June 23 2014


Euronext shares are, as I long predicted, slipping – dipping below 19 Euros as we race to pixel this morning. Unlike the CBOE IPO which I also predicted was not worth undertaking at issue, I am not sure Euronext will manage even a short term reversal above the launch price.

Elsewhere Jignesh got an extra weekend in jail and may have a judgement on his incarceration duration tomorrow while share sales and kerfuffles abound in the FTIL-related Indian marketplace. Interestingly some auctions may be looming to start the NSEL restitution process. Lance Uggla aims to power Markit ahead with more acquisitions as DB1 plans a greater innovation initiative while Baltic Exchange and LCH are in talks. NCDEX launches Indian Brent futures contract. ASX publish Oxera benchmark study on equity clearing and settlement. Once again, another interesting day in Exchange Invest…

Meanwhile, as our coveted top tier supporters already know, the analysis at Exchange Invest Premium is a useful addition to all the insights you get free, gratis and for nothing in this daily newsletter. I have a new post today continuing our ongoing investigation into that volume ‘whodunnit’ the mysterious case of NLX’s hype and its volume statistics. If you want to stay ahead of what’s happening in markets you need Exchange Invest. To give you an even greater advantage, it’s only $120 for Our Premium Service of analytical insights: Subscribe Here

New: NLX: Missed Opportunity
– like Spain’s world cup team, much hyped NLX had an open goal but they still couldn’t score…

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 original hypothesis: The Butterfly (In)Effect

HFT2: 1972 A Historical Perspective
– discussing the world of HFT, more parts to follow in this series…

Public Markets

Euronext Shares Slip Below Offer Price After IPO (subscription)
Philip Stafford – Financial Times

Euronext had an inauspicious debut on its own markets on Friday as its shares fell 3% below the price set for its IPO.

PLY: The great split is not quite complete for those visiting multiple web sites and seeking data but the Euronext entity trades on its own and has declined again this morning…indeed is below 19 Euros as we head to pixel. Good sale by ICE, although the investors look like suckers, frankly.

Post Euronext IPO, ICE To Report Financial Results For Euronext As Discontinued Operations Starting Q2 2014.

In connection with the IPO and the amount of shares sold by ICE, ICE intends to report the financial results for Euronext as discontinued operations starting in Q2 2014. ICE expects to only report one business segment starting with Q2 of 2014.

Markit Chief Eyes Further Acquisitions In Wake Of IPO (subscription)
Anish Puaar – Financial News

Markit CEO Lance Uggla has said the financial information services firm will continue to seek acquisitions after the $1.3 billion IPO, as he dismissed fears that the listing would weaken the relationships with bank shareholders.

IEX: FTIL Mulls Appeal Against CERC Order
The Economic Times

FTIL is mulling appealing against electricity regulator CERC’s order that directs the company to completely divest its stake in the Indian Energy Exchange (IEX) the country’s leading power exchange with a market share of more than 95%.

EI reported on March 25th that FTIL planned to sell part of IEX for USD 12 mln to Golden Oak (Mauritius). FTIL’s shareholding in IEX will be at 28.49%, and on a fully diluted basis at 25.64%, after the transaction is completed. CERC asked FTIL to cut its stake in IEX to 25%.

EuroCCP To Clear LSE Trades

EuroCCP announced that it will be clearing trades executed on LSE – the first of Europe’s big national exchanges to open its trade feeds to competitive clearing by three interoperating CCPs.

PLY: Confirming announcement first made in May.

Baltic Exchange, LCH.Clearnet In Tie-up Talks On Ship Futures Platform

London’s Baltic Exchange and LCH.Clearnet are in talks about a tie-up over the Baltic’s freight derivatives platform.

PLY: The Baltic MTF for futures on FFAs (Freight Forwarding Agreements) has not prospered with about 70% of the dry bulk OTC market clearing LCH already. A linkage allowing an EFP process for OTC makes sense for both parties.

