March 20 2015

elb2The ICE Age era continues as the new look Gold price fixing is preparing to launch. Aequitas also on the launch pad, counting down the last week to lift-off while Korea ponders new startup exchange encouragement and Hong Kong regulator ponders killing shareholder democracy. Man sells house in cryptocurrency as UK says will regulate exchanges. Associations make second strong hire in a week: after Nandini’s confirmation, Rainer Riess is permanently cemented into the FESE Management hierarchy. Chinese energy exchange opens to outside competitors, firing up competition to a whole new level…

Please note I am in London today and a touch frantic – messages will be returned asap but there may be some latency build-up as I didn’t clear my inbox overnight.… Thanks too to those signing up for Premium recently – it’s extra insight and it helps keep this daily free for all to read.

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BGC / GFI: Post Merger Disposals
NSEL Scandal Brief – Part 9 NEW!
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

GFI Group Announces Intention To Voluntarily Delist Common Stock From NYSE & Deregister Common Stock
PRNewswire

The Company has submitted written notice to NYSE of its intention to voluntarily delist and deregister the common stock under the Securities Exchange Act of 1934, as amended. The delisting is expected to become effective 10 days after the filing of the required Form 25 with SEC. However, the Company intends to make voluntary SEC filings with respect to its 8.375% Senior Notes due July 2018 in compliance with its obligations under the related indenture.

Approximately 56% of the outstanding shares of the common stock are held by BGC Partners or its affiliates, and approximately 38% of the outstanding shares are held by Jersey Partners as well as by certain members of GFI’s management team and their respective affiliates.

GFI will operate as a consolidated subsidiary of BGC. Given these circumstances, GFI’s BoD has concluded that the added costs of compliance, the demands of management’s time, and the resources required to maintain GFI’s NYSE listing and to continue its SEC reporting obligations are greater than the benefits received by the Company and its stockholders.

PLY: Logical. QV our Premium brief: BGC – CME – GFI Brief.

New Era Of Gold Benchmarking To Start With Six Pioneers
Clara Denina – Reuters

Six institutions will start setting gold prices electronically on Friday, as ICE completes a sweeping change to London’s bullion benchmarks and dispenses with the century-old gold “fix” (as announced last month).

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

PLY: Banks are Barclays, HSBC, Bank of Nova Scotia and Société Générale— (former London Gold fix participants) while the newcomer unveiled on Thursday is UBS with the sixth participant to be unveiled today.

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

LME Urged To Act Swiftly Over ‘Broken’ Aluminium Market
Karl West – The Guardian

Big industrial users frustrated over premium costs and lengthy delivery delays, in wake of damning report by US Senate committee last year.

Hong Kong Regulator Open To Shareholding Structure Change Post Alibaba (subscription)
Gregor Stuart Hunter & Ned Levin – Wall Street Journal

Hong Kong’s securities regulator hinted it is open to easing the city’s longstanding aversion to different shareholding structures, over a year after it lost out to New York on hosting e-commerce giant Alibaba’s record IPO (September 2014).

SFC hinted Thursday that it might not oppose a move towards allowing different classes of shareholdings in listed companies, as long as investors’ rights are protected and it doesn’t hurt the city’s competitiveness.

PLY: Bad news: we need more open and flat shareholder structures, not gerrymandered founder dominance.

Eurex Eyeing Alternative Clearing Models (subscription)
Cian Burke – FOW

Eurex is working to offer a new clearing model to help investors, such as larger funds and corporates, struggling to find traditional clearers.

Regulators Should Raise Public Trade Data Standards (subscription)
Donald MacKenzie & Stéphane Tyč – Financial Times

PLY: Proposal for anonymised ‘stub’ trade data to be made freely available to demonstrate data leakage / venue quality etc in all equity markets.

CFTC Issues An Exemption To the Hong Kong Securities And Futures Commission Permitting U.S. Customers To Deal Directly With Hong Kong Brokers
CFTC

Private Markets

‘Flash Boys’ Fight Moves To Canada With New Market About To Open
Eric Lam – Bloomberg
Building A Liquidity Safety Net For Public Companies And Investment Products In Canada – Aequitas NEO Exchange Announces Designated Market Makers
MondoVisione

Neo Exchange opens March 27, challenging TMX’s stranglehold on the $2 trillion Canadian equity market. The platform’s rules and infrastructure are designed to blunt trading practices it deems predatory, and it’s taking its pitch to corporations seeking a different kind of market where they can list their stocks.

Aequitas received the green light from Ontario Securities Commission in November.

South Korea – Financial Regulator Vows To Lower Barrier For Third Stock Exchange (subscription)
Yonhap

South Korea’s chief financial regulator pledged Thursday to ease regulations on the third stock exchange, KONEX (opened in June 2013 for start-ups), to vitalize the tepid market and strengthen the nation’s three-pronged bourse system through competition.

PLY: More discussion on our report from yesterday.

UK To Regulate Digital Currency Exchanges
Jemma Kelly – Reuters

Britain took a significant step towards becoming a global bitcoin hub on Wednesday as the government announced it would regulate digital currencies for the first time by applying anti-money laundering rules to exchanges.

PLY: Interesting development as Bitcoin businesses in the UK have been struggling as they were de facto choked by a lack of banks willing to provide facilities – this is an encouraging development, provided of course, the regulation is sensibly proportionate.

World Premiere: House In Romania Sold For Mcoin
Andreea Tobia & Marian Buga – Mediafax

The house was sold exclusively in Mcoin, a currency which was launched months ago. The owner sold the house for 55 000 Mcoins (20 000 Euros at current rates).

The transaction took place at a notary’s office and the contract stipulates that the payment was done in a virtual currency.

