January 28 2015

A cri de coeur from Mickey Gooch but has momentum ebbed from his GFI position? Millennium appoint new head of sales, GMEX invest in Avenir, EU progressing CMU while trans Atlantic regulatory cooperation is gaining tangible momentum, it seems.

Interesting times, meanwhile, if you’re bored reading, then try some viewing:

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

cinnober 3

The previous videos made with our friends at Cinnober in Stockholm for this year’s series are:

The future of money – where is cryptocurrency heading?

What will the launch of real-time clearing at BM&FBOVESPA mean for the industry?

Meanwhile, over in Premium Posts, busy as always with several new Premium Briefs to remind you of various issues in the industry:

NY AG – Barclays Dark Pool Brief
FX – CHF Crisis – Brief
China’s Everbright Securities Trading Error – Brief

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

GFI Head Makes Last Call For CME Backing (subscription)
Philip Stafford – Financial Times
Michael Gooch Issues Open Letter To GFI Group Stockholders
PRNewswire

In an open letter to shareholders published on Tuesday, Chairman & Founder of GFI, Mickey Gooch said he would be paid only $4.44 for his shares compared with the $5.85 in cash and stock deal on offer from CME.

Mr Gooch said shareholders could “opt for a ‘bird in the hand’ with the CME or hold out for a hostile, conditional ‘BGC in the bush’.” The latter has also yet to conduct due diligence on GFI.

He added that his ex-wife, whom he recently divorced, was also willing to take a reduced sale price of $5.46 per share for her GFI shares. “That is her vote of confidence in the CME merger and shows how much she wants to see the CME deal close,” he added.

The value of GFI has risen nearly 90% beyond the CME’s initial bid last summer and its equity is valued at $743m by the CME deal.

PLY: I cannot see BGC winning outright in the meeting this week but it is quite feasible the CME-GFI quasi status quo repo transaction will fail.

Read our Premium brief: BGC – CME – GFI Brief

EU Says Near Deal With Washington On Derivatives Rules
Huw Jones – Reuters

The EU and the US are poised to accept each other’s rules on financial derivatives trading in a bid to prevent a global market that supports economic growth from fragmenting, a senior EU official said on Tuesday.

The two sides are introducing rules to make derivatives such as CDS more transparent after their opacity played a key role in exacerbating the 2007-09 financial crisis.

PLY: Very encouraging and some long overdue common sense appears to be prevailing.

EU Aims To Complete Capital Markets Union By 2019
Huw Jones – Reuters

The EU will put in place its “capital markets union” by 2019, starting with quick wins like encouraging direct investment in businesses. An EU document co-written by financial services chief Jonathan Hill, sets out a timetable for the first time on a core policy of the European Commission to help revive the bloc’s flagging economy.

Harmonising rules for capital markets to increase the trade in stocks, bonds and other securities is an important goal for the EU. The EU’s executive Commission is due on February 18 to publish three papers to kick off its plans.

PLY: It is tricky for the corporate socialist EU to nowadays endorse the free market and hence this CMU is a challenge as Brussels’ maintains stuck in an anti-growth phase of its own making. From here, genuine CMU looks impossible but an improvement to cross border capital raising and so forth can only help bring back some hope of growth and perhaps reduce the festering fetid mess on the Mediterranean which has a trajectory akin to South America 30-40 years ago as opposed to embracing the future. Alas.

Overseas Forex Trades Laid FXCM Low (subscription)
Andrew Ackerman & Ira Iosebashvili

Retail fx broker FXCM was nearly felled by outsize bets made by foreign customers who aren’t subject to U.S. regulations, according to people familiar with regulators’ review of the firm.

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

Earnings Increase Expected For Nasdaq
Forbes

Analysts expect higher profit for Nasdaq OMX Group when the company reports its Q4 results on Thursday, January 29, 2015. The consensus estimate is calling for profit of 74 cents a share, reflecting a rise from 69 cents per share a year ago.

ITG Canada Sees Dark Pool Changes, Order Protection Rules & T+2
John D’Antona Jr. – Traders Magazine

ITG has announced its predictions for what’s to come in the Canadian equity markets – with dark pool routing, final order protection rules and the implementation of t+2 trade settlement, to name a few.

CFTC Aims To Approve New Position Limits By Year’s End: Staffer
Tom Polansek – Reuters

CFTC aims to approve by the end of this year proposed rules to crack down on speculation in energy, grain and metals markets, the agency’s chief of staff said on Tuesday.

Private Markets

‘Flash Boys’ Hero Katsuyama: Not All HFT Is bad
Jeff Cox – CNBC

PLY: The pragmatism of Brad Katsuyama, discussed.

Sebi Allows Gauhati SE Exit From Bourse Business
The Hindu

Regional Bourses’ Investors Breathe Easy With Extension
Jash Kriplani – Financial Express

Over 200k retail investors, who have shares in the exiting regional stock exchanges, got a breather last week. Sebi gave another 18 months to the companies exclusively listed on the exiting regional stock exchanges to migrate to the nation-wide stock exchanges.

Israeli Brokers Seek Regulatory Changes To Compete With Banks
Tova Cohen – Reuters

Israeli brokers, struggling to compete with the country’s powerful banks when it comes to trading in securities on the Tel Aviv market, are seeking regulatory changes that they hope will boost their falling share of trade.

