November 13 2013

Patrick-l-young-mergermania

“The market needs to embrace change, but somebody’s got to stand up and take a leadership role and hopefully others will line up behind us and help support a vision.”
– Jeff Sprecher

Hello Good Morning and Welcome from the historic Draper’s Hall in the heart of the City of London where the MondoVisione Exchange Forum is running at full force under the excellent Chairmanship of Dr Robert Barnes, CEO of Turquoise.

It’s a big day with multiple results and of course the closure of the mega-merger where Jeff Sprecher concludes his purchase of ICE. Welcome to the future of markets.

Meanwhile, you can catch a third installment of the video made when I visited Cinnober, this time discussing merger mania et al: here.

All manner of insights below, scroll forth and multiply your knowledge:

Public Markets

LSEG Interim Results For The Six Months Ended 30 September 2013

Revenue up 44 per cent to £504.2 million (H1 FY 2013: £349.8 million), including five months’ contribution from LCH.Clearnet; revenue up 8 per cent on organic and constant currency basis

Total income (excluding unrealised gains/losses at LCH.Clearnet) up 34 per cent at £567.1 million (H1 FY 2013: £423.7 million); down 4 per cent on organic and constant currency basis

Underlying operating expenses kept broadly flat, reflecting continued good cost control

Adjusted operating profit up 6 per cent at £229.9 million (H1 FY 2013: £217.2 million); down 13 per cent on organic and constant currency basis; operating profit of £151.0 million (H1 FY 2013: £186.8 million)

Adjusted basic EPS of 48.2 pence (H1 FY 2013: 51.8 pence); basic EPS of 24.9 pence (H1 FY 2013: 43.0 pence)

PLY: Interim numbers in line with expectations, good results once again from Xavier Rolet’s LSE Group.

ICAP plc Interim Results For the six months ended 30 Sep 2013
ICAP

Group revenue at 736 mln pounds was marginally (1%) down on the prior year
Operating profit at 153 mln pounds was 6% higher than the prior year reflecting the benefit of the continuing cost reduction programme
Group operating profit margin increased by 2p pt to 21% (H1 2012/13 – 19%)
Profit before tax 139 mln pounds was 1% higher than the prior year
EPS (adjusted basic) 2 up 5% to 16.2p; statutory EPS (basic) down 62% to 3.0p principally driven by settlement payments and associated legal fees in connection with the Libor-related investigations
Interim dividend payment to shareholders 6.60p per share (H1 2012/13 – 6.60p per share)
Successful launch of ICAP SEF and the commercial launch of EBS Direct

PLY: Given the abject stagnancy (at best) of the IDB community pre-SEF introduction, these results look encouraging from ICAP as it endeavours to move from 500lb gorilla IDB to being a 500lb gorilla in the brave new Dodd-EMIR-Frank world.

ICE Completes Takeover Of NYSE
Reuters
ICE Seals $10 Bn Takeover With Plan To Float Euronext (subscription)
Financial Times
NYSE Euronext Takeover Poses Tough Challenges For ICE Boss (subscription)
Financial Times
NYSE’s New Chief Puts Focus On Individual Investors (subscription)
The Wall Street Journal

ICE will announce within days which parts of NYSE it plans to keep, and which parts it plans to divest, ICE CEO Jeff Sprecher said in an interview on Tuesday.

…Jeffrey Sprecher, said he plans to reorient the exchange back toward individuals and away from the high-frequency traders who play an increasingly large role in the financial markets.

“Everything we do on the NYSE should be focused on: Are we making it a better environment for individual investors and people who manage individual investors’ retirement accounts?” Mr. Sprecher said.

PLY: Hooray. Let’s get it on.

NYSE’s New Boss Says 221-Year-Old Market Must Act Like Startup
Bloomberg

Jeffrey Sprecher wants the combined entity to act more like a startup than a venerable institution with roots in the 18th century. His new employees should take more risks, adopting an approach that made ICE one of the world’s biggest exchange operators just 13 years after its founding, he said.

PLY: Hooray.

