November 05 2014

elb2Mid-term upheaval grips the US – as it looks like the Pres may have so much time for golf, even David Hardy may get a game in (provided David can spare the time for a round as he saves the CCP world from the perils of the waterfall). Interesting to see that Bruce Rauner (formerly an investor in, and around this parish) looks to be the new Governor of Illinois which must hopefully presage an outbreak of management and a decline in Pat’s pork barrel, presuming they don’t have to prise Mr Quinn from office with crowbars. Rauner to me looks a good choice as a business dude with the ability to help turn Illinois into the state success espoused by its powerhouse corporate names (CME amongst them). Reminds me of the time many NRA badge wearing NYMEX floor traders noted they were voting for Jon Corzine on the basis a head of Goldman Sachs ought to have management nous. Seat belt amnesia aside, he had a pretty good Gubernatorial run operationally before heading on to further burnish his management credentials at MF Global,…er, the rest of which is, of course, broadly sub judice…

Right, that’s enough politics intertwined with exchanges… in today’s cram-packed EI, the pith discusses Chris Concannon – finally the clear heir apparent at the second largest US stock market? (It just isn’t the bourse you first thought) as the oil ‘proxy war’ gets Jeff going and we have added wisdom from Lee Olesky, CFTC Commissioner Mark Wetjen and Bob Greifeld amongst others. Enough of me, start scrolling, there is lots to read:

Public Markets

ICE Q3 Financial Results
ICE

Three months ended September 30

Total revenues, less transaction-based expenses USD 745 mln, up 120%, Net Income USD 213 mln, up 46.9%, Diluted EPS USD 1.8, down 6.2%

Nine months ended September 30

Total revenues, less transaction-based expenses USD 2,292 mln, up 115%
Net Income USD 722 mln, up 64%
Diluted EPS USD 6.02, up 2.7%

HKEx Q3 2014 Financial Results
HKEx

Nine months ended September 30 2014

Revenue and other income $7,092 mln, up 8%
EBITDA $4,916 mln, up 8%
Profit attributable to shareholders $3,654 mln, up 4%
Basic EPS $3.14, up 2%

ICE Chief Blasts Rival’s Tactics To Lure Users (subscription)
Gregory Meyer – Financial Times

PLY: The Brent versus WTI ICE-CME(NYMEX) contest has long struck me as akin to one of those proxy wars in Africa during the 1970’s where despot A was (all interchangeable:) defended/opposed with US/Soviet equipment and thus the latest T-wotsit or M1A-whatever tank was tested in the battlefield. It was also all part of an ongoing tactical war to tie up resources as ultimately reached its hiatus in Afghanistan post 1980…

No suggestion either CME or ICE are Soviet, although the CME clearly shares a board nomination process the Politburo would have approved of. However clearly the inducements are creating a ripple but do not seem to be having a lasting effect on market share – but again (and I need to look at the programmes here) we have complaints of payment for order flow / inducements which raise questions. No prizes for guessing where else we have had risk-free subsidised butterflies getting us in a flap.

NYSE Boss Thomas Farley Sees Value In Trading Floor (subscription)
Nicole Bullock & Gregory Meyer – Financial Times

PLY: Gosh it took 2 FT staff to write this utterly vapid piece. No wonder newspapers are struggling. Zero facts & more (repeated) detail about hipster actors working out than the economics of the floor. Is it a big advertising background cum lab of some trading activity that focuses the world on Wall Street daily? Well, yes methinks – otherwise is there a business case? Refer to point one, that in and of itself is a pretty powerful case provided costs can be maintained within reason. I remember when the Financial Times, well, could discuss finance, or at least I think I do…

ICE Warns Europe Over Regulatory Impasse (subscription)
Luke Jeffs – FOW

ICE has said failure by Europe to recognise the equivalence of the US regulatory regime could hike costs for European firms and force them to quit the US market.

GFI Board Rebuffs BGC Partners’ Unsolicited Tender Offer
RTT News

GFI Group said its board other than Messrs. Gooch and Heffron, both of whom abstained, unanimously determined to reject the unsolicited tender offer from BGC Partners to acquire all of the company’s outstanding shares for $5.25 per share cash.

