June 23 2015

elb2 Thanks for the feedback from viewers intrigued/bemused/surprised/delighted to see me appearing on their local TV screens – yesterday it was CBC Canada. All I can say is blame the EU & Greeks – if they didn’t have a crisis, daytime tv would not be marked with my presence. As to the kind person who called me a ‘rock star’ – I’m blushing (and no, they aren’t a relative).

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Today in Exchange Invest:

Fidelity clarifications on Colt acquisition as the through train to Shenzhen is preparing for launch this year. IOSCO in territory fight against rapacious central banks. Bill Templer confirmed Curve CEO (well he has been running the project for almost 18 months) as SEBI-FMC merger talks heat up and Citadel stakes its claim to being a key swaps player in the post bank-centric world.

Much more too, happy scrolling:

Public Markets

Fidelity – Statement Regarding All Cash Final Offer For Colt – Confirmatory Statement Regarding All Cash Final Offer For Colt Group S.A. & Commitment Not To Sell Colt Shares To Any Third Party Prior To 31 December 2016

PLY: The significance to this deal is that COLT remains a hugely vital participant in the provision of direct line connections between people and machines in the world’s trading architecture, particularly in London. Fidelity already owns over 62% of the shares in COLT and is now seeking to mop up the outstanding shares and take the group private.

HKEx Chairman Confirms Shenzhen Connect To Be Launched In 2015

HKEx Chairman Chow Chung Kong confirmed that the Shenzhen – HKEx trading link will be launched later this year.

Read our Premium HKEx – SZSE Stock Connect Brief.

Market Watchdogs Fight Back Against Central Banks
Huw Jones – Reuters

An uneasy truce between market watchdogs and central banks, struck during the financial crisis, is showing signs of strain as they look for ways to tackle potentially extreme volatility in bond markets when interest rates start to rise.

The watchdogs are worried central banks will try to impose bank-style rules such as capital requirements on market players like asset managers and specialist funds.

PLY: Stuffing weights on horses is for handicap races, capital needs more mature treatment but then again citizens deserve more sensible economics than those espoused by the central banks this past decade. In the event of any capital controls apply them first to the QE mongers and let’s see how solvent they are, shall we?

Dark Pools Vs Protectionism
Terence Corcoran – Financial Post

Should Canadian investors be denied access to the vastly more liquid and dynamic U.S. investment market?

PLY: An interesting dilemma, Canada is struggling to find ways to maintain relevance in sectors where only a form of regulatory protectionism is precluding more business heading outside the Canadian nexus it seems.

Aequitas Hits TSX On Listing Fees
Barbara Shecter – Financial Post

PLY: Jos Schmitt hones a rival offer for IPOs which is much more holistic than merely cheaper…

Sebi Likely To Meet Today On Roadmap To Merge FMC With Self
The Economic Times

Analysts believe the merger may strengthen regulations and open the door for launching new instruments in commodity derivatives markets.

Read our Premium SEBI-FMC Merger Brief.

PLY: Without a mentality change, it will also open a whole broad swathe of asset classes to the ongoing anti-market mentality of SEBI.

India To Launch New Overnight Benchmark Rate From July 22

India will adopt from July 22 a new method to set the overnight interest rate benchmark based on traded levels instead of contributions from market participants, replacing the current Mumbai Inter-Bank Offer Rate (MIBOR), and will be administered by the board of Financial Benchmarks India Private Ltd (FBIL).

The new benchmark will be called the FBIL Overnight MIBOR and will be based on trade-weighted call money transactions conducted on Clearing Corporation Of India’s trading platform between 0900-1000 IST.

Clearing Houses Reduce Risk, They Do Not Eliminate It (subscription)
Gary Cohn (President & COO Goldman Sachs) – Financial Times

They can be centres of risk, amplifying problems instead of alleviating them.

PLY: As elucidated in my Premium Post pertaining to supermodels and Homer Simpson.

Private Markets

Nigerian SE Presses On With Markets Infrastructure Overhaul (subscription)
Philip Stafford – Financial Times

The user-owned NSE is looking to break decades of influence from local banks and brokers by demutualising and going public.

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

Stock Exchange For Unlisted Startups GREX Launched In Hyderabad
Business Standard

The Indus Entrepreneurs (TiE), in association with incubation centre The Entrepreneur Zone, organised a promotional launch of Pune-based company GREX. GREX is India’s first stock exchange for unlisted startups, which is scheduled to be launched in July 2015.

