May 06 2014

elb2

Markit seeks $5 billion plus listing valuation in Q2, India has multiple issues arising, notably Reliance requesting regulator FMC annul the various contracts between MCX and FTIL…without forgetting that FMC is meeting today to discuss sanctions against FTIL for not selling its FTIL stake. Meanwhile the former head of NSEL is on a mission to disgrace Jignesh Shah and MCX is on the search for a new CEO as is CME Europe. . TriOptima produce more wondrous reductions while BM&F is pessimistic about IPOs.

Recent Premium posts include:

HFT1: The Market is Not Rigged
– first in a series about HFT and the issues arising…

Gordon Bennett! Low Latency Data At The New York Yacht Club?
– a follow up to HFT: The Early Years

OSOV No Argument
– democracy is an essential antidote to plutocracy –

The ZA Pivot
– Cinnober grabs the clearing advantage in South Africa –

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Public Markets

Reliance Capital Seeks Annulment Of All MCX-FTIL Agreements
The Economic Times

Raising fresh concerns over MCX’s “umbilical dependence” on Jignesh Shah- led FTIL, the bourse’s main suitor Reliance Capital has asked regulator FMC to annul all agreements between MCX and its erstwhile promoter.

PLY: A nuclear option in many ways but hardly a surprise as the contracts, are, to put it mildly, remarkable. FTIL on the other hand stands to be the biggest loser. I would suspect most potential investors want to avoid massive legal fallout but are fairly agnostic as to which technology platform the exchange uses.

MCX Board To Discuss PwC Audit, MD’s Exit
Rajesh Bhayani – Business Standard
MCX Stock: More Questions Than Answers
Jitendra Kumar Gupta – Business Standard

Reliance Capital’s (R-Cap’s) letter asking FMC to annul all MCX-FTIL agreements and related-party transactions has come as a setback for MCX’s shareholders, as this could in the near term hurt both investors’ confidence and valuations.

MCX board is set to meet on Friday to decide on a PwC report on the exchange, as well as the resignation of its MD, Manoj Vaish.

PLY: I am not sure that having the Reliance letter in the open is such a setback. This argument was always coming as soon as the remarkable payments to FTIL for their ultralong contract were public knowledge…

BSE Asks For Additional Details Of PwC Audit
Jayshree Pyasi – Business Standard

BSE has sought more details on PwC forensic audit on MCX, to check for possible violations of listing agreement. The exchange has written to MCX for greater details on the special audit. BSE has sought the names of related parties, which have been withheld by MCX.

PLY: Leading to the tricky situation where if BSE bids for MCX stock, all other bidders can claim the good bourse of Bombay had an information advantage.

TriOptima Completes First Cross Currency triReduce Compression Cycle Eliminating ¥12.318 Trillion Notional Principal In JPY/USD Swaps
TriOptima

In the first ever triReduce cross currency compression cycle, TriOptima eliminated ¥12.318 trillion ($120 Billion) notional in JPY/USD cross currency swaps with 12 institutions participating.

BM&FBovespa CEO Sees No Brazil IPOs Unless Expectations Improve
Reuters

No IPO has been filed with Brazil’s securities industry watchdog CVM so far this year, something unheard of since at least 2004, according to Thomson Reuters data. Prospects are so gloomy that many deals suspended last year due to souring market conditions are unlikely to materialize in coming months.

Private Markets

Markit Eyes $2bn From US Offering (subscription)
Arash Massoudi, Philip Stafford & Nicole Bullock – Financial Times

Markit is aiming to raise up to $2bn from a US listing, according to people involved in the process, as it seeks to challenge larger global rivals Bloomberg and Thomson Reuters in the fast-changing market for complex financial markets data.

Markit has appointed 14 banks as bookrunners on its IPO, which could take place later in Q2 and give Markit a valuation well in excess of the $5bn level it reached last year.

PLY: The foibles of being a vendor to multiple banks: they all want a piece of the action! This is a fascinating firm with amazing prospects, the IPO will be a highlight of Q2.

Shanghai SE Won’t Extend Trade Time
Ecns

Shanghai SE (SSE) said Monday that it will not extend the A-share trading time to 4:00 pm to match the trading time with HKEx, news portal 21cbh.com reported Monday.

The report cites an unidentified staff from the publicity department of SSE, saying that the length of trading time does not have a big impact on the investors, and the SSE will still keep the original trading time.

Currently, the trading time in HKEx is from 10 am to 12:30 am, 2:30 pm to 4:00 pm compared with the stock exchanges in Shanghai and Shenzhen which run from 9:30 am to 11:30 am and 1:00 pm to 3:00 pm.

Outgoing SET President Suggests Goals For Future Of Thai Bourse
Erich Parpart & Somluck Srimalee – The Nation

As he prepares to step down at the end of this month as president of Stock Exchange of Thailand (SET), Charamporn Jotikasthira has outlined a broad range of goals for the bourse in the future.

