February 26 2015

elb2

After yesterday’s frenzy, time to consider and indeed tender, if you are a GFI shareholder. I have added some Premium thoughts: Magnus Bocker – SGX Reflections while elsewhere more data emanating from the Euronext results, LSE-MTS-Bondvision launches US ATS to access European bond markets, MOEX adds insurance tier to CSD, while India looks set to eliminate its regressive Commodity Trading Tax (FTT lovers take note of the damage…).

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:

ICE – NYSE Euronext Deal BriefPart 1, Part 2, Part 3
MILA Exchanges
SEE Link Project
Greater Mekong Subregion Exchanges Project
ASEAN Exchanges Project

Our Premium service is on a roll – can you afford not to be a subscriber? $120 per user/year helps keep Exchange Invest daily Free. Subscribe here or email and I will invoice you forthwith.

Public Markets

LendingClub Posts Loss As Expenses Rise
Sudarshan Varadhan – Reuters

The net loss attributable to common shareholders was $9 million, or 7 cents per share, for Q4 ended Dec. 31. The company reported a profit of $2.9 million and broke even on a per-share basis in the year-earlier quarter.

Total net revenue more than doubled to $68.1 million.

PLY: Anybody else have a sense of millennial dotcom deja vu?

BGC Reminds GFI Stockholders To Tender Their Shares Before Its $6.10 Per Share Offer Expires
BGC Partners

GFI Board Unanimously Recommends Stockholders Tender Their Shares to BGC’s Offer. Offer Set to Expire on February 26 with no Further Extensions Expected. Accepted Shares Expected to be Paid for on March 3, 2015.

Read our Premium brief: BGC – CME – GFI Brief

Cerutti Engineers Euronext Comeback (subscription)
Anna Irrera – Financial News

When Dominique Cerutti was appointed executive assistant to IBM’s legendary CEO Louis Gerstner in 1998, the technology giant was staging a big comeback.

PLY: After not making much impact during the dying years of the NYSE empire, Dominique Cerutti and his Euronext team certainly appear to have undergone a renaissance of leadership as Euronext has reversed to a remarkable extent, years of antipathy towards its brand in just one year. As per yesterday’s exhortation: “more please.”

MTS Markets International Launches Bondvision US Trading Platform
LSEG

LSE’s MTS BondVision US Trading Platform is fully operational. As a result, institutional investors and other market participants can actively trade European fixed income products in the US.

MTS BondVision connects directly to one of the largest networks of global liquidity providers via a single platform, operating as an ATS in the US.

Comment: Unbundling Rules Will Get Tougher (subscription)
Richard Balarkas – Financial Times

PLY: Richard Balarkas is right to draw attention to something which actually is a much required regulatory reform but has been somewhat lost in the mire of uncomprehending bureaucrats. Another element of the needless complexity of equity dealing which needs to be reworked to create a better market for investors.

EU Calls For Treaty To Avoid Transatlantic Regulatory Spats
Huw Jones – Reuters
EU And U.S. Struggle To Resolve Derivatives Clearing Dispute
Douwe Miedema – Reuters

Transatlantic spats over regulating banks and markets could be avoided under a treaty-based system of cooperation, the EU’s financial services chief said on Wednesday.

The EU and US are locked in talks over the finer details of recognizing each other’s rules on clearing houses

PLY: No Holmesian postprandial processing shock there: two large out of touch with the grassroots behemoths of bureaucracy packed with vast civil service egos convinced of their divine right to dictate can’t work out a compromise.

MOEX Gets Insurance For Settlement (subscription)
Luke Jeffs – FOW

MOEX has cut a deal with an insurance firm to provide insurance cover for possible problems at its settlement depository including technical issues.

PLY: Encouraging news as always from MOEX.

India – Budget 2015-16: Expect CTT To Be Removed, Says MCX
Moneycontrol

MCX Joint MD Singhal says commodity trading volumes have come down significantly since the imposition of CTT, and this is also leading to grey market transactions in which the government gets no revenue at all.

PLY: Looney left take note, CTT (like FTT) kills regulated business and encourages dark compromises.

The Future Of Payments Systems: Stability Through Change – Speech By David Bailey, Director, Financial Market Infrastructure, Bank Of England
MondoVisione

Private Markets

Flow Traders Said To Prepare IPO Of Dutch HFT Firm
Matthew Monks, Ruth David & Sam Mamudi – Bloomberg

HFT firm Flow Traders BV is preparing for an IPO that could value the company at more than 1 billion euros ($1.13 billion). The Amsterdam-based company, is working with Rothschild and interviewing other banks to help manage the sale later this year, hasn’t decided if it will sell its shares in the U.S. or Europe.

FAO: Virtu Financial, one of the major HFT players, filed for an IPO on Friday.

PLY: Clearly a challenge for the new Amsterdam Euronext CEO is whether he can secure the deal with Flow who will doubtless be both in demand with multiple bourses and also eagerly watching to see how the Virtu deal is snapped up in New York.

Read our Premium brief: Virtu Financial IPO Brief.

After The Bitcoin Rush
Nathan Schneider – New Republic

“Mining” is the engine that keeps the Bitcoin network working, but it has swelled into a resource-hungry, capital-intensive, centralized syndicate. Is the Internet’s native currency worth all the effort?

