May 13 2013

elb2It’s a day with many interesting snippets of investor news leaving a mark across the globe. At the microexchange end of the spectrum, Bob Geldof’s fund investing in Eleni is a fascinating move proving once again that there are lots of dynamic and exciting possibilities at the smaller end of the exchange spectrum. Elsewhere, we have left out the latest in a series of increasingly deranged articles about why merging stock exchanges in the New Europe makes sense when all evidence clearly shows it has been a fiasco so far.

Meanwhile the (subscription only) Financial News has a fascinating story that former Chi-X and Equiduct CEO Peter Randall is in the process of attracting private equity interest to create a bid for Euronext. If nothing else that ought to mark the official firing point of the race to buy the northern European plus Portugal bourse and I expect to see some heated bidding, especially as France’s government panics that it might lose control…

We live in interesting times. Opportunity laden ones too.

Here are today’s stories:

Public Markets

TMX Group Limited Reports Results for the First Quarter 2013

Herald Online

revenue of $172.2 million in Q1/13
Diluted earnings per share of 70 cents in Q1/13
Adjusted diluted earnings per share of 78 cents, excluding 3 cents per share of Maple transaction and integration costs, 16 cents per share of amortization of intangible assets related to acquisitions, and 11 cents per share related to reduction in income tax expense due to recognition of deferred income tax asset
Cash flows from operating activities of $57.7 million in Q1/13

Press Release here

Financial News: Former Chi-X Europe Chief Plots Bold Euronext Bid ( subscription required)

Peter Randall, the former chief executive of the pioneering trading platform Chi-X Europe, is in the early stages of forming a private equity-led consortium to bid for the Euronext group of exchanges, according to two people familiar with the plans.
Euronext, which operates exchanges in Paris, Amsterdam, Brussels and Lisbon, is facing an uncertain future after the IntercontinentalExchange said in December it would spin off the group as part of its $10.1 billion takeover of NYSE Euronext.

TMX Group Limited declares dividend of $0.40 per common share

Sacramento Bee

The Board of Directors of TMX Group Limited declared a dividend of $0.40 on each common share outstanding, payable on June 7, 2013 to shareholders of record at the close of business on May 24, 2013.

CBOE Holdings Not A Bad Option

Forbes

Although financials continue to lead the market higher, newer segments are taking the reins in Q2. In addition to smaller regional banking institutions, many investors are seeing solid performances out of firms in the exchange business, such as CBOE Holdings (CBOE).
While probably less famous than fellow Chicago-based exchange CME Group (CME), CBOE has been soaring higher for much of 2013 as demand for listed options on securities remains strong. This is especially true in two of the company’s key products; options and futures on the CBOE Volatility Index as well as the S&P 500 Index.

Court Won’t Block Vote on NYSE and ICE Deal

Fox Business

A Delaware corporate-law judge on Friday refused to block the merger of NYSE Euronext (NYX) and Intercontinental Exchange Inc. (ICE), dumping a challenge by shareholders who argued the deal was flawed.
Chancellor Leo Strine turned down a bid for an injunction that would have barred shareholders from voting on the merger, finding critics have little chance of winning if their case goes to a full trial.

Nasdaq OMX Passes Power Price Manipulation Case to Regulator

Businessweek

Nordic power derivative prices may have been manipulated by an unidentified member on three separate instances last year, according to Nasdaq OMX Group Inc.
The exchange’s Market Surveillance unit found evidence of price manipulation from a member who had a dominant market share, and has filed necessary documents to Norway’s Financial Supervisory Authority for further investigations, the exchange said today in an e-mailed statement.

Private Markets

CVC set to return with higher offer for Betfair

Telegraph.co.uk

The private equity group, which is working with two major Betfair shareholders — Richard Koch and Antony Ball — is understood to have sounded out investors over a revised approach ahead of a takeover panel deadline at 5pm on Monday.
It is believed the new offer, which would value the company close to £1bn, could be tabled to Betfair’s board as early as Sunday. But sources this weekend stressed that conversations were still ongoing and that a final decision had not been made.

