November 26 2013

elb2

Aquis a go-go as Hellenic report 9 month results, Christian Katz seeks consensus, Mass. wants to educate investors, ISDA on FTT, SCOACH name goes and much more, scroll on:

Public Markets

Hellenic Exchanges 9 M 2013 Financial Results
MondoVisione

The consolidated net after tax profits of HELEX amounted to EUR 40.5 mln vs. EUR 8.8 mln in 9M 2012 and are significantly increased mainly due to the recapitalization of the systemic banks.

The net after tax profits per share in 9M 2013 including bond valuation differences amounted to EUR 0.63 vs. EUR 0.15 in the corresponding period last year.

The total turnover from core activities of the Group amounted to EUR 67.5 mln in 9M 2013 vs. EUR 22.1 mln in 9M 2012, while total consolidated revenue amounted to EUR 67.2 mln vs. EUR 23.7 mln. It should be noted that in 9M 2012 the company booked EUR 2 mln in non-recurring revenue.

PLY: As I have often stated before, Greece may be a basket case and likely to remain so until its populus realise the folly of their political masters and indeed exit the Euro straitjacket but HELEX is an incredibly robust business as these figures once again demonstrate.

Hellenic Exchanges: 1st Repetitive General Meeting Of HELEX
MondoVisione

On Friday November 22 2013, the 1st Repetitive General Meeting of shareholders of the Company was held…

Europe Market Structure Debate Needs More Consensus, Katz Says
Bloomberg

Amid a public debate about whether modern equity markets are fair, reliable and transparent, the European securities industry’s key players must collaborate more on resolving differences, according to the new chairman of the region’s main lobbying group for exchanges.

The public wants “safe, efficient, transparent markets…We have to live up to it. The industry groups and stakeholders — that is, exchanges, banks, customers and the public — should be less against each other and more together. There should be joint effort for capital market solutions.”

PLY: Readers should be in no doubt, I like Christian Katz. More importantly I respect him too. He is a capable thinker.

Moreover, Christian arrives at FESE at the right time for the organisation. The crossroads from lobbying to implementation Christian correctly emphasises that we are moving to a point where having seen so much work on secondary markets, the primary markets need our focus so we can see Europe achieve a great equilibrium not the currently unsustainable 80:20 bank/public market model. FESE itself is at a crossroads too – the industry as a whole needs to work holistically for all our investment benefits but FESE needs to consider its own breadth. The barriers between MTFs / Institutional Liquidity Pools and alternative platforms are breaking down. The EU is producing rules for SME exchanges as well as crowdfunding and to that end, FESE needs to consider how it becomes the broad church of exchange platforms – for there is no argument this is the greatest point in history for exchanges to exploit. The key issue is whether FESE can move forward and exploit the model or will fall victim to a legacy attitude which means they could yet end up on the wrong side of the ledger despite espousing the perfect model for the age.

If anybody can make sense of this situation, it is Christian Katz and in FESE he retains a highly credible secretariat which can work with him to shape the fascinating future for both exchanges and the broad European marketplace. Despite stumbles by the Commission et al of late, there is still everything to play for to ensure European prosperity as an anchor to world growth as we implement the brave new world.

Sense of the Markets: For Now At Least, Euronext May Stay Single
The Street

PLY: So they have smoked out the usual suspects while others are wondering whose phone number they ring to bid. Meanwhile the unitary licence of Euronext and LIFFE may delay things a bit but the sale will happen and the more France huff and puff, the more it will encourage a break-up bid.

RBC Urges SEC To Test Overhaul Of Exchange Business Model
Bloomberg

The practice among stock exchanges of paying rebates to some traders puts long-term investors at a disadvantage and SEC should consider eliminating the system, RBC Capital Markets said.

The SEC should consider an alternative to the “maker-taker” business model and require trading venues to offer rebate-free pricing structures, Richard Steiner, the New York-based global equities liaison to regulatory and government affairs at RBC Capital Markets, wrote in a comment letter to the SEC.

PLY: Richard Steiner of RBC has entered the debate with some gusto here and I applaud his efforts to prise open the labyrinthine world of exchange fees where, frankly a PHD may be left scratching his head in wonder (I firmly believe if you can follow the CBOT fee structure of, say, 2000 A.D. then cracking the Rosetta Stone ought to be a cinch).

