March 18 2015


Hyperunsurpisingly CME apparently discussing tech assets with BGC post GFI deal. First publicly traded Bitcoin exchange delayed, Singapore reactionaries seek return to the Imperial age…

Meanwhile, breaking as I type, is the attempt to immolate the new ECB building. Cynics may ponder that for once the value destructive vandals are actually outside as opposed to within the central bank enacting policy. I will be on RT at 1100 London time discussing the issue, just after this email hits your inbox. Watch live (& probably in repeats!): RT. …Elsewhere, ponder the cost mismanagement of German projects – the new Berlin airport has been under construction since the early 19th century I think (still not finished since I made that quip speaking after dinner at FESE Berlin Convention in 2013), and the cost overrun of the ECB building reminds me of British public works in the 1970’s (not a good place to be).

In other moves, Lamon Rutten and Sandy Broderick at centre of interesting GMEX oversight moves…and lots more, happy scrolling:

N.B. Recent “must read” Premium Posts include:

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)

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BGC / GFI: Post Merger Disposals
NSEL Scandal Brief – Part 1Part 2Part 3Part 4Part 5Part 6, Part 7
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Public Markets

CME Said To Be In Talks For GFI Tech Assets After Losing To BGC
Matthew Monks & Zeke Faux – Bloomberg

CME has held preliminary discussions with BGC about buying GFI’s trading-software units, Trayport and Fenics, The assets may be valued at more than $600 million, the people said.

PLY: Entirely understandable, there was bound to be a conversation…whether it leads to a dialogue, let alone a deal, remains to be seen of course…

For the history: see our Premium briefs: BGC – CME – GFI Brief and BGC / GFI: Post Merger Disposals Brief.

GAIN Capital Receives Shareholder Approval For Acquisition Of City Index Limited

GAIN Capital common shareholders overwhelmingly approved the acquisition of City Index at a special meeting of shareholders held on March 12, 2015 with a turnout of 93% of all outstanding shares attending the special meeting and over 99% of such shares voting in favor of the transaction.

GAIN expects the transaction to close early in Q2 2015.

Details of the deal, as reported last November: value $118m (£73.9m), Gain to pay $20m in cash, $60m in convertible bonds and 5.3m-worth of the US group’s shares.

Nasdaq Sees Tech Partnership With HKEx In Derivatives Link-Up
Eveline Danubrata – Reuters

Nasdaq is a “natural partner” for its Hong Kong counterpart should the latter need technological assistance for derivatives link-ups with other exchanges, Nasdaq President Adena Friedman said.

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

SGX Needs To Serve Up Equities Revival (subscription)
Jeremy Grant – Financial Times

A group representing about 3,200 small brokers — called “remisiers” in the quaint vernacular of old-style broking — has been campaigning for months to reinstate the lunch break at SGX.

The brokers feel that the interests of the small investor — their clients — are being sidelined as SGX promotes its lucrative derivatives businesses, such as iron ore futures that are widely traded by mainland Chinese trading firms.

This rearguard action is part of a feeling of general malaise that has afflicted SGX for some time.

PLY: Read our Premium post: Magnus Bocker – SGX Reflections. Then if you prefer the life of the remisiers, I suggest the Malaysia & Singapore Vintage Car Register newsletter – I joined years ago (despite a broker keen for me to supercede that meeting with seeing some bloke called Nick Leeson – wonder what ever happened to him?). This newsletter perfectly encapsulates the remissiers’ ‘lost’ world – tea plantations, rubber plantations, the faint hum of the Shorts Sunderland crisscrossing the skies above in a leisurely fashion and a world where ‘social media’ meant sending your servant over to the next plantation and inviting them across for Gins, tonic and afternoon tea…

Merger Talks Between MGT Capital Investments, Tera Group Put On Hold
Maria Nikolova – LeapRate

MGT Capital Investments has announced the suspension of merger talks with Tera Group, after the deadline set in the Letter of Intent, confined to the potential deal, expired on March 16, 2015.

