July 02 2013

elb2 Clearly the CDS lawyers amongst the readership aren’t focussed on EI this morning as they wade through 400 pages of EU indictment.

Elsewhere, ICE clears LIFFE, so something is already hitting the bottom line even before the merger is fully closed. Meanwhile, the old Warsaw SE boss has headed off to Romania. Less charitable souls might argue there aren’t so many head turning blonds in the Carpathians. DB is taking cloud trading to a whole new (intelligent) level and an FTT has an immediate material impact on trading volumes in India.

All this and more from 5 continents below with added comment from PLY:

Public Markets

Europe Steps Up Regulatory Assault On CDS (subscription)

Financial Times

PLY: 400 pages to summarise two simple questions:

if this was an open market, how come the futures markets at DB and CME were so resolutely unpopular?

(Werner Langen MEP in particular I believe volubly asked specifically the DB element to the question soon after Lehmans collapsed).

Meanwhile ICE has a successful clearing house but it is open only to A rated corporates with the word “bank” in their name…

13 investment banks are scouring the details this morning while the EU has made a direct step forward for market transparency and objective competitive access to, and pricing of, financial products. Doubtless bankers are cursing them but this ought to be progress towards showing the game is up for high margin OTC products.

ICE Clear Europe Completes Clearing Transition Of NYSE Liffe Derivatives Contracts

MarketWatch (press release)

PLY: LIFFE now clears ICE across some 1300 products. Jeff Sprecher is already making money from his NYX acquisition before it even closes.

LME Launches Consultation On Metals Warehouse Queues

Reuters UK

LME has launched a 3 month consultation on proposed changes to metals warehousing rules, aimed at reducing long queues of over 100 days that end-users face in getting material.

PLY: Clearly anybody making money on storage while releasing stocks to LME end users slowly is not playing a fair game. This move can only increase the efficiency of the market for the good of all users of metals.

Deutsche Börse Launches Marketplace For Trading Outsourced Storage & Computing Capacity

PLY: Clients will know I have been discussing the ultimate depreciating currency of late when looking at forex futures in the wake of Bitcoin’s breakthrough and I use data storage as an example. However, short term the market is volatile. DB are to be applauded for entering a market which clearly has a huge opportunity to make IT more efficient.

From early 2014, Deutsche Börse Cloud Exchange AG, a new jv formed together with Berlin-based Zimory GmbH will create the first neutral, secure and transparent trading venue for “cloud computing” resources.

This is a simply brilliant move: especially in the government sector any unused capacity must be sent to the exchange to reduce deficits, building a natural market which will be enhanced by private players.

KCBT Wheat Futures Trading Debuts In Chicago With Little Fanfare

Reuters

There was no fanfare, with no celebrities ringing an opening bell and no donuts or cake served in the hallways to mark the transfer of KCBT floor trading to the Chicago floor. The KCBT closed its pits for good on Friday following CME’s purchase of KCBT last fall.

PLY: The handful of ‘pit’ traders were holding laptops. There is no need for a grain floor, now it’s just a long-drawn out wake…

SGX Branches Out Into FX Derivatives (subscription)

Futures and Options Intelligence

PLY: A sensible move with a focus on Asian currencies. Clearly lack of liberalisation may hamper the likes of Indian Rupee trade for now but the market is a logical expansion for SGX and we hope it works…

TSX Chief Works To Build Exchange Into Global Brand

Toronto Star

PLY: TMX continues charm offensive. Is it to dent the Aequitas challenge or an attempt by Tom Kloet to extend his mandate which we keep hearing is coming to a conclusion?

Commodity Volumes Crash On New Tax

Business Standard

Commodity volumes in the top-five exchanges fell over a third on Monday with the imposition of a new tax regime of 0.01 per cent on commodities.

PLY: The Indian CTT mimics the EU suicide note, or FTT. If FTT is applied and ‘only’ one third of volume disappears from EU equity markets, it ought to enshrine EU-led impoverishment of the Eurozone and beyond. As I said in Berlin last week to the FESE Convention: End this evil tax on all citizens & pensioners now!

Private Markets

UBS MTF Launches In Spain (subscription)

Financial News

UBS MTF, will start offering Spanish equities from Wednesday, as alternative markets continue to capitalise on reforms that have helped challenge the dominance of Spain’s domestic stock exchange.

Bolsas y Mercados Españoles, Spain’s national stock exchange, has seen its share of equity trading fall from 92.5% at the start of the year to 80.21% at the end of June, according to Thomson Reuters data.

PLY: Having fought a massive rearguard action to avoid the inevitable, BME is now being hit hard by competitors entering the market. The worrying question: Is there a natural floor for BME market share when trading remains critically focussed on a relatively few very large cap equities which are popular with pan-European platforms?

Swaziland Bourse Has Long Way To Go

Independent Online

In a financial world of instantaneous transactions, when billions of shares are traded at the speed of light, the sleepy Swaziland Stock Exchange (SSX) remains a throwback to an earlier era.

Visitors will not find an electronic ticker flashing the activity of the bourse’s six listed companies.