I have no problem with wholesale discounts but at the same time there needs to be greater clarity and, frankly, where exchanges appear to pay rebates always strikes me as inches away from ‘backhanders.’ Those of a long memory will recall how ⅜ pricing caused NASD a huge problem with their old stock trading platform before it became an exchange. The regulators construed conspiracy, I always construed a different c-word but the point is some zealous prosecutor will sooner or later use pricing structures that don’t smell of roses against the industry.

LME Has No Current Plans To Cease Open-Outcry Floor Trading: CEO
Platts
Jefferies Withdrawal Renews Questions On LME Ring Future (subscription)
The Wall Street Journal

LME currently has no plans to cease open-outcry floor trading, LME CEO Garry Jones told Platts Monday although a consultation would be started in 2014 on the future of the open-outcry system.

PLY: Essentially after a 14 month period in the ring, Jefferies withdrew and now the media are trying to turn it into a floor closure story. As the world’s leading advocate of floor closure let’s make it clear – the ring is 4000 sq feet (circa 400 sq m). It is therefore a multi-use facility and as a fixing point so long as it provides brand and value to LME, it ought to stay. All other floors are, however, definitively doomed, having lasted at least a decade more than they ought.

OTC Clear Has Smooth Soft Launch
HKEx

OTC Clearing Hong Kong Limited (OTC Clear), a subsidiary of HKEx established to provide clearing services for OTC derivatives, announced that its soft launch of business was completed smoothly yesterday.

MarkitSERV To Process OTC Derivatives For OTC Clearing Hong Kong
waterstechnology

MarkitSERV, Markit’s electronic trade processing service for OTC derivatives, is the first global trade processing middleware service to connect to OTC Clear. MarkitSERV will also connect customers to the Hong Kong Monetary Authority’s new trade repository and provide workflows to facilitate compliance with trade reporting requirements in Hong Kong from early December onwards.

SGX And CSRC Establish Direct Listing Framework
Automated Trader

SGX and the China Securities Regulatory Commission (CSRC) have announced they will establish a Direct Listing Framework for companies from China to list in Singapore.

PLY: Very interesting. Will SGX and Singapore’s regulators be willing to act pre-emptively if they see some element of untowards activity? That will be the key test.

Private Markets

Aquis Poised For Debut (subscription)
Financial News

Aquis Exchange, Europe’s newest alternative equity market, is set to launch today with 11 customers, in a bid to shake up trading tariffs across the region by using a fixed subscription model. It will start trading UK, French and Dutch stocks.

PLY: We know Alasdair Haynes has built everything out on a tight budget and we wish him well with his endeavour. Aquis is a fascinating model but it appears to need a very significant market share to make a profit…

Bats Global Markets Says Options Trading Disrupted
kansascity.com

BATS markets were disrupted Monday.

SIX Strengthens Market For Structured Products In Switzerland
MondoVisione

As of 1 January 2014 the brand identity of the exchange for structured products will be integrated into SIX and the Swiss Exchange business area. Backed by the strength of the SIX brand, the Swiss exchange for structured products will be able in future to address the special characteristics of the Swiss market and contribute to its continuing development.

PLY: Farewell to the worst brand name in industry history: SCOACH will be retired not before its time after some bright spark in DB didn’t do elementary due diligence. “Scoach” in US street slang apparently means “to steal with stealth” or words to that effect. Clearly not appropriate branding for potentially complex structured products.

Australian Regulator To Report On Dark Pool Curbs (subscription)
Financial News

ASIC is to commence an analysis of its anonymous trading restrictions and expects to publish its findings in the new year.

PLY: Which will prove fascinating if, as expected, it transpires the EU has taken a horrible wrong turning in Mr Barnier’s insanely prescriptive anti-investor measure he wanted pushed through last week in MIFIDII.

