November 14 2014

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Sad news to begin the day. Alas Gary Anderson, who recently stepped down as CEO of DGCX as a result of his ill health, has succumbed to cancer. Our condolences to Gary’s family. The exchange industry has lost a popular and effective executive, his legacy as CEO of DGCX has been a remarkable one.

Today, more results and a westward pivot strategy from LSE – look out for a clash of 3 big cash players between LSE, NASDAQ & NYSE soon…

Public Markets

BM&FBovespa Q3 Financial Results
BM&FBovespa

Q3 Net revenues 546.0 R$ mln (USD 210 mln), up 2% compared to Q3 2013, EBT 449.0 R$ mln (USD 172.7 mln), up 3.4% compared to Q3 2013, Net income 238.4 R$ mln (USD 91.7 mln), down 15.3% compared to Q3 2013

YTD: Net revenues 1,500.5 R$ mln (USD 577.1 mln), down 9.4% compared to 2013, EBT 1,241.7 R$ mln (USD 477.5 mln), down 9.6% compared to 2013, Net income 744.6 R$ mln (USD 286.3 mln), down 17.2% compared to 2013. BM&FBovespa Quarterly financial report here.

LSE On Track To Complete Russell Investments Deal This Year
Chad Bray – NY Times

In June, the exchange agreed to acquire Russell Investments for $2.7 billion in cash as part of a push into the US. Shareholders approved the deal in September and LSE said on Thursday that it had received approval from the competition authorities to proceed with the Russell acquisition, and that it expected to complete the deal “within the next few weeks.”

Rolet: US Is ‘Number One’ Market For LSE (subscription)
Tim Cave – Financial News

LSE CEO Xavier Rolet described the US as the exchange’s “number one” market, in a further sign of the group’s rapid expansion beyond its UK roots.

PLY: A fascinating westward pivot, as Rolet rightly recognises the west’s functional economy stateside but at the same time, will the US approach be derivative-centric (where LSE remains weak) or in equity… presumably Russell will be a central factor and perhaps the core fund management business will be retained which runs contrary to many expectations…

CCP “Contagion” Fears Spark Derivatives Debate
Elliott Holley – Banking Technology

Controversy over the handling of derivatives dominated talk at the Mondo Visione Exchange Forum this week, where panellists contested the value of interoperability and whether CCP contagion might bring down the financial system.

PLY: A good report on the excellent panel Andrew Simpson of Euronext ably chaired at the MondoVisione Exchange Forum this week where the quality of discussion was consistently high. One footnote though – that “open access” poll didn’t specify cash or derivatives (or both) markets, so I am not sure it was quite as valid as the 80:20 result suggests. Finally thanks to the main delegates who have taken the time to write in and praise the Exchange Forum this year, it was a great event with a lot of really useful discussion all day long.

Shanghai-HK Link Leaves A Singapore divide
Kenneth Lim & Cai Haoxiang – Business Times

PLY: Many parties panicking who are not in either HK or Shanghai. I happen to believe the pure binary will be the only thing not to happen – aka Singapore, Seoul, Sydney or wherever have huge opportunities, they just need to locate the right niche(s).

Shanghai-Hong Kong Stock Connect A Key Pillar In China Market Reform (subscription)
Richard Harris – South China Morning Post

Forget about “One Country, Two Systems”. We have moved onto One Country, Two Jurisdictions.

Read also our Premium post China Liberalises.

Earlier this week HKEx CEO said that the tax regime for the link is to be announced before the Nov. 17 launch.

CIS Exchanges Consider New Information Projects
ABC

The 6th meeting of information and marketing services of CIS International Association of Exchanges’ member exchanges has been held in Baku at the initiative of the Baku Interbank Currency Exchange (BBVB). Representatives of currency, stock and commodity exchanges of the five countries (Azerbaijan, Russia, Kazakhstan, Uzbekistan and Belarus) discussed means to co-operate.

Private Markets

Bourse Seeks Measures To Cool Speculative Trading
Nuntawun Polkuamdee – Bangkok Post

CFTC Staff Extends Conditional Time-Limited No-Action Relief to Australian-Based Trading Platform Yieldbroker Pty Limited
CFTC

Dividend News

BM&FBovespa approved a payment of dividends out of net income for Q3 2014 in the aggregate amount of R$190,726,000.00, or a net payment of R$0.10439974 per share,

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX flat as FTIL down 2%, court action continues on the forced merger proposal of NSEL in to parent FTIL:

FMC Order Forced A Distress Sale Of Assets, FTIL Tells High Court
Sharleen D’Souza – Business Standard
FTIL Moves Court Against Bid To Merge NSEL: A Bit Too Soon?
Malvika Jain – Moneycontrol

PLY: The case continues Friday with suggestions FTIL’s action may be premature but given the threat to their structure, I am not surprised they are eager to prevent the action.

FTIL Claims Rs1,000 Cr (USD 162.2 mln) Loss In Distress Sales After FMC Order
Khushboo Narayan & Ashish Rukhaiyar – Livemint

FTIL, on Thursday claimed that it had lost Rs.1,000 crore (USD 162.2 mln) due to “forced divestments” as a result of FMC’s 17 December order declaring it unfit to run exchanges.

Technology

NYSE Halts Trading In 9 Stocks Due To Hardware Problem
Hailey Lee – CNBC

CLTX & DB1 Announce Real-Time Data Agreement
Finextra

Deutsche Börse Market Data + Services will distribute and market real-time CLTX exchange data for key commodity derivatives products traded on CLTX. The agreement will extend to Freight Investor Services and The China Steel Index also provided by CLTX.

