January 25 2016

elb2

Good Morning and welcome to a busy week… The Chi-X sale (Oz, Japan & HK Tech) is completed (at last – been rumoured for a long time) to JC Flowers (hoping for better luck than their Man experience which left them, er, Blue). Meanwhile we live in an era of permanent SEF recognition – 18 so far!

Elsewhere, I have mused on the Digital Asset Holdings deal in Premium: “Digital Asset Holdings: A Slight Over Distribution?”  Oh and don’t forget, if you’re in Malta next Monday, come to my fintech briefing. Meanwhile, you can catch my latest Op Edge Column here.

Happy scrolling:

Public Markets

J.C. Flowers Buys Chi-X Trading Business In Australia, Japan

Eduard Gismatullin, Yuji Nakamura & Toshiro Hasegawa –  Bloomberg

J.C. Flowers & Co. agreed to buy Chi-X Global Holdings LLC’s Australian and Japanese businesses as well as technology services unit Chi-Tech Hong Kong and is expected to close this quarter if regulators approve. Terms were not disclosed. Chi-X handles about 11 percent of on-market trades in Australia and less than 2 percent of equity transactions in Japan. The venue has a bigger slice of Australian off-market trades, taking more than half of them last week.

PLY: An interesting deal which has been in the offing for some time now. Plaudits to the folks behind the scenes, particularly Chi-X alumnusTony MacKay who has been very closely involved. Hopefully JC Flowers can garner the value from the less successful Japanese franchise and exploit the excellent Australian business to the full, without losing momentum in fighting the good competitive fight against the ASX’s variation on a theme of monopolistic domination. Readers will recall NASDAQ bought ChiX Canada in December.

 

LME Said In Talks With Banks To List London Gold Contracts

Eddie Van Der Walt & Agnieszka De Sousa – Bloomberg

PLY: The World Gold Council discussion which is a discrete market opportunity separate to the LBMA’s ongoing discussions with various bourses… Discussions are believed to be between multiple venues in both cases, it is not clear here that LME have reached an exclusive discussion as of yet. Maybe Bloomberg are well ahead of the pack or they have just grasped part of the stick…

 

HKEx Commodity Platform In Shenzhen Would Be A Breakthrough, If Challenges Can Be Surmounted

Enoch Yiu – South China Morning Post (subscription)

First it was the accounting firms and financial companies, and now even Hong Kong Exchanges and Clearing is going north, seeking to open a platform on the mainland to expand its commodities business.

 

HKEx Considers Expanding Cross-Border Stock Connect To IPO Market

Asia Asset Management

PLY: Lots of interesting follow up on the HKEx strategic plan announced last week.

 

SGX Must Strike Balance Between Derivatives & Equities

The Straits Times

SGX must decide what role it wants to play.

PLY: Interesting letter, I do not agree with all of it but it is a clear heartfelt plea!

Private Markets

Stock Exchanges To Be Classified As Infra Company: Sebi

Financial Express

Capital markets regulator Sebi says stock exchanges and depositories will be classified as infrastructure companies.

PLY: An historic movement, as SEBI lurches back into the late 20th century (N.B. for ‘lurch’ interpolate “progress”) by enabling exchanges as infrastructure companies, albeit with the utterly futile caveat that ALL shareholders must be ‘fit & proper.’ So in other words, there is always the chance SEBI can rescind their regulations by claiming one in likely several million, is not proper. ‘F&P’ at a threshold can make sense. As a blanket rule, it’s the socialism of the licence Raj writ large. However, this is progress, even if, in classic SEBI fashion it is never unfettered progress.

 

Trading Members Can Not Be On Governing Board Of Bourse: Sebi

Economic Times

PLY: I do like a board with a goodly dose of independent NEDs and I certainly do not believe a member dominant board has historically proven to deliver the best vision…but to ban the users from the board entirely demonstrates that SEBI really wants to hang on the ludicrous Jalan report recommendations which marked a low point not that far short of just collectivising free markets and making them government controlled objects of redistribution.

 

BSE Mulling IPO Plans, Again

S V Krishnamachari – International Business Times, India Edition

 

NSE Not Okay With Listing On Rival Bourse

Jayshree P Upadhyay & Swaraj Singh Dhanjal – Livemint

PLY: However SEBI-socialism continues to insist on this silly line of argument – which is borne of the regulator’s own innate whacky world view. Very odd.

