May 28 2013

elb2 NLX is go while parent NASDAQ has paid the fine, not taken the Chance card and hopes to monopolise IPOs after a difficult start to the year against an invigorated NYX. Competition is everywhere and HFT is being tweaked on DB platforms at EUREX and in India. Interesting product news too with the IPX on Intellectual Property, one of several start-ups in a fascinating field.

Meanwhile the future of markets will of course be discussed next week @YMarkets with parallel streams from Torun, Poland and Titanic Quarter, Belfast. If you can’t make it in person, join us online as a virtual delegate for 100 Euros: Subscribe here. Our thanks to Cinnober for their sponsorship for what is going to be a content rich event…

Meanwhile, various stories which add up to one recurring theme – the investment opportunity in this marketplace is enormous. Oh and check out the sting in the tail on regulation story…

Public Markets

NLX & LCH.CLEARNET Approved For Launch

NASDAQ OMX NLX Secures Support Of Founding Participants Ahead Of Launch

PLY: Well it’s the big test for copycat exchanges which as mentioned yesterday, the FT says just don’t work.

NLX has copy pasted 3-month EURIBOR®, 3-month Sterling, Long Gilt, 2-year Schatz, 5-year Bobl and 10-year Bunds from the catalogue of EUREX and LIFFE with key named participant banks & clearing firms: BNP Paribas, Citi, GH Financials Ltd, Nomura, The Royal Bank of Scotland Plc and UBS.

They have some good name brokers too & we wish Charlotte Crosswell and her team every success with the project. That said, I don’t believe the exchange will work in its current guise.

London Stock Exchange Cuts Fees For ETF Market Makers (subscription)

Financial Times

PLY: LSE market share of European ETF trading grew from 18 to 26% in calendar year 2012 while DB declined from 33 to 23% which is impressive.
At the same it’s interesting to note that market makers pay fees (now halved to 0.1% from 0.2%) in ETFs while in the futures/options business they pretty much don’t pay anything at all provided they make sufficient prices…

Nasdaq To Pay $10 million To Settle SEC Charges From Facebook Snafu

Reuters

PLY: The smiling face of Bob Greifeld in a t-shirt at Facebook HQ in California as Marc Zukerberg remotely opens the exchange, is perhaps not gracing the NASDAQ executive offices today as they swallow a $10 million dollar fine which is frankly small change for the humiliation the market suffered from the technology failure during the much hyped tech IPO.

The phrase “ill-fated decisions” is a tad damning by the SEC.

The good news: it’s over, NASDAQ, time to move on…

Hellenic Exchanges S.A.– Dividend For Fiscal Year 2012

Hellenic Exchange dividend is €0.09 per share subject to 25% withholding tax shareholders will receive a net amount of €0.0675 per share.

CME Group Plans New York Mercantile Exchange Building Sale

Businessweek

PLY: CME is not only the world’s largest futures exchange, it’s also a hefty property owner. The NYMEX building is headed off the books. Perfectly sensible to sell the building. Perfectly bizarre to maintain a trading floor in the digital age.

MCX Q4 Net Up 16%; Total Income Rises 9%

Moneycontrol.com

MCX net profit increased by 16 per cent to Rs 76.62 crore (USD 13,6 mln) the fourth quarter ended March 31 (Rs 65.95 crore (USD 11,7 mln) same period 2012).

PLY: Plaudits to MCX, Indian exchanges are in hypercompetition and have a regulatory framework which is hardly investor / exchange owner friendly…

LME Traders Back HKEx’s Asia-Centric Plans (subscription)

Financial News

PLY: Traders have backed moves by HKEx to morph the market from its traditional ‘metals for corporates’ quasi-continuous forwards/futures market into all manner of commodities and possible j.v.s with mainland Chinese exchanges. AKA, the London Metals Exchange could become the London Multi-Commodity Exchange… Given how much HkEx paid, they ought to push hard whether in softs or any other product that can deliver shareholder value.

Private Markets

Intellectual Property Exchange International (IPXI®) to Announce 1st Offering

Herald Online

PLY: Intellectual Property Exchange International, Inc. (IPXI), is a new venue for licensing and trading IP rights amongst many looking at the field where several IDBs have also been active.

IPXI are having two webinars on the topic June 5th. That said when the first one is on you ought to be watching Gary Katz et al speak @YMarkets, our conference in Poland!

