January 06 2016

elb2

Will Kent become the home to the phallus of HFT hubris? (Will this even have reached you through your inbox filter…who knows but frankly it has to be said, first amendment rights and all that…). Greifeld seizes a good deal for NASDAQ in Tel Aviv with IT sale and a private market j.v. in the “startup nation.”

And there’s more, as we bring you up to date with the week’s events…

N.B. Don’t forget, in 8 days new subscribers to Exchange Invest Premium will be paying $300, lock in the $120 rate now if you are not already behind the insightful paywall of market infrastructures.

Public Markets

Nasdaq Maintains US New Listings Leadership For U.S. Market In 2015 – (Numerically But Not In Cash Terms)

MondoVisione

Nasdaq welcomed 275 new listings, (143 IPOs) raising $16.6 billion, to the Nasdaq Stock Market in 2015.

FAO: Last month NYSE reported that it raised $136.0 billion from 397 transactions in 2015, more than any other exchange in the world, including 8 of the largest 10 IPOs in the U.S. resulting in NYSE’s fourth consecutive year as the leader in technology IPOs.

PLY: …NASDAQ had a numerical advantage in names, NYSE raised more money. The apple/orange comparisons of self-aggrandising exchanges somewhat sap our resources checking the veracity of their claims.

 

Nasdaq & Tel-Aviv Stock Exchange Sign Landmark Strategic Agreement

Nasdaq

PLY: Just in, as we race to pixel: to endeavour to gain more value from the Israeli “startup nation,” NASDAQ will jointly operate with TASE a j.v. private market with various added mentoring & other services (presumably NASDAQ will ping over some of their industry renowned accountants to show how not to pay bills on time). Now we can see why Bob Greifeld was so keen to schedule his Middle East trip for the signing of the Istanbul agreement to visit the Israeli Prime Minister in 2014. Interesting deal, even if private markets have not yet shown their potential (with various parties such as Liquidnet having invested in largely barren entities).

In revenue terms, there is even better news for NASDAQ with TASE agreeing to replace its TACT system with Genium for multiple asset classes. Good deal for NASDAQ all round, although my sub 350 millionths of a second gut reaction is that this seems to signal a certain degree of strategic surrender on the part of TASE.

 

JPMorgan Names Virtu Financial As Its NYSE Market Maker

Reuters

The bank replaced KCG Holdings partly due to poor performance during the Aug. 24 market mayhem.

PLY: Ouch, given how KCG had hoped they were on a permanent recovery path from their self-inflicted meltdown in August 2012.

 

Wall St. Watchdog Homes In On HFT To Combat Spoofing

Suzanne Barlyn & Ankit Ajmera – Reuters

FINRA will examine how well HFT firms are protecting their systems from unscrupulous traders who are trying to manipulate markets.

PLY: Good. Better late than never on an expunging of the spoofers…

 

FINRA Orders Wall St. Brokerages To Return $96.2 million For 2015

Reuters

FINRA ordered brokerages to return an estimated $96.2 million in funds they obtained through misconduct during 2015, nearly three times the 2014 total.

Fines collected by FINRA from individuals and firms, however, declined to an estimated $93.9 million in 2015 from $134 million in 2014.

PLY: ..Alas my hackles rise as a cynicism early warning device. Placing this in context of the previous story, I sincerely hope FINRA want to make markets better, not simply shakedown HFT companies (Besides that is the Obama administration’s job anyway methinks).

FINRA’s 2016 Focus: Supervision, Liquidity & Securities Firms’ Culture

MondoVisione

PLY: Speaking of culture on a rather different plane, the sad news about Gilbert Kaplan’s passing is below…

 

Nevsky’s Taylor Blames Algos In Closing $1.5 Billion Hedge Fund

Nishant Kumar – Bloomberg

Nevsky Capital’s $1.5 billion hedge fund is shutting down, part of a growing trend among money managers following weak returns in 2015. What’s unusual is the reason the managers gave for folding: navigating markets driven by computers and index funds.

