May 01 2015

elb2Fear not, as usual we’re not marking Pan European Day of Indolence with a day off so welcome to today’s free Exchange Invest. I’m in Berlin where apparently the local crusty community will celerate the day with a spot of rioting later on (thus meaning it’s the hard left which continue to inspire QE as after all how will they pay for all the police resources and any damage done?). That said Baltimore this isn’t. Personally I think the FIA ought to have maintained their (cancelled) annual Law conference and just sent some of the speakers out to address the mob by reading passages from Dodd Frank or MIFID II. I am not sure pacification would be the result, perhaps more a morbid torpor but at least it ought to slow down the vandalism.

Anyway, today in Exchange Invest, good results from CME and Warsaw in particular as DB1 mulls share buybacks. T Rowe testing HFT. Turkish electricity market ready to launch, FINRA may drop surveillance system plan, EACH proposes stress test best practice while CHi-X Canada has closing auction plan approved by regulators. All this and more in today’s scrollfest of pith:

Conference News:

SAVE THE DATE: My focussed event about the Future of Finance, Young Markets will take place in Warsaw, Poland, on September 17th. More details to follow…

Anniversary News:

Our 500th Anniversary and 2nd anniversary are looming in the middle of May and I am subsidising your daily ‘must read’ newsletter on exchanges – I feel it is only fair for that to change. Please Email me and let’s have a dialogue on the way you and your business can support Exchange Invest to give you more pith and insights going forward.

Meanwhile, our 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.

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CEESEG Stakes Sales Brief NEW!
HKMEx Fate Brief
Pakistan Exchanges Merger Brief 
Flash Crash & Hound of Hounslow – Brief 
Taiwan SE Cross Trading Links Brief
India – GIFT Exchanges Brief
A Taste Of HFT Scandal Brief – Part 1, Part 2, Part 3, Part 4, Part 5, Part 6
Vietnam Exchanges Merger Brief
CVC Betfair Bid Brief
India – NSE Sales Brief
EU CMU Brief
EU FTT Brief Part 1, Part 2
NSEL Scandal Brief – Main File

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Public Markets

CME Q1 2015 Financial Results
CME

Highlights

Total Revenues $842.7 mln, up 8.4%
Operating Income $507.3 mln, up 11.6%
Net Income $330.4 mln, up 24%
Diluted EPS $0.98, compared to 0.79

CME CEO Phupinder Gill on Q1 2015 Results – Earnings Call Transcript (subscription)
Seeking Alpha

PLY: Encouraging results from CME with the good Mr Gill expressing some optimism that an equivalence agreement on expenses may be coming relatively soon.

ITG Q1 2015 Financial Results
ITG

Highlights

Total revenues $149,7 mln, up 8.8%
Net income $16.7 mln, up 22.8%
Diluted EPS $0.49, compared to 0.38

ITG’s CEO Bob Gasser On Q1 2015 Results – Earnings Call Transcript (subscription)
Seeking Alpha

PLY: Also encouraging numbers.

WSE Q1 2015 Financial Results
WSE

Revenues PLN 88.2 mln (USD 24.5 mln), up 1.9% YoY and 5% QoQ
EBITDA PLN 54.3 mln (USD 15 mln), up 10.7 YoY and 33.5% QoQ
Net profit PLN 38.4 mln (USD 10.6 mln), up 2.1% YoY and 58% QoQ

PLY: Very good financials from WSE as some element of restructuring is under way.

Oslo Bors Q1 2015 Financial Results
MondoVisione

Profit of NOK 70 million (USD 9.3 mln), up 5.6% YoY
EPS NOK 1.63, compared to 1.47 in Q1 2014

NZX Q1 2015 Financial Results
NZX

Revenues NZD 16.4 mln (USD 12.4 mln), up 9.1% YoY

SIBEX Q1 2015 Financial Results
SIBEX

Total Revenues Lei 141k (USD 36k), down 50%
Total Expenses Lei 851k (USD 216k), up 18%
Loss Lei 709k (USD 180k), compared with a loss of 439k Q1 2014

PLY: Another dire quarter as SIBEX continues to dwindle under incapable management.

DB1 To Mull Share Buybacks If Volumes Improve – CFO
Reuters

DB1 will think about returning cash to shareholders by buying back its own shares if trading volumes show substantial improvement, DB1’s CFO said on Thursday.