IPXI have an interesting commoditised product “ULR” or “Unit Licence Rights” contracts at the epicentre of their offering…

Burma’s ‘Vital’ Stock Exchange Plans Proceeding On Schedule

The Irrawaddy News Magazine

Burma remains on track to establish a stock exchange in Rangoon by the end of 2015. “Yangon SE” (it’s a Mumbai/Bombay city name thing) will help Burma end its ‘isolation’ as the only member of ASEAN with a bourse.
PLY: Another new exchange and – hooray – we’ve made it this far through today’s EI without any stories of exchange mergers and rationalisation…the opportunity remains huge at the bottom of the exchange tree, as I will not tire of saying!!

Zimbabwe Commodities Exchange Receives $500k Funding

NewsDay

Government has invested $500,000 to help make the Agriculture Commodity Exchange during the upcoming grain marketing season.

PLY: Good to see Finance minister Tendai Biti supporting an exchange – wish all governments could be as enlightened as Zimbabawe in supporting bourses. Then again Zimbabwe has a shining example in their neighbour South Africa as to how exchanges save government money (thanks to SAFEX and especially the efforts of Rod Blondin).

PEGAS Launched Successfully

EEX and Powernext have launched their common trading platform using Trayport technology, PEGAS, for natural gas.

Bombay SE Determines Share Fair Value At Rs 139 (USD 2.50) Apiece

MoneyControl

BSE has estimated ‘fair value’ of its unlisted shares at Rs 139.06 (USD 2.50) apiece, valuing the company at nearly Rs 1,500 crore (USD 268 mln). In the previous year, the fair value stood at Rs 161.48 (USD 2.90) apiece.

Commodity Exchanges Of Belarus, Kazakhstan Ink Cooperation Agreement

News of Belarus

PLY: There are a plethora of small commodity exchanges in the New Europe and former CIS with some countries such as Serbia actively developing a new commodity exchange law. It’s a fascinating area with some intriguing opportunities in softs and all manner of commodities…

Technology

Eurex Rolls Out High-Frequency Trading Platform

CME Group

PLY: It’s the technology everybody loves to hate; unless you run an exchange in which case you adore its effect on the bottom line. Fairness to all is a key mantra to stop futures markets becoming just algo-shops. Now the solution is partition (will the buy side demand “home rule?” I wonder). At the same time, this release, is, frankly, confusing…

Good to hear the name of the excellent John McPartland being mentioned.

BSE’s New Technology To Handle 100 k Orders Per Second

Business Standard

PLY: One Lakh orders per second, tech supplied by DB1…

Appointments

Alexandre Zeller Elected Chairman Of SIX

Banker Alexandre Zeller was elected Chairman of the Board of Directors of SIX succeeding academic Prof. Peter Gomez.

Abu Dhabi Securities Exchange Appoints Deputy Chief Executive

Abu Dhabi Securities Exchange (ADX) announced the appointment of Mr. Ghanem Hamad Al Dhaheri as Deputy Chief Executive of Operational Affairs.

Crowdfunding

Is Crowdfunding The Way Forward For Councils?

The Guardian

Local authorities are using innovative measures to raise money such as crowdfunding.

Other stories

European Regulators Clash With US Over Derivatives Market Reforms (subscription)

Financial Times

Gary Gensler, chairman of the Commodity Futures Trading Commission, is pushing to finalise the guidance before an exemption for foreign market participants expires on July 12, imposing the rules more widely.

Will The Next Week Herald A New Age Of Competition In Europe?

Futures&Options World
Three events over the coming week could impact competition in Europe for years to come – launch of NLX, EUREX relaunches EURIBOR and TOM faces LIFFE in a Dutch court…
PLY: LIFFE looks most exposed says FOW. Will the existing management cope or will the battle be run by ICE executives?

HKMex Head Denies Dining With Triad Members

Hong Kong Standard

Barry Cheung Chun-yuen, denied a report claiming he dined with Kwok Wing-hung, nicknamed Shanghai Tsai asking him for a loan of HK$20 million…
PLY: After the glamour of the Anna Szarek / Sobolewski Warsaw SE affair over Christmas, now we have reports of the exchange world fraternising with gansters (and no, buy side, I don’t mean bourses endorsing HFT).

Volcker: US Should Have Fewer Financial Regulatory Agencies (subscription)

Wall Street Journal

PLY: The Man behind the, er Volcker rule, complains about US financial regulation and wants holistic revision of both agencies and uber-lengthy, flawed bills. Hear! Hear!

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