March 04 2014

elb2

DFM and Tullett Prebon profits slip while Kickstarter crosses a billion dollars of pledges. EUREX encroaching on Euribor turf while TMX de facto encroaches on `MILA’ through mining j.v. with Santiago. HKEx strategy, SEBI micromanaging fruitlessly once again, BNY Mellon CSD expands, NY regulator sapiently pragmatic about Bitcoin…

It’s an interesting day for Exchange Invest, oh and I’ll be on RT discussing IMF loans to Ukraine for those with a macro interest, probably live around 1500 CET (0900 EST) and then subsequently in the news cycle.

Here are today’s useful nuggets of wisdom to deploy judiciously at the water cooler, happy scrolling:

Public Markets

DFM Company Shareholders Approve Financial Statements For The Year 2013
MondoVisione

DFM recorded a net profit of AED 6.451 mln in 2013, compared to AED 35.2 mln in 2012. Total revenues reached to AED 4.356 mln in 2013, compared to AED 191 mln in 2012. The total revenue comprised AED 444 mln of operational revenues.

Results of the DFM AGM here.

Tullet Prebon Says FY Revenue Falls 6 Percent
Reuters

Full year revenue fell 6 percent, just behind analysts’ expectations, revenues for the year ending Dec. 31 were 803.7 mln pounds, down from 850.8 mln pounds a year earlier (consensus estimate compiled by Tullett for of 807 mln pounds). Pretax profit was 99.6 mln pounds, down from percent from 111.3 mln pounds in 2012. Analysts were expecting profit of 102 mln pounds.

Tullett Prebon results here.

Nowhere Close To Any Deal With FTIL: Tech Mahindra
Moneycontrol

Vineet Nayyar, vice chairman of Tech Mahindra says the IT major is nowhere close to any agreements with FTIL.

PLY: Sources say that Tech Mahindra officials met FTIL’s restructuring committee.

TMX, Santiago SE To Launch Venture Market In Chile
Reuters

Santiago will host a new exchange designed to raise capital for early-stage businesses in the mining sector, joint venture partners the Santiago SE and TMX said on Monday. The new junior market will be called Santiago SE, Venture and initially focus on capital formation for small and medium enterprises in mining, but may expand to other sectors at a later date.

TMX press release here.

PLY: Perhaps the most interesting aspect here is that Santiago is a member of the MILA Exchange Initiative, a co-op working its way towards a possible integrated/merged LatAm marketplace. Fascinating that TMX have managed to create a j.v. in this arena as they were not hitherto much seen in the South American region. Good deal for TMX.

CLTX & CBEX Sign Accord
Simon Osborne – The Trade

Cleartrade Exchange (CLTX) and Beijing-based China Beijing Equity Exchange (CBEX) have signed a MoU, which agrees to share information and develop joint projects. The shared initiatives are likely to centre on derivatives/futures within the commodity space. CBEX is the parent company for a number of other exchanges, including the China Forestry Exchange, China Technology Exchange, China Gold Exchange and China Beijing Environment Exchange.

PLY: I tend to believe MOUs are useless while Chinese MOUs are even more useless in terms of delivering value to the partners. It will be interesting to see how this progresses.

BNY Mellon CSD Approved By Luxembourg SE As A Recognized Securities Settlement System
MondoVisione

BNY Mellon, a global leader in investment management and investment services, has confirmed that its Brussels-based CSD, BNY Mellon CSD SA/NV, has been accepted as a recognised system for settling transactions in securities listed on the two markets operated by the Luxembourg SE.

PLY: The CSD arena is about to be hugely shaken up and BNY Mellon are in the forefront of the move. Fascinating times and I look forward to being able to read the final EU agreement on CSD regulations as it will likely enlarge competition, or at least diversify offerings which will be good for markets.

LME Faces Wait On Judicial Review Decision (subscription)
Joe Parsons – FOW Intelligence

LME faces a wait of up to two weeks to hear if it faces a review of its planned warehouse reforms following a court hearing last week.

