June 17 2015

elb2 In Oslo, a nation which neatly abuts the EU but stays out of membership, partly for fear of seeing their sovereign wealth redistributed to the usual suspects – banks, Mediterranean governments etc. Fabulous city with a small but perfectly formed bourse (both in architectural and operational elegance). Looking forward to another excellent FESE Convention while circa 1430 today expect the whiffs of white smoke from behind the elegant Georgian columns of the Oslo bourse as the new President of FESE is announced, replacing Christian Katz whose input as Chairman has been sadly curtailed by his departure from SiX. Meanwhile the meeting itself takes place against a background of increasingly freyed tempers amongst some MEPs over MIFID II and the regulations around it.

…which reminds me. I asked the question Monday: which element of MIFID II is the worst? So far, precisely nobody has offered to support the broad thrust of this regulation.

…Incidentally, I just heard I will be live on RT (cable & online here) at 1500 CET (0900 EST) today discussing the Greek tragedy, Eurocrisis et al.

Today in Exchange Invest:

From ICE launching Eris futures to worries about repo from LCH to MEPs proclaiming they want CMU to work by lowering the impediments on business across the EU. At least in the latter case there is no shortage of opportunity to improve the situation but will we see a tangible result to help Europe bounce just as the Greeks appear to be heading off into post Euro pastures?

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Today in Exchange Invest:

Public Markets

Plus500 UK May Account Freeze Was Not The First Time
Andrew Saks-McLeod – LeapRate

In October 2014 Plus500 UK wrote to the FCA requesting to freeze individual customer accounts where adequate documentation and verification had not been received.

Read our Premium Plus500 Turmoil & Deal – Brief – Part 1, Part 2

PLY: QV Will the Plus500 Takeover Survive? No further comment required today.

Hong Kong-Shenzhen Connect Launch Date Announcement Delayed
Reuters

…on hold due to technical issues, maybe not to be delivered by China’s year end suggested date some say…

Read our Premium HKEx – SZSE Stock Connect Brief.

Rules To Rein In Stock Market Volatility In Hong Kong Will Benefit Small Investors (subscription)
SCMP

FAO: Previous discussions on HKEx measures to curb volatility here.

LCH. Clearnet Sounds Alarm Over Declining Use Of Repo (subscription)
Joe Rennison & Philip Stafford – Financial Times

LCH.Clearnet said there may be limits to the amount of customer margins it can send to the repurchase, or repo, market as regulation constrains customers.

PLY: This strikes me as the thin end of a potential cataclysm…or at least the end of modern wholesale banking as we have known it for the past couple of decades or so?

‘Flash Crash’ Trader Navinder Sarao Worked With Fund Network Now Under Investigation (subscription)
Margot Patrick – Wall Street Journal

When British trader Navinder Singh Sarao planned to raise money to launch a new investment fund in 2010, he was put in touch with David Cosgrove, an Irishman who had set up dozens of such funds in offshore centres.

Five years later, Mr. Sarao is in a London prison, charged by U.S. authorities with market manipulation that contributed to the U.S. stock-market “flash crash” of 2010. Meanwhile, regulators in Mauritius and Guernsey shut down Mr. Cosgrove’s network of funds this year and are investigating the funds’ oversight and valuation.

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On Feds Hounds and Floors – Watch Out This Ends Badly…
A Valid Case Against Sarao
The Post Floor Moral Breakdown
Barking At the Moon: The Hound of Hounslow & other follies
Flash Crash & Hound of Hounslow – Brief

Esma Slammed Over Mifid II Standards (subscription)
James Rundle – Financial News

Tempers flared at an influential European Parliament committee meeting this morning where lawmakers clashed with regulators over a perceived lack of transparency over the way new fixed income rules are being drafted for the revised MiFID.

Private Markets

Saudi Arabia Equity Market Opening Just The Start (subscription)
Philip Stafford – Financial Times

There’s a distinct sense of déjà vu around the opening up of Saudi Arabia’s stock market to foreign investors.

The kingdom offers a tempting prospect. It represents 5.5% of total emerging markets market capitalisation and it is bigger than Mexico, Turkey, South Africa and Russia, both in terms of size and liquidity.

