March 16 2015


PLY: It’s the Monday after the rat’s mouth before and we have results from Thomson Reuters. BATS complete Hotspot acquisition, ITG looking at Convergex brokerage services, FXCM selling assets, worries about MIFID, Giancarlo ponders another recusal, Australian clearing discussions, KRX acquisitive for smaller stakes…and much much more including Jeff Sprecher warning of cyber risks and possible latency implications for HFT…

Happy reading…

Meanwhile, Recent “must read” Premium Posts include:

Did Duncan Do Due Diligence?
Duncan Niederauer Fund Manager – An Essential Due Diligence Resource
LCH.Clearnet: A Paradismal Shift? (to be read alongside the classic: Homer Simpson maxim of CCP)

Premium Briefs keeping you abreast of various industry issues are updated daily when news arises. All topics covered can be found on our dedicated Briefs page via Exchange Invest Premium. The latest include:

BGC / GFI: Post Merger Disposals
NSEL Scandal Brief – Part 1Part 2Part 3Part 4, Part 5
Rise of Africa – Part 1Part 2Part 3Part 4Part 5
The Bond Platforms Rush – Part 1Part 2
ICE – NYSE Euronext Deal – Part 1Part 2Part 3

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Public Markets

Thomson Reuters Annual Report 2014
Thomson Reuters


Revenues from ongoing businesses $12,605 mln, up 0.5%
Adjusted EBITDA $3,313 mln, up 8%
Underlying operating profit $2,138 mln, up 14%
Adjusted EPS $1.85, up 20%

ITG Said In Talks To Buy Convergex For Brokerage Services
Matthew Monks & Sam Mamudi – Bloomberg

ITG is in talks to buy brokerage-services provider Convergex which could be valued at about $200 million in a sale, said the people, who asked not to be identified because the information is private.

The New York-based company, backed by private-equity firm GTCR, is working with Goldman Sachs to find a buyer, the people said.

ITG Announces New Capital Plans & Confirms Receipt Of Notice Of Nomination Of Directors

ITG provided stockholders with an update on the Company’s review of its capital allocation policies, announcing that its BoD has approved a plan to significantly increase the Company’s share repurchase levels and to form a board-level committee to continue reviewing ITG’s overall capital allocation framework. ITG also confirmed that it has received notice from Philadelphia Financial Management of San Francisco, and Voce Capital Management announcing their intent to nominate three candidates to stand for election to the ITG BoD at the Company’s 2015 Annual Meeting of Stockholders. ITG stockholders are not required to take any action at this time.

FXCM Aims For FastMatch, Lucid Stake Sale To Repay Loan
John Detrixhe & Sam Mamudi – Bloomberg

FXCM is seeking to sell its stakes in three trading businesses as it grapples with repaying an emergency loan. The company started the process of selling the positions in FastMatch, Lucid and V3 Markets, FXCM CEO Drew Niv said during a conference call with analysts. Niv said it has received “many unsolicited indications of serious interest” for Lucid, a market-making firm, and FastMatch, a currency trading platform. V3 is a high-frequency trader.

Read our Premium briefs: FX – CHF Crisis – Brief.

Broker Deal Prompts CFTC Commissioner To Reexamine His Conflicts
Robert Schmidt – Bloomberg

CFTC member J. Christopher Giancarlo, whose industry ties are being examined by lawmakers, has sought ethics advice on whether he needs to stay away from regulating an additional company.

The new potential conflict involves R.J. O’Brien & Associates, a major futures brokerage that announced last week it was buying the Kyte Group from GFI Group. If he has to avoid matters related to R.J. O’Brien, it would be the commissioner’s second recusal this month.

Read our Premium brief: BGC / GFI: Post Merger Disposals

HKEx To Upgrade China Stock Connect Trading Link (subscription)
Josh Noble – Financial Times

HKEx will roll out an upgrade to its equity trading link into China in the next few weeks, something analysts hope will encourage global asset managers to start using the facility.

Read our Premium briefs: HKEx – SSE – Stock Connect Brief Part 1,Part 2, Part 3.

Chi-X Says Competition In Clearing Not Viable, But Split Still Needed
Shaun Drummond – Sydney Morning Herald

Chi-X Australia concedes the local market is too small to sustain competition in share clearing, but wants the provision of clearing and trading services by its rival ASX to be separated to ensure fair access and predictable pricing decisions.

Chi-X CEO, John Fildes said the exchange provider wants either a complete separation of ASX Clear into a separate entity or at the very least internal separation with an independent board that includes representatives from clients and independent members.

