June 12 2014


PLY: IDX is already over – well some might say the after affects are still with them but ours is not to pass judgement on those few who may have marginally crossed the waterfall of sobriety at last night’s dinner. It has to be said Charlotte Crosswell trumped all the delegates throughout the week by lifting the best dressed garland for a range of splendid outfits throughout the event.

As we digest the aftermath of discussions on everything from the mega-bourses to the fascinating world of Trade Repositories, having run the gauntlet of considering just what it might be like white water rafting over the waterfall of a counterparty default in the brave new world, there is a lot to consider…plaudits to the FIA team in Washington and London for an excellent event.

Meanwhile, I see that this morning Euronext has had difficulties coaxing life into its trading system – Murphy’s Law of IPO time appears to hit exchange technology once again.

Discussed in today’s EI, the de facto renationalisation of Warsaw SE sits alongside ICAP’s figures while NASDAQ OMX sell to APX and EEX acquires Gaspoint Nordic…

Meanwhile, recent premium posts include:

New: 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 hypothesis in: The Butterfly (In)Effect

HFT2: 1972 A Historical Perspective

Euronext: Sale of the Century

Must Read: The Butterfly (In)Effect
– investigating the First Birthday Hype of NLX revealing alarming anomalies between PR hype & data

…Subscription to our Premium service is a mere $120 dollars per user / year plus we’re confident we’re tax deductible in most jurisdictions! Subscribe Here It all helps fund the free Exchange Invest daily alongside our sponsors! (If Paypal is outside your jurisdiction, email me, we’ll find a way to invoice you!).

Public Markets

ICAP Annual Report For The Year Ended 31 March 2014

Revenue GBP 1,397 mln, down 5%
Trading operating profit GBP 295 mln, down 4%
Profit before tax GBP 122 mln, up 85%
EPS 15.7 pence, up 134%

PLY: The IDB business remains becalmed in a low rate environment where nobody wants to trade until regulations are settled and new systems bedded down…

Poland Wants Tamborski To Finalize Warsaw-Vienna Bourse Merger
Konrad Krasuski – Businessweek

Poland will shuffle management of WSE to speed up preparations for a merger with Wiener Boerse and help the country’s sole equity market operator cement its position as the largest in central Europe.

The government, which holds a controlling stake in WSE, last week proposed appointing former Deputy Treasury Minister Pawel Tamborski as a new CEO at a shareholders♠meeting on June 26. Tamborski, who earlier worked as an investment banker at UniCredit SpA in Warsaw, will replace Adam Maciejewski, whose term expires this month.

“I expect the new CEO to lead the process of a potential merger of the Warsaw and Vienna bourses to the point where I’ll be able to make a final decision on it,” Treasury Minister Wlodzimierz Karpinski said in e-mailed responses to Bloomberg News questions. Tamborski started negotiations with the Vienna bourse and is “a credible partner for the Austrian side.”

PLY: The government exerting control over Warsaw SE is not merely a bad example of state manipulation, it also sets a rather bitter tone, as Adam Maciejewski has done much right and nothing wrong during his tenure. He deserves much better than this ignominious dismissal from the graceless Treasury Minister. The CEESEG merger proposal remains by a long chalk the single worst such proposal yet seen in the history of market infrastructure. A sad moment for Poland as it seems to be turning its back on the free market. This is very worrying for the New Europe. Note too that the idea Tamborski is seen as a credible partner for the Austrian side of negotiations infers he will do a deal come what may, which is plain dumb as the Austrians are tantamount to distressed sellers… An awful deal awaits us, as the Warsaw Stock Exchange becomes a chattel for a government who seem more mired in the old-fashioned playbook of the Communist era than anything approaching freedom, development and liberalisation which Poland still badly needs.

EEX Acquires Shares In Gaspoint Nordic

EEX and the Danish Gas Transmission System Operator Energinet.dk have agreed on a comprehensive cooperation. In this context, EEX will acquire 50% of the shares in the Danish gas exchange Gaspoint Nordic A/S, subject to the approval of the respective authorities. With this cooperation, both companies force the further development of the Danish natural gas market and its alignment with continental European standards.

IDX Beat: Futures Industry Regenerates (subscription)
Philip Stafford – Financial Times

PLY: A perfect story from Phillip Stafford summarising elegantly the IDX event and noting how indeed the venue is somewhat full to the gills given the record turnout for the FIA/FOA years of organisation. On a possible new venue, I was bemused to hear yesterday that some people still have not forgiven me for describing the previous venue in the Barbican as the “Guantanamo Bay” of conference venues…

IDX14: LCH.Clearnet CEO Maguire Said EMIR Clearing Sign-Off Is ‘Imminent’ (subscription)
Jonathan Watkins – FOW

LCH.Clearnet’s re-authorisation under new regulations is ‘imminent’ according to the central counterparty’s global head of SwapClear, Daniel Maguire.