Saudi Bourse ‘To Attract $40bln Inflows’ After Opening To Foreigners
Al Arabiya

Asset managers are unanimous in their belief that this move by the Saudi Capital Market Authority (CMA) could attract as much as $40 billion of inflows into the Saudi bourse over the next three years upon the MSCI upgrade to emerging market status, and multiplications thereafter.

Read our Premium Saudi Arabia Opening Capital Markets – Brief 

South Korea To Seek Measures To Include Stock Market In MSCI Developed Markets Index
Reuters

South Korea’s financial regulator said on Wednesday that it will develop measures for the country’s stock market to be included in MSCI’s developed markets index.

GCX Takes Off In June 2016
Emmanuel Bruce – Graphic Online

Trading on the proposed Ghana Commodity Exchange (GCX), for grains and cereal producers is set to commence in June 2016, Project Coordinator, Mr Robert Dowuona Owoo, has said, deploying a warehouse receipt system modelled on the Ethiopian system.

FAO: In March 2014 EI reported that eleni (run by Eleni Gabre-Madhin), a private company positioned as the premier commodity exchange promoter in Africa, formed a private-public investment consortium to finance the establishment of GCX.

Investment consortium partners included Ghana’s top tier financial institutions, Data Bank Agrifund Manager Ltd, Ecobank Ghana Ltd, UT Bank Ghana Ltd, as well as IFC, 8 Miles Fund and eleni, with minority stakeholding by the Government of Ghana.

GCX Gets EU Backing
GhanaWeb

Read our Premium briefs: Rise of Africa – Part 1Part 2Part 3Part 4Part 5.

New IDX Director ‘Should Lobby For Tax Incentives For Listed Companies’
Vanesha Manuturi – Jakarta Globe

In order to attract more companies to list their shares, Indonesia’s securities firms hope the local stock exchange’s new director will spearhead a new lobby effort for more tax incentives.

The Financial Services Authority (OJK) has approved Tito Sulistyo, currently a VP at listed toll road company Citra Marga Nusaphala, as the sole candidate for president director of Indonesia SE (IDX). IDX shareholders are expected to give their stamp of approval in a meeting scheduled for June 25.

Bitcoin Surges As Grexit Worries Mount, Posts Best Run In 18 Months
Jemma Kelly – Reuters

Bitcoin surged by as much as 7% on Tuesday and was on track for its longest winning streak in 18 months, as concerns that Greece could tumble out of the euro drove speculators and Greek depositors into the decentralized digital currency.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Clearly something happening or about to be announced around FTIL as it jumps nearly 15% while MCX is up less than 2%.

Technology

CME Data Issue Resolved After Over Two Hours (subscription)
Luke Jeffs – FOW

CME said on Tuesday afternoon that trading had been returned to normal after a two-and-a-half hour issue with its historic data.

ASIC: Macquarie Investment Management To Refund Clients After Review Of System Errors
MondoVisione

Macquarie is due to refund over $5.5 million to around 2,300 clients affected by system errors. The errors occurred between 2001 and 2014, on a number of products using the Macquarie Wrap Platform.

Products

ICE To Launch Eris Standard Interest Rate Futures On June 29; Introduction Will Include Euro And Sterling Rates
ICE

ICE Futures Europe intends to launch Eris standard interest rate futures contracts denominated in Euro (EUR) and Pound Sterling (GBP) on Monday June 29, 2015.

The new contracts, Eris Standard EUR Interest Rate futures and Eris Standard GBP Interest Rate futures, will trade and clear at ICE Futures Europe and ICE Clear Europe. They are based on the product design of Eris Exchange US dollar-denominated Eris Standard Swap future and Eris Flex Swap future contracts.

Eris interest rate futures contracts replicate all of the cash flows and economics of comparable swaps traded OTC, including Price Alignment Interest (PAI), which are incorporated into a single futures-style variation margin cash flow. Additional contract features include capital, margin and operational efficiencies of exchange-traded, cash-settled futures contracts, without physical delivery risk at maturity.

In December ICE and Eris Exchange announced a multi-year license agreement for ICE exchanges to list futures and options based on the Eris Methodology.

