June 19 2013

elb2 Greetings from Frankfurt where I am on a flying visit. Appropriately enough DB leads the news today while elsewhere Turkey has an announcement brewing and the long tail includes demutualisation progress while emerging markets and emerging products, especially emissions, are prevalent…read on:

Public Markets

Deutsche Boerse CEO On Lookout For Takeovers

Reuters

PLY: DB CEO Reto Francioni continues to look for acquisitions but at the same time tasty morsels for one of the businesses at the top of the bourse pyramid is tricky. So, they concentrate wisely on generic growth and have cut some head count (the union position is always worrying in Europe but Francioni has been skilled at dealing with this). Having acquired the Swiss stake in EUREX, large purchase options which don’t add hugely to headcount and make some appreciable bottom line contribution are limited. It’s a tricky position. The big guys want to make acquisitions but funding is difficult to get smaller markets off the ground to grow into something which makes a logical consolidation target…

CME, NASDAQ And ICE Are Ready To Wrangle For European Market Share

Trefis

The CME Group plans to launch its European futures market in London on September 9.

PLY: DB and ICE lead the field and NLX is already in while CME is coming… It will be interesting to see how they develop the overall market as so far they have differing strategies, copycat for NLX, forex for CME. Neither have historically succeeded from London in scale although certainly the forex market’s depth in recent years would suggest that maybe CME can carve out a niche with European currency based products…

Eurex Clearing’s Lending CCP To Extend Covered Markets And Service Scope

Eurex Clearing, one of the world’s leading clearing houses, has extended the product and service scope of its Lending CCP, Europe’s first CCP service for the bilateral securities lending market.

Blue chip equities from Belgium, France and the Netherlands are now eligible for the Lending CCP service that already covers equities from Germany and Switzerland and a wide range of international fixed income instruments and exchange-traded funds. A full range of voluntary corporate actions is now included in the service, based on bilateral agreements between lenders and borrowers.

PLY: QV Excellent internal generic developments from DB to grow their bottom line…A very interesting and sound project which ought to gain business from both EUREX and Clearstream customers.

Private Markets

Borsa İstanbul Will Announce Partner In Two Months

Balkans.com Business News

The head of Borsa İstanbul, İbrahim Turhan, announced on Tuesday that the market will partnering with a major global stock markets in two months.

PLY: I am not sure whether to simply yawn or feel depressed by this announcement. Borsa Istanbul has just been de facto gifted the local futures markets through government sponsored ‘mergers’ while the Turkish economy is demonstrating a mercantile brilliance throughout the world. Meanwhile, the stock exchange looks like a rather plodding imperial bureaucracy which is pursuing that failed 1980’s strategy of partnership: an approach never worth the frequent flyer miles generated to create it.

Turkey has many innovative approaches in its foreign policy and is a growing economic powerhouse, I am utterly confused why they need a partner from any western bourse to achieve a future they can do internally much more cost effectively…

Nigeria – NSE, NASD And Emerging Battle In The Capital Market

THISDAY Live

Today, there are three exchanges in Nigeria. They are: the Nigerian Stock Exchange (NSE), The Abuja Securities and Commodity Exchange (ASCE) and the NASD Plc. Like in other climes, these exchanges were set up for different reasons. For example, the NASDAQ was created in response to concerns from the United States Congress in the 1960s that its Securities and Exchange Commission (SEC) had been lax in supervising stock trades, and had not adequately enforced rules against large securities companies.

PLY: Useful background on Nigeria – a nation where the economy could soar for some time on the back of a massive population boom, However, just fyi, bear in mind that here “NASD” means “Nigerian Association of Securities Dealers.”

Shenzen Emissions Exchange Debut

Bloomberg

China traded its first carbon dioxide permits for 22% less than today’s price in Europe as the nation inaugurated the Shenzhen Emissions Exchange.

The permits were priced from 28 yuan to 30 yuan ($4.90) a metric ton compared with 4.70 euros a tonne ($6.30) today for European Union permits on London’s ICE Futures Europe exchange, the world’s biggest carbon market by traded volume.

EEX Approved As Germany Phase 3 Auction Platform

EU News

The EU Climate Change Committee today supported Germany’s choice of European Energy Exchange (EEX) as its definitive opt-out auction platform under the Auctioning Regulation.

