January 06 2014

elb2

Welcome to our first daily of 2013, following our festive ‘review’ issues on December 30 and January 03.

It’s still holidays in much of Europe so I will return tomorrow to my burgeoning inbox! In the meantime, a full newsletter with that EUREX TAIFEX purchase price announced, an end to ICEX, NSE exuberant, PSE seeks clarity, interesting US bond interview, Bitcoin bounces back, FTIL selling stakes…

All this and more in today’s Exchange Invest, a Happy Epiphany to one and all:

Public Markets

Eurex Acquires Stake In TAIFEX
Deutsche Borse

PLY: Confirmation from DB of its 5% purchase in TAIFEX from Yuanta Financial Holdings, a 47 million USD bargain. The Yuanta Group will remain a shareholder in TAIFEX after the planned sale (which is interesting as I thought TAIFEX had a 5% ownership limit?).

First reported here December 30 via Yuanta announcement.

It Will Be A Big Year For: The Trading And Tech Chiefs (subscription)
Financial News

Financial News profiles some executives who will shape the agenda in the trading industry this year.

David Peniket – President and COO, ICE Futures Europe
Garry Jones – CEO, LME
Suneel Bakhshi – CEO, LCH.Clearnet
William Knottenbelt – MD, EMEA, CME
Kay Swinburne – Member of the European Parliament, Welsh Conservatives

PLY: Not sure anybody except David Peniket is really shaping the agenda here. The rest are surely followers as the article itself defines? Pity Mark Hemsley isn’t here as out of the London pack he ought to be leading the agenda in cash equities, with Alasdair Haynes amongst others keen to demark his corner of the pitch too…

Big Board Scores One For The Humans (subscription)
Wall Street Journal

For the first time in at least 19 years, NYSE in 2013 landed more IPOs of technology/internet companies than NASDAQ.

PLY: NYSE clearly believe this is the first in a trend reversal while NASDAQ will note that their consistent record would outperform the best hall of fame members in any sporting discipline given their utter dominance of tech IPOs, in all but 12 months over 2 decades…

PSE To Pursue Merger Of Stock, Capital Markets
Manila Standard Today

PLY: The ongoing soap opera of pushing Philippine SE and the bond market continues, against a backdrop of court cases.

PSE CEO Hans Sicat: “Clarity on the case would be helpful.”

How Will A Nasdaq Dark Pool For Treasuries Work?
Traders Magazine

Phil Albinus pens a useful interview with Michael Chuang, CEO of fixed income IT provider iTB Holdings and a former fixed income trader himself, on various topics including the implications of Nasdaq’s move into the fixed income ‘dark’ / ILP space.

Private Markets

National SE To Remain ‘Forever Young’, Says Chitra Ramkrishna
Indian Express

PLY: CEO Chitra Ramkrishna discusses NSE, one of the greatest achievers of the “Capital Market Revolution!” keen to remain nimble and innovative after 20 highly successful years.

ICEX May Shut Down Operations By May
The Hindu Business Line

Indian Commodity Exchange (ICEX), promoted by Reliance Capital and the Indiabulls group, has decided to close down (after May contract expiry) on account of poor performance although it may sell the business.

PLY: A ‘perfect storm’ of commodity transaction tax followed by the NSEL fiasco has stymied commodity exchanges attempts to work on their current basis, although the need to really marry the requirements of producers with risk transfer products remains unsatiated in India.

Jakarta SE Attempts To Suppress Volatility
Live Trading News

There is a new wave of anti-volatility regulations in Indonesia, a move that will hurt the profitability of market participants and may result in less local and foreign interest in the exchange.

Erbil SE: Mapping The Development Of Capital Markets In Iraqi Kurdistan
Marcopolis

Interview with Abdullah Ahmad Abdul-Rahman, Chairman of Erbil SE.

Bitcoin Tops $1,000 Again As Zynga Accepts Virtual Money
Bloomberg

The price of Bitcoin surpassed $1,000 again after Zynga Inc. said it would start accepting the virtual currency for some of its online social, citing wider use of the digital money.

PLY: BTC has had a good festive season with multiple commercial platforms and retailers moving to accept cryptocurrency.

Special Section: FTI, NSEL, India at the Crossroads

PLY: FTIL is roaring (up nearly 11% today alone) on the back of a 48 million dollar stake sale in NBHC while MCX is 2% to the good after a huge nearly 3% block was traded…

FTIL Sells Stake In NBHC For Rs 300 Crore (USD 48.11 mln): Sources
The Economic Times

FTIL, which has been looking to raise funds by selling its non-core assets, has sold a stake in its warehousing and collateral management subsidiary National Bulk Handling Corporation (NBHC) to a private equity investor for over Rs 300 crore (USD 48.11 mln).

PLY: Presumably somebody is doing their Due Diligence with gusto here to ensure there really are 569 storage facilities with stock worth Rs 5,500 crore (USD 882.11 mln) given how the NSEL network proved to be, well, a tad more virtual than physical. How much has been sold and whether FTIL will retain any holding is not clear.

MCX Turns Volatile After Block Deal
Business Standard

Shares of MCX have trading almost flat at Rs 573 (USD 9.18), after a huge block deal executed on BSE.

At 9.15, around 1.48 million shares representing 2.9% of total equity of MCX have changed hands at a price of Rs 568 (USD 9.26) per share via single block deal.

PLY: Good block trade with MCX proving to have buyers around at the current relatively depressed prices.

New MCX Chief Faces A Slew Of Challenges
Business Standard

Manoj Vaish, who was appointed MD & CEO of MCX on Thursday, may not find the going entirely smooth at the country’s largest commodity bourse.

