November 18 2015

elb2ICE Singapore launches smoothly – of course the Trayport acquisition is useful to the exchange’s energy ambitions in the City State and around South-East Asia too. No done deals, and nobody leaves DB1 but Barclays does get fined and there’s a Sino-HK “through train” story, so there is an element of continuity to today’s daily bulletin on the world of market infrastructure…And as we race to pixel, HKEx announces a restructuring and GMEX receives a welcome Thanksgiving feast: a serving of CFTC approval – well done GMEX! Happy scrolling:

Public Markets

ICE Futures Singapore Launches With Commodity & FX Contracts Serving Asian Markets

ICE

ICE announced the successful launch of trading and clearing for ICE Futures Singapore and ICE Clear Singapore on Tuesday, November 17, 2015.

PLY: ESMA may be seeking delays to MIFID II implementation but the Asia pivot regulatory arbitrage backstop strategy is moving ahead with ICE in the vanguard and DB1 not far behind.

 

Exchanges & IDBs Reshape To Face Fragmenting Market (subscription)

Philip Stafford – Financial Times

As regulation clamps down on trading in financial markets, the operators of the world’s financial plumbing are reshaping themselves to capitalise on the fragmentation of the industry. In recent weeks the world’s largest exchanges and IDBs have concluded a wave of asset swaps, realignments and consolidation, and broken into new markets or buried old rivalries.

PLY: Good to see Alasdair Haynes (Aquis) and Lance Uggla (Markit) quoted here. Particularly good to see industry expert Jake Pugh quoted from the ”ICAP Moves Centre Stage” story published in our domain yesterday. A couple of useful diagrams here too in Philip’s article.

QV Premium: Exchange Deals Brief.

 

HKEx Announces Group Structure Changes In Preparation Of New Strategic Plan

MondoVisione

HKEx announced changes to its Group structure as it prepares to launch and implement its strategic plan for 2016 to 2018, which will be announced early next year. with these changes taking effect on 1 January 2016.

A new Platform Development Division will include Group Project Management & selected IT development teams.

Two divisions, the Clearing Division and Markets Division will be created to consolidate all Hong Kong clearing & trading businesses.

A new Market Development Division will be created comprising the current Mainland Division plus the non-operating areas of the current Global Markets Division, including Client Business Development & Product Development, as well as Corporate Communications.

PLY: Interesting moves. The biggest individual promotion looks to be Trevor Spanner whose successful creation of LME Clear has propelled him to Group COO moving from London to Hong Kong – good for you Trevor, I wish you all the best.

Incidentally, you can catch a glimpse of the dizzying progress of LME Clear in my latest white paper “Towards A Real Time Market” available for free from our new download centre.

 

Successful Market Launch Of CEINEX

MondoVisione

China Europe International Exchange (CEINEX), the jv of Shanghai SE (SSE), DB1 & China Financial Futures Exchange (CFFEX) was successfully launched  in Frankfurt.

PLY: CEINEX Launches with ETF trades…good luck to all parties!

 

Proposed Shanghai-London Link Won’t Copy Stock Connect

Michelle Price & Saikat Chatterjee – Reuters

A proposed link (reported in September) between the London and Shanghai exchanges will not be a “copycat” of the landmark Hong Kong-Shanghai Stock Connect scheme due to differences in time-zones and investor bases.

HKEx Marks First Anniversary Of Stock Connect

HKEx

China To Expand Exchange Link With Increased Quota, More Shares

Bloomberg

PLY: With the Chinese economy exuding volatility these past 12 months it feels more like we’re living dog years. Of course dog years aren’t that simple, as dogs mature within 2 human years…will “through train” achieve a similar great leap forward in the next 12 months?

QV Premium: HKEx – SSE – Stock Connect Brief Part 4.

 

HKEx CEO – HKEx – SZSE Stock Connect Won’t Be Launched This Year (subscription)

Enoch Yiu – SCMP

Neither HKEx nor mainland officials have announced a launch date.

