January 07 2014

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We wish all our Orthodox readers A Very Happy Christmas Day for those following the Julian calendar.

Meanwhile, in Exchange Invest today: Euronext to be protected alongside pre-IPO sale while India leaves questions on regulatory intervention on various fronts. European Parliament struggles to pass its legislation, first NSEL charges laid, CME moves back-up data centre, partners in new programming standard…and much more, happy scrolling:

Public Markets

Euronext Said To Plan Sale Of Up To 30% Stake Before IPO
Bloomberg

ICE plans to sell up to 30% of Euronext pre-IPO.

Euronext’s advisers are preparing to start talks as soon as this month with potential buyers willing to hold their stakes after the IPO, said the people, who asked not to be identified because the talks are private. No single investor will be allowed to own more than 10% without regulatory approval, a process that could take as long as a year.

European regulators are forcing ICE to hold 25% for 3 years post IPO, unless it can attract investors prepared to hold stakes for the long term.

PLY: Anybody who doubts that France is closed for business only needs to read this excellent scoop from Nandini Sukumar. Euronext will have ownership stakes capped at 10%, presumably to make it easier for flexible competitors TOM (25% owned by NASDAQ) or BATS to destroy whole swathes of the ‘PABLO’ city franchise. A pre-IPO sale is clearly intended to stabilise (i.e. concentrate) control of Euronext in hands deemed sympathetic to the French government who remain emotionally scarred that NYSE Euronext turned – zut alors! – into American hegemony over ParisBourse et al.

Shareholder value in Euronext has been materially damaged by these constraints. None of it is good for free markets or competition, nor I would suggest ICE maximising shareholder value as it endeavours to exit the Euronext business.

Private Markets

Should BSE Feel Short-Changed In The CAMS Deal?
Livemint

PLY: BSE complains that it was attacked by a government initiated competitor in NSE which BSE believes receives preferred treatment. In 2010 SEBI apparently discouraged BSE from acquiring 51% of Computer Age Management Services Pvt. Ltd (CAMS) in 2010. Now NSE is purchasing a 45% stake…

Perceptions and confidence go hand in hand. The Indian marketplace needs to be very careful as multiple recent events have eroded confidence and many foreign investors increasingly believe the market structure is hugely prone to manipulation by government contrary to basic open market tenets.

CNSX Changes Name
Resource Investing News

Canadian National Stock Exchange (CNSX) is now The Canadian Securities Exchange (CSE).

Wall Street Bitcoin Fans Try To Make Real Money From Virtual
Bloomberg

PLY: An interesting romp around Wall Street discussing the future of Bitcoin…

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX is up 6% while FTIL has gained 10% on continuing optimism about stake sales and new management orientation at the exchanges. Meanwhile we have first charges filed:

Mumbai Police File First Chargesheet In NSEL Case
Livemint

The five accused are Anjani Sinha, former CEO of NSEL; Amit Mukherjee and Jai Bahukhandi, former assistant vice presidents of business development and warehousing, respectively; Nilesh Patel, MD of NK Proteins Ltd; and Arun Kumar Sharma, MD of Lotus Refineries Ltd.

All of them are currently in judicial custody and the charge sheet runs to a hefty 9000 pages across the five cases.

FTIL Hearing At SEBI Today
Business Standard

SEBI has summoned Jignesh Shah-promoted FTIL for a hearing on Tuesday. In December 2013, SEBI had issued a showcause notice to FTIL, questioning its ‘fit and proper’ status to run MCX-SX.

Exemption Saves NSEL From Action
Times of India

An exemption given to the crisis-hit NSEL by the ministry of consumer affairs (MCA) in 2007 is proving to be a major roadblock for the government to initiate any strict action against the commodity bourse and its management.

Last month, a group of secretaries and top officials from various investigative agencies under the ministry of finance debated various options to delve deeper into the NSEL default crisis, during which top officials from the ministry questioned that if exchange was not recognized in the first place, how was it given an exemption by MCA to introduce one-day carry forward contracts, which are at the core of the whole trouble.

Technology

CME Relocates Backup Data Center To New York
Reuters

CME moved its primary backup data center to the NYMEX building in New York from Chicago last month, SEC documents show.

CME And Chevron Launch New Spatial Programming Standard
TechWorld

The Open Spatial Programming Language (OpenSPL) consortium also includes Juniper Networks, HPC solutions provider Maxeler Technologies, Imperial College London, Stanford University, University of Tokyo and Tsinghua University.

In a spatial computer, programs execute in space, rather than in time sequence. Application data flow is laid out in space on a chip and every operation runs in parallel. According to the consortium, this offers “dramatic” increases in performance compared with traditional instruction-processor machines.

PLY: Fascinating.

Products

Algorithm Trading In Micro, Mini Contracts To Resume
Business Standard

After a year of suspension, FMC has allowed the introduction of algorithmic (algo) trading in micro and mini contracts, to attract participation from small traders. Some conditions have been specified.

Around 95 per cent of the volume generated in this segment was through bulk orders and the regulator feared misuse of the technology was driving automatic trade orders. This resulted in suspension of algo trades in the micro and mini segment from January 1, 2013.

Indexes

BM&FBOVESPA Announces The 3rd Preview For Ibovespa & Other Indexes ,Valid From January To April 2014
MondoVisione

BM&FBOVESPA announces the third preview for the BOVESPA Index theoretical portfolio, which will be valid for the period of January 06, 2014 to May 02, 2014, based on the closing of the January 02, 2014 session.

Career Paths

Janet Yellen, vice chairman of the Federal Reserve, was confirmed Monday by the Senate to succeed Chairman Ben Bernanke as the next head of America’s central bank.

