May 18 2015

Thank you to all those who took the time to write (and subscribe to Premium!) to mark our second anniversary last week. Thanks too for all the positive feedback on our special weekend anniversary issue.

FinTech Startups – last call to Warsaw!

I have a space tomorrow on the Startupbootcamp FinTech Fast Track lest anybody had a sudden last minute flash of brilliance at the weekend. Email me if you want to come tomorrow.

Warsaw 19 Poster Final

Exchange Invest Premium:

Premium posts:

New! Slovak Telecom – A Market Failure

Three articles centred around the Sarao Saga:
A Valid Case Against Sarao
The Post Floor Moral Breakdown
Barking At the Moon: The Hound of Hounslow & other follies

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China Capital Markets Transformation – CNY & Banking Reform Brief Part 1 NEW!
China Capital Markets Transformation – Commodities Trading & Warehousing Brief Part 1, Part 2, Part 3, Part 4
Exchange Infrastructure – Brief Part 1, Part 2, Part 3, Part 4, Part 5 
SEBI-FMC Merger Brief
CEESEG Stakes Sales Brief

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Today in Exchange Invest Daily:

Second tier ASX broker goes bust, BoE worried about risks in HFT, others concerned at “Homer Simpson” risk in CCPs. SEBI seeks contract size increases which will damage market, ESMA seeks new regulations for securitisation which probably won’t help that market either. New repo platform from Tradition and more, happy scrolling…

Public Markets

ICE 2015 AGM Results

BM&FBovespa To Add Stakes In LatAm Rivals Until Regulatory Limits

BM&FBovespa plans to keep buying stakes in rivals across Latin America until existing regulations impose a limit, CEO Edemir Pinto said on Friday.

PLY: Reiterating previous statements.

Read our Premium MILA Exchanges Brief.

MCX Wants Sebi Nod To Raise Stake To 15% In MSXI
The Economic Times

PLY: Earlier this year MCX has written to Sebi to be allowed to raise its stake in MSX to 15% and is still clearly struggling to dispose of the warrants.

Little Progress Seen So Far In Turning Hong Kong Into A Commodity Trading Centre (subscription)
Enoch Yiu – SCMP

HKEx paid £1.39 billion (HK$16.9 billion) to buy LME, but the city continues to lag Singapore and Japan in commodities trading and metal trading is still run in London where the trade shows no sign of moving.

Hong Kong To Ban Individual Investors From ‘Dark Pool’ Trading (subscription)
Gregor Stuart Hunter & Jacky Wong – Wall Street Journal
Hong Kong SFC Enhances Regime To Regulate Alternative Liquidity Pools

Hong Kong’s securities regulator will ban individual investors from trading in “dark pools” following a 15-month consultation with the city’s finance industry.

The ban will come into effect on December 1 this year, the Hong Kong SFC said.

Shanghai Way Ahead Of SGX In IPO Market
Wong Wei Han – The Straits Times

Singapore has welcomed two listings this year compared with Shanghai’s booming exchange with 35 IPOs that raised about US$5.4 billion (S$7 billion) in Q1 2015.

Clearing Houses Are Big Risk, Top U.S. Federal Researcher Says
Douwe Miedema – Reuters

Clearing houses, whose role to guard financial stability was much expanded after the 2007-09 crisis, now pose threats themselves, Richard Berner, the head of The Office of Financial Research, told Reuters.

“They are very much on the (priority) list,” agency director Richard Berner told the Reuters Financial Regulation Summit. “There have been lots of discussions and I think there will continue to be lots of discussions about risk and (clearing houses) and I think that’s totally appropriate.”

PLY: As we have been discussing for years. For a brief primer on the problem, read our Premium post The Homer Simpson Buffet Risk.

New Regulatory Measures Anger European Securitisation Industry (subscription)
Thomas Hale – Financial Times

Europe’s struggling securitisation industry has voiced frustration over new regulatory recommendations, in the latest sign of the market’s difficulties in the aftermath of the financial crisis.

PLY: An excellent example of how EU politicians say one thing and then their regulators act in the naturally bureaucratic form: adding more rules.

HFT Faces Tougher Bank of England Scrutiny (subscription)
Caroline Binham – Financial Times

HFT is to face tougher scrutiny from the Bank of England in an attempt to reduce the risk of shocks to the financial system.

PLY: A worthy aim but are the regulators really up to the job?

Read our Premium A Taste Of HFT Scandal Brief – Part 1, Part 2, Part 3, Part 4, Part 5, Part 6

HKEx – Partial Cancellation Of The Bonds Due To Conversion

Following the latest bond conversions from resulting in the issuance of:

5,580,188 shares reported here
8,257,715 shares reported here
10,764,556 shares reported here
12,731,550 Shares – reported here

an additional bond conversion and issuance of 14,209,709 Shares, representing approximately 1.20% of the total Shares in issue as at the date of this announcement (1,182,519,345 Shares), have been issued and credited as fully paid.

Stockbroker BBY Placed In Administration (subscription)
Andrew Main & Leo Shanahan – The Australian
ASX Gives Alternative Clearing Firms Deadline To Take BBY Options Positions
Joyce Moullakis – SMH

ASX is believed to have given alternative clearing firms two days to take transfer of client options positions from embattled firm BBY, otherwise the ASX will close all open positions.

BBY, a stockbroking and advisory firm, went into voluntary administration on Monday morning, after a proposed company-saving deal with George Wang could not be agreed.

