January 09 2014

elb2

Platform updates. JPX goes to single one for derivatives March 24th, Warsaw SE looks forward to UTP upgrade in 2014 too. OPCOM buys Trayport while GMEX/GRC go with Regis-TR. First Chinese Ring Dealer at LME, Alibaba casting a spell over HKEx once again?

All this and much more in the industry daily which, I note, remains free for 2014 (pending additional sponsors, please!).

Happy scrolling and thanks for all the feedback as always. Yes, the whole team blush at your kind words about our insights. And we’re keen to provide more…

Public Markets

Japan Eyes Further Transformation After Exchange Merger (subscription)
waterstechnology

PLY: The merger of the Osaka SE and Tokyo SE into the JPX is progressing. Integration of futures exchange platforms set for March 24th with the two matching engines and co-location facilities ending up in one Osaka venue…

Euronext Will Try To Place 30% Of Its Capital (story is in French)
L’Echo

PLY: Reviews the news from January 7th about Euronext’s possible pre-IPO sale and includes a quotation from one Patrick L Young…

REGIS-TR’s Partnership With Global Reporting Company
REGIS-TR

Global Reporting Company (“GRC”), backed by Global Markets Exchange Group International LLP (“GMEX Group”) and REGIS-TR, the European Trade Repository owned by Clearstream (Deutsche Börse) and Iberclear (BME), today announced a partnership to provide buy side and corporate clients with trade reporting services, ahead of the EMIR obligation to report OTC and listed derivative transactions, which comes into effect on 12th February 2014.

PLY: An entirely logical solution given the investment by DB in GMEX announced on October 25th.

Alibaba Prompts Hong Kong IPO Rethink (subscription)
Wall Street Journal

HKEx is close to launching a public debate on allowing a wider range of shareholding structures for IPOs, according to people familiar with the matter.

PLY: The Alibaba incident continues with a public consultation an interesting next move to discuss appropriate corporate structures for IPO. Hopefully, it will be something which delivers a resounding vote for democratic capitalism and not opaque founder/management-centric structures which discriminate against investors’ interests.

WSE Reveals Extensive Plans For The Future
Warsaw Business Journal

PLY: Warsaw SE migrating derivatives to UTP ought to provide a firm volume fillip and CEO Adam Maciejewski actually understands this key segment in contrast to his predecessor who always appeared a bit hazy once beyond cash equities. There are high hopes for the Aquis stake while the talks with CEESEG are still ongoing, although given the gestation period so far, hopes must remain high that this dire value destructive proposition is near death. Finally Warsaw will be promoting the Warsaw financial centre – which is good although also rather raises a matter of concern as the capital city bubble represents a modest fraction of the nation’s opportunity…just saying…

LME Welcomes First Chinese Ring-dealing Member (subscription)
Wall Street Journal

LME has welcomed the first Chinese-owned firm as a ring-dealing member.

GF Financial Markets (UK) Ltd., which is owned by Chinese securities broker GF Securities Co. Ltd., will become a category-one member of the LME, giving it the right to trade in the open-outcry ring.

PLY: LME is back to 11 ring dealers after Jefferies Bache withdrew in November.

LME press release here.

Private Markets

MF Platforms Are Good But Will They Work In Harmony?
Livemint

In the middle of January 2014, when the BSE Ltd opens its doors to independent financial advisers (IFA) of mutual fund (MF) distributors to directly buy and sell MFs from fund houses using its stock exchange platform, the Indian MF industry will take one more step towards the hinterland of the country.

Last year, the capital markets regulator, SEBI, allowed some IFAs to use the stock exchange platform directly to aid penetration.

HKMEx Accused Deny Possessing Fake Documents
The Standard

The three defendants on trial for links to the collapsed HKMEx denied possessing bogus bank documents, with one accused claiming they were only “samples.”

In District Court yesterday, Dai Linyi, 56, Li Shanrong, 49, and Lian Chunren, 50 denied four counts of possessing forged bank investment and deposit confirmation documents. The 32 bogus documents involved deposits, guarantees and banknotes worth a total of HK$90 billion (USD 11.6 bln), the prosecutor said.

PLY: The case continues…

Coinsetter Integrates With Bitstamp To Boost Its Bitcoin Trading Platform
CoinDesk

New York City-based bitcoin trading platform Coinsetter is bringing liquidity to bitcoin trading for investors by integrating with Bitstamp.

