June 27 2014

elb2

A rather frantic week comes to a conclusion in a day of poisoned chalices: NYSE wins Alibaba IPO, Polish government installs puppet ex-Minister CEO of Warsaw SE, prorogues AGM (no problem guessing who is in charge but free this market is no longer methinks…). Elsewhere Barclays loses MTF connections after NY AG litigation launched. Lots happening, all with a spot of added pith too:

…Meanwhile if you like the free stuff and want to support us building out the industry platform for markets, please join our top tier, it’s only $120 and keeps this daily newsletter free. Recent stories include:

Euronext: Separation Anxiety?
– as we race to pixel, Euronext shares

Poland At the Crossroads
– the poster child of New Europe looks increasingly to be going off the rails worse than Miley Cyrus post Hannah Montana, today the government votes to parachute their ministerial puppet in as CEO.

NLX: Missed Opportunity
– like Spain’s much hyped 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

Alibaba Picks NYSE For U.S. IPO
Reuters

Alibaba, which handles more than 80% of online retail transactions in the world’s second-largest economy, will list under the symbol “BABA,” the company said in an updated IPO prospectus.

The Chinese company is expected to make its debut this summer in what could be the largest U.S. tech IPO. It is expected to eclipse Facebook Inc’s $15 billion initial share sale in 2012.

PLY: A genuine poisoned chalice here for NYSE as the plutocratic shareholder structure of Alibaba doesn’t inspire me that it is good for shareholder value in the long run.

Rolet Tight-Lipped On Russell’s Asset Manager (subscription)
Tim Cave – Financial News

LSE, which announced a $2.7 billion all-cash deal to acquire Frank Russell & Co, will undertake a ground-up review to determine what it does with the firm’s investment management business.

PLY: As discussed yesterday.

Major Brokers Cut Ties To Barclays Dark Pool (subscription)
Bradley Hope & Sott Patterson – Wall Street Journal

Investors and brokers cut ties with the stock-trading venue run by Barclays, disconnecting from one of Wall Street’s biggest so-called dark pools as the firm battles allegations of fraud and misleading its customers.

Broker-dealers, including Credit Suisse, Deutsche Bank, RBC, Sanford C. Bernstein & Co. and ITG removed connections to the dark pool, called Barclays LX, from their routing systems on Thursday, according to people familiar with the decisions.

Those moves followed a civil lawsuit filed Wednesday afternoon by NY AG Eric Schneiderman that accused Barclays of allegedly telling customers it would protect them from high-frequency traders while actually catering to such firms.

PLY: Ouch, or, presumably, in protocol terms, ex-OUCH…

Five Questions On The Barclays Dark Pool Lawsuit (subscription)
Sarah Krouse & Anish Puaar – Financial News

“This is a case about fraud and deceit by one of the world’s largest banks.”

Paweł Tamborski Appointed President Of WSE Management Board
MondoVisione

On 26 June 2014, the AGM of WSE appointed Mr Paweł Tamborski as the President of the WSE Management Board

On request of a shareholder, the General Meeting has been adjourned until 15 July 2014

PLY: Just to rub salt into the wound of this de facto re-nationalisation, the government appointed their puppet and promptly asked for the meeting to be adjourned.

MOEX AGM Results
MondoVisione
Moscow Exchange Supervisory Board Resolutions
MondoVisione

Moscow Exchange held its AGM on 26 June 2014, elected the new supervisory board, no surprises I can see…

BGC Partners Updates Its Outlook For Q2 2014
MondoVisione

BGC Partners has updated its outlook for Q2 2014, expecting to generate distributable earnings revenues of between approximately $420 million and $440 million compared with $471.1 million. The year earlier figure was approximately $447 million, excluding eSpeed. BGC anticipated pre-tax distributable earnings to be between approximately $47 million and $55 million versus $53.8 million. The prior period amount was approximately $40 million, excluding eSpeed. The Company expected its effective tax rate for distributable earnings to be around 15%, compared with 14.5%.

Bank of Baroda Exits MCX, Exchange Appoints New Auditor
NDTV

MCX said on Thursday one of its investors, state-run Bank of Baroda, has sold its entire stake in the troubled bourse. State Bank of India, Corporation Bank and Bank of Baroda all PSU lenders, had together bought 9.69% in MCX in 2004 at a total investment of Rs. 3.94 crore (aprox USD 866k), according to the offer share sale document of the exchange.

