March 18 2014

elb2Tom Kloet to retire as TMX CEO after 6 busy years in situ while the block trading world has two new venues: one for equity from a major name and one for bonds from the group which really created the Institutional Liquidity Pool concept for the buy side. India share shuffles continue. FESE in vanguard of industry move for EU “JOBS” act to create growth – hooray! Bank of England reviewing clearing, Chi-X attacks ASX’s Unsustainable Monopoly…and there’s more, happy scrolling!

Meanwhile, the Latest posts on Exchange Invest Premium:
(new posts will be online by Wall Street open today for subscribers at Exchange Invest Premium)

The Dark Side Of EMIR Regulation

Boca Pool Side: A Remarkable Fraternal Exchange

The Pot Stirs

Boca Pool Side: A New Derivatives Dauphin For London?

Boca Pool Side: The Fresh Prince Of Asia?

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Public Markets

TMX CEO To Retire (subscription)
Ben Dummett – Wall Street Journal

Toronto-based TMX, which runs Canada’s flagship Toronto SE and the Montreal derivatives market, as well as other markets, said it would immediately begin the search for a successor.

TMX press release here.

PLY: After 6 years on the job, during which time, the TMX has changed enormously (particularly in core ownership/structure), it is not surprising that Tom will move on. Tom has no definitive new role yet, nor I note, have the board asked him to step down. (A premium post will be online by early afternoon discussing the musical chairs of exchange CEOs). Tom will leave office having completed the integration of TMX, Alpha and the clearing operations. I wish Tom every success.

Thomson Reuters Launches Block Trading Venue (subscription)
Jake Thomases – waters technology

Built on the Autex network, Thomson’s new liquidity pool will be open to buy and sell-side traders.

In marketing the advantages of Thomson Reuters’ existing network community for anyone seeking to execute large orders, Rob Hegarty could not explain why it has taken his company this long to create a venue that would enable such intermingling. So though Thomson Reuters Block Connect is late to the party, demand hasn’t waned, meaning late is better than never.

PLY: The least fair question to ask any Reuters executive is “why didn’t you do this before?” Good to see TMR enter the block trading business, they remain a company oozing opportunity, the important thing is to see them moving forward and exploiting it!

FESE Leads Group Review Of Europe IPO Financing To Boost Growth
Nandini Sukumar – Businessweek

Three European trade groups are joining to propose new ways to facilitate IPOs for companies in the region.

FESE, the European Private Equity and Venture Capital Association, and European Issuers are setting up a task force that will offer recommendations to the European Commission and parliament,

Press release here.

PLY: With such excellent initiatives as a “European JOBS Act” on the horizon, FESE, EVCA and European Issuers are to be applauded for this co-operation. Europe desperately needs jobs with Eurozone unemployment stuck at an utterly unacceptable 12%. Government credit lines are maxed out and the only way forward is ground up growth. Good luck to this task force, I look forward to attending the IPO Round Table in Zurich on June 18th.

BoE Starts Review Of Clearing Houses (subscription)
Philip Stafford – Financial Times

The Bank of England has begun a review of how clearinghouses test their resilience to market shocks in an effort to ensure that some of the world’s largest clearing houses pass tough new European industry standards.

PLY: The Bank has just published its first annual report on market infrastructure as EMIR comes into force – and already appears to have encountered some hiccoughs as I noted in the Premium service the other day: The Dark Side Of EMIR Regulation.

Oslo Børs And LCH.Clearnet Launch New Clearing Service

As of March 19 2014, equities and ETFs traded on Oslo Børs and Oslo Axess can be cleared through LCH.Clearnet. The agreements for interoperability between LCH.Clearnet and Oslo Clearing have been approved by the Norwegian Ministry of Finance and the Bank of England.

