November 12 2014

elb2

Not the busiest day for news but then again many decision makers are at the MondoVisione exchange forum in London which I am chairing today.

Through train excitement reaching a frenzy, as ICE ponders exceptions for levying LIBOR fees.

Catch the #ExchForum today via twitter…

Public Markets

Capital-Gains Tax Is A Puzzle As Shanghai Market Opens (subscription)
Gregor Stuart Hunter – Wall Street Journal

Days before a much-heralded trading link opens Shanghai’s stock market to overseas investors, traders in Hong Kong say they are in the dark about a more prosaic concern—paying taxes in China.

Hong Kong levies no capital-gains tax, and while China does—at the rate of 10%—authorities haven’t collected any tax from foreign buyers investing through China’s qualified institutional investor programs, quota-based systems that have allowed as much as $112 billion to be channelled into Chinese stocks and bonds since 2003.

HKEx CEO said the tax regime for Shanghai stock link is to be announced before Nov. 17 launch.

Hong Kong Banks Waive Fees, Jostle For Stock-Connect Cash
Alfred Liu – Bloomberg

Banks in Hong Kong wrestling for a share of the spoils from a stock-trading link between the city and Shanghai are waiving fees and even offering gold medals as prizes to lure customers.

ICE Said To Plan Waiving Libor Usage Fee For Small Banks
Jody Shenn & Matthew Leising – Bloomberg

ICE, which took over administering Libor this year, is planning to excuse the smallest banks from paying new fees.

ICE Benchmark Administration received $13.5 million in funding from parent company ICE in 2013 and has received an additional $2.2 million in the first half of 2014.

PLY: The smallest banks / S&Ls are certainly micro sized so this is not altogether surprising news.

Liquidity Alliance Implements Next Generation Of Customer Connectivity
Deutsche Borse

Liquidity Alliance member Cetip from Brazil will act as a pilot for the entire Liquidity Alliance and has scheduled the implementation for November 2014. ASX, Clearstream, Iberclear and Strate are part of the subsequent roll-outs.

EI reported earlier this month that Liquidity Alliance will provide worldwide collateral access to T2S.

Europe Pulls Back On Research Cost Revamp (subscription)
Philip Stafford – Financial Times

The UK markets regulator is set to fail in its attempt to introduce a Europe-wide ban on brokers bundling the cost of research with trading.

ASX Clear Long-Term ‘AA-’ S&P Rating Stable Outlook
ASX

ASX has obtained a S&P issuer credit rating for its equities and equity options clearing house, ASX Clear Pty Limited.

S&P has assigned a ‘AA-’ long-term and ‘A1+’ short-term credit rating to ASX Clear Pty Limited. The rating outlook on the long-term issuer credit rating is stable.

NZX Consults On Proposal To Shorten Settlement Cycle To T+2
MondoVisione

BVB Presented The AeRO Market
BVB

AeRO will be a market dedicated to start-ups and SMEs in search for financing for their growth and development stories.

According to the data received, the accounts number through which Romanian retail investors made at least one trade in H1.2014 grew by 12% vs the last six months of 2013, to almost 29,000. Compared to the level from H1.2013, the number is higher by 40%.

The data also reveals that Romanian retail investors have 31% share in the turnover registered in H1.2014, and Romanian institutional investors have a weight of 27%. The difference is covered by investors from EU (34%), USA (6%) and others (2%).

PLY: With a population of 22 million, a rounding error of the Romanian population now trade in the stock market. There is still a mountain to climb in Bucharest.

Private Markets

Despite Mt. Gox Fiasco, Karpeles Still Has Bitcoin Plans
Tim Hornyak – Computerworld UK

Mark Karpeles’ t-shirt couldn’t be more ironic.

“I don’t always test my code,” it reads, “but when I do, I do it in production.”

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX flat, FTIL up 2%

FTIL Challenges Government Order On Merger With NSEL In High Court
Ram Sahgal – The Economic Times

FTIL, parent of the scam-hit NSEL, has challenged a government order to ‘forcibly’ merge the spot exchange with itself and to take over the management of the parent company.

PLY: Any sensible legal system will leave vast egg on the face of the government regulatory complex.

Technology

Iraq Stock Exchange Launches Nasdaq’s X-stream Trading Technology
Globe Newswire

X-stream replaced the existing Horizon platform. Nasdaq has delivered trading technology to ISX since 2007.

PLY : Existing US Sanctions clearly do not apply to this deal.

Direct Edge Reminder: BATS Weekend Test Opportunity For New EDGA & EDGX Exchange Platforms In NY5 On November 15, 2014
MondoVisione

Products

Hong Kong Futures Exchange To Raise Margin Requirements On All HKEx Futures Contracts
Forex Magnates

Rising by approximately 20% as of November 13th.

