November 05 2015

elb2 PLY: The breakfast table at Schloss Young was enlivened by this magnificent photo from the launch of the Chi-X Australia warrants market. In the week of Boole’s 200th birthday, it’s binary in action. On one side, the brooding presence of that leaden footed monopolist ASX is seemingly invariably in the wings. On the other hand, you could also say it is remarkable that a rival can get all the way to the heart of what some call the Sydney CBD “ASX Death Star” and promote their rival product right under the Dickensian incumbents’ noses…

Elsewhere in the wonderful exchange competition landscape, an SEC comment letter concerning the exchange application by IEX by a certain Patrick L Young has been published here.

In Exchange Invest Daily: Lots of results to crunch through today including news of roaring Euronext results. The phoenix arising from the ashes metaphor frankly undersells the scale of the magnificent turnaround here – which only goes to prove that if they can do it, so too any other market can turn itself around (Si senores – even you!) enjoy the pithy scroll:

Public Markets

Euronext Q3 2015 Results
Euronext

Q3 2014: continued strong reduction in operational expenses ex- depreciation and amortization: -18.5%; EBITDA €77.1 mln (USD 84 mln), up 42%; quarterly operating profit before exceptional items was €73.4 mln (USD 80 mln), up 46.9%; net profit €47.7 mln (USD 52 mln), down 3.7%.

As of 30 September 2015 the Company had cash and cash equivalents excluding financial investments of €160.0 mln (USD 174 mln), and total debt of €107.9 mln (USD 117 mln).

PLY: #Excellent. Euronext bring tears to the eye – of joy (compared to those we may have shed in previous times). Focus, management and execution aforethought – any market can achieve this… I am so much happier to be praising Euronext than the unfortunate berating they (deservedly) received in the past at their nadir. #PleaseKeepThisUp!

MOEX Q3 2015 Results
MondoVisione

vs Q3 2014: total operating income RUB 11.17 bln (USD 176 mln), up 52.9%; EBITDA RUB 9.14 bln (USD 144 mln), up 66.9%; net profit RUB 6.98 bln (USD 110 mln), up 71.7%.

PLY: Despite sanctions and an, er, volatile, quarter for the IT system, very very good numbers from MOEX.

Virtu Financial Q3 2015 Results
Virtu Financial

(GAAP) vs. Q3 2014: total revenues $215.8 mln, up 24.6%; trading income, net, $206.8 mln, up 27.5%, net income $69.5 mln, up 67.9%.

France Seeks Big Fine Against Virtu & Euronext For HFT
AFP

Financial Markets Authority (AMF) investigators want to levy at least 5 mln euros ($5.5 mln) in fines against Virtu Financial for manipulating 27 shares listed on the Paris CAC 40 index between July 21 and September 2, 2009. AMF is also seeking 4 mln euros (USD 4.4 mln) from Euronext…

PLY: Low latency activity from a different age encounters a remarkably high latency regulatory process.

FTIL Posts Q2 Net Loss Of Rs. 35 Cr (USD 5.3 Mln)
The Hindu

Q2 Net loss of Rs. 35 crore (USD 5.3 mln) vs.a net profit of Rs. 327.41 crore (USD 54 mln) in 2014.

PLY: A further shiver of Shahdenfreude will go down the spines of those folks rooting for the end of the Jignesh empire.

Aequitas, TMX Rivalry Set To Heat Up Over Fund Trading Platforms
Reuters

The rivalry between TMX and Aequitas Innovations is set to intensify as the two exchange operators race to create platforms for the buying and selling of some actively managed funds. Aequitas aims to launch a platform in Q1 2016.

PLY: The word I keep hearing from Bay Street is the TMX currently looks leaden footed…and that’s at the favourable end of the spectrum.

Polish Court Says Moving Pension Fund Assets To State Was Legal
Reuters

PLY: Unsurprising insofar as some dolt in the EU wrote the pillars/pillocks principal in the first place. The tragedy of the moral vacuum of government enshrining de facto theft into the law of the land is one massive hangover which is stunting Polish capital markets. That the new government will not reverse the law (admittedly tricky operationally given constitutional debt ceilings) clearly demonstrates the risk that this great nation reborn to dynamism after the end of Communist misrule, is in danger of falling off the rails.

Spoofing Verdict Shocks Futures Trading Industry (subscription)
Gregory Meyer, Lindsay Whipp & Philip Stafford – Financial Times

The futures industry was reeling after trader Michael Coscia became the first person to be found guilty of “spoofing” (reported yesterday) in a landmark criminal case.

PLY: Expenses justifying hyperbole may be a part of the above attempt at shock and awe. For those looking from outside the loop in, I get Leslie Sutphen’s considered point: “It seems that the Justice Department will define spoofing as excessive cancellation. If that is the case, then everybody spoofs. This will have a profound and negative effect on liquidity…” That is a worrying precedent but frankly the industry has no cause for real shock – the writing has been on the wall for years. Where the naked ambition of elected US prosecutors meets a target unloved by the media/general public, the path of least resistance involves orange jumpsuits. That the industry left itself open to this by not policing many more egregious cases of spoofing, such as that former MOU, the now hapless hound of Hounslow, is a cause for deep disappointment and imho the root cause of this prosecutorial escalation of hostilities against financial markets.

