November 20 2013


DB says no to Euronext, Jeff says still plans an IPO, Qatar goes dark when NYSE Tech fails, CME takes heat for industry leading fee rises, ISE Gemini breaks 20 million trade barrier in barely 100 days, FTIL value a huge conundrum…

It was a pleasure to be amongst the guests yesterday at first a dynamic IPO roundtable and then at the inaugural European SME IPO Awards organised by FESE and European Issuers last evening. Fascinating to see so many exciting, dynamic nominees and winners drawn from diverse sectors ranging from nanotech via IT all the way to freight transport. A super event and particular congratulations to Warsaw SE with a stunning 3 nominations in 4 categories and indeed Oslo Exchange who swept the board with 3 winners. Excellent nominees too from DB, NASDAQ and NYSE Euronext, amongst others.

The event marked a fitting swansong for outgoing FESE President Hans-Ole Jochumsen who with good humour, charm and a great deal of diligence, has worked assiduously to promote FESE during a successful Presidential term which has helped increase the profile/prestige of both FESE and indeed by association, NASDAQ OMX in the European marketplace. I’m completing EI today facing in the direction of FESE’s offices endeavouring to spot the white smoke which will doubtless presage the election of a fitting successor to Hans-Ole…

…and indeed the news reaches me that Dr Christian Katz, another avid CEO reader of these pages has been elected President, as expected. Brilliant news, the organisation is well positioned to move ahead under the stewardship of the Swiss Exchange CEO.

…another big news day, happy scrolling:

Public Markets

ICE Remains Committed To Euronext IPO After Liffe Separation

ICE remains committed to spinning off its European equity market division, Euronext, through an IPO, according to CEO Jeff Sprecher.

“The first order of business is to complete the extensive work to separate LIFFE from Euronext.”

PLY: The phrase “may retain a stake in Euronext post IPO” for me is significant here. While I love the idea of such efficiency in markets as to be able to sell your business into an IPO outright, just how many such sales have been achieved in recent years? Therefore, ergo, if I pop in and say offer a few suitcases full of (AML cleared, naturally) cash for the whole business and will save Jeff’s team lots of meetings with investment bankers, lawyers and whatever chargeable hours will emerge, would he take the deal?

Meanwhile, Euronext’s open market value appears to be slipping as they lose market share in single name options to EUREX and TOM – surely therefore the highest price will be paid by an eager trade bidder who thinks they can turn Euronext into a more coherent business going forward?

Deutsche Boerse Chairman Says No Large Deals On The Cards

Deutsche Boerse will continue to shun large acquisitions, its supervisory board chairman said on Tuesday.
“It’s not on the agenda anywhere,” Joachim Faber told journalists on the sidelines of the Euro Finance Week conference in Frankfurt, when asked whether large takeovers were on the cards again for DB.

PLY: Good thing too, DB has the tools at its disposal to move forward, now it needs to exploit them.

ICE Turns Up Heat On Singapore Commodity Markets

Singapore’s growing status as a commodities trading hub has drawn global heavyweight ICE, which will fork out US$150 million to acquire commodities market operator SMX.

PLY: ICE in Singapore is a great advertisement for the City state and their willingness to be more open will have an ongoing positive impact for the financial centre.

Singapore Regulator May Have Nudged Jignesh Shah-Owned FTIL To Exit SMX
The Financial Express

PLY: Without a doubt the least shocking news story of the year.

CME Stands By Fee Hikes As Brokers Protest
Chicago Tribune

CME will move ahead with plans to hike fees for traders despite an outcry from customers fuming over higher costs.

PLY: It’s a complex and emotive issue but actually if exchanges can get to a point where they can raise prices where appropriate it will be a huge leap forward for investors and ought to be an improvement for users too (somewhat oxymoronically perhaps) especially if the uber-complexity of tariffs are simplified and a more level playing field applied.

CBOE Says It Is Open To Growing Within Comfort Zone

CBOE is open to licensing new products and acquiring technology but only within its options-focused comfort zone and interested in new products the company can offer exclusively or semi-exclusively, CEO Ed Tilly said in a webcast of a Keefe, Bruyette & Woods conference in New York.

PLY: CBOE will stick to its comfort zone. Understandable but self-evidently unlikely to be transformative. A steady Chicago approach is in view, with management flexible within their existing core competencies.

London SE Endorsed As Pre-LOU For Legal Entity Identifiers

The Regulatory Oversight Committee (ROC) of the Global LEI System (GLEIS) has endorsed LSE as a globally accepted Pre-Local Operating Unit (LOU) for the allocation of Pre- Pre-LEIs.

ISE Gemini Trades Its 20 Millionth Contract
The Options Insider

ISE announced that ISE Gemini traded its 20 millionth contract.

PLY: ISE hits the spot – again! After a rollout of scintillatingly seamless smoothness, ISE’s incremental expansion has left the new market with circa 2.8% of the US options market since launch on August 5th and has crossed the 20 million contract threshold. Stunning. Gary Katz and his team deserve fulsome praise once again.