The Death Of Intrade
reason.com

PLY: Actually Intrade’s CEO John Delaney may have died but the company itself is about to re-emerge back in the hands of original CEO Ron Bernstein and indeed while it has been widely written off by many, I expect the story is far from over…*

*Disclosure: As an original founder, I still have a few shares although it is more due to rounding error aka you can’t ever be diluted to zero…

Coinsetter’s New Funding Round Almost Complete
coindesk.com

Nascent bitcoin exchange Coinsetter has completed over half of a $1m funding round by crowdsourcing from its early adopters.

Last Monday, CEO Jaron Lukasiewicz sent an email to those who had already signed up for accounts at his exchange to ask if they would like to invest in the interim seed round. Lukasiewicz, who recently launched the public beta version of the exchange, originally secured a $500,000 seed investment in April from a group of angels including: Barry Silbert’s Bitcoin Opportunity Fund, Roger Ver and Technology Entrepreneur Jimmy Furland, among others.

Special Section: FTI, NSEL, India at the Crossroads

PLY: It’s Tuesday so it almost goes without saying we are due for an NSEL default today. MCX and FTIL shares are flat to slightly lower. Another forensic auditor has been appointed:

Forensic Auditor For E-Series Contracts Appointed
Moneycontrol

FMC has appointed Choksey & Choksey for conducting forensic audit of e-series contracts at NSEL.

Mohan India Seeks De-Freezing Of Attached Properties, Approval Of Settlement Pact
Business Standard

Delhi-based Mohan India (MI), the sole borrower of the Rs 5,600 crore (USD 900 mln) scam-hit NSEL that has signed settlement agreement with the exchange, has filed an affidavit with the Mumbai High Court seeking approval of the pact.

NSEL’s second largest borrower with Rs 908.9 crore (USD 145.6 mln) worth payment obligations to the exchange for the entire group companies, including MI and Tavishi Enterprises, agreed to pay Rs 771 crore (USD 123.4 mln) with 15% haircut. But, the bipartite settlement pact was objected by the regulator FMC which understandably wanted the process to go through as per the Bombay High Court direction.

Technology

Budapest Bourse To Launch Xetra Trading Platform Dec 6
4-traders

Budapest SE will switch to the Xetra trading platform Dec. 6, a change aimed at boosting liquidity due to higher international access to the bourse.

The change will apply to the spot market of securities. Futures, options and commodities will continue to trade on the old platform.

PLY: Budapest CEO Zsolt Katona made a good impression on CNBC last week when the channel presented a neophyte delve into Eastern Europe. I still believe in the medium term adding the cost base of Xetra to CEESEG was a mistake and the loss of Vienna SE’s derivatives business to EUREX has further added credence to my concern. Hopefully it can help Budapest but I just don’t follow how the added IT expense inflicted by Vienna is beneficial to the group.

DTCC Limit Monitoring To Provide An Early Warning System
MondoVisione

National Securities Clearing Corporation (NSCC) has filed a proposed rule change with SEC to provide its members with a new tool designed to serve as an early warning system that alerts those firms to trading activity that is nearing defined trading limits.

Speed Traders Meet Nightmare On Elm Street With Nanex
Bloomberg

The nemesis of Wall Street’s high-frequency traders operates out of an apartment-sized office above the Bliss Salon — manicure/pedicure $45 — on Elm Street in the Chicago suburb of Winnetka.

Staring at four computer monitors, Eric Scott Hunsader, the founder of market-data provider Nanex LLC, looks for hints of illicit trading hidden in psychedelic images of triangles dancing with dots that represent quotes to buy and sell U.S. stocks broken down by the millisecond.

Charts of trading produced by Hunsader’s eight-person firm have captivated everyone from regulators to art gallery owners. One stunt involved a computerized piano piece mimicking quotes for an exchange-traded fund. He infuriates some traders, who say Nanex draws unwarranted conclusions and spreads conspiracy theories.

“You ever see ‘Lord of the Flies’ or read that book? When you don’t have a parent around, things fall apart.”

PLY: Good metaphor in William Golding’s classic novel of boys abandoned on a desert island. Interesting article.

Calypso Technology Expands Offices In Santiago, Chile
MondoVisione

Calypso Technology have expanded their offices in Santiago, Chile in response to a rapidly growing client base and increasing opportunities in the Latin American markets.