France Approves ICE Acquisition Of NYSE Euronext, Urges National Role In Spinoff
The Wall Street Journal

French Finance Minister Pierre Moscovici on Tuesday approved the acquisition of stock market operator NYSE Euronext by ICE and recommended French market players step in to buy NYSE’s European arm, due to be spun off after the merger.

PLY: Worst kept ‘secret’ in markets, France expects private sector to take control in Euronext (or presumably Paris Bourse if a break-up bid is lobbed in from Amsterdam or Brussels).

CME Group Hikes Transaction Fees For 2014
Reuters

Starting on Jan. 1, CME will raise fees for trading in Treasuries, energy, metals, currencies, and stock-index futures.

The biggest increases await traders who do not own memberships at CME’s exchanges, which include the Chicago Mercantile Exchange, Chicago Board of Trade, Nymex and Comex. Even exchange members, whose “seats” and equity stakes in CME give them fee discounts, will have to pay more in some cases as the exchange operator executes its first substantial fee changes since 2009.

“We routinely adjust fees and since our last fee increase, we’ve made numerous investments in resources and technology enhancements to address the growing infrastructure needs for our customers,” CME spokesman Michael Shore said.

PLY: Gutsy move but if CME can challenge the orthodoxy of endless price cuts and stand up to market pressure, this will deliver an incredible investor uptick…

Exchanges Offer Proposals To SEC To Strengthen Market Infrastructure (subscription)
The Wall Street Journal

The biggest U.S. stock-exchange operators said Tuesday they have reached broad agreement on measures to strengthen market systems following a string of high-profile breakdowns, a response to regulatory demands to address the market failures.

“It’s a good thing and it’s probably long overdue,” said Jeffrey Sprecher.

NYSE Euronext press release here.

LME Likely To Set Up Futures Delivery Warehouse In Shanghai FTZ (subscription)
metal.com

LME still might be the first foreign exchange to establish futures delivery warehouse in China.

Bursa Malaysia Derivatives, DCE Extend Collaboration For 3 More Years
bernama.com.my

Bursa Malaysia Derivatives Bhd and Dalian Commodity Exchange (DCE) have extended their eight-year collaboration for another three years.

Both parties have formalised their mutual commitment to the promotion and progress of the futures markets for oil and oilseeds globally, through the organisation of the annual China International Oils & Oilseeds Conference (CIOC).

Obama Nominee For Swaps Agency Draws Skepticism Over Experience
Bloomberg

Timothy Massad, a little-known Treasury official who oversaw the U.S. rescue of Wall Street, faces skepticism about his qualifications from lawmakers who will vote on his nomination.

Private Markets

Europe Turns To Alternative Venues For Dark Trading (subscription)
Financial Times

An increasing amount of share trading in Europe on the controversial off-exchange venues known as dark pools is taking place on alternative trading venues, according to a new study.

SEF Rules Slow Transition To FX Multi-Dealer Platforms
ifre.com

The recent movement of the foreign exchange trading market towards multi-dealer platforms is being stunted by the implementation of swap execution facility rules by the CFTC, according to a report released by Greenwich Associates today.

SEFs Face Major Delays In Operating Outside The US (subscription)
Risk.net

SEFs are facing up to a year without clients in countries such as France, Germany, Switzerland, Canada and Hong Kong

The Rush To Coin Virtual Money With Real Value
dealbook.nytimes.com

If cash is king, virtual cash may be the crown prince in waiting.

Programmers around the world have been churning out new digital currencies that try to improve on the concept of bitcoin, the hot but controversial virtual money that has swept the Internet.

Already, dozens of ideas are jockeying for the market. At last count, a website that tracks the market, coinmarketcap.com, listed 36 so-called crypto-currencies, with names like bitbar, freicoin and cryptogenic bullion, and new ones are being added each month. Collectively, these digital moneys had a recent market value of about $4.3 billion, of which $4.1 billion was from the dominant currency, bitcoin.

PLY: Fascinating.

Bitcoin Exchange BitFunder Announces Closure
coindesk.com

The site, which launched in December 2012 and held around $16m in assets in July, will cease trading on 14th November and transfer out any leftover bitcoins held by users on 2nd December.