PLY: Good luck once again to Mr Vaish, this is going to be an exciting ride and hopefully he can reactivate the dynamism of MCX in a world of opportunity, albeit one directly threatened by India’s tendency towards reactionary regulation.

MCX-SX Board Approves 1:1 Rights Issue
Livemint

The board of MCX-SX on Friday approved a 1:1 rights issue to its shareholders to boost capital and appointed a chartered accountancy firm to conduct a comprehensive audit.

MCX-SX Board meeting decisions here.

PLY: De facto a dilution of FTIL/MCX even before they get to sell a share…

MCX-SX Board Appoints EY For Forensic Audit
Indian Express

MCX-SX board chaired by former home secretary GK Pillai on Friday appointed Ernst & Young (EY) to carry out forensic audit of the stock exchange since its inception in December 2008 when it began trading in currency futures.

PLY: An understandable first move to reinvigorate confidence in MCX-SX after the foibles of NSEL.

Technology

Nairobi SE’s Automated Share Trading System Delayed
The Star

INVESTORS in shares trading at the Nairobi Securities Exchange will wait for at least a year before the reduction settlement cycle from the present three days could begin.

PLY: However Millennium system upgrade will be complete by end Q3.

Products

China To Require Central Clearing Of IRS
Business Times

China’s central bank will require interest rate swaps to be conducted via a central clearinghouse via
Shanghai Clearing House, one of two state-backed clearing houses for China’s interbank bond market.

Career Paths

Stuart Sloan and Catherine Lester have joined the LME as Chief Operating Officer and Head of Strategy, and Chief Financial Officer respectively.

PLY: One of the most highly speculated moves of recent months as Stuart Sloan is reunited from LIFFE as COO alongside his former boss Garry Jones. Good luck to both Stuart and Catherine Lester (ex-PwC) on their LME appointments.

CFTC acting Chairman Mark Wetjen announced that Joseph Cisewski and Scott Reinhart have been named Co-Chiefs of Staff and Co-Chief Operating Officers.

SEC announced that George S. Canellos, co-director of its Enforcement Division, will leave the agency later this month after four-and-a-half years of service in senior leadership positions.

Financial Calendar

Today

LSEG interim dividend of 10.1 pence payment

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

Share Notes

Interactive Brokers Group Chairman Earl Nemser sold another 13,570 shares Thursday, January 2nd at an average price of $24.35 (bargain $330,429.50). Mr. Nemser’s regular sales are chronicled on this specific page.

Analyst Notes

LSE‘s “Overweight” Rating Restated At Barclays – GBX 1,800 Target Price
Tullett Prebon’s “Equal Weight” Rating Reiterated At Barclays – GBX 325 Target Price
ICAP’s “Overweight” Rating Reiterated At Barclays – GBX 455 Price Target

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.

Other stories

No Bonanza Yet For Big Funds From New Rules To Cut Risk
Reuters

If pension funds, insurers and sovereign wealth funds were hoping to cash in on lending “high quality” assets to those scrambling to meet tougher collateral requirements in 2014, they are likely to be disappointed due to the phasing in of regulations like Dodd-EMIR-Frank.

India – SEBI Grants New Status To Three Clearing Corporations
The Economic Times

SEBI has granted qualified central counterparty status to National Securities Clearing Corporation, Indian Clearing Corporation and MCX-SX Clearing Corporation.

The QCCP status will make the three clearing corporations comply with the Principles for Financial Market Infrastructure (PFMI), an international standard to handle counterparty risk on derivatives.

Dealers Braced For Reporting Revolution (subscription)
Financial News

Q1 is busy for investment banks, trading is brisk and it’s traditionally a good time for IPOs. Q1 2014 could be more hectic than ever, as dealers grapple with the implementation of a key piece of post-crisis reform.

U.K. Agency Struggles In Fight Against Insider Trading (subscription)
Wall Street Journal

The FCA stepped up its pursuit of insider trading after British officials came to believe financial wrongdoing was damaging London’s standing as a financial center.

J.P. Morgan To Pay Over $2 Billion To U.S. In Penalties In Madoff Case (subscription)
Wall Street Journal

U.S. prosecutors and regulators are expected to announce this week that J.P. Morgan Chase & Co. will pay slightly more than $2 billion in penalties for alleged failures to warn about Bernard L. Madoff’s massive fraud.

High-Speed Traders Form Trade Group To Press Case (subscription)
Wall Street Journal

A group of HFT firms have hired a pair of heavy-hitting political strategists and formed a trade group to press their case with regulators and lawmakers.

PLY: Heavy hitters indeed, Kevin Madden and Erik Smith are top level campaign insiders who have submitted paperwork to found the “Modern Markets Initiative.” Presumably next up (and this is not intended as a joke, although it may have some irony within:) will be the equivalent of the Turinese born “slow food movement” for those who like their executions to take over a microsecond or three and involve large clip sizes? Clearly the “MMI” looks like a seriously big ticket alternative to the FIA Principal Traders Group which has also represented HFT interests up to now…

Everbright Securities Sells Stocks Bought In Error
Market Watch

Everbright Securities Co. sold between Nov. 16 and Dec. 31 stocks for 2.81 billion yuan ($464 mln) — 52% of the CNY5.38 billion ($889.2 mln) it spent on securities in a trading error in August.

The Aug. 16 trading glitch sent the benchmark Shanghai Composite Index up 5.6% in minutes, cost the company CNY 523.29 million ($85 mln) in fines, saw it prohibited from proprietary trading and temporarily banned from applying for new business. Four of its executives were banned for life from the securities industry.

PLY: Once again I remind you of the 4 lifetime bans and swingeing fines and restrictions placed upon Everbright for its errors. Note the relative paucity of any incidents in China since August 16th…

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