July 01 2014


Summer or no summer, so far the world looks resolutely interesting for market structure mavens the world over! In vendorland, one day after Millennium lost Dar Es Salaam to STT’s South African insurgency, NASDAQ OMX storms the Philippines from NYSE NSC. NASDAQ OMX leads US IPO market for H1 2014 while Reuters confirm DB1’s eastern approaches a mere half year after we discussed the topic in our Premium feed. Banks seek CCP loss pass through while DB1 powers HFT for BSE. Thomson Reuters Acquire UBS Convertible Indices. Optiver targets US markets while BNP Paribas does its bit to reduce US deficit singlehandedly (paying the equivalent of 2 days’ US government over-exuberance).

All this and more in today’s Exchange Invest…

Public Markets

NASDAQ Tops U.S. Exchanges For IPOs In Q2 2014

NASDAQ OMX welcomed 79 new listings in Q2 2014, including 55 IPOs, on The NASDAQ Stock Market, to bring its total IPO count to 99 for H1 2014. This represents more IPOs than any other U.S. exchange and a 57% increase in listings compared to the same quarter last year – marking the strongest first half of the year for NASDAQ listings since 2000. The combined proceeds raised by NASDAQ’s IPOs in Q2 totaled approximately $8.8 billion to bring its YTD proceeds raised to approximately $13.5 billion.

Q2 2014 Highlights

Over 60% of all IPOs in the U.S. during Q2 occurred on NASDAQ
90% of NASDAQ’s IPOs in Q2 filed under the JOBS Act

PLY: Very interesting statistic is how the JOBS act is helping push the IPO market forward – vital as US bourses have been somewhat starved of content arriving since Sarbanes Oxley inelegantly over-reacted to the tabloid end of dotcom excess… Good result for NASDAQ OMX, overall the group powers on.

DB1 Looks Outside Euro Zone As Transaction Tax Looms

DB1 plans to expand operations outside the euro area to give non-European clients an opportunity to avoid the bloc’s proposed FTT, four people familiar with the exchange operator’s thinking told Reuters.

“The group has to be ready to offer its clients something outside the euro zone if domestic trading is no longer attractive because of the FTT,” one of the sources said.

DB1’s new derivatives clearing house in Singapore, due to come on line in 2015, is expected to play a significant role in the plans while Eurex Zurich has applied for a trading licence from the U.S. CFTC.

PLY: If the above counts as news, then you clearly aren’t reading our Premium Product! After all I discussed the DB1 pivot on 21st and 22nd January of this year in the following two posts: The Direction of Deutsche Boerse and Deutsche Boerse’s Asian Experiment. Only $120 would have kept you clearly ahead of the competition, and almost half a year ahead of the esteemed end of the fourth estate… So, how can you afford not to be in our elite subscriber group? Support the free daily Exchange Invest, up your insight level and please subscribe here.

Single Guarantee Fund For WSE ATS And BondSpot ATS

BondSpot, WSE and KDPW_CCP have established a single guarantee fund securing the clearing of transactions concluded in the ATS.

PLY: Every little pothole filled in helps the collateral highways become smoother, good move by WSE and KDPW.

BVB CEO: It Would Be A Failure If We Don’t Reach The EUR 20 Mln Average Daily Turnover In One Year
Andrei Chirileasa – Romania Insider

Bucharest SE (BVB) aims to more than double its daily stock trading volumes from an average of EUR 9 million in H1 2014 to at least EUR 20 million one year from now, according to BVB’s CEO Ludwik Sobolewski. Several measures, including a special trading market for small and medium enterprises, should help to this end. Increasing the liquidity of the local capital market is a must for Romania to be considered for an upgrade to emerging market status, one of Sobolewski’s main goals as CEO of BVB.

