November 04 2015

elb2PLY: Fascinating possibility of a BM&F Bovespa – Cetip mega-silo in Brazil. Slip of the tongue briefly slingshots HKEx to biggest bourse by market cap: this is the age of the “through train” as I have always said. Hair shirts in the post for WFE members who enjoyed their Qatari boondoggle thanks to latest, bizarre hippy edict from one of their more nebulous committees. A much more coherent and economically relevant debate to consider is the BATS letter about IEX’s exchange application (disclosure: I already sent a submission to the SEC). Cosy colocation for SGX with CME while FSB (rightly) worries about OTC derivatives change implementation. FuturesTechs & iPushPull line up interesting unbundled play…

There’s lots more too, happy scrolling through your industry daily Exchange Invest newsletter:

Public Markets

BM&FBovespa, Cetip Discuss Merging As Brazil Outlook Deteriorates

Guillermo Parra-Bernal – Reuters

BM&FBovespa and rival clearinghouse Cetip have discussed merging…QV EI Premium: BMF&Bovespa Monopoly – Brief.


PBOC Inadvertently Boosts Stocks With Dated Zhou Comments

Kana Nishizawa & Adam Haigh – Bloomberg

Shenzhen-HK Connect Report Sparks Stock Rally (subscription)

Jennifer Hughes – Financial Times

Unusual Price & Volume Movements – Response to Media Report on Shenzhen Stock Connect


HKEx briefly became the biggest bourse by market capitalisation on Wednesday after an article posted online by Zhou Xiaochuan, the head of the People’s’ Bank of China, appeared to confirm a stock connect link between Hong Kong and Shenzhen would begin by the end of this year. HKEx shares however gave back more than half their 9% rally after it became clear the newly published piece was based on a speech made by Mr Zhou in May… QV EI Premium: HKEx – SZSE Stock Connect.


Two Years On, SGX’s New CEO Seeks To Overcome Stock-Rout Fallout

Jonathan Burgos & Andrea Tan – Bloomberg

SGX CEO Loh Boon Chye says his top priority is to restore confidence in Southeast Asia’s biggest stock market, where turnover is yet to recover from a mystery penny-stock crash more than two years ago.


Massad: CFTC’s Aim Is ‘Not Just’ To Expand Clearing (subscription)

Luke Clancy – Risk

The goal of CFTC is not to increase the amount of clearing, according to its chairman, Timothy Massad, but to mandate clearing where the agency believes it can reduce systemic risk.

PLY: QV That longstanding Premium content watercooler staple: Homer Simpson & The Supermodel Buffet  – aka a Guide to Clearing in the New Era.


Don’t `Put It In Writing,’ Hayes Told Colleague At Citigroup

Liam Vaughan – Bloomberg

PLY: Clear delineation here between traders and experienced, old line moneybrokers, er IDBs. The latter were never too troubled about the logistical complexity of of committing sentences to paper as part of the workflow process. (NB notes the ex-TNT staffer).


CME Trader Found Guilty In Landmark ‘Spoofing’ Case

Kim Janssen – Chicago Tribune

Jurors in federal court needed just one hour of deliberation to find Michael Coscia guilty.




PLY: The interesting move here is more at the financial centre level than yet another LSE MOU essentially in line with its policy of being an element of PM David Cameron’s diplomatic & trade strategy. Good for Kazakhstan.


WFE Enhanced Sustainability Guidance


PLY: Governor Chris Christie’s zinger in the face of the dismal CNBC Presidential debate questioning last week springs to mind: “We have $19 trillion in debt, we have people out of work, we have ISIS and Al Qaeda attacking us, and we’re talking about fantasy football?”

Likewise, “Europe is in terminal decline, the international regulatory picture is a miasma of ‘great power’ confusion while there is an exchange explosion taking place across the world as poverty is being clearly eroded by better use of centralised market structures in a digitally connected world…and the, ahem, “World” Federation of Exchanges is worried about the impact of leaky office faucets?”


WFE must escape its reputation as a narrowly focussed (non-global), expensive, ineffective, talking shop for committee loving bureaucrats and actually define a purpose as an industry leading body, as its recent CCP paper does (discussed in Premium here). Self-imposed hogwash is simply a waste of time – WFE must deliver a holistic economically efficient solution. These ‘right on’ ideas embody student union politics – they are not the embodiment of dynamic free markets delivering growth. Other clubs of well meaning folk have suffered when they became nebulous. If WFE cannot get its act together then it has no place in modern market structure. Indeed, the WFE’s committee structure is so plodding, this nonsense dates back several management generations in the workflow… It’s still early days for the latest management team, I sincerely hope they can find a way forward, delivering value while acquiring a more global industry mandate but it would be a disservice to that process for me to pay liberal lip service to this ludicrous waste of exchange shareholders’ funds.