DB1 press release here.

PLY: Cleartrade CEO Richard Baker was excellent on my panel Wednesday at the MondoVisione Exchange Forum.

MOEX Historical Data Products (subscription)
Waters Technology

MOEX has launched a range of new historical data products for its securities, currencies, derivatives and OTC markets.

Exchanges Issue Summary Of Data Processor Meeting For First Time
Herbert Lash – Reuters

U.S. stock exchanges have posted online details about the management of data processors that have sparked embarrassing trading glitches and accusations of shoddy disclosure by releasing minutes from an oversight meeting for the first time.

Will HFTs Force A Market Redesign?
Ginger Szala – AllAboutAlpha

In late August 2014, the CME issued a regulatory notice defining and providing examples of “disruptive practices” prohibited on the exchange. These infractions were noted in the Chicago Federal Reserve paper as well as prohibited by the Dodd-Frank Act. However, what’s key about Rule 575, is it doesn’t so much outline new rules as finally give market participants seeking to comply with all market regulations more guidance about what constitutes bad faith trades.

This articulation has been lacking for years, causing headaches, confusion and in some instances, uneven penalties by regulators and exchanges. The fact that the Chicago Fed wrote a paper outlining recommendations before the exchange specified rules illustrates the debate the derivatives industry has grappled with during the growth of HFT…

PLY: Interesting analysis from Ginger Szala.

Interxion To Host Perseus Telecom’s New Global Network Operations Centre Infrastructure
MondoVisione

Interxion announced that Perseus Telecom is to host its new network infrastructure at Interxion’s Dublin facility, connecting to Perseus’s new Network Operations Centre (NOC) in Galway.

Products

LME Losing Ground In Battle For Asian Copper As Chinese Turn To CME (subscription)
South China Morning Post

Asian traders are increasingly choosing CME over LME for buying and selling copper, as they seek to cut costs and complexity of trade.

ZSE Plans To Establish Bond Market
allAfrica

Zimbabwe SE (ZSE) has started work on plans to establish a regulated platform for listing and trading of debt securities.

Indexes

New MICEX 10 Index Methodology To Come Into Force
MondoVisione

A new version of the MICEX 10 Index Methodology comes into force on 27 November.

Barclays And MSCI Announce Launch Of Green Bond Index Family – Innovative New Index Family Will Track The Growing Market Of Bonds Issued To Fund Projects With Environmental Benefits
MondoVisione

Barclays MSCI Green Bond Index family complements the existing Barclays MSCI ESG (Environmental, Social, and Governance) Fixed Income Index family, and is now available to clients.

Career Paths

Chi-X Australia has appointed Peter Warton as Head of Market Operations. Peter joins from Tibra, where he served as Global Head of IT Operations. Throughout Peter’s 25 year career working with financial markets and platforms, he has gained extensive experience in software development, market connectivity, client services management and market operations.

The BoD of Depozitarul Central (the Romanian CSD) relieved Adriana Tanasoiu (CEO) of her position. Bucharest SE (BVB) owns 69.04% of Depozitarul Central. The statement of BVB regarding the revocation of the Depozitarul Central’s CEO can be read here.

Financial News reports that Illuminate Financial Management hired Mark Whitcroft, who previously worked in debt syndication at Deutsche Bank and HSBC. He has taken on the role of principal in the firm’s five-strong London-based team. Illuminate Financial was launched in February by Mark Beeston, who left Icap after four years at the helm of its post-trade business. The firm focuses on investing in financial technologies that can impact capital markets.

Financial Times reports that Ryan Sheftel, global head of fixed income e-commerce at Credit Suisse, has joined HFT company Global Trading Systems in a move that illustrates the influence of new regulatory pressures and technological changes sweeping across Wall Street. Mr Sheftel joined Global Trading Systems to help expand its electronic rates trading business, where the HFT company makes markets in assets including US Treasuries and futures tied to the government debt, according to people familiar with the move.

ESMA Vacancy Notice – SNE – Legal Profile (Deadline: 12/12/2014)
MondoVisione

The deadline is 12 December 2014. Please refer to our Vacancy page for further details.

Financial Calendar

Today

SIBEX Q3 results
MCX Q2 2014 Financial Results

Next week

Record date Thomson Reuters $0.33 quarterly dividend
MarketAxess $0.16 quarterly cash dividend payment
Record date TMX $0.40 Q4 dividend

New announcement

CME announced that its 2015 Annual Meeting of Shareholders will be held at 3:30 p.m., Central Time, on Wednesday, May 20, 2015, in the Auditorium at CME, located at 20 South Wacker Drive, Chicago, Illinois.

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

Share Notes

Interactive Brokers CFO Paul Jonathan Brody sold 5,019 shares Wednesday, November 12th at an average price of $26.94 (bargain $135,211.86). Mr. Brody’s regular sales are chronicled on this specific page.

Crowdfunding

TrustBuddy Conditionally Agrees To Acquire Italian & Dutch P2P Lending Firms
Finextra

TrustBuddy has conditionally agreed to acquire two leading P2P lenders, Geldvoorelkaar and Prestiamoci, for a total consideration of EUR 15.9 million of which EUR 11.4 million is in TrustBuddy shares or vendor loan notes. Both acquisitions remain subject to the satisfaction of certain conditions.

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