PLY: Anticipated sympathy from Main Street is zero but as a sign of how HFT is losing the broad argument, if a hedge fund is blamestorming its demise on the algos, there is clearly a broad structural issue which is being missed by many myopic folks on Wall Street.

 

Aim Left Bruised By A Lack Of New Issues (subscription)

John Murray Brown – Financial Times

London’s Aim stock market last year saw the smallest number of new issues since 2009.

PLY: AIM may be more worried by resurgent competition from ISDX in some senses with concerns arising about listings moving to Patrick Birley’s ICAP parented return to traditional SME roots. The oil/energy bust is cyclical and always a hallmark of smaller cap markets in Lon/Syd/Jo’burg/Canada while the Chinese marketplace needs to be cleansed of its dubious practices in some entities which soil the reputation of the nation.

 

China To Extend Share-Sale Ban To Calm Markets (subscription)

Financial Times

Regulator also preparing permanent rules to discourage big sales.

China Securities Regulator: Circuit Breaker Protected Investors, Calmed Market

CNBC

China Central Bank Publishes Nine New Financial Service Standards

Reuters

New standards set guidelines for financial services and protect financial consumers.

 

Leaving Europe Outweighs Mifid On Risk Scale (subscription)

Tim Cave – Financial News

Ask any trading practitioner what their biggest potential headache of 2016 is and most would have said – without hesitation – Mifid II. That is, until a few weeks ago.

PLY: …Which just goes to show the infantile level of debate and understanding of the EU Brexit canard. Non-EU members such as Switzerland & Norway are within EU regulations on finance, Britain leaving makes very little difference, except on a scaremongering basis. Besides, unless the EU can gets its act together, given that all its major initiatives are now failing, how long can it survive? Now, the latter will be a risk as continental socialists will doubtless head towards much more protectionist mores (as the economies of France & Italy likely collapse into a South American perma-malaise) on any weakening of the already fissuring EU mismanagement fiasco.

Private Markets

Mergermarket Acquires Creditflux – Expands Fixed Income Intelligence & Data Provision

MondoVisione

Mergermarket Group, a BC Partners portfolio company, acquired London-based Creditflux, a provider of intelligence, analysis, data and events covering CLO and credit fund pricing, investments, trading and returns.

 

CFTC’s Division Of Market Oversight Grants FTSEF LLC Temporary Registration As A SEF

MondoVisione

 

7 Major Regulation Changes Of KRX Markets In 2016

MondoVisione

 

India – Govt Floats Idea Of Setting Up Gold Board

Rajesh Bhayani – Business Standard

Decision may be announced in upcoming Budget; in discussions with stakeholders.

 

Bitcoin: How The Isle of Man Is Leading A Cryptocurrency Revolution

Cahal Milmo – The Independent

PLY: Delighted to see good news stories on that little gem of the Irish sea, the Isle of Man.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX up 1% as FTIL is down 1% overnight.

Technology

High-Speed Trader DRW Proposes Thousand-Foot-Plus Tower in Rural England (subscription)

Tim Cave & James Rundle – Wall Street Journal

PLY: This phallic symbol of HFT hubris is surely the epitome of all which is wrong with speed trading. It is tricky to know where pragmatic deployment of speed ends and stupidity begins. However, the notion of erecting a tower on the quest for the greater ‘arb’ strikes me as several miles beyond any remote vestige of common sense. That said while towers are being sought for erection, a lot of market structure folks are busy digging in with sandbags to defend the broken status quo. Not sure when we can expect to find the Main Street mob arrive with their pitchforks but the exchange industry needs to be mindful it has lost the battle of public opinion and has squandered investor confidence. Wood / Trees & clear lines of vision arranged in a suitable sentence spring to mind…

Products

BGC Brokers’ Capitalab Portfolio Compression Service Eliminates EUR 800 Billion Of Swaption Notional In Q4 2015

PRNewswire

BGC Partners Joins Clean-Up Of Bank Derivatives Books (subscription)

Philip Stafford – Financial Times

BGC Partners is pushing aggressively into risk management of OTC derivatives and created a new tool that has already torn up more than €800bn worth of hard-to-value options.

PLY: BGC Capitalab copies the genius of TriOptima. Who needs a dry January on a diet when you can compress your book instead?

