May 12 2015

elb2 Today in Exchange Invest Daily:

Citigroup reckon 10 funds are about to ride the ‘through train” while Brunei plans a bourse. TMX results are neither good nor bad but cause for concern in the face of competition. TNT launch private asset platform while NASDAQ unveils more of their Bitcoin plan while NLX issues new market maker plan, thus demonstrating intent to mark a longer demise than any known operatic heroine. Odd shuffle in Slovak IPO as BIS sets sights on single forex code of conduct.

Anniversary News:

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Public Markets

TMX Q1 2015 Financial Results
TMX

Highlights

Revenue CAD 185.3 mln (USD 153 mln), up 2%
Income from operations CAD 67.3 mln (USD 55 mln), down 13%
Net income attributable to TMX Group shareholders CAD 42.6 mln (USD 35 mln), down 8%
Diluted EPS CAD 0.78, down 9%

Tullett Prebon Launches Online Platform To Match Up Traders (subscription)
Harriet Agnew & Philip Stafford – Financial Times

The Tullett Prebon Alternative Investments Matching Engine is aimed at investors in hedge funds, private equity and real estate funds who want to buy or sell illiquid positions, a practice that has historically been complicated and opaque.

PLY: Every platform helps…it has struck me as an odd hangover of regulatory fiat that we can do all manner of transactions on Alibaba or eBay/Allegro/Mercadolibre and yet buying/selling private assets is remarkably complicated, see also the automation of VC in the crowdfunding story near the end of today’s bulletin:

Traditional Funds To Step Up Investments Via Stock Connect: Citi
Eji Insight

Overseas funds will step up utilization of the Shanghai-Hong Kong Stock Connect program in the coming months to channel more money into Chinese stocks, according to a Citigroup executive.

At least 10 traditional funds are mapping out plans as new rules facilitate special segregated accounts, eliminating the worries about counterparty risks.

PLY: Things are now going so swimmingly with the “through train” that soon everybody will have forgotten that this was a daft idea which would never work, well according to the conventional media and a great many VPs of nothing consequential…

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

Mooted Hong Kong-Taiwan Stock Link Runs Into Wall Of Scepticism
Faith Hung & Michelle Price – Reuters

A mooted equity trading link between Hong Kong and Taiwan has been described by some traders and investors as a flawed – and potentially costly – attempt to replicate the hugely successful Hong Kong-Shanghai stock connect.

Read our Premium Taiwan SE Cross Trading Links Brief.

Small Investors Focus Of Trading Shake-Up (subscription)
Philip Stafford & Nicole Bullock – Financial Times

Five years of adverse headlines about dark pools, flash crashes and HFT has hardly encouraged retail investors jumping on board the long-running US equity bull market.

However, the main US regulator of equities has not forgotten small investors and is looking at whether share trading requires a fresh approach.

On Wednesday, 16 of the US equity markets’ most experienced traders, executives and academics meet in Washington under SEC’s first Equity Market Structure Advisory Committee.

LSEG: Maroclear Selects UnaVista Technology For Trade Repository Solution
MondoVisione

Decoded: The US-EU Derivatives Stand-Off (subscription)
Tim Cave – Financial News

US and European regulators are still at loggerheads on how to harmonise new rules overseeing the $600 trillion derivatives landscape, threatening activity across the world’s two largest swaps markets.

PLY: To repeat that great logic puzzle “what happens when an unbreakable cannon ball hits an immovable post?” Whether the Atlantic regulators regard themselves as the cannon ball or the post, this is precisely the impasse we have currently in markets and we are all the worse for it.

ESMA Consults On Technical Standard No 4 On Central Clearing Of IRS
MondoVisione

ESMA has opened a consultation seeking stakeholders’ views on proposed regulatory technical standards on the clearing obligation under Regulation (EU) No 648/2012 of the European Parliament and Council on OTC derivatives, central counterparties and trade repositories (EMIR).

Private Markets

In Bid To Diversify, Brunei Aims For Stock Exchange By 2017
Bernardo Vizcaino – Reuters

Brunei’s financial regulator plans to launch a securities exchange as early as 2017, a must-have if the Sultanate is to diversify its economy away from oil and catch up to more mature capital markets in Southeast Asia.

Brunei is among the world’s richest countries on a per-capita basis, although it sits alongside the likes of North Korea and Cuba in not having a stock exchange, risking lagging behind regional economic integration plans.

An exchange has been discussed for years, but efforts are gathering pace with new capital market rules introduced in February and other initiatives now underway by the Autoriti Monetari Brunei Darussalam (AMBD).