 

HKEx CEO: China Regulators May Have Overreacted But Reform Path Intact

Michelle Price & Saikat Chatterjee – Reuters

HKEx CEO: China’s regulators may have overreacted with proposed new trading curbs to stamp out speculative behavior but HKEx remains hopeful that onshore markets will eventually rise to international standards.

PLY: Interesting granular remarks.

After Market Crash, China Mulls Single ‘Super-Regulator’

Engen Tham & Benjamin Kang Lim – Reuters

China is considering bringing together its banking, insurance & securities regulators into a single super-commission.

QV Premium: China Capital Markets Transformation Brief – Main File.

 

Dragon Capital Suspends Participation In Acquisition Of Ukrainian Exchange Shares From MOEX

Interfax

Dragon Capital investment company has suspended its participation in the acquisition of shares in PJSC Ukrainian Exchange from MOEX which November 16 signed an agreement to sell the stake in Ukrainian Exchange to a specially created foreign enterprise, controlled by Ukrainian investment company Univer Capital.

FAO: MOEX Supervisory Board approved management’s proposal to exit the Group’s subsidiaries in Ukraine and to potentially participate in the capital of a new Russian credit rating agency. MOEX holds 50% plus 1 share in PFTS and 43.08% in Ukrainian Exchange.

 

Barclays To Pay $100 Mln To End Currency-Rigging Probe

Greg Farrell – Bloomberg

Barclays Faces Another Heavy Forex Fine (subscription)

Gina Chon, Martin Arnold & Kadhim Shubber – Financial Times

Barclays is set to pay at least another $100m to resolve allegations it abused forex markets through its electronic trading platform by next month, presenting an early test for the bank’s incoming chief Jes Staley. NYDFS is likely to impose a smaller penalty for the alleged electronic trading abuses than the $485m the bank agreed to pay New York’s banking regulator in May over manipulation of forex spot trading.

PLY: It feels somewhat as if the difference between workdays and weekends can be best defined ‘as the weekend is the one time Barclays don’t get fined’…So far.

 

U.S. SEC To Consider Rules To Help Investors Navigate ‘Dark Pools’

John McCrank – Reuters

There are around 35 broker-run ATSs competing with 11 registered exchanges for stock trading business, and most of them are so-called “dark pools,” which do not display pre-trade information. Unlike exchanges, ATSs currently have no requirement to tell investors how they operate.

 

NYSE To Eliminate “Stop Orders” From February

Reuters

Investors will not be able to make “stop orders” and “good till cancelled orders” on NYSE and NYSE MKT from Feb. 26. On Aug. 24, people had standing “stop orders” that they thought would protect them, but the shares crashed through the “stop orders” and investors were automatically sold out of positions at prices well below where their “stop order” stood.

All existing “good till cancelled orders” and “stop orders” residing on the NYSE book will be canceled, NYSE said on Monday.

PLY: Interesting reflection on relative US stock liquidity and raises the question that clearly if stops are no longer an order type, then why do we bother with the other couple of dozen (qv usage stats here)?

 

High-Speed Firms Add New Perspective To Treasury Advisory Group

Alexandra Scaggs & Liz McCormick – Bloomberg

KCG Holdings and Virtu Financial are the newest members of the Treasury Borrowing Advisory Committee of SIFMA. Known as TBAC, the panel meets with U.S. officials quarterly to discuss debt issuance and borrowing plans.

 

MiFID II – Keep The Pedal To The Metal

FTSE Global Markets

ESMA has called for delays to the MiFID II implementation deadline. While some commentators have suggested this puts an end to the punishing timeline that the industry is currently wrestling with, things are rather more complicated, and an industry-wide sigh of relief may be premature.

 

CFTC Divisions Provide Time-Limited No-Action Relief for Certain Affiliated Counterparties

CFTC

 

CFTC Open Commission Meeting On November 24th To Consider A Proposal On Automated Trading

CFTC

 

Square IPO Offers Up A Litmus Test (subscription)

Telis Demos & Corrie Driebusch – Wall Street Journal

The battered market for new technology-company shares faces an important test Wednesday, when Square is to price an IPO that could value the company at more than $4 billion.

