November 15 2013

Patrick-l-young-mergermania

I am locked into my Liquidnet Europe board duties today hence have to dispense non-executive tasks. However, EI, is as ever, here and if you’re missing a surfeit of my comments, scroll down for a few of my pithy remarks at the MondoVisione conference the other day…

Lots happening and as always some of the best stories are at the end of the letter, happy scrolling, catch you Monday from Brussels!

Public Markets

German Parties Urge FTT Covering Stocks, Bonds, FX, Derivatives
Reuters

PLY: As discussed by me here, Angela Merkel’s failure to secure a majority may lead to a lurch even further to the left. There is a battle royal looming and Deutsche Boerse will have its work cut out to defend free markets against the retarded incipient anti-business rhetoric of the likely new German coalition. Disappointing but not unsurprising – although q.v. how even in France FTT has been somewhat pushed back in recent weeks. Oh and the French socialists are even selling some shares today so they aren’t locked into the daft Mitterand era collectivisation folly of his first term.

NYSE’s New Boss On The Future Of The Trading Floor
CNBC

Sprecher did not make any long-term commitments to keep the NYSE floor—the Twitter IPO and the extensive coverage CNBC provided around how the IPO was priced has left him with a renewed appreciation for the value of human participation in markets.

Sibex SE Q3 Results
Sibex

Compared to 3Q 2012 total revenues down 40% to 1.31 mln Lei (USD 400k), total expenses down 15% to 2.48 mln lei ( USD 750k), losses increased 70% to 1,16 mln Lei (USD 351k).

PLY: Apparently bereft of a strategy, SIBEX remains the poster child of missed opportunity. Very sad as it could be such a tangible business.

Exchange Tie-Ups “Not Worth The Paper They’re Written On” Patrick L Young
banking technology

The wisdom of exchange alliances and mergers was a subject of controversy at the Mondo Visione exchange forum in London this week, with one participant lambasting such deals as “not worth the air miles they were written on”.

The shareholder value of exchange alliances and mergers was roundly criticised by session chair Patrick Young, executive director at DV Advisors, who labelled the CEESEG headed by Vienna Börse as a total failure and a putative Warsaw-Vienna deal as “the worst shareholder deal in history”.

PLY: In a rapid fire session, various of my remarks reported here including my distaste for MOUs and criticism of the ghastly proposal to merger Vienna/CEE into Warsaw (not just standalone Vienna per se!). Also reported:

“Exchange alliances are not worth the paper they’re written on. They don’t work and never have done. The Vienna-led stock exchange group is a disaster – it has three franchises but no value. Their volumes are collapsing, they lost all their futures, possibly because Deutsche Börse just happens to be on Xetra and so can steal all their volumes. CEESEG is a complete business failure, and now Vienna hopes Warsaw will be stupid enough to buy it.”

“Why does Shenzhen Exchange taking a photo with Luxembourg mean anything?” he added. “I just don’t buy it. Where is the money? When you say Western empires are better than exchanges, that’s foolish. Why does it require very expensive Western technology? Xetra is a horribly expensive platform for emerging market exchanges and doesn’t add any value. Recreating the Austro-Hungarian Empire isn’t doing anyone in eastern Europe any good.”

Ooh I could sound all bad tempered reading this. Well, actually given the missed opportunities from SIBEX to CEESEG and others, I am. New thinking is required, not tired old MOUs and silly shotgun mergers.

Hong Kong Buoyed By China’s IPO Freeze As Alibaba Eyes New York
Bloomberg

Hong Kong, recovering from the weakest market for IPOs in almost a decade, is getting a much-needed boost from an unlikely source — China’s securities watchdog.

No Overnight Solution To LME Metal Queues – LME Executive
Reuters

LME’s rules overhaul will not solve its four-year warehousing crisis overnight, an LME executive warned, while an analyst said the measures could increase volatility and hurt liquidity in the exchange’s top-volume contract aluminum.

