June 22 2015

elb2 Today T2S goes live…just ahead of the Eurozone crisis meeting with Greece. Is timing everything? We have a free Guest Post – Henri Bergstrom, Head of Product Management for CSD Technology, Market Technology, Nasdaq:

“T2S aims to reduce cost of European cross-border settlement and facilitating competition between European CSDs. At the same time the need for investments of European CSDs and their customers is significant addition to those done by the ECB in establishing T2S.” Read more here.

Elsewhere, it’s a mix of regulation, worries, threats, concerns, occasional bursts of trading and lest you missed the outside world news headlines, the youthful yodeller Taylor Swift took Apple head on and got them to change direction. Doubtless if Miss Swift’s music career dries up, she can expect to earn a fortune as a lobbyist with such a track record.

Markets: lots to discuss, happy scrolling:

Public Markets

BBY Heads For Liquidation As Creditors Urged To Wind Up Firm (subscription)
Andrew White – The Australian

BBY will be placed in liquidation today if shareholders accept a recommendation by KPMG.

Read our Premium BBY Collapse – Brief.

Shenzhen-HK Link Eyed In September

The Shenzhen-Hong Kong Stock Connect will debut in September, likely on Sept. 14 or Sept. 21, the Hong Kong Economic Journal reported Monday.

Eligible stocks for the northbound link will include blue chips with a market capitalization of 20 billion yuan (US$3.23 billion) or above and listed either on ChiNext or the SME Board of SZSE.

HKEx Moves Closer Toward Allowing Dual-Class Shares
Eduard Gismatullin – Bloomberg
HKEx Publishes Conclusions to Concept Paper on Weighted Voting Rights
Presentation by HKEx Chief Regulatory Officer and Head of Listing David Graham at a Media Briefing on Conclusions to Concept Paper on Weighted Voting Rights

HKEx moved closer to loosening shareholder voting rules, seeking to attract more listings after losing Alibaba to New York.

HKEx will propose a formal consultation on weighted voting rights by as early as Q3 after initial feedback from market participants supported allowing minority-control voting structures.

PLY: A bad bad day for Hong Kong. This will not end well. A short term IPO gain will be offset by a long-term decline in relevance, immersed in inevitable scandal.

Hong Kong Regulator & Exchange Operator Often Do The Same Things, Needlessly (subscription)
Enoch Yiu – SCMP

The ability of HKEx to police listed companies came into question again after the securities watchdog stepped up its role as a corporate regulator over the last year.

In its annual report for the financial year ending in March, SFC said it issued a record 9,752 requests (up 71%) for brokers and fund managers asking for information about the unusual share movement of some stocks.

PLY: Clearly a candidate story for the Casablanca quotation…

ECB’s €1bn Securities Settlement System To Go Live (subscription)
Philip Stafford – Financial Times

After eight years of planning, construction and delays, a €1bn IT project to underpin a single European capital market is set to go live on Monday.

Read our Guest Post on T2S from Henri Bergstrom, Head of Product Management for CSD Technology, Market Technology, Nasdaq here.

PLY: T2S is live and now we merely have to hope the Euro stays alive long enough to see the investment in this system repaid.

ICE Benchmark Administration: 2 New Gold Auction Direct Participants

Morgan Stanley and Standard Chartered have been approved in the LBMA fixing auction. Last week Bank of China was announced as a direct participant in the gold auction.

EU Agrees Rules To Curb Bank Trading Risks
Huw Jones – Reuters

EU finance ministers agreed a draft law to rein in trading risks at banks on Friday, including an exemption for Britain’s lenders because they already face similar curbs.

PLY: Allowing Britain’s broader law to stand marks an interesting piece of procedural progress within the EU just as more industry leaders in Britain are seeking significant revision to the dysfunctional EU status quo.

With Some CME Pits Closing, Time To Embrace The Future
Crain’s Chicago Business

In less than two weeks, CME will start dismantling more than half of its remaining 30 pits in the old CBOT tower. The others may last a few years, until their volume is sucked away, too.

India Set To Change Listing Rules For Start-Ups (subscription)
James Crabtree – Financial Times

India is set to agree a shake-up of listing rules for start-ups this week amid rising fears of an exodus of fast-growing technology companies to Singapore and the US.

PLY: A good move albeit with SEBI behind it, the chances of Indian markets equating to nimble and able to compete with the likes of AIM, NASDAQ/NYSE et al, is, well, challenging.

FMC/SEBI Merger: Marriage A Saviour!
Hitesh Jain – IIFL

The need of the hour is to restore confidence in the commodity markets.

Read our Premium SEBI-FMC Merger Brief.

PLY: SEBI+FMC = Proof(Pudding*Eating)

While Mr Jain describes SEBI as ‘robust” I fear that their robustness is largely anti-commerce which is not how I define sound regulation.