Non-bank members of the Tel Aviv SE saw their share of equity trading fall to 17.9% in December 2014 from 21.7% a year ago and a peak of 44% in 2007. In bond trading their share is even less – 12.1% in December 2014 compared with 18.2% in December 2013.

Bitcoin Mining Firm CoinTerra Files For Chapter 7 Bankruptcy
Stan Higgins – CoinDesk

Bitcoin mining company CoinTerra has filed for bankruptcy.

CoinTerra has between $10m and $50m in assets, with liabilities within the same range, according to court documents. The firm has filed for Chapter 7 bankruptcy protection, meaning it is likely to liquidate all assets in its bid to repay secured creditors.

CoinTerra stated that it would be unable to repay unsecured investors and named hundreds of creditors in its filing, which was submitted on 24th January.

PLY: As I noted in the Premium post: Bitcoin Mining Under Threat a week or two back, Bitcoin mining is now under pressure. CoinTerra is unlikely to be the first to collapse.

Hong Kong Bitcoin Exchange ANX Acquires CoinMKT
George Krash – News BTC

ANX had acquired CoinMKT in order to expand their presence around the globe.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX flat, FTIL small up, no news.

Technology

GMEX Group Takes Stake In Avenir Technology
MondoVisione

PLY: Avenir have developed interesting CSD technology under the watchful eye of founder Stuart Turner. Now he is linking into the GMEX network for sales – which ought to be an interesting opportunity.

Also announced earlier this month, HFT firm Virtu will join GMEX, scheduled for launch in April to make markets in the IRS Constant Maturity Future (CMF) which GMEX have pioneered.

JPX & SGX Launch JPX-SGX Co-Location Direct Service
MondoVisione

JPX and SGX launched the JPX-SGX Co-Location Direct service which will commence in April 2015. This follows the Letter of Intent (LOI) signed between JPX and SGX in December 2014.

Icap Partners With Wind Information To Provide Chinese Market Data Feed
Finextra

ICAP announced that ICAP Information Services (IIS), the information division of ICAP, has partnered with Wind Information Co., Ltd (Wind Info), a leading provider of financial data, to provide offshore Chinese renminbi (CNH) and US Treasury data to the Chinese market.

Aequitas Neo Exchange Completes Successful Industry Test Weekend Ahead Of Its March 2015 Trading Launch
MondoVisione

Euronext CISO Wants Staff To Think Like The Exchange’s Attackers (subscription)
Clint Boulton – Wall Street Journal

A rash of data breaches is driving demand for cyber experts who can talk business and technology. Euronext N.V. CISO Robert Duncan said a good part of his job involves communicating cyber risks to board members, and educating security engineers about how the stock exchange operator works.

Products

CME To Launch Euro-Denominated Cocoa Contract
David Brough – Reuters

CME Europe said on Tuesday it planned to launch a euro-denominated cocoa futures contract on March 30, just days before rival ICE Futures Europe introduces a similar contract.

The launch of a cocoa futures contract for physical delivery marks CME’s entry into deliverable soft commodities.

CME press release here.

ICE Futures Europe announced this month it would launch a euro-denominated contract in April.

MOEX To Increase Price Tick For Major RUB Instruments
Mike Fox – LeapRate

MOEX will increase tick size from RUB 0.0005 to a more standard RUB 0.001 for key ruble currency pairs, effective February 2nd.

Career Paths

MillenniumIT announced that it has appointed Lorne Chambers as Head of Sales & Marketing.

Lorne joins MillenniumIT from NASDAQ OMX where he was most recently Global Head of Sales and Business Development for SMARTS Integrity, NASDAQ’s global surveillance solution.

PLY: Interesting move by Millennium filling the head of sales role which has been empty for some time. We believe Lorne has already started work in the London office.

ICE announced that ICE Benchmark Administration (IBA) has appointed Mary John Miller, the former Under Secretary for Domestic Finance at the U.S. Treasury, as a Director of IBA.

Miller will serve as Chairman of IBA’s Nominating Committee, and joins the following directors on the Board of IBA:

André Villeneuve, Chairman of ICE Benchmark Administration
Joanna Perkins, Chairman for the LIBOR Oversight Committee of ICE Benchmark Administration
Michel Prada, Chairman of the Audit and Risk Committee of ICE Benchmark Administration
David Goone, Chief Strategy Officer of Intercontinental Exchange
Finbarr Hutcheson, President of ICE Benchmark Administration

PLY: It’s always good to see a board with the impressive Michel Prada.

Financial Calendar

Thursday

Nasdaq Q4 Financial Results
ITG Q4 2014 Financial Results

Friday

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

New announcement

Dubai Financial Market PJSC – Board of Directors’ Meeting – February 2nd, 2015
CBOE Risk Management Conference March 4 – 6, 2015 (press release here)
SEC Roundtable To Explore Ways To Improve The Proxy Voting Process – February 19, 2015 (press release here)

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

Crowdfunding

Funding Circle Launches Fractional Loan Marketplace
Finextra

Funding Circle, the global small business loan marketplace, has become the first and only major P2P lender in the U.S. to offer individual investors the opportunity to invest in secured small business loans with the launch of its new Fractional Loan Marketplace.

Other stories

New Zealand’s Financial Markets Authority & NZX Sign MoU
MondoVisione

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