May 14 2014

elb2

PLY: Internal tensions reach the point where FESE boss Judith Hardt departs the organisation – a sad day for the exchange industry as a whole. Much happier news is that Mustafa Baltaci will remain FEAS Secretary General as part of his ongoing involvement with Borsa Istanbul after their restructuring. Elsewhere, CME HFT grabs the headlines but I prefer CME TriOptima as an exciting story which will benefit the industry. GFI signals its perestroika moment in opening up to IDB clients, TASE plans reforms, . If it isn’t HFT, it’s CCP or SEF today on multiple fronts, often interconnected…

Public Markets

TriOptima And CME To Provide Data Verification And Portfolio Reconciliation Of Trade Repository Data For OTC Derivatives Portfolios
MondoVisione

TriOptima, provider of OTC derivative post trade services, announces that it will offer data verification and portfolio reconciliation of data in CME’s SDR with TriOptima’s triResolve OTC derivatives reconciliation service as requested by their mutual clients.

PLY: Good move all round.

CME Softens High-Speed Traders’ Edge (subscription)
Scott Patterson – Wall Street Journal

CME Chairman Terrence Duffy said in congressional testimony Tuesday that the futures exchange operator has taken steps to reduce delays in the time between when clients, including high-speed traders, receive market data and when other firms get the same information.

CFTC Weighs High-Speed Trader Registration For Oversight
Silla Brush – Bloomberg

The main U.S. derivatives regulator is debating whether requiring a new registration for high-speed traders would give overseers better access to information collected by exchanges, Vincent McGonagle, director of the CFTC’s market oversight division, told senators today.

EI reported yesterday that CFTC’s former chief economist told lawmakers that high-speed traders should be forced to register with regulators to ensure adequate oversight.

PLY: Gathering data, even in a big data world, inherently increases the pressure on regulators to spend money they don’t have on being able to analyse the data they have demanded… It’s a sort of MC Escher puzzle applied to financial markets.

Swaps Revolution Begins With GFI Poised To Open Up
Matthew Leising – Bloomberg

GFI anticipates that investors will soon start trading swaps on its platform, finally broadening access to a corner of the market previously reserved for banks.

PLY: After years coveting their anonymity, now IDBs are eager to promote their availability to a broader client base. Adding the buy side also explicitly infers the breakdown of investment bank dominance of IDB business which has massive ramifications for the industry. See also our premium post ICAP Explores A New Galaxy and the excellent guest posts by Jake Pugh here and here.

SwapClear Dealers Cede Control As CCP Seeks Emir Approval (subscription)
Tom Osborn – Risk

The dealers that founded SwapClear at the turn of the millennium have given up control of the IRS clearing service, following lengthy discussions. The move is required by Europe’s new clearing regime, which restricts the power of shareholders in a CCP, and could open the door to significant changes in the competitive landscape – making it more likely that dealers move their business to a rival service and providing cross-margining opportunities for planned new futures products.

ESMA Seeks To Improve Access To Swaps Data (subscription)
Anish Puaar – Financial News

ESMA is in the early stages of a project to improve the ability of national regulators to access swaps trading data, following a troubled start for the region’s trade reporting regime.

Markets In Financial Instruments: Council Of The EU Adopts New Rules
MondoVisione

The Council today adopted new rules on the provision of services for investments in financial instruments and on the operation of regulated financial markets.

Private Markets

TASE Chief Sets New Plan To Revive Trading
Steven Scheer – Reuters

TASE hopes to recover from a sharp downturn in its fortunes which cost the jobs of two top executives last year with a new plan to boost trading volumes, its recently appointed CEO Yossi Beinart, formerly head of NADEX, said on Tuesday.

CFTC Issues Notice Of Temporary Registration As A SEF To Clear Markets North America, Inc.
MondoVisione

CFTC has approved the application of Clear Markets North America, Inc. (CMSEF) for temporary registration as a SEF. CMSEF is incorporated in the state of Delaware.

The Exchange Invest updated SEF page can be found here.

