November 06 2014

elb2

Amongst the amusing statements of FIA Expo this week – where vendors aplenty issue key expense account justifications, I mean partnerships of course, ASX unveiled a new high speed link via a subsea cable that cuts the round trip computer signal latency from 183.5 to 181.5 milliseconds. ASX has been celebrating shaving milliseconds off in a world where microseconds count.

Interestingly, this is the same ASX whose CEO Elmer Funke Kupper last Friday was railing against the fragmentation of liquidity which has enabled HFT in Australian equities.

It would be easy to score points against the hapless ASX CEO but the problem is much broader. The exchange industry is fabulously schizophrenic about HFT and that has hurt the image of bourses post Flash Boys. I for one am not against HFT but equally markets without HFT are to be encouraged – the market ecosystem is bigger than one simple model. However, if the C-suite wishes to avoid being viewed as incoherent and potentially hypocritical, it would be worthwhile to clarify management positioning. Of course in the local scenario of Australia where competition is clobbering the inefficient ASX on all sides, it sadly looks as if Mr Funke Kupper will clutch any straw to keep out competition which is making Australian markets better, albeit at the expense of an ASX which once led but now lags the “Capital Market Revolution!”

Elsewhere in today’s free daily EI, encouraging Euronext results, and then it’s acronym central, starring ICE, NASDAQ, SIP, JPX, with guest stars including CFTC, LME, HKEx and introducing FMA, happy scrolling:

Public Markets

Euronext Q3 2014 Financial Results
Euronext

PLY: The exciting news is that these results incorporate very novel and welcome phrases for Euronext – such as the ones noting cost reduction plans being ahead of schedule…something which the NYSE management team could never claim.

TVS Capital-Led Group To Buy FTIL’s Stake In IEX For Rs577 Cr (USD 93.9 Mln)
Livemint

A consortium led by Chennai-based private equity firm TVS Capital Funds has bought the nearly FTIL 26% stake in Indian Energy Exchange (IEX) for around Rs.577 crore (USD 93.9 mln) after ‘nearly’ (PLY: ?) 18 bidders were in the race. The deal values the exchange at nearly Rs.2,300 crore (USD 374.3 mln).

FAO: Previous reports on runners and riders here, here, here, here etc.

Nasdaq Wins Contract To Operate Securities Information Processor (subscription)
Bradley Hope – Wall Street Journal

PLY: NASDAQ made it over the line at last after a rather tortured voting process… Previous discussions regarding the voting method here, here and here.

JPX Wants To Join Hong Kong-Shanghai Link
Eduard Gismatullin – Bloomberg

JPX wants to join the planned equity-trading link between Hong Kong and Shanghai.

LME May Temper Trading Fee Rise After Complaints
Eric Onstad – Reuters

The 137-year-old LME announced an average 34% increase in fees in late September as owner HKEx moved to boost profits after buying the exchange for $2.2 billion.

Bank of England Gives Brokers & CCPs Access To Liquidity
Reuters

Broker-dealers & CCPs critical to Britain’s economy are now able to apply for access to Bank of England funds that were previously largely restricted to banks.

BVB Moves To Eliminate Odd Lots (subscription)
Radu Bostan – Ziarul Financiar

Private Markets

Chicago-based HFT Closes European Equities Team (subscription)
Tim Cave – Financial Times

Chopper Trading has disbanded its fledgling European equities trading team, becoming the second US firm in a matter of weeks to pull back from the market amid mounting regulatory and operational costs.

US HFT firm RGM Advisors also ceased operations in Europe in September.

Dividend News

CME declared a Q4 dividend of $0.47 per share, payable December 26, 2014, to shareholders of record as of December 10, 2014.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX up 4% as FTIL is flat post the sale announcement of the Power Exchange stake sale (IEX).

FTIL Shareholders Have Not Benefited From NSEL: Venkat Chary
Rajesh Bhayani – Business Standard

Venkat Chary, Chairman and Independent NED, FTIL, and former Chairman, FMCD, told Rajesh Bhayani that the NSEL-FTIL merger would set a very dangerous precedent.

Proposed FTIL-NSEL Merger And FTIL Board Change Is Unwarranted
Madhoo Pavaskar – dna

PLY: Another week, still the same old shortsighted attack on Indian corporate governance precepts.