The regulator has set up a team to oversee the project with groundwork set to begin this year and targeting a launch in two-years time

“At a regional level, it will allow us to take part in the ASEAN exchanges and move towards ASEAN integration.” (AMBD)

PLY: Great news from the tiny state which would presumably see a lot of interest from the financial centre Malaysia created under PM Dr Mahathir, on the neighbouring Labuan island. I look forward to more news in due course of this exciting development for the region.

Read our Premium ASEAN Exchanges Project Brief.

Government Halts Sale Of Slovak Telekom Shares Via Stock Exchange
Slovak Spectator

The floating of Slovak Telekom shares on the stock exchange over the past couple of days has set the value of the state’s 49% stake in the company at €750 million which is the minimum price laid down by the government. However, it has decided to put a halt to the stock exchange sale in light of a new bid.

PLY: A frustrating impasse in the history of CEE exchange development. The Bratislava exchange was finally eyeing a brilliant, massive privatisation but now the government appears to be pulling it because of a better offer from a trade sale. This has considerable ramifications and demonstrates a worrying issue pertaining to the credible development of New European capital markets.

Nasdaq Dubai & Kazakhstan SE Sign MoU
MondoVisione

Dividend News

TMX declared a dividend of $0.40 on each common share outstanding, payable on June 12, 2015 to shareholders of record at the close of business on May 29, 2015.

Special Section: FTI, NSEL, India at the Crossroads

PLY: “What God gives, God takes away” as my dear departed fellow trader Bernie Horn used to say: today it’s MCX -3% and FTIL down 2%. Alas, no other news of restitution…

Technology

Nasdaq Launches Enterprise-Wide Blockchain Technology Initiative
Nasdaq
Nasdaq Adopts Bitcoin Backbone For Stocks (subscription)
Richard Waters – Financial Times
This Experiment Shows Why You Should Take Bitcoin Seriously
Time

As rumoured yesterday, Nasdaq announced plans to leverage blockchain technology as part of an enterprise-wide initiative. Nasdaq will initially leverage the Open Assets Protocol, a colored coin innovation built upon the blockchain. In its first application expected later this year, Nasdaq will launch blockchain-enabled digital ledger technology that will be used to expand and enhance the equity management capabilities offered by its Nasdaq Private Market platform. Nasdaq’s blockchain technology will offer efficient, fully-electronic services that facilitate the issuance, transfer, and management of private company securities.

PLY: Interesting but still only scraping the surface. Nonetheless, good luck to NASDAQ with this initiative and the appointment of Fredrik Voss to evangelise it.

Products

NLX – Invitation To Tender For Designated Market Maker Status In STIR & LTIR Futures And TED Spreads
Nasdaq OMX NLX

NLX has decided to introduce a new Designated Market Maker (DMM) scheme which will run for a period of 6 months from Monday 1st June 2015 to Friday 27th November 2015. This Market Maker scheme will replace the previously announced scheme.

NLX therefore invites participants of the NLX market to submit tenders for DMM status in NLX’s STIR and LTIR futures, and TED spreads, as defined in section 1, in the attached (“the Products”). The tenders received will be assessed on several metrics covering volume, spread, number of expiries and the stipend required. Metrics Guidance is provided at Appendix A. The appointed DMMs shall receive an execution fee rebate for the duration of this Market Maker scheme (as outlined in section 2, in the attached), and a monthly stipend to contribute towards the direct costs associated with providing the Market Maker service.

Read our Premium NLX Brief

PLY: From its position in life support, albeit on a comfy corner ward with a nice view and lovely systems surrounding it (including nifty surveillance software with great butterfly nets), alas poor old NLX is endeavouring to make one of those comebacks a tad akin to fiscally dissolute boxers returning to the ring long after there was any pretence to a Rocky Balbao movement. It’s all a bit sad and frankly difficult to see why NASDAQ maintain this masochistic stance. Now we have Rita with supposedly a few backbone banks signed up and NLX offering a sort of ‘expenses’ payment to get around what was previously a market where the FCA have failed to tread but looks all too much like it was the scene of some variation on the ‘west London practices’ which have made Hounslow so famous in recent days.

There’s more to come in Premium from later today incidentally, as I have been musing on spoofers and the like with one eye on Mr Hound himself and another on the exchange industry as a whole. Meanwhile, Neil Crammond is in zero prisoner taking mode himself over on Linkedin: ”Exchanges Integrity Needs Questioning.”

CME Says To Begin Trading At Settlement Orders For Livestock, Grain Futures June 8
Reuters

…will adopt trading at settlement (TAS) orders for livestock, grain contracts from June 8, pending approval by CFTC. TAS orders to be accepted for live cattle, feeder cattle, lean hogs, corn, soybean, SRW wheat, HRW wheat, soybean oil and soymeal futures.

The move comes ahead of the closure of open outcry trading in CME and CBOT livestock and grain futures.

