May 04 2015

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 issue and 2nd birthday 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.

Calling FinTech Startups:

Meanwhile, we’re seeking interesting FinTech ideas to take to Startupbootcamp in London. My StartUp club in Poland Mission ToRun is co-organising the FastTrack pitch day in Warsaw, May 19th and we welcome participants from anywhere to apply…more details by clicking on the link below:

Warsaw 19 Poster Final

Premium News:

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.

The latest include:

SEBI-FMC Merger Brief NEW!
CEESEG Stakes Sales Brief 
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

Our Premium service is a unique source of industry analysis – insight in a low latency environment if you like. Can you afford not to be a subscriber? $120 per user/year helps keep Exchange Invest daily Free. Subscribe here or reply to this email and I will invoice you forthwith.

Today in EI: While the UK enjoys the spring bank holiday, we have results from CBOE and lots of spoof talk from the UK… which causes me to raise a simple question (all answers received will be in confidence):

If you could have a level playing field where everybody got data and trade access at the same latency…would you prefer that market?

All feedback welcome from markets and participants alike.

Elsewhere, from NZX buying an agri data business to a market veteran embracing the Blockchain, there is news from throughout the world of markets. Happy scrolling:

Public Markets

CBOE Q1 2015 Financial Results
CBOE

GAAP Financial Highlights

Total Operating Revenues $142.8 mln, down 10%
Net Income $42.3 mln, down 14%
Diluted EPS $0.50, down 11%

PLY: Revenues slightly down along with volume.

PSE Clears Bond Market Merger
Jenniffer B. Austra – Manila Standard Today
PSE Board Sets Sights On Tasks At Hand
Business World Online

Shareholders of Philippine SE over the weekend approved the acquisition of a majority interest in bond market Philippine Dealing Holdings Corp. for P2.25 billion (USD 50.4 mln).

“We have received approval to go ahead with the PDS transaction. We are targeting three months to complete the process, so hopefully by end-July, we can close the deal, subject to SEC’s approval,” PSE president & CEO Hans Sicat said in an interview.

PSE owns 21% of PDS, while SGX holds 20%. The Bankers Association of the Philippines (28.9%), San Miguel Corp. (4%) and Golden Astra Capital (0.36%) have agreed to indicative terms of the exchange’s offer to buy their stakes.

Other major shareholders of PDS are Tata Consultancy Serves Asia, Computershare Technology Services, The Philippine America Life and General Insurance Co., Financial Executive Institute of the Philippines, Social Security System and Investment House Association of the Philippines.

The PSE intends to fund the buyout of the PDS minority shareholders through a combination of cash and borrowings. The bourse had P1.05 billion in cash at end-2014, according to the exchange’s latest regulatory filing.

PLY: QV our Premium PSE – PDEx Merger Brief – at last it looks as if this oft delayed merger may finally be happening…

Nasdaq Tempts Energy Traders With Extended Fee Holiday (subscription)
Gregory Meyer – Financial Times

Nasdaq is planning an extended fee holiday to tempt traders to its new energy market, mounting an aggressive challenge to the two reigning oil and gas futures exchanges.

The upstart Nasdaq Futures exchange plans to launch 28 energy contracts at midyear as it diversifies beyond stock trading. Bob Greifeld, Nasdaq CEO, has argued energy markets are a “monopoly” dominated by CME and ICE.

PLY: Monopoly, duopoly, whatever, I am simply mystified why NASDAQ has opted to enter the energy market, particularly with little more than what seems to be a blunt discounter strategy.

‘Spoofing’ On U.K. Regulator’s Radar For Past Six Years (subscription)
Juliet Samuel & Chiara Albanese – Wall Street Journal

Regulators in the U.K. have had “spoofing” and other dubious trading strategies in their cross hairs for at least the past six years, and issued several warnings to the country’s brokers and traders.

PLY: The FCA may have been issuing warnings but then again it looks as if it has been lax, particularly as it has not been more public in its complaints about some oft-discussed dubious market practices. The UK regulator looks to be playing catch up and the ‘hound of Hounslow’ accusations have blown the story into the broader media (not that they really understand it but they sense an element of traders gaining unfair advantage which plays well in a Britain where genuine capitalism has few, if any, public champions…).