SEC announced that Michael J. Osnato, Jr. has been named chief of the Enforcement Division unit that
conducts investigations into complex financial instruments.

DTCC announced that Ann Shuman has joined the company as MD and Deputy General Counsel. She reports to Larry Thompson, MD and General Counsel.

TheCityUK has announced the appointment of Nicky Edwards as its new Director of Policy and Public Affairs and the appointment of Marcus Scott as COO. Marcus was appointed CFO in May 2011, and has taken on a number of leadership roles as the organisation has developed.

Cantor Fitzgerald Europe announced the continued expansion of its European Credit fixed income team with the appointment of Franz Bucher as MD in London. Mr. Bucher will focus on High Yield, Distressed Debt and Special Situations, and on expanding Cantor’s presence in German-speaking markets.

According to Businessweek, Mongolian SE’s CEO and his deputy will resign from their positions on January 15.

Changes in Investors/Shareholders

Blackstone Acquires 1.42 Mln Shares Of MCX For Rs 81.49 Crore (USD 13.06 Mln)
Deccan Herald

Blackstone on Monday bought 2.79 per cent stake in MCX for around Rs 81.49 crore (USD 13.06 mln), after FMC gave the private equity giant its nod to hike holding in the commodity bourse to 4.99 per cent.

According to information available with the stock exchanges, foreign fund house Merrill Lynch sold its entire stake of 1 422 245 shares, amounting to 2.79 per cent stake, of MCX to Blackstone GPV Capital Partners Mauritius VI FII.

The shares were offloaded on an average price of Rs 573 (USD 9.18) valuing the transaction at Rs 81.49 crore (USD 13.06 mln).

As of September quarter, Blackstone held 1.01 mln shares, equivalent to two per cent stake, in MCX.

On December 18, 2013, FMC accorded its approval to Blackstone GPV Capital Partners (Mauritius) VI FII Ltd to increase its stake in the company up to 4.99 per cent through secondary market transactions.

Financial Calendar

Next week

CME $2.60 annual variable dividend payment
CBOE $0.50 special cash dividend payment

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

Share Notes

Interactive Brokers Group CFO Paul Jonathan Brody sold another 7,544 shares Thursday, January 2nd at an average price of $24.35 (bargain $183,696.40). Mr. Brody’s regular sales are chronicled on this specific page.

ICE Executives Sell $6.5M In Stock
Atlanta Business Chronicle

ICE reported today that on Jan. 2, shares were sold by CEO Jeffrey C. Sprecher, CFO Scott A. Hill, President and COO Charles A. Vice, CTO Edwin D. Marcial, General Counsel Johnathan H. Short, Chief Strategic Officer David S. Goone, Chief Accounting Officer Dean S. Mathison, and Thomas W. Farley, COO of NYSE Euronext.

Sprecher sold 9,333 shares and his wife sold 842 shares at $224.60 per share, or $2.3 million. Hill sold 5,512 shares for $224.60 to $225 per share, or $1.2 million. Vice sold 4,981 shares at $224.60 per share, or $1.1 million.

Goone sold 2,800 shares at $224.60, or $629,000. Farley sold 1,783 shares for $224.60, or $400,461.

Marcial and Short each sold 1,761 shares at $224.60 per share, or $395,521.Mathison sold 434 shares at $224.60 per share, or $97,476.

PLY: While spousal sales are often lumped together with their partner’s, it strikes me as somewhat unreasonable not to give Kelly Loeffler her own name check in selling some stock here given the vital role she plays as part of the ICE management team?

Crowdfunding

Crowdcube Raised £12.3 Million In 2013, Grew Over 500%
Crowdfund Insider

Crowdcube, a UK based equity crowdfunding platform leader, closed 2013 having raised £12.3 million on their portal for 54 UK based business.

The fast growing company, which boasts over 55,000 registered investors, will be celebrating their third anniversary this February. Total funding on the platform is in excess of £16 million having facilitated financing for over 80 UK based companies since 2010.

Other stories

EU Bank Trading Plan Stops Short Of U.S. Volcker Rule
Reuters

Banks in the EU face limits on taking market bets with their own money under a draft EU proposal that represents a central plank of attempts to prevent a repeat of the financial crisis of 2007 to 2009.

Policymakers want to rein in excessive trading risks in the EU banking sector, whose assets total some 43 trillion euros ($59 trillion), that could threaten depositors if trades go wrong and potentially put taxpayers on the hook in a rescue.

Yet the EU proposal, seen by Reuters on Monday, has already been described as a watered-down measure designed to ensure approval across the bloc and which is less rigorous than equivalent “Volker Rule” regulations being introduced in the US.

Big Changes Ahead For Financial Benchmarks (subscription)
Financial News

Since the Libor scandal first erupted in June 2012, policymakers have been scrambling to restore confidence in the global benchmark industry.

These efforts are due to crystallize in 2014, marking a critical year for an area of the financial services industry that has long flown under the regulatory radar, according to benchmark experts.

PLY: A fascinating tale of how ultimately the big regulatory leap forward planned by Commissioner Barnier has ended up as a hugely unseemly queue of Soviet proportions which ultimately will not be resolved before the European Parliament elections.

J.P. Morgan Officials Excluded From Penalties In Madoff Deal (subscription)
Wall Street Journal

J.P. Morgan officials won’t be penalized as part of a deal the largest U.S. bank is negotiating with the Justice Department over alleged failures to warn about Bernard Madoff’s massive fraud, while Manhattan U.S. Attorney Preet Bharara and U.S. banking regulators intend to announce a total of more than $2 billion in fines this week, these people said.

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