Chi-X Canada Wins Regulator Approval For Closing Auction
Eric Lam – Bloomberg

Chi-X Canada ATS, a unit of Chi-X Global Holdings, has secured approval from the Ontario Securities Commission for a new type of order designed to compete against TMX’s market closing auction, which sets end-of-day prices for stocks on TSX as well as certain listings on TSX Venture exchange.

Last month Aquis Exchange launched MaC (Market at Close) – a new order type that allows its members to enter orders for matching on the Aquis Exchange platform at the closing price of the market-of-listing end-of-day auction.

Spoofing Elephant In Room Goes Unmentioned During CME Call
Matthew Leising – Bloomberg

For 10 days, it’s been the top story in the world for the futures market. You’d never know it from Thursday’s quarterly earnings call for CME, operator of the market where it happened.

PLY: Some cynics say the whole point of results calls are being missed here. They are really a jockeying of position amongst analysts to remind investor clients of their innate brilliance while asking apparently tough but relatively soft questions to ensure better relations with management.

CME Bars Two Gold Futures Traders For Allegedly Spoofing
Reuters

CME on Thursday barred two traders from its markets for allegedly colluding to enter orders repeatedly with no intention of trading, a strategy that has been fingered as a key contributor to the 2010 Wall Street flash crash.

Heet Khara and Nasim Salim, both traders of CME’s gold and silver futures contracts on its Comex exchange in New York, are prohibited from trading for 60 days, according to a disciplinary notice released by the futures exchange giant.

Read our Premium Flash Crash & Hound of Hounslow – Brief

T. Rowe Price Dips A Toe Into High-Speed Trading
Bradley Hope – MarketWatch

Every day for the past several months, one of the biggest asset managers in the U.S. has quietly sent a portion of its orders to a HFT firm for execution.

The experiment, involving T. Rowe Price Group and HFT Virtu Financial reflects a growing willingness among big investors to adapt to a fragmented, ultrafast stock market.

It is all the more extraordinary because T. Rowe Price, based in Baltimore, has been a vocal critic of what it has called “predatory” strategies among high-speed traders. The brokerage it is using for the experiment, Themis Trading LLC, was co-founded by two veteran brokers who in 2012 published the book a book “Broken Markets: How HFT and Predatory Practices on Wall Street Are Destroying Investor Confidence and Your Portfolio.”

The experiment, begun earlier this year, was designed after discussions among the three firms about the difficulties of routing orders through a fragmented marketplace that includes a dozen exchanges and more than 40 private trading venues known as dark pools, said Andy Brooks, VP and head of U.S. equity trading at T. Rowe Price. Less than 1% of the firm’s trades are involved in the experiment. T. Rowe manages about $733 billion.

Read our Premium A Taste Of HFT Scandal Brief – Part 1, Part 2, Part 3, Part 4, Part 5, Part 6

EACH White Paper On Best Practices For CCPs Stress Tests
EACH

PLY: EACH justifies its modest budget with helpful offerings such as this, codifying the discussion sensibly, good work by President Marcus Zickwolf, Secretary General Rafael Plata and the group.

HKEx – Partial Cancellation Of The Bonds Due To Conversion
HKEx

After last week’s bond conversion and issuance of 5,580,188 shares, and this week’s of 8,257,715 shares, an additional bond conversion and issuance of 10,764,556 shares, representing approximately 0.92% of the total Shares in issue as at 31 March 2015 (1,168,309,636 Shares).

Private Markets

Turkish Energy Stock Market To Be Launched Next Week
Hurriyet Daily News

The brand-new Turkish Energy Stock Market (EPİAŞ) will be launched at the 21st International Energy, Environment Fair and Conference, ICCI 2015, to be held in Istanbul next week. EPİAŞ is designated to serve as the sole energy exchange of Turkey and will be integrated into Borsa Istanbul, the umbrella institution within which all the exchanges in Turkey operate, beginning trading in electricity with a wholesale market and an emissions market.

Read our Premium BIST IPO Brief

Goldman Sachs Invests In Bitcoin Start-Up Circle Internet Financial
LA Times Dean Starkman

Circle Internet Financial, a bitcoin start-up led by Internet entrepreneur Jeremy Allaire, has raised $50 million from investors including Goldman Sachs and a major Chinese investment firm, IDG Capital.

Dividend News

BME agreed to pay a final dividend of €0.89 per share on 8 May, which is 37% higher than the previous year equivalent. The total ordinary dividend payment to its shareholders is of a gross €1.89 per share, a 15% increase on last year.

