July 10 2014


The shining sun is having little impact on the pace of activity in the exchange world with everything today from an Irish SE SME bond initiative to various London silver fix announcements and most things in between… Qatar is cutting its LSE holding, Bloomberg buys vendor RTS and much more…

Meanwhile if you like the free stuff and want to support us building out the industry platform for markets, please join our top tier, it’s only $120 and keeps this daily newsletter free. Recent stories include:

NEW: EUREX Clearing Paper Released

Euronext: Separation Anxiety?
– as we race to pixel, Euronext shares

Poland At the Crossroads
– the poster child of New Europe looks increasingly to be going off the rails worse than Miley Cyrus post Hannah Montana

NLX: Missed Opportunity
– like Spain’s much hyped world cup team, much hyped NLX had an open goal but they still couldn’t score…

NLX: Big Data: Easy to Find?
– given the quality of their surveillance system and data tools, I ponder why we don’t have more evidence to disprove my original hypothesis: The Butterfly (In)Effect

Public Markets

Qatar Cuts Holding In LSE By A Third
James Quinn & Ashley Armstrong – Daily Telegraph

Qatar Holding is to trim its 15% stake in the owner of LSE by a third ahead of a $1.6bn rights issue by the British bourse to fund its acquisition of Russell Investments. The Middle East investor on Wednesday night instructed Citigroup and BAML to sell a 4.83% stake in LSEG in an overnight accelerated bookbuild process. The sale is expected to have been completed by the time the market opens on Thursday morning, with the shares likely to be sold to a broad range of institutions rather than a single buyer.

Banking sources indicated Qatar Holding, part of the Qatar Investment Authority, will use the cash from the proceeds to maintain a 10% shareholding in the British bourse without stumping up more cash for the expected rights issue, due to begin in September.

The investment fund is to reduce its stake from 15.13% to 10.3%.

CME, Thomson Reuters In Line To Run Silver Fix (subscription)
Francesca Freeman – Wall Street Journal

CME and Thomson Reuters are expected to be crowned the new operators of the London silver fix this week, a person with knowledge of the matter said Wednesday.

An announcement is expected Thursday or Friday to mark the end of a nearly two-month-long hunt for a replacement to the benchmark, despite an 11th hour attempt to muscle in on the action by LME and Autilla, a brokerage technology provider.

PLY: Further suggestion it is CME and TMR who will win, despite this story:

LME And Autilla Announce Alliance To Provide London Silver Price

LME and Autilla Ltd have entered into a strategic alliance to deliver the new London Silver Price. The alliance will link Autilla’s leading interbank bullion trading platform to the LME’s regulatory framework and infrastructure.

PLY: As I mentioned the other day, if LME does not win, HKEx will feel the heat.

SGX Takes First Step On Link-Up With HKEx (subscription)
Enoch Yiu – South China Morning Post

SGX opened an office in Hong Kong and linked up with the local exchange’s data centre to make it easier for investors in the city to trade its derivatives products, a first step since last December’s MOU on co-operation.

FCA Sets Sights On High-Frequency Traders (subscription)
Sam Fleming & Philip Stafford – Financial Times

High-frequency traders and the practices they use to get a jump on other investors are firmly in the sights of the UK financial watchdog as it launches a review of competition in the wholesale securities markets.

UK Launches Competition Review Into Institutional Banking
Huw Jones – Reuters

FCA is launching a broad “exploratory” review of competition in the wholesale markets used by banks, fund managers and exchanges to check if they operate effectively to help the economy and give their customers a good deal.

PLY: Hopefully that will help explain why it costs multiple basis points to execute stock or derivatives through a sell-side bank when the exchanges only charge pennies…

Throwing Sharks Out Of The Dark Pool Tank (subscription)
John Bates – Wall Street & Technology

Barclays is the most recent brokerage to be fined for letting predators into its dark pool. But will investors be happy with dark pools without sharks?

PLY: Drawing an analogy with Pipeline which clearly is the equivalent of rushing up to an MTF and screaming “Blood! Blood! Blood!”

SEBI Eases Norms On Brokers Dues For Exiting Bourses
The Hindu Business Line

To facilitate and expedite the exit of non-operational bourses, SEBI has proposed to make it easier for such exchanges with regard to outstanding dues from their defaulting brokers whose number stand at nearly 2,600, as opposed to their mandatory exchanges are liable stance.

