July 04 2013

elb2 We wish a very very Happy US Independence Day to all and sundry from both DV Advisors and Exchange Invest. In just 237 short years, the USA has become a magnificent pulsating hotbed of capitalism and a wondrous diverse nation – enjoy your special day, it deserves a celebration.

As you can see, anybody missing their daily information fix as the USA closes down need fear not, we’re publishing as usual!

In a busy session at the EuroParliament yesterday, the good news was that bonus caps on fund managers were removed while the leftist populus ethos of the diet was exemplified by their voting for an FTT in an attempt to induce life into a project which with some more effort will die. (Symbolic votes for daft legislation are de rigeur in the EuroParl).

Elsewhere everything from exchange IPOs to multiple other exciting snippets from quite literally all round the world, today!

Public Markets

CME Clears 64% More OTC Interest Rate Swaps In June

The TRADE News

The number of OTC interest rate swaps (IRSs) cleared at CME Group has jumped by 64%, after the latest stage in the clearing of swaps took effect.

The US derivatives exchange volume figures for June showed it cleared an average of US$66 billion a day of notional value of OTC IRSs, up 64% from US$40 billion in May.

PLY: The percentages are almost certain to be spectacular as the legislation is enacted but it would be churlish not to applaud CME making tangible progress in the business of clearing OTC products. There must be relief and excitement at CME that it now has skin in the game and can build on this successful foundation…

Ambiguity Reigns Supreme: CFTC Removes FX Asset Class From ICE Trade Vault

Forex Magnates

CFTC have approved an order to remove the foreign exchange asset class from the provisional registration of IntercontinentalExchange’s ICE Trade Vault as a swap repository.

PLY: I must admit to being a touch confused. If I understand correctly, the CFTC have not yet defined what exactly the fx asset class contains for swap clearing but they have in any case rescinded ICE Trade Vault’s ability to clear it?

Biggest US Exchanges Said To Seek Delay For Volatility Curbs


The biggest U.S. equity exchange operators and an industry trade group plan to ask the SE to delay the final phase of a market-wide program aimed at curbing sudden stock swings.

PLY: Limit up or Limit down the only constant variables are more regulatory proposals and more lobbying.

Nasdaq OMX Supplies Exchange Technology To Turkish Bourse


Nasdaq will provide Borsa Istanbul with technology.

PLY: I know we led on this topic yesterday but I will run this article to demonstrate that first up Bloomberg’s Nandini Sukumar is the sort of highly capable journalist who can discern fact from hype in exchange media releases and also because distilled to the basics, this deal is a simple revenue win for NASDAQ OMX and their excellent IT platforms business.

BVB chairman: New Bucharest CEO Could Replicate Polish Success


PLY: We wish Ludwik Sobolewski every success as Bucharest CEO but at the same time, Chairman Lucian Anghel does not seem to appreciate that Ludwik’s many successes were steering a remarkable course in a great economy, not building a business from nothing to the point where it propelled itself towards great things: that job was accomplished by WSE founder Wieslaw Rozlucki. I am not saying Ludwik cannot do this but he faces a huge amount of obstacles to get the job done in Romania and we all need to be realistic about the likely outcome. At the same time any progress would be welcome in the stasis of Romanian capital markets.

Private Markets

Jamaica SE Launches IPO

Jamaica Gleaner

The JSE aims to raise J$107.8 million (USD 1,07 mln) to retire debt and offer new services, according to its IPO prospectus offering ordinary shares.

The public would own over 19 per cent of the company in a fully subscribed offer, translating to 27.4 million public shares at J$2.85 (USD 0.028) per unit.

Additionally 3.8 million staff reserved shares are on offer at J$2.55 (USD 0.025), while a final tranche of 7.01 million shares is available to the lead broker Stocks & Securities Limited at J$2.85(USD 0.028).

JSE is owned by its member dealers. Each broker holds about 9.0 per cent interest, which will dilute to 7.2 per cent following the listing.

The IPO is open to subscription from July 5-9.

PLY: We wish JSE every success with their offer.

Trump Plaza And Betfair Partner In New Jersey


Trump Plaza and Betfair will partner in New Jersey’s regulated online gambling market. The two companies have applied for an interactive license in the State and hope to begin November 26, 2013, the date NJ has declared all online gambling sites can go live.

PLY: A good deal for Betfair with a potentially strong foothold in the US market as gradually the states open up to online gambling.

Kenya – Sh1 billion (USD 116 mln) Set As Capital For Futures Exchange

The Star

The Nairobi Securities Exchange or any other company that wants to operate a futures exchange in Kenya will be required to have a minimum paid up share capital of Sh1 billion (USD 116 mln).

In addition, an applicant for a futures exchange license must have a minimum of Sh100 million (USD 1.16 mln) in the settlement guarantee fund before commencement of trading.

PLY: Hmmm, am I alone in regarding this as a bit of a daft move? I mean the exchange needs to have 116 million US in capital – why? There is an insane predilection for overly high capital requirements the world over which is stifling exchange development. At the same time, the idea that the settlement guarantee fund starts with barely a million US strikes me as a topsy turvy judgement. This is presumably incumbent protectionism as is often practised in European states and elsewhere.