PLY: The first broker to fail on the Australian Exchange for decades. The SMH article notes ironically that the last near failure, StoneBridge, was rescued by BBY before it had to close. With margin call issues etc, BBY appears to have simply suffered too much reputational damage to be taken over. Against a background where other major counterparties have been cutting back of late, this is not welcome news for the ASX whose addiction to Dickensian monopoly is hardly helping sustain the local marketplace.

For tennis trivia buffs, the BBY Executive Chairman was Glenn Rosewall while his Father the legendary Ken was a non-executive director. (At last, something to interest my Mother in today’s bulletin).

Private Markets

FMC Tells Surendranagar Cotton Exchange To Close
Vimukt Dave – Business Standard

Citing failure to match the mandatory recognition rules, FMC has decided on an ending of operations at one of the oldest and only offline cotton exchange in the country — the Surendranagar Cotton Oil & Oilseeds Association, also known as the Surendranagar Cotton Exchange.

Last week SEBI allowed Madras SE to exit the exchange business.

Saudi Arabian Stock Market Welcomes Foreign Investors (subscription)
Chris Flood – Financial Times

Under the new rules, qualified foreign investors (QFIs) with at least $5bn in assets under management and a five-year investment record will be able to buy up to 10 per cent of the shares of any listed Saudi company from next month.

Previously discussed here.

Philippines Rides The Emerging Bitcoin Wave
News BTC

The practically non-existent start-up ecosystem in Philippines has suddenly sprung to life…

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL are flat. No news.


CME Announces The Launch Of CME Europe Cocoa Options

CME announced the launch of options on its Physically Delivered Cocoa futures contracts. These options will be listed on CME Europe for first trade date on 29 June, 2015, building on the existing Cocoa futures.

ICE Futures Europe is also present in the cocoa futures market as discussed here.

Tradition To Set Up London Repo Venue (subscription)
Philip Stafford – Financial Times

The Swiss IDB, is looking to reinvigorate Europe’s struggling repo market with a new electronic trading venue where pension funds and corporations can pawn high-quality assets for cash, called DBV-X.

India – Sebi Move May Spoil F&O Party For Retail Investors
The Economic Times

A regulatory proposal to raise the entry bar for trading in equity derivatives could shut retail and even rich investors out of the market. The move is ostensibly aimed at preventing individuals from making themselves vulnerable to high-risk speculation but critics say any such change would make trades expensive, kill off volume and restrict the market to institutions.

PLY: Once again Sebi seem to be eager to kill free markets. This time by endeavouring to force an increase in contract sizes.

Cantor Exchange President Richard Jaycobs: “US Model Is The Future For Binary Options”
Andrew Saks-McLeod – LeapRate

Cantor Exchange President Richard Jaycobs considers the on-exchange modus operandi for binary options that is the law in the US to be the way forward for the entire industry globally.

Nasdaq Stockholm Lists Bitcoin-Based Certificate

Bitcoin Tracker One (short name: BITCOIN XBT), a tracker certificate that uses the digital currency Bitcoin as underlying asset, started trading at Nasdaq Stockholm. Bitcoin Tracker One is issued by XBT Provider, part of the KNC Group.

Bitcoin Tracker One was approved at the end of last month.

Career Paths

LCH.Clearnet appointed Ali Hackett to the newly created role of Global Head of Sales and Relationship Management. Ms. Hackett will report into the Group CEO, Suneel Bakhshi, and will be a member of LCH.Clearnet’s Executive Committee. She will be based in New York.

NZX has appointed Aaron Jenkins to head up its funds management businesses, including SuperLife and Smartshares. Mr Jenkins has headed up NZX Markets since January and before this was GM at Fonterra. He has also held senior roles with E*trade.

Mr Albert Au Siu-cheung was appointed as a NED of Securities & Futures Commission (SFC) for a term of two years with effect from 26 May 2015.

Ms. Ursula Menke has been appointed Chairman of Ontario Securities Commission’s (OSC) Investor Advisory Panel, effective June 1, 2015, and will serve a two-year term.

Additionally, Ms. Connie Craddock, who is currently completing her term as Chairman, and Mr. Ken Kivenko have agreed to a second term on the seven member Panel. The other members on the Panel are Ms. Letty Dewar, Mr. Harold Geller, Ms. Allison Knight and Ms. Louise Tardif.

Financial Calendar

This week

May 18

AGM 2015 of Oslo Børs
Polish Capital Market Day organised by WSE, Ipopema Securities and Auerbach & Grayson, NY
IOSCO & IFIE To Hold Global Investor Education Event In Kuala Lumpur

May 19

ICAP Results for the year ended 31 March 2015
LME Week Asia 2015 Kick Off
Startupbootcamp FinTech FastTrack Warsaw

May 20

Hellenic Exchanges-Athens Stock AGM

New announcements

IOSCO & IFIE To Hold Global Investor Education Event 18-20 May In Kuala Lumpur
BGC Partners 2015 AGM – Tuesday, June 2, 2015
FESE Convention – Oslo – June 17-18, 2015: Exchange Invest Founder Patrick L Young will chair the opening panel.
SFOA Burgenstock Meeting Geneva September 22 – 24, 2015. Exchange Invest Founder Patrick L Young will be chairing the blue riband Crossfire panel.

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

Other stories

CME & Korea Financial Investment Association Sign Letter Of Intent For Greater Collaboration

Remarks At The Inaugural SEC Equity Market Structure Advisory Committee Meeting, SEC Commissioner Kara M. Stein, May 13, 2015

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