Currently, 10 bourses which have applied with SEBI for voluntary exit have Rs. 42 crore (USD 7.04 mln) worth of pending dues by a total of 2,591 brokers.

Private Markets

Bloomberg Acquires RTS Realtime Systems – RTS Delivers High-Performance, Multi-Asset Trading Solutions To Enhance Speed And Geographic Reach Of Bloomberg Trading Technologies

Bloomberg announced that it has acquired RTS Realtime Systems, a global provider of low-latency connectivity and trading support services. RTS provides market connectivity and trading tools for equities, futures, options, FX and fixed income trading.

PLY: An interesting deal for Bloomberg and a remarkable sale for the Gemuenden family business. Congratulations to CEO Stefan and team on a successful sale, it will be interesting to see what happens next… Various other vendors continue to be rumoured for sale incidentally.

Stock Exchange And Government Plan Bond Finance For Irish SMEs
Donal O’Donovan – The Irish Independent

Irish SE (ISE) is working with the Government to create a market in bonds backed by Irish SME debt.

PLY: Good plan by CEO Deirdre Somers to adopt bond markets that may help revitalise lending to the Irish corporate sector.

IEX’s ‘Broker Priority’ Plan Stirs Debate
Bradley Hope – Wall Street Journal

IEX’s plans to bring its “broker priority” market structure into the light have stirred up a debate about exactly how this system works and whether anyone is disadvantaged.

PLY: A better outline of issues which were somewhat confusing me in an article from Monday this week… There is nevertheless a debate to be had here which reminds me of FIFO versus proportionality in some respects too.

Romanian Power Exchange OPCOM To Be Listed On BVB This Autumn? (Romanian version only)
Ana Zidaru & Alina Toma – Bursa

The rumors indicate that the Romanian authorities have decided to list OPCOM – the Romanian power exchange – on BVB this autumn, after pressure from the IMF to execute the plan of diversifying the shareholding structure of the exchange.

OPCOM is 100% owned by Transelectrica, the Romanian national energy transporter.

PLY: An interesting development in the Romanian power market.

ECX To Introduce Traceability, Online Trading

Ethiopia Commodity Exchange (ECX) plans to implement commodity traceability and online trading projects this Ethiopian fiscal year, says its Interim CEO, Shimelis Habtewold.

Netagio Launches First British Bitcoin, Gold & Sterling Exchange

Netagio, the UK-based digital currency broker, today announced the launch of the first and only British exchange enabling retail customers and institutional investors to trade gold, Bitcoins and GBP on a single P2P exchange platform. Building on Netagio’s growth and reputation as a secure platform, on which to buy and sell Bitcoins and gold individually, customers from 114 countries around the world can now trade each asset class against each other on the exchange.

PLY: The key factor here is how Netagio have used the recent Isle of Man openness to cryptocurrency to create their market – a good move for both parties which will be interesting to see develop.

Bitcoin Is Having Its Moment But There Are Better Sustainable Currencies
Oliver Balch – The Guardian

For something entirely virtual, Bitcoin has caused a very real ruckus. Everyone from central bankers to anarchist cypherpunks has queued up to give their five pence worth on the “decentralised online currency”, as the US Treasury describes it.

PLY: Bitcoin remains the Model T Ford of cryptocurrency. Perhaps it can upgrade to be the Crowd Victoria or Mustang but right now it has been the digital money which broke through into public consciousness.

Global Advisors Announces World’s First Regulator Approved Bitcoin Investment Fund

Global Advisors Jersey Limited (GAJL), an investment management company based in Jersey, announced that it has received regulatory approval for a Bitcoin Investment fund. The Global Advisors Bitcoin Investment Fund (GABI) has received certification from the Jersey Financial Services Commission (JFSC) and will launch August 1st 2014. The Global Advisors Bitcoin Investment Fund will operate within the Collective Investment Funds (Jersey) Law 1998 as an Expert Fund.

PLY: Not sure this is precisely right as I have seen multiple side funds and so forth already created but certainly there will be many more Bitcoin funds where GAJL is in a leading pack.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX flat as FTIL tumbles 3.5% as concerns about NSEL settlement and values for the MCX stake continue to worry investors, long before anybody remembers Jignesh Shah is still a jailbird.

