July 03 2014

elb2

Russia Central Bank sells 11% in MOEX to western investors in today’s big deal news while LSE edges everybody out in Q2 money listings, including the US exchanges. Euronext listings tick up. UK Gold fix fair says regulator. New users for BXTR as Cinnober squares up with new acquisition BOAT. New exchanges in Africa and Turkey, while Clearstream publish fascinating collateral study.

Various interesting stories today while I am keynoting in Warsaw at the excellent Digital Money & Currency Forum.

Public Markets

MOEX Diversifies Investor Base After Central Bank Sells 11% Stake
MondoVisione

On 2 July 2014, the Central Bank of Russia announced the sale of an 11% stake in MOEX to the market. The sale is in line with the Central Bank”s obligation to completely exit the shareholder capital of MOEX by 1 January 2016.

Russian State Fund Attracts Western Investors For MOEX Deal (subscription)
Alec Macfarlane – Financial News
Foreign Investors Show Appetite For Russia In MOEX Sale-cbank
Reuters

PLY: The ongoing kerfuffle over the politically challenged economic basket case Ukraine has not affected investors being attracted to MOEX, the exchange at the core of Russia’s exciting financial centre project. RDIF teamed up with a consortium of investors from UK, Germany, US, China, Singapore, UAE and Qatar to buy the 11% stake. “The bank sold 267.3 million shares in the exchange priced at 60 roubles ($1.75) each, raising $468 million.” Apparently around 50% of the shares were acquired by RDIF and its associates.

A good deal methinks for a business which has huge opportunity going forward.

LSE Edges NY Exchanges To Q2 Listings Crown (subscription)
Anna Irrera – Financial News

LSE was the place to list in the second quarter, with companies raising more money on the iconic UK exchange than anywhere else.

PLY: Number of listings versus money raised and…multiple options

So Dealogic notes that the LSE captured 26 IPOs and raised $12.8 billion in the last quarter so it had the best Q2 ahead of 32 on NYSE ($12.2 billion) and 50 on NASDAQ worth $11.3 billion.

We also ran Half Year NASDAQ OMX and NYSE reports on IPOs on July 1st and July 2nd.

Euronext Says H1 Listings Activity Rises 8.7%
Reuters

Euronext said listings activity rose 8.7% in H1 to 57.6 billion euros ($78.6 billion) thanks to a “substantial increase” in IPOs.

A total of eight large-cap IPOs were completed, compared with one for the same period last year, and 23 small and medium-sized company IPOs were completed in the first half, against 10 a year ago, Euronext said.

PLY: More IPOs is good although I think “substantial increase” may be a touch over-egging things… Euronext shares stand at 18.83 Euros (issue price 20) as we race to pixel.

Barclays Probe Casts Ugly Light On Dark Pools
Matthew Philips – Businessweek

In a 30-page complaint (PDF) against Barclays last week, NY AG Eric Schneiderman levels accusations of fraud in its private “dark pool” trading venue called Liquidity Cross, or LX.

FX Dark Pools Predicted To Rise
Farah Khalique – Euromoney

Dark pools are the most recent corner of the financial markets facing the wrath of the regulators. However, despite the furore and speculation that some banks will close them down, FX dark pools are gaining popularity and are predicted to increase in use among the buy and sell side.

UK Watchdog Says No Evidence That Gold Price Is Rigged
Huw Jones – Reuters

Collusion among banks in setting the gold price benchmark was possible but there is no evidence of this, a senior British regulator said on Wednesday when answering lawmakers’ questions on the trustworthiness of the gold market.

Private Markets

Cinnober Takes Fight To BATS With BOAT Deal (subscription)
Tim Cave – Financial News

Stockholm-based Cinnober acquired Markit’s Boat reporting service on Tuesday, having provided the underlying technology to the service since 2007.

Boat was launched by nine investment banks to coincide with the EU’s 2007 MiFID, which enabled the emergence of equity trading and reporting systems to rival exchange offerings. Mifid established a so-called trade data monitor mechanism, or TDM, to allow banks and brokers to report their OTC equity trades.

Markit acquired the Boat TDM system in 2008, to help keep a check on exchange fees for reporting services.

PLY: Head to head competition between BOAT and BXTR is good for the market and I expect both services can survive and thrive.

BATS Chi-X Europe Adds More Customers To BXTR Trade Reporting Service
BATS Global Markets

BATS Chi-X Europe has added further customers to “BXTR”, the exchange’s market-leading suite of on- and off-exchange trade reporting services. The service, which covers more than 11,800 reportable securities, has captured significant market share since its launch in November 2013, with an average €14.7bn reported each day.

Amongst our new BXTR participants are: Deutsche Bank, Instinet, KCG, Liquidnet.

These firms join the initial customers who joined the BXTR service when it launched six months ago – Bank of America Merrill Lynch, Citigroup, Credit Suisse, JPMorgan, Morgan Stanley and UBS.

Turkey’s EMRA Has Set Up An Istanbul-Based Energy Exchange
Balkans

Turkey’s Energy Marketing Regulatory Authority (EMRA) has set up an Istanbul-based energy stock exchange.