Impasse Over Closing Auction Plan For HKEx (subscription)
Enoch Yiu – South China Morning Post

Five years after scrapping auctions to determine closing stock prices, HKEx is looking at bringing them back, a move opposed by local brokers but endorsed by international investors.

HKEx CEO Charles Li At HKEx Annual Media Luncheon
MondoVisione
HKEx On Market Integrity
MondoVisione

Click here to download the presentation.

PLY: In the haste to pixel, have not had a chance to peruse this yet…

CME Uncertain About Success Of OTC Clearing Business, According To SEC Filing
Avi Mizrahi – Forex Magnates

CME has filed its annual report to SEC, containing some key currency trading metrics and shedding light on its evaluation of the markets and regulations. In 2013, the estimated percentage of clearing and transaction fees revenue contributed by forex trading was 8% of the total revenues of all the CME’s products, up from 7% in the previous two years. Average Daily Volume of forex contracts was 886,000 in 2013, up 4.9% from 2012.

Equities Trading Businesses Come Under Further Pressure (subscription)
Philip Stafford – Financial Times

The amount of commission European fund managers pay for using cheaper and automated algorithms is nearing parity with what they spent with banks for specialist sales trading, a new survey has found.

A study by Tabb Group, the financial markets consultancy, found that buy side investors such as pension fund managers and institutional investors were likely to spend more than 40 per cent of their trading commission on lower-cost trading tools this year.

PLY: A brutal war of attrition is brewing in (European) equity execution with the sell side under threat of disintermediation and not appearing well placed to cope alongside upstart platforms such as Aladdin backed by Blackrock from the buy side and the likes of ITG neatly adding more cost effective algorithmic options.

N2EX Clearing And Operations To Transfer From NASDAQ OMX To Nord Pool Spot
MondoVisione

The partners in the UK power market N2EX – NASDAQ OMX and Nord Pool Spot – have agreed on the transfer of the short-term physical market clearing and operations portion of the N2EX business.

The transaction, which is expected to be completed by October 1, 2014, will give Nord Pool Spot sole ownership of N2EX, the UK’s leading power market by volume, while NASDAQ OMX will remain the operator of the financial power market.

Private Markets

Korea Trading Error Prompts Global Clearing House Review (subscription)
Viren Vaghela – Risk

After HanMag Securities caused $45 million of losses in December by submitting a series of incorrect trades at KRX listed derivatives service, triggering the use of non-defaulting members’ default funds under KRX’s rules, the FIA plans to review the waterfall structure at every clearinghouse globally.

For the first time in recent history, non-defaulting members were asked to top up millions of dollars in default fund contributions through no fault of their own after a Korean securities company botched its trading strategy.

PLY: More on the HanMag story we mentioned yesterday and its global ramifications.

SIX Will Introduce T+2 Settlement For Switzerland Starting 6 October 2014
MondoVisione

Starting 6 October 2014 the settlement cycle will be reduced to two business days (T+2) from T+3 for all securities tradable on SIX Swiss Exchange and SIX Structured Products Exchange, settling through the Swiss Central Securities Depository, SIX SIS AG.

MGSE Gets SEBI Nod To Exit Business
Business Standard

Capital market regulator SEBI allowed Mangalore Stock Exchange (MGSE) to wind up its business at the exchange’s own request.

MtGox Opens Call Centre After US$500m Bitcoin Loss
Channel NewsAsia

MtGox, which last week sought bankruptcy protection in Japan, opened a helpline for anxious customers on Monday.

Mt Gox Collapse Could Ultimately Help Bitcoin Cause: NY Regulator
Douwe Miedema – Reuters

The collapse of Mt. Gox is part of a struggle for survival that could ultimately strengthen the virtual currency industry, NY’s banking regulator said on Monday.

“It’s on the one hand a setback, on the other hand it will cause further improvements in this industry and some more regulatory involvement,” Benjamin Lawsky, superintendent of NY’s Department of Financial Services, told Reuters.

