July 16 2015

elb2

Greetings from Berlin where Tech Open Air is in full swing. I just enjoyed an excellent panel session on Bitcoin with, amongst others, Bitnet CEO John McDonnell. John used one of the best sentences I have heard yet to describe cryptocurrency, which you may recall I have espoused since even before the electronic currency discussions in “Capital Market Revolution!” in 1999.

John McDonnell’s ‘mot juste:’ “We are now in the era of Money Over IP.”

Yip that tickles the digital g spot of the future of finance.

In other news, the Kafka Index reaches all time highs driven by the Greek deal now being accepted overwhelmingly by Greek politicians despite the fact nobody except a few delusional souls predominantly clustered in the Brussels 1000 zip code still consider it marks progress. Point to ponder: what do the staff of the IMF know about finance after all?

Today in EI, Michael Spencer predicts further volatility, as the buy side goes IDB and bypasses banks for their bonds (still not sure there is enough flow for all those new platforms, though). NASDAQ lets the last second lie while ICE’s excellent global cotton contract is closer to launch. There’s more, including perhaps the worst article ever written in the history of Indian capital markets.

Public Markets

ICE Eyes 5% Stake In MSEI

Moneycontrol

Metropolitan SE (MSEI) held discussions with ICE for a 5% stake. This comes at a time when foreign exchanges are eyeing larger pie of the shareholding in Indian bourses despite the current cap of 5%.

Forex Broker FX World Under Investigation By City of London Police (subscription)

Chiara Albanese – Wall Street Journal

FX World operated under a license granted by the U.K. FCA, which was suspended on June 29.

PLY: The noose will tighten soon – exchange-based forex is moving a step closer.

ICAP’s Michael Spencer Predicts Further Market Volatility (subscription)

Philip Stafford – Financial Times

Nasdaq Ditches Plan To Tinker With Its Closing Auction In U.S.

Ryan Hoerger – Bloomberg

PLY: NASDAQ will let the sleeping second lie when theoretically prices could be skewed in the first instance post 1600 hrs when the market closes…

BlackRock’s Latest Fix For Bond Trading Is Circumventing Banks

Tracy Alloway, Mary Childs & Lisa Abramowicz – Bloomberg

PLY: The terror in Bond trading…banks complaining liquidity will never be the same again, is driving the buy side to use IDBs, exchanges and other platforms without routing straight to the formerly natural monopolists…

TradingScreen Deploys TradeCross – A Crossing Platform Developed With The Buy Side

MondoVisione

PLY: …Which vendors with foresight such as TradingScreen readily appreciate…

Private Markets

The Vicious Rivalry Of Indian Stock Exchanges & Why They Should Not List

N Sundaresha Subramanian – Business Standard

Like Arnold Schwarzenegger and the dinosaurs of the Jurassic age, the constituency in favour of listing Indian stock exchanges is back.

It started with a bang catching the finance minister off guard on his American trip, where investors alleged that the holdup in BSE’s IPO is an example of the bureaucratic logjam that still plagues investors in India (previous discussions yesterday).

PLY: What a lot of dramatic, emotional, ill-considered, claptrap. This truly ghastly article singularly avoids the key issues (let alone what happens in the real world beyond the SEBI-blob – oh and the world ends with India’s borders, clearly) preferring a rattling narrative without thought to business issues… At least it is interesting (albeit downright terrifying) to read somebody supporting the single most misguided regulatory report in exchange history, the Jalan Commission. For those who think humanity is on the side of progress, we need to give this hapless hack a free pass. This is dangerous drivel masquerading as comment.

Hypercompetitive markets are those where capitalism delivers solutions – as exchanges have strived to do, despite India’s blob fighting a permanent rearguard action against progress. In these cases there is no reason to only permit ridiculous outmoded crypto-socialist preclusions on the listing of any capitalist business. Exchanges ought to be in the vanguard of exemplifying the benefits of their own excellent model. To suggest otherwise is to a ludicrous infringement of economic potential.

Trading Halt Mechanism To Start In Taiwan In Jan. 2016

Want China Times

…Beginning Jan. 15, 2016 on the main stock exchange and OTC market.

Taiwan – Securities Lending Rules Set To Change On Jan. 1: FSC

Ted Chen – Taipei Times

PLY: A significant easing which ought to help capital markets in Taipei.