DB1 On The Hunt For Fintech Tie-Ups (subscription)
Anna Irrera & Anish Puaar – Financial News

DB1 will next week officially launch an online platform, titled “Open Innovation,” through which early stage companies will able to present their ideas. Fintech firms with relevant propositions will be supported by Deutsche Börse in areas ranging from technology development, to regulatory affairs, and will be connected to the bourse’s network of member firms and vendors.

PLY: One interesting approach to innovation via the excellent DB1 CIO (where “I” = “Innovation”) Brendan Bradley. It will hopefully be followed by other innovative models but many legacy exchanges seem to struggle not merely with genuine challenging innovation but indeed the ways in which to encourage said innovation, as opposed to strangling it within their blobs. A useful and interesting initiative but surely only one of several to come as there are multiple potential models to approach this issue.

Defining HFT’s US Level Of Evil (subscription)
John Dizard – Financial Times

The Wall Street/Washington policy world tends to agree with its European counterparts that there is a worrying lack of liquidity in the credit markets. Most people do not worry much about that as long as the dryness goes along with rising prices; it is during the falling-price times that talking heads worry about liquidity.

PLY: Interesting perspectives on HFT and market structure from Joseph Brennan of Vanguard and Thomas Peterffy of IBKR.

CFTC Position Limits Rule Blasted By Commodity Merchants (subscription)
Alexander Osipovich – Risk

Vitol, Louis Dreyfus and other commodity trading firms say the proposed bona fide hedge exemptions in the CFTC’s revived position limits rule are too narrow and discriminate against merchants.

PLY: Position limits are, perhaps counterintuitively, likely to drive more opaque market agreements as they incentivise agreements outside the exchange mechanism but there remains a rather misguided left-wing canard that commodity prices are increased by liquid markets.

Private Markets

IFCI Mulls Stake Sale In NSE
Ashwin Ramarathinam – Livemint

IFCI proposes to engage consultants for the “Partial disinvestment of IFCI’s stake in National Stock Exchange of India Ltd (NSE).” IFCI will also divest its entire stake in IFCI Financial Services Ltd. The IFCI board has given an in-principle nod to a 2.5% stake sale in NSE. As on 31 March 2014, IFCI held 2.5 million shares in NSE, representing 5.5% stake.

PLY: First stake offered in NSE for a while.

CSE A Step Closer To Land Sale
The Telegraph India

The shareholders of Calcutta SE gave their consent to the local bourse’s proposal to sell its three-acre land off EM Bypass which will help the exchange mobilise much needed funds to recover from its present crisis and avoid a potential derecognition by market regulator SEBI.

CSE expects to garner about Rs 250 crore (USD 41.5 mln)through the sale of land. CSE board plans to utilise the proceeds to pick up a stake in a clearing corporation, which will allow the bourse to restart its own trading platform C-star.

PLY: Good for the board of CSE, keep fighting and add value in an Indian marketplace where a billion people need more avenues to develop and raise capital.

CMA Yet To Approve Nairobi SE Demutualisation As Deadline Nears
James Anyanzwa & Jackson Okoth – Standard Media

The planned demutualisation and eventual self-listing of the Nairobi SE (NSE) appears headed for fresh trouble. This follows revelations that the Capital Markets Authority (CMA), currently operating without a substantive CEO and a board chairman, is yet to approve the transaction.

Bitcoin Banned By Bolivian Central Bank As A Threat To National Currency
Guy Bentley – CITY A.M.

Bitcoin is facing another crackdown from government authorities after the El Banco Central de Bolivia banned any currency that is not issued or regulated by the Bolivian government. The list of cryptocurrencies that were mentioned by name in the Bolivian central bank’s directive included Bitcoin, Namecoin, Peercoin, Quark, Primecoin and Feathercoin.

PLY: If the Bolivian central bank is cracking down on Bitcoin, that is more a damning indictment of the Bolivian Central Bank’s legacy than that of cryptocurrency, surely?