Why Bitcoin will succeed

MarketWatch

It’s hard to know which there are more of these days: the number of Bitcoins worldwide or the number of pundits who believe the newly popular crypto-currency is a fad, doomed to failure, or both.
But rather than pile on, I have come up with several reasons why Bitcoin can succeed.
Bitcoin screw-ups have resulted in fewer Bitcoins but never more of them
A natural consequence of a rise in value of something is the creation (or mere appearance) of more of that thing. Whether tulip bulbs, Impressionist paintings or dot-com stocks, a rise in the value of originals begets an increase in the supply of copies. These copies can be legitimate (e.g., follow-on stock offerings), or counterfeits (ultra-rare Ferraris cobbled together from parts of less-rare Ferraris).

Geldof’s Africa fund backs commodity exchange company

Reuters

Bob Geldof’s 8 Miles African private equity fund has made its first investment, backing a start-up company that plans to buildcommodity exchanges across Africa and improve food security.
The rock star activist’s $200 million fund has joined Morgan Stanley and the International Finance Corporation (IFC), in providing a total of $5 million of seed capital in eleni LLC, co-founded by Eleni Gabre-Madhin, the former head of the Ethiopia Commodity Exchange (ECX).

US Exchange Direct Edge’s Brazilian Venture Faces Headwinds

Institutional Investor

Eighteen months after it announced plans for an equities exchange in Rio de Janeiro, U.S.-basedDirect Edge has some heavy lifting left to do. The firm still must convince Brazil’s securities regulator and the country’s lone exchange operator that competition will be good for everyone.

Appointments

LSE Said to Hire Schwieger From Merrill as Equities Head

Bloomberg

London Stock Exchange Group Plc (LSE) hired Brian Schwieger from Bank of America Corp.’s Merrill Lynch unit, three people with knowledge of the plans said.
Schwieger will be based in London as head of equities at the exchange operator, said one of the people, who asked not to be identified because the details aren’t public.

Crowdfunding

Investing In Real Estate Through Crowdfunding – NuWire Investor

NuWire Investor

Crowdfunding is one of the new buzz words to hit the financial services industry and it is now being applied to real estate. Through crowdfunding, investors can pool money together and buy shares of real property like apartment buildings, office buildings and retail centers. Rather than buying the entire property and dealing with the hassles of tenants, toilets and trash, individuals investing through crowdfunding do not deal with any of the day-to-day management of the property.

Crowdfunding could be regulated, but what are the risks?

Metro

Calls for ‘crowdfunding’ to be regulated could be heard as early as next April when new rights for consumers come in to play.
But with so many internet platforms popping up, the catch-all term can be confusing.
It is used to describe a large group of people all contributing cash towards anything from charitable causes or campaigns, to businesses looking for start-up capital.
Through an internet platform such as Kickstarter or Crowdfunder, you could have your independent film funded by charitable individuals and promise of a non-financial return such as a cinema ticket when it’s made.
Alternatively, ‘peer-to-peer’ platforms such as Funding Circle, Ratesetter or Zopa, allow people to invest in businesses and take home returns of between 4-6.9 per cent, beating the banks’ best savings rates.

Other stories

EBRD And Borsa Istanbul Join Forces – Memorandum Of Understanding To Develop Regional Capital Markets

The European Bank for Reconstruction and Development and Borsa Istanbul are joining forces to develop regional capital markets. To this end EBRD First Vice President Philip Bennett and Borsa Istanbul’s Chairman and CEO Ibrahim Turhan signed a Memorandum of Understanding today which sets out a framework of cooperation.
This includes potential joint investments in stock exchanges and related capital markets infrastructure along with technical assistance in countries where the EBRD invests. The cooperation will particularly focus on the Western Balkans, Central Asia and the southern and eastern Mediterranean.

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