EPEX SPOT SE: South-Western And North-Western Europe Day-Ahead Markets Successfully Coupled – A Significant Step Towards An Integrated European Power Market
MondoVisione

In a landmark move towards an integrated European power market, the full coupling of the South-Western Europe (SWE) day-ahead markets was successfully launched today. As a result, the SWE and North-Western Europe (NWE) projects, stretching from Portugal to Finland, now operate under a common day-ahead power price calculation using the Price Coupling of Regions (PCR) solution.

Scots Firm Takes Bite Out Of Big Apple To Become World’s Largest Low Latency Cloud Provider For Automated Forex Trading
MondoVisione

BeeksFX VPS buys New York-based Gallant VPS for undisclosed seven-figure sum.

The deal sees BeeksFX VPS become the world’s largest and leading low latency cloud provider for automated traders.

Set up three years ago by Scots Gordon McArthur and Tony Doleman, BeeksFX VPS has grown from a £60,000 turnover in year one to £2m today. And the company plans to more than double revenue organically to £5m within three years.

Bitcoin Needs Regulatory Framework To Change ‘Risky’ Image
Clare Hutchison – Reuters

Regulators should create a framework of rules to help to make virtual currencies such as bitcoin more attractive to ordinary consumers, a lawyer from the Bitcoin Foundation said on Tuesday.

Bitcoin Embassy Launches In Poland’s Capital Warsaw
Jaroslaw Adamowski – CoinDesk

A new bitcoin embassy was launched in Poland’s capital Warsaw on 12th May with the aim of promoting the digital currency in the country and fostering innovation.

PLY: Plaudits to Exchange Invest reader Maciej Ziolkowski and his associates in creating this embassy to promote Bitcoin.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Another fairly flat day, FTIL bounces slightly up 2% while MCX is barely higher.

Lessons From NSEL Fiasco
Madhusheel Arora – Hindustan Times

The recent arrest of the chairman of FTIL, the operator of NSEL, Jignesh Shah, has sharpened focus on the sophisticated end of the business dynamic. This has been an issue that came to the fore in August last year, but the only thing a layman has understood is that this was an alleged financial fraud.

Technology

ASX CIO Gets Busy On New Technology Rollouts
Rebecca Merrett – CIO

CIO Australia caught up with ASX CIO Tim Thurman to see what he is up to at the ASX.

Trading Technologies To Support Launch Of TAIEX Derivatives At Eurex Exchange
MondoVisione

Trading Technologies announced that it will introduce support for derivatives based on TAIEX, the Taiwan SE’s main stock index. TAIEX derivatives will be available through TT’s existing Eurex Gateway when Eurex and the Taiwan Futures Exchange (TAIFEX) launch the Eurex/TAIFEX Link on May 15.

PLY: TAIEX is an index, TAIFEX the exchange, for those who suspected they had spotted a typo.

Live Streaming Prices For Eris Swap Futures Available Through UBS Neo
MondoVisione

Eris Exchange announced today that live streaming prices for Eris Swap Futures are now available through the UBS Neo platform.

Impact Of Algo Trading On Commodity Exchanges
Nilanjan Ghosh – (Chief Economist at MCX) – The Hindu Business Line

Ever since FMC formally approved algorithmic trading in May 2008, HFT/AT attained significant prominence in the India commodity futures market. Yet, apprehensions with HFT remained in various circles including regulators. It has often been hypothesized that HFT may not have the beneficial impacts that it is supposed to have (by providing liquidity, thereby smoothening the exit and entry barriers), but can destabilize the markets by increasing volatility.

PLY: More lucid thoughts from Nilanjan Ghosh.

Products

DB1 – First Renminbi Bond Listed In The Regulated Market
Deutsche Borse

The first bond denominated in Chinese renminbi was listed in the regulated market of the Frankfurt SE. This enables more than 230 trading participants in 18 countries to trade this bond on a transparent and efficient market.

DB1 Offers Full Transparency For Eurex Benchmark Futures
hedgeweek

Deutsche Börse Market Data + Services has launched Eurex Order by Order, a new information product that makes available the entire Eurex order book for benchmark futures for the first time.

