January 27 2015

The third video in my Cinnober series has been published today – this time it’s the fascinating era for capital markets which we are lucky to be witnessing:

Cinnober Video no. 3 – link here.

cinnober 3



(The previous videos made with our friends at Cinnober in Stockholm can be found here and here).

Welcome to today’s free Exchange Invest daily: Fixes changing as LME prepares to move its floor, Taiwan wants to be a stop on Through Train as Shenzhen is officially given the nod to be next destination, various tech, data and products new or tweaked and of course the forex fiasco festers in a way which only disgraces that sector.

Meanwhile, over in Premium Posts, busy as always with Chinese leverage stories and a series of new briefs charting the history of the non-merger (phew!) between Warsaw and Vienna.

A Margin For Concern – aka China’s Leveraged Worries
Luminex – Crazy Name, Crazy Development?

The Latest Premium Briefs:

FX – CHF Crisis – Brief
China’s Everbright Securities Trading Error – Brief

WSE – Wiener Borse Failed MergerPart 1, Part 2, Part 3.

Our Premium service is now on a real roll – can you afford not to be a subscriber? $120 per user/year and it helps keep EI Free. Subscribe here or email and I will invoice you forthwith.

Public Markets

Questions Raised Over Swiss Franc Retail Trades
Patrick Graham & Jemima Kelly – Reuters

Doubts grew on Monday about the validity of trades in the turmoil that followed this month’s removal of the cap on the Swiss franc, with administrators of Alpari UK saying they were taking another look at the retail broker’s trades.

PLY: A mess. This forex farago is an embarrassment to the concept of markets – the inability to say at what prices trades were executed demonstrates retail forex dysfunction.

‘Fake Margin Calls’: Forex Traders Furious After Losses
Jonathan Shapiro – Sydney Morning Herald

A group of foreign exchange day-traders from around the world have vented their fury with a Sydney-based online broker IC Markets, after SNB’s surprise currency move triggered “fake margin calls” that resulted in tens of thousands of dollars of losses.

In the chaotic aftermath of the SNB move, IC Markets told its customers that it was fed erratic fx prices by its “liquidity providers” allowing the banks to execute “client trades at prices they shouldn’t have”.

After several days of sifting through client trades, IC Markets adjusted their clients’ accounts to reflect correct trading levels. But some traders became further enraged when they realised that they suffered losses a result of margin calls triggered by the erratic prices.

“These misquotes were so far away from the market price that the misquote basically caused fake margin calls,” said a trader who claimed to have lost $40,000 as a result of the incident.

PLY: Ditto.

Read our Premium brief: FX – CHF Crisis – Brief.

Firms Behind HFT Lobby Prominent In Barclays Complaint
Market Watch

The New York AG’s complaint (filed in June last year) against a leading bank’s dark pool activity named many HFT firms that support Washington’s lobbyist on the practice.

The amended complaint (filed last week) named three members of Modern Markets Initiative, a lobbying organization supportive of HFT.

In the complaint, the New York AG’s office said that Barclays had lied about barring a HFT firm called GTS Securities LLC, a broker-dealer and part of the companies by Global Trading Systems–which is a member of Modern Markets Initiative.

GTS released a statement saying, “GTS is confident that its trading activity is and has been fully compliant with regulatory rules and policies.”

The complaint said that in January 2014, senior leaders in Barclays’ equities electronic trading division described Hudson River Trading, another member organization of Modern Markets Initiative, as “historically…very toxic” but never denied it access to its dark pool.

The complaint also said another member of Modern Markets Initiative, Tower Research Capital LLC, requested information about how Barclays’ dark pool was operated after Tower said it was interested in having more trading teams connect with the dark pool.

ICE To Change Isdafix Calculation (subscription)
Philip Stafford – Financial Times

ICE will next month switch the way it calculates Isdafix in a bid to bolster market confidence in one of the key benchmarks for the IRS market.

The US derivatives exchange said on Monday that it would change from mid-February to publishing rates based on tradeable quotes rather than submissions by a panel of banks.

ICE press release here.

EI reported on April 30th that IBA was appointed as the new administrator of ISDAFIX. On September 5th Barclays, Bank of America, Citigroup and 10 other banks were accused in a lawsuit of conspiring to manipulate ISDAfix.

France Says EU Ministers To Press Ahead With Transactions Tax Talks

[Anti-capitalist] Austria will spearhead fresh efforts by eleven European finance ministers to reach a deal on an elusive financial transactions tax, France’s finance minister said on Monday.

PLY: Previous discussions on the topic here, here, here, and here.

Taiwan’s Odds Of Opening The Next Backdoor To Restricted China Stocks
Ralph Jennings – Forbes

Foreign investors are suddenly excited about the complex, risky and restricted Chinese stock market. Since November, they’ve been able to buy shares in 568 Chinese companies, some of the world’s largest, through a scheme binding the bourse in Shanghai to the more open, less restricted one in Hong Kong. Buying into mainland China through the scheme called Shanghai-Hong Kong Stock Connect more than doubled, to 43.6 billion yuan ($7 billion) between November and December (stats here). Now Taiwan’s stock exchange, keen to work with offshore peers and grow past what’s often described as a local market, is weighing cooperation with its counterpart in China (as previously discussed here).

