May 22 2015

elb2 A busy week ends with Jean-Francois being laid to rest in Paris this morning.


Exchange Invest Premium:

New Premium posts:

Slovak Telecom – A Market Failure

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

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The latest include:

China Capital Markets Transformation Brief – Main File
SEBI-FMC Merger Brief
CEESEG Stakes Sales Brief

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Today in Exchange Invest Daily:

Banks in firing line for so many billions of fines that I suspect we have passed the rubicon of defining it as “serious money.” Mutual fund recognition between China and Hong Kong…and much more, happy scrolling…

Public Markets

Third time unlucky as ICE delays Singapore futures market again
The Straits Times

ICE Futures Singapore will not offer trading in Brent crude, gold or yuan derivatives until the second half of the year, having hoped to open the market by end June but has delayed to enable customer preparations.

Investigators Probe $500tn IRS Market (subscription)
Philip Stafford – Financial Times

If banks thought Wednesday’s settlement over fx manipulation would help them draw a line under allegations of benchmark rigging, there was a nasty surprise buried in one of the settlements Barclays inked with a US derivatives regulator.

FAO: CFTC fined Barclays $115m for attempting to manipulate Isdafix over a five-year period ending in 2012.

Barclays, RBS Seen Facing $11 Billion More in Misconduct Costs
Stephen Morris – Bloomberg

Barclays Plc and RBS, which were fined $3 billion on Wednesday for rigging currency markets, will have to set aside another 7 billion pounds ($11 billion) for misconduct within two years, JPMorgan Chase said.

Barclays faces a further 900 million pounds for alleged manipulation of the foreign-exchange market, particularly a U.S. probe into electronic trading not covered by the recent settlements, JPMorgan said in a note Thursday. RBS’s biggest potential cost is for mishandling U.S. retail mortgage-backed securities, which could be an extra 3.1 billion pounds.

Hong Kong, China Mutual Fund Recognition To Be Announced Soon
Alison Lui & Michelle Chen – Reuters

A mutual fund recognition agreement between China and Hong Kong that will allow global asset managers to grab a bigger slice of money available for investment in China and vice versa will be announced soon.

Read our Premium China Capital Markets Transformation – Exchanges & Markets, ETPs & Exchange Infrastructure – Brief Part 1, Part 2, Part 3, Part 4, Part 5

China Capital Markets Transformation – CNY & Banking Reform Brief Part 1, Part 2

CBOE Holdings Increases Share Repurchase Authorization By $100 Million

CBOE announced that its BoD increased its share repurchase authorization by $100 million. Including this new authorization, the BoD has authorized a total of $500 million for buying back shares since 2011.

FMC issues norm to protect members/clients in suspended bourse
Economic Times

NEW DELHI: Commodity market regulator FMC has come out with fresh norms to protect the interest of members and clients of the exchanges which have suspended their trading operations.

The norms comes into force with immediate effect. National level commodity bourse ICEX and three regional bourses have suspended trading operations as of now, a senior FMC official said.

ESMA Publishes Response To CMU Green Paper

ESMA has published its response to the European Commission’s Green Paper on Building a CMU.

Read our Premium EU CMU Brief.

ICAP e-Commerce Launches US Agency Securities Matching Engine

ICAP Global Broking’s e-Commerce, the hybrid execution business of ICAP, has launched an US Agency Securities matching engine powered by ICAP’s premier US Agency Securities desk.

The matching engine brings together buyers and sellers in the US Agency Securities marketplace by using both traditional and new execution methods, creating an unparalleled and liquid user experience for new and existing ICAP customers.


HKEx – Partial Cancellation Of 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
14,209,709 shares – reported here

An additional bond conversion and issuance of 16,445,572 Shares, representing approximately 1.39% of the total Shares in issue as at the date of this announcement (1,184,755,208 Shares), have been issued and credited as fully paid.

NZX: Results Of Resolutions At AGM

South Africa, Kenya & Nigeria plan more ETF cross-listings
Eric Ombok – Bloomberg

South Africa, Nigeria and Kenya are planning to cross-list more exchange-traded funds on their stock markets to boost liquidity of the securities, according to the JSE.