SET should seek to build the stability and integrity of spot commodity markets, stabilise agriculture prices, improve the transparency of and access to bond markets, create liquidity in key financial products, and expand the market’s coverage through partnerships with global exchanges, he said.

Charamporn, who became SET president on June 1, 2010, and will step down on May 31, said it would depend on circumstances and the vision of his successor how these new goals would be prioritised. But he believes that creating liquidity-provisioning mechanisms in key financial products and improving the effectiveness of market makers, especially in the derivatives market, are the best places to start.

EI reported on April 22nd about SET’s selection process for a new president.

The new CEO, Kesara Manchusree, is planning to carry on the vision of her predecessor.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL are flat. No news, just confirmation that the NSEL CEO Anjani Sinha is placing the blame right at Jignesh Shah’s door and endeavouring to pressure an arrest on the FTIL boss…

Jignesh Shah To Blame For NSEL Scam, Says Arrested CEO’s Affidavit
Abhijit Sathe – Mumbai Mirror

An affidavit written by arrested former NSEL CEO Anjani Sinha laying the blame for the NSEL scam squarely on the exchange’s promoter Jignesh Shah has been circulated among investors who lost money in the scandal, in an apparent attempt by Sinha to pressure Mumbai Police EOW to act against the top honchos of the company.

Technology

Philippine Bourse Trading Halt
Reuters

Following an interruption caused by a technical “issues’, trading on the Philippine SE resumed at 1:35 p.m. (0535 GMT) on Monday and closed at 3:30 p.m. as usual, the bourse said.
Trading was halted at 11:02 a.m..

A New Vision For Managed Services In Capital Markets
John Avery, SunGard’s Capital Markets Business – Wall Street & Technology

Reusing people, processes and technology wherever possible — helps firms reduce total cost of ownership (TCO) and achieve economies of scale.

Products

ICE Said To Seek Mortgage-Swap Rebirth For Dodd-Frank Age
Jody Shenn & Matthew Leising – Bloomberg

ICE is pitching Wall Street on new derivative contracts allowing investors to wager on U.S. homeowner defaults, six years after subprime-mortgage swaps helped fuel the financial crisis, according to five people with knowledge of the matter.

ICE, is gauging interest among banks and investment firms for a contract linked to a new type of mortgage securities that Fannie Mae and Freddie Mac started selling last year, said the people, who asked not to be named because the discussions are private. The government-backed firms have issued $4.5 billion of those bonds, which share the risk of home-loan defaults, as policy makers seek to scale back their roles in the $9.4 trillion mortgage market.

Career Paths

CME Looks To Europe For New Exchange CEO (subscription)
Anish Puaar – Financial News

CME Europe, a new UK-based exchange that offers trading in FX and energy derivatives, is looking for a new chief executive, following the death of Robert Ray in early March, targetting external candidates.

PLY: I would urge the CME to be bold and think outside the box, finding a radical, thinker who can help propel their CME Europe exchange forward as a new and exciting force in European markets.

James Cawley Steps Down As Javelin CEO (subscription)
Michael Mackenzie – Financial Times

Javelin Capital Markets, a fledgling derivatives trading platform that has pushed hard for sweeping reform of the market in recent years, said on Monday that James Cawley, its founder and one of its largest shareholders, was stepping down as CEO. Mr Cawley will continue to serve on Javelin’s board and he told the FT: “I’m very happy about the business we have built and the role we have played in starting a major revolution in how swaps are traded.”

Financial Calendar

Today

CBOE Q1 2014 financial results

This week:

ICE Q1 financial results
TMX Q1 2014 Financial Results
Record date Charles Schwab $0.06 quarterly dividend
Record date MarketAxess $0.16 quarterly cash dividend
SunGard Q1 2014 financial results

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

Analyst Notes

Zacks Reaffirmed Their “Neutral” Rating On CME – $74.00 Price Objective
CME Target Price Trimmed By Keefe, Bruyette & Woods From $84.00 To $80.00
Goldman Sachs Restated Their “Neutral” Rating On ICAP – GBX 440 Price Target

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

Kickstarter Will ‘Sit Out’ Crowdfunding Of Stocks, CEO Says
Tom Risen – US News

Kickstarter CEO Yancey Strickler has high hopes for his crowdfunding platform, which allows startups to create a market for their projects and gives consumers power to resurrect shows such as “Veronica Mars” that were canceled by Hollywood studios. Kickstarter’s future will not include allowing businesses to sell ownership shares in their startups through the crowdfunding platform, Strickler said, referring to rules being developed by the government.

PLY: Kickstarter is dominant in the niche of crowdsourcing products and wants to stay that way…

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