July 22 2015

elb2Aquis gets first tech sale, DB1 approved for Singapore clearing house, IEX preparing to apply for US stock market licence, GS exits retail market making, upgrades Sigma-X (which they considered closing only a year or so ago). BoE approves LME push for compression (hooray!) as CME and MCX sign an MOU. Its a crunchy mid-summer’s day today, you need to give it a scroll…

On the macro picture, remember those heady days of the early digital revolution when results of chip and PC manufacturers had the world’s investors all aquiver with excitement? The revolution continues on its quixotic, Schumpeterian way…

Public Markets

Interactive Brokers Q215 Financial Results

BUSINESS WIRE

Versus Q2 2014: Net revenues $387 mln, up 25%, Net income $221 mln, up 37.2%, EPS (diluted) $0.37, up 42%

ESMA Extends Greece Short Selling Ban Until July 27 Despite EU Agreement

Mike Fox – LeapRate

FXCM Plans 1-for-10 Reverse Stock Split (subscription)

Maria Armental – Wall Street Journal

PLY: FXCM plans a 1-for-10 reverse stock split, as the shares closed Tuesday at $1.29 a share, growing perilously close in after hours trading to the $1 of death level where NYSE would relegate the share to a penny stock. FXCM shares are down 87% from $12.63 on January 16th before the company learnt lessons of risk management the hard way thanks to the Swiss Franc revaluation fracas.

Read our Premium FX – CHF Crisis – Brief and FXCM Stakes Sales Brief.

DB1 Receives Full Regulatory Approval From MAS For Its Clearing House – Eurex Clearing Asia To File Application With ESMA Next

MondoVisione

PLY: Great news for DB1 and useful forward pivot optionality as the EU seeks to merge itself or die – perhaps achieving both in the process.

China Takes Stock As Market Dust Settles (subscription)

Tom Mitchell & Josh Noble – Financial Times

Every summer China’s leaders retreat to the coastal resort of Beidaihe to discuss their biggest political and economic challenges, from the timing and outcome of sensitive corruption cases to the direction of reform.

But this year the ruling Chinese Communist party will deliberate on a question that was not even on the agenda a month ago. Having climbed on to the back of China’s bull-turned-bear market in an effort to arrest its steep decline, how does it get off?

China’s Market Plunge: Where Only 3% Of Firms Could Trade (subscription)

Gregor Stuart Hunter & Wayne Ma – Wall Street Journal

China may have the world’s second-biggest stock market after the U.S., but at one point during a roller-coaster ride for investors this month only 93 of 2,879 listed companies were freely tradable—about the same number as trade in Oman.

Beijing May Be Fighting Wrong Battle In Curbing Index Futures

Reuters

Beijing has blamed some futures traders for suspected “malicious” short selling in its efforts to contain a stock market rout, but a Reuters analysis shows it may be barking up the wrong tree.

China Said To Probe Shanghai FTZ Firms On Manipulation Claims

Bloomberg

Read our Premium China Capital Markets Transformation Brief – Main File.

CME & MCX Sign MOU

PRNewswire

CME and MCX signed a MOU on various cooperation activities and potential business opportunities, including a joint viability study of setting up operations in an International Finance Service Center in India.

Read our Premium India – GIFT Exchanges Brief.

DB1 Plans New Neuen Markt (German version only)

Sven Clausen – Manager Magazin

PLY: A little more thought on the June announcement of the DB1 Neuer-Neuer Markt.

Goldman Said to Upgrade Dark Pool, Exit Wholesale Market-Making

Sam Mamudi & Michael J Moore – Bloomberg

Upgrading Sigma X dark pool, winding down a retail market-making operation and hiring an executive for electronic execution in Europe.

PLY: An interesting turnaround. At the height of the “Flash Boys” bubble in April 2014 Goldman Sachs was considering shutting down Sigma X…

LME Clear Receives BoE Approval For Trade-Compression Service

LME

LME Clear has received approval from BoE to give members the opportunity to reduce the notional value of their positions and simplify their portfolio management.

PLY: Given the fact that LME forwards are in effect 90 day forwards, this could have a significant effect to encourage LME volumes for those whose balance sheets are constricted by open positions. Brilliant news all round, enabled by the Cinnober system in the LME real-time CCP.

India – CERC Allows 24-hr Trading At Power Bourses

Business Standard

Central Electricity Regulatory Commission (CERC) has directed the Power Exchange of India (PXIL) and Indian Energy Exchange (IEX) to start operation of extended market session by August 1.