ESMA Updates List Of Authorised CCPs – CME Clearing Europe Extends Services


Private Markets

BATS: Comment Letter: IEX Application As A National Securities Exchange


BATS Says IEX’s ‘Flash Boys’ Speed Bump Is Unfair

John McCrank – Reuters

PLY: Interesting letter. BATS welcome competition, want IEX approved but don’t like the “speed bump” as it affects NBBO. An interesting debate. The letter is worth reading and I hope to cycle back, time permitting, in due course. Incidentally, before the BATS letter, I had already contributed my own thoughts to the SEC in favour of IEX being given an exchange licence – I’ll pass the link on when it is published.


Croatian, Slovenian Power Exchanges Set To Complete Coupling Activities In 2016


Special Section: FTI, NSEL, India at the Crossroads

PLY: FTIL sinks nearly 2% while MCX is flat. Auditors set for another handy stipend in the ongoing navel gaze posing as a restitution and recovery operation around NSEL.

New Forensic Audit Of NSEL Likely

Dilip Kumar Jha – Business Standard

Kamal Dewan, director of White Water Foods Pvt Ltd, has also been arrested following NK Proteins Chairman Nimish Patel earlier this week.


SGX Establishes Presence In CME Co-Lo Data Centre In Aurora, Illinois

Maria Nikolova – LeapRate

PLY: Having long had close relations between CME and SIMEX, this ongoing proximity hosting (on multiple levels) always leads one to wonder… When the CME needs its Singapore play (and given the CEO, the inestimably excellent Mr Gill, being himself a native of the great city state? Certainly with ICE and DB1 already there, Singapore looks to be the Asian centre for the future of many derivatives trades. Of course the issue would be CME doesn’t like cash markets which has stymied other deal talks in the past but I am not convinced “never” has quite the duration it once had…


smartTrade Enhances Its FX Platform With Margin Credit Extension



FuturesTechs Partners With Fintech Firm iPushPull


PLY: Here’s a lovely little granular piece with history. Jonathan Cowan is now working with Clive Lambert & JC’s former partner at Ecco, Dan Eccleston (now a founder of iPushPull), to launch a lovely real-time unbundled service which can be easily displayed on intranets, the web et al, white labelled too.

You could call it FinTech in Action, which contrasts with a lot of the hype around that sector which is often all talk, then Fintech inaction. Good to see Jonathan Cowan already enhancing the distribution of Clive Lambert’s excellent technical analysis products.


FSB Reports Describe Progress In Implementing OTC Derivatives Market Reforms, & Highlight Where Further Work Is Needed


PLY: Interesting point about TRs. However I worry the problem is not so much the granular data but really which agencies actually have the bandwidth to look at it? Presumably the central banks can/will make space which I suppose contrasts with the regulatory agencies’ approach to seek data with the greed of Jabba the Hutt demanding chicken wings while actually not being able to digest the surfeit of information they have been sent as a result of their edicts.

Career Paths

GreenTree International, the parent group of the American Cannabis Exchange (Amercanex), has appointed Richard Schaeffer as its newest Chairman & Gordon Rutledge as the acting Vice Chairman of its BoD.

PLY: In other deregulatory news, the Irish government announced drug decriminalisation moves. Watch out for a WFE committee suggesting guidelines for market operators soon, I suppose.

Financial Calendar

04.11 – Record date MarketAxess $0.20 quarterly cash dividend

05.11 – TMX Q3 2015 Results

05.11 – ITG Q3 2015 Results

05.11 – FXCM Q3 2015 Results

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

Share Notes

CME Director James E. Oliff sold 1,000 shares Friday, October 30th at $94.91 (bargain $94,910.00).

Analyst Notes

Societe Generale Set A GBX 2,600 Price Target On LSE – Neutral Rating

A full table of current analysis can be found on our Analyst Ratings page which is updated daily.


Crowdcube Joins LSE’s Elite Support Program For Growing Businesses

Samantha Hurst – Crowdfund Insider

Other stories

Opening Statement Of CFTC Commissioner Sharon Y. Bowen, Market Risk Advisory Committee



Moving Towards A Sustainable Model Of Regulation – Speech By Tracey McDermott, Acting CEO, FCA, At The Association of British Insurers Conference, London


PLY: Mostly about insurance (obviously) but Tracey McDermott continues her campaign to get the industry on side as she seeks the CEO position permanently. For a former head of enforcement, this line is instructive alone: “it is important that regulation is not seen as an adversarial process where the regulator and the regulated are in constant conflict.”


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