PLY: I don’t think there is an emerging ranking of “dodgy bucket shop” but this is generally how overseas investors perceive the basket case which is Romania’s capital markets. That said, I am really impressed by Ludwik Sobolewski’s first year at BvB and he has already achieved more than I expected. The trajectory is sound and that can only be good news for Romania which remains a massive opportunity… Plaudits too for the successful privatisation of Electrica recently. BvB is gaining some momentum even if the struggle is uphill…

Mergermarket Group Expands Product Offering Through Successful Acquisition Of Perfect Information

Mergermarket Group, the global BC Partners portfolio company, has successfully closed the acquisition of Perfect Information, the London-headquartered provider of global workflow solutions and financial information for investment banks and corporate finance advisory professionals, for £ 26 million.

PLY: An interesting deal for Mergemarket as Perfect has long been the market leader with its database of annual company filings.

Thomson Reuters Issues Changes To Spot Matching Trading Rules – New Rule Book Encourages Behaviors To Enhance Liquidity For All Matching Users

Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, today publishes its revised Rule Book for the Thomson Reuters Matching community, reinforcing practices designed to safeguard liquidity and maintaining high certainty of execution for all users.

Banks Look To Pass CCP Investment Losses To Clients (subscription)
Cecile Sourbes – Risk

UK-based CCPs have to pass on certain non-default losses to clearing members, who in turn are looking to pass them through to end-users.

PLY: One of many rather thorny issues at present for the ongoing dominance of CCP clearing, as core issues of risk have not been clearly thought through by the political classes and there are various cascades of risk moving through the food chain – which hopefully will be sorted before anybody actually catches sight of a real world need for the waterfall…

Private Markets

BSE Targets HFT Firms After Tech Revamp (subscription)
Anish Puaar – Financial News

Bombay SE (BSE) is finalising deals to bring in HFT firms to its equities and derivatives markets, spurred by recent regulatory changes and the introduction of new technology.

Since it adopted new technology supplied by German derivatives market Eurex, many of the world’s largest HFT firms – whose names are rarely disclosed – have put agreements in place to join the Indian bourse, Ashish Chauhan, BSE CEO, told FN.

PLY: A similar story in the Indian media (which we couldn’t find online) last week discussed the same theme last week – BSE is clearly benefitting from its co-operation with stakeholder DB1. A veritable win win and one which merely reinforces my longstanding view that DB1 is pivoting east! (See also above DB1 story).

Shanghai May Launch Gold Trading Bourse In Q4

Shanghai may launch the international trading board for gold in the city’s pilot free trade zone in Q4 this year, while gold consumption edged up 0.8% in China during Q1. The new bullion trading board in the FTZ may attract foreign market players as China hopes to raise its influence on global gold prices..

Previous discussions on the topic in Exchange Invest can be found on May 28th and March 17th. While the exchange CEO was discussing a gold fixing yesterday.

Optiver Targets US But Rules Out Purchase (subscription)
Philip Stafford – Financial Times

Optiver, one of the world’s largest electronic market makers, has ruled out making a large US purchase even as the Dutch group targets the market in an effort to emulate a buoyant 2013 trading performance. Paul Hilgers, group CEO, said on Monday the group was targeting growth opportunities in the Asia-Pacific region and the US, two areas it has invested in heavily recent years, amid continued low volatility in markets.

However he said it would not follow the acquisition strategy of local rival IMC Financial Markets, which last month agreed to take over Goldman Sachs’s post on the floor of NYSE, allowing IMC to make prices in about 630 securities listed on the exchange. Terms for the deal not disclosed but IMC is understood to have paid just under $30m for the unit.

PLY: Pretty much gone but not forgotten (for all the wrong reasons) readers will recall Duncan Niederauer who played a role helping Goldmans lose a cool billion on their NYSE market making play in purchase price alone… Interesting to watch Optiver expand.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Both FTIL and MCX are up just a bit shy of 2% currently. Yip, Jignesh still in jail.


PSE To Ditch NYSE Euronext For NASDAQ OMX As New Trading Platform
GMA News
PSE Selects NASDAQ OMX’s X-stream Trading Technology

Philippine SE (PSE) and NASDAQ OMX, have signed an agreement for NASDAQ OMX to deliver its industry-leading trading technology, X-stream Trading, to PSE. The new system will power PSE’s trading platform, which currently trades equities and ETFs. X-stream Trading, which will replace the current NSC platform, is expected to go live in mid-2015.