“We still do things manually:” Anyone at the trading sessions who has legible handwriting records trades with marking pen on a plastic display board.

Technology

Sina becomes first Chinese Web outfit to introduce Nasdaq Last Sale real-time data

Finextra (press release)

Nasdaq Last Sale real-time data is now available to millions of individual investors on the digital media network of Sina Corporation (Nasdaq:SINA), an online media company serving China and the global Chinese community.

SINA will become the first ever Chinese website to launch free real time trade data for all U.S. listed securities.

PLY: Way back when in the early days of the internet, I used to publish something else and people still asked if they really thought this WWW thing would catch on, an upstart ISP Ozemail licensed all real time financial data from the Australian SE. Then, to the horror of the exchange and the delight of customers, Ozemail gave it away for free on their homepage which consequently became one of the biggest in Australia, helping propel growth in core services and making shareholders rather wealthy.

Products

CME Trade First USD-Denominated Palm Oil Swaps (subscription)

Wall Street Journal

CME cleared their first USD Malaysian Crude Palm Oil Calendar Swaps on 21 June 2013, through CME ClearPort.

PLY: Food, or perhaps fluid, for thought for those looking at running the Malaysian Mercantile Exchange…

Indexes

Luxembourg Launches Responsible Investment Index

Luxembourg SE will launch a new responsible investment index, the Lux RI Fund Index, on 1 July 2013 representing the overall performance of some of the major funds domiciled in Luxembourg that operate in the area of responsible investment, primarily those concerned with environmental, social and ethical issues.

PLY: Tree huggers rejoice.

Muscat Securities Market Launches Its Sharia Compatible Index

Oman News Agency

Muscat Securities Market (MSM) today launched its Sharia Compatible Index.

Career Paths

Ex- Warsaw CEO To Restructure Bucharest

Romania-Insider.com

PLY: Having been much rumoured for weeks: confirmation that Ludwik Sobolewski will be CEO of BvB. With an average stay time of recent CEOs measured in months, not years, it will be fascinating to see how Ludwik copes with this challenge. Certainly it will prove if he can build a business as BvB has no truly sustainable franchise – just opportunities and, sadly, Romania is all too renowned for its failure and scandals.

BvB needs serious surgery and whether the fractious, dissipated shareholder base of BvB can cope with serious upheaval remain to be seen. To remind you of a key metric: Poland has approx 39 million citizens and more than 1.6 million customer accounts. Romania has approx 22 million citizens and a breathtakingly dismal circa 85,000 customer accounts (Warsaw has been known to add more accounts in a couple of months than the entire size of Romania’s market).

Having some experience in the region, I wish Ludwik every success. He will be challenging his own ability to re-engineer but particularly the fractious and often challenging environment of Romania makes reform difficult. It is a big risk to his reputation, I hope it works for him.

At the same time, I can personally vouch for a marvellous talent pool in the country and indeed we enjoy excellent input at EI parent DV advisors’ from our Romanian office.

Thai Bourse Announces EVP Market Operation

The Stock Exchange of Thailand (SET) has promoted Chanisa Chutipat to EVP & Head of Market Operation Division, overseeing overall post-trade services, trading operations, clearing house, securities depository, securities registration and provident fund registration, effective from July 1, 2013.

NCDEX Appoints Nidhi Nath Srinivas CMO

Economic Times

National Commodity & Derivatives Exchange Ltd (NCDEX), India’s leading agri-commodity exchange, today announced the appointment of Nidhi Nath Srinivas as Chief Marketing Officer.

Analyst Notes

Betfair Group Given “Hold” Rating at Deutsche Bank
Analysts at Nomura reiterated a “Neutral” rating on shares of Betfair Group
Numis Securities Ltd restated their “Buy” rating on shares of Betfair Group
Citigroup reiterates “Buy” on Betfair, target raised from 950p to 975p
TMX Group had its price objective lowered by Scotiabank from C$55.00 to C$53.00, “Sector Perform” rating

Crowdfunding

Equity Crowdfunding: The Driving Force Behind Job Creation

Huffington Post

According to a Kauffman Foundation report, new firms add an average of three million jobs to the U.S. economy during their first year of operation, while older companies cut around one million annually. Unfortunately, at least 65 percent of these new startups go out of business within the first four years due in part to lack of access to financing.

PLY: Here is a great nugget which proves why Crowdfunding is essential: out of 6 million US start-ups in 2012, only 1,174 received venture capital funding. Entrepreneurs have as much chance of raising VC funding as winning the lottery…and things are a lot worse in Europe and the rest of the world.

Other stories

Poland – KDPW CCP Files EMIR Application

PLY: KDPW, the Polish depositary/clearing house is still slated for privatisation before the end of the Tusk government although things have gone a bit silent of late. This is a potentially enormous business in the heart of the New Europe.

Japan Securities Clearing Corporation To Become CCP For Osaka Listed Derivatives

PLY: As part of the merger of TSE and OSE to make JSE, the CCP will come from JSCC.

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