NSEL To Bring Defaulters’ Auditors Under Scanner
Sharleen D’Souza – Business Standard

The crisis-hit NSEL has decided to bring to book the statutory auditors of its defaulter borrowers.

PLY: Did auditors not notice discrepancies in their charges’ accounts due to NSEL loans? That’s a new approach from NSEL to receive satisfaction.


LSEG & Wipro Partner To Launch A Hosted Enterprise Reconciliation Utility

LSEG and Wipro Ltd have entered into a strategic partnership to provide a hosted, end-to-end reconciliation solution for the financial services industry using LSEG’s UnaVista platform, a hosted, global platform for all matching and reconciliation needs, helping firms reduce their operational and regulatory risk.


Eurex Enters FX Trading Business, Could Force CME To Reduce Prices

In its recent monthly volumes breakdown, CME reported a decline in trading volumes in the last several months over the year-ago period across almost all derivative classes, other than interest rate derivatives, after a solid start to 2014. Competing exchange operator NASDAQ OMX also witnessed a similar decline in trading volumes of derivatives during the current quarter. Among the various derivatives traded on CME’s platform, trading activity for FX traded products have been very low over the last year or so.

Banks Racing To Pare Swaps Holdings Ahead Of Rules, Goldman Says
Matthew Leising – Bloomberg

Wall Street banks are racing to simplify their swaps holdings (increasingly through compression) before new rules make it more costly to own the derivatives starting in 2017, according to Goldman Sachs executive, Andy Hudis, who runs the credit valuation adjustment desk in London.

PLY: Lest anybody can forget the ICAP business TriOptima is a 500lb gorilla in the business of compressing swaps.

Career Paths

ITRS Group announced the appointment of Guy Warren as CEO of the company. Mr Warren replaces Kevin Covington, who will remain as a Senior Advisor to ITRS.

FT notes that UK-based bitcoin exchange Coinfloor has tapped the former global head of commodities at Credit Suisse to lead its attempt to promote professional trading of the virtual currency.

Adam Knight, who has been an angel investor in London since leaving Credit Suisse in 2011, has become executive chairman of Coinfloor and taken a stake in the company in a new fundraising round. Mr Knight joined existing backers Passion Capital and Taavet Hinrikus. Coinfloor was founded by Mark Lamb.

Financial Calendar

This month

Interactive Brokers Q2 Financial Results – Tuesday, July 15, 2014
NASDAQ OMX Q2 2014 Financial Results – Thursday, July 24, 2014
Tullett Prebon H1 Financial Results – Tuesday, 29 July 2014
Thomson Reuters Q2 2014 Financial Results – Wednesday, July 30, 2014
SGX – Financial Year 2014 (FY2014) Financial Results – 31 July 2014
BGC Partners Q2 Financial Results – Thursday, July 31, 2014

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

Share Notes

NASDAQ OMX EVP Edward S. Knight sold 25,930 shares Monday, July 7th at an average price of $39.64 (bargain $1,027,865.20). He now owns 92,098 shares.

Analyst Notes

Interactive Brokers Downgraded By Zacks From “Outperform” To “Neutral” Rating – $24.50 Price Objective

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 Leaps Forward Beyond Hype To Solve Big-World Problems
Devin Thorpe – Forbes

Much of the hype around crowdfunding has frustratingly proved to be so much hot air. The United Nations Global Compact and the U.S. State Department are working to change that by bringing crowdfunding forward to finance projects in the developing world, especially projects designed to address the social problems endemic there.

Other stories

FIA’s Fourth SEF Tracker Shows Higher Volume On SEFs

FIA today published the fourth issue of FIA SEF Tracker, a periodic report on trading activity taking place on swap execution facilities.

Hearing: The Role Of Regulation In Shaping Equity Market Structure And Electronic Trading – Tuesday, July 8, 2014, Testimony Of Mr. Kenneth Griffin Founder and CEO, Citadel LLC

Hearing: The Role Of Regulation In Shaping Equity Market Structure And Electronic Trading – Tuesday, July 8, 2014, Testimony Of Mr. Kevin Cronin, Global Head of Trading, Invesco, Ltd

ESMA: Open Hearings On MiFID II – Audio Recordings

ESMA has published the audio recordings of two of the MiFID II open hearings which took place in Paris this week.

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