June 13 2014

elb2Time to prepare to leave London but another full day ahead while next week is the annual FESE Convention which promises to be another stunning event, this time in Zurich. LCH joins Clearnet as authorised under EMIR while CEESEG reports better numbers, albeit on extraordinary items, as it endeavours to puff up its value before the Polish government forces the Warsaw Exchange into a somewhat suicidal merger.

Welcome to the last Exchange Invest of what has been a frantic week:

Meanwhile, our 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

LCH.Clearnet Ltd Receives EMIR Authorisation

LCH.Clearnet Ltd, LCH.Clearnet Group’s UK-based CCP, announced that the Bank of England approved its application as a CCP under EMIR. This is the final step in the process, which follows LCH.Clearnet S.A.’s authorisation by L’Autorité de Contrôle Prudentiel et de Résolution (ACPR) on 22 May 2014.

PLY: In haste to pixel the other week, I applauded the regulation of LCH when it was in fact Paris’ Clearnet arm… so hooray today for LCH, and thus to clarify, a post trade cross collateralized salute for Clearnet too…

European Commodity Clearing Receives EMIR Authorisation

On 11 June, the German regulator BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht) has admitted European Commodity Clearing (ECC) as a CCP according to EMIR for the settlement of transactions in commodities, including emission rights.

ESMA Adds European Commodity Clearing & LCH. Clearnet Ltd To The List Of Authorised CCPs Under EMIR

PLY: Other EMIR approved CCPs are: Nasdaq OMX Clearing, EuroCCP, KDPW_CCP, Eurex Clearing, CC&G (Italy) and LCH.Clearnet SA (France).

ICAP Boosts Tech Spending To Tap Demand For Screens (subscription)
Joe Parsons – FOW

ICAP hiked its spending on electronic execution by almost a fifth in the last calendar year as the derivatives broker looks to cash-in on growing demand for screen-based trading.

See also our premium post ICAP Explores A New Galaxy and the excellent guest posts by Jake Pugh here and here.

PLY: Rumours abound throughout London that a night of the long knives may well be a summer of sackings across the ICAP group as it aggressively repositions out of voice broking as SEF-world develops.

Dark Pools Take Larger Share Of Trades Amid SEC Scrutiny
Sam Mamudi – Businessweek

The rise of off-exchange trading in the U.S. stock market continues unabated even as regulators question the wisdom of allowing the shift to continue.

MCX Hopes To Launch New Contracts After Transferring FTIL Stake To Escrow Account
Suresh P Iyengar – The Hindu Business Line

MCX may move FMC to lift the ban on launch of new contracts after amending the Articles of Association and transferring the promoters’ stake to an escrow account. The exchange has proposed a special resolution to make the amendment and sought shareholders’ approval through postal ballot. The entire process is expected to be completed by June 18, said MCX.

PLY: FTIL appear to be losing control of the situation – can we presume the loss of Jignesh to the penitentiary system means the business is incapable of making significant decisions such as the sale of stakes…or have the bidders taken fright? Things have certainly gone very quiet on the sale front.

India – New FMC Norms: Exchanges Set To Boost Tech Focus
Rajesh Bhayani – Business Standard

Owing to the directives issued by FMC on Wednesday, exchanges will have to implement various changes, including setting up committees of directors and appointing key management personnel. Technology could also be an important issue, as FMC has mandated commodity exchanges to have a standing committee of directors for technology.

Betfair Aims To Capitalise On New Gambling Tax (subscription)
Duncan Robinson – Financial Times

Betfair will use its £210m cash pile to try to capitalise on the fallout from a new taxation regime set to shake up the online gambling world later this year.

PLY: Betting in the UK is moving from a point of consumption levy to a point of supply – which while regarded as an opportunity by Betfair could be regarded by some as akin to an FTT, no?

Euronext And Dalian Commodity Exchange Sign MOU

Euronext today announced that it has signed a MOU with Dalian Commodity Exchange (DCE). Its aim is to carry out joint research into the promotion, distribution and trading of commodity products, develop new strategies for improving the safe operation of orderly futures and options markets and discuss the feasibility of cooperatively developing new products.

PLY: Interesting to see Euronext determined to add to their MOU pile, Chinese exchanges are spoilt for choice currently from a broad range of visitors it seems.

Private Markets

CEESEG Posts Solid Earnings For 2013

CEESEG, the holding company of the stock exchanges of Vienna, Prague, Budapest and Ljubljana, reported solid earnings for the financial year 2013, as presented at its AGM on 12 June 2014. EBIT for 2013 was EUR 27 million, up 34% vs. 2012 (EUR 20.2 million).

PLY: Note that an extraordinary item releasing provisions accounts for 4.1 million of the 6.8 million profit gain after a period of stagnant results. Cynics might note how this release may not be tax efficient but it could help boost valuation if a deal was at hand, say because Austrian banks are eager to gain liquidity and sell anything they can. The abject apathy of other exchanges to buy the somewhat dysfunctional Vienna bourse (with admittedly useful resources in Prague and Budapest in particular) is apparently unmatched by the eagerness of the Polish government to bid…

U.S. Marshals To Auction Bitcoin Seized In Raid On Silk Road Market

U.S. government plans to auction about 30,000 bitcoin, the electronic currency, valued at about $17.4 million, on June 27 which were were seized during an FBI raid in October on the Internet marketplace Silk Road.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX is off 1.5% and FTIL slips nearly 4% as the NSEL situation appears somewhat stuck without restitution and resolution.