CME agreed to buy GFI in July.

PLY: Tricky all round, the independence of the board even apart from Messrs Gooch and Heffron may come into question anyway, certainly on the executive side.

Major Exchanges Seek To Dismiss HFT Lawsuit
Jonathan Stempel – Reuters

Major U.S. stock exchanges have asked a federal judge to dismiss a lawsuit accusing them of costing ordinary investors billions of dollars by rigging markets to benefit high-frequency traders.

Bats Said Near SEC Settlement In Direct Edge HFT Order Type Case
Sam Mamudi – Bloomberg

Bats is close to settling with U.S. regulators over accusations that Direct Edge gave unfair advantages to HFT.

LSE To Launch Midday Auction
LSE

LSE announced that it will be introducing a new intraday auction for all SETS equities, the largest and most liquid shares traded on its markets. During the two minute auction, which will take place at 12.00 every day, continuous trading of shares will be paused on LSE.

PLY: Previous rumours reported here now confirmed, as LSE looks to really make an ongoing series of hybrid markets which I first recall being shown by Rich Friesen founder of ePit from San Francisco in about 2000 A.D. – ah a trip down dotcom memory lane. LSE is intriguing, endeavouring to squeeze value from every model within what now amounts to a complex but apparently value additive framework between the main exchange and the various Turquoise offerings for cash equities alone.

Nasdaq To Test Lower U.S. Stock-Exchange Trading Fees
Sam Mamudi – Bloomberg

The experiment, which starts in February, covers charges paid by broker-dealers and market makers who operate on Nasdaq and will be limited to 14 stocks.

HK Chief Links Exchange Delay To Protests (subscription)
Josh Noble & Robin Kwon – Financial Times

Hong Kong CEO CY Leung has drawn a direct link between pro-democracy protests and the delay to a high-profile equities trading platform that had been billed as key to the territory’s financial future.

China Securities Regulatory Commission (CSRC) said last week that the stock connect scheme is in its final stage.

Trading Industry Strives To Find Its Form (subscription)
Philip Stafford – Financial Times

PLY: Wisdom from Bob Greifeld in this ‘he says, she says’ which at least displays some vestige of core competence at the daily pinko (thank you Philip!): “I think we will see exchanges start to evolve away from each other a bit more. Some will choose indexes, others will choose technology. I think we will see that exchange comparisons are harder to make.”

Agree / Disagree? Well, either way don’t forget to come to the MV Exchange Forum which I am chairing next week which will be discussing precisely these questions on my panel with, amongst others, Peter Lenardos of RBC and Nandini Sukumar, the acting CEO of the World Federation of Exchanges.

Comment: Sefs Face New Challenge (subscription)
Lee Olesky – Financial Times

Over Tradeweb’s 16-year experience in building and operating electronic markets, we have not seen any other fixed income asset class adopt electronic trading so aggressively as the derivatives industry over the past year…we are seeing an orderly transition to a more transparent marketplace – but the work is not done.”

PLY: In a world where assorted flunkeys write texts that get signed off and faxed to the Op-Ed pages, I have the suspicion Lee Olesky actively contributes to, if not, actually writes his own material – and it is certainly all the better for his excellent, thoughtful, insights.

Thomson Reuters To Redeem C$750 Million Of Debt Securities
PRNewswire
Thomson Reuters Announces Pricing Of C$550 Million Note Offering
MondoVisione

C$550 million (approximately US$483 million) principal amount of 3.309% notes due 2021 expected to close November 12, 2014, and will fund redemption of the other issue…

France In Push To Break EU FTT Deadlock
Reuters

PLY: Pity they wouldn’t break the deadlock of their domestic market atrophying before dragging everybody down to their crypto-Marxist fester masquerading as an economy.

Clearstream & Standard Chartered Bank Implement Their Collateral Management Offering For Singaporean Collateral
Deutsche Borse

Private Markets

KONEX, KRX Gold Market Far From Profitable
Business Korea

Korea New Exchange (KONEX) for venture firms and SMEs and KRX Gold Market for the legalization of the underground economy has yielded less than 5 million won (USD 4 600) during their first year.