QV my question of the week posited above:

If you could have a level playing field where everybody got data and trade access at the same latency…would you prefer that market?

…answers by email welcome (in confidence).

Exchanges Need To Balance Policing & Profitability (subscription)
Brooke Masters – Financial Times

Read our Premium Flash Crash & Hound of Hounslow – Brief 

LME Swats A Warehousing Fly, But What About The Tigers?
Andy Home – Reuters

LME has fined one of its warehousing operators, CWT Commodities (Metals), 100,000 pounds ($149,000) for breaching information barriers with associated trading companies.

Dark Pool For Bonds Might Depend On Equity Success
Rick Baert – Pensions & Investments

The recent launch by eight large U.S. money managers of an equity dark pool has some wondering if something similar could be built by the buy side for fixed-income trading.

The concerns that helped form U.S.-based Luminex Analytics & Trading along with another manager-owned venue, Europe-based Plato Partnership — best execution in block trades and transparency for its participants — are also crucial issues in fixed-income trading, analysts said, which makes it logical that a buy-side fixed-income trading venue could serve those needs.

Read our Premium post On Bonds & SEFs and Premium brief The Bond Platforms Rush Part 1, Part 2.

ICE Benchmark Administration Publishes Feedback Statement On LIBOR Evolution Position Paper
ICE

ICE has published a feedback statement on the responses received to the ICE Benchmark Administration (IBA) position paper on the evolution and enhancement of ICE LIBOR.

IBA’s position paper sought comments from stakeholders on the proposed evolution of LIBOR. The position paper covered submission criteria, the implementation of a more transaction-based approach to the greatest extent possible, having a waterfall of calculation methodologies to ensure the continued availability of LIBOR rates and the consistency and reliability of data, as well as other enhancements to the benchmark.

Launch Of ASX Equity FlexClear
ASX

ASX announced the launch of ASX Equity FlexClear, a service allowing institutional investors to centrally clear OTC equity options transactions at ASX.

Private Markets

Colombo SE To Finalise CCP Model By End May
Duruthu Edirimuni Chandrasekera – Sunday Times Sri Lanka

Colombo SE (CSE) will finalise its CCP model and the final structure by month end, officials said.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX up 2%, FTIL flat.

CBI Probes MCX’s Market Debut
Neeraj Chauhan – TOI

The Central Bureau of Investigation has launched a probe into the IPO of MCX to see if there were irregularities in clearing the share sale, which had received a healthy response.

Sources said the agency has filed a preliminary enquiry into the issue which dates back to 2012. CBI spokesperson Kanchan Prasad, without sharing details, confirmed the enquiry.

Before the IPO, which was initially cleared by the consumer affairs department, MCX had received some exemptions from the prescribed guidelines of the regulator, FMC, which is being looked into by CBI.

PLY: Another diversion as the Indian blob consistently fails to actually resolve the NSEL problem but finds yet another avenue to look busy without actually achieving anything.

Technology

NZX To Acquire iFarm Agri Data Business
MondoVisione

NZX is pleased to announce the acquisition of iFarm, a leading livestock market information business. The acquisition strengthens NZX Agri’s position as a leading provider of information and data products to a growing number of farmer and corporate subscribers, across New Zealand and globally.

EGX Denies ‘Rumors’ About Trading System Penetration
Cairo Post

Egyptian Exchange (EGX) denied claims about penetration of its trading systems in an official Sunday statement.

Denying “rumors” about a breakthrough of the stock exchange systems, the EGX said, “this is not true at all,” adding that its trading systems have the “highest degree of protection, confidentiality and capacity,” in addition to the “latest technique of network and data security,” which separates between brokerage firms and other business units within the same firm.

PLY: At the core of the Egyptian Exchange system is NASDAQ X-Stream.

Thomson Reuters, Markit Extend CDS Data Deal (subscription)
Waters Technology

Thomson Reuters has renewed a deal (for 2 years) that allows it to carry CDS data from Markit, and has expanded the agreement to allow broader distribution of the content to its subscriber base.

Blythe Masters: Embrace The Blockchain (subscription)
Anna Irrera – Financial News

The next wave of financial innovation should tackle some of the stability challenges the financial sector faces, such as counterparty risk, according to industry heavyweight Blythe Masters.