Eris Eyes H2 2015 European Swap Future (subscription)
Luke Jeffs – FOW

Eris Exchange has become the second US swap futures platform this week to hint at a European launch in 2015, marking the latest statement from a range of firms eyeing this new market.

EI reported yesterday that CME Europe also eyes a swap futures launch in Q1 2015.

FMC Discontinues October, November, December Guar Contracts On MCX
Livemint

Insufficient liquidity.

Regulators Fine Global Banks $3.4 Billion In Forex Probe
Kirstin Ridley & Joshua Franklin – Reuters
UK Regulator Fines Five Banks $1.7 Billion After Currency Rigging Probe
Reuters
CFTC Orders Five Banks To Pay Over $1.4 Billion In Penalties For Attempted Manipulation Of Foreign Exchange Benchmark Rates
CFTC

Global regulators imposed penalties totaling $3.4 billion on five major banks, including UBS, HSBC and Citigroup on Wednesday for failing to stop their traders from trying to manipulate foreign exchange markets.

RBS and JP Morgan were also fined over attempts to rig currency benchmarks.

Indexes

ISE ETF Ventures Launches the ISE Cyber Security Index (HXR)
Business Wire

ISE ETF Ventures announced the launch of the ISE Cyber Security Index (ticker: HXR), an index that allows investors to quickly take advantage of both event-driven news and long term economic trends in the cyber security and information technology space. The index, which is the first and only one focused specifically on publically-listed companies that develop or provide cyber security technology and related services, is licensed to PureFunds and will be the basis for an ETF.

S&P Dow Jones Indices Announces The Addition Of Gasoil Along With The 2015 Weights For The Dow Jones Commodity Index
MondoVisione

Career Paths

Financial News reports that Marcello Sicuro, previously a SVP at Eurex, joined Bats last month as a sales manager for Germany, Switzerland and ltaly. Sicuro had spent seven years at Eurex and had also previously worked for Swiss stock exchange SIX.

BoD of SIFMA announced that it has elected several directors to leadership positions on the Board for 2015.

The new principal officers include:

Chairman – William A. Johnstone, chairman and CEO, D.A. Davidson Companies
Chairman-Elect – John F. W. Rogers, EVP, Goldman, Sachs & Co.
Vice Chairman – Timothy C. Scheve, president and CEO, Janney Montgomery Scott
Treasurer – Gerard McGraw, president, Fidelity Institutional

The following executives were elected by the SIFMA members as directors of the Board with terms concluding in 2017:

Jim Allen – Hilliard Lyons
William Caccamise – Bank of America Merrill Lynch
Roger Ochs – HD Vest Financial Services
John Vaccaro – Westport Resources

AxiomSL, the global leader in regulatory reporting and risk management solutions, announced the appointment of Raymond Tse as APAC CFO and COO. As CFO and COO, Mr. Tse will drive AxiomSL’s corporate vision, financial resources and all operations with the goal of expanding and growing in line with the company’s strategic objectives across the APAC region.

Financial Calendar

This week

LSEG H1 Interim Results
SIBEX Q3 results
Markit Q3 2014 Financial Results
MCX Q2 2014 Financial Results
Tullett Prebon 5.6p interim dividend payment

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

Analyst Notes

Zacks Upgraded Shares Of CBOE To “Neutral’ – $65.00 Price Objective
JPMorgan Chase Upgraded Betfair To “Overweight” Rating – GBX 1,350 Target Price, Up From GBX 1,175

Betfair Climbs Back Above IPO Water (subscription)
Bryce Elder – Financial Times

Having spent the past four years below its flotation price, Betfair was back above water on Tuesday.

Betfair took much of the blame for the UK’s new issue pipeline closing in the wake of its £1.3bn float in 2010.

The shares crashed more than 50% within a year because of product delays, poor communication and the failure of its financial product. On Tuesday, the stock was up 1.7% at £13.16, above the £13 IPO, after JPMorgan Cazenove upgraded.

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.

Other stories

ESMA Agrees To Renewal Of Short-Selling Measures Introduced By Italian CONSOB
MondoVisione

ESMA has issued an opinion regarding the emergency measures introduced by the Italian Market regulator under the Short-Selling Regulation (SSR). The SSR requires ESMA within 24 hours following the notification by a national competent authority to issue an opinion on whether it considers the measure, or proposed measure, necessary to address the exceptional circumstances.

Malaysia Gets To Set Up Yuan Clearing House
The Star

In a landmark move, Malaysia and China have agreed to set up a yuan clearing bank here to facilitate and reduce the cost of doing business in the country.

With this agreement, Malaysia will be the second country after Singapore in the Asean region to establish a yuan-clearing bank with China.

Yesterday, Bank Negara inked a MoU with the People’s Bank of China (PBoC) in Beijing to establish yuan clearing arrangements in Malaysia.

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