Global Regulators To Intensify Efforts To Revive Securitization
Huw Jones – Reuters

Global regulators will intensify their efforts to revive a securitization market tarnished by the financial crisis and now seen by policymakers as a key source of funds for the economy…

IOSCO and the Basel Committee, will consider possible remedies.

PLY: I remain a fan of securitisation and it can play a role as part of the revival of markets in Europe where there is a huge debt demand but no ability for the banks to fill it. However we need broader solutions, more IPO flexibility, greater access to crowdfunding and peer to peer lending et al to make an efficient market from the current failing bank-centric system.

Markets Need Competition (subscription)
John Fildes – Financial Review

PLY: Chi-X Australia CEO John Fildes takes the ASX to task for its ongoing outmoded protectionism (he infers hypocrisy too) as part of the crusade to make Australia’s free market government embrace, well, free markets. See also my Premium Post: Antipodean Monopoly Woes (amongst others).

Private Markets

Liquidnet Expands Into Fixed Income Market: Acquires Vega-Chi

Liquidnet, will enter the fixed income market with its acquisition of bond trading platform Vega-Chi, subject to regulatory approval. This will combine Liquidnet’s experience, scale and global reach within the institutional investment community with Vega-Chi’s proven corporate bond trading platform and sector expertise to accelerate efficiencies within the corporate bond market.

PLY: As a mere non-executive director of Liquidnet Europe, I do not wish to steal the executive team’s thunder about a deal which has been mooted for some time. This is an exciting acquisition to add to Seth Merrin’s unique vision which has shaped both Liquidnet and the buy side’s ability to invest in large sizes. It remains obvious both the bond market and Vega-Chi have enormous potential for development and this is a fascinating new product area for Liquidnet as a group which will involve the buy and sell side.

Under-Pressure USE In Talks To Be Acquired By BSE
Palak Shah – The Economic Times

United SE (USE), under pressure over dwindling net worth and operating only in the currency futures segment, is in talks to be acquired by the venerable BSE. BSE already holds a 15% stake in USE that it purchased in 2009 and a share swap is one possibility.

USE promoters include Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Federal Bank and HDFC Bank. Corporate promoters include MMTC, Indian Potash, Jaypee Capital and TCS. The brainchild of Jaypee Capital’s Gaurav Arora, USE was launched in 2010. The Jaypee group now owns a 2.91% stake in USE.

PLY: USE simply never gained traction in a tricky marketplace where regulatory fiat is considerable and the market somewhat fickle. That said I remain hugely convinced the future is more exchanges, not less, in India, as elsewhere (regulation permitting of course).

China’s Temporary QR Code Ban Could Have Implications For Bitcoin’s Future
Pete Rizzo – CoinDesk

The People’s Bank of China (PBOC) has placed a temporary ban on payments made by scanning quick-response (QR) codes with mobile devices. The move by China’s central bank, which was announced on 14th March, is aimed at stopping, at least for the moment, the upcoming launch of ‘virtual credit cards’ by major Internet companies.

PLY: Very important and a highly significant issue here that is little reported. We do BTC transactions through my little horeca business in Poland using QR codes and Bitcoin for instance. In essence the QR code is the API to cryptocurrency and hence by cutting off this access point, China can limit virtual credit cards as well as, indeed, Bitcoin / cryptocurrency.

BTC-e, Bitstamp Handling 75% Of Trades Amid Mt. Gox Collapse
Andrew Moran – Pfhub

Bitcoin exchanges BTC-e and Bitstamp are taking advantage of Mt. Gox’s losses: According to figures from Bitcoin Average, BTC-e manages approximately 30 percent of trades, while Bitstamp is handling close to half (44 percent) of the current bitcoin trading volume. Bitfinex is third on the list with less than 23 percent.

EI reported yesterday that Pantera Capital Management LP, the hedge fund that manages money for Fortress Investment Group executives, invested about $10 million in Bitstamp months before the startup emerged as the world’s dominant dollar-Bitcoin exchange.