Dividend News

LSEG declared an interim dividend of 10.1 pence per share, an increase of 4 per cent on the interim dividend paid last year. The interim dividend will be paid on 6 January 2014 to shareholders on the register on 6 December 2013.

ICAP declared an interim dividend of 6.60p per share (H1 2012/13 – 6.60p per share) covering the six month period to 30 September 2013 will be paid on 7 February 2014 to shareholders on the register at 3 January 2014. The shares will be quoted ex-dividend from 31 December 2013.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTiL broadly flat in the wake of a zero payout. Dismal.

Week 1: Rs 92.73 crore (USD 14.37 mln) paid
Week 2: Rs 12.05 crore (USD 1.79 mln) paid
Week 3:Rs 15.37 crore (USD 2.29 mln) paid
Week 4: Rs 7.77 crore (USD 1.21 mln) paid
Week 5: Rs 8.57 crore (USD 1.35 mln) paid
Week 6: Rs 11.45 crore (USD 1.82 mln) paid
Week 7: no payout – bank accounts frozen
Week 8: Rs. 2.85 crore (USD 457.9 k) paid
Week 9: Rs. 28.34 crore (USD 4.58 mln) paid
Week 10: Rs. 30 lakh (USD 49k) paid
Week 11: Rs. 29.05 crore (USD 4.72 mln) paid
Week 12: Rs. 11 crore (USD 1.77 mln) paid
Week 13: no payout

NSEL Fails To Pay Investors, Defaults For 13th Time
The Economic Times

NSEL failed to pay investors any of the Rs 174.72 crore (USD 27.5 mln) installment due to them, defaulting for the 13th straight time.

NSEL Promoter Jignesh Shah Submits Bona Fides To FMC
The Economic Times

Jignesh Shah, promoter of the crisis- ridden NSEL, today submitted bona fides before FMC in response to a showcause notice served by the regulator earlier.

Notice To Attach Mohan India’s Property; Jignesh Shah Meets FMC
Business Standard

The economic offences wing (EOW) of the Mumbai police, probing NSEL payment crisis, said it had issued a notice to attach the property of Mohan India, one of the defaulters.

“We are tackling one borrower at a time and have served them (Mohan India) a notice under MPID (Maharashtra Protection of Interest of Depositors in Financial Instruments) Act. Notices are constantly being sent,” said an official.

Jignesh Shah Questions Grant Thornton’s Forensic Audit Report
The Financial Express

Jignesh Shah has questioned Grant Thornton’s forensic audit report on the settlement crisis at the FTIL-owned NSEL.

Shah and FTIL are defending their ‘fit & proper’ status before FMC, which has issued a showcause notice questioning their suitability to remain part of the commodity futures exchange business in India.

Additionally, Shah wants the FMC to hold its decision on the group’s ‘fit & proper’ status until investigations by other probe agencies are completed.

NBHC Traded On MCX In Violation Of Guidelines
Business Standard

In another significant development in the cloud surrounding FTIL group, National Bulk Handling Corporation (NBHC), a group company, has been found to have traded on MCX.

This is a breach of rules, which do not permit a related party to trade on a commodity exchange of the same group.

Technology

Moscow Exchange Expands Derivatives Market Platform Functionality

The changes mean that 100% of collateral will be in USD, versus the current requirement of 50% USD and 50% RUB. The change will simplify operations for foreign market participants and lower funding costs for Russian market participants.

Direct Edge Selects Greenline’s Comprehensive Automated Testing Solution
bobsguide.com

Greenline Financial Technologies has delivered a comprehensive testing solution to Direct Edge.

Kensho Chooses NASDAQ OMX FinQloud To Build Their Professional-Grade Analytics Platform
Nasdaq OMX

Kenshō, a provider of next-generation data analytics for investment managers and research analysts will be the first professional-grade analytics platform built completely on NASDAQ OMX FinQloud.

Neonet Securities And Liquid Metrix Announce Partnership To Create Industry Leading Enhanced Algorithmic Trading Suite

Neonet Securities and LiquidMetrix will collaborate on the creation of a new enhanced suite of trading algorithms.