 

ESMA Consults On The Validation & Review Of CRAs’ Methodologies

MondoVisione

 

MiFID: ESMA Makes Available Pan-EU Data On Suspensions & Removals From Trading

MondoVisione

Private Markets

New York Asks Court To Shut Down FanDuel, DraftKings (subscription)

Sharon Terlep – Wall Street Journal

FanDuel said on Tuesday it would temporarily bar New York residents from playing contests on its site. It had already stopped taking new deposits. Rival DraftKings continued to allow New Yorkers to play without restriction. The two dominate the fantasy sports business. In a motion for a preliminary injunction filed on Tuesday in New York State Supreme Court, Attorney General Eric Schneiderman argued that the state constitution prohibits bookmaking and gambling and that daily fantasy sports contests are “plainly illegal.”

PLY: A pivotal moment of concern for the fantasy sports franchises…

 

Japanese Regulators Discuss Policing Domestic Bitcoin Exchanges

Stan Higgins – CoinDesk

The Japanese government is gearing up to regulate bitcoin activity more actively in the wake of the collapse of bitcoin exchange Mt Gox.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX down 15%, FTIL off 1%.

Technology

LSE, SocGen, CME, UBS Among Big Names In Blockchain Trade Push (subscription)

Anna Irrera – Financial News

LSE, CME and Major Banks Reportedly Form ‘Blockchain Settlement Group’

Leon Pick – Finance Magnates

Some of the world’s largest exchanges, banks and trading services firms have set up a cross-industry group to explore how blockchain technology could transform post trade process.

 

Hotspot – Successful Migration Of U.S. Matching Engine To Equinix NY5 Data Center

BATS Global Markets

Products

SGX Plans Bond Trading Platform Launch In Q1 2016

Anshuman Daga & Lisa Jucca – Reuters

SGX is looking to launch a corporate bond trading platform in Q1 2016 (first reported one year ago) as it seeks to expand its product suite in an effort to boost revenue, its CEO said.

SGX’s Bond-Market Foray Now Includes A Dark Pool

Christopher Langner & Andrea Tan – Bloomberg

SGX will also open a dark pool for bonds as part of SGX’s Bond Pro platform scheduled for Q1 2016.

QV Premium: The Bond Platforms Rush Brief – Part 2.

 

GMEX’s CMF Granted CFTC Approval

GMEX

CFTC permits GMEX to offer its Interest Rate Swap Constant Maturity Futures (IRS CMF) to U.S.-based firms by directly accessing GMEX Exchange. Trade confirmation and clearing of the GMEX IRS CMF takes place at Eurex, the derivatives marketplace of Deutsche Börse. Transactions will be processed via the Eurex Trade Entry Service, which has been made available to U.S. based exchange participants recently.

 

ICE Futures Europe To Introduce A Containerised White Sugar Futures Contract In 2016

Business Wire

Expected launch Q1 2016, with a first maturity of August 2016.

 

New Players Break Into Credit Derivatives (subscription)

Joe Rennison – Financial Times

New entrants are breaking into the dealer-dominated credit derivatives market as trading increasingly occurs on electronic platforms. Eagle Seven, a prop trading firm in Chicago, confirmed it began quoting prices on cleared index CDSs last week. Verition, a NY-based hedge fund and Stifel Nicolaus, a new bank entrant to CDS markets, have also been making inroads.

 

BlackRock Seeks Approval For Nontransparent ETFs (subscription)

Leslie Josephs – Wall Street Journal

BlackRock is the biggest provider by assets of ETFs. Most of the firm’s offerings track indexes, but BlackRock is making a renewed attempt to win SEC approval for products that are run by a portfolio manager and don’t have to disclose their holdings daily, according to a filing dated Nov. 12.

Career Paths

HKEx announced the Group structure changes in preparation of new strategic plan.

