March 31 2015

elb2

Southbound “through train’ achieves new record amidst metals news from Shanghai and much more from China/Hong Kong. BlackRock emerges a key buyer in the Dubai LSE sell-off as MCX sells another tranche of MSXI warrants). C-suite pay jumps at CME, happy scrolling:

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Public Markets

BlackRock Ups LSE Stake To £587m (subscription)
Tim Cave & James Rundle – Financial News

BlackRock upped its stake in LSE on the same day that Borse Dubai’s sold out of the UK exchange, with the US funds giant now holding a stake of nearly 7% in the UK bourse.

Read our Premium Exchange Deals Brief.

MCX Sells 9.02 Million Warrants Of MSXI To IL&FS
Ashish Rukhaiyar – Livemint

MCX has sold 9.02 million warrants of Metropolitan SE (MSXI – the rebranded MCX-SX)—to IL&FS Financial Services Ltd (IL&FS). Each warrant sold at Rs.2.50 is convertible into one equity share of the exchange.

Prior to this deal, MCX held 582.6 mln warrants and 4.10% equity stake in MSXI – around 33% holding in total (with converted warrants).

This is the second instance of the commodity exchange selling part of its warrants to IL&FS. On 16 March, it sold 21.52 million warrants of the stock exchange to IL&FS. As per the latest financial statement of MCX, it held a total of 634.17 million warrants of MSXI as on 31 December 2014. The commodity exchange also held 27.16 million equity shares of MSXI as on 31 December 2014.

MCX has to convert the warrants before June and was directed by SEBI to cap its holding at 5% after conversion. Earlier this month MCX has written to Sebi to be allowed to raise its stake in MCX-SX to 15%.

Read our Premium Exchange Deals Brief.

‘Algo’ Trading Probably Played Role In October Bond Turmoil: TMPG
Reuters

Algorithmic trading probably played a role in the abrupt move in the U.S. fixed income market 5-1/2 months ago, when 30-year Treasuries bond prices jumped 6 points in minutes, according to records released on Monday from a bond industry group meeting.

At the Feb. 26 meeting of the Treasury Market Practice Group, staff members of the New York Federal Reserve summarized what the group members said might have produced extreme volatility and record bond futures volumes on Oct. 15.

PLY: Dismal scientists produce dismal insights. Essentially no clear evidence found but it’s always best to scapegoat when your ambition is to secure a government long service pension, so HFT gets fingered. I am not saying there was not HFT influence but this report suggests blamestorming via committee – the same process which made the Soviet Union bankrupt but is still beloved of the blob.

HKEx, Brokers Rally As China Seeks To Further Open Markets
Jonathan Burgos – Bloomberg

HKEx jumped to a four-year high, with the bourse operator rallying along with brokerages after China’s securities regulator said it will do more to open mainland financial markets.

HKEx: Turnover Of Southbound Trading Reaches Record High, Other Milestones Hit
MondoVisione

PLY: Silence in the HK media which seems to have got the narrative of “through train” failure entirely wrong as I predicted.

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

LME Allows Malaysian Warehouses To Accept Metal After Tax Ruling
Eddie Van Der Walt – Bloomberg

LME will allow Malaysian warehouses to keep accepting metal after finance officials exempted transactions from a new tax.

LME threatened earlier this month to stop letting warehouse companies in Johor and Port Klang from issuing warrants if the metal was subject to a goods and services tax that starts April 1. Malaysia’s warehouses hold about 85% of the LME-registered tin and about half of the nickel globally, as well as almost all zinc and lead in Asia, bourse data show.

Cleartrade Exchange To Launch New Global Trading Platform
Commodities Now

David Briggs, CTO at Cleartrade Exchange (CLTX) discusses how participants in traditional OTC cleared voice markets transition to electronic trading and the new CLTX global trading platform using DB1 Architecture due to launch next month.

DB1, China’s CCB Agree Strategic Partnership
Reuters

DB1 & China Construction Bank (CCB) agreed to examine potential for cooperation in their respective geographical markets.

DB1 press release here.