PLY: Eris is the one swap platform which has so far delivered seriously credible progress. The last roll was pretty spectacular and volumes / depth of book are consistently growing in the core platform. The tie-in with ICE is a brilliant move forward, even if, presumably, the Eris product may eclipse the excellent, if overlooked LIFFE product line which began with the LFB almost 20 years ago.

TMX Turns To Cattle Sales
Reuters
TMX – Launch Of AgriClear
TMX

The expansion comes weeks after the TMX completed a six-month operations review (reported here), which analysts read as focusing on streamlining its business.

TAIFEX Submits Draft Plan For dlr/yuan Contract
Reuters

Taiwan Futures Exchange (TAIFEX) proposes to use yuan fx rates in Hong Kong (CNH) and Taiwan (CNT) to settle U.S. dollar/yuan currency futures contracts with trading beginning July 20th.

China’s First Public REIT Set To Go Online In Shenzhen
Derek Au – Asia Asset Management

Chinese authorities have given the green light for the Mainland’s first REIT for public investors to launch.

The China Securities Regulatory Commission (CSRC) granted the go-ahead earlier this month as an experimental step to develop the Chinese REIT market. The REIT, issued by Penghua Fund Management, will be listed on Shenzhen SE, backed by rental income from the commercial properties of China Vanke, a major developer located in Qianhai, which is a special economic zone in Shenzhen.

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

EPEX SPOT & ECC To Reduce Intraday Lead Time On All Markets – Trading Up To 30 Minutes Before Delivery – Austrian Lead Time Decreases By 45 Minutes
MondoVisione

S&P & SGX Launch Research Platform
Finextra

Integrated data, analytics and market research platform IRFacts has been, created in partnership with SGX, for IR professionals.

Career Paths

Bloomberg reports that Luminex has hired Jonathan Clark as its CEO. Clark will join Aug. 1 from BlackRock, where he is co-head of equities trading for the Americas. He had been a VP at Merrill Lynch Investment Management, joining BlackRock when it acquired the unit in 2006. BlackRock has a stake in Luminex, which aims to open its trading venue late in Q3. Once he receives regulatory approval, Clark will become the company’s first permanent CEO.

Read our Premium post: Luminex – Crazy Name, Crazy Development?

Bloomberg reports that Tullett Prebon hired Gary Vura from ICAP to increase the IDB’s presence in the New York money markets. Vura, 53, will head the desk. He joined ICAP in 1996.

Financial Calendar

FESE Convention – Oslo – June 17-18
CBOE $0.21 quarterly cash dividend payment – June 19

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

Share Notes

NASDAQ OMX EVP Anna M. Ewing sold 15,000 shares Monday, June 15th at an average price of $50.17 (bargain $752,550.00). She now owns 34,541 shares.

NASDAQ OMX EVP Edward S. Knight sold 14,062 shares Friday, June 12th at an average price of $50.91 (bargain $715,896.42). He now owns 52,870 shares.

Crowdfunding

Etsy Tests Crowdfunding Venture (subscription)
Leslie Josephs – Wall Street Journal

Etsy Inc. is crafting a new revenue stream: crowdfunding.

The Brooklyn-based artisan-and-vintage marketplace on Tuesday launched a two-month pilot program in which sellers can raise money on the company’s website to fund the manufacture of new products.

PLY: Brilliant move.

Other stories

Introductory Statement On T2S by Yves Mersch, Exec Board ECB, at Public T2S Hearing On TARGET2-Securities (T2S) Before ECON Committee, Brussels, 16 June 2015
MondoVisione

European Parliament – Capital Markets Union: More Investment Across The EU & More Funds For SMEs
MondoVisione

PLY: The sympathies are laudable but alas the EU is rightly viewed amongst many seasoned entrepreneurs as an impediment to enterprise with recent anti-business measures alone including the moronic imposition of pan-EU VAT on micro businesses. The EU needs a turbocharged high performance rotary axe to start cutting anti-enterprise rules across the community and I sadly doubt they have the capacity to deliver anything like a fraction of what is required to turn the sick continent around…

Read our Premium EU CMU Brief.

Hong Kong’s SFC Publishes Annual Report 2014-15
MondoVisione

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