PLY: Precisely as I have been saying since even before Exchange Invest launched.

Products

GFI Launches Electronic Trading Platform For Odd Lot US Corporate Bonds
MarketWatch

GFI Group announced the launch of an electronic trading platform for Odd Lot Corporate Bonds in the U.S.

Effective immediately, this service consists of an end of day odd lot matching session that provides instant executions via CreditMatch, GFI’s electronic trading system for corporate bonds and derivatives. GFI anticipates extending this into a fully executable Central Limit Order Book (CLOB) during Q3 2015. Trades will be electronically posted to FINRA’s Trade Reporting and Compliance Engine (TRACE) and cleared by Pershing.

CBOE Holdings To List VIX “Weeklys” Futures & Options
CBOE

CBOE announced that it plans to list futures and options with weekly expirations on the CBOE Volatility Index (VIX Index), the leading market barometer of U.S. equity market volatility.

VIX Weeklys futures are expected to begin trading at CBOE Futures Exchange (CFE) in July, subject to regulatory review. VIX Weeklys options are expected to begin trading at CBOE shortly thereafter, also subject to regulatory approval.

New Cycle Structure For Forex Futures At BIST Derivatives Market (VIOP)
Mike Fox – LeapRate

VIOP will increase the number of maturities in FX futures.

BSE To Push SEBI On Forward Trading
The Hindu Business Line

Bombay SE (BSE) will be making a representation to the Finance Ministry and the SEBI to take steps to impart liquidity to the stock markets. BSE is of the view that SEBI should suggest a time-frame for bringing back forward trading as it will facilitate brokers to take a long-term view of the market. Among the other measures suggested are bank finance for stock brokers, tax-free dividends and abolition of surcharge. The President and the Executive Director of the BSE will be submitting their views tomorrow to the SEBI Chairman, Mr. D. R. Mehta.

Hedgy Raises $1.2 Million For Smart Contract-Powered Bitcoin Derivatives
Stan Higgins – CoinDesk

Bitcoin derivatives startup Hedgy has raised $1.2m in new seed funding from a group of 10 investors that includes Draper Fisher Jurvetson partner Tim Draper, Salesforce CEO Marc Benioff and Sand Hill Ventures.

In conjunction with the announcement, Hedgy has also launched a new derivatives product aimed at commercial bitcoin miners.

Miners that use the derivative can effectively lock in a future price at which they can sell bitcoins, using a smart contract to settle the transaction on the bitcoin blockchain.

Career Paths

BWO reports that 14 out of the 15 directors of Philippine SE were elected for a fifth term. Independent director Cornelio Peralta “retired from board participation and his spot had been taken by Ramon Monzon. Aside from Mr. Hans Sicat, the other returning board members are Emmanuel T. Bautista, Annabelle L. Chua, David O. Chua, Francis C. Chua, Dakila B. Fonacier, Eddie T. Gobing, Amor C. Iliscupidez, Edgardo G. Lacson, Jose T. Pardo, Eusebio H. Tanco, Robert G. Vergara, Alejandro T. Yu, and Ma. Vivian Yuchengco.

Mr. Sicat remains President & CEO while Mr. Pardo returns as Chairman.

MCX Board at its meeting held on April 30, 2015 noted the expiry of the term of appointment of Mr. Ravi Kamal Bhargava, Independent Director on the Board of the Company. FMC vide its letter dated June 13, 2012 had appointed Mr. Bhargava as an independent director for a period up to March 31, 2015.

Financial Calendar

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.

Analyst Notes

Barclays Restated Their Overweight Rating On LSE – GBX 2,700 Target Price
CME Price Objective Cut By Barclays From $90.00 To $89.00 – “Equal Weight” Rating
CME “Buy” Rating Reissued By Deutsche Bank – $104.00 Target Price

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.

Crowdfunding

Crowdfunding Comes To Singapore Real Estate
Lee Meixian – AsiaOne

Other stories

Testimony Before The Subcommittee On Capital Markets & Government Sponsored Enterprises Committee On Financial Services, Richard G. Ketchum
MondoVisione

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