Private Markets

Angola’s Securities Clearinghouse Starts Operating In H2
Macau Hub

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

BTC Could Change The Derivatives Market, Says UBS Banker
Justin OConnell – CryptoCoinNews

PLY: Yip.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX ad FTIL flat.

Securities Appellate Tribunal Dismisses FTIL’s Appeal
Reena Zachariah – The Economic Times

The Securities Appellate Tribunal (SAT) has dismissed FTIL’s appeal to restraint MCX-SX clearing corporation from passing any resolution to amend its articles of association. The tribunal has also refused to allow MCX-SX clearing corporation as a party to the appeal against market regulator Sebi’s order directing FTIL to divest its holdings in stock exchanges including MCX-SX and its clearing corporation.

Read our Premium FTIL Stakes Sales Brief.


PSE Goes Live With New Trading System

As previously announced, Philippine SE (PSE) successfully launched today their new trading system powered by NASDAQ replacing the PSEtrade platform provided by NYSE Technologies.

PSE press release here.


NSE To Begin Overnight Investment Facility
The Economic Times

NSE will introduce an overnight liquid transaction facility on its web-based Mutual Fund platform. The facility will enable traders, especially small investors, to invest even for a single night in liquid funds.

There Is A Bondage Twist To Complex Corporate Bond Markets (subscription)
John Dizard – Financial Times

“As any well-informed financial markets person can tell you, the move to electronic trading and execution of corporate bonds is just on the horizon. It has been just on the horizon since I first wrote about it back in 1999, and it will stay there until a lot of people such as corporate treasurers, lawyers and other fee-seeking intermediaries are forced into big changes in the way they do business.”

PLY: Pithy, insightful and perhaps the best perspective of the year on electronic bond markets.

Career Paths

China Securities Regulatory Commission (CSRC) said it has dismissed Li Zhiling, the head of its share issuance bureau, as he was suspected of criminal activity and had been handed over to police.

Nasdaq appointed Stacie Swanstrom to lead the Global Corporate Solutions Business. She will report directly to Adena Friedman, President, Nasdaq, effective July 1, 2015.

The Supervisory Board of EEX has confirmed Dr. Thomas Siegl as member of the Management Board and extended his term by five years.

Instinet Loses Research Arm Staff To Bloomberg Tradebook
John D’Antona Jr. – Traders Magazine

Instinet research has three research sales people who will join Bloomberg Tradebook. The three are Justin Tannenbaum, Kyle Henderson and Craig LoGrande and all start on Monday.

The three will find themselves working with a former Instinet executive, Glenn Lesko, who ran Instinet’s Far East and U.S. Operations. Lesko recently came back to the States and replaced Ray Tierney as Tradebook’s CEO & President. Instinet had reportedly been trying to shift the unit for some time.

Financial Calendar

This week

IIROC roundtable to discuss alternatives to the proposal in IIROC Notice 15-0023 Re-Publication of Proposed Dark Rules Anti-Avoidance Provision to address the impact of retail orders being routed to U.S. broker-dealers – June 23
CME $0.50 Q2 2015 dividend payment – June 25
Nasdaq $0.25 quarterly dividend payment – June 26

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

Analyst Notes

Moody’s Investors Services upgraded LSE senior unsecured and issuer ratings to Baa1 with a stable outlook from Baa2, review for upgrade. Moody’s also confirmed LSE’s long-term issuer ratings of Baa1, stable outlook. Moody’s full announcement here.

A full table of current analysis can be found on our Analyst Ratings page which is updated daily.

All Analysts, Banks and Brokers are welcome to contribute to this section.


P2P Lender ThinCats Australia On Prowl For Strategic Investors, Potential IPO
Sarah Thompson, Anthony Macdonald & Jake Mitchell – AFR

ThinCats Australia is looking to capitalise on investor interest in P2P lending, as it gears up for a potential IPO and holds talks with strategic investors.

Other stories

FT City Network: Rolet Warns On Indebtedness (subscription)
Patrick Jenkins – Financial Times

LSE’s CEO, Xavier Rolet, warned about the risk posed to the UK economy by rising levels of debt and an overreliance on regulation, countering attempts by the government to revive a mood of optimism in the financial services industry.

Rolet likened the approach of regulators to “investing in more fire extinguishers as we continue to pour petrol on to the fire” and said the proliferation of new rules was typical of the knee-jerk responses that follow every crisis.

PLY: Yip to the power of maximum yip.

European Council Council Of The European Union: Council Conclusions On A CMU

Read our Premium EU CMU Brief.

PLY: My discussion at the FESE Convention was a lot pithier. For those who missed it, I will endeavour to recreate a synthesis for Premium subscribers.

HKEx Chief Executive Charles Li – Latest Charles Li Direct: After 15 Great Years, A New Beginning

PLY: 15 years public and with lots of optionality…

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