Euroclear Delay Hurts Moscow Stock Trading Ambitions
Ksenia Galouchko – Businessweek

A delay in the start of Euroclear Bank SA’s plans to offer international investors direct access to Russian equities is proving another setback in the country’s efforts to boost local stock-market trading.

A bill that would have streamlined corporate actions in a format similar to those used by U.S. and European investors wasn’t introduced during the spring session of Russia’s lower house, preventing Euroclear from offering the service from July 1 as had been earlier announced, according to Stephan Pouyat, global head of international markets at the world’s largest securities settlement system. The amendments needed to give investors technical access to equities may be passed next month, the National Settlement Depositary said.

FTIL’s Case Against FMC, MCX To Be Heard On Friday
Business Standard

The high court here will consider on Friday the plea of FTIL against the move by MCX to auction the former’s equity holdings in the latter, on an order from FMC.

ISDA Warns On Dangers Of Equity Derivatives Clearing (subscription)
Anish Puaar – Financial News

ISDA has fired an early warning to European regulators on the introduction of clearing rules for equity derivatives, claiming that proposed regulations could lead to “operational hazard” and potential monopolies for clearing houses. The vast majority of equity derivatives are already traded on exchanges and subject to clearing, but under the new European regulations equity derivatives that are traded OTC will be cleared.

UK CCPs Should Move Contracts To US, Says CFTC Official (subscription)
Matt Cameron – Risk

A conflict between EU and US rules on the protection of client collateral should be resolved by moving UK-cleared contracts to the US, according to one CFTC official. The alternative would be for the CFTC or ESMA to provide an exemption, but Ananda Radhakrishnan, director in the division of clearing and risk at the CFTC, told a conference yesterday that he is “tired of providing exemptions”.

PLY: Hmmmm. A big fat Hmmmm.

QCCP Stand-Off Could Hurt EU Banks, Says CME’s Taylor (subscription)
Tom Osborn – Risk

European banks will suffer if EU authorities do not give the thumbs-up to US clearing house rules, according to Kim Taylor, CEO of CME Clearing – the result of a huge jump in capital requirements that would apply to trades they clear with US CCPs.

FIX Becomes The Pre-Eminent Standard For OTC Derivatives Trading On SEFs

FIX Trading Community, the non-profit, industry-driven standards body at the heart of the global electronic trading community, announces the adoption of the FIX Protocol by an overwhelming majority of SEFs, including BGC Derivative Markets, L.P., Bloomberg, trueEX, GFI Group, ICE Swap Trade, MarketAxess, Tradeweb (TW and DW), Tradition Trad-X and Tullett Prebon.

FX Focus – Is SEF Equivalency Still Solvable?
Michael Watt – FX – Week

Negotiations for an equivalency system to allow European platforms to offer SEF-like liquidity to US persons fell apart in mid-May. Participants blame CFTC intransigence and warn of permanent fragmentation of the market. Can a solution still be found?

Private Markets

BSE Seeks Reduction In STT
Business Today

To attract more investors into the stock market, Bombay SE has pitched for reduction in STT and rationalisation of taxation norms for different financial products – a demand also made by SEBI and other market entities.

The bourse has written to the government seeking rationalisation and reduction in STT.

Dividend News

ICAP directors recommend a final dividend of 15.4p per share.

If approved, the final dividend will be paid on 25 July 2014 to shareholders on the register at the close of business on 4 July 2014. The shares will be quoted ex-dividend from 2 July 2014.

The full-year dividend will be 22.0p (2012/13 – 22.0p) including the payment of the 6.6p interim dividend on 7 February 2014. The full-year dividend per share is covered 1.5 times (2012/13 – 1.5 times) by trading EPS of 33.2p.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX is flat, FTIL up 1% while Jignesh continues to languish in a Mumbai cell. One thing I can report from IDX is that Shahdenfreude is flourishing throughout the ETD industry.

‘Investors Were Lured By Brand Jignesh Shah’
Mumbai Mirror

Jignesh Shah and Shreekant Javalekar remained in judicial custody after the hearing on their bail petition continued on Wednesday. Advocate Sandeep Karnik, opposing their bail application, said they knew exactly what the situation was while cheating the investors, even though now they “claim ignorance”.


Euronext Delays Open Of Cash-Market Trade On Fault
Alexis Xydias – Bloomberg

Euronext NV, operator of exchanges from Paris to Amsterdam, delayed the start of trading in cash markets by 30 minutes today due to a connectivity problem. Trading resumed at 09:31 CET according to the Euronext website.

Technical Glitch Hits BSE
Times of India

Bombay SE (BSE) suffered a technical glitch Wednesday leaving real-time data feeds blank when trading began at 9:15am (0345 GMT) before being restored at about 10:00am due to a technical glitch in its calculation system.