Taiwan SE also announced it will start cross trading links with SGX and JPX, as mentioned here, here and here.

Shenzhen Next Stop On ‘Through Train’ (subscription)
Mark Austen – Financial Times

HKEx CEO expects a link to Shenzhen this year. As discussed earlier this month here, here and here.

LME Will Move Trading Ring In 2016 (subscription)
Ese Erheriene – Wall Street Journal

The lords of the ring are being re-housed.

LME announced Monday its historic trading ring will move to new premises in Q1 2016 after 11 years at its current location in Leadenhall Street. LME and LME Clear plan to move to 10 Finsbury Square.

The move, the fourth in its 138-year history, comes because LME has outgrown its current site due, in part, to the development of new products with increased staffing requirements, such as LMEclear – its trade-clearing platform.

Wall Street Braces For Storm; Exchanges To Stay Open
John McCrank & Richard Leong – Reuters

Private Markets

APX Releases New APX Mining Rules and Signs Strategic Co-operation Agreement with Beijing Mining Exchange

Asia Pacific SE (APX) has released a consultation paper on new listing rules for the mining, oil and gas sectors. It is APX’s intention to establish a fully-fledged mining, oil and gas framework, allowing it to admit domestic and international mining, oil and gas companies to its official list.

BSEC To Formulate ‘Commodity Exchange’ Rules
Yasir Wardad – The Financial Express

Bangladesh Securities and Exchange Commission (BSEC) has moved forward to formulate rules to open ‘commodity exchange’ in the country for the first time.

Special Section: FTI, NSEL, India at the Crossroads

PLY: FTIL and MCX flat, no news on NSEL.


Icap Preps Bond Pricing Service, Taps Interactive Data Evaluations (subscription)
Waters Technology

Icap’s e-commerce division will unveil a new pricing front-end for corporate bonds in February, dubbed Scrapbook, that will enable traders to better spot opportunities and manage their positions, offered via the BrokerTec MTF platform.

ICAP press release here.

Read our Premium posts:ICAP Explores A New Galaxy and On Bonds & SEFs.

CME Announces Six New Additional European Natural Gas Contracts On CME Europe

Clearstream Paves The Way Towards Seamless Local JGB Mobilisation To Cover Global Exposures
Deutsche Borse

EEX To Launch Exchange Trading In Spanish, Swiss & Nordic Power Futures
Commodities Now

From 16 February 2015…

LBMA & TriOptima Eliminate Gold IRS Trades Prior To “GOFO” Rate Being Discontinued

London Bullion Market Association (LBMA) and TriOptima announced that twelve market participants eliminated 99% of their outstanding gold IRS trades with each other prior to the discontinuation of the Gold Forward Offer Rate (GOFO) fixing on January 30, 2015.

Career Paths

Calypso Technology announced that it has appointed Pascal Xatart as President. He will head the company’s executive leadership committee and report to company founders and co-CEO’s Charles Marston & Kishore Bopardikar.

CFTC Announces Membership Of The Energy And Environmental Markets Advisory Committee

Energy and Environmental Markets Advisory Committee Membership List

James C. Allison, Manager, Corporate Studies and Initiatives, ConocoPhillips
Michael Cosgrove, Partner, Vectra Capital
Bryan T. Durkin, Chief Commercial Officer, CME Group
Benjamin R. Jackson, President & Chief Operating Officer, ICE Futures U.S.
William F. McCoy, Law & Compliance Division Executive Committee Member, Futures Industry Association
Mac McFarland, Chief Executive Officer, Luminant
Lopa Parikh, Director of Federal Regulatory Affairs for Energy Supply, Edison Electric Institute
Tyson T. Slocum, Director, Energy Program, Public Citizen
Dena E. Wiggins, President & Chief Executive Officer, Natural Gas Supply Association

Financial Calendar


Nasdaq Q4 Financial Results
ITG Q4 2014 Financial Results


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

New announcement

CBOE Risk Management Conference March 4 – 6, 2015 (press release here)

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

Analyst Notes

LSE Target Price Lifted By RBC Capital From GBX 2,150 To GBX 2,500 – “Outperform” Rating
Betfair “Overweight” Rating Reissued By HSBC – GBX 1,942.86 Price Target

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.


FCA To Target P2P Marketing (subscription)
Emma Dunkley – Financial Times

UK financial regulators are set to clamp down on the marketing of P2P lending platforms amid concerns that some are mis-selling their products as “risk-free” savings accounts.

Colorado Drafts New Intrastate Crowdfunding Regulations
JD Alois – Crowdfund Insider

The Centennial state is preparing to introducing legislation that will facilitate crowdfunding by authorizing online intermediaries to match Colorado investors with a Colorado based business that wishes to sell securities to raise funds in a “simplified regulatory regime”.

Other stories

ISDA Proposes CCP Recovery & Continuity Framework

ISDA announced the publication of a new position paper that sets out a proposed recovery and continuity framework for CCPs.

Keynote Address By CFTC Commissioner J. Christopher Giancarlo, Commodity Markets Council, State Of The Industry Conference, Miami, Florida, End-Users Were Not the Source Of The Financial Crisis: Stop Treating Them Like They Were

Japan’s Financial Services Agency: Exchange Of Letters On Co-Operation In The Area Of Financial Institutions Supervision With The Indonesia Financial Services Authority

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