…Oh and by the way I understated the achievement in the opening blurb. Florin tells me it was 107 calendar days since launch which makes for some 76 trading days apparently (and don’t forget they only launched with a very very modest slate of just 6 shares at first – en route to 20 million options contracts they have expanded their rollout to 700 names!).

Private Markets

Direct Edge CEO: Investors Aren’t Getting Ripped Off

PLY: Bill O’Brien gets irritated by Jeff Sprecher’s assertion that small investors are being ‘ripped off’ and other issues…

EMEX, LLC Launches New Exchange

EMEX, LLC, a leading technology firm providing real-time energy procurement platforms in the deregulated regions of the USA, is launching its new Exchange with the most technologically advanced Energy Reverse Auction Platform for natural gas and electricity:

The new Exchange enables commercial, industrial, and governmental buyers of natural gas and electricity to procure the same way it’s done by wholesale buyers in the PJM market, including PSE&G, JCPL, PPL, and PECO: via real-time Reverse Auctions.

With commercial customers having unprecedented access to transparency and liquidity through the advanced technology that compels leading Energy Service Companies (ESCOs) to compete and provide the lowest possible electricity and natural gas rates, the Energy Market Exchange platform revolutionizes energy procurement for business, industrial, and government customers of all sizes.

PLY: Sounds interesting. I look forward to more news on this while indeed looking forward to broader US energy deregulation.

NGM Nordic Pre Market

Nordic Pre Market is a brand new platform for companies on their way to the exchange. A platform that aims to prepare the company before it enters the exchange and lists their shares for daily trading. To support companies at Nordic Pre Market NGM has developed an educational program in five steps that prepares the company for a listing at NGM Equity or Nordic MTF.

Through Nordic Pre Market, the companies will be given support and advice in order to raise their quality at the same time as making their transition to the stock market easier. The companies will also be exposed to investors with interest in upcoming issues.

PLY: An interesting development from this exciting Boerse Stuttgart subsidiary…

Qatar Exchange Cancels Day’s Trades After Glitch

Qatar Exchange cancelled all transactions executed on Tuesday after an unspecified technical problem disrupted its trading platform.

QE press release here.

Qatar Exchange Resumed Business As Usual Today.

Press release here.

PLY: You may recall the pyrrhic victory of NYSE Euronext’s investment in Qatar when they got their money back after multiple years providing a small army of consultants to the emirati exchange. Now it seems the NYSE technology isn’t working. Not a good result just as NYSE Technologies is looking at an uncertain future.

EOW Begins Preliminary Inquiry Against NCDEX

The Economic Offences Wing (EOW) today said it has initiated preliminary inquiry against NCDEX following a case filed for alleged non-delivery of black pepper.

PLY: The pepper saga continues…

40 NCDEX Warehouses Get Authority Registration
The Hindu Business Line

NCDEX has announced that 40 warehouses associated with it have received Warehouse Development and Regulatory Authority registration and another 250 have applied for registration.

The exchange has 500 accredited warehouses and all of them have to get themselves registered with the authority before the end of this year according to FMC directive.

The new directive was fallout of the settlement default by the NSEL which allowed traders to take sell position without the backing of commodity at the warehouses.

PLY: …And indeed in the case of NSEL there was a further layer of ‘virtualisation’ as many of the apparent warehouses didn’t actually exist, let alone the many others which were understocked or indeed often, entirely barren.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Weekly default day yesterday passed as usual without much incident – at least in terms of actually troubling anybody with a repayment, approximately 26 million short for the week…

The fraud squad are encumbering all manner of properties which is good while the market ponders just how much FTIL is worth – it’s wildly wealthy in asset terms, the tricky bit is how much ends up itself encumbered in all manner of claims going forward: The ultimate arb for the brave/reckless or certainly risk averse. MCX shares are flat today while FTIL retraces a few percent after a couple of heady days of euphoria.

The NSEL tally of shame remains:

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
Week 14: Rs. 6.1 crore ( USD 976.7k) paid

NSEL Defaults For Fourteenth Time, Pays Rs. 6.1 Crore (USD 976.7k) Against Rs. 174 Crore (USD 27.86 Mln)

NSEL defaulted for the 14th straight time on Tuesday as it could pay only Rs. 6.10 crore (USD 976.7k) to investors against a scheduled payment of Rs.174.72 crore (USD 28 mln).

With Tuesday’s payout, NSEL settled about Rs. 226 crore (USD 36 mln) against Rs.5,600 crore (USD 896 mln) dues to 13,000 investors.

The Big Hole In FTIL’s Sum-Of-Parts Valuation

PLY: I am delighted to be quoted here from yesterday’s EI stating my approval of the SMX trade for ICE while author Mobis Philipose deftly identifies the issue for FTIL – a lot of cash may be about to appear but there could still be similar or greater liabilities to any income!

Another highly pertinent point by Mobis in his article:

“Of course, some investors knew a day earlier, which is evident from the surge in both volumes and prices on Monday. FTIL shares had risen by 20% on NSE on Monday, which should be reason enough for SEBI to investigate which investors gained the most by trading on the unpublished information.”