Reported Bitcoin Creator Denying Newsweek Claim Hires Lawyer
Carter Dougherty – Bloomberg

Dorian Satoshi Nakamoto, a Temple City, previously denied Newsweek’s March 6 story in an interview with the Associated Press. In a statement today, he said he hired a lawyer, Ethan Kirschner of Los Angeles.

“I did not create, invent or otherwise work on Bitcoin….I unconditionally deny the Newsweek report.”

PLY: Having tracked down an uber-secretive, arguably paranoid, definitely eccentric, man who created Bitcoin, I am intrigued at the naivete of the media in actively reporting his denial without question. People usually don’t confess as a first line of action, even the less eccentric folks. There is a lot of evidence which suggests this is Satoshi. More than the mainstream media seems to want to believe…

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX is up 2%, FTIL up 4%, as ramifications continue about the CBI probe of last week. Mr Bhave is indeed very vexed but then again, whether it is a justified probe or not, I still can’t help but feel there is a touch of karma in the air. Heat, kitchens and occupancy may be a pertinent metaphor here.

Quit MCX-SX To Protest CBI Move; Bhave Probe Weird: Pillai

The decision to resign as chairman of MCX-SX was in part a protest against the CBI move, says former home secretary GK Pillai. The resignation came hours ahead of a scheduled board meeting of MCX -SX, where former LIC Chairman Thomas Mathew took over as new Chairman.

PLY: Again this may seem an odd line of enquiry but former civil servants throwing their toys out of the pram at the first instance strikes me as an odd way to respond given their own relative high-handedness in office. Whether the CBI probe is proven correct or not, the core factor is that India cannot afford an untouchable bureaucratic class.

Never Disowned Responsibility For Giving Recognition To MCX-SX: Chandrasekhar Bhave, Ex-Chairman, SEBI
Shaji Vikraman – The Economic Times

The former civil servant, who headed SEBI between 2008 and 2011, was abroad when the CBI registered the PE. He spoke to Shaji Vikraman on Sunday, challenging the federal investigation agency.


Deutsche Borse Launches Notification Feed
Automated Trader

Deutsche Börse – Market Data + Services has announced the launch of AlphaFlash Risk Signal, a notification system that informs users of upcoming economic releases and then alerts them when the economic indicator is released.

DB press release here.

Oslo Børs ASA Implements Next Generation OTC Derivatives Platform From Baymarkets

Oslo Børs has upgraded Oslo Connect, their OTC derivatives MTF trading and price discovery system, to the latest version of Edge, provided by Baymarkets AB.

BATS Successfully Tests, Operates Company Headquarters From Disaster Recovery Site

BATS announced the successful and total operation of its U.S. equities exchanges BZX and BYX, and BATS Options, from its disaster recovery (DR) site on March 13th as part of its Business Continuity Planning (BCP) process.

First Derivatives In Partnership With Tullett Prebon’s Chapdelaine FX
Samuel Agini – London South East

First Derivatives Monday has entered a partnership with Tullett Prebon for Tullett’s forex platform Chapdelaine FX.

EDI Launches BondΣ, A New Bond Analytics Service, In Partnership With The Beast Apps

Exchange Data International (EDI) in partnership with The Beast Apps announced today the release of its latest data feed, bondΣ.

Technical Disturbances On NASDAQ OMX Nordic And Baltic, Derivatives, Fixed Income And Commodities markets

An issue related to Match ID for FIX has been discovered in the Genium INET 4.0201 release.


Not The London Metal Exchange? (subscription)
Metal Bulletin

Talk of LME once again branching into contracts for materials other than metals highlights the differences in thinking between the exchange and some of its users.

PLY: What’s in a name? LME is opening in Hong Kong, and is owned by HKEx. It may trade plastics which are intriguingly correlated but also, well, the antithesis of metals… Clearly, therefore the brand “London Metals Exchange” could look a touch out of whack with the product range. Then again many corporate mnemonics when expanded don’t reflect the business they have become….