NSEL To File Recovery Suit Against Borrowers
Business Standard

The reconstituted board of the scam-hit NSEL decided to file a recovery suit against borrowers shortly. The board, chaired by MD and CEO Saji Cherian, also decided to approach the Supreme Court to appoint an authority to oversee all court cases to speed the recovery process.


Broadridge Expands Multi-Asset Processing Footprint By Increasing Derivatives Coverage – Broadens Market Share With Differentiated End-To-End, Multi-Asset Offering

Broadridge Financial Solutions, Inc.adds more coverage.

The Virtual Datacenter Model Explained (subscription)
WallStreet & Technology – Natalie Lehrer

There are many tools and technologies that make a virtual datacenter run. Here are a few of the major layers firms will have in their virtual set up.


Euronext Launches Spotlight Options In Amsterdam And Brussels

Euronext announced that in July it will launch Spotlight Options, a segment dedicated to the development of new option classes requested by market participants, on its Amsterdam and Brussels derivatives markets. Through a unique combination of Liquidity Provider support and dedicated promotion by Sponsoring Brokers, underlying assets with notable market events or activity will be put in the spotlight, by means of a very straightforward and transparent trading vehicle: options.

CME Sees No Wheat Convergence Issue Despite Widening Spread Concerns
Christine Stebbins – Reuters

CME has scrutinized trading in its wheat futures contract after receiving complaints that heavy last-minute spread trading could influence a hike in storage rates, but found no evidence that was the case. The current price spread between July and September wheat contracts on the world’s biggest agricultural commodities exchange is wide enough to prompt a 3-cent increase in storage rates for the first time in three years.

Shanghai Looks To Create Freight Derivative Markets (subscription)
Xiao Wang – Risk

Chinese authorities have made regionally established commodity benchmarks a policy aim and now Shanghai is looking to create derivative products in the underlying freight markets.


May FTSE Mondo Visione Exchanges League Table – Moscow Exchange Play A Blinder

PLY: Warning: clicking on the link above unleashes a lot of soccer cliches.

During May, the FTSE Mondo Visione Exchanges Index best performer by capital returns in US dollars was MOEX with a 26.8% increase in share price from 30 April to 30 May 2014. The next best performer was JPX with a 21% increase over the same period.

The FTSE Mondo Visione Exchanges Index worst performer by capital returns in US dollars was CBOE with a 5% decrease in share price from 30 April to 30 May 2014. This was followed by Romania’s BvB with a 4.2% decrease over the same period.

NZX: Equity Derivatives Strengthen NZ’s Capital Markets Offering

NZX’s Index Futures, set for launch on Monday 16 June, will further strengthen New Zealand’s capital markets infrastructure and provide investors with additional tools for their New Zealand equity investment and risk management needs.

Career Paths

At the AGM of CEESEG AG the following resolutions on changes to the Supervisory Board were passed: Robert Ottel (voestalpine AG), Angelika Sommer-Hemetsberger (Oesterreichische Kontrollbank AG) and Stefan Szyszkowitz (EVN AG) become new members of the Supervisory Board of CEESEG AG. They succeed Claus Raidl, Johannes Attems and Rudolf Gruber who retired from the Supervisory Board. Willibald Cernko remains Chairman of the supervisory board; Heimo Scheuch (Wienerberger AG) takes over as his deputy from Rudolf Gruber.

FOW reports that LME has approved its first Middle-East representative to sit on the LME aluminium committee, increasing the presence of Asian participants at the exchange. Walid Al Attar, CMO at Emirates Global Aluminium (EGA), joins the committee.

LME press release here.

As of 16 June 2014, Alain Bichsel will take over as Head Corporate Communications at SIX. He succeeds Ruth Stadelmann, who has decided to step down from her role as Head Corporate Communications.

PLY: All the best to Alain in your new role.

Financial Calendar


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

Next week

Record date ICE $0.65 Q2 dividend
IPO Roundtable (Jointly organised by European Issuers, EVCA and FESE)
FESE Convention
CBOE $0.18 quarterly dividend payment
Record date First Derivatives 9.00p final dividend

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

Other stories

ICMA: Trade Bodies Join Forces To Promote EU Private Placement Market

The development of a European Private Placement market is underway as leading trade bodies join forces to establish a guide to best market practice.

Message From Europe’s ETF Providers, Users And Industry Participants To ESMA: Developing Europe’s Market Structure For ETFs – Key Principles For MiFID ‘Level 2’ And The CSD Regulation

Index Conference 2014 To Celebrate 20th Anniversary Of KOSPI 200

KRX holds “Index Conference 2014”, celebrating the 20th anniversary of KOSPI 200. The conference is assigned to evaluate the performance of KOSPI 200 to date, to discuss its representative role over the Korean index, and to introduce recent trend in global index investment strategy.

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