Earlier this year, the companies said they were planning a merger that would have to create the first publicly traded U.S. Bitcoin derivatives exchange. The binding LOI, however, expired on Monday, and the companies could not agree on extension.

Still, MGT’s CEO Robert Ladd voiced an optimistic note on a potential deal, saying that “The upside opportunity of a deal is extraordinary for our stockholders, and we remain committed to working with Tera management and legal team to finalize the complex agreement.”

Keys To Success Of International Finance Centre At GIFT City
Rajesh Bhayani – Business Standard

The International Financial Services Centre (IFSC) coming up at GIFT City at Gandhinagar, Gujarat, expected to be notified as a Finance Special Economic Zone (FSEZ), is likely to have separate regulations for securities and currency trading, banking and insurance, apart from a zone-specific tribunal as an appellate authority.

The Union finance ministry is also working on a competitive tax structure suitable for IFSC. This includes proposals to lower the corporate tax rates and exempting indirect taxes like the Securities Transaction Tax (STT) for equity spot and derivatives trading, apart from other derivatives.

FAO: Both BSE and NSE plan to set up exchanges in India’s first International Financial Services Centre (IFSC), GIFT as reported here and here.

Read our Premium brief: The GIFT Horse?

Exchange Data Revenues Make Positive Start To 2015 (subscription)
Joanne Faulkner – Risk

Exchanges worldwide reported gains in market data revenues in the latest round of financial results, and were largely able to offset lower revenues in some business areas with new revenues from acquisitions.

PLY: Exchange data revenue up, sell side moaning to increase during following quarter…

White Says SEC Should Act On Fiduciary Rule For Brokers, Advisers
Sarah N. Lynch – Reuters

SEC Chairman Mary Jo White said on Tuesday she supports crafting new rules to harmonize the differing standards that govern how retail brokers and advisers offer investment advice.

REGIS-TR Registers As Registered Reporting Mechanism For REMIT Reporting

Private Markets

Kotak Commodity Gives Up Membership In Ace Exchange Following FMC Directive
Ashish Rukhaiyar – Livemint

Kotak Commodity Services Ltd (KCSL) has surrendered its membership in Ace Derivatives and Commodity Exchange after the commodities market regulator highlighted that KCSL and Kotak Mahindra Bank Ltd, which owns 40% in the exchange, qualified as “related parties”. As a consequence, trading volumes on the bourse have fallen. In December, FMC said that relatives of key management personnel of Kotak Mahindra Bank are shareholders of KCSL, which makes the commodity brokerage firm a “related party”.

Winklevoss Twins Believe Bitcoin Will ‘Wipe Out’ Cash
James Covert – New York Post

The Winklevoss twins predicted a “cashless society” by 2025 as they continued their push to popularize the troubled virtual currency bitcoin.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX jumps 5% and FTIL up 1%.

Decks Cleared For CLB To Hear Petition To Revamp FTIL Board
Khushboo Narayan – Livemint

The Company Law Board (CLB) will hear a government petition to supersede the board of FTIL in New Delhi on 19 March, with the Bombay high court on Tuesday refusing to entertain an FTIL plea to prevent the hearing. The court was hearing an FTIL petition challenging the attempt by the ministry of corporate affairs (MCA) to replace existing FTIL directors by government nominees.

Read our Premium brief: NSEL-FTIL Merger Brief.


Nasdaq Options Market Resolves ‘System Issues’
Jacob Pramuk – CNBC

Nasdaq Options Market suffered “system issues” on Tuesday afternoon that were fixed by 3:35 p.m. EDT, Nasdaq said.


Traders Eye Challenges Of Variance Futures (subscription)
Luke Jeffs – FOW

A group of Europe’s top volatility traders have outlined the challenges of moving a liquid swap product on to exchange despite regulatory pressure to do so.

