins who remains one of the SEC Commissioners I found most open to doing business in recent times, he is one of several excellent potential NEDs now available for hire. Readers will recall Joe Ratterman resumes the chairmanship he lost after the first abortive IPO attempt.

SGX CEO Who Failed To Acquire ASX Steps Down
Will Hadfield & Jonathan Burgos – Bloomberg
SGX CEO To Step Down After Drop In Trading Volume
Anshuman Daga – Reuters

Magnus Bocker, SGX CEO who underperformed his peers after failing to take over ASX, is stepping down.

Bocker, whose contract expires in June, won’t seek an extension. The company’s shares have risen 4.6% since Bocker became CEO in December 2009, while Singapore’s benchmark Straits Times Index has rallied 26%.

The former Nasdaq president saw his A$8.35 billion ($6.5 billion) bid to buy ASX blocked by Australia’s then treasurer Wayne Swan. The takeover attempt, which would have created the world’s fifth-largest exchange operator, was dismissed for being against the national interest.

PLY: The career knives are sharpened in what amount to obituaries as opposed to tributes for Magnus who I actually thought didn’t do such a bad job at SGX. True he was unlucky that the Australian government was run by narrow minded protectionists including Wayne Swan.

Overall, I am considering Magnus’ legacy and will add some comment on EI Premium later today or perhaps tomorrow…although net net I still see his run as being a lot less apocalyptic than the current mass negativity within and outside the city state.

LCH.Clearnet announced that Professor Lex Hoogduin will succeed Jacques Aigrain as Chairman of LCH.Clearnet Group Limited Board and LCH.Clearnet Ltd Board. This follows Jacques Aigrain’s decision to step down from both Boards, as a result of his extended activities with Warburg Pincus. Jacques has been Chairman since 2010 and has played an integral part in shaping LCH.Clearnet’s growth as a leading global clearing house.

Lex has been a member of the LCH.Clearnet Group Board since September 2012 and has previously chaired its Limited, SA and LLC Risk Committees. He brings extensive expertise and insight to the role, having been Executive Director at De Nederlandsche Bank (DNB) from January 2009 until July 2011 where his wide-ranging responsibilities included economic policy and research, financial stability, financial markets, clearing and settlement systems. He has also held senior positions at Robeco and MD of the IRIS research institute.

Jonathan Eliot, currently a NED of LCH.Clearnet Ltd, also joins the Boards of LCH.Clearnet Group, LCH.Clearnet SA and LCH.Clearnet LLC. Jonathan will chair the Risk Committees across the business. Jonathan is currently Chief Risk Officer at Man Group, and has had a 27-year City career with companies including JP Morgan, Deutsche Bank and Barclays.

All appointments are effective 5 March 2015.

OCC announced that Thomas R. Cardello and Robert R. Litterman were appointed to its BoD, increasing the number of public directors on OCC’s Board from 3 to 5.

Tullett Prebon announced that Philip Price has joined the company as Group General Counsel and Global Head of Compliance. His appointment follows the arrival of Stephen Breslin as Group Head of Communications and Carrie Heiss as Global Head of Human Resources, further strengthening the management team under CEO John Phizackerley.

Reuters reports that MarketAxess appointed David Krein as head of its research division.

Fidessa announced a key appointment for its sell-side business, Jay Biancamano is now Head of Equities Product Marketing for the Americas, based in New York and reporting to James Blackburn, Global Head of Equities Product Marketing.

Volante Technologies announced the appointments of Nadish Lad as Head of Payments Product and Peter McKenna as Global Marketing Director. Volante has also hired additional development and testing staff and opened two new offices in Jersey City and Hyderabad.

Financial Calendar

This week

MarketAxess $0.20 quarterly dividend payment
Record date Thomson Reuters $0.335 quarterly dividend
Record date CBOE $0.21 quarterly cash dividend
Record date Interactive Brokers $0.10 quarterly dividend
CFTC Energy and Environmental Markets Advisory Committee (EEMAC) public meeting – agenda here.

New announcement

CFTC will hold a public roundtable on March 5, 2015, from 9:00 a.m. to 5:00 p.m., to discuss issues related to recovery and orderly wind-down of Derivatives Clearing Organizations (DCOs).

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

Share Notes

MarketAxess CEO Richard M. Mcvey sold 20,013 shares Friday, February 20th at an average price of $80.30 (bargain $1,607,043.90). He now owns 1,131,408 shares.

Other stories

Presentation Of Green Paper On Capital Markets Union, Commissioner Jonathan Hill, Speech At EuroParl Econ Committee

ESMA And JFSA Conclude An MoC Regarding CCPs

ESMA and the Financial Services Agency of Japan (JFSA) have concluded a Memorandum of Cooperation (MoC).

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