PLY: Great to see virtual currency house sales while those out west whose real estate portfolios are at dizzying QE valuations (especially London) may wish to consider moving some property investment funds to the New Europe where I can assure you there is a great deal of value at incredible low values, not just this 20K Euro, I’m sorry, 55,000 Mcoin, Romanian apartment…

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX off 2%, FTIL flat despite NSEL creditors rejecting the FTIL settlement offer with haircut (outlined yesterday).

NSEL Brokers, Investors Reject FTIL Settlement Offer
The Hindu Business Line

NSEL Investors’ Forum and brokers have come down heavily on the so-called settlement offer of ₹1,000 crore (USD 160 mln) made by embattled FTIL to investors.

Sebi Asks FTIL To Issue Advisory To Investors On NSEL Issue
The Economic Times

Capital markets regulator Sebi asked FTIL to issue an ‘advisory’ on matters relating to a government-proposed merger of its crisis-hit subsidiary NSEL, to help the investors take an “informed decision”.

Supporters, Opponents Square Off Over Proposed NSEL-FTIL Merger
Ashish Rukhaiyar – Livemint

With the deadline nearing for the government to pass a final order on the proposed merger between NSEL and its parent FTIL, supporters and opponents of the move have squared off in a high-decibel campaign.

Read our Premium briefs: NSEL-FTIL Merger Brief and NSEL Scandal Brief – Part 9

Technology

Equinix Taps Singapore For APAC Data Capabilities, Launching SG3
Jeff Patterson – Forex Magnates

Equinix has launched its third installment of its International Business Exchange (IBX) data center, colloquially known as SG3, in Singapore.

Wipro, HCL In Race For Sebi’s Fraud Detection System Upgrade
The Economic Times

As Sebi plans a capacity augmentation of its fraud detection system, IT majors, including Wipro, HCL, Tech Mahindra, L&T Infotech, HP, IBM and KPMG have shown interest.

Products

China Opening Crude Futures To World In Quest For Influence
Bloomberg

The Shanghai International Energy Exchange will allow foreign investors to transact through agents that have net capital of at least 30 million yuan ($4.8 million) or the equivalent in foreign currency, according to draft rules published on its website on Wednesday. It will accept foreign-denominated funds, standard warehouse receipts, treasury bonds and securities with “stable value and high liquidity” as collateral.

PLY: Another international energy market looking for business which surely brings further into question, just what NASDAQ think they are adding with their ‘me too’ product in an already packed field…it has been some time since “light sweet” crudes have been the, er, ‘sweet spot’ for future energy trading growth.

Indexes

Swap Gauge Expands In Latest Effort To Revive Derivatives Market
John Glover – Bloomberg

Benchmark indexes of CDS will protect 30 of the region’s banks and insurers, up from 25 previously tracked, when they start trading at 8 a.m. in London. That’s the most since they were created and follows two successive expansions of Europe’s high-yield corporate benchmark.

Markit, which manage the indexes, is seeking to boost liquidity in measures that have seen a 23% reduction over the past year. CDS contracts were overhauled last year to better protect holders of financial debt by explicitly insuring against losses imposed as part of government rescues of failed lenders.

Career Paths

Rainer Riess, the former DB1 executive, has been named as the permanent head of FESE as part of an overhaul of top executives at Europe’s main exchanges lobby group.

In addition Burçak Inel, Deputy Director General, has decided to take a family break. She will leave FESE after 10 years of service. A new Deputy Director General will be hired most likely in 2015. Richard Gardiner, who has been with FESE since 2010, has been promoted to be the new Head of Public and Regulatory Affairs with immediate effect. Also, since January 2015 the FESE team has been strengthened with the arrival of two Junior Policy Assistants.

FESE press release here.

PLY: A good week for association news. This announcement is icing on the cake alongside the confirmation that Nandini Sukumar being confirmed as WFE CEO. I am delighted for my fellow Irishman Richard Gardiner on his well-deserved elevation while I have always found it a pleasure to deal with Burçak Inel who will doubtless follow previous FESE Deputy DG Gregor Pozniak in going on to bigger things.

The primary news may come as a surprise to many: confirming Rainer Riess as permanent DG. The surprise element: Rainer is not a career Brussels policy wonk but his excellent management of the organisation and his lengthy industry experience has convinced the board to appoint him and I believe he will be an excellent leading voice in Brussels for the bourse business. He was also a hugely popular candidate with staff, hence the move from interim position to permanence. I understand he is retaining his board position at MOEX, incidentally.

The Hindu reports that SEBI has restrained P J Mathew (former MD of the erstwhile Inter-connected Stock Exchange of India or ISE) from accepting the position of MD or CEO in any stock exchange for one year.

Financial Calendar

Today

CBOE $0.21 quarterly cash dividend payment

Next week

CME $0.50 Q1 2015 dividend payment
Amman SE (ASE) will hold its Sixteenth General Assembly Meeting
Nasdaq $0.15 quarterly dividend payment
NZX 6 cents fy 2014 dividend payment
Aequitas Innovations Inc. is opening the Neo Exchange

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

Share Notes

CME CAO Jill A. Harley sold 1,950 shares Monday, March 16th at an average price of $100.00 (bargain $195,000.00). She now owns 10,191 shares.

ITG CEO Robert J. Boardman sold 6,800 shares Wednesday, March 18th at an average price of $28.61 (bargain $194,548.00). He now owns 140,271 shares.

Analyst Notes

Deutsche Bank Reiterated Their “Hold” Rating On ICE – $250.00 Price
Deutsche Bank Reiterated Their “Buy” Rating On NASDAQ OMX – $67.00 Price Objective
Deutsche Bank Restated Their “Hold” Rating On CBOE – $60.00 Target Price
AlphaValue Restated Their “Sell” Rating On LSE – GBX 2,174 Price Objective

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.

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