July 23 2013

elb2

Sorry I can’t see everybody in London this week who emailed, I will be back soon!

Interesting meetings so far and today some useful nuggets for EI. We have SGX results, a fourth candidate SEF, new CCP in LatAM, Romanian infrastructure shuffling and Indian regulation not to forget job moves plus a big infrastructural / investment gap in the bond market..and much more, happy reading!

Public Markets

Singapore Q4 Net Profit Up 43 Percent

Reuters

Singapore Exchange Ltd reported a 43 percent rise in quarterly profit on Tuesday, helped by a record year for its derivatives business making its best annual performance since 2008, although its numbers still came in just shy of expectations.

PLY: Magnus Bocker and team, take a bow, very good results!

GFI Group Files SEF Application With The CFTC

Sacramento Bee

PLY: GFI is number 4 to apply for an SEF licence…

FCA Imposes First HFT Fine HFT

4-traders (press release)

The Financial Conduct Authority (FCA) has fined U.S. based trader Michael Coscia nearly $1 million (652 thousand pounds) for manipulating UK commodities markets, its first penalty on ultra-fast trading.

In the US, CFTC and CME have imposed fines for similar market manipulation by Coscia.

SIF1 Buys SIF4 in first Romania Voucher Fund Merger

PLY: The Romanian investor landscape is dominated by a group of “SIFs,” publicly listed funds which began managing assets from voucher privatisation et al. There were 5, now there are 4 with SIF1 taking over SIF4. A significant move for Romania’s investor horizons per se with some modest ramifications for exchanges:

SIF 4 holds 4,22% of BVB reported in 26.06.2013 and 4,95% of Sibex reported in 28.06.2013

SIF 1 holds 0,19 % of BVB reported in 20.12.2012 and 0,44 % of Sibex reported in 20.12.2012

Therefore the combined BVB holding will be below the 5% maximum voter threshold of the merged fund while a small stake of 0.40% of SIBEX will presumably have to be disposed of in due course…

JSE To Launch Co-location Facility Next Year

BDlive

PLY: JSE launching co-lo to help attract HFT especially foreign investors of said methodologies…

Exchanges To Delay Limit Up/Limit Down Curbs From Trading Close

Bloomberg

The biggest US exchange owners will postpone full implementation of the limit up/limit down system of volatility curbs after alerting securities regulators to concern about how it will work at the close of trading.

Nasdaq OMX Group’s Upcoming Earnings: What You Need To Know

DailyFinance

PLY: a useful summary of what is anticipated ahead of the latest NASDAQ results.

Private Markets

Dark Pool Call To Transform Corporate Bond Trading (subscription)

Financial News

European buyside traders have called for a fresh approach to corporate bond trading to ease the problems of liquidity the market is expected to face when new regulations come in for fixed income next year.

PLY: ‘A riddle wrapped in a mystery, inside an enigma’ as Churchill once described Russia neatly surmises the mystery of bond markets. Everybody is devising a SEF, the world is awash with equity MTFs and dark (not to be confused with ‘Block’ Institutional Liquidity Pools) all battling their counterparts to the death. Yet the bond market (as incidentally already largely rationalised by emerging markets like Russia and Poland to exchanges!) everywhere screams for an alternative solution to the clunking fist of banker power as manifested poorly in bilateral dealing.

There are a couple of great plans going around at the moment for what is a billion dollar business and has rich opportunities in all manner of niches. Who’s up for the challenge? Answers as always by email or postcard…

Commodity Exchanges: Ocean Group’s Info Comex Teams Up With Belarus

Saigon Times

HCMC – Ocean Group’s commodity exchange Info Comex in Vietnam has signed a cooperation agreement with Belarusian Universal Commodity Exchange (BUCE).

PLY: There are so many commodity exchanges out there not on the radar and some of them have significantly interesting potential. Belarus borders Ukraine and Poland with similar grain basket tendencies on its rich fertile land…

Products

Eurex Will Launch Options On OAT Futures In Sept (press release)

4-traders (press release)

Eurex will launch options on futures based on long-term government debt issued by France, September 10.