PLY: Last week ASX announced a cut in equities clearing fees. The cut was labelled as “cynical” by Chi-X.

MiFID II Requirements “Naïve” & “Terrifying” Says Industry
Elliott Holley – Banking Technology

The financial services industry faces a daunting task as the European Commission’s MiFID II legislation draws close to its final deadline, and grave concerns about inconsistencies in the rules and the pressures of meeting it remain.

PLY: An already overworked, overstressed industry is in the midst of vast change, many of which are fundamentally ill–considered and overly prescriptive. Meanwhile the regulators are maxed out and don’t even have the wherewithal to monitor some of the regulatory changes…

Recipe for Disaster anybody?

RI Still Reluctant To Join ASEAN Trading Link
Anggi M. Lubis – Jakarta Post

Indonesia SE (IDX) is still reluctant to join the ASEAN Trading Link because of the lack of a dispute-settlement system.

Read our Premium brief: ASEAN Exchanges Project Brief.

China Cuts Red Tape For Securities Listings Ahead Of IPO Reform

China’s securities regulator is scrapping approvals for new exchange-product listings, signaling accelerating efforts to cut administrative red tape before planned reforms of IPOs.

New securities products can be listed on stock or futures exchanges without the endorsement of the China Securities Regulatory Commission, according to a statement on the website of the State Council, or cabinet. The revision or termination of futures contracts and bond sales on the interbank market will no longer need regulatory endorsement, the cabinet said.

Read our Premium post:China Liberalises.

Private Markets

BATS Global Markets Completes Acquisition of Hotspot FX Market
Business Wire

BATS completed its acquisition of Hotspot FX, a leading institutional FX market, from KCG Holdings.

The transaction was announced January 28th and received Hart-Scott-Rodino clearance from the U.S. Department of Justice on February 18th. Hotspot will continue to be led by Bill Goodbody, Jr., who has managed the entity since 2008. He and the rest of the New York-area Hotspot team will be based in the BATS office in lower Manhattan.

Read our daily updated Premium brief: Exchange Deals Brief.

TFEX-AFET Announce Merger To Drive Thailand Agricultural Futures Exchange

Under the merger plan, AFET, currently operating Thailand’s agricultural futures market, will be merged with TFEX, offering a fully integrated trading, clearing, settlement and depository services of derivatives products. This aims to form one single futures market for all, in order to enhance the efficiency and provide benefits to investors in doing one-stop trading markets for all futures products.

Read our Premium brief: AFET TFEX Merger Brief

KRX Aims To Expand Via Stakes In Smaller Players (subscription)
Allen T. Cheng – Institutional Investor

In a bid to stay competitive, KRX is buying into its counterparts in Central Asia and elsewhere.

Kyunsoo Choi, Chairman & CEO of KRX, declared: “We would like to have 10% or 25%, and even up to 49%, equity stakes in every market we invest in”.

KRX is currently creating a stock market supervision system for Baku SE, as reported here and here.

Read also our Premium brief: KRX IPO Brief.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Most recently detained brokers remain incarcerated, MCX off MCX 1%, FTIL off 2%.

NSEL Case: Judicial Custody Of 3 Commodity Brokers Extended To Mar 20
The Hindu Business Line

The MPID Court in Mumbai has extended the judicial custody of the three commodity brokers arrested in connection with the NSEL case to March 20.

Read our Premium briefs: NSEL Scandal Brief – Part 1Part 2Part 3Part 4Part 5


Nasdaq Options Exchanges Briefly Declare ‘Self-Help’ Against NYSE AMEX

Nasdaq said on Friday that several of its operated exchanges briefly declared “self-help” against the NYSE AMEX options exchange.

Self-help, which occurs when an exchange is dealing with internal problems processing trades and needs to send orders through alternate venues, was declared by Nasdaq OMX PHLX, Nasdaq OMX BX Options and Nasdaq Options Market at about 10:46 a.m ET against the NYSE Amex.

NYSE Amex Options said in a market status alert that live orders except those classified as ‘good-til-canceled,’ would be canceled. The Nasdaq exchanges revoked the self-help declaration at around 11:14 a.m. ET.

Asia Pacific SE Goes Live With New Trading Technology Powered By Nasdaq

PLY: And good luck…

ICE Warns Of Cyber Risk To HFT (subscription)
Gregory Meyer – Financial Times

ICE has warned that its efforts to fend off cyber hackers could reverse the momentum towards ever-faster markets, piling fresh pressure on the “flash boys” of HFT.