 

CME Europe Introduction Of Dynamic Circuit Breakers In Globex For Its Forex Contracts

LeapRate

 

CME Declared Force Majeure For CBOT Soy Shipping Stations

Reuters

CME declared force majeure for all soybean shipping stations until further notice because of flooding on the Illinois River, a notice from the exchange operator said on Jan 4th.

 

Euronext Cuts French Equity Options Fees (subscription)

FOW

 

ETFs Hit Record as BlackRock Sees Shift Away From Futures

Yuji Nakamura – Bloomberg

A record amount flowed into global ETFs for a second straight year, with investors increasingly using them as a replacement for futures & swaps.

Indexes

Investment Firm Launches First Outright Price Index For Canada Crude

Reuters

Canadian investment management firm Auspice Capital Advisors has launched a new benchmark CDNCRUDE, the first-ever real-time index monitoring the outright price of heavy Canadian crude, based on prices published by derivatives exchange ICE Futures Europe. Canada is the No. 1 supplier of crude to the US and home to the world’s third-largest reserves, but its crude has always been priced at a differential to the U.S. benchmark West Texas Intermediate.

Career Paths

FT reports that Sir Nick Macpherson, who spent a decade as permanent secretary of the Treasury, stepped down.

WSJ reports that former commissioner Daniel Gallagher was named President of Patomak Global Partners.

PLY: Hooray! Patomak was founded by former Commissioner Paul Atkins and has somewhat of an SEC powerhouse line up on its roster of expert staff, now with the addition of the brilliant Dan Gallagher whose absence as an SEC Commissioner is already sorely missed.

The International Securities Exchange elected Jeffrey Tessler to the BoDs of its two options exchanges, ISE & ISE Gemini. Mr. Tessler is a Member of the Executive Board of DB1 and is responsible for the newly created Clients, Products and Core Markets division, which includes ISE.

PLY: Jeff Tessler grasping the mantle of his new ETD beat as part of that restructure of DB1 which sent Andreas Preuss into a new world / the twilight of his DB1 career (depending on your half of the glass).

PLY: I am very sad to report the demise of Gilbert Kaplan a former economist at the American Stock Exchange who will be remembered for his creation of the Institutional Investor publishing empire as well as his passion for conducting, particularly fascinated upon Mahler’s 2nd Symphony. Our sympathies to his widow and family.

WSJ reports that Credit Suisse’s head of U.S. equities trading, Daniel Mathisson, plans to leave the bank in February.

Ref. WSE EGM, the exchange informs that the following candidates for independent members of the Exchange Supervisory Board have been submitted on 5 January 2016:

Mr Mariusz Patrowicz nominated by a Minority Shareholder – DAMF Invest S.A.

Mr Damian Patrowicz nominated by a Minority Shareholder – Mr Mariusz Patrowicz

Mr Jarosław Grzywiński nominated by Powszechne Towarzystwo Emerytalne PZU S.A representing a Minority Shareholder, Otwarty Fundusz Emerytalny PZU „Złota Jesień”

Mr Artur Rzepka as a Minority Shareholder

PLY: Given several folks above have been nominated by holders of less than a handful of shares, thanks to the readers who suggested perhaps Mrs Young could use her modest (but proportionately larger!) GPW holding to nominate me.

Reminder Of Application Period For Listing Committee Candidate

HKEx

The Stock Exchange of Hong Kong reminds potential candidates for its Listing Committee that the period for submitting applications for nomination to the committee will close on 15 January 2016.

Financial Calendar

WSE EGM – Jan 12, 2016

Interactive Brokers Q4 2015 Results – Jan 19, 2016

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

Analyst Notes

CME Upgraded By Zacks From “Hold” To “Buy”, $101.00 Price Objective

A full table of current analysis can be found on our Analyst Ratings page which is updated daily.

Other stories

CFTC Approves A Proposed Rule Providing An Alternative To Fingerprinting For Foreign Natural Persons

MondoVisione

PLY: A good move to replace what was always a bizarrely bureaucratic banana republic approach from the CFTC.

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