Illinois Basin OTC Contract Likely To Launch In May: ICAP Energy Director
Andrew Moore – Platts

A standardized contract for trading Illinois Basin coal will likely be introduced by May, the director of coal services for brokerage house ICAP Energy Daniel Vaughn said Monday.


ICE Introduces Clearing For Markit iTraxx Senior Financials Index

ICE announced today that it will launch clearing for Markit iTraxx Senior Financials CDS index instruments.

Solactive Launches A Buyback Index For Europe

Solactive AG has launched the Solactive European Buyback Index (BUYEU Index), which will be used as underlying for index-linked products by Société Générale Corporate & Investment Banking (SG CIB), including swaps, options, warrants and certificates.

Career Paths

TMX announced that Thomas Kloet, CEO, will retire from the company effective August 31, 2014. A search for a successor will begin immediately while TMX stresses that Tom stepped down at his own request and is not immediately moving to another position.

PLY: I wish Tom every success wherever he goes next and look forward with interest to seeing who TMX will appoint as their next CEO. Meanwhile, Tom is scheduled to appear at the FESE Convention in June which looks like the best exchange event in H1 of this year: FESE Convention Details.

Wall Street Journal notes that Robert Greifeld, CEO of Nasdaq OMX was paid of $13.8 million in 2013, an increase of 55.3% from 2012, according to the company’s annual proxy filing.

He received $12.8 million in stock awards and other incentives, on top of his base salary of $1 million, the filing said. Mr. Greifeld entered a new five-year contract with Nasdaq OMX on Feb. 22, 2012. He joined the company in 2003.

Charlene Begley, formerly the chief information officer of General Electric has been nominated to join the BoD of Nasdaq OMX.

Martin Evans has left his position as director of metals products at CME. Evans joined the derivatives exchange in February 2010 and has previously worked at LME.

Global private equity firm Warburg Pincus has employed the chairman of LCH Clearnet Group as a senior adviser to locate new investments in the European financial services sector. Jacques Aigrain, also a NED of LSE and advertising firm WPP, and a former M&A head at JP Morgan, has joined Warburg Pincus to help to expand the firm’s European investments.

Renuke Wijayawardhane has been appointed COO of Sri Lanka’s Colombo SE (CSE), with effect from March 1, 2014.

Waters Technology notes that market data industry veteran Steve Dickey has been appointed director of the Options Price Reporting Authority, which manages the OPRA consolidated feed of US exchange-traded options quote and trade data. Dickey was most recently global technology manager at Thomson Reuters, prior to which he was a director at commodities data provider DTN, and was previously global head of market data technology services at MF Global.

Nilam Doctor has been appointed a Grant Committee Member of the Bitcoin Foundation.

Financial Calendar

This week

CBOE $0.18 quarterly dividend payment
NZX $NZ 0.0160 final dividend payment

New announcements

IPO Roundtable (Jointly organised by EuropeanIssuers, EVCA and FESE) – 18th June 2014
FESE Convention – 19th June 2014

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

Share Notes

Interactive Brokers Group SVP Milan Galik sold 1,800 shares Thursday, March 13th at an average price of $22.38 (bargain $40,284.00). He now owns 801,317 shares. Mr. Galik’s regular sales are chronicled on this specific page.


Is Equity Crowdfunding The Key To More International Startup Hubs?
Jessica Stillman – Forbes

Is crowdfunding the secret to creating more Silicon Valley-like tech hubs around the world? Crowdfunder CEO Chance Barnett argues yes.

Other stories

BoE & FCA Agree MoU For Supervision Of Markets And Market Infrastructure

FCA and BoE, including the Prudential Regulation Authority (PRA), have agreed a Memorandum of Understanding (MoU) that sets out how they co-operate with one another in relation to the supervision of markets and market infrastructure, which includes financial market infrastructures (FMIs).

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