APX Selects NASDAQ OMX’s X-stream Trading Technology

Asia Pacific SE (APX) and NASDAQ OMX have signed an agreement for NASDAQ OMX to deliver its industry leading trading technology, X-stream, as well as Genium FIX, to APX to power its APeX trading platform, the new rapidly growing securities exchange that is a bridge for capital, knowledge, deals and investor flows between Asia and Australia. The trading system is expected to go live in late 2014.

PLY: The launch of APX was reported by EI on March 7th and is intended to drive an Australo-Sino investment surge in equities. Interesting model.

globeSettle Selected As Collateral Location Venue By LCH.Clearnet Ltd & CC&G

Clearing members will be able to choose to place collateral with globeSettle, offering Clearing members a straight through collateral and custody solution, contributing to to CCPs client segregation model.

MOEX Selects FINCAD’s F3 Platform
Automated Trader

FINCAD, the provider of OTC derivatives pricing and risk management solutions, has announced that MOEX has chosen FINCAD’s F3 Platform to support its OTC derivatives trading and clearing services.

REDI Acquires InstaQuote EMS From Merrill Lynch (subscription)
Becca Lipman – WallStreet & Technology

Executives from REDI Global Technologies announced the completed acquisition of BofA Merril Lynch’s InstaQuote execution management system (EMS) business, including its technology, clients, and 30 employees from the client service office in Dallas. The acquisition expands REDI’s EMS client base by roughly 20%, including small and midsized redistribution brokers.

MarketPrizm To Deliver Direct Market Access In Singapore

MarketPrizm, a leading provider of market data and trading infrastructure services, announced an agreement with CME to provide raw market data and order routing services at SGX.

Markit Announces Realtime Trade Feed From MarkitSERV
Automated Trader

Markit has announced that customers of its Portfolio Valuations service can now elect to have their portfolios updated automatically using a realtime trade feed from MarkitSERV.


Rusal To Offer CME-Based Aluminum Pricing By July (subscription)
Tatyana Shumsky – Wall Street Journal

United Company Rusal, the world’s biggest aluminum producer, plans by next month to begin offering customers the option of using CME’s new aluminum futures contract to set prices, a company executive said in an interview.

Rusal’s use of CME futures would give a boost to the fledgling contract, which has been slow to gain traction since its launch in May. Aluminum is primarily traded on LME.

Career Paths

Reuters reports that NYSE executive Lou Pastina, who leads the Big Board’s cash equity market operations, is set to leave the company as part of its integration with ICE.

ICAP Reduces CEO Spencer’s Bonus 75% After Settlement
Edward Evans – Businessweek

ICAP cut CEO Michael Spencer’s bonus 75% to 700,000 pounds ($1.2 million) in cash and shares from 2.8 million pounds in the year-earlier period. His total compensation will fall to 2.2 million pounds from 4.3 million pounds, ICAP said.

BVB CEO Ludwik Sobolewski Named President Of Romanian Post Before Privatization
Romania Insider

Polish Ludwik Sobolewski, who is currently CEO of Bucharest SE (BVB) is the new president of the board for Romanian state owned postal company Posta Romana. His mandate will be to help prepare the company for privatization.

DGCX has appointed Sanjeev Vohra as the Head of Soft Commodities. Vohra, who has over nine years of experience in product and business development in the Exchange industry, will be responsible for developing new products and exploring growth opportunities for DGCX in the soft commodities sector.

Infosys named the former technology chief of SAP AG, Vishal Sikka, as its new CEO and MD and unveiled a management restructuring.

MondoVisione reports that StarCompliance, a leading provider of enterprise compliance and regulatory software solutions, appointed Sunil Sehdev as CTO. A veteran in software development for the financial services industry with a strong expertise in compliance solutions, Sunil will be based in the company’s UK office and will report to Marc Epstein, CEO of StarCompliance.

Financial Calendar

This week

Fidessa 24.5 pence final dividend and 45.0 pence special dividend payment
Interactive Brokers $0.10 quarterly dividend payment
Record date NASDAQ OMX $0.15 quarterly dividend

New announcement

ICAP AGM – Wednesday 16 July 2014

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


Real-Estate Sector Moves Crowdfunding Beyond The Trinkets (subscription)
Ruth Simon & Eliot Brown – Wall Street Journal

Dozens of crowdfunding sites now offer individuals the chance to invest in everything from single-family fixer-uppers to ground-up real-estate developments and even distressed mortgages, sometimes for as little as $100. Already they have raised more than $135 million in debt and equity for real-estate deals, according to WSJ calculations.

Other stories

FESE European Equity Market Report – May 2014 figures

The European Equity Market Report is a piece of analysis that allows for an accurate comparison of trading statistics across European trading venues.

FIA Issues Third SEF Tracker Report On Swap Trading Activity

FIA today published the third issue of FIA SEF Tracker, a periodic report on trading activity taking place on SEFs.

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