Products

China To Launch Oil Futures ASAP
hispanicbusiness.com

China , the world’s biggest energy consumer, is pushing ahead with plans to introduce crude oil futures trading as early as possible.

China Approves Trade Of Fiberwood And Plywood Futures At The Dalian Commodity Exchange
lesprom.com

China Securities Regulatory Commission approved trade of fiberwood and plywood futures contracts at the Dalian Commodity Exchange

SHFE Will Add A Night Session For Industrial Metals Trading
Bloomberg

The Shanghai Futures Exchange said it will extend trading hours for copper, aluminum, zinc and lead by adding a night session from Dec. 20 trading from 9 p.m. to 1 a.m. Shanghai time the following day.

Career Paths

NASDAQ OMX announced that Eric W. Noll, EVP, Transaction Services U.S. & U.K., will be leaving the company to accept an offer to become President and the next CEO of ConvergEx Group. NASDAQ OMX will assess internal and external candidates for Mr. Noll’s replacement, and plans to fill that role near the end of the first quarter 2014.

ConvergEx Group is a leading provider of global brokerage and trading-related services for institutional investors and financial intermediaries.

Press release here.

PLY: Within NASDAQ it seems nobody anticipates a Greifeld retirement and indeed he has a contract until 2017, although outside the business, the consensus seems to be increasingly the opposite.

Financial Calendar

Today

Aquis Exchange launch
CBOE will begin trading ex-dividend. A cash dividend payment of $0.18 per share is scheduled to be paid on December 20, 2013.
Interactive Brokers will begin trading ex-dividend A cash dividend payment of $0.1 per share is scheduled to be paid on December 13, 2013.

This week

GFI Group $0.05 Q3 dividend payment
Record date CBOE Q4 $0.18 dividend
Record date Interactive Brokers $0.10 Q3 dividend
Financial Technologies Q2 results

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

Share Notes

Charles Schwab EVP John Clendening sold 83,566 shares Friday, November 22nd at an average price of $24.84 (bargain $2,075,779.44). He now owns 275 shares.

Analyst Notes

LSE “Buy” Rating Reiterated At Galvan Research – GBX 1,700 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

Mass. To Offer Investors Advice On ‘Crowdfunding’
myfoxboston.com

Massachusetts Secretary of State William Galvin is offering training to investors in anticipation of new federal rules on so-called “crowdfunding.”

In July, Galvin formed a new investigative unit to monitor crowdfunding websites that use the Internet to solicit a large number of smaller investors.

The watch group, called I-Crowd, released a brochure on Monday that Galvin says provides tips for those considering making investments through crowdfunding.

The secretary said while he considers such investments risky, he wants to make sure investors have as much information as possible.

PLY: Well, we can’t spell the state, but we love Mass. Secretary of State Galvin demonstrates the enlightened nature that can emerge even in traditionally paternalistic US states. Instead of the clunking fist of aspirational apartheid which threatens to disrupt and divide crowdfunding into ‘haves’ and ‘cannots’ in other parts of the world, government wants to educate investors so they can fend for themselves. Why we can’t teach people to fish investments for themselves in knee jerk socialist areas like the UK and Europe is deeply disappointing – but it is not too late to learn from this welcome political innovation which can be termed “critical MASS” if it makes the crowdfunding world grow in a spirit of educational expansion.

Other stories

HKEx CEO Charles Li Live And Direct: Charles Li Direct
MondoVisione

OTC Clear: Building out a new asset class…

ISDA: FTT: The Impacts And Arguments – A Literature Review
MondoVisione

The report offers an impartial view and provides an indication of the expected impact of the FTT across the financial services sector, as well as the spill-over effects beyond the EU-11 states. It includes key arguments for and against the EC’s proposal and the experiences of the implementation of several historical and contemporary national FTTs. The report was commissioned by a group of 27 trade associations, financial market organisations and business groups.

The executive summary of the report synthesises the key findings of the literature review in order to serve as a briefing note for policymakers and senior officials, who are being sent the report to assist in their decision making processes as the debate on the introduction of the FTT continues.

Link to: Financial Transaction Tax: The Impacts and Arguments – A Literature Review

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