May 11 2015

Welcome to a big week for Exchange Invest – Thursday marks Issue 500 and Friday will be our second birthday…

Calling FinTech Startups to Warsaw Next Week:

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

Anniversary News:

As I said above, Thursday marks Issue 500, Friday our second birthday and as I am subsidising your daily ‘must read’ newsletter on exchanges – I feel it is only fair to request some support. 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.

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:

China Capital Markets Transformation – Exchanges & Markets, ETPs and Exchange Infrastructure – Brief Part 1, Part 2, Part 3, Part 4, Part 5 NEW!
SEBI-FMC Merger Brief
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:

NASDAQ dabbling in cryptocurrency, ACE looks to run out of road, HKEx results previewed optimistically, FXCM unsurprisingly dives into a loss while we await TMX results later today, happy scrolling:

Public Markets

FXCM Q1 2015 Financial Results
FXCM

Net (loss) income USD 426.8 mln, compared to 2 mln profit in Q1 2014.

PLY: After a quarter being torn asunder by the controversial SNB decision, FXCM is a shadow of its former self, qv our Premium FX – CHF Crisis – Brief and FXCM Stakes Sales Brief.

HKEx Q1 Profit Growth Tipped At 30-50% (subscription)
Enoch Yiu – SCMP

HKEx is expected to report profit growth of between 30 and 50% on Wednesday for Q1 on the back of high stock market turnover and greater contribution from LME that it now owns.

Analysts believe the market operator will report earnings of between HK$1.5 billion and HK$1.8 billion, compared with HK$1.18 billion a year ago.

PLY: HKEx is a key turnaround story of the past 12 months, the formerly under pressure CEO Charles Li ought to feel somewhat vindicated if his results are remotely in this region.

SEC Should Make Spoofing Focus Of Markets Meeting (subscription)
RT Leuchtkafer – Financial Times

Until recently US regulators had one story about the 2010 flash crash. It was in a report SEC and CFTC staff delivered almost five years ago, just months after the event.

Read our Premium Flash Crash & Hound of Hounslow – Brief.

PLY: A sound and sensible column, albeit that the US has so much egg on its face right now it is looking rather discredited as a steward of good markets. Saudi FII opening to help propel more Sukuk? ABEX & CBEX sign MOU, can they create an Australo-Sino branch line linkage of sorts?

SEC & FINRA 2015 National Compliance Outreach Program For Broker-Dealers
SEC

Registration is open. The program provides an open forum for regulators and industry professionals to discuss compliance practices and exchange ideas on effective compliance structures.

BME Completes Its Consultancy Work For The Peruvian Public Debt Market – It Follows The Electronic Platform Created By BME For The Algerian Public Debt Market
MondoVisione

BME Innova, the innovation subsidiary of BME, has conducted a consultancy project on the needs and solutions required by Peru’s securities market operation systems, in the area of IT infrastructure.

Private Markets

India’s NSE Continues To Revolutionise The Equities Sector
Courtney Trenwith – Arabian Business

In 1992, India’s financial markets were considered a closed brokers club riddled with corruption and desperately needing reform and modernisation. Bombay SE (BSE) had dominated the scene for decades, but few were game to dabble in stocks unless they were already a qualified broker on the inside.

The $780m stock manipulation scandal involving Harshad Mehta eventually exposed the severe immaturity of the century-old BSE and embarrassed the entire Indian financial market system.

But from the ashes rose the ambitious idea to create a new index that would rival the BSE with transparency, the country’s first electronic trading and strict regulatory monitoring at its core.

National SE (NSE) was born under then-finance minister and mastermind of India’s economic liberalisation Manmohan Singh, who went on to serve as prime minister until last year.

PLY: A good portrait of NSE, an exchange which deserves more credit for its pivotal role in the “Capital Market Revolution!”

PSE’s Retail Investor Base To Hit 1M By 2017
Daphne J. Magturo – Business World Online

At least three million Filipinos have the financial muscle to join the stock market, and the Philippine SE (PSE) is targeting to corner a third of that by 2017 by penetrating the Visayas and Mindanao regions, PSE officials said.

“There are about 600,000 investor accounts now, and a realistic goal for the next few years would be to bring that number up to a million,” PSE Chairman Jose T. Pardo.

Read our Premium PSE – PDEx Merger Brief.

PLY: With a population of nearly 100 million, that seems a low estimate qv Warsaw where there are under 40 million residents in Poland but about 1.6 million client accounts.

Saudi Arabia To Foster Sukuk Market As Stocks Open To Foreigners
Business Times

Opening its US$568 billion stock exchange to foreigners for the first time may be the push Saudi Arabia needs to boost its sukuk market according to Adel Al-Ghamdi, CEO of the Saudi Stock Market Tadawul.

Saudi Stock Exchange (Tadawul) Announces Its Readiness To Work In Accordance With The Rules For Qualified Foreign Financial Institutions’ Investment In Listed Shares
MondoVisione

KRX: Improving Market Stabilization Facilities & Expanding Daily Price Limit
MondoVisione

As the Financial Services Commission (FSC) approved the revised Business Regulations for the KOSPI, KOSDAQ and Derivatives Markets of KRX on April 29, 2015, KRX plans to revise relevant enforcement rules to work out details and time for the implementation of the revised regulations.

Low Volume Forces Ace Commodity Exchange To Suspend Launch Of New Contracts
Ashish Rukhaiyar – Livemint

Ace Derivatives and Commodity Exchange, in which Kotak Mahindra Bank Ltd owns a 40% stake, has decided against launching any new contracts and will let all existing contracts expire on 29 May.