Jignesh Shah Expresses “Mixed Emotions” About Sale Of SMX

FTIL CEO and MD Jignesh Shah expressed “mixed” feelings about the sale of sale of SMX for $150 million to ICE.

Mr Shah hoped that the bourse’s success would inspire many more entrepreneurs in both countries.

PLY: Have to agree with the latter statement but will regulators remove their inherent monopolistic mind-set and allow more exchange entrepreneurs to flourish?

Angry NSEL Investors Accuse FTIL Of Another Fraud

Financial Technologies claims it is repaying foreign currency loans, but angry investors in NSEL allege that the promoters are taking money out of the company to pre-empt any adverse regulatory/judicial ruling.

The SMX deal valuation of Rs 900-odd crore (USD 150 mln) has analysts rubbing their eyes in disbelief, considering Rs 292 crore (USD 46.7 mln) of accumulated loss, FY13 revenues of around Rs 18 crore (USD 2.8 mln), and a daily turnover of around USD 200 million. Arun Dalmia, President of NSEL Investors Forum is questioning FT’s haste to repay foreign currency loans, when they are maturing in 2014 and 2015. In September this year, FT had repaid USD 76 million of foreign loans. And he is mincing no words.

PLY: The SMX value is fair given the optionality for ICE of gaining a ‘plug and play’ clearing house with exchange attached. The separate notion that FTIL might try to spirit money overseas in some way is of course, well, interesting.

EOW To Attach Properties Of Jignesh, Massey
Business Standard

PLY: Property of the directors, including Jignesh Shah and Joseph Massey, of NSEL have been attached by the fraud squad amongst a growing portfolio of 166 properties (so far).

NSEL Scam: NK Proteins Agrees To Settle Dues
The Economic Times

PLY: Hmmm. NSEL says NK Proteins owe 150 million dollars (Rs 935 crore) but is seeking to settle ‘only’ its counterclaim debt of Rs 250 crore (USD 40 mln) to the crippled exchange and even then over a lengthy installment plan. Lawyers said NK Proteins Patel is ready to pay Rs 11 crore USD 1.7 mln) to NSEL in the next 15 days and then Rs 5 crore (USD 800k) every month till dues of about 250 crore (USD 40 mln) are settled.

In other words, if NK Proteins pay as they schedule it will be 4 years before they would repay what they claim they owe…or indeed a shade under 15 and a half years if they have to pay the full amount NSEL asserts. Meanwhile Indian inflation is about 7%.

Nope, doesn’t really work for me and I’m not even a creditor.


Deutsche Börse Enhances Xetra Market Data Offering With Exclusive Real-Time Analytics
Deutsche Börse

Deutsche Börse Market Data + Services is introducing exclusive analytics based on raw, unpublished Xetra order book data. Effective 25 November 2013, Xetra real-time analytics will provide market participants with additional, exclusive in-depth trading information.

New Go-Live Date For The NASDAQ OMX Genium INET
Nasdaq OMX

The go-live date for the NASDAQ OMX Genium INET release 3.0201 has been postponed to December 9th 2013, from the previously announced November 25th 2013.

Moscow Exchange Will Migrate To A New Format Of The Stock Market Data Dissemination On February 17, 2014

From February 17th, 2014, the only data available for the vendors clients, using terminals and other products containing the Exchange market data, will be the data from the Main Market, while the market data from the “Standard” and “Classica” sectors will be available only to trading members connected directly to the Exchange.

TeraExchange Joins IPC Connexus Financial Extranet Service

The SEF TeraExchange, has joined IPC’s Connexus Financial Extranet service.

Career Paths

Cantor Fitzgerald Europe announced the continued growth of its European credit fixed income sales and trading business with the appointment of Sara Simmons and Per Mortensen as MDs based in London. Ms. Simmons will focus on sales for Investment Grade, Emerging Markets, High Yield and bank capital products in Benelux, Austria and Switzerland, while Mr. Mortensen will focus on sales of Investment Grade and High Yield products in Scandinavia and Germany.

Financial Calendar


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.

Analyst Notes

Espirito Santo Investment Bank Cut Their Price Objective On Tullett Prebon From GBX 364 To GBX 354 – “Buy” Rating

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 Website Raises Money For Vets’ Causes, launched last spring, is a crowdfunding website inspired by — but the mission of the site is specifically to help veteranss.

Other stories

JPMorgan Agrees $13bn Settlement (subscription)
Financial Times

Bank admits mis-selling mortgage securities in landmark case.

PLY: For readers who think it cannot get weirder than the US government pogrom against JPM (or perhaps weirder still than me sympathising with a bank), try reading about the former Chairman of the UK’s Co-Operative Bank. I long wondered what they were on to get the ghastly loan book which sank them. As always the truth is a greater cocktail of weirdness than any fiction could plausibly suggest.

KPMG Collaborates With NYSE To Release IPO Guide
The Wall Street Journal

KPMG, in collaboration with NYSE, has released the latest NYSE IPO Guide, a publication distributed every two years that provides critical insight into the challenges and opportunities associated with taking a company public.

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