Career Paths

Lobbying Chief Judith Hardt Quits FESE (subscription)
Anish Puaar – Financial News

Judith Hardt will resign from her role at the helm of FESE, after rising tensions within the organisation. Hardt is expected to step down by month’s end.

FESE press release here.

PLY: Judith Hardt has made a real mark on the exchange industry for the better as the second executive head of FESE and her imprint will be felt on the organisation she has hugely shaped since 2005. The worry now is clearly just what the exchange organisation will stand for, as many in the banking community will see Judith’s resignation as vindication of their closet war against bourses. Chairman Christian Katz of SwX needs to demonstrate the advantages of exchanges in a world where the sell side’s grasp is enormous now but is being disintermediated. The word on the street in many Brussels regulatory circles remains a curious juxtaposition: ‘exchanges are in the best position they have ever been in history, the problem is that the legacy exchanges may not be capable of exploiting that situation.’ I wish Judith every success in the future, it has always been an absolute pleasure to work with her and I am sure she will progress to another exciting position given her skills, experience and massive network of contacts.

PLY: Meanwhile, good news from another association, following the restructuring within Borsa Istanbul discussed last week, Mustafa Baltacı will remain in an advisory role with Borsa Istanbul and I am delighted to say that includes his remaining Secretary General of the FEAS which is good news for that organisation which has been even more dynamic under Mustafa’s organisational leadership.

CalPERS Launches Search For Chief Investment Officer
MondoVisione

CalPERS seeks an experienced investment professional for the role of Chief Investment Officer (CIO) to lead and manage its 400-plus person Investment Office, which invests CalPERS $285 billion in assets across a diversified global portfolio in public and private equity, fixed income, real estate and inflation-linked assets.

Anne Simpson, CalPERS Senior Portfolio Manager and Director of Global Governance, has been elected to the Council of Institutional Investors (CII) Board of Directors.

Headless MCX Sets Up Two Panels To Supervise Daily Affairs
Sharleen D’Souza – Business Standard

After the exit of Manoj Vaish, the former MD & CEO of MCX, two committees have been constituted to overlook the operations of the exchange.

The commodity exchange in the last board meeting decided that the board committee will be a four-member team headed by Satyananda Mishra and will also include D K Mehrotra, former chairman, LIC, G Ananthraman and retired IRS officer, Pravir Vohra.

“The board committee will be headed by Satyananda Mishra, which will and the committee will over look the workings of the managing committee,” said a source.

The managing committee also consists of P K Singhal, Nilanjan Gosh, JB Ram, Ajay Puri and Sandeep S.

PLY: In the interim MCX will absolutely be a committee run organisation as has long been a fear in the way the organisation’s management has been defenestrated over time. Hopefully the entity will soon appoint a visionary CEO who can move the business forward.

Financial Calendar

This week

DB1 AGM
NZX AGM
SIBEX Q1 financial results
TD Ameritrade $0.12 quarterly cash dividend payment
Record date BGC Partners $0.12 quarterly dividend
Record date GFI $0.05 quarterly dividend
Record date Fidessa 24.5 pence final dividend

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

Crowdfunding

German P2P Lending Service Auxmoney Raises 16M US$ Series B
wiseclerk

German p2p lending service Auxmoney completed a 16M US$ series B round, financed by Foundation Capital, joined by Partech Ventures and Scott Bommer, alongside existing backers Index Ventures and Union Square Venture. Index Ventures and Union Square Ventures already invested in the Series A in the end of 2012. Auxmoney was founded in 2007, and has originated 94.4 million EUR in p2p loans since.

Other stories

CFTC’s Technology Advisory Committee To Meet On June 3, 2014
MondoVisione

CFTC announced today that on Tuesday, June 3, 2014 from 10:00 a.m. to 5:00 p.m., the CFTC’s Technology Advisory Committee (TAC) will hold a public meeting at the CFTC’s headquarters in Washington, DC. This meeting will focus on three issues related to 1) HFT, 2) the CFTC’s surveillance program, and 3) SEFs. A complete agenda will be available prior to the June 3rd meeting.

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