EU Carbon Market Needs Immediate Changes

Businessweek

Europe’s carbon emissions trading system risks failing unless significant changes are made, including an end to the bloc’s renewable energy target.

The European Union’s emissions trading system, or ETS, is on target to fall short of the region’s goal of cutting greenhouse-gas discharges by 80 to 95 percent from 1990 levels by 2050 unless the number of permits being handed out is immediately reduced or steeper cuts are imposed after 2020.

PLY: At Young_Markets the other week we had a passionate discussion about the merits of Bitcoin. Given Bitcoin supply is finite, it looks a better bet for the long term than these plentiful carbon permits…

Sri Lanka Securities Law To Allow De-Mutualization, On Track

Lanka Business Online

Changes to Sri Lanka’s securities law which will set civil penalties to offences, and make the Colombo Stock Exchange a limited liability and set up a derivatives exchange, are awaiting final clearance..

PLY Progress continues in Sri Lanka…

Technology

Direct Edge Introduces EdgeRisk Gateway

GlobeNewswire (press release)

Direct Edge®, the third largest stock exchange operator in the United States, announces EdgeRisk GatewaySM, a new risk management tool that provides a dedicated access gateway for trading on the EDGA Exchange (EDGA®) and EDGX Exchange (EDGX®). EdgeRisk Gateway is an optional, fee-based service available to market participants who want additional protection against the potential risks of shared infrastructure. Such risks can include performance degradation or disruptions in service resulting from sharp increases in the order activity of other Exchange members.

Johannesburg Stock Exchange (JSE) Rolls Out Online Portal For Market Data

The Johannesburg Stock Exchange (JSE) has rolled out a new web-based portal called Nova through which JSE market data clients can report their monthly usage of JSE data direct to the exchange.

The new system allows market data clients to log on to Nova to view JSE data products that their company subscribes to as well as historical usage figures. This assists with risk management of monthly reporting for clients while reducing administration and complexity.

Products

JPX Reviving Super Long-Term Bond Futures (subscription)

Futures and Options Intelligence

The Japan Exchange Group (JPX) is planning to re-launch its super long-term Japanese
Government Bond futures contracts next year after it goes live with its consolidated derivatives market.

PLY: A useful reintroduction of a future first seen on the Tokyo SE. In line with increased demand for futures at the long end of the yield curve in a time of likely increasing bond volatility.

Qatar Exchange To Start Trading Government Bonds

Reuters

Qatar Exchange will trade government bonds from June 20, as part of measures to deepen the Gulf state’s debt market and diversify investment tools for banks and other institutions.

The listing of government bonds is a step towards launching a market for corporate bonds which would help companies finance their expansion plans.

PLY: Ditto to the above comments, albeit in the cash markets here, all transparent trading of bonds on exchanges or platforms are good for issuers and investors, as well as benefitting the exchanges themselves.

Crowdfunding

Crowdfunding: A Welcome Phenomenon

GrowthBusiness.co.uk

New Crowdfunding platforms are proliferating at a rate of sites per week. ‘Good works’ sites, where people are asked to subscribe to a project to do good, can range from building a hospital in a poor economy to space projects. Here, whilst you might get a bed named after you or a free video from space, the motive is more noble than just profit. However, most sites now deal in providing finance for businesses with a view to commercial return. Typically it’s some form of loan capital (Funding Circle) or equity (Seedrs) – with the market already getting more sophisticated with more complex funding such as asset-based funding and invoice discounting (Pegasus) being increasingly available and provided.

Other stories

NSA Disruption Of Stock Exchange Bomb Plot Disputed

Wired

Did the government really disrupt a bomb plot targeting the New York Stock Exchange?

The FBI deputy director said that today in a Spygate hearing where the government for the first time said the secret spy techniques publicly disclosed two weeks ago had halted some 50 terror attacks in 20 countries.

Sean Joyce, the bureau’s deputy director, identified Khalid Ouazzani as the culprit. “Ouazzani had been providing information and support to this plot,” Joyce testified to the House Select Committee on Intelligence.

According to interviews and court records, the 2008 plot failed, not because the authorities broke it up, but because the alleged attackers decided against it.

PLY: Security is paramount at NYSE. I recall being told about a CEO (long before 9/11) being seen putting on his bullet proof jacket before he met a Canadian Exchange.

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