PLY: Sounds like the end of the road looms for ACE…

Asia Pacific Stock Exchange Signs MOU with China Beijing Equity Exchange Launches “CBEX to APX Express Channel”
APX

Asia Pacific Stock Exchange (APX) has signed a MOU with the China Beijing Equity Exchange (CBEX).

APX and CBEX also launched the “CBEX to APX Express Channel”, a program designed to promote Chinese companies across China to list on APX, guide qualified institutional investors to invest in companies listed on APX, and build a bridge of projects and capital.

PLY: I suppose one might refer to this as the “through side train.” If it helps allocate capital to SMEs then it will be serving a useful purpose.

Cryptocurrency Compliance: Reality Bites
Jeffrey Kutler – GARP

In a move that may have been both a wake-up call and a sign of increasing legitimacy for digital currencies, the U.S. Treasury Department’s Financial Crimes Enforcement Network has fined Ripple Labs $700,000 in the first civil enforcement action against a virtual currency exchange organization.

The Treasury agency, known as FinCEN and primarily focused on anti-money-laundering (AML) and anti-terrorist-financing enforcement, coordinated with the U.S. Attorney’s Office for the Northern District of California in citing Ripple Labs and its XRP currency subsidiary for violations of the Bank Secrecy Act and not sufficiently complying with requirements for AML and related controls.

Dividend News

Scrip Dividend Scheme In Relation To The Final Dividend For The Year Ended 31 December 2014 Calculation Of Market Value
HKEx

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX jumps nearly 4%, FTIL up 1.5%.

Technology

CME Upgrades Globex To Cut Trading Latency (subscription)
Alice Attwood – FOW

CME’s planned enhancements on Globex will reduce latency by 5% for futures markets and 10% for options on futures.

TMX Readies Toronto-NJ Wireless Network (subscription)
Waters Technology

TMX Datalinx will launch a new wireless network route between its datacenter in Toronto, Canada and datacenters in the US before the end of next month, to provide latency sensitive customers with faster market data between the venues.

A Bitcoin Technology Gets Nasdaq Test (subscription)
Bradley Hope & Michael J. Casey – Wall Street Journal

Nasdaq is testing a new use of the technology that underpins the digital currency bitcoin, in a bid to transform the trading of shares in private companies.

The experiment joins a slew of financial-industry forays into bitcoin-related technology. If the effort is deemed successful, Nasdaq wants to use so-called blockchain technology in its stock market, one of the world’s largest, and potentially shake up systems that have facilitated the trading of financial assets for decades.

Nasdaq will start its pilot project in Nasdaq Private Market, a fledgling marketplace launched in January 2014 to handle pre-IPO trading among private companies. The platform has more than 75 private companies signed up.

PLY: An interesting approach from NASDAQ.

Products

Shanghai Exchange Seeks Foreign Nickel To Help Ease Shortage
Bloomberg

Shanghai Futures Exchange plans to allow delivery of foreign-made nickel into its futures contracts as it seeks relief from a shortage of domestic supply to the bourse.

Hong Kong’s LME Metal Contracts Languish In Thin Business (subscription)
Enoch Yiu – SCMP

The three LME metal contracts it launched to great fanfare in Hong Kong have a combined daily average of 287 contracts in the first four months of 2015, making them the second least traded futures contracts at HKEx.

CLTX & LCH.Clearnet Launch Mini Fertilizer Contracts
MondoVisione

ISDA & Markit Launch New EMIR Clearing Classification Tool On ISDA Amend
MondoVisione

ISDA & Markit launched the EMIR Clearing Classification Tool on ISDA Amend.

Career Paths

Thomson Reuters Founders Share Company appointed Ory Okolloh to its Board of Directors.

SEC named David Grim as Director of the Division of Investment Management. Mr. Grim has been the division’s acting director since February, following the departure of former director Norm Champ.

While the UK General Election came as a shock to those expecting Great Britain to quantitatively ease itself to minor Britain last week, there was one interesting snippet reported by Britain’s leading political insider, the Guido Fawkes blog in their Sun column on Sunday. Their pith is perfect so I will quote outright:

“Back in 2002, Nigel Farage called on the services of a Ukip-supporting accountant to close down his commodity trading firm, Farage Futures, so he could focus on his political career.

Thirteen years later that very same accountant, Craig Mackinlay, defected to the Tories, ran for parliament and defeated Nigel in South Thanet. Closing down Farage’s future for a second time.”

Former Commodity Trader Farage resigned Friday as leader of the anti-EU UKIP after a record vote haul of 4 million but only one MP due to vagaries of the first past the post system.

Financial Calendar

This week

11.05 – TMX Q1 Financial Results

12.05 – Record date MOEX RUB 3.87 dividend

13.05

HKEx Q1 Financial Results
SEC Equity Market Structure Advisory Committee – focus on Rule 611 of SEC Regulation NMS, known as the “Order Protection Rule” or “Trade-through Rule.”

14.05 – BM&FBovespa Q1 2015 Financial Results

15.05

ICE AGM
NZX AGM
Record date BGC Partners $0.14 quarterly dividend
Record date ITG $0.07 quarterly dividend

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

Share Notes

ICE insider Charles A. Vice sold 2,500 shares Tuesday, May 5th at an average price of $229.25 (bargain $573,125.00). He now owns 42,324 shares. ICE insider stock transactions are chronicled on this specific page.

Analyst Notes

CME Upgraded By Evercore Partners From “Hold” To “Buy”
Barclays Decreased Their Price Target On ICE From $267.00 To $261.00 – “Overweight” Rating
NASDAQ OMX Target Price Boosted By Barclays From $56.00 To $57.00 – “Overweight” Rating

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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