Trevor Spanner, CEO of LME Clear & Head of Global Clearing (Europe), will relocate from London to Hong Kong in January 2016 to become COO of HKEx & head the new Platform Development Division.

Henry Ingrouille, current COO, has decided to pursue interests outside of HKEx, but will remain with HKEx until the end of March 2016 to help manage the transition.

The new Clearing Division and Markets Division will headed by Calvin Tai & Roger Lee respectively. Mr Tai is currently Head of Global Clearing (Asia). Mr Lee is the Global Markets Division’s Head of Market Operations.

The new Market Development Division will be co-headed by Romnesh Lamba, who currently heads Global Markets, & Li Gang, who currently co-heads the Mainland Division.

Mao Zhirong, currently Co-head of the Mainland Division, will continue to be responsible for Mainland business development including regulatory, policy and exchange relationships.

Adrian Farnham, COO of LME Clear, will replace Mr Spanner as CEO of LME Clear and Iain Greig, CTO of LME Clear, will succeed Mr Farnham as COO of that business.

Trevor Spanner will be reappointed to the Board of LME Clear and will also join the Board of LME. Adrian Farnham will also join the Board of LME Clear in his capacity as CEO of that business.

BGC Partners appointed Anthony Warner as Senior MD & GM for BGC Brokers, London.  Reporting to BGC’s President, Shaun D. Lynn, Mr. Warner’s responsibilities will include overseeing corporate initiatives and strategic growth efforts in the U.K. as well as other European and Middle East locations for the group.

SR Labs hired Rob Lane as Head of European Sales, Business Development and London GM. Prior to SR Labs, Rob Lane worked for Interactive Data for over 19 years where he held numerous positions.

Business Insider reports that UBS O’Connor, the $5.7 billion hedge fund unit housed by UBS, hired former Citigroup trader Kevin Russell to be chief investment officer. He will join the firm in January and report to Dawn Fitzpatrick, head of O’Connor.

Algomi Cuts Nearly 10% Of Staff (subscription)

Anna Irrera – Financial News

London-based fixed-income start-up launched by a former UBS trio made the decision after its annual performance review.

Financial Calendar

This week

18.11 – MarketAxess $0.20 quarterly cash dividend payment

19.11 – SEC Government-Business Forum on Small Business Capital Formation – agenda here.

19.11 – Record date Thomson Reuters $0.335 quarterly dividend

20.11 – Record date TMX $0.40 dividend

20.11 – Record date BGC Partners $0.14 dividend

20.11 – Record date ITG $0.07 quarterly dividend

New announcement

24.11 – CFTC Open Commission Meeting (more here)

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

Analyst Notes

Moody’s affirms Baa3 Ratings Of ICAP & Ba1 Ratings Of Tullett Prebon, both outlooks changed to stable. (more here).

A full table of current analysis can be found on our Analyst Ratings page which is updated daily.

Other stories

`Barrow Boy’ Brokers Were Ignored By Bankers On Libor, Read Says

Liam Vaughan – Bloomberg

Darrell Read, a former ICAP employee accused of helping rig Libor told a London court that IDBs are second-class citizens in the financial world who are ignored by better-educated bankers. “Banks hold all the power,” the 50-year-old Read said. “The old image is of East End barrow boys paid to give prices and be entertaining.”

 

Executives Sued By SEC Over Bob Marley Pump-and-Dump Scheme

Matt Robinson – Bloomberg

U.S. regulators sued a group of alleged penny stock manipulators in a $78 million scheme where they hijacked a small coffee company formed by Bob Marley’s son to reap profits from the name and trademarks of the late reggae singer.

 

Remarks By US Department Of The Treasury Deputy Secretary Sarah Bloom Raskin At The Clearing House Annual Conference

MondoVisione

 

Federal Reserve Governor Jerome H. Powell, At The Clearing House Annual Conference, New York, November 17, 2015, Central Clearing In An Interdependent World

MondoVisione

PLY: The US banking Clearing House pre dates the Fed Reserve by about 50 years…

 

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