Bank Of China To Issue Letters Of Credit For Dubai Mercantile Exchange Trading From Singapore – Initiative To Boost DME Efforts In Creating A More Efficient & Cost-Effective Trading Environment For Customers

MondoVisione

Tanzania Says To Fully Embrace Foreign Capital This Year

Reuters

…As part of Tanzania’s commitment under the East African Community (EAC) common market to open up its capital markets and free up movement of capital.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX up 5% and FTIL flat, as FMC’s sensible attempt to take action is suffocated in a different chamber of the blob.

FMC Will Have To Wait For Police Report To Take Action In NSEL Case

Ram Sahgal – The Economic Times

FMC cannot act against any broker in connection with the NSEL fiasco unless it receives credible evidence of their complicity in the scam.

Read our Premium NSEL Scandal Brief – Part 16.

Products

ICE World Cotton Contract On Track For Launch This Year

Reuters

Congress approved a bill July 9 that will allow U.S. exchanges to handle foreign-grown cotton at delivery points around the world. The U.S. Department of Agriculture (USDA) has been required to sample and grade all cotton tendered against a U.S.-listed contract.

The Atlanta-based exchange has been pushing its new global contract, the first alternative for merchants, mills and growers to pricing on ICE’s U.S.-only one, for years but the law has forced it to fall behind its intended timetable.

In October last year EI reported that ICE was aiming to launch a global cotton contract.

ICAP Global Broking Launches First Matching Session In South African Rand Government Bonds

MondoVisione

India – Efforts To Build Exchange-Traded Currency Derivatives Market Miss The Mark

Ashish Rukhaiyar – Livemint

Attempts to build an exchange-traded currency derivatives market in India as a way to give small and medium enterprises easier access to currency hedging tools have yielded little, with most of the volumes in this segment coming from those looking to profit from trading in derivatives rather than those looking to hedge their risks.

Career Paths

CBOE promoted Andy Lowenthal from VP to SVP, Business Development.

Third Of Icap Shareholders Vote Against Doubling CEO’s Pay

The Guardian

More than 30% of shareholders voted against the remuneration policy which set out the plans to increase Spencer’s salary from £360,000 to £750,000 but reduce the size of bonuses – which could be many times the size of his base salary.

Some 34% of investors voted against the remuneration report which sets out how Spencer and other staff were paid in the most recent financial year. Spencer, who owns 16% of the business, received £3.3m compared with £2m a year earlier.

PLY: ‘Monkeys and peanuts’ spring to mind here. In a regressive oppressive atmosphere of totalitarian idiocy promulgated by politicians who punish the profitable but have ignored punishing their inept banker friends, the shareholders here demonstrate an innate imbecility at eschewing what is a remarkably modest base salary. QV those MTF bosses who have received over 700,000 GBP a year to lose tens of millions of shareholder funds at NASDAQ for instance. In the long-term I hope shareholders can become better informed and lose their petulance, to make the metaphor pertinent to ‘tea cups and poor sailing conditions.’

Financial Calendar

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

Share Notes

ICE insider Thomas W. Farley sold 8,330 shares Monday, July 13th at an average price of $230.36 (bargain $1,918,898.80). He now owns 7,239 shares. See all ICE insider stock transactions on our dedicated page here.

CBOE VP Gerald T. O’Connell sold 9,909 shares Monday, July 13th at an average price of $62.00 (bargain $614,358.00). He now owns 71,548 shares.

Analyst Notes

ICAP “Neutral” Rating Reaffirmed By Credit Suisse – GBX 550 Price Target

A full table of current analysis can be found on our Analyst Ratings page which is updated daily.

Other stories

DTCC: Statement On House Passage Of H.R. 1847 – Swap Data Repository & Clearinghouse Indemnification Correction Act

MondoVisione

Fair & Effective Markets Review – Speech By Tracey Mcdermott, Director Of Supervision, Investment, Wholesale & Specialists, At The UK Financial Conduct Authority (FCA), Delivered At The ICMA Public Sector Issuers Forum, London On 24 June 2015

MondoVisione

Statement Of CFTC Commissioner Mark Wetjen On The DMO MAT Process Roundtable

MondoVisione

Steven Maijoor, Chair European Securities & Markets Authority, At ECON MiFID II/MiFIR Scrutiny Hearing

MondoVisione

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