Canadian Senate Says No To Regulating Digital Currencies
Susan Willms – Bitcoin Magazine

PLY: Hooray for the oft ignored fine folks of the Canadian Senate – no regulation and a wariness for the blob stymying development. Terrific news for Canada which now may leapfrog the US where the Bitlicence demonstrates the Obamian fetish for interference in finance while adopting an increasingly quixotically aloof approach to foreign policy. Canada scores a key victory in the first Stanley Cup of Cryptocurrency.

Ukrainian Bitcoin Community Proposes Its Own BitLicense
Gola Yashu – NewsBTC

FAO: Lawsky BitLicense release here.

PLY: So you can understand why Ukraine is an economic failed state – in order to make progress, the poor citizens still think they need regulation, as opposed to a massive deregulation accompanied by the creation of a functioning justice system.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX up 3%, FTIL up 1%, resolution…oh presumably various regulators are too busy dividing committee posts and corner offices while as for the legal authorities:

Two Years On, NSEL Investors Seek To Retrieve Lost Funds
Ashish Rukhaiyar – Livemint

Investors plan to seek assessment of attached assets, identification of unencumbered assets and notification in gazette.

High Court Grants NSEL Intervention
Business Standard

NSEL sought its intervention in a case related to expedition of a probe into the NSEL scam, the Bombay High Court heard on Monday.

Filed by the NSEL Investors’ Action Group (NIAG), the case seeks an expeditious probe in the ~5,600-crore (USD 900 mln) payment crisis by the three government agencies, the Central Bureau of Investigation, Enforcement Directorate and the Economic Offences Wing of the Mumbai Police.

The court granted the NSEL intervention and the matter is scheduled for hearing after two weeks.

Read our Premium NSEL Scandal Brief – Main File.


LCH.Clearnet Launches Clearing Of European Senior Financials Credit Derivatives

LCH.Clearnet announced its CDSClear service has started clearing Markit iTraxx Senior Financials Indices along with all single name constituents of these indices. This is the first time that CDS referencing banks, including some of CDSClear’s clearing members, can be centrally cleared.

Citadel Makes Inroads Into Swaps Arena (subscription)
Katy Burne – Wall Street Journal

Citadel has emerged as a top dealer in U.S. IRS, becoming one of the first nonbank firms to step into a breach created by postcrisis rules overhauling trading in those derivatives.

Citadel Securities unit has the largest market share by number of trades and the third largest by dollar volume in Q2 on Bloomberg’s swaps platform.

PLY: Clearly not news to our advisory clients to whom I was predicting this several years back.

Nigeria Bourse Seeks To Start Trading Local Currency Futures
Maria Levitov – Bloomberg

Nigerian SE plans to start trading naira futures.

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

Sebi To Pave Way For Foreign Participation In Commodity Derivatives
Business Standard

Sebi is working on a framework to facilitate foreign portfolio investor (FPI) participation in the commodities market.

PLY: A good move if not overly prescriptive as is the standard SEBI wont.

Career Paths

FOW reports that LSE is set to appoint Bill Templer, former UBS and Morgan Stanley futures head, and Cathryn Lyall, formerly of BM&FBovespa, Icap and CME, as CEO and COO of its new futures exchange Curve.

PLY: Given we led with news Bill Templer was off to LSE as early as March 2014, this is unsurprising. However Bill is an excellent choice and I wish him well (even if I still am unconvinced by the mooted model). Cathy incidentally was a key player in shaping NLX.

FCA Board approved two new appointments to the Board of the Payment Systems Regulator (PSR): Mark Falcon, PSR Head of Regulatory Strategy and Policy, and Carole Begent, PSR Head of Legal. They will join the Board from 1 July 2015.

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

New announcements

CFTC Division of Market Oversight public roundtable on July 15, 2015, to discuss the Commodity Exchange Act’s trade execution requirement and the process of making Made Available to Trade (MAT) determinations (announcement here).
CBOE Q2 Financial Results – Friday, July 31, 2015

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

Analyst Notes

Is ASX A Buy?
The Motley Fool

ASX might seem like a boring company, but it would be a mistake to dismiss it as an investment on this basis. The company can be thought of as owning much of Australia’s financial markets infrastructure.

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.


German Crowdfunders Fear New Risk Rules (subscription)
Jeevan Vasagar – Financial Times

Crowdfunding platforms in Germany have warned that stricter investor protection rules will deter private investors from backing technology start-ups — limiting the funding options for new growth businesses and giving foreign rivals an advantage.

Lending Club & Smaller Banks In Unlikely Partnership (subscription)
James Sterngold – Wall Street Journal

More than 200 community banks have signed on to deals with Lending Club despite some inherent risks.

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