January 31 2014

elb2DFM and JPX release encouraging numbers while ITG reverses last year’s equivalent period loss. Multiple tech and product stories, liquidations loom in India, bank politics, BATS borrowing to pay merger dividend, LCH upgrades IT capacity, Trade Repository news and more…

Welcome to Friday’s Exchange Invest, happy scrolling:

Public Markets

JPX – Overview Of Earnings For 3Q FY2013

FY 2013 3Q April – December (JPY mln)

Operating Revenue – 89,102 (USD 870 mln) +57.1%
Operating Expenses – 48,975 (USD 478 mln) +14.5%
Operating Income – 40,127 (USD 392 mln) +187.3%
Ordinary Income – 42,082 (USD 411 mln) +157.7%
Net Income – 24,396 (USD 238 mln) +161.6%
EBITDA – 53,702 (USD 524 mln) +118.6%

Full Year (JPY mln)

Operating Revenue – 111,500 (USD 1088 mln)+35.1%
Operating Expenses – 66,500 (USD 649 mln) +11.5%
Operating Income – 45,000 (USD 439 mln) +96.8%
Ordinary Income – 47,000 (USD 459 mln) +86.1%
Net Income – 27,000 (USD 263 mln) +108.4%

Full results here.

Dubai Financial Market (DFM) Net Profit Rises 709% To AED 284.6 Mln (USD 77.54 Mln) In 2013

Net profit of AED 284.6 mln (USD 77.54 mln) for the year 2013, compared to AED 35.2 mln (USD 9.59 mln) in 2012
Total revenues reached to AED 453.1 mln (USD 123.46 mln) at the end of 2013, compared to AED 191 mln (USD 52 mln) in 2012.

ITG Q4 2013 Results

Q4 2013 Highlights

Net income of $9.7 million, or $0.26 per diluted share compared to a net loss of $6.5 million, or $0.17 per diluted share and adjusted net income of $0.6 million, or $0.02 per diluted share for Q4 2012.

Net income for Q4 2013 included a $0.9 million income tax benefit, or $0.02 per diluted share, from resolving a contingency in the U.K. The reserve related to this income tax contingency was not excluded from adjusted results when it was previously established.

Revenues of $131.9 million, compared to revenues of $121.5 million in Q4 2012.

Expenses of $121.3 million, compared to expenses of $130.1 million and adjusted expenses of $119.2 million in Q4 2012.

Full Year Results

For full year 2013 revenues were $530.8 million, net income was $31.1 million, or $0.82 per diluted share, and adjusted net income was $37.1 million, or $0.97 per diluted share. For the full year 2012, revenues were $504.4 million, net loss was $247.9 million, or $6.45per diluted share, and adjusted net income was $8.2 million, or $0.21 per diluted share.

Traders Faces European Repository Rerun (subscription)
Financial Times

Buried within the latest European proposals on curbing risky trading by banks are two issues that may strike dread into the heart of every trading executive.

Waking up to the systemic market dangers inherent in the so-called “shadow banking” market, Brussels yesterday proposed tightening oversight of the repo and securities financing market.

PLY: It is curious how the EU, in seeking to make banking safer has de facto entrenched the monopoly of bankers by erroneously piling regulation upon “shadow banking” because, well, like “dark pools” there must be a perception that it is a shady business. Rather alternative models are the future of banking and the bankers themselves must be laughing at the naivete of the regulatory-political complex in further helping prop up the discredited banking sector.

EU Bank Reform Must Reflect French, German Regulations: French Finmin

France wants to make sure that EU banking reform proposals reflect regulations already in place in France and Germany, Finance Minister Pierre Moscovici said on Thursday, voicing concerns that the current plans favor banks in London.

PLY: French politician against competition, seeks protection for national champions. Same old story, similarly economically corrosive result looming on the horizon if this ‘flat Earth’ view prevails.

Former Barclays Executive Ricci Backs New London Exchange
Ex-Barclays Rich Ricci Takes Stake In Fledgling Exchange
Wall Street Journal

Former Barclays investment banking supremo Rich Ricci has invested in Aquis Exchange, which launched in London last year.