 

SEC Grants Registration To 18 SEFs

MondoVisione

PLY: 360 T; BGC; Bloomberg; CME; DW; GFI; ICAP Global; ICAP SEF (US) LLC; ICE; Javelin; LatAm; MarketAxess; SwapEx; Thomson Reuters; tpSEF; Tradition; trueEX; and TW SEF are all registered.

As we race to pixel, I make it the following are still being approved from their current temporary status: Clear Markets, EOX, GTX, TeraX and Bitcoin venture LedgerX.

 

SEC Approves New Rules For Corporate Papers

Iris Gonzales – Philippine Star

The local SEC has approved an expanded list of corporate bondholders who can trade with each other under new guidelines meant to boost capital market liberalization. Under the new guidelines submitted by the Philippine Dealing and Exchange Corp. (PDEx) last year, holders of securities subject to 25% & 30% final withholding tax will be allowed to trade with tax-exempt individuals.

 

Russia Blocks Online Bitcoin Exchange In Midst of Blockchain Reform

Tyson O’Ham – Bitcoinist.net

Russia blocked one of the largest running cryptocurrency exchanges, BTCe, following BitStamp’s voluntary IP block of its Russian users. These developments are likely a preview of what is to come from enforcement of recent laws criminalizing blockchain technologies and ‘money substitutes’ in the Russian market.

PLY: There is a very active political argument about enabling Bitcoin in Russia but it appears to be being lost in the mire of fears over collapsing oil prices & broader economic contagion.

 

China Risks Capital Slipping Out Bitcoin Back Door

Nikkei Asian Review

With stocks plunging and the yuan weaker against the dollar, the Chinese economy may face yet another avenue for capital flight: the borderless digital currency bitcoin.

 

File Results, Annual Reports, Corporate Governance Online: NSE To Companies

Daily News & Analysis

NSE will not accept physical documents related to corporate governance, shareholding pattern, financial results and annual reports, from January 29. Rather listed entities must submit filings through the exchange’s online system ‘NSE Electronic Application Processing System (NEAPS).’

 

Will 2016 Be Charles Schwab Corp.’s Best Year Yet?

Motley Fool

The market is off to a pretty terrible start in 2016, but even with this tough start, many companies are thinking 2016 could be their best year yet, including The Charles Schwab Corporation.

Special Section: FTI, NSEL, India at the Crossroads

PLY: FTIL up 2% while MCX is broadly flat amidst a few stories and even a whiff of hope (we stopped the chicken count at zero before things got overly optimistic it has to be said…):

FT Moves Apex Court Over IEX Dividend

Indu Bhan –  Financial Express

FTIL on Friday moved the Supreme Court seeking release of around Rs 32-crore  (4.7 mln USD) dividend it had earned on shares held in the Indian power exchange.

PLY: Of course this money is going to NSEL shareholders, a penitent FTIL says in the brief filed…oh no hold on a second…

 

NSEL Challenges Financial Intelligence Unit penalty

KR SRIVATS – Hindu Business Line

NSEL has challenged the ₹1.66-crore penalty ($245k) order slapped by the FIU, terming it as flawed, and bad in law. The next hearing is slated for March 17.

QV Premium: NSEL Scandal Brief – Part 16

 

Hope For NSEL Scam Victims: Court Directs Auction Of 355cr Properties

Mateen Hafeez – Times of India

MUMBAI: Investors in the Rs 5,600-crore (828 mln $) cheating case involving NSEL case can heave a sigh of relief. A Maharashtra Protection of Interest of Depositors court has directed the competent authority to begin the process to auction at least five properties, collectively estimated to be worth Rs 354.50 crore (49.5 mln $), belonging to the accused. The money fetched through the auction will then be distributed among the victims.

Besides this,the city police have written to the law and judiciary department, asking it to set up a special court to conduct the NSEL case trial.

PLY: The trials are an afterthought, the Indian blob needs to auction with vigour and repatriate the money defrauded asap – if nothing else, we can then even conclude this section!

QV Premium: NSEL Scandal Brief – Part 16

Technology

Thomson Reuters Progresses With Financial App Store

John Bensalhia – The Stack

Data and news company Thomson Reuters is getting into Fintech…

PLY: Pedants might argue it has kind of been at the cutting edge of many aspects of fintech since deploying carrier pigeons to bring news from the battlefronts? Albeit those low latency dudes at Rothschild apparently had a faster messenger. Plus ca change…

Products

Nadex To Narrow Daily Bitcoin Contracts Strike Interval Width, To Add More Strike Levels

LeapRate

Nadex, part of IG Group Holdings plc (LON:IGG), is planning to change trading conditions for Daily Bitcoin contracts.