Products

CBOE Russell 2000 Volatility Index F&O Launch Dates Announced
CBOE

CBOE announced it will launch futures and options on the CBOE Russell 2000®Volatility Index in coming weeks.

Indonesia’s Tin Contract Gains Traction As LME Firms Eye Membership
Reuters

Several top tier LME members, including JPMorgan Chase, are starting to look at whether they may join Indonesia’s main commodities exchange (ICDX) in a sign the new tin contract may eventually lure Western players.

China To Start Trading Rice Futures
globaltimes.cn

China, the world’s top rice producer and consumer, will start trading Japonica rice futures on November 18 on the Zhengzhou Commodity Exchange (ZCE).

Indexes

SGX Introduces New Asian Index Futures

SGX introduces three new Asian Index Futures, SGX-PSE MSCI Philippines Index Futures, SGX MSCI Thailand Index Futures and SGX MSCI India Index Futures.

In addition, it provides global investors deeper and more extensive reach into Asia’s emerging markets. The three new contracts will commence trading from 25 November 2013.

FTSE Mondo Visione Exchanges Index Increases 3.4%

All but three of the constituents’ share prices increased in value during the month.

Career Paths

Former Chi-X Europe CTO Florian Miciu joined Tradeweb last week as a director, reporting to group CTO Jay Spencer. He will be based in New York, and will work on the operator’s inter-dealer trading platform Dealerweb.

Retired bureaucrat Krishna Mohan Sahni, an IAS officer of the 1969 batch, has been appointed the new Chairman of National Multi-Commodity Exchange of India Ltd.

Presidemt Obama has nominated senior Treasury official Timothy Massad to lead CFTC.
Rumors reported here.

HELLENIC EXCHANGES announced that on November 11th 2013, the EGM approved the election of the Member of the Board of Directors Mr Fokion Karavias to replace Mr Konstantinos Vousvounis who resigned.

Financial Calendar

Tomorrow

Moscow Exchange EGM
Sibex Sibiu SE Q3 Results

Friday

Record date GFI $0.05 Q3 dividend

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

Share Notes

Following her sale of 34,016 shares on August 2nd at an average price of $22.66 (bargain $770,802.56) reported on August 7th, her sale of 95,958 shares Tuesday, October 15th at an average price of $23.33 (bargain $2,238,700.14) reported on October 18th, her sale of 35,837 shares Friday, November 1st at an average price of $22.90 (bargain $820,667.30) reported on November 5th and her sale of 20,316 shares Monday, November 4th at an average price of $23.08 (bargain $468,893.28) reported on November 6th Charles Schwab EVP Carrie Dwyer sold another 42,218 shares at an average price of $24.17 (bargain $1,020,409.06).

Analyst Notes

Jefferies Group Boosted Their Price Target On NASDAQ OMX From $32.00 To $35.00 – “Hold” Rating
Tullett Prebon “Hold” Rating Restated At Numis Securities Ltd – GBX 299 Price Target

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

EY In Crowdfunding Joint Venture
financialdirector.co.uk

EY has partnered with all of London’s 33 local authorities and a start-up tech firm to provide crowdfunding for local regeneration projects.

The joint venture is part of London Ventures, a move by EY to boost innovation in the public sector by scaling up ideas through its network of corporates and in-house experts.

Other stories

South Korea’s Derivatives Decline Threatens Equity Trade
Financial Times

South Korea’s derivatives market, once the world’s largest by trading volume, is suffering a sharp drop in liquidity as stricter regulations damp appetite and drive investors to neighbouring markets in China and Japan.

FESE European Equity Market Report – October 2013

The European Equity Market Report is a piece of analysis that allows for an accurate comparison of trading statistics across European trading venues.

India – SEBI Pitches For More Competition, Listing Of Stock Exchanges
Zeenews

Capital markets regulator SEBI Chairman U K Sinha Tuesday advocated the listing of bourses and greater competition among exchanges.

SEBI chief also said that efforts have be made to avoid “any conflict of interest” when it comes to regulatory and business functions.

He noted that as a regulator dealing with listed firms, SEBI can’t philosophically take a stand that listing aggravates problems.

PLY : An encouraging outpouring from SEBI on which to end a busy day’s EI!

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