Technology

ICE Completes Transition Of Liffe’s European Interest Rates To ICE Futures Europe
ICE

The transition was completed between October 6 and November 3. London softs were transitioned by September 29, 2014; and the final phase of the Liffe migration will be the equity derivatives product suite, which is expected November 17, 2014.

Betfair Commits To In-House Product Development
SBC News

SGX Outage Resulted From Malfunction In Power Supply
MondoVisione

Nasdaq Expands Market Access In Chicago (subscription)
Ivy Schmerken – Wall Street & Technology

Equinix To Build New $43M Data Center In Tokyo
PRNewswire

Perseus Telecom Opens Ireland Network Operations Center To Support Managed Services Growth – Creates 25 Jobs In Galway
MondoVisione

Products

ICE Endex introduces Belgian ZTP Natural Gas Futures
BusinessWire

New Push To Ease Japan Commodity Trading Rules (subscription)
Ben McLannahan – Financial Times

A top Japanese politician is pushing for an overhaul of regulation governing exchanges, potentially opening the door to a long-awaited consolidation of the country’s fragmented trading landscape.

CFTC Pushes Back Electronic Trading Mandates For Some Swaps
Reuters

Indexes

Enternext Announces “Enternext PEA-PME 150” Index Composition
MondoVisione

Index will be launched on 17 November 2014.

Career Paths

Metal Bulletin reports that LME has hired another executive, Hiroki Kazekami, in Singapore, taking its team in the location to five, as parent HKEx looks to expand its Asian commodities business. Mr. Kazekami will be joining the LME’s Singapore office from next week as vp commodities, and will focus on new business opportunities in Japan and South Korea.

The BoD of HKEx approved changes in the composition of the following committees with immediate effect to fill the casual vacancies arising from the resignation of John Estmond Strickland.

HKEx’s Board Committee

Investment Advisory Committee

Wong Sai Hung, Oscar (Chairman) (newly appointed)
Timothy George Freshwater
Hui Chiu Chung, Stephen
Lee Tze Hau, Michael
Lui Yin Tat, David

Committees of The Stock Exchange of Hong Kong Limited

Listing Appeals Committee

Chow Chung Kong (Chairman)
Timothy George Freshwater (Deputy Chairman) (newly appointed)
NED of HKEx to be appointed on a case-by-case basis

Listing Nominating Committee

Chow Chung Kong
Timothy George Freshwater (newly appointed)
Leung Ko May Yee, Margaret
Chairman of Securities and Futures Commission (SFC)
Two Executive Directors of the SFC

Bloomberg reports that Tradition Financial Services, the brokerage unit of Cie. Financiere Tradition SA (CFT), hired a former ICAP Plc broker to expand in U.K. natural gas. Andrew Kent, who spent 16 years at ICAP, joined Tradition Nov. 3 and will be part of a three-person desk, according to Stuart Jones, the London-based head of gas at the brokerage.

MSCI announced that Stephen Davidson has joined the company as MD & Director of IR. Based in New York, Mr. Davidson reports to Bob Qutub, CFO at MSCI, and he will be the primary point of contact with investors and analysts who cover MSCI.

The longstanding and often seemingly indefatigable Carol Gregoir is standing down from her administrative role at SFOA after 23 years. Her exit follows the retirement of CEO Paul-Andre Jacot in September and is part of the cost-cutting required to try and rescue the association under new Chairman Daniel Day-Robinson. Having been rescued from the abyss by Otto Naegeli in a productive period of Chairmanship, the association still needs radical surgery if it is to survive (take note other industry associations!). It’s sad to see Carol forced out of her position but the writing was clearly on the wall a decade ago when I was a director of the association. Sadly warnings were ignored and smug denial ended up running the association on to the rocks. I sincerely hope Carol will go on to bigger and better things.

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 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.

Analyst Notes

Zacks Reissued Their “Neutral” Rating On ICE – $228.00 Price Target
Numis Securities Reiterated Their “Hold” Rating On LSE – GBX 2,074 ($33.06) Target Price
Keefe, Bruyette & Woods Reiterated Their “Outperform’ Rating On ITG – $23.00 Target Price, Up From $22.00

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.

Crowdfunding

FMA Issues Crowdcube New Zealand Its Crowdfunding License
Erin Hobey – Crowdfund Insider

Other stories

Remarks Of CFTC Chairman Timothy G. Massad Before FIA Expo 2014
MondoVisione

CFTC Commissioner Sharon Bowen FIA Expo Inaugural Speech, November 5, 2014
MondoVisione

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