In April, Corporation Bank reportedly offloaded stake worth Rs. 19.91 crore (USD 3.28 mln) in the exchange and brought down its stake to 1.32% from 2.10%.

After a board meeting on Thursday, MCX said following the divestment of its entire stake, Bank of Baroda has also withdrawn its nominee Rajiv Abhyankar from the board.

However, the exchange did not disclose how much stake the public sector bank held in it.

The board also accepted the resignation of Pravir Vohra, an Independent Director.

Meanwhile, MCX said it has appointed Shah Gupta & Co as new statutory auditor of the company on recommendation of its Audit Committee.

Following the vacancy caused due to the resignation of Deloitte Haskins & Sells as the statutory auditor, the board has approved appointment of Shah Gupta & Co as auditor of the company, the exchange said.

SAT Reserves FTIL ‘Fit & Proper’ Order
Business Standard

The Securities Appellate Tribunal (SAT) has reserved its order in a FTIL appeal, challenging a regulatory order declaring FTIL unfit to hold a stake in market infrastructure institutions like stock exchanges and clearing corporations. SEBI had passed the order on March 19.

Deadline extension for divesting stake in MCX-SX and others to continue till final directions passed.

RiddiSiddhi Claims Rs 100 cr (USD 16.65 mln) Each From MCX, PwC For Causing Harm To Reputation
The Economic Times

Mumbai’s top gold dealer RiddiSiddhi Bullion (RSBL) has claimed Rs 100 crore (USD 16.65 mln) each in damages from Multi Commodity Exchange (MCX) and audit firm PricewaterhouseCoopers (PwC) for causing harm to its reputation.

Nasdaq OMX NLX: Access All Areas (subscription)
Risk – Tom Osborn

Nasdaq and LCH.Clearnet’s new venture NLX is off to a flying start, and Charlotte Crosswell, CEO of Nasdaq OMX NLX, believes the only way is up…

PLY: See our Premium posts: NLX: Missed Opportunity, NLX: Big Data: Easy to Find? and The Butterfly (In)Effect …which question pretty much all of the above thesis. We cannot verify that NLX has made any tangible progress and indeed I know many readers remain surprised how NLX has been utterly coy about helping me with the quandary of proving just how much substance there is to their claims of success.

Eurex vs LCH.Clearnet: Clash Of The Titans (subscription)
Risk – Cecile Sourbes

Eurex is trying to steal business from the market’s dominant IRS clearer, LCH.Clearnet. The pitch: it is less risky and therefore cheaper in terms of capital and margin. Some dealers are starting to pay attention, but others say recent rule changes have undermined the argument.

Lack Of IPOs, Buyout Boom Exacerbate SGX’s Woes
Today

Experts say Singapore’s stock market is becoming a niche player – popular for yield plays such as REITs and business trusts, as well as the mineral, oil and gas sector but not too much else.

PLY: Writing SGX off is a popular pastime almost every decade. On every previous occasion they have proven the doubters wrong. I don’t know what their next move is but it is wrong to write the City State’s bourse off…

Is This A Possible Avenue Of Growth For SGX?
Stanley Lim – The Motley Fool

SGX recently proposed a new regulatory framework for companies looking at a secondary listing in Singapore; this might potentially mean more business for the stock exchange operator.

PLY: …and this could be one solution to drive more growth.

Tradeweb Delays Corporate-Bond Platform Launch (subscription)
Katy Burne – Wall Street Journal

Tradeweb has delayed the launch of its U.S. corporate bond platform until late July apparently. Tradeweb has had three previous attempts to launch a U.S. corporate bond platform, including one in 2004. Its European corporate bond platform has a 6% share of overall trading in the securities, according to consultancy Celent.

PLY: It appears to be an administrative / operational delay at present, hardly surprising given the pressure of work on the regulatory/IT nexus on multiple fronts…

Dark Times For Opaque Trading Platforms (subscription)
Jeremy Grant – Financial Times

Whoever dreamt up the label “dark pool” to describe a particular kind of stock market trading, they must be wishing they had spent more time brainstorming better ideas.