First mortgage-backed security swap trade through SEF completed on Tradeweb
Renee Caruthers – Fiercefinanceit

Executed last week, one day ahead of a deadline mandating that trading of the swap portion of those kind of packages occur on SEFs or designated contract makers (DCMs).

ADX achieves 95% disclosure compliance
Gulf News

Dubai: ADX has succeeded in achieving a compliance rate of 95 per cent regarding the disclosure of Q1 financial statements of its listed public joint stock companies within the deadline of 45 days from the end of the financial period.
About 62 listed companies, local and foreign, disclosed their first quarter financial statements for 2015 within the 45 days period given, the ADX said in a statement posted on its website.

Private Markets

Korea Exchange: Implementation Of Expanded Daily Price Limit

New Name. New Identity. MCX-SX Is Now MSEI

MCX Stock Exchange (MCX-SX) has been recently re-rechristened as Metropolitan Stock Exchange of India Ltd (MSEI).

FAO: After “mSXI” which was approved by SEBI in September 2014…

PLY: A remarkable chapter in exchange branding history is already over.

New York Soon To Unveil Fresh Bitcoin Licensing Rules (subscription)
Michael J.Casey – Wall Street Journal

In one of his final moves as New York’s top financial regulator, Benjamin M. Lawsky will soon unveil a set of new licensing rules that could have long-lasting effects on businesses using bitcoin and other virtual currencies.

Benjamin M. Lawsky, Superintendent of Financial Services, will depart the New York State Department of Financial Services (NYDFS) in late-June after four years serving as the newly created agency’s first superintendent, as reported yesterday.

Previous comment and mentions re. BitLicense here, here, here.

PLY: Lawsky is now heading off to run his own practice it seems, having been unable to get a job in private practice, after a controversial spell in office where his approach was somewhat highhanded and anti-market it seemed to many.

EEM buys European operations of the Carbon Trade Exchange Group
Commodities Now

European Environmental Markets plc (“EEM”), the environmental commodities exchange operator, has today signed an agreement outlining the terms of the strategic acquisition of Carbon Trade Exchange Ltd (“CTXEU”), the European operations of the Carbon Trade Exchange Group (“CTX Group”), which operates the only global electronic exchange platform in the voluntary carbon markets.
The transaction, which will includes CTX EU’s European clients and European exchange businesses for both Voluntary and Regulated carbon emissions trading, will assist EEM in its goal of becoming the largest and most comprehensive environmental commodity exchange in Europe.

Special Section: FTI, NSEL, India at the Crossroads

PLY: FTIL and MCX flat.


Jury Sides With High-Speed Trading Firm Quantlab (subscription)
Bradley Hope – Wall Street Journal

A Houston-based high-frequency trading firm won a six-year civil lawsuit against a former employee and a businessman it accused of stealing code. A jury awarded Quantlab Financial LLC $12.2 million in damages from Andriy Kuharsky and Emmanuel Mamalakis, according to court documents. Both defendants said they would appeal the decision.

Six other defendants, including another former Quantlab employee and a trading firm, SXP Analytics LLC, arrived at a settlement with Quantlab before the trial and agreed to bear responsibility for $28.5 million in damages.

Previous discussions on the dispute here.

Thomson Reuters to Sell Competitive Intelligence Unit to Broadridge
American Banker (subscription)

Investor communications company Broadridge Financial Solutions has entered into an agreement with Thomson Reuters Lipper to acquire its Fiduciary Services and Competitive Intelligence unit.Terms were not disclosed, closure expected in Q4.

Broadridge framed the announcement around its long term enterprise data, analytics and research growth strategy. The company provides its clients operations solutions for business and securities processing.

Baku SE to switch to new trading system by mid 2016
Azerbaijan Business Center

…Purchased from the Korean Stock Exchange.


China Embraces Foreign Bond Investors (subscription)
Anjani Trivedi – Wall Street Journal

One of the biggest yet little-known corners of China’s vast capital market is quietly being opened to foreign investors at a record pace, even as the roaring stock market has grabbed all the attention.

