July 19 2013

elb2 It’s been an exciting week with news from DB/Liquidnet, exciting figures & developments at LSE; CME battling to stop the CFTC killing the US industry and the best career path news is the excellent appointment of Warsaw SE founder Wieslaw Roslucki as Chairman of Warsaw SE.

Today, CME moves towards more swap clearing optionality while Bursa Malaysia has great results. NASDAQ has a forum hitch while SIFMA’s Quantum Dawn has been deemed a success in testing US market structure against cyberattack… & there’s more:

Public Markets

CME & trueEX To Deliver Credit Spread Futures™ New indexes

Sacramento Bee

CME & trueEX, LLC, the first CFTC-regulated electronic exchange for swaps,announced a non-binding agreement to forge a strategic partnership to develop trueEX Credit Spread Futures contracts based on the newly created S&P Indices distributed to the global futures markets on CME Globex (subject to final agreement). The product set will include trueEX Credit Spread Futures contracts based on the newly-launched S&P Credit Spread Indices.

PLY: CME gain another foothold in the battle to secure as much former OTC product clearing as possible under Dodd EMIR Frank. Incidentally, lovers of platform history ought to note that TrueEX is a 2010 start-up not connected to TruExchange, an earlier business in contiguous space.

Nasdaq Forum Website Hacked, Passwords Compromised

Chicago Tribune

Cyber-criminals targeted Nasdaq OMX Group’s community forum website and gained access to the email usernames and passwords of the members of the site, which took two days to come back online Thursday evening.

PLY: Clearly frustrating and embarrassing for NASDAQ although the forum itself was a discussion board and not a commercial forum. Nevertheless, a useful indicator of how significant the cyberattack study by WFE that we reported Wednesday.

Bursa Malaysia Best Results For Q2 & H1 Since 2007

Bursa Malaysia announced their best financial results for Q2 & H1 since the 2007 rally and a special 20 sen dividend on top of the 16 sen dividend is to be distributed to the shareholders.

PLY: Promising results from an exchange which has been public since 2005, with the first half at least partly bolstered by the May Malaysian general election where the aftermath brought increased liquidity.

Japan Exchange Revises Forecasts

Japan Exchange released some revised forecasts just as we were going to press.

Private Markets

TOM Changes Dutch Options Tickers After Court Ruling

Bloomberg

The Order Machine, a Dutch alternative trading system, changed the ticker symbols for options based on Amsterdam’s AEX Index after a court ruled it infringed NYSE Euronext (NYX)’s trademark rights.

PLY: I remain a tad confused how an options product can trade outside of its exclusive licensee. TOM continue to beat the drum for their aggressive stance with 50% share in AEX options in sight, thanks to its backing from major Dutch players like Binckbank.

NSE Regains Top Slot As World’s Largest Bourse For Equity Trade

Hindu Business Line

PLY: An interesting statistic. Although slightly misleading (most NYSE/NASDAQ equities trade on other networks away from their listing venue). Nevertheless NSE does cross trade stocks and hence it is an interesting demonstration of their continuing power in the Indian market – and indeed the investor potency of the Indian marketplace overall – that they can rank so highly in the world tables.

Hong Kong Adds To Charges Against Two in HKMEx Prosecution

Businessweek

PLY: Dripping out bit by bit are unpromising facts for the future of HKMEx. Even if we overlook the sub judice issue of fraud, being pursued for unpaid rent is unlikely to encourage short term interest in investing in, or trading on, the exchange until there is a great deal more clarity just what has happened and what is the financial status of the firm (which, recall, is still adamant it will return to being an exchange soon).

Poor management, debt and economy triggers ZSE delistings

NewsDay

ZSE has gone from 79 listings not so long ago to 66.

PLY: The exchange is not the problem here but there are clearly issues with the gerontocracy of President Mugabe which cast a shadow over investors’ appetite for Zimbabwean investment on or off the exchange.