SGX To Introduce Position Accounts For CDP Clearing Members
Wong Wei Han – The Straits Times

SGX is planning to introduce position accounts for clearing members of the Central Depository (CDP), as part of its efforts to improve the post-trade environment for Singapore’s securities market.

SGX press release here.

JPX To Strengthen Screening Measures
Reuters

JPX will seek to strengthen screening measures for companies looking to go public, including requiring firms to provide the basis of earnings projections at the time of the IPO, two sources familiar with the matter said on Tuesday.

LCH Calls For Standardised CCP Stress Testing
Cian Burke – FOW

LCH.Clearnet has become the latest to pile into CCP stress testing debate by releasing a white paper calling for standardised testing.

PLY: Standardised testing is an interesting issue as the overall business of testing methodology can be argued to be still in its infancy.

LCH.Clearnet white paper here.

Clearing Houses Still Face Headwinds After UK/EU Agreement (subscription)
James Rundle – Financial News

The agreement between UK and European authorities over CCPs, struck this weekend, brings to a close a long-running dispute and removes one obstacle for the risk-management houses, but several issues still remain.

Clearstream Opens New Representative Office In Zurich
MondoVisione

Private Markets

TOCOM Announces Rolling Update Of Midterm Management Plan
MondoVisione

The Exchange has developed a new Midterm Management Plan covering the three-year period from fiscal 2015 to fiscal 2017.

Australian Treasury: Bitcoin A Threat To Tax Collection
Stan Higgins – CoinDesk

The Australian Department of the Treasury is claiming bitcoin and digital currencies are a potential threat to its tax collection efforts.

Undercover Agents ‘Stole Bitcoin’ While Investigating Silk Road
Daily Telegraph.
Former US Federal Agents Charged With Bitcoin Money Laundering And Wire Fraud – Agents Were Part Of Baltimore’s Silk Road Task Force
MondoVisione

The US Department of Justice said Carl Mark Force and Shaun Bridges kept a large amount of the Bitcoin from undercover transactions made as part of efforts in 2013 to find evidence against Silk Road mastermind Ross Ulbricht, or “Dread Pirate Roberts”.

PLY: The long arm of the law caught with its fingers in the blockchain.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX flay, FTI roars up 7%, presumably something is afoot…

NSEL Brokers, Investors Battle It Out On Social Media; Accusations Fly
Ram Sahgal – The Economic Times

L’affaire NSEL has spilled over from courtrooms and Mumbai crime branch to the print and social media. A war of words has been brewing between brokers and certain investor forums on the one hand, and NSEL, on the other.

Read our Premium NSEL Scandal Brief – Part 15

Technology

Euronext Derivatives Trading Resumes Following One-Hour Halt
John Detrixhe – Bloomberg

Euronext NV resumed trading on all derivatives products after a one-hour halt following a weekend technology change with trading interrupted from 9:10 a.m. to 10:20 a.m. London time. Trading on cash products continued normally. Similar interruptions happened last year after Euronext upgraded its derivatives price feed. National benchmark indexes for France, the Netherlands, Belgium and Portugal failed to calculate for more than three hours on Nov. 27 (reported here).

PLY: A genuine case of separation pain from ICE.

Subsidiaries Of HKEx & SSE Sign Market Data Vendor Licence Agreement
HKEx

HKEx Information Services, a wholly-owned subsidiary of HKEx, signed a market data vendor licence agreement with SSE Infonet, the information business subsidiary of the Shanghai SE (SSE), on 27 March 2015 to better meet the needs of Mainland investors for Hong Kong stock market data.

SSE Infonet will now provide mainland brokerages and retail investors with streaming real-time 10 price-depth data from the Hong Kong stock market through a cloud platform.

Aequitas Neo Exchange Goes Live In Canada Using Full Suite Of MillenniumIT Trading Technology
LSE

Products

CME Scores Victory In Day One Of Battle Of New Cocoa Contracts
David Brough – Reuters

CME won the first round of a battle of two new euro-based cocoa futures contracts against rival exchange ICE Futures.

More than 200 lots traded through the CME contract on Monday, marking the exchange’s entry into deliverable soft commodities as it seeks to break ICE’s dominance of cocoa futures trading.

