July 08 2013

elb2 A relatively quiet start to the week albeit with a couple of rather vital stories today.

China is looking at private banks and creating a new Treasury futures market – big steps towards open capitalism. Also in China, Tencent will be the sole mobile source of free real-time NASDAQ data.

In today’s other big story, Bankers are worried about clearing house safety.

Happy reading:

Public Markets

China To Restart Treasury Futures After 18-Year Halt

Businessweek

China will resume trading of government bond futures for the first time in 18 years to provide investors with a hedging tool and help boost the fixed-income market.

China is opening its $3.7 trillion bond market to foreign investors through its Qualified Foreign Institutional Investor and Renminbi Qualified Foreign Institutional Investor programs.

PLY: Trading may restart as early as September although access remains restricted to qualifying institutions. Nonetheless a step forward towards RMB liberalisation and indeed opening up China’s debt markets overall. Note elsewhere, talk is growing of China permitting private banks..ironically this may be at the tail end of the banking era but financial liberalisation is the key factor here for the development of markets.

Banks Warn Of Risk At Clearing Houses (subscription)

Financial Times

PLY: Jean-Pierre Mustier’s comment is probably a tad harsh: “We’re moving from a set-up where banks were interconnected, because they had transactions between them, to a system where very lowly capitalised entities, the clearing houses, are supposed to protect the banks from a problem.”

At the same time, there remains a critical issue – when only 20% of the market, CCPs didn’t have as much risk as when they become 100% – and it is not simply 5 times more risk as the likes of AIG and Lehman were effectively not risking anything much in clearing houses. Clearing is a remarkably safe business based on relatively small proportions of collateral per se.

Nevertheless it is good to hear that clearly bankers want to pay higher margins to cover their risks. This is probably not a bad idea at all.

…As many clients will have heard me opine: it’s all very well modelling your “all you can eat” buffet exposure on Kate Moss and her supermodel friends. However, does the same risk model hold up if instead it’s Homer Simpson, Barney and the regulars of Mo’s Tavern who turn up at your restaurant?

Private Markets

ICE Futures Canada Weighs Pre-Arranged Block Trades

Alberta Express

ICE Futures Canada, known mainly for its canola futures and options, is considering whether to allow pre-arranged trades of large blocks of contracts, a practice already common in some other commodity markets.

Calcutta SE Awaits Sebi Nod To Resume Trading With New Clearing House

Hindu Business Line

The Calcutta Stock Exchange is expecting to resume trading with its new clearing house infrastructure.

MSE Launches Market-Making Rules (subscription)

Times of Malta

The Malta Stock Exchange has outlined the rules that will govern the operation of market-making which will launch in October.

Indexes

NSE Launches ‘LIX 15’ Index

The Economic Times

India’s National Stock Exchange (NSE) launched ‘LIX 15’ index derivatives, in a bid to provide exposure to the most liquid stocks.

Technology

WSE Info Engine Selects Trayport Trading System

WSEInfoEngine SA, a subsidiary of Warsaw SE, will use the Trayport Exchange Trading System (ETS) for OTC commodities trading.

PLY: WSE is now attacking the independent Warsaw Commodity Exchange head on…

Tencent To Become The Only App In China With Free Real-Time NASDAQ Data (subscription)

Wall Street Journal

Tencent’s mobile application Tencent Portfolio has become the only mobile stock application in China to provide Chinese investors with free access to real-time, intraday trade data for all securities traded on NASDAQ systems.

Changes in investors/shareholders

Gooch & Jersey Partners Trim GFI Shareholdings

Wall St. Cheat Sheet

Jersey Partners Inc. a 10% Owner at GFI Group Inc. (NYSE:GFIG), and Mickey Gooch each sold 30,000 shares at $3.82 per share for a total value of $114,600.

Financial Calendar

TMX Group Limited to announce Q2 2013 financial results on Thursday, August 1, 2013

Analyst Notes

ICAP plc Upgraded to “Neutral” at Espirito Santo Investment Bank Research
London Stock Exchange Group Plc’s “Overweight” Rating Reaffirmed at Morgan Stanley
Nasdaq OMX Group Inc Upgraded to “Neutral” by Zacks Investment Research

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.

Crowdfunding

Italy Adopts Crowdfunding Rules

Crowdsourcing.org

Italian regulator (CONSOB) has just enacted an equity crowdfunding law, providing good solutions for several issues raised by legislators, industry and consumers.

Based on the Decreto Crescita Bis, (“Growth Act 2.0”), the new CONSOB regulation, to be published next week adds a full and proper equity crowdfunding regulation to the existing rules for the other models of crowdfunding (lending, donation and reward- based). Equity crowdfunding is available for any Italian domiciled business.

PLY: Pity the rule is only for Italian companies…

Other stories

Canadian Regulator Seeks Tougher Trading Controls (subscription)

Financial News

Canada’s market regulator plans to introduce new rules from next year that will set a framework around direct access to stock markets, as part of a raft of recent measures designed to mitigate the risks of electronic trading.

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