Lack of Confidence and Regional Instability Cloud Amman Bourse

Zawya

PLY: Amman, like many other MENA exchanges is suffering low volume and a relative lack of investor interest. Across the region there is a general corporatist malaise in many markets leaving the possibility of huge upside but simply merging with cousins will not cure the overall problem. Legal structures too dissuade many investors in the region. Change these factors and there is a good opportunity for all these exchanges.

Products

Bursa Malaysia To Liberalise Short-selling

The Star Online

Bursa Malaysia is set to unveil next week new guidelines for restricted short selling (RSS) and securities borrowing and lending (SBL), which regulate short selling on the local market with plans to expand the list of securities eligible for short selling to 171 from 100 currently.

Technology

Taiwan SE Suffers Computer Glitch (subscription)

Wall Street Journal

Taiwan SE has suffered a first computer glitch and the exchange was quick to rule out hacking. The glitch was five minutes before market close and involved warrant prices not being sent to data providers.

PLY: The word ‘glitch’ seems appropriate here. The Taiwan SE remains a highly competent exchange and doubtless is rigorously checking for the source of this problem.

Analyst Notes

Keefe, Bruyette & Woods Increases CBOE Holdings Price Target to $51.00 (CBOE) maintains market perform.
NASDAQ OMX Group (NASDAQ: NDAQ) target price lifted by Keefe, Bruyette & Woods from $32.00 to $37.00 Reiterate “market perform” rating.
Interactive Brokers(Nasdaq:IBKR) upgraded by TheStreet Ratings from hold to buy.
Interactive Brokers Group Price Target Raised to $20.00 at Keefe, Bruyette & Woods reiterate “outperform” rating.
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Thomas Murray Upgrades Counterparty Rating For Palestine Exchange

The Palestine Exchange announced that the Counterparty Risk (CR) rating for the Palestine CDS has been upgraded from “A-” to “A” by Thomas Murray Limited. Meanwhile, the overall proprietary rating remains at “A-”. The CR rating upgrade reflects the new DVP settlement arrangements at the Palestine CDS, including the launching of cash settlement processing through the Palestine Monetary Authority (PMA) in March 2013.

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

All Analysts, Baenks and Brokers are welcome to contribute to this section.

 

Crowdfunding

A Rare Look Into Crowdfunding In Japan

Gamasutra

In this interview reprinted from Gamasutra’s sister site IndieGames, Japanese indies Team Grand Slam take readers inside their local crowdfunding scene.

Other Stories

US regulators Scrutinize Risk Controls For High-Frequency Trading

Reuters

FINRA has sent out targeted examination letters to 10 high-frequency trading firms this week asking for detailed information on the testing and supervision of trading algorithms and other software.

FINRA also asked the firms to describe any instances in which they had a malfunction with an algorithm or trading engine that had a major financial impact to the firm or caused a market disruption.

Derivatives Key To Exchanges’ Fortunes (subscription)

Financial Times

Shares in LSE, CME and the ICE are all up more than 40 per cent this year. Equity trading volumes have recovered strongly in 2013 as global stocks have hit record levels.

PLY: Since 1996 and indeed before, I have been happy to point out “it’s a derivatives world” and that drives profitability, especially in strong equity bull phases.

Despite Stay Order, BSE May Face Demolition

Mumbai Mirror

The Bombay Stock Exchange may finally have to face BMC’s hammer. Almost a month after a city civil court stayed a demolition notice issued to BSE by BMC, the civic authority has asked its legal department to get the stay vacated by moving the Bombay High Court.

Once the stay is vacated, BMC will go ahead with the removal of unauthorised structures that have allegedly been constructed in the iconic BSE building in South Mumbai.

PLY: I visited BSE a few years back and the office interiors of the exchange left a lasting impression, resembling something which had looked good in “Modern Times” but since had perhaps been left without sufficient refurbishment…

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