Ricci, who holds a small stake in the company, has invested alongside founder and boss Alasdair Haynes and Aquis staff who have 25 per cent. Warsaw SE, the biggest shareholder, is set to increase its holding to 30 per cent.

PLY: As previously rumoured but here confirmed that Ricci is an investor, holding 10%.

Clearstream & NSD Partner For Russian Corporate Bonds
FTSE Global Markets

Clearstream has opened up settlement to Russian corporate bonds via its direct link to the Russian National Settlement Depository (NSD). The clearing and settlement division of Deutsche Börse has also confirmed its cooperation with its ICSD counterpart, Euroclear, to open the Bridge – an effective linkage between the two ICSDs – in Russia.

EI reported on January 22nd that NSD and Euroclear launched cross-border services for Russian corporate and municipal bonds.

DB press release here.

FCA Plans Tighter Rules For Listing Sponsors

Britain’s financial regulator has proposed new rules for firms acting as so-called sponsors to London listed companies, setting out a series of minimum requirements aimed at protecting investors following scandals involving two mining companies.

Sponsors, typically investment banks or corporate finance specialists, provide guidance to companies listed on the LSE’s premium segment as well as those looking to join the market. They also carry out checks to ensure companies are complying with listing rules.

CFTC Announces Trade Execution Mandate For Certain Swaps

CFTC’s Division of Market Oversight announced that MarketAxess SEF’s self-certification of available-to-trade determinations (MAT Determination) for certain CDS contracts is self-certified.

HELEX – SIBEX Collaboration

Helex and Sibex representatives will sign the cooperation agreement for technological and clearing services on Wednesday, 5th February, 2014.

PLY: Date announced only, no further details provided.

Ex-ICAP Unit Broker Sentenced For Securities Fraud (subscription)
Wall Street Journal

A former broker at a unit of brokerage ICAP was sentenced to 18 months in prison after pleading guilty last year for his part in a scheme that prosecutors said added millions of dollars in extra costs to trades by institutional clients during periods of high stock-market volatility.

The broker, Marek Leszczynski, pleaded guilty in August to one count of conspiracy to commit securities fraud and wire fraud.

Private Markets

Investors To Share $235 Mln From BATS-Direct Edge Merger (subscription)
Financial Times

Investors in BATS Global Markets and Direct Edge, which include Morgan Stanley and Goldman Sachs, are set to share a payout of at least $235m of special dividends once the merger to create a transatlantic stock exchange is completed.

PLY: It strikes me as a tad curious that the balance sheet is being leveraged to pay this dividend.

Splitting SunGard, Sponsors Clear Path Toward Exit

By spinning off a unit that represents about a third of the company, owners of SunGard Data Systems are separating two businesses going different directions and giving themselves options for exiting the eight-year-old investment.

EI reported on January 27th Sungard’s announcement to split off its availability services business.

Vienna SE And Kazakhstan SE To Intensify Cooperations
Friedl News

Vienna SE has signed an agreement with its first Asian partner – Kazakhstan SE(KASE) for cooperation in market data vending. Since January 2013, Vienna SE has been calculating the KTX Local index which consists of the eight most actively-traded companies.

BSE To Charge Members Turnover Fee Of Rs. 2.5 Per Crore In IRF

Bombay SE, which commenced trading in 10-year government bonds, has said members trading in the newly-launched product will have to shell out a fee of Rs. 2.50 (USD 0.04) for every Rs. 1 crore (USD 160k) of turnover made by them.

Bitcoin ‘Ponzi Scheme’ Worry Sparks Estonia Central Bank Caution

The central bank of Estonia, where Swedish banks dominate the lending market, urged consumers to steer clear of Bitcoin, warning that the software and others like it could prove to be little more than a “Ponzi scheme.”

