January 09 2015

elb2

CME raises fees once again while more “through trains” from the Chinese mainland are anticipated. EU ponders binary compromise or oblivion options with US regulations on fixes while there is a flurry of precious metals stories amongst other items.

Today’s issue is short and sweet (gives you more time to read Premium posts) while I am deliberately endeavouring to avoid annual volume stories especially those where PR departments inflate their already doughty sense of self-brilliance.

Meanwhile, over in our Premium service (which subsidises the free provision of this daily newsletter): In addition to the recent series of briefs threading together the history of burning issues (e.g. NLX, The bidding war for GFI, PSE – PDEx Merger brief, FTIL Stakes Sales overnight we have added a new digest of LSE – Frank Russell Deal Brief) the latest new posts have concerned that hotbed of current platform growth, the bond market:

BSE’s Christmas Wishes – Is Indian Exchange Shareholding Reform Looming?
On Bonds & SEFs
NEW: The Bond Bubble

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Public Markets

CME Raises Transaction Fees Again
Tom Polansek – Reuters

CME will raise transaction and clearing fees in markets ranging from interest rates to energy and agricultural products next month, increasing costs for traders for the second time in 13 months.

The increases, which take effect on Feb. 1, appear to target traders who do not own memberships at CME’s exchanges, which include CME and CBOT.

PLY: The long held maxim that exchanges have little or no pricing power appears to be dissolving in front of a new orthodoxy as a new trend develops: that prices can be raised incrementally, provided it is done in the right way towards the correct demographic (i.e. somewhere at the nexus of the less promiscuous traders and in those markets with less overall mobility potential). This is a very interesting developing issue which will attract investors’ attention.

Kotak Mahindra Withdraws Parambi’s Nomination To MCX Board
Business Standard

Kotak Mahindra Bank announced temporary withdrawal of the nomination of Paul Parambi to the Board of MCX, without assigning any reason.

PLY: A second abrupt volte face from Kotak who at first said they would not seek board representation for their investment then last month they surprised by opting to seek a position on MCX’s board where they now own 15% of the stock.

EU Lawmakers Eye Compromise For U.S. On Benchmarks
Huw Jones – Reuters

EU lawmakers look set to ease the international impact of rules to stop market benchmarks being rigged, addressing U.S. concerns that global investors could lose out.

PLY: A frankly moronic, or to use the politically approved phrase “overly prescriptive,” EU proposal, looks set to be sensibly diminished to avert a mess for European investors already under threat from transaction taxes and other reactionary devices.

New China Stock Connect To Follow In Old Footsteps
Nyshka Chandran – CNBC

Earlier this week, Chinese Premier, Li Keqiang, said a stock link between Hong Kong and Shenzhen should be established.

Taiwan Mulls Plan To Open Stock Market To Individual Mainland Investors (subscription)
Jeanny Yu & Enoch Yiu – South China Morning Post

Taiwan is studying the opening up of its stock market to individual mainland investors, a move that would deepen its offshore yuan pool and boost the performance of local stocks.

Private Markets

BSE SME Exchange vs NSE Emerge: Which Is The Better Story?
N Sundaresha Subramanian – Business Standard

PLY: Jury still out…

Sebi Cautions Vadodara SE On Land Dealings
Ashish Rukhaiyar – Livemint

Sebi has cautioned the Vadodara SE (VSE), after investigations revealed a lack of transparency in deals involving the real estate of the exchange.

CFTC Commissioner: Market Manipulation Could Shape Bitcoin’s Future
Pete Rizzo – CoinDesk

CFTC was one of the more vocal US government entities on the subject of bitcoin in 2014, holding a hearing to discuss its role in options and futures, claiming regulatory oversight over the derivatives market and speculating on how it might intervene in the digital currency ecosystem.

Perhaps most notably, however, CFTC Commissioner Mark Wetjen penned an opinion piece heralding the technology’s potential to transform the industries his agency oversees.