The central bank has allowed a further 32 foreign institutional investors this year to trade in the $6.1 trillion interbank bond market, which is used by a wide range of investors in addition to banks. That compares with 34 approvals in all of 2014 and brings the total number of approved foreign investors to 152 as of April, not counting sovereign-wealth funds and central banks.

Overseas fund managers now hold 713 billion yuan ($115 billion) of domestic Chinese bonds, up 78% since December 2013, according to central-bank data. That is more than the 601 billion yuan held in onshore stocks.

Read our Premium

China Capital Markets Transformation – Exchanges & Markets, ETPs & Exchange Infrastructure –Part 1, Part 2, Part 3, Part 4, Part 5
China Capital Markets Transformation – CNY & Banking Reform Brief Part 1, Part 2

EEX To Introduce New Financially Settled Power Futures For Belgium & The Netherlands – New Products & Corresponding Location Spreads To Start In June

Career Paths

The International Securities Exchange announced the addition of Eric Levine and Tyler Sorba to the BoD of its two exchanges. Additionally, eight non-industry directors, two exchange directors, and the CEO director were re-elected.

Mr. Levine, a Director and Head Trader of Barclays’ automated volatility trading group, was appointed to represent ISE’s Competitive Market Makers (CMMs). He joined Barclays in 2008 through its acquisition of Lehman Brothers. Since joining Lehman Brothers in 2004, Mr. Levine has been instrumental in building the listed options market-making business. An active participant in the industry, he represents Barclays on SIFMA Listed Options Trading Committee. Mr. Levine earned a Bachelor of Arts in history from the University of Pennsylvania.

Mr. Sorba is the Co-Head of Automated Equity Options Market Making (AMM) at Morgan Stanley and was elected to represent ISE’s Primary Market Makers (PMMs). From 2007 to 2011, Mr. Sorba worked on Morgan Stanley’s Equity Exotics desk, leading several prominent books during his tenure. He earned a Bachelor of Science in mathematics from the Massachusetts Institute of Technology.

Patrick Hickey, Head of Market Structure, Optiver U.S., and Elizabeth Martin, MD and Head of Global Equities Management, Goldman Sachs, were re-elected to represent ISE’s CMMs and Electronic Access Members (EAMs), respectively. David Krell, Andreas Preuβ, Michael Monaco, Hauke Stars, Joseph Stefanelli, Marcus Thompson, Kenneth Vecchione, and Christianna Wood were re-elected to serve one-year terms as non-industry directors, and Gary Katz was re-elected to serve a one-year term as CEO director.

Xue Jun will join the Board of China Exchanges Services Company (CESC), a joint venture (JV) of HKEx, Shanghai SE (SSE) and Shenzhen SE (SZSE) on 1 June 2015.

Mr Xue will replace Xie Liansheng as Director & Deputy CEO of CESC following Mr Xie’s departure from the Board on 1 June 2015.

Mr Xue was Assistant Director of the Information Center of the SSE.

CESC’s Board is comprised of three directors nominated by each of the JV partners. The Directors of CESC effective 1 June 2015 are:

Shi Xiaocheng, Co-Chairman, Appointed by SSE
Fu Decai, Co-Chairman, Appointed by SZSE
Mao Zhirong, Director & CEO, Appointed by HKEx
Wu Ying, Director, Deputy CEO & CFO, Appointed by SZSE
Xue Jun, Director & Deputy CEO, Appointed by SSE
He Jibao, Director, Appointed by SZSE
Sanly Ho, Director, Appointed by HKEx
Calvin Tai, Director, Appointed by HKEx
Zhang Bin, Director, Appointed by SSE

NZX AGM – re-elected Jon Macdonald and elected Patrick Strange as Directors of NZX.

As previously signalled, James Miller was appointed as Chairman of the NZX Board following Andrew Harmos’s retirement from the board after seven years as Chairman and 13 years as a Director.