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX is down 1%, FTIL flat with welcome news of some likely auctions of assets looming while Jignesh Shah is still in jail awaiting another decision on his possible release, perhaps as early as Tuesday:

Judgment On Shah’s Bail Plea Likely On Tuesday
Business Standard

Jignesh Shah, chairman of FTIL and Shreekant Javalgekar, former MD & CEO of MCX, will have to stay at least two more days in jail owing to the delay in the pronouncement of the judgment on their bail plea. The order was expected to be pronounced on Saturday, but sessions court judge justice D P Surana sought two days’ extension for the same.

NSEL Defaulters Told To Transfer Title Deeds Of Attached Properties
Dilip Kumar Jha – Business Standard

The Monitoring and Auction Committee (MAC) constituted by FMC to oversee recovery of money from defaulters on dues to NSEL, has ordered the latter to transfer title deeds of their attached immovable properties.

After their transfer to NSEL, these will be auctioned to recover the money.

PLY: News of auctions is a very welcome development, let’s hope the process continues in this positive vein.


Trillium Adapts Surveyor To Spot HFT Gaming (subscription)
Max Bowie – waters technology

Trillium Labs, a software development spin-off from New York-based proprietary trading firm Trillium Trading, has diversified the potential uses of its Surveyor tool for identifying potential market manipulation, and is positioning it for use by buy-side firms seeking to avoid being beaten to trades by high-frequency traders.


NCDEX Launches International Crude Oil Futures
The Economic Times

NCDEX on Friday introduced the country’s first International Brent Crude Oil and Light Sweet Crude Oil futures contracts.

PLY: A Brent contract for India comes at an apposite time as $120 appears in view once again and the danger of a western oil recession has multiplied in recent days… Oh and lest you might not recall, ICE, the home of Brent Crude futures, owns approximately 3% of NCDEX.

Supported By Shanghai SE Detailed Rules, Exchangeable Bonds To Pilot Soon

The exchangeable bond is a kind of corporate bond issued by an issuer with its shares in a listed company as collateral and exchanging target. A bondholder can exchange bonds held by it into shares in the listed company within a certain term according to stipulated conditions.

PLY: Interesting.

Career Paths

At the Jamaica SE (JSE) AGM, chairman of the JSE, Donovan Perkins announced to shareholders that he would resign his role as Chairman to allow him to concentrate on his expanded role as head of Sagicor Bank. Perkins intends to retain his seat as a Director of the Board of the JSE.

Conor McCarthy has joined ConvergEx as CFO. McCarthy will oversee all of ConvergEx’s global financial operations and will serve on the firm’s Executive Committee, responsible for providing organizational guidance and governance.

Most recently, McCarthy was CFO – Americas for global institutional brokerage GFI Group. Previously he held senior roles at Moneyline Telerate (now part of Thomson Reuters), Exco USA (now part of ICAP) and Bankers Trust Company.

HSBC Ramps Up Bond Trading Platform (subscription)
Anish Puaar – Financial News

HSBC is extending the reach of its electronic bond trading platform, which was introduced in response to the changing dynamics of the fixed income market.

The bank has hired a new sales head for the platform known as Credit Place, as it expands the product range to cover US and Middle East products and new currencies.

The new head of sales, Marco Cravero, was previously a director at electronic fixed income market MarketAxess.

Financial Calendar

This week

CME $0.47 Q2 dividend payment
BM&F BOVESPA R$145.7 mln (USD 61 mln) dividends payment
NASDAQ OMX $0.15 quarterly dividend payment

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

Other stories

Oxera Global Cost Benchmarking Of ASX’s Post-Trade Equity Services

ASX has released the Oxera Global cost benchmarking of cash equity clearing and settlement services report.

PLY: The chart on the ASX web site gives great GUI. Clearly there are three ugly sisters at the top of the page – and isn’t it entirely unsurprising that one, Brazil is being targeted by umpteen competitors, while a second, Spain is apparently regarded by its peers as a reactionary protectionist place and is of course under significant competitive pressure already. ASX overall is not doing badly but that doesn’t mean a monopoly is the only way forward. After all Australian market infrastructure used to lead the world, now it’s dropped towards the rear of the peloton driven by a cost cutting focus which eliminated vision…

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