Warning Over Dash To Bond ETFs

Andrew Pearce – Financial News

European investors are ready to pour more money into bond exchange-traded funds as an easier-to-trade alternative to bonds – a strategy some describe as a “recipe for disaster” that could amplify problems in a market fall.

Career Paths

Ethereum Co-founder and CEO of Decentral & Kryptokit, Anthony Di Iorio began his new job at the Toronto Stock Exchange earlier this month, and has given an interview on the TMX digital vision here.

Financial Calendar

25.01 – ESMA Open Hearing For Validation And Review Of CRA Methodologies

26.01 – CFTC’s Technology Advisory Committee

28.01 – Nasdaq Q4 2015 Results

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

Analyst Notes

IBRK Inc. Forecasted to Earn FY 2016 Earnings of $1.65 Per Share by Gabelli

BNP Paribas Reiterates Outperform Rating for ICAP – GBX  590 Price Target

CLSA Brokers Cut r Q1 2016 Earnings Estimates for SCHW at $0.25 per share

DB “Buy” rating issued by HSBC – 95.00 € Price Target

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

Crowdfunding

FCA Publishes Consultation On Loan Based Crowdfunding. Agency Seeks to Simplify Client Money Requirements

JD Alois – Crowdfund Insider

The Financial Conduct Authority (FCA) has published a consultation paper to address the rules regarding client money requirements for “loan based crowdfunding platforms” including peer-to-peer & marketplace lending.

PLY: Overly prescriptive FCA needs to recant a bit back to more pragmatic ground.

 

Does The SEC Want To Create A Regulatory Approach For Cross Border Equity Crowdfunding Offers?

JD Alois – Crowdfund Insider‎

Keith Higgins, Director the Division of Corporate Finance of the SEC, travelled to the UK last week to keynote a speech at the Fifteenth Annual Institute of Securities Regulation in Europe.  The speech, entitled; “International Developments -Past, Present & Future, launched into the premise of cross-border rationalization in dealing with securities markets. It was a bit of a trip down memory lane but when Higgins arrived to present day reality it stopped at an interesting juncture.

PLY: Alas we always fear cross border is spelt “extra territorial” when it comes to large nation regulators in particular.

 

Kickstarter Finally Rolls Out An Android App

Anu Passary – Tech Times

…Three years after its iOS app was launched.

 

China Says Will Step Up Regulation Of Internet Finance

Reuters

Chinese authorities are planning to tighten regulation of its fast-growing internet finance industry and crack down on illicit transactions, as the country works to rein in fraud on its online lending platforms.

China’s unregulated online peer-to-peer (P2P) industry has been dogged by reports of fraud in recent years, underscoring growing financial risks and increasing the potential for social unrest.

 

Equity Crowdfunding Poised For Takeoff

The Korea Herald

Crowdfunding, a global fad of people clubbing together to fund projects of all kinds, will reach new heights when enabled in Korea.

Other stories

China ‘Ready To Intervene In Stock Market’

The Straits Times

China is willing to keep intervening in the stock market to make sure a few speculators do not benefit at the expense of regular investors, Vice-President Li Yuanchao said in an interview. And China has no plan to devalue the yuan, he added.Calling the country’s market “not yet mature”, Mr Li said the government would boost regulation in an effort to limit volatility.

PLY: Hmmm, that looks as plausible as the golfer in chief delivering his ‘hopey changey’ thing before his White House term ends.

 

Is Bitcoin Dead? Not The Part that Matters

Daniel Palmer – CoinDesk

 

DC Blockchain Summit: Exploring Challenges & Applications Of The Blockchain

newsBTC

The DC Blockchain Summit will be the first Bitcoin-focused conference wherein a US Congressman on the finance committee will be addressing the Bitcoin community in Washington, D.C.

 

Croatia Is The Link Between The Capital Markets Of The Western Balkans &The EU

Vedrana Jelušić Kašić & Ivana Gazic – Emerging Europe

PLY: An encouraging piece to end today’s bulletin, co authored by Zagreb SE boss Ivana Gazic

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