But while the CFTC and Wetjen in particular have been open with their views on bitcoin, the organisation as a whole has been less clear on how it will proceed with providing more clarity to bitcoin businesses going forward.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL Both flat.

Products

CME ‘Would Consider’ Asia-Based Silver, PGM Contracts After Gold Launch
Ian Walker – Bullion Desk

CME might consider launching silver, platinum and palladium futures contracts alongside its kilobar gold contract that is due to be launched in Hong Kong later this month.

LME Mulling Launch Of Gold & Silver Futures Contracts
Ian Walker – Bullion Desk

LME is mulling the launch of monthly gold and silver futures contracts – as well as mini contracts to run in parallel. The dollar-denominated gold contracts will be physically settled – probably against the LBMA good delivery list, which sets and regulates the acceptable requirements for large gold and silver bars.

Broker ICAP Defies Tide, To Expand Dry Bulk, Energy Ops In Asia
Florence Tan & Jessica Jaganathan – Reuters

ICAP is going against the tide in Asia as brokerages, including rival Newedge, have downsized in the past few years as trade volumes slumped after the introduction of capital rules that prompted banks to cut back on certain trading activities.

Brokers have also been losing some revenue to electronic trading platforms on exchanges such as ICE.

China Derivatives Push Gathering Steam (subscription)
Financial Times

Beijing expanding financial and commodity futures and stock options.

SET, Gold Currency Plan Hits Obstacle
Pathom Sangwongwanich – Bangkok Post

Hopes of the Stock Exchange of Thailand and gold dealers of seeing equities and gold settlements on the physical exchange in major currencies, particularly US dollars, are dimming as the Bank of Thailand says it needs time to consider the issue.

China Sets Stage For Trading 10-Year Govt Bond Futures
The Economic Times

China Financial Futures Exchange (CFFEX) has issued draft rules for the launch of 10-year government bond futures, a move seen as another step towards interest rate liberalisation.

The futures will be based on long-term government bonds with durations of 6.5 to 10.25 years to their maturity.

Career Paths

Nairobi Securities Exchange (NSE) appointed Mr. Geoffrey Otieno Odundo CEO, effective March 1, 2015.

Mr. Odundo is an accomplished Investment Banker with 22 years financial sector experience; 16 in Capital Markets.

RJ O’Brien UK, led by CEO David Mudie, has hired in London former Icap brokers John Steptoe, Darren Byrne, Jeremy Hopkins, and Peter Herrmann.

SEC named Walter E. Jospin as Regional Director of its Atlanta office, where he will oversee enforcement and examinations in a region covering five states.

Financial Calendar

January 27, 2015

GFI Group special meeting of stockholders to vote on the transaction with CME

New announcements

Interactive Brokers Q4 2014 Results – Tuesday, January 20, 2015
ITG Q4 2014 Financial Results – Thursday, January 29, 2015
Nasdaq Q4 2014 Financial Results – Thursday, January 29, 2015
CME Q4 2014 Financial Results – Thursday, February 5, 2015
Thomson Reuters Full-Year And Q4 2014 Earnings – Wednesday, February 11, 2015.

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

Share Notes

Interactive Brokers CFO Paul Jonathan Brody sold 5,387 shares Tuesday, January 6th at an average price of $28.78 (bargain $155,037.86). Mr. Brody’s regular sales are chronicled on this specific page.

Analyst Notes

Credit Suisse Reissued Their “Outperform” Rating On LSE – GBX 2,350 Price Objective
CME Downgraded By Credit Agricole From “Outperform” To “Underperform”

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

ESMA Publishes Review Of CCP Colleges
MondoVisione

ESMA has published a peer review report on its participation in the supervisory colleges set up under EMIR to authorise and supervise EU-based CCPs. EMIR asks ESMA to coordinate between national competent authorities and across colleges with a view to building a common supervisory culture and consistent supervisory practices, ensuring uniform procedures and consistent approaches, and strengthening consistency in supervisory outcomes.

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