March 03 2015

elb2

Vast warehousing changes afoot from LME as immediate post deal coverage suggests GFI really did resemble Hitler’s bunker in a certain much parodied film. CME a bidder still for assets? (Don’t say we didn’t tell you…months ago). CBOE sees several patents invalidated as ISE rejoices over pragmatic US administration. Are LSE and NYSE looking a GIFT-horse in the mouth while FTIL gain a (brief?) reprieve over Indian government corporate code manipulation suit. Agile ASX on the IT front as Cinnober tech heft helps Sydney CIO Tim Thurman move the entity forward.

…Lots more to read, so happy scrolling:

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Public Markets

Dealmaking Saga Over GFI Nears Conclusion (subscription)
Philip Stafford – Financial Times

PLY: As Terry Duffy has said he expects to see Fenics and Trayport for sale even if BGC completes a takeover, clearly there is bidder interest.

Division In The GFI Group Board Room Until The End (subscription)
Ronald Barusch – Wall Street Journal

…peace never came to the board room at GFI. A regulatory filing by GFI last Wednesday described the meetings the special committee of independent directors of GFI and its board held last month to approve the BGC deal. And though the words are in typical disclosure-speak, low-key tones, it seems fairly obvious that the directors were at each others’ throats.

Read our Premium brief: BGC – CME – GFI Brief.

PLY: As Howard Lutnick stalked his prey with the precision of a siege master armed with the finest trebuchets, it is hardly surprising nerves may have frayed within the GFI boardroom.

PSE Readies Final Offer To PDS Shareholders
Business World

PSE will make a final offer “in the next few weeks” to Philippine Dealing System (PDS) shareholders, including SGX which is “reviewing” the possibility of selling its stake, PSE President and CEO Hans B. Sicat told reporters in a briefing in Makati City.

PLY: As one Brazilian soap opera closes, PSE-PDS may yet get across the line, even if it is just a deal powered by sheer embarrassment at how long this has gone on for…

QV our Premium brief: PSE – PDEx Merger Brief.

NYSE, LSE Plan To Set Up Shop In GIFT
Rajesh Bhayani – Business Standard

PLY: A lovely hype piece which I doubt will eventuate. Indian PM champions Gujarat International Finance Tec-City Company Ltd (GIFT), being set up at Gandhinagar in Gujarat. When asked that immortal junk mail special offer? “Send no money now, are you interested?” naturally behemoths like LSE and NYSE tend to say yes. NYSE have already had one disastrous Indian investment (Duncan the Value Destroyer oversaw a $38.75 meltdown in India from a $55 million investment in MCX. There may thus be a marked reluctance on the now genuinely for profit NYSE to invest in an India where regulatory fiat can undermine your investment (qv Jalan). However, if the Indian government rings up, you don’t say no until you see the financials…

Domestic bourses such as the BSE (reported here) and NSE (reported here) have already announced setting up international exchanges at GIFT to invite foreign investors to buy their products. Now MCX says they are joining the GIFT fray too…

LME Aims To Double Cuts To Warehouse Logjams
Eric Onstad – Reuters
LME Provides Update On Warehouse Reform Package
LME

LME announced new rules and proposals on Monday aimed at slashing delivery backlogs at its global network of warehouses twice as quickly as under current reforms.

PLY: LME is clearly eager to reform and get it right – it’s a difficult situation but at least the management desire for change is apparent and that makes me optimistic we will see a healthier market as a result of a sound resolution.

USPTO Invalidates CBOE Patents
MondoVisione

The Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office (USPTO) today issued three decisions in response to petitions filed by ISE to invalidate three CBOE patents (US Patent Nos. 7,356,498, 7,980,457 and 8,266,044). The PTAB agreed with ISE and found that all three patents are invalid. These patents formed the basis of litigation that CBOE brought against ISE in the case of CBOE v. ICE (Case No. 1:13-cv-01339-JMF), the proceedings in which have been stayed pending the outcome of the PTAB review.

PLY: As a non-expert (serious understatement) in the patent field my remarks are clearly not brilliantly informed from that end but some of the patents here don’t exactly strike me as worthy to sit on a roster of brilliant innovations created by minds like Thomas Edison and Nikola Tesla to name but two.

More Power For Sebi Is Good; But Some Checks Are Needed
Mobis Philipose – Livemint

The central government has done well to move (reported yesterday) on the proposal to merge FMC with Sebi. As this column has argued before, it’s best that surveillance and regulation of organized markets be done by the same regulator, across asset classes.

PLY: A single centralised regulator makes sense as Mobis outlines above but the idea of “Sebi having proven its mettle as the most disciplined regulator in India, with fairly robust governance processes,” I find a tad unnerving. Sebi may be the best in the country but given the festering fiasco of non-resolution which is NSEL, that is not saying much.

Facilitating Cross-Border Capital Raising In ASEAN
MondoVisione

MAS and SGX jointly signed a MOU with the Malaysian Securities Commission and the Thai SEC, to establish a Streamlined Review Framework for the ASEAN Common Prospectus. The Framework, is an initiative under the ASEAN Capital Market Forum (ACMF) Implementation Plan to facilitate cross-border offerings of Equity Securities and Plain Debt Securities in ASEAN.