Jeff Sprecher, CEO of ICE, said that the growing risk of cyber attacks would force traders to pass new electronic sentries as they connect to his exchanges, which include the landmark equity bourse and important futures exchanges.

PLY: A great many items may yet provide an anchor weighting effect on pure speed HFT, not merely the cyber security risks appositely outlined by Jeff Sprecher here but also items such as pre-risk margining which I believe ought to be essential in some way…etc.


ICE Announces Launch Of 44 New Contracts; Including Energy And Euro Cocoa Futures & Options

ICE announced the introduction of 44 new contracts, including Euro Cocoa and energy futures and options contracts, on March 30, 2015, subject to the satisfactory completion of applicable regulatory processes.

Following extensive market consultation, ICE will introduce the new Euro Cocoa contracts, which will operate in parallel with the existing pound-sterling London Cocoa contract. Excluding currency, the new Euro Cocoa contracts specification will mirror the London cocoa contract including physical settlement and will trade and clear at ICE Futures Europe and ICE Clear Europe. Customers will therefore be able to benefit from cross margin offsets with the London Cocoa contract.

The new energy futures and options contracts, which will be available for trading at either ICE Futures Europe or ICE Futures U.S. and cleared at ICE Clear Europe, include cash settled oil, wet freight, U.S. natural gas and financial power, as well as physical environmental contracts.

CME is also launching euro denominated cocoa contracts on March 30.

Previous comment on the topic last week.

HKEx Suspends Gold Futures Contract As London Gold ‘Fix’ Gets Makeover

Hong Kong Futures Exchange (HKFE) on Friday suspended (press release here) its thinly-traded gold futures contract ahead of next week’s replacement of the century-old London process known as the “fix”, against which the gold futures were priced.

An electronic auction run by the ICE is due to take over from the gold “fix” on March 20 (as announced last month).

IBA won the process tender for the gold fix last November.

EI reported earlier this month that China is planning the launch of a yuan-denominated gold fix this year.

KRX: Exemption Of Securities Transaction Tax For Market Makers Of Single Stock Futures & Options

Euronext Expands Listed Private Placement Bonds Offer

Euronext announced the launch of Euronext Private Placement Bonds (EPPB). A pan-European initiative, this new product rounds out Euronext’s existing private placement bond range by extending it to Alternext.

Career Paths

Waters Technology reports that HKEx has named former head of market data Daniel Poon MD and head of cash and derivatives clearing within the exchange’s global clearing division, effective March 1. Poon became head of market data in 2012 when his predecessor Bryan Chan moved to become CEO of the China Exchanges Services Company – a joint venture with the Shanghai and Shenzhen exchanges – and subsequently MD of HKEx’s Global Markets division.

Waters Technology reports that Brian Hyndman, SVP of global data products at Nasdaq OMX, will leave the exchange at the end of March.

FMC Asks MCX To Clarify On MD’s Appointment
Business Standard

FMC has sought clarification from MCX on the proposal to appoint Balasubramaniam Venkataramani as MD & CEO. The exchange had announced Venkataramani’s appointment about a month ago and had forwarded his name to the commodities markets regulator for approval. FMC has now sought details such as whether the appointment complies with Clause 5.6 of the directives issued by the regulator on June 11, 2014, regarding the management of national commodities exchanges.

Financial Calendar

This week

Thomson Reuters $0.335 quarterly dividend payment
Record date ICE $0.65 Q1 2015 dividend
CBOE $0.21 quarterly cash dividend payment
CFTC public roundtable on Cybersecurity and System Safeguards Testing
CFTC public roundtable on issues related to the recovery and orderly wind-down of DCOs

New announcement

CFTC Market Risk Advisory Committee (MRAC) will hold a public meeting on April 2, 2015 at CFTC’s headquarters in Washington, D.C.

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

Other stories

NYSE Boss Who Was Fired For Telling Poor People To ‘Stop Being Poor’ On The Daily Show Now Suing For $150,000
Daily Mail

Former NYSE managing director Todd Wilemon filed lawsuit Thursday. He was fired after appearing on The Daily Show on March 6, 2014. He was interviewed about his opposition to Obamacare. His comment ‘if you’re poor, stop being poor’ were widely criticised Wilemon claims termination violated a California labor law that prohibits employers from curbing workers’ participation in politics.

PLY: Storm, teacup, man with a crazy ambition to be ridiculed on left-wing tv shows ends up with a speculative Californian lawsuit. Welcome to Hollywood … and I am inclined to suggest good riddance from the exchange industry?

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