LME Lists New Delivery Location In Netherlands (subscription)
The Wall Street Journal

LME Thursday said it has listed Moerdijk in the Netherlands as a goods delivery point for primary aluminum.

CBOE Responds On Vix (subscription)
Risk.net

CBOE is encouraged by every public discussion of volatility indexing and volatility-linked products. We were especially interested to read your recent article: “Vix Challenged by New Volatility Index”.

Private Markets

ATS Brasil Has Partners Lined Up, Eyes Nov. 2014 Opening
Reuters

Americas Trading System Brasil (ATS Brasil) plans to open as a stock exchange in Brazil next November with partner firms to be announced within weeks, the CEO of the upstart said on Thursday.

ATS Brasil will be the first competitor to Brazil’s sole stock-exchange operator, BM&F Bovespa, and aims to secure a 15 percent market share in Brazilian equities trading within two years of operating, said Alan Gandelman, ATS Brasil’s chief executive. Within three years, the exchange aims to enter the corporate listings business and may even go public itself, he said.

NYSE Euronext, which has a 20 percent stake in ATS Brasil, is providing technology for the new exchange.

PLY: Brazilian competition is heating up and that can only be good for the market. Of course ICE (as opposed to it’s NYSE subsidiary) already has a j.v. being developed with CETIP for bond trading and was developing power markets with Eike Battista’s empire. Meanwhile BATS have ambitions in Brazilian equity trading too.

EU-Backed Social Media Sentiment Project Releases Market Surveillance Tool
Finextra

Project First, the EU-backed research effort to find a way of extracting and analysing financial services-related sentiment from social media networks, has concluded with the launch of a prototype market surveillance system.

Launched in late 2010, the three year project aimed to harness artificial intelligence to find information on the Internet that can then be used to support financial decision makers.

It was overseen by a consortium including Banca Monte dei Paschi di Siena, Boerse Stuttgart, Interactive Data b-next and the University of Hohenheim, with the aid of a EUR4.6 million budget co-funded by the EU.

The findings show how the sentiment reflected in social media postings can be automatically analysed and summarised to form an indicator. This source of information increases the probability that financial market trends can be correctly anticipated, says Christoph Lammersdorf, CEO of Boerse Stuttgart.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Both MCX and FTIL are slightly up as it looks increasingly like that Jignesh et al will lose their fit and proper status.

Company Registrar: Jignesh Shah & Co Should Not Continue As FT, NSEL Directors
The Economic Times

The Registrar of Companies (RoC) will blame Jignesh Shah and other directors of FTIL, for the implosion of its subsidiary, NSEL, and is likely to recommend they should not continue as directors of either FT or NSEL.

NSEL: Govt May Not Bail Out Investors
The Hindu Business Line

A working group, under the Chairmanship of K.C. Chakrabarty, Deputy Governor of Reserve Bank, is not in favour of providing financial assistance to NSEL investors.

PLY: I am hugely sympathetic to anybody who loses on a risk trade but ultimately investors cannot be guaranteed a return. However, there ought to be a means for government errors in regulation to be accounted for.

‘Spot Exchanges Should Create A National Market For Agri Produce’
The Hindu Business Line

The ongoing payment crisis at NSEL has trained attention not only on regulatory issues but also on the greater need to create an effective pan-India, farmer-friendly, physical market.

Business Line spoke to the former MD and CEO of NCDEX, R. Ramaseshan, who, during his tenure, accelerated the pace and trajectory of NCDEX even while cautiously guiding the business to ensure genuine benefits to vulnerable stakeholders like small growers.

PLY: A key issue much overlooked. India desperately needs proper agricultural markets to permit risk transfer for farmers, and users. That was part of the original aim of the likes of MCX and NSEL but has somewhat eased out of the equation in recent years as NSEL became a slightly crazed leveraged punting shop in many places.