Read our Premium brief: ASEAN Exchanges Project Brief.

Private Markets

NCDEX Mulls Setting Up 1,000 Warehouses
The Hindu Business Line

NCDEX plans to set up about 1,000 warehouses dedicated to its Forward contracts over a period of two years with private owners and agencies providing small warehouse services, from different regions of the country.

Gibraltar SX To Give Small Funds Entry To Europe
Daniel Flynn – International Adviser

Gibraltar’s first stock exchange is to give European investors access to funds that do not have a licence to market in the region, focusing particularly on Cayman Island-domiciled funds with underlying assets in Hong Kong or Singapore. GSX accepts listings from funds distributed outside of Europe which are domiciled in jurisdictions that do not permit marketing in Europe without an Alternative Investment Fund Manager (AIFM) licence.

PLY: Good idea.

New York State Department of Financial Services: Revised BitLicense Regulatory Framework
MondoVisione

Previous comment and mentions here, here and here.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Quieter day – FTIL is off about 3% after yesterday’s excitement about the stay on the (dumb) government move to force an FTIL-NSEL merger. Meanwhile MCX is down 1%.

Bombay High Court Gives Temporary Relief To FTIL
Ashish Rukhaiyar & Khushboo Narayan – Livemint

Bombay high court on Monday offered interim relief to FTIL by restraining the Company Law Board (CLB) from passing an order on a government petition seeking to supersede the board of the company, which is fighting to keep management control with itself. FTIL moved court after its board passed a resolution on Sunday to oppose the government’s petition. The principal bench of the CLB at New Delhi is scheduled to hear the government petition on Tuesday.

Read our Premium brief: NSEL-FTIL Merger Brief.

Technology

Inside ASX’s First Officially Agile Project
Allie Coyne – itnews

ASX recently started getting its hands dirty on a four-year, $50 million project to completely overhaul its trading and post-trade platforms, in what the organisation’s CIO is calling its first officially agile project, deploying Cinnober Technology.

PLY: ASX CIO, Canadian Tim Thurman is a big Cinnober fan (from his experience with Alpha) and helped champion their adoption by ASX, in the most fascinating IT development since the Australian exchange pioneered demutualisation and going electronic under Thurman’s legendary predecessor Rory Collins a generation ago.

ASX Implements Velocimetrics
MondoVisione

The solution delivers real-time visibility of latency issues that could cause trading delays, providing greater operational oversight and increasing the exchange’s ability to proactively respond to issues and minimise potential member impact.

SIX Swiss Exchange Launches Access Point Connectivity Option In London
FTSE Global Markets

Products

LME Eyes October For Aluminium, Steel Launch (subscription)
Alice Attwood – FOW

LME said it will launch its aluminium premium and steel contracts on October 26 2015.

Indexes

Benchmarkers Failing To Comply With Iosco Rules (subscription)
Tim Cave – Financial News

Only a third of financial benchmark providers are fully compliant with principles IOSCO laid out for the sector in 2013, a figure described as “worrying” for a framework likely to form the basis of incoming EU regulations on benchmarks.

Career Paths

TMX announced the promotion of Cheryl Graden to SVP, Group Head of Legal and Business Affairs and Corporate Secretary, effective immediately. Ms. Graden has also been appointed an officer of TMX Group Limited and its subsidiaries.

R.J. O’Brien & Associates announced that its Senior MD and Chief Risk Officer Jamal Oulhadj has been promoted to COO.

Traders Magazine reports that ConvergEx has hired Nick Palumbo and Troy Draizen for its sales department, adding to the list of former KCG Holdings employees who’ve joined the broker. The firm also recently hired Philip Gough and John Holl in London. Gough, CEO of the firm’s London-based brokerage, was COO at KCG Europe, while Holl, head of sales and trading in London, was head of European institutional equities at KCG.

Spectrum Group Management hired Russell Diamond as a MD.

Traders Magazine also reports that Bloomberg Tradebook has a new CEO. The firm announced Glenn Lesko as the new CEO & President of Bloomberg Tradebook LLC. Ray Tierney, who was the previous CEO, President & director of the global Bloomberg Tradebook entities, is transitioning to become the head of Bloomberg’s Trading Solutions group, which includes the Bloomberg suite of Order Management Systems for the buy-and sell-side.

Financial Calendar

This week

CFTC will hold a public roundtable on March 5, 2015, from 9:00 a.m. to 5:00 p.m., to discuss issues related to recovery and orderly wind-down of Derivatives Clearing Organizations (DCOs).
TMX $0.40 dividend payment

New announcement

ICE 2015 Annual Meeting of Stockholders – Friday, May 15, 2015 at 8:30am ET at the Four Seasons Atlanta, located at 75 14th Street Northeast, Atlanta, Georgia 30309 (press release here)

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

Analyst Notes

LSE “Sell” Rating Reiterated By AlphaValue – GBX 2,129 Price Objective
CBOE Downgraded By Bank of America From “Buy” To “Neutral” Rating – $63.00 Price Target

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

Ontario Securities Commission Announces Results Of Enforcement Activity In 2014
MondoVisione

World Federation Of Exchanges: Strong Increase Of Equity Trading Volumes (+17.4%) In 2014
MondoVisione

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