PLY: The more I hear from Mr Lawsky the more he appears to be a regulator who encourages growth – hopefully somebody will clone him soon.

Bitcoin Doesn’t Meet The Test Of A Currency, Buffett Tells CNBC
Noah Buhayar – Businessweek

Warren Buffett, the billionaire chairman and CEO of Berkshire Hathaway, said that the virtual currency Bitcoin is a speculative investment and may not be around in a decade. “It does not meet the test of a currency I wouldn’t be surprised if it’s not around in 10 or 20 years.”

PLY: This just in from the sage of Omaha who criticised derivatives as weapons of mass destruction shortly before embracing them for his own profitable use.

Dividend News

DFM shareholders ratified the board’s suggestion of a cash dividend of 5 per cent of the capital to Dh399.8 million (USD 109 mln), which represents 140 per cent of the net profit in 2013.

Special Section: FTI, NSEL, India at the Crossroads

PLY: A certain degree of apathy ahead of the weekly NSEL default today with FTIL stock flat and MCX up nearly 3%.

FTIL Action: Corporate Affairs Ministry Seeks Views From Law Ministry, SEBI
The Hindu Business Line

The Corporate Affairs Ministry has sought clarifications from the Law Ministry as well as regulators SEBI and FMC to finalise action against “gross violations” by FTIL and related entities.

Technology

Forex Trading Speeds Up Moves To Computer Platform (subscription)
Daniel Schäfer & Delphine Strauss – Financial Times

Tired of headlines about alleged trader misbehaviour, investment banking executives are accelerating longstanding efforts to save costs and become technology leaders by replacing humans with computers.

PLY: The forex marketplace continues to offer huge opportunities for electronic trading and indeed organised platforms who can find a suitable niche.

Cybersecurity Concerns Force Boards To Rethink Risk Oversight
NYSE Euronext

Experience in overseeing the growing threat of cybersecurity risk is one of the key attributes boards will look for when appointing their next new corporate director, according to the 11th annual What Directors Think survey, a comprehensive report on boardroom trends.

The survey, which was released by NYSE Governance Services and executive search firm Spencer Stuart, highlights the elusive nature of cyber risk, with 20% of directors lacking confidence in their board’s understanding of the many facets of it.

PLY: I am frankly surprised only 20% of directors lack confidence in board understanding of cybersecurity given how many boards appear to lack even cursory understanding of IT systems.

Nasdaq Extends New Feed Tests (subscription)
Max Bowie – waters technology

Nasdaq OMX has delayed the end of beta testing for a suite of enhanced datafeeds by two weeks (March 28) to ensure direct feed subscribers have adequate time to test the new versions.

Latency At The Speed Of Light?
Becca Lipman – Wall Street & Technology

McKay Brothers, a provider of specialty microwave telecom services to the low-latency trading space, announced it bettered its lowest known latency connecting Aurora, IL and Secaucus, NJ to 8.15 milliseconds. The company is ahead of schedule to reduce roundtrip latency to 8.12 ms on its Aurora-Secaucus path in the second quarter. The low-latency race is generally targeting the speed of light. The speed of light between Aurora, IL and Secaucus, NJ is 7.95 ms. Latencies are quoted as round trip time, rack to rack.

Thomson Reuters Launches Monitoring Tool For Real-Time Analysis Of Oil Supply Chain
Commodities Now

Thomson Reuters today announced that it has added a tool “Commodity Flows” to monitor and display the flow of commodities along the physical supply chain on Eikon.

KVH To Start Offering FISC Guideline Compliant Financial Private Cloud Service In Japan
MondoVisione

KVH, Asia’s leading information delivery platform headquartered in Tokyo, Japan, announced it has launched “KVH Financial Private Cloud,” a service that supports financial services audits to comply with the “Security Guidelines on Computer Systems for Banking and Related Financial Institution” (“FISC Guidelines”).