PLY: Central bankers continue to demonstrate a knee jerk protectionist approach to the threat to their monopoly in the money market. Note the Estonian Central Bank conspicuously failed to spot the staggering property bubble fuelled by Swedish banks in the Baltic states until the property market collapsed spectacularly.

BTC China Accepting Bank Deposits Again

Prominent Chinese bitcoin exchange BTC China is now accepting customer deposits via its corporate bank account.

Dividend News

Dubai Financial Market proposed a cash dividend of 5% of the capital equivalent to AED 400 mln (USD 108.9 mln).

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX is up 3%, FTIL up 5% as it appears NSEL e-series metals are going to be recoverable now while Mohan and Vimla head towards liquidation as NSEL steps up efforts to get paid.

NSEL E-Series Investors May Now Be Able To Recover Investments
The Economic Times

More than 30,000 small and medium-sized investors who purchased gold and silver contracts of small denominations on NSEL might now be able to redeem metal worth a cumulative Rs 500-600 crore (USD 80 – 96 mln) that’s stuck on the crisis-hit bourse.

Findings of a forensic audit of the so-called e-series bullion contracts traded on NSEL has “broadly indicated” that the metals backing the contracts were intact and the funds used to purchase them did not belong to investors who pumped thousands of crores into paired contracts – contracts that involved a simultaneous purchase and sale of other commodities — said two persons aware of the development.

NSEL To Liquidate Assets Of Mohan India, Vimla Devi
Business Standard

NSEL has decided to invoke the default clause agreed upon with defaulters Mohan India and Vimla Devi Agrotech in the settlement agreement signed recently. NSEL is looking at legal options to liquidate securities of the companies.

Mohan India (dues of Rs 922 crore – USD 148 mln) has agreed to a settlement of Rs 771 crore (USD 123.6 mln), but paid Rs 23.9 crore (USD 3.8 mln). According to the agreement, the group was to pay Rs 120 crore (USD 19.2 mln) till January 30.

NSEL Trades Worth Rs 4,000 Cr (USD 641.5 Mln) Saw Client Code Modification
The Financial Express

Brokers who dealt with NSEL are believed to have indulged in wide-spread client code modification to shift trades from the account of a particular client to another. Sources say brokers made such modifications in trades amounting to nearly R4,000 crore (USD 641.5 mln).

According to persons privy to the data, entities like Anand Rathi Commodities, Sincere Commodities & Derivatives Market, Way2Wealth Commodities and Vibrant Commodities Trading modified the client code in a significant number of trades.

PLY: Readers will recall the moral righteousness of brokers who felt the exchange was entirely to blame for its woes in the early days of this crisis.


LCH.Clearnet Doubles Transaction Volume With Clearing Platform Upgrade
Computer World UK

LCH Clearnet has begun implementation of a new clearing platform, allowing it to double the number of transactions it processes each day.

LCH.Clearnet, bought by LSE in 2012, provides clearing and settlement services for several major exchanges.

The clearing house has announced a five year extension to its contract with Atos to re-develop its Universal Clearing and Settlement System (UCS) platform.

Confisio & Traiana Collaborate For EMIR Reporting Solution

Traiana, the leading provider of pre-trade risk and post-trade processing solutions, announces that it has entered into a strategic alliance with Confisio Managed Services Ltd, a premier supplier of customized turnkey solutions to the financial services industry. Traiana and Confisio will together provide a middleware trade reporting solution to Confisio clients in Cyprus ahead of the impending 12 February EMIR deadline.

LGIM Installs Misys Platform To Handle Risk And Trading Activities

Legal & General Investment Management (LGIM) is installing Misys’ Sophis Value software to manage its trading and risk activities on its fixed income index-linked strategies and liability-driven investment (LDI) portfolio, which includes bespoke solutions for Defined Benefit (DB) and Defined Contribution (DC) pension plans.

The latest version of Misys’ Sophis Value is aimed at derivatives and fixed income and LDI managers, and it is expected to help LGIM to achieve greater internal efficiency and sales growth via the risk and procedural technology upgrade.