BIS Sets Sights On Single Global FX Code Of Conduct
Patrick Graham – Reuters

Bank for International Settlements (BIS) has set up a working group aimed at creating a single global code of conduct for the foreign exchange market, the central banks’ central bank said on Monday.

The group will be headed by Reserve Bank of Australia Assistant Governor Guy Debelle, the co-author of recommendations drawn up last year for reforming “fixing” benchmarks after two years of scandal over their alleged manipulation.

PLY: Expect a “Dear Shag” letter seeking comment in due course presumably. Seriously, forex desperately needs an outbreak of standards more than ever, a good initiative.

Morgan Stanley To Sell Oil Arm To Castleton (subscription)
Christian Berthelsen – Wall Street Journal

Morgan Stanley struck a deal to sell its oil-trading and storage business to Castleton Commodities International, bringing the bank closer to unloading a unit that has attracted heightened regulatory scrutiny.

Assets In ETFs/ETPs Listed In Europe Broke Through The 500 Billion US Dollar Milestone At The End Of April According To ETFGI
MondoVisione

Assets In ETFs/ETPs Listed In The United States Reached A New Record 2.132 Trillion US Dollars At The End Of April According To ETFGI
MondoVisione

Career Paths

Fredrik Voss, VP at Nasdaq, has been named the company’s Blockchain Technology Evangelist to lead the strategic development of this initiative for Nasdaq.

PLY: Interesting appointment, good luck to Fredrik adding this to his portfolio.

The trading participants of the European Energy Exchange (EEX) elected a new Exchange Council in accordance with the applicable schedule on 7 May 2015. The Exchange Council represents the interest of the trading participants and is involved in all essential decisions of the exchange. It has in total 24 members and, for example, approves the rules and regulations of the exchange and changes to it.

The group of interconnected utilities and trading companies is represented by:

Michael Bonde, E.ON Global Commodities SE
Paul Dawson, RWE Supply & Trading GmbH
Jens Göbel, ENI Trading & Shipping SpA
John Grey, EDF Trading Limited
Pierre Guesry, Alpiq AG
Peter Heydecker, Vitol S.A.
Dr. Carsten Poppinga, Statkraft Markets GmbH
Andrea Siri, Edison Trading S.p.A.
Dr. Bernhard Walter, EnBW Energie Baden-Württemberg AG
Leonardo Zannella, Enel Trade S.p.A.

The group of municipal and regional suppliers is represented by:

Ralf Henze, Stadtwerke Hannover AG
Malte Neuendorff, EWE Trading GmbH
Dr. Michael Redanz, MVV Trading GmbH

The group of banks and financial service providers is represented by:

Matteo Ballarin, Europe Energy SpA
Dr. Wolf B. von Bernuth, Energy & More Energiebroker GmbH und Co. KG
Christoph Bilshausen, BNP Paribas
Jason LaBrooy, Macquarie Bank Limited

Vincent van Lith, Deutsche Bank AG, was elected as the representative of the group of the members of the EEX clearing house. Bastien Le Bouhellec, Solvay Energy Services, represents the group of commercial consumers.

In addition to the trading participants of the exchange, the four associations Bundesverbandes der Energie und Wasserwirtschaft (BDEW), VIK Verband der Industriellen Energie und Kraftwirtschaft e.V., BDI Bundesverband der Deutschen Industrie e.V. and the European Federation of Energy Traders (EFET) will delegate one representative each to this board.

In addition to these members, the Exchange Council will elect one representative from the energy science.

The Chairman and Deputy Chairman of the Exchange Council will be elected in the constitutive meeting of the Exchange Council in Leipzig on 10 June 2015.

ESMA Vacancy Notice – Communications Officer – (Deadline: 08 June 2015)
MondoVisione

ESMA is looking to recruit a Communications Officer to join its Communications Team, details of the position (Ref.2015/VAC11/AD6) and how to apply can be found on our vacancy page. The deadline for applications is 8 June 2015.

Financial Calendar

This week

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

New announcement

BGC Partners 2015 AGM – Tuesday, June 2, 2015

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

Analyst Notes

Deutsche Bank Restated Their “Buy” Rating On CME – $105.00 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

Equity Crowdfunding Platform FlashFunders Is Automating Securities Law For Seed-Stage Rounds
Jordan Crook – TechCrunch

Thanks to the JOBS Act, the world of equity crowdfunding is blowing wide open.

FlashFunders, an equity crowdfunding platform, is announcing a new program that automates the process for entrepreneurs, making it entirely free to raise or invest in a seed round.

PLY: All very interesting stuff…

Other stories

U.S. Equity Market Structure: Making Our Markets Work Better For Investors, Commissioner Luis A. Aguilar, SEC
MondoVisione

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