Slovenia-based Bitstamp is currently the number two globally for USD/Bitcoin trading by volume, according to Bitcoin Charts.

Alibaba Division Bans Bitcoin After China Crackdown As IPO Looms
Reuters

China’s biggest online marketplace, Alibaba’s Taobao, will ban the sale of bitcoins on the heels of a government crackdown against the virtual currency to plug a potential gap in its tight controls on capital flows.

Singapore Govt To Tax Some Bitcoin Transactions
TECH IN ASIA

Singapore-registered companies who buy and sell bitcoins or exchange the digital currency for other goods and services must pay taxes for these transactions, says the Inland Revenue Authority of Singapore (IRAS), Singapore’s tax authority.

The government’s stance towards the volatile cryptocurrency, which once again soared above $1,000 in price, echoes countries like Germany, Norway, and the UK, all of which deemed Bitcoin taxable.

PLY: And the more who deem Bitcoin taxable – while a deep affront to the ultra-Libertarians – only lend more credibility to cryptocurrency…whatever the Central Bankers say.

Special Section: FTI, NSEL, India at the Crossroads

PLY: FTIL is still soaring (up almost 8%) in the hope of major cash income from stake sales while MCX is off around 1.5%. Jignesh fights on for FTIL in the case of ‘fit & proper.’

No Relief For FTIL In ‘Fit And Proper’ Case Yet
Business Standard

The high court on Wednesday adjourned the hearing of the case by FTIL asking for a stay on the ‘fit and proper’ order of FMC.

FTIL May Seek More Time To Reduce MCX-SX Stake
Moneycontrol

As a deadline to reduce stake in MCX-SX looms, FTIL is likely to write to SEBI seeking more time to comply with regulations.

Before the stock exchange was allowed to commence equity-trading operations, FTIL and its sister firm MCX had to commit to reduce their combined stake to a total of 5 percent by January 18, in order to comply with SEBI’s manner of increasing and maintaining public shareholding (MIMPS) regulations.

Sources say FTIL may also offer three options to the regulator that would help in bringing down its stake.

The company would not subscribe to MCX-SX’s recent rights issue — FTIL’s stake would fall if other shareholders subscribe to the issue and total outstanding shares increase.

FTIL may also offer to forgo its right to a buyback-of-shares arrangement that exists, sources said. Finally, the firm may also allow capping of its voting rights in MCX-SX.

PLY: Having given the original 5% undertaking so long ago, clearly FTIL is in a tricky position here and it would not be unsurprising to find the regulators in merciless mood, demanding a fire damage sale alongside the ongoing rights issue.

Hearing On FTIL’ ‘Fit And Proper’ Plea Today
The Economic Times

The Bombay High Court will on Thursday hear FTIL petition seeking a stay on a regulatory order that declares it not ‘fit and proper’ to be a shareholder on the country’s largest commodity bourse MCX.

EoW Records Jignesh Shah’s Statement, To Summon Brokers
Business Standard

The Economic Offences Wing (EOW) of the Mumbai Police today summoned Jignesh Shah, Chairman and Group CEO of FTIL, for further interrogation in the scam at NSEL.

Further, the EOW is looking to summon brokers to investigate their role of trading in paired contracts. The official said that brokers used to corner a commodity after booking it in bulk in the morning and would then allocate it in small quantity to their interested members. According to their modus operandi, members of brokers were not necessarily members of exchanges too.

A large number of big brokers and their directors also traded huge quantities of commodities on their proprietary account which they told EOW, were not on their own record. But, EOW discovered brokers’ trading records in the software and hard disk seized by them from NSEL offices.

Brokers were charging different rate of interest for availing funds to their own private members which was obviously higher than the rate of interest assured by NSEL to brokers.

PLY: Once again the evidence suggests that the Mumbai fraud squad are truly earning their stripes in this case. I hope justice will be done.

EOW-Sealed Agri Commodities Susceptible To Spoilage
Business Standard

A huge quantity of agri commodities seized by the Economic Offences Wing (EOW) of the city police from borrowers’ warehouses of the crisis-ridden NSEL is prone to spoilage in the godowns. The commodities include those owned by third parties. The police will begin the auction process shortly.