Gibraltar To Launch Stock Exchange
Olive Press

Gibraltar’s first stock exchange (previous discussions here) is ready to launch once approved by the Rock’s financial regulator. Companies will not float on the exchange during the ‘soft launch’ but there will be a full opening in Q1 2015.

UCX, The Universal Compute Xchange, Launches Beta For Trading Cloud
Globe Newswire

UCX, announced the beta launch of the Universal Compute Xchange. The launch of UCX builds on the news earlier this year that the CME signed a definitive agreement to develop an IaaS exchange.

PLY: This is a fascinating marketspace, as you may recall EI reported on July 2nd, 2013, the DB1 announcement regarding the launch of Deutsche Börse Cloud Exchange, a marketplace for trading outsourced storage and computing capacity.

TradingScreen Launches Trading Access To Eris Exchange
Eris Exchange

PLY: The good folks of Eris Exchange who have been barnstorming the post OTC world for the past year and more, now can be accessed via TradingScreen. More useful progress on top of their liquid pool.

TradingScreen & The Buy Side To Launch TradeCross – A Fixed Income Electronic Crossing Platform Leveraging The Galaxy MTF
MondoVisione

A select group of large Asset Managers and TradingScreen, the leading independent provider of liquidity, trading, and investment technology via SaaS, announced their intention to launch the first Buy side designed crossing platform for Fixed Income corporate bonds.

TradeCross will cover all segments of the credit market and will offer numerous new and innovative trading models that are not offered today on traditional platforms with an overarching goal to create a much more efficient way to trade these securities. Key elements of the initiative are to insure complete trade confidentiality and reduction of market impact, especially during periods of market stress.

PLY: There are now so many new electronic bond platforms looming/launched/when issued that frankly herding them into an orderly queue appears challenging.

Dividend News

ICE announced a $0.65 per share dividend for Q4 2014. The dividend is payable on December 31, 2014 to shareholders of record as of December 16, 2014. The ex-dividend date will be December 12, 2014.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX up 3% after a few slow days while FTIL is flat after several more active ones. Resolution to NSEL? …It almost appears rude to ask…

Technology

SGX Reopens Securities Market At 1715 Singapore Time
MondoVisione

FAO: SGX website is down at the time of editing.

DTCC Unveils Cyber-Threat Sharing Platform (subscription)
Anna Irrera – Financial News

DTCC has unveiled a cyber-threat intelligence sharing platform, as the financial services sector ramps up its defenses against cybercrime. The software, launched by Soltra, DTCC’s new joint venture with the Financial Services Information Sharing and Analysis Center, will collect and standardise cyber-threat information from various sources to allow organisations to automate and speed up responses to attacks.

TWSE Invests In $90 Million Data Centre
Finextra

Taiwan SE (TWSE) is pushing forward with the construction of a new state-of-ar​t data center in Banqiao (BQ Data Center), New Taipei City, which will be fully operational by the end of 2015.

Barclays Seeks Fintech Startups For Accelerator Programme (subscription)
Anna Irrera – Financial News

Barclays has opened applications for the second edition of its fintech accelerator programme, which will provide $20,000 seed funding and a dedicated office space in east London for the selected companies.

PLY: Sadly conflicting with the MV Exchange Forum which I will chair, it will be demo day next Wednesday at the StartUpBootCamp FinTech accelerator programme which promises to be interesting.

TOCOM Establishes Market Data Access Points In Chicago Via CQG’s Continuum
MondoVisione

Products

HM Treasury: Digital Currencies: 5 Reasons We’re Calling For Information – Bitcoin, Litecoin…Why We’re Calling For Information On The Benefits And Risks Of Digital Currencies.
MondoVisione

PLY: A refreshing blast of elegant inquisition from HM Treasury. Time to write in and explain why digital money is much of the future and indeed why that ought to make central banks much less powerful, let alone the way it impacts the ability of government to leverage the economy…etc.