Technology

MarketPrizm Announces Data And Order Entry Deal With DGCX
Forex Magnates

MarketPrizm, will offer data and order entry services to fast growing Middle Eastern exchange DGCX, and its 267 members from across the globe.

Traiana Broadens Eastern Expansion: Announces Opening Of Singapore Operations
Forex Magnates

International expansion into regions with a highly developed institutional FX industry appears to be on the agenda for pre-trade risk and post-trade processing solution company Traiana, which has announced the opening of its new office in Singapore.

Products

CBOE And C2 To List Options On Twitter Today
CBOE

PLY: As will ISE (first to announce) and all the other major US markets as we have an IPO summarised in 140 characters…

BSE To Launch Currency, Interest Rate Derivatives In December
Reuters

Bombay SE (BSE) will launch currency and interest rate derivatives on its platform in the first week of December.

BSE will become the fourth player in currency derivatives in India, after the National Stock Exchange, the MCX – SX and United Stock Exchange, in which BSE has a 15 percent stake.

PLY: BSE moves into a space where MCX-SX is currently without a CEO, although the recruitment process is ongoing.

Metal Warehousing Tactics Embitter Coffee And Cocoa Market
Reuters

The window is closing on lucrative – and much-resented – practices that some exchange-licensed coffee and cocoa warehouses have copied from the metals market, as exchanges step in to pre-empt scrutiny from regulators.

Traders of coffee and cocoa have complained of the expense and delays involved in removing beans from some warehouses in Antwerp, where the majority of exchange stock is stored.

Indexes

ICE Merger With NYSE Euronext – Changes In FTSE Mondo Visione Exchanges Index

NYSE Euronext was deleted from the FTSE Mondo Visione Exchanges index.

ICE will remain in the index.

Career Paths

FINRA announced that Mike Rufino will become Head of Member RegulationSales Practice, and Bill Wollman will become Head of Member Regulation – Risk Oversight and Operational Regulation (ROOR).

Rufino and Wollman will report to Susan Axelrod, FINRA’s Executive Vice President of Regulatory Operations.

SEC announced that Kevin W. Goodman has been named as the national associate director of the broker-dealer examination program in the Office of Compliance Inspections and Examinations (OCIE).

He will oversee a staff of approximately 300 lawyers, accountants, and examiners responsible for inspections of U.S.-registered broker-dealers.

Financial Calendar

Today

Record date GFI $0.05 Q3 dividend

Next week

Moscow Exchange 9M2013 IFRS Results
MarketAxess Q3 $0.13 dividend payment
Record date Thomson Reuters for $0.325 Q3 dividend
Record date MCX Rs. 7 interim dividend
Record date TMX $0.40 dividend

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

Share Notes

Interactive Brokers SVP Milan Galik sold another 3,000 shares Wednesday, November 13th at an average price of $22.45 (bargain $67,350.00). He now owns 754,604 shares.

In the interests of reducing RSI risk for those scrolling through his many orders, Mr Galik’s regular sales are chronicled on this specific page.

Analyst Notes

Numis Securities Dropped Their Price Objective On LSE From GBX 1,505 To GBX 1,477 – “Hold” Rating
LSE‘s Had Its “Neutral” Rating Reaffirmed At UBS AG – GBX 1,550 Price Objective

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

Ubiquitech To Enter Multi-Billion Dollar Crowd Funding Industry With NeedFunded.com (subscription)
The Wall Street Journal

Ubiquitech Software , an IT and Services company, is set to launch www.NeedFunded.com where individuals can raise capital from other like-minded individuals for hundreds of different needs, from charitable foundations to students starting a Rock band, and everything in between.

Other stories

Wall Street Vs P2P (subscription)
Financial Times

While Orwell was, of course, satirising Soviet communism, it is tempting to see parallels between his fable and the growth of peer-to-peer lending.

P2P Lender Eyes Credit Rating (subscription)
Financial Times

First rated securitisation of P2P loans to come to market.

PLY: Two fascinating stories to end the week. Have a great weekend!

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