PLY: Jeremy Grant reaches the same conclusion as me, “dark pools” a bad name – large block services ought to adopt “Institutional Liquidity Pools” asap, it will make life easier…

ICE Endex And GasTerra Renew Contract For Gas Storage Service
MondoVisione

ICE announced that ICE Endex has agreed with GasTerra, the international natural gas Dutch trading firm, to continue the facilitation of gas storage auction services in the Netherlands.

First Trade Completed On MTS Repo Platform For LCH.Clearnet’s €GCPlus
MondoVisione

MTS, a premier facilitator for the European fixed income market, announced the completion of the first LCH.Clearnet S.A. €GCPlus trade on MTS Repo, its order-driven electronic European repo trading platform.

Private Markets

BATS Renews Lease At Kansas Global Headquarters – Announces Opening Of Chicago Office & NY Office Expansion
MondoVisione

BATS announced the signing of a 10-year lease renewal at its Kansas City-area global headquarters, as well as plans to open a Chicago office and expand its New York City presence due to the Direct Edge Holdings merger.

MIAX Options – Fee Changes Effective July 1, 2014 Including Expansion Of Priorty Customer $0.20 Rebate Program To 60 MIAX Select Symbols
MondoVisione

MIAX Options Exchange has filed for immediate effectiveness of six filings to amend the MIAX Options Fee Schedule beginning July 1.

Mt. Gox Head Believes No More Bitcoin Will Be Found (subscription)
Takashi Mochizuki & Eleanor Warnock – Wall Street Journal

Dividend News

MOEX shareholders voted to pay a dividend of RUB 5,423,154.9 (USD 161k), or 46.83% of consolidated IFRS net profit, for 2013. This means a dividend of RUB 2.38 USD 0.07) per ord with a nominal value of RUB 1 (USD 0.03). Dividends will be paid no later than 15 August this year. The record date will be 11 July.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Both shares are flat to slightly down…

NSEL Settles E-Gold Contracts; Makes Payment Of Rs 154.80 Cr (USD 25.77 Mln)
Business Standard

NSEL said it has completed the financial closure of e-gold contracts by making payment of Rs 154.80 crore (USD 25.77 mln) to over 23,000 investors.

Technology

NZX Reopens After Three Hour Trading Halt
TVNZ

Trading on NZX resumed after a three hour halt as the share market operator dealt with a technical issue, caused by a FIX messaging problem, its second outage this month.

Wickr Raises $30 Million; Investors Include CME, Wargaming
Reuters

Wickr, a startup founded by privacy advocates, said it has raised $30 million from investors including CME to help develop self-destructing messaging technology for use by financial services firms and gaming companies.

Why LME Is Investing £1m In New Technology For Old-Style ‘Pit Trading’
Graeme Burton – Computing

PLY: As mentioned here yesterday and also in the past, it’s actually obvious why you recycle a 4000 sq foot space through multiple fixes to make the only still viable floor model.

Technology Changing The Mexican Market
David Buchanan – LBC

LBC spoke with Jorge Alegría, CEO of Mexican Derivatives Exchange, MexDer, about what CFOs should expect in the near future, as well as the latest developments in the markets.

GFT Group Acquires UK-Based Business And IT Consultancy Rule Financial – Company Greatly Strengthens Its Presence Among Investment Banks In The UK & USA
MondoVisione

GFT Technologies AG signed an agreement via its subsidiary, GFT UK Limited, to acquire the UK-based company Rule Financial Limited and all its international subsidiaries. The parties agreed not to disclose the acquisition price. The transaction strengthens the GFT Group’s position as one of the leading IT service providers for the banking sector in Europe and North America.

Options Expands Belfast Office, Eyes International Growth (subscription)
Giulia Lasagni – waters technology

Infrastructure-as-a-service provider Options is expanding its office in Belfast, Northern Ireland, with plans to grow its local staff from about a dozen at present to around 30 by next year, in a move mainly designed to boost its Velocity market connectivity and application hosting service.

Indexes

Euronext Joins FTSE Mondo Visione Exchanges Index
MondoVisione

Euronext was added to the FTSE Mondo Visione Exchanges Index from the start of business on Friday, 27 June.