The Exchange members of the European Power Exchange EPEX SPOT have elected a new Exchange Council on 19 May 2015.

With the 2015 election, the number of seats was extended from 16 to 23, with 22 directly elected by the Exchange members amongst five categories.

The group of Banks, Financial Service Providers and Clearing Banks will be represented by:

Deutsche Bank: Mr. Vincent van Lith, Director – Head of EU Power & Gas Intraday and Scheduling Utilities and Aggregators

The group of Utilities and Aggregators will be represented by:

Alpiq AG: Mr. Pierre Guesry, Head of Power West
Compagnie Nationale du Rhône: Mr. Rémi Perrin, Head of Trading
EDFT Paris: Mr. Julien Haure, Trading Manager Short Term
Edison Trading: Mr. Andrea Siri, Head of Power Trading SEE,Branch Manager Bulgaria Branch
EnBW Trading: Dr. Bernhard Walter, Senior Manager Market Design & Regulatory Affairs
Enel Trade S.p.A.: Dr. Nigel Hawkins, Head of Power and Fuel Portfolio Management
E.ON Energy Trading: Mr. Michael Bonde, Lead Trader
GDF Suez: Mr. Vincent Verbeke, Head of Prompt Optimization & Trading
RWE Supply & Trading: Mr. Paul Dawson, Head of Regulatory Affairs
Verbund Trading: Mr. Werner Fleischer, MD & CFO Local Suppliers and Consumers

The group of Local Suppliers and Consumers will be represented by:

MVV Trading GmbH: Dr. Michael Redanz, MD
Stadtwerke Hannover AG: Mr. Ralf Henze, Head of Trading TSO

The group of Trading Companies will be represented by:

Danske Commodities: Mr. Jesper Tronborg, VP, Head of Trading
Mercuria Energy Trading: Mr. Stewart Davis, European Gas and Power Operations Manager
NEAS ENERGY: Mr. Jesper Severin Johanson, Head of Short Term Power Trading
Vitol: Mr. Peter Heydecker, Head of European Power

The group of TSOs will be represented by:

50Hertz Transmission: Mr. Dirk Biermann, Managing Director, Chief Markets and System Operations Officer
Amprion: Mr. Joachim Vanzetta, Director System Control
RTE: Mr. Emanuele Colombo, Director European Market Integration
Swissgrid: Dr. Arthur Janssen, Head of Market Development and Design
TransnetBW: Mr. Andreas Semmig, Head of Trading

The TSOs selling Market Coupling Contracts nominated Mr. Andreas Semmig from Transnet BW as their representative.

Financial Calendar

Hellenic Exchanges Athens Stock Exchange SA :approves net dividend of 0.189 euros per share, sets ex-dividend date as of May 26 and record date as of May 27

Next week:

25 May


29 May

Record date CBOE $0.21 quarterly cash dividend
Record date TMX $0.40 dividend
Oslo Bors NOK 8.20 dividend payment
BGC Partners $0.14 quarterly dividend payment

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

Analyst Notes

RBC Capital Restated Their “Outperform” Rating On LSE
LSE “Add” Rating Restated By AlphaValue – GBX 2,801 Target Price
London Stock Exchange Group Plc 9.8% Potential Upside Indicated by Barclays Capital
Charles Schwab Corp Receives $33.36 Consensus Target Price from Brokerages
Tullett Prebon Plc Earns “Buy” Rating from Canaccord Genuity (TLPR)
ICAP plc Earns Hold Rating from Shore Capital

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.


Yorkshire start-ups look to crowdfunding
BQ Live

According to Venture Funding Hubs, Sheffield and Leeds are in the top ten most active places in the UK for crowdfunding, with a total of 55 active campaigns currently ongoing between them.

Other stories

European Commission Asks For Input On The Implementation Of & First Experience With EMIR

Remarks Of CFTC Commissioner Mark P. Wetjen Before Global Derivatives Trading & Risk Management Conference, Amsterdam, The Netherlands – Applying The Insights Of Joseph De La Vega’s Confusion De Confusiones To Today’s Derivatives Markets — A Case For More Transparency

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