Presidents To Unveil Grain Exchange
Nicholas Waitathu – Standard Media

Small-scale farmers and traders will soon start to benefit from competitive prices for their produce following the launch of an agricultural commodity exchange in the region. Today, three presidents – Uhuru Kenyatta of Kenya, Uganda’s Yoweri Museveni and Paul Kagame of Rwanda will launch a regional common commodity exchange in Kigali.

California Investor Wins Federal Government’s Bitcoin Auction
Riley Snyder – Los Angeles Times

Venture capitalist and entrepreneur Tim Draper is rolling in bitcoins after winning a U.S. government auction Monday, buying 29,656 bitcoins were part of a trove that the government seized from a raid of online illegal drug market website Silk Road last year. Draper, co-founder of Silicon Valley investment firm Draper Fisher Jurvetson, beat out 44 other participants during the 12-hour auction Monday and identified himself as the winner Wednesday. Though the dollar amount of the winning bid wasn’t released, the stash is worth about $19 million at current market prices.

PLY: As mentioned yesterday when still anonymous…Mr Draper retains a healthy contempt for state politics in California calling for UDI for silicon valley…

Coinbase Tries To Quell Security Concerns With ‘Vault’ Service
Zach Miners – PC Advisor

Coinbase, a prominent startup for buying, selling and storing bitcoins online, is offering a free security feature that it hopes will do a better job at keeping bitcoins safe: a free, optional service called the Vault, which adds several layers of security to its online wallet service.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL are flat to small off today, Jignesh remains incarcerated.

Technology

India’s BSE Halts Bourse On Network Failure As NSE Keeps Trading
Rajhkumar K Shaaw & Santanu Chakraborty – Bloomberg

Trading on BSE was disrupted by a technical error for at least the third time since April.

Fidessa Launches New Affirmation Service For The Buy-Side – Next Phase Of Post-Trade Strategy Delivers Comprehensive Workflow Across FIX
MondoVisione

Fidessa announced the next phase of its post-trade strategy with the launch of an affirmation management service (AMS) for the buy-side, a new class of application automating the workflow for direct trade affirmation between the buy-side and sell-side, delivering a faster, cheaper and more accurate alternative to current solutions. It also complements Fidessa’s existing sell-side community and its FIX-based Post-trade Hub launched last year.

Markit Announces Confirmation Service For FX Options (subscription)
James Rundle – waters technology

Markit has announced the development of a new electronic service for FX options confirmations and exercise management, in conjunction with a number of investment banks.

Mind The Gap Between Regulation & Innovation (subscription)
Behzad Gohari (MD The Althing Group) – WallStreet & Technology

The real reason HFT is under the spotlight isn’t the frequency of the trades. It’s the gap between regulation and innovation.

Indexes

Vix Market Fear Gauge Goes Global (subscription)
Neil Munshi – Financial Times

Wall Street’s ‘fear gauge’ is going global.

PLY: I hate to be pedantic but it strikes me 24 hour trading is a long way from going global. CBOE remains an interesting business, driven by its ViX and other proprietary index portfolio but remains a lively Chicago franchise with linkage to the outside world. Global is still some way away in the ambitions of CBOE methinks.

Career Paths

Maciej Wewiór has been appointed Director of the PR Department of WSE and its Spokesperson.

PLY: I have often complained that the Polish government are overstepping the mark with their manipulation of the Warsaw Exchange but news that they have castrated Mr Wewior sounds extreme. Presuming this is just an idiotic politically correct phrase which is fundamentally incompatible with a holistic grammatical approach to English as a language, we welcome Mr Wewior as Spokesman for WSE.

SEC announced that James McNamara has been selected as the deputy chief human capital officer in its Office of Human Resources.

Financial Calendar

This week

Record date ICAP 15.4p final dividend

New announcements

NASDAQ OMX Q2 2014 Financial Results – Thursday, July 24, 2014

NASDAQ OMX press release here.

CBOE Q2 2014 Financial Results – Friday, August 1, 2014

CBOE press release here.

SGX – Financial Year 2014 (FY2014) Financial Results – 31 July 2014

SGX press release here.

Thomson Reuters Q2 2014 Financial Results – Wednesday, July 30, 2014

Thomson Reuters press release here.

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

Other stories

Clearstream-Sponsored Study Reveals Need For “Collateral Value Chain” To Enable Up To EUR 40 Billion In Equity Capital Savings For European Banks
Deutsche Borse

The new study “Collateral optimisation – the value chain of collateral: Liquidity, cost and capital perspectives” by Clearstream and Elton-Pickford finds that European banks could reduce their Basel III equity capital requirements by up to 20% – an equivalent of EUR 40 billion – through efficient collateral optimisation.

PLY: Fascinating numbers, well oiled collateral will be a key to efficient market functioning for all counterparties going forward.

ICMA & Rule Financial Launch T2S Survey
MondoVisione

ICMA and Rule Financial announced the launch of a joint survey into industry preparedness for and attitudes towards Target 2 Securities (T2S).

PLY: A useful study, I look forward to hearing more as the results emerge.

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