CFTC Head Massad Issues Warning To Spoofers After U.S. Verdict
Tom Polansek – Reuters

“If they’re entering a lot of orders without the intention to consummate, then they should go talk to their lawyers.”

PLY: Thus the cost of order cancellation is now looming around $500 per hour (including counsel) for bulk volume traders I suppose. QV EI Premium: Flash Crash & Hound of Hounslow – Brief.

SEF Situation: As MiFID II Looms, Harmonization Necessary (subscription)
Dan DeFrancesco – Waters Technology

Private Markets

Time For Gulf Stock Market Regulators To Introduce Short Selling
Mohammed Al Hashemi – The National

Stock market regulators in the Arabian Gulf should put the introduction of short selling at the top of their agenda, despite worries it would further depress share prices, because the practice builds long-term confidence by increasing trading volumes and investor choice.

Jordan Moves To Part Privatise Bourse To Revive Trade
Reuters

Amman SE is expected to be part privatised by early next year with an eye to offering a stake to investors in an IPO later, it’s CEO Nader Azar said.

Bitcoin Frenzy Back As Epic Bust Fades (subscription)
Paul Vigna – Wall Street Journal

BTC climbed as much as 50% this week, re-creating scenes from a manic 2013 run that took it from $13 to a high of $1,100 before it crashed. The burst of speculative buying followed a spate of positive publicity and a move by the EU to define bitcoin as a currency and not a commodity.

PLY: Looking good until we hit this headline and note the byline below, Dan McCrum is the one man at the FT with a proven record for spotting issues:

Bitcoin Surges As Chinese Flock To Russian Fraudster’s Site (subscription)
Izabella Kaminska, Dan McCrum & Robin Kwong – Financial Times

BTC price surged on Wednesday to its highest in more than a year amid a wave of Chinese testimonials for a “social financial network” called MMM, which bears the hallmarks of a pyramid scheme.

Dividend News

Virtu Financial quarterly cash dividend of $0.24 per share payable on December 15, 2015, record date December 1st, 2015.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX flat, FTIL off 3% on the back of disappointing numbers.

Technology

ESMA Publishes Responses To The Consultation On Draft Implementing Technical Standards Under MiFID II
MondoVisione

TradingScreen Launches Market Surveillance Tool For Listed Derivatives
MondoVisione

Duco Opens European Headquarters In Luxembourg
MondoVisione

Indexes

CFTC Pulls Plug On Commodity-Flows Report (subscription)
Christian Berthelsen – Wall Street Journal

CFTC Chairman Massad said the agency would stop surveying banks and traders for its monthly Index Investment Data report, which tracks the amount of money following commodity indexes such as the S&P GSCI and the Bloomberg Commodity Index.

Career Paths

LSE In Advanced Talks With Broderick To Head Curve (subscription)
Luke Jeffs – FOW

LSE is in advanced talks with swaps expert Sandy Broderick about becoming CEO of CurveGlobal. Brokerick is currently Chairman of GMEX.

PLY: Interesting news leaves me wondering how this fits with, for example, Bill Templer who has done an excellent job of progressing Rita-Curve to the point of being a tangible entity from a raw plan and thus the structure of Curve going forward.

Reuters reports that Russell Investments appointed Sarah Leslie as head of fiduciary management for the UK and Ireland.

CPI Financial reports that IG Group appointed Hussein Al Sayed as Chief Market Strategist in MENA.

P&I reports that Mark J.A. Snyder, an EVP at State Street and head of the bank’s global markets sales and trading and research division, will retire at the end of the year.

Bloomberg reports that Jacques Lajard, a trader and stocks portfolio manager at Vanguard in London, has departed the firm.

NZ Financial Markets Authority (FMA) appointed Paul Gregory as director of external communications and investor resources. Mr Gregory will be joining the FMA’s executive committee from the NZ Super Fund where he has been since March 2009, firstly as head of communications.

Compliance Science (CSI), a provider of governance, risk management and compliance solutions, appointed Ronald Gould as Chairman – Europe. Mr. Gould, who is also joining the BoD, served as a Senior Advisor to FCA.

Financial Calendar

05.11 – TMX Q3 2015 Results

05.11 – ITG Q3 2015 Results

05.11 – FXCM Q3 2015 Results

New announcements

The Russian Capital Markets Forum on Friday, 6 November, 2015 in Shanghai

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

Share Notes

ICE President & COO Charles A. Vice sold 1,500 shares on Nov 2, 2015 at $258.94 (bargain $388,224.19).

NASDAQ OMX CEO Robert Greifeld sold 104,648 shares Tuesday, November 3rd at $59.50 (bargain $6,226,556.00). He now owns 789,230 shares.

IBRK CFO Paul Jonathan Brody sold 651 shares on Nov 2, 2015 at $42.38 (bargain $27,565.07).

Analyst Notes

NASDAQ OMX Price Target Hoisted By Barclays From $62.00 To $64.00 – “Overweight” Rating

Barclays Restated “Underweight” Rating On Tullett Prebon – GBX 310 Target Price, Down From GBX 385.

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

Crowdfunding

Crowdfunder Launches £1m Fundraising On Crowdcube
Madeline Ratcliffe – CITY A.M.

The Cornish crowdfunding platform is looking to raise the money to create 50 new jobs, and link up with new partners, which currently include JCDecaux, Virgin StartUp and Not on The High Street.