CFTC Commissioner Calls For Flexible Regulation Of Digital Currencies
CoinDesk
Bringing Commodities Regulation To Bitcoin (subscription)
Mark Wetjen – Wall Street Journal

More than 5,000 people across the globe recently logged on for the webcast of a CFTC public meeting—not a significant number by Internet cat-video standards, but by far the largest online audience that one of our meetings had ever attracted. Viewers in Guangzhou, China, outnumbered those in Washington, D.C.

PLY: Commissioner Wetjen advocates flexibility, he will be on the right side of history methinks.

Indexes

New Global Financial Disruptors Equity Index Launched
Angel News

UK based investment bank Liberum and research firm AltFi Data have launched the first equity index tracking the world’s leading financial services’ disruptors – the Liberum AltFi Financial Disruptors Index (LAFDI).

PLY: Interesting idea, deliciously labyrinthine name…

Career Paths

BATS Global Markets named senior industry leader and market expert Chris Concannon as president, effective Dec. 15. Mr. Concannon, who spent six years at Nasdaq as EVP, transaction services, will report directly to BATS CEO Joe Ratterman, who has led the firm since July 2007. He will be based in New York as part of the firm’s Executive Committee.

Venu Palaparthi, a VP at Nasdaq OMX, is joining HFT firm Virtu Financial next month, according to people familiar with the matter.

WSJ reports that Mr. Palaparthi will take over the compliance roles of Chris Concannon, the president and COO of Virtu who is joining BATS Global Markets next month as its new president.

PLY: The move of Concannon to BATS is fascinating given how successful Virtu has been and suggests there is something exciting afoot for his future as I cannot see why Chris is joining BATS to play second fiddle to Joe Ratterman for long? Equally how things go in a sort of intriguing circle, Concannon is now clearly heir apparent to run the second biggest stock market in the USA. The only thing is, it isn’t Bob Greifeld’s NASDAQ as was the position what seems only a short while ago…

HKEx’s Listing Nominating Committee is now seeking applications from individuals interested in serving on the Listing Committee & the Growth Enterprise Market (GEM) Listing Committee. Appointments will be for a term of approximately twelve months commencing in May/June 2015.

ESMA Announces New CWG For The Post Trading SC
MondoVisione

Following the call for interest for the renewal of the Consultative Working Group for the Post Trading Standing Committee, ESMA announced the composition of the new group.

The Post-Trading Standing Committee (PTSC) is supported by a Consultative Working Group (PT CWG) made up of external stakeholder representatives.

Giuseppe Vegas (Chairman), Chairman of Commissione Nazionale per le Società e la Borsa (CONSOB), Italy
Jesus Benito, BME
Wesley Betsill, CME
Diana Chan, EuroCCP
Helen De Geer, NASDAQ OMX
Natasha De Terán, SWIFT
Ulrich Karl, HSBC
Roland Kipper, Commerzbank
Eric Litvack, SocGen
Stephan Lomas, DB
Noel Miles, Fidelity
Mathias Papenfuss, Clearstream Banking AG
Fabrizio Plateroti, Borsa Italiana
Martin Pluves, LCH Clearnet
Valerie Sainsaulieu, Lafarge
Paul Symons, Euroclear
Adriana Tanasoiu, CSD Romania
Marc Tibi, BNPP
Jaime Viladecans Bombardó, Caixabank

Financial Calendar

This week

TMX Q3 Financial Results
Record date MarketAxess $0.16 quarterly cash dividend

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

Share Notes

CME Chairman Terrence A. Duffy sold 14,580 shares Monday, November 3rd at an average price of $84.55 (bargain $1,232,739.00). He now owns 111,124 shares.

CME Insider Kathleen M. Cronin sold 1,920 shares Monday, November 3rd at an average price of $84.52 (bargain $162,278.40). She now owns 17,783 shares.

NASDAQ OMX President Hans-Ole Jochumsen sold 31,876 shares Monday, November 3rd at an average price of $43.13 (bargain $1,374,811.88). He now owns 31,570 shares

Crowdfunding

Santander & BlackRock Work On First Rated P2P Securitisations (subscription)
Tracy Alloway – Financial Times

Santander and BlackRock are working to create the first rated securitisations of P2P loans from Lending Club and Prosper in the latest sign of the nascent “P2P” industry’s growing acceptance on Wall Street.

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