As US Crude Gap Shrinks, CME Retakes Lead In Oil Benchmark Battle


Trading in CMEs benchmark U.S. crude oil contract surpassed ICE’s North Sea Brent in June for the first time in 15 months as the huge price difference between the two contracts collapsed.

The move halts a three-year trend that has seen CME cede ground to ICE in crude oil trading, as soaring North American production flooded the delivery point of the flagship New York Mercantile Exchange (NYMEX) contract and disconnected it from global prices.

PLY: The semi-artificial issues of supply and particularly processing capacity in the USA has affected WTI futures for some time. Nonetheless, any apocalyptic tones about the demise of ICE Brent appear overstated as it continues to grow: it’s just WTI has rebounded. The oil futures story going forward is not anyway about the two light sweet benchmarks which don’t really represent the oil which the big producers have: electronic markets make for multiple benchmarks and that is where the real battle is shaping up for oil futures…

DGCX Plans Plastics, Renminbi Futures Contracts


Dubai Gold & Commodities Exchange, the Middle East’s first derivatives market, plans to offer futures contracts based on polypropylene and the renminbi as it seeks to tap into growing trade with China.

The deliverable plastics contracts, denominated in dollars, are being developed in partnership with China’s Dalian Commodity Exchange and are expected to begin trading in the third quarter,.

PLY: DGCX is a market which looked challenged, if even a little lost at first but is now finding its stride with multiple initiatives including Sensex Futures which will launch tomorrow on the popular Indian stock index.


Toshiba To Supply Data Center For Myanmar Stock Exchange

Asahi Shimbun

PLY: Confirmation of rumours we reported June 23rd. Toshiba & telco KDDI will supply a modular data center for a planned securities exchange system in Myanmar.

NYSE Technologies Calls For Collaboration

Low-Latency.com (blog)

Nine months after taking the reigns at NYSE Technologies, CEO Jon Robson has begun to articulate a renewed vision for NYSE Euronext’s IT services operation with “A Call for Collaboration” to the financial markets. Of course, in Robson’s mind, that collaboration hopefully means trading firms will embrace the cloud platform, global network and open sourced middleware APIs that it has rolled out in recent years.

PLY: After a succession of management changes, Jon Robson has an interesting position. Could this be a step towards a spin-off of the group? Certainly ICE have previously proven disinterested in selling many IT services. It is an interesting twist in the history of NYX’s tech group and how it plays out will also be worth watching whether within or outside the ICE group’s embrace.

Analyst Notes

CME Group Given a $86.00 Price Target at Jefferies Group – “Buy” rating
Credit Suisse Increases CME Group Price Target to $65.00 – “Neutral” rating
CBOE Holdings PT Raised to $44.00 at Keefe, Bruyette & Woods – “Market Perform” rating
CBOE Holdings Price Target Increased to $35.00 by Analysts at Credit Suisse – “Underperform” rating
CBOE Holdings Price Target Raised to $48.00 at Sandler O’Neill – “Hold” rating
CBOE Holdingss “Buy” Rating Reaffirmed at Goldman Sachs – $47.00 target price
Jefferies Group lifted their target price on shares of CBOE Holdings to $47.00 – “Hold” rating
NYSE Euronext Given a $42.00 Price Target at Jefferies Group
NASDAQ OMX Group Price Target Raised to $32.00 at Jefferies Group – “Hold” rating

Career Paths

Colombo SE CEO Tenders Resignation

Colombo Page

CSE CEO Surekha Sellahewa has tendered her resignation effective from the 31st of October 2013 for “personal reasons” after a 7 year term and 23 years with the organisation.

ADX Appoints Assistant Chief Executive

Abu Dhabi Securities Exchange (ADX) announced the appointment of Mr. Abdul Aziz Al Neaimi as Assistant Chief Executive for Support Services at the exchange.


Crowdcube Plans Global Expansion


“The ultimate aim is to build a network of crowdfunding sites in 25 to 30 countries … so the whole thing becomes a global investment platform,” said Darren Westlake, chief executive and co-founder of Crowdcube, which says it is the world’s largest equity crowdfunding site.

Other stories

EuroParl Backs Planned Temporary Boost To CO2 Permit Price

Plans to freeze the auctioning of some CO2 permits to encourage firms to invest in low-carbon innovation was backed by Parliament on Wednesday, after it narrowly rejected them in April. This time MEPs set stricter conditions for a freeze. The measure aims to restore the incentive effect of the Emissions Trading System, which is designed to cut greenhouse gas emissions and tackle climate change.

PLY: I am not sure if carbon can bounce back as a market. Clearly the core system was not well run within the EU ETS and the oversupply of permits made things a real mess.

FTT: Wide Scope And Attention To Pension Funds And SMEs

Parliament kept up the pressure on Wednesday for a comprehensive financial transaction tax in 11 EU countries with a wide scope and rates of 0.1% for trades in stocks and bonds and 0.01% for those in derivatives. Lower rates should apply until 1 January 2017 for trades in sovereign bonds and pension fund industry trades. Finally, a new legal ownership principle was inserted to make tax avoidance more costly.

PLY: The madness continues. This tax must be killed. It is already very very vulnerable.

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