PLY: Once upon a time everything lurched from single national futures in the big EU nations to a vast clunking Bund for the Eurozone. Then finally everybody realised the others mostly didn’t share Germany’s productivity and government restraint so now OAT options (once a centrepiece of the Paris MATIF) is being reborn at EUREX as the exchange broadens its product base to account for the declining credit ratings of increasingly diverging Euro member states.

SGX, POSB Launch New Invest-Saver Product

Channel News Asia

PLY: Singaporean retirement accounts hold a lot of cash, 97% of all assets are in property, insurance and deposits, hence SGX wants to see an ‘equalisation’ closer to the 50-70% commonly held in equities in other parts. A very sensible move for SGX and the ever-sapient Singapore Inc.

Technology

COMDER Selects Calypso To Power New Chilean OTC Derivatives CCP

Calypso Technology Inc., will provide the core clearing platform for a new central counterparty (CCP) for OTC derivatives created by a consortium of Chilean banks, COMDER.

ICE – Liffe: Margin Rates

theice.com

ICE Clear Europe has entered into an agreement with CME to use SPAN4® for margin calculations.

PLY: SPAN is indeed the standard parameter for financial futures and hence helps customers…clearly the big question remaining in all these clearing pools will be where the offset lies for traders but that’s a whole different story…

Career Path

Nasdaq Dubai Appoints Hamed Ali As CEO

Reuters

Nasdaq Dubai has permanently appointed acting CEO Hamed Ahmed Ali as chief executive officer, tasked with expanding the exchange’s growth into new markets and product offerings following the departure of Jeff Singer to become head of the DIFC Authority.

Kenya Fires Head Of Biggest Stock Investing Fund

Businessweek

Kenya fired the head of the National Social Security Fund, the biggest investor in the East African nation’s stock market.

NSSF Managing Trustee Tom Odongo will be replaced on a temporary basis by Hope Mwashumbe, general manager of corporate affairs and corporation secretary

Analyst Notes

National Bank Financial Downgrades TMX Group to “Underperform”
Citigroup reiterated “Neutral” rating on NASDAQ OMX
Bank of America raised LSE to 16.00 GBP reiterates “neutral” rating on the stock.
Espirito Santo restated “buy” rating on LSE
NASDAQ OMX Group Receives Neutral Rating from Citigroup Inc

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.

Financial Calendar

GFI Group Inc. Schedules Second Quarter 2013 Earnings Release on Thursday

Financial Results/Dividend News

BME will pay first interim dividend for 2013 September 9 worth €33.3 million, €0.40 per share, the same as paid in September 2012.

Bursa Malaysia will pay an Interim Dividend and a Special Dividend of 0.16 and 0.2 MYR per share respectively on August 15th.

Crowdfunding

Crowdfunding and IRBs: The Case of uBiome

Scientific American (blog)

uBiome is a citizen science startup that sequences the microbiome, financed entirely by crowdfunding. Crowdfunding is a service where people contribute to a project that doesn’t exist, and in return, receive various perks when the product is created. Skipping ahead a bit in the story, we raised over $350,000, the largest successful single citizen science project in history.

PLY: Fascinating: Crowdfunding is also on the cusp of pushing back medical and scientific regulation which in many cases seems to date back to the era of body snatchers and certainly does not appreciate the incredible levels of technology now freely available to every interested party. Allied with crowdfunding can this presage another glorious age of independent / even quasi-amateur scientists making discoveries from their studies?

Other Stories

Exchange investors in India hit by regulatory risk

Livemint

Investors in Indian exchanges have been hit by significant regulatory risks this year. Shares of the country’s only listed exchange, Multi Commodity Exchange of India Ltd (MCX), have halved in the year till date. Not that investors hadn’t been warned—the company’s initial public offering (IPO) prospectus had mentioned regulatory risks in at least three different places among its risk factors.

PLY: This is an excellent summary of the deeply misguided approach of India’s regulators towards exchanges, particularly the demands which look like an ongoing attack against private shareholders and ‘for profit’ markets which have been the catalyst for making India’s markets such a pulsating and exciting investor environment. India’s regulatory system really needs wholesale change to allow the exchange system to flourish and permit private operators and shareholders to profit from developing the investor infrastructure to the benefit of India as a whole.

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