Private Markets

IEX To Apply For Exchange Status (subscription)

Andrew Ackerman & Bradley Hope – Wall Street Journal

IEX Group plans to submit its formal application to SEC within the next two weeks.

PLY: Hooray.

Linear Investments Acquires The Assets Of AQX Securities’s Agency Execution Business

MondoVisione

Linear Investments acquired the assets of AQX Securities’s agency execution business from the Aquila Group. The acquisition will enhance Linear’s existing execution-only services and broaden its reach across asset classes, from equities, ETFs, futures and options, to cash fixed income.

India – NSE Files Rs 100-cr (USD 15.7 Mln) Suit Against Moneylife

Indian Express

Almost a month after Moneylife reported that a few investors had fixed the HFT or algo based trading in the National SE (NSE) and thereby jeopardised the interest of retail investors, the exchange on Tuesday filed a defamation case against the magazine with a claim of Rs 100 crore (USD 15.7 mln).

TrueEx Builds Bridges In The New World Of Swaps

Aaron Timms – Institutional Investor

BTC Exchange Kraken Reduces Transaction Fees

newsbtc

PLY Interesting: Kraken is moving towards a “maker taker” fee model….

Bitcoin Exchange itBit Introduces ‘Global OTC Agency Trading Desk’

Mike Fox – LeapRate

itBit explains that it’s objective in opening a trading desk is to simply match OTC buyers and sellers.

Dividend News

Interactive Brokers BoD a quarterly cash dividend of $0.10 per share, payable September 14, 2015 to shareholders of record as of September 1, 2015.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX up 4%, FTIL flat.

Technology

Aquis Exchange Announces First Technology Licensing Deal

Aquis Exchange

Aquis Exchange has agreed to supply the South African exchange A2X with a trading platform, clearing and surveillance systems and ancillary support services.

PLY: The JSE challenger A2X becomes a first Aquis customer on a bright day for Alasdair Haynes’ venture.

Coinbase’s Fred Ehrsam Says Bitcoin Still Seeks ‘Killer App’ (subscription)

Stephen Foley – Financial Times

Products

Low Bond Liquidity Presents Little Risk (subscription)

Douglas Hodge (CEO, PIMCO) – Financial Times

While banks are now better capitalised, the combination of post-crisis capital and liquidity regulations and a lower return environment has made them less able and less inclined to function as market makers.

PLY: Somebody holding more bonds than some nations have managed to issue debunks this quarter’s shrill sell-side led hysteria…

BSE To Increase Derivatives Lot Size

The Hindu Business Line

PLY: The apparent regulatory war against capitalism in India continues with more demands for larger contracts to reduce user flexibility and squeeze out smaller, aspirational players from access to risk transfer or speculative opportunity. #Shame.

Indexes

Eurex Expands Dividend Index Derivatives Offering

DB1

Introduction of first global STOXX dividend index derivatives/ Launch of STOXX Global Select Dividend 100 Index contracts on 20 July.

JPX: Launch Of First Ever Full-Scale Fixed Income Volatility Index In Japan

MondoVisione

Career Paths

LeapRate reports that IG Group’s Tim Howkins has announced his intention to retire, standing down from his post as CEO and as a director of the company at the AGM in October.

Bloomberg reports that Citigroup hired John Lowrey (former CEO at Chi-X Global) to be global head of cash electronic execution as the bank invests in a stock-trading business ranked last by revenue among the five largest Wall Street firms.

DTCC appointed Stephen Scharf to the newly-created position of Chief Security Officer (CSO). Mark Clancy steps down as DTCC’s Chief Information Security Officer to assume his current full-time position as CEO of Soltra, a DTCC & FS-ISAC joint venture that provides an automated cyber threat intelligence platform.

Linear Investments hired Sam Merali to run its agency brokerage business.

CFTC announced four new associate members of the Energy and Environmental Markets Advisory Committee (EEMAC).

Mr. William B. Jones, CEO, Jones Petroleum and JP Capital & Insurance

Mr. Martin Bates, President, Strategy, Energy & Development, Alcoa, Global Primary Products

Mr. Joseph W. Allen, Director of Energy Policy for Caterpillar and Solar Turbines

Mr. Andrew K. Soto, VP for Regulatory Affairs, American Gas Association

Financial Calendar

NASDAQ OMX Q2 2015 Financial Results – Thursday, July 23rd, 2015

New announcements

Lending Club Q2 2015 Financial Results – Tuesday, August 4, 2015

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

 

 

 

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