PLY: A body blow to the rump of NYSE Technologies which loses this customer to the good offices of NASDAQ OMX. Incidentally, I ought to have noted yesterday that the breakthrough implementation by South African vendor STT in Dar Es Salaam came at the expense of LSE Millennium.

BATS Introduces The BATS One Feed

BATS launched BATS One Feed, which will deliver aggregated quote, trade, and optional depth information for all four US equity exchange books operated by BATS.


Thomson Reuters Acquires UBS Convertible Indexes

Thomson Reuters announced that it has completed the acquisition of the UBS Convertible Indices – a widely used benchmark in the convertible bond market. The UBS Convertible Indices will be renamed the Thomson Reuters Convertible Indices and integrated with existing Thomson Reuters products and services for the convertible bond market and its suite of indices. The indices will be operated in the spirit of the IOSCO principles for financial benchmarks which come into effect in July 2014.

PLY: An interesting transaction. Bloomberg bought the UBS Commodity Indices recently while Thomson Reuters bought the Convertible Indices – might they also be a bidder for the Barclays Indexes which are currently up for sale?

EI reported on June 24th that Bloomberg took control of UBS’s leading commodity index.

EI reported on June 25th that McGraw-Hill Financial and CME are interested in acquiring Barclays’ index business and merging it with S&P Dow Jones Indices.

Career Paths

Gloria Pfaue and Andreas Heuer are to be the new MDs of Eurex Bonds GmbH with effect from 1 July 2014. Pfaue has been a consultant for Eurex Bonds since 2010. Prior to that, she was responsible for the German-speaking region at EuroMTS in London, and spent over ten years in various specialist and management roles at the Unicredit Group. Business graduate Heuer spent 14 years in various management positions within Deutsche Börse Group, where he in parallel heads the Market Analytics Cash section.

DB1 press release here.

FX Week reports that LCH.Clearnet has appointed Simon Davies as a NED to the BoD with immediate effect.

Davis is a veteran of the asset management industry, having more than 30 years’ experience. He retired as chairman of Threadneedle Asset Management in 2012, after leading its growth from a manager of in-house insurance assets into an international firm managing £89.7 billion. Previously, he held the roles of CEO and chief investment officer.

Datalliance, the leading independent provider of Vendor Managed Inventory (VMI) platform services, announced that Jennifer Warner has been promoted to VP of Administration. In this expanded role, Warner is now responsible for all Datalliance administrative functions, including Finance/Accounting, Human Resources and Legal.

Financial Calendar

This week

Record date ICAP 15.4p final dividend

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

Analyst Notes

ICE “Overweight” Rating Restated By Barclays – $212.00 Target Price
LSE “Add” Rating Restated By Numis Securities
Barclays Increased Their Price Target On CME From $75.00 To $77.00 – “Equal Weight” Rating

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.


Can Equity Crowdfunding Revitalize the IPO Market?
JD Alois – Crowdfund Insider

PLY: Interesting presentation here while clearly given 90% of NASDAQ OMX IPO applications being under the JOBS act, it would see the crowdfunding/JOBS act pincer movement is succeeding already.

Other stories

FINRA Brings 144A Corporate Debt Transactions Into the Light

FINRA began publicly disseminating Rule 144A transaction data in corporate debt securities, bringing transparency to a market that had previously operated in the dark. 144A transactions—resales of restricted corporate debt securities to large institutions called qualified institutional buyers (QIBs)—account for a significant portion of the volume in corporate debt securities.

BNP Pleads Guilty In U.S. Sanctions Case – To Pay $8.8 Billion

BNP Paribas Looks To Keep Customers Amid U.S. Penalties
Yalman Onaran – Bloomberg

BNP Paribas SA (BNP), barred from some dollar transactions for a year, will use a six-month grace period to set up alternate payment systems for clients to keep them from taking their business elsewhere.

…and a few million other stories in the same light from multiple US agencies…

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