LuxSE To Launch Expanded Data Offering For Average Bond Yields
MondoVisione

On 1 July 2014, Luxembourg SE will release thirty-two new indices for average bond yields.

Career Paths

The AGM of WSE has appointed Mr Paweł Tamborski as the President of the WSE Management Board.

MOEX shareholders approved a new composition for the Supervisory Board, which now contains 15 directors, of which five are independent.

The Supervisory Board now comprises:

Alexander Afanasiev, CEO, Executive Board Chairman, Moscow Exchange.
Nicola Lane Beattie, Senior Executive Director, NBXC (independent director).
Mikhail Bratanov, Head of Societe Generale Securities Services for Russia and CIS, Head of Depository Department at Rosbank (independent director).
Wang Yuan, Chief Economist, China Development Bank Corporation (independent director).
Sean Glodek, Director, Russian Direct Investment Fund.
Andrey Golikov, Board of Directors Co Chairman, National Securities Market Association.
Valery Goreglyad, Chief Auditor, Bank of Russia.
Yury Denisov, Deputy Chairman of the Supervisory Board, National Clearing Center.
Bella Zlatkis, Deputy Chairman of the Management Board, Sberbank.
Anatoly Karachinsky, President, IBS Group (independent director).
Sergei Kozlov, SVP, Investment Department Deputy Director, VTB24.
Alexey Kudrin, Supervisory Board member, Sberbank.
Sergei Lykov, Executive Board Deputy Chairman, Vnezheconombank.
Reiner Riess, independent consultant (independent director).
Kirill Shershun, Executive Board First Deputy Chairman, Centrocredit.

Alexey Kudrin was elected Supervisory Board Chairman, and Sergey Lykov and Andrey Golikov were elected to Deputy Chairman posts.

MOEX shareholders determined the composition of the Revision Commission, which comprises three members:

Tatiana Sannikova, Deputy Director of Financial Market Operations Facilitation and Control, Bank of Russia.
Vyacheslav Ulupov, Internal Control Service Director, Vnezheconombank.
Olga Romantsova, Head of Financial Market Operations Audit, Sberbank.

Financial News reports that a senior executive is to leave Tullett Prebon, just weeks after it was revealed the interdealer broker’s founder and CEO Terry Smith is set to step down.

Paul Humphrey, CEO of electronic broking at the UK-based interdealer broker, has resigned with plans to 8leave the company within a month, according to two people familiar with the situation.

Humphrey, who has been with Tullett Prebon since 2007, has not signed on to join another firm, the people said.

JSE Begins FISD Certification Rollout To Data Staff (subscription)
Giulia Lasagni – waters technology

Johannesburg Stock Exchange (JSE) had its first market data staff take industry association FISD’s Financial Information Associate (FIA) professional certification this month, and plans to make the program a prerequisite for its senior and client-facing market data employees, with the aim of better serving its customers by narrowing the “training gap” to top financial centers.

Financial Calendar

Today

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

New announcement

CME results for Q2 2014 – July 31, 2014

CME press release here.

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

Share Notes

ICE COO Thomas W. Farley sold 3,250 shares Tuesday, June 24th at an average price of $190.87 (bargain $620,327.50). He now owns 12,103 shares. ICE insider stock transactions are chronicled on this specific page.

Analyst Notes

Exchange Forecasts Slashed On Low Volatility
IFR

Analysts at Keefe, Bruyette & Woods have lowered EPS estimates for a handful of derivatives bourses as low volatility depresses volumes and damages revenues at major exchange operators.

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.

Other stories

Gazprom Seeks HK Listing, May Use Yuan In China Gas Deal
Reuters

Russia’s Gazprom has held talks about a Hong Kong listing and may use the yuan currency in a recently agreed gas deal with China as it looks to strengthen its foothold in energy-hungry Asia.

CFTC’s Division Of Clearing And Risk Issues No-Action Letter For KRX
MondoVisione

CFTC’s Division of Clearing and Risk (DCR) issued a time-limited no-action letter stating that DCR will not recommend that the Commission take enforcement action against Korea Exchange (KRX) for failing to register as a DCO pursuant to Section 5b(a) of the Commodity Exchange Act (CEA).

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