ICE had no trades in its euro contract by late afternoon in London. But it already dominates cocoa futures trading with its longstanding sterling- and dollar-based cocoa contracts.

CME has sought to capitalise on concerns that ICE’s sterling contract does not always align closely with the physical market in Europe.

PLY: First blood to CME although 200 lots is a skirmish, not a battle.

Previous comments on the topic here.

Hong Kong & Shanghai, Future Metals Allies Or Rivals?
Andy Home – Reuters

On Friday Shanghai Futures Exchange (SHFE) expanded its metals trading suite to include both nickel and tin, meaning the leading Chinese venue now has a metals portfolio precisely the same as LME.

Are Hong Kong and Shanghai future collaborators or potential competitors in the world of metals pricing?

LME Will List Powder Under Cobalt Contract (subscription)
MetalBulletin

Market participants have often called for powder to be included as part of the contract, but currently only 99.3% minimum cobalt metal can be listed. Cut or broken cathodes, ingots, briquettes or rounds are now accepted under the LME contract.

BIST To Introduce Steel Scrap Futures Contract On April 2
Metal.com

ASX & AEMO Launch Wallumbilla Gas Futures
ASX

ASX and the Australian Energy Market Operator (AEMO) have announced the launch of ASX Wallumbilla natural gas futures, which start trading on Tuesday 7 April 2015. The launch comes a year after AEMO established Australia’s first voluntary gas supply hub in Wallumbilla, Queensland. The Wallumbilla End of Day Benchmark price will be used as the reference price for ASX’s new gas futures contract.

Career Paths

Cantor Fitzgerald announced the expansion of its Emerging Markets Debt Capital Markets sales and trading team with the appointments of Dray Simpson, Alex Yulman and Michael Barfoot as MDs. Mr. Simpson will be based in London with Mr. Yulman and Mr. Barfoot in New York. They will report to Charles Cortellesi and Erich Bauer-Rowe, Co-Heads of the Debt Capital Markets’ Emerging Markets Division at Cantor Fitzgerald.

Clearstream’s new Zurich office will be managed by Marco Geisselhardt, Head of Relationship Management, Investment Fund Services at Clearstream.

Pay Pops For CME’s CEO & Chairman
Lynne Marek – Crain’s Chicago Business

The top two executives at CME got 25%-plus raises last year as the company’s trading volumes and stock price climbed.

CME CEO Phupinder Gill‘s compensation last year rose 29% to $5.37 million, including a base salary of $1 million and a stock award of $2.95 million, compared to the $4.15 million he earned in 2013, according to a proxy filing CME made with SEC Gill became CEO in 2012.

Compensation for CME Executive Chairman & President Terry Duffy jumped 27.5% to $6.66 million, including a salary of $1.25 million and stock awards of $3.68 million, compared to $5.22 million in 2013, the SEC filing said.

PLY: Given Gill gets paid (even post rise) about one third of Bob Greifeld’s remuneration, he looks like a sweet deal for CME to me.

Schwab Cuts Senior Officer Pay, CEO’s Salary Down 7%
Zacks

Charles Schwab, in an annual proxy document filed with SEC, announced a cut in the President & CEO Walt Bettinger’s remuneration for 2014. Bettinger received $11.8 million as compensation package, marking a 7% decrease from 2013.

ESMA Vacancy Notice – Seconded National Expert – Legal profile
MondoVisione

Deadline: 30 April 2015. Please refer to our vacancy page for the details on this position (Ref. 2015/VAC5/SNE) and how to apply.

Financial Calendar

This week

ICE $0.65 Q1 2015 dividend payment

New announcement

MOEX AGM – 28 April 2015

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

Analyst Notes

  • Jefferies Increased Their “Price Objective” On CME To $104.00
  • ITG Upgraded By Evercore Partners From “Hold” To “Buy” – $33.00 Price Objective, Up From $24.00

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

Richard Baker’s Trading Places Column March 2015: The Liquidity Network – A New ‘Community’ Solution To Exchange Trading?
MondoVisione

European Parliament – Benchmarks: Restoring Confidence In The Financial Markets
MondoVisione

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