Mohan India To Pay Rs 59.5 Crore (USD 9.57 Mln) To Defreeze Draft
The Economic Times

The MPID Court on Wednesday ordered the Enforcement Directorate and the income tax department to defreeze a draft amounting to Rs 59.5 crore (USD 9.57 mln) belonging to Mohan India, which will be deposited into NSEL’s escrow account to pay off aggrieved investors.

Similarly, the court ordered the agencies to hand over title deeds of Mohan India’s immoveable properties to EOW which has been ordered to lift the freeze on these assets as and when a prospective buyer is found by Mohan India.

Mohan India signed a deal last October with NSEL to repay Rs 771 crore (USD 124 mln) out of the Rs 922 crore (USD 148.3 mln) owed to investors over a year.

PLY: More progress on repayment…

Technology

OPCOM Selects TRAYPORT’S GlobalVision Exchange Trading System
Trayport

OPCOM (the Romanian Power Exchange) will launch a centralised electricity market for bilateral contracts with continuous negotiation. The market will be used for trading physical electricity forwards contracts for multiple standard delivery periods. Trayport’s Exchange Trading Solution (ETS) will be modified to meet the requirements of the new market. The system to be implemented by OPCOM is a hybrid of the OTC and Exchange market models.

PLY: SIBEX already uses Trayport systems for their markets.

RTS Realtime Systems To Open Data Center In Dubai – Offer DGCX Co-Lo
MondoVisione

RTS Realtime Systems Group (RTS), is opening its first Middle East site in Dubai adding to its global data center network. Expected to go live in mid-July, RTS will offer ultra-low latency access to fast-growing DGCX thanks to being co-located in the DGCX facility.

License To Kill: The Complexity Of Circuit Breakers (subscription)
waterstechnology

As regulators collaborate to review different concepts to protect the integrity of the US financial markets and reduce potential technology failures, Marina Daras looks at the technical challenges of implementing circuit breakers for brokers and exchanges.

Aizawa Securities Selects Fidessa For Wholesale Agency Trading
FX-MM

Fidessa has announced that Aizawa Securities, an independent securities company headquartered in Tokyo, has selected Fidessa as its new proprietary and wholesale agency trading system.

Career Paths

In his capacity as Ruler of Dubai, UAE Vice President and Prime Minister, His Highness Sheikh Mohammed bin Rashid Al Maktoum, has issued a decree appointing His Excellency Essa Abdulfattah Kazim as Governor of the Dubai International Financial Centre (DIFC), with effect from January 1st, 2014.

According to bobsguide, Len Schuch, the founding CEO of mobile tech firm Ubiquisys, which subsequently sold its femtocell base station coverage business to Cisco for $310m, has been appointed to the Liquity advisory council.

The online secondary market finance platform seeks to bring private company owners in need of money together with small stake investors and to compete with more traditional venture capital face-to-face formats using the web.

United Stock Exchange Seeks New Head
Business Standard

The United Stock Exchange (USE) has invited applications for the post of MD and CEO. A USE official confirmed that it was seeking a new CEO.

PLY: As a reminder, the USE CEO, Saurabh Sarkar, is leaving to run MCX-SX…

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 now listed in our Events page.

Analyst Notes

NASDAQ OMX Upgraded At Citigroup From “Neutral” To “Buy”
CME Downgraded At Citigroup From “Buy” To “Neutral”
Citigroup Began Coverage On ICE – “Neutral” Rating

Would Warren Buffett Buy SGX?
The Motley Fool

So, how does SGX figure in Buffett’s estimation according to a motley Singaporean…

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.

Crowdfunding

FINRA Makes Crowdfunding A Priority For 2014
Crowdfund Insider

As they do every year, FINRA has released a letter outlining their priorities for the forthcoming year. Regulatory changes prompted by the passage and implementation of the JOBS Act are featured heavily in the letter as risks that mandate diligence on behalf of FINRA.

FINRA letter here.

Other stories

Direct Edge Extends Deadline For Compensation Claims And Permits Claims For Compensation For Routed Orders
MondoVisione

Effective Wednesday, January 8, 2014, EDGA ExchangeSM (EDGA®) and EDGX ExchangeSM (EDGX®) (together, the “Exchanges”) will:

Extend the deadline to submit written claims for reimbursement for losses resulting directly from the malfunction of the Exchanges’ physical equipment, devices and/or programming or the negligent acts or omissions of its employees; and

Accept claims for losses relating to orders routed by the Exchanges through its routing broker-dealer (DE RouteSM) to other Trading Centers that experienced a systems issue.

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