The GPW Management Board recommends (recommendation is subject to approval by AGM) the payment of dividend at PLN 2.40 per share. The dividend payout ratio for 2014 is 89.7% of the consolidated net profit and is consistent with the dividend policy published in October 2014 which provides for a dividend payout ratio above 60% of the consolidated net profit of GPW. The dividend yield is 4.9% at the share price of 31 March 2015.

ITG‘s BoD has initiated a dividend program under which the Company intends to pay quarterly cash dividends beginning in Q2 of 2015, subject to quarterly declarations by the BoD. For Q2 2015, BoD declared a quarterly dividend of $0.07 per share. The dividend is payable on June 5, 2015, to shareholders of record on May 15, 2015.

BoD of Oslo Børs has proposed to the AGM that the Board should, pursuant to section 8-2 (2) of the Public Limited Liability Companies Act, be given authorisation to decide the dividend payments to be made on the basis of the company’s annual accounts for 2014. The Board intends to consider making dividend payments twice a year, specifically in June and December. This does not represent any other change to dividend policy or practice.

Special Section: FTI, NSEL, India at the Crossroads

Markets closed – Maharashtra Day

Technology

Bloomberg Scare Speeds Up Hunt For Affordable Back-Up (subscription)
Tim Cave – Financial News

Read our Premium Post: Bloomberg Down – Embarrassing But Hardly Scorched Earth?

Products

CFTC Approves Proposed Rulemaking To Amend The Trade Option Exemption By Reducing Certain Reporting And Recordkeeping Requirements For End-Users
MondoVisione

OTC Derivatives Statistics At End-December 2014
MondoVisione

The Bank for International Settlements (BIS) released OTC derivatives statistics at end-December 2014.

Career Paths

BME AGM ratified Juan March and Santos Martínez Conde as members of the board.

ESMA Vacancy Notice – Senior Officer – Risk Expert (CCPs)
MondoVisione

Deadline: 07 June 2015 [AM]. Please refer to our vacancy page for the details on this position (Ref.2015/VAC9/AD7) and how to apply.

ESMA Vacancy Notice – Senior Legal Officer (Legal Support)
MondoVisione

Deadline: 03 June 2015. Please refer to our vacancy page for the details on this position (Ref.2015/VAC7/AD7) and how to apply.

ESMA Vacancy Notice – Market Data Expert
MondoVisione

Deadline: 07 June 2015. Please refer to our vacancy page for the details on this position (Ref.2015/VAC8/FGIV) and how to apply.

Financial Calendar

CBOE Q1 2015 Financial Results – Today

Philippine SE (PSE) AGM – 02 May
ICE Q1 2015 Financial Results – 05 May
Lending Club Q1 Financial Results – 05 May
Nasdaq OMX AGM – 06 May

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

Share Notes

Charles Schwab major shareholder Charles R. Schwab sold 1,047,300 shares Monday, April 27th at an average price of $30.23 (bargain $31,659,879.00).

Crowdfunding

Wall Street’s Latest Craze Meets Small Short In New Derivatives
Tracy Alloway & Matt Scully – Bloomberg

It began with a seemingly wacky idea to reinvent banking as we know it. But no one is scoffing at P2P lending anymore — least of all, Wall Street.

Barely a decade old, “P2P” has gone mainstream and is now being co-opted by some of the big financial players it was supposed to bypass.

PLY: Fascinating yet the legacy exchanges do not seem to have really woken up to how P2P is reshaping finance and indeed disintermediating banks.. I suppose Stockholm syndrome is hard to shake off in the short term.

Other stories

Finra Signals Controversial Broker Data System May Be Unneeded
Dave Michaels – Bloomberg

Wall Street’s self-regulator is weighing whether to drop a plan for a trade-surveillance system that has drawn sharp opposition from the brokers that fund the agency.

PLY: Wheel reinvention by large bureaucracies is often not the proven way forward, especially when technology is available off the shelf which can do much, if not all of the required functionality straight off…

Statement Of CFTC Commissioner J. Christopher Giancarlo Regarding Trade Options Rule
MondoVisione
Concurring Statement Of CFTC Commissioner Bowen Regarding Proposed Rulemaking On Trade Options
MondoVisione

Focusing On Dealer Conduct In The Derivatives Market, SEC Commissioner Luis A. Aguilar, April 29, 2015
MondoVisione

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