NCDEX Launches Futures Contract For Small-Grain Sugar
The Economic Times

Trading in Sugar S began with six contracts being offered; starting from contracts expiring in April 2015 to September 2015. Kolhapur is the main delivery centre, with Belgaum, Solapur, Sangli, Pune, Kolkata and Delhi being the additional delivery centres.

LME May Stop Issuing Malaysia Metal Warrants Over Tax Changes

A move by LME to potentially stop issuing warrants for metal stored in warehouses in Malaysia due to planned tax reforms could push more shipments into neighboring Singapore, traders and warehousers said on Tuesday.

Thomson Reuters Adapts Eikon As Regulators Ban Multilateral Messaging
Andrew Saks-McLeod – LeapRate

In the aftermath of the FX rigging cases which cost banks $4.3 billion in regulatory fines and further lawsuits, the use of instant messengers across multiple institutions became a subject of regulatory disdain, hence Thomson Reuters has now set the Eikon messenger to provide bilateral messaging with screening.

Career Paths

Sandy Broderick has been appointed as NED to the Boards of GMEX Technologies; Global Markets Exchange Group Limited (GMEX) which operates GMEX Exchange; and Global Derivatives Indices Limited (GDI). Sandy, most recently CEO of DTCC Deriv/SERV, brings 25 years’ derivatives experience in trading and post-trade infrastructure to the team. He joins Lamon Rutten as an independent NED on all three Boards and will serve as Chairman of GMEX with Lamon becoming Chairman of GMEX TECH and Hirander Misra continuing as Executive Chairman of GDI.

Mark Blundell has transitioned from a NED to take up the role of Chairman of the GDI Index Oversight Committee. This appointment will help ensure the index benchmarks underpinning GMEX’s pioneering Constant Maturity Futures (CMF) IRS contracts continue to have very high standards of data integrity. These contracts will be matched by GMEX Exchange, which is scheduled to launch during Q2 2015, with trade confirmation and clearing occurring at Eurex. Both competition and regulatory change are driving the need for credible index benchmarks to underpin global trading activity based on tradable inputs that can be trusted.

GMEX press release here.

PLY: Interesting moves. Mark Blundell brings enormous insight to the Index Oversight Committee and will play a vital role ensuring the fascinating CMS concept works fairly in practice. Lamon Rutten brings vast experience from emerging markets the world over and is, let us not forget, a former CEO of MCX. Likewise Sandy Broderick has a vast experience – good moves all round…

TradeNext appointed Matt Mumford as senior institutional sales executive, he will report to Larry De Souza, the director sales and trading at the firm’s institutional offering.

ESMA: Vacancy Notice – Finance & Procurement Team Leader

Deadline: 19 April 2015. Please refer to our vacancy page for the details on this position (Ref. 2015/VAC2/AD) and how to apply.

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.
CME Q1 2015 Financial Results – Thursday, April 30, 2015

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

Share Notes

CME insider Kimberly S. Taylor sold 13,000 shares Monday, March 16th at an average price of $100.00 (bargain $1,300,000.00). She now owns 100,768 shares.

ITG insider P Mats Goebels sold 6,800 shares of the stock Monday, March 16th at an average price of $28.39 (bargain $193,052.00). He now owns 64,037 shares.

Analyst Notes

Charles Schwab Upgraded By JMP Securities From “Market Perform” To “Outperform”

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

CFTC Approves Final Rule on Residual Interest Deadline For FCMs

CFTC unanimously approved a final rule removing the December 31, 2018 automatic termination of the phased-in compliance period for the Residual Interest Deadline for FCMs.

Statement Of CFTC Chairman Timothy G. Massad In Support Of Adoption Of Amendments To CFTC Regulation 1.22 (Residual Interest Deadline For FCMs)
Statement Of CFTC Commissioner J. Christopher Giancarlo In Support Of Adoption Of Amendments To CFTC Regulation 1.22 (Residual Interest Deadline For FCMs)
Statement Of CFTC Commissioner Mark P. Wetjen In Support Of Adoption Of Amendments To CFTC Regulation 1.22 (Residual Interest Deadline FCMs)

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