PLY: As discussed weeks ago in our Premium post: Bitcoin Mining Under Threat

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX is off 2% and FTIL is down 1%.

FTIL Shareholders Form Body To Oppose Merger With NSEL
The Hindu Business Line

The shareholders of FTIL have formed an association to jointly oppose the Government-proposed merger of the company with its scam-ridden subsidiary, NSEL. Last October, the Ministry of Corporate Affairs had issued a draft order on the merger. The proposal got a conditional approval from the Bombay High Court after a long legal battle. The last date for seeking public comment on the issue is March 5.

PLY: QV our Premium brief: NSEL-FTIL Merger Brief…I have to side with all shareholders in what is a ludicrous attack on corporate governance norms which will only harm India Inc. as I have not tired of repeating…

Technology

An HFT Believer: Mark Gorton Of Tower Research
Phil Albinus – Traders Magazine

How Mark Gorton of Tower Research Capital defends HFT and why the markets have never been more fair.

‘Out-Dated’ Wall Street Technology Gets A Bitcoin-Inspired Fuel-Injection
Michael del Castillo – New York Business Journal

As bitcoin struggles to catch on in the mainstream, Coinsetter is building the technology beneath it into the backbone of how Wall Street brokers make trades.

Coinsetter Unveils Project High Line: On-Blockchain Trade Settlement
Coinsetter

Products

Eurex Clearing Eyes March For Inflation Swaps (subscription)
Luke Jeffs – FOW

Eurex said its clearing arm is looking to start testing inflation swaps clearing on March 9, marking a step forward in the exchange group’s plan to launch this potentially lucrative new asset class.

Euronext To Launch New Wheat Futures On March 2
Valerie Parent & Gus Trompiz – Reuters
Euronext Brushes Off Concerns About EU Wheat Futures Competition
Richa Naidu – Reuters

Euronext said on Wednesday its new premium-quality wheat futures will start trading on March 2, backed by fee discounts and a facility to switch positions from current wheat futures.

A surge in traded volumes in European wheat futures has spurred CME to launch its own contract by the end of April (reported here), according to a draft document seen by Reuters.

That would mark the biggest competition to Euronext’s flagship wheat product since it was created in the mid-1990s.

Earlier this month ENX announced it will launch a new wheat futures contract in March.

Shanghai-Hong Kong Gold Link-Up May Offer New Regional Benchmark
Michelle Chen – Reuters

China is set to launch a link between gold markets in Shanghai and Hong Kong this year following a landmark stock connect scheme, aiming to enhance its pricing power of gold contracts and ultimately challenge its competitors in the West.

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

SSE Launches Collateralized Agreed Repo Of Bonds For Growth Of Corporate Bonds, Asset Securitization Market
MondoVisione

To promote the development of the bond market and increase the liquidity of various bonds and asset backed securities (ABS), the Shanghai SE (SSE) officially releases the “SSE Provisional Measures on Trading of Collateralized Agreed Repo of Bonds” and relevant guidelines, marking the formal launch of collateralized agreed repo of bonds.

The Great China Gamble For Futures Exchanges (subscription)
Owain Johnson (Chief Products & Services Officer – Dubai Mercantile Exchange) – FOW

ICE’s bold Singapore-based play could set a precedent for other exchanges.

Indexes

CBOE Signs Licensing Agreement To List Options On FTSE & Russell Indices
CBOE

CBOE entered into a licensing agreement with LSEG to develop and list options based on more than two dozen FTSE and Russell indices.

NZX, S&P Dow Jones Indices Enter Strategic Index Agreement
MondoVisione

NZX & S&P Dow Jones Indices announced a strategic agreement to jointly develop, produce and commercialise co-branded investable indices featured on NZX platforms and related data products.

Career Paths

FOW reports that ICE is set to hire former Arc Derivatives trader Chris Rhodes as its London-based head of interest rates.

CalPERS To Open 2015 Board Election – Election Will Determine Retired Member Representative
MondoVisione

CalPERS will open the Board of Administration election for nominations to the retired member representative position on March 23, 2015. The term of incumbent Henry Jones will expire on January 15, 2016.

Financial Calendar

Today

MarketAxess $0.20 quarterly dividend payment
CFTC Energy and Environmental Markets Advisory Committee (EEMAC) public meeting – agenda here.

Tomorrow

Record date CBOE $0.21 quarterly cash dividend
Record date Interactive Brokers $0.10 quarterly dividend

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

Crowdfunding

Equity Crowdfunding: Growing But Not Yet Of Age
Geri Stengel – Forbes

Other stories

ESMA Publishes Review On Best Execution Supervisory Practices Under MiFID
MondoVisione

ESMA has conducted a peer review on how national regulators (national competent authorities or NCAs) supervise and enforce the MiFID provisions relating to investment firms’ obligation to provide best execution, or obtain the best possible result, for their clients when executing their orders. ESMA found that the level of implementation of best execution provisions, as well as the level of convergence of supervisory practices by NCAs, is relatively low.

PLY: Bold sufficient methinks, no need for further comment.

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