Capital Markets In Transition, Regulators On Watch
Wall Street & Technology

The days of easy money are long over. Technology is transforming trading styles as algorithms create a more competitive environment and exponential growth in data volumes. As the number of firms deploying algorithms increases they will be chasing after a diminishing pot. Some predictions for 2014…


CBOE Futures Exchange Announces Launch Date For CBOE Short-Term VIX Futures With Weekly Expirations

CBOE Futures Exchange announced day that it plans to launch trading of futures with weekly expirations on the new CBOE Short-Term Volatility Index on Thursday, February 13, pending regulatory review.

Career Paths

Bolsas y Mercados Espanoles (BME), has named finance professor Jorge Yzaguirre as chairman of its derivatives arm (MEFF) to replace Tomas Muniesa.

Clotilde Salmerón, previously Markets Director, has been appointed General Manager of the Spanish Derivatives Market.

Cetip SA Mercados Organizados, Brazil’s largest securities clearinghouse, said CFO Francisco Carlos Gomes has tendered his resignation amid a broad management shuffle announced late on Wednesday.

Gomes, who became CFO in May 2012, will step down on Jan. 31, alongside two executive directors in Cetip’s securities and liens business segments, according to a securities filing. Gomes, also a veteran of rival BM&FBovespa SA, will be replaced temporarily by CEO Gilson Finkelsztain, the filing added.

Broadridge Financial Solutions, the leading provider of technology-driven solutions for financial services firms globally, announced that it has appointed Bennett Egeth as President of its newly-expanded Investment Management business.

Financial Calendar

Next week

CME Q4 2013 results
SunGard Q4 2013 results
NASDAQ OMX Q4 2013 results
TMX Q4 2013 results
6.60p ICAP interim dividend payment
CBOE Q4 2013 results

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

Share Notes

Interactive Brokers Group SVP Milan Galik sold 2,000 shares Tuesday, January 28th at an average price of $21.48 (bargain $42,960.00). He now owns 827,517 shares Mr. Galik’s regular sales are chronicled on this specific page.

Analyst Notes

ICAP “Sell” Rating Restated At Espirito Santo Investment Bank – GBX 335 Target Price

Roof Leaker To Watch: CME
The Street

Trade-Ideas LLC identified CME as a “roof leaker” (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified CME Group as such a stock due to the following factors:

CME has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $177.1 million.
CME has traded 428,329 shares today.
CME is trading at 1.91 times the normal volume for the stock at this time of day.
CME crossed below its 200-day simple moving average.

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.


Seedrs Raises £2.58m In Crowdfunding Round

Equity crowdfunding platform Seedrs has closed its self-hosted crowdfunding round, securing £2.58 million to support its growth into Europe.

The London-based business, received almost three-and-a-half times its original target from 909 investors, in return for 33.3 per cent equity.

Zopa Looks To Build P2P Lending Offering After Netting £15 Mln Investment
growth business

Peer-to-peer lending platform Zopa has raised £15 million of new investment capital ahead of a projected lending target of £500 million by April 2014.

Arrowgrass Capital Partners has led a funding round for London-based Zopa, and now joins Augmentum Capital, Wellington Partners and Balderton Capital as backers. Zopa, set up in 2005, facilitates peer-to-peer loans for the retail and business community. Customers have lent some £455 million through the platform, with £180 million dealt in 2013

Other stories

ESMA Delivers Second Set Of Advice On EMIR Equivalence

ESMA has published a supplement to its advice to the European Commission on the equivalence of the regulatory regime for CCPs of Japan with EMIR.

This supplement to the September 2013 Final report sets out ESMA’s advice to the European Commission is in respect of the equivalence between the Japanese regulatory regime for commodity CCPs and the regulatory regime for CCPs under EMIR.

CFTC Announces Agenda For The Upcoming Public Meeting Of The Technology Advisory Committee

The meeting will be held on Monday, February 10, 2014 at the CFTC’s headquarters in Washington, D.C. from 10 a.m. to 5 p.m. For more information regarding the meeting, view CFTC Press 6840-13.

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