Perseus Leads Wireless Trading – London Microwave Access At Data Centres LD4, LHC, LSE And Basildon Strengthens Global Connectivity Provider’s Foot Print For The Most Markets On One Proprietary Network
MondoVisione

Perseus Telecom, a leading provider of high-speed global connectivity, High Precision Time and Market-to-Market networks announced today four wireless routes in London are now available for trading with Perseus.

Settrade Launches New Version Of Streaming Program
MondoVisione

Settrade.com Co., Ltd has rolled out the latest version of Streaming, the real-time trading program for Thai stock and derivatives trading.

Products

Eurex Boosts STIRs Suite With New Euribor Contracts (subscription)
Jonathan Watkins – FOW Intelligence

Eurex has launched four new Euribor Mid-Curve options as part of the German exchange’s plan to expand its short term interest rate offerings and challenge European rivals.

PLY: Once upon a time spread functionality was far superior for Euribor in LIFFE technology – I believe EUREX have narrowed this gap as they encroach closer and closer to the core ICE LIFFE short term benchmark.

HKEx To Offer After-Hours Yuan Futures Trading From April 7
Reuters

HKEx will add yuan currency futures to after-hours trading from April 7.

Indexes

Revised Lists Of MOEX Indices
MondoVisione

MOEX has revised lists for the constituent lists of the MOEX Indices as well as free floats effective from March 18, 2014 through June 16, 2014.

Career Paths

Nomura has hired former Barclays trader Pradeep Swamy to start a new proprietary trading team (the Equity Strategy Risk Group) in Hong Kong, as the pivot away from the Volcker lands continues…

Johan Erikson joins Neonet Securities as Head of Execution Services. (Neonet Securities press release here).

Rupert Fennelly and Kevin Twitchen are to co-head Morgan Stanley Electronic Trading, or MSET, for EMEA from the middle of this year, according to a person familiar with the situation. They will jointly replace Brian Gallagher, who is to return to the US in a senior role management role within the MSET business, the person said.

Algomi, the provider of information-matching solutions to optimise fixed income liquidity, has named former Chairman and CEO of BondDesk Group Howard Edelstein as a Strategic Advisor, effective immediately. Edelstein has also made an investment in the company.

AlfaSec Advisors announces the opening of its Tokyo office and the appointment of Mr. Kyoichi Murakawa as Chief Representative, Japan, effective March 3rd, 2014.

Financial Calendar

This week

FTIL Rs 2 interim dividend payment
Record date ASX 88.2 cents half-year dividend
Record date NZX $NZ 0.0160 final dividend
TMX $0.4 dividend payment

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

Analyst Notes

ICE Upgraded By Thomson Reuters/Verus From “Sell” To “Hold”
Betfair “Neutral” Rating Reaffirmed At Davy Research
Charles Schwab Upgraded By Thomson Reuters/Verus From “Sell” To “Hold”
GFI Group Upgraded By Thomson Reuters/Verus From “Sell” To “Hold”

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.

Crowdfunding

Kickstarter Marks $1 Billion In Crowd Funding Pledges
Fahad Saleem – Morning News USA

PLY: Plaudits to the crowdsourcing site on reaching the milestone of $1 billion pledged.

Other stories

Fidessa Paper Explores Relevance Of The Buy-Side Dealing Desk In Today’s Marketplace
MondoVisione

“View From The Top” looks at impacts on dealing desks from the practitioner’s’ standpoint.

PLY: Again race to pixel, not read yet but presumably worth a peek.

SEBI Wants Monitoring Agency To Keep An Eye On All IPO Funds
Financial Express

Going by the current market regulations, a large number of companies attracting a significant number of investors are not required to float a committee that monitors the use of the IPO money — a big gap in the regulations, which SEBI looks to bridge with its new proposal.

PLY: More micromanaging madness from India: surely there is an executive management and a board and an audit/risk committee already? The first 2 alone ought to be very keenly watching where the money is spent.

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