November 27 2014

elb2

Greetings from Brussels where last evening FESE and European Issuers hosted their second annual European Small and Mid-Cap Awards Ceremony. Huge plaudits to Susannah Haan and Rainer Riess as well as the indefatigable Sara Baldi and all the organising team. FESE President Christian Katz was in good form while the blistering performance of the evening was a pointed, passionate, passport to better SME fundraising by Deirdre Somers of the Irish Stock Exchange. A great evening and terrific to see a broad roster of victors all the way from Spain in the west to Poland in the east.

While Europeans were giving thanks for SMEs – which, as Deirdre Somers noted, provide 67% of European employment – our readers on the other side of the Atlantic are preparing for their own Thanksgiving. On behalf of myself and the team, we wish all Exchange Invest readers a very Happy Thanksgiving and applaud the many great achievements of the incredible nation which is the USA.

Today in Exchange Invest, it is mostly life outside north America with a few useful nuggets no matter what your specific interest, happy scrolling:

Public Markets

Investment From Rakesh Jhunjhunwala Re-Imposes Faith In MCX-SX: Saurabh Sarkar, MCX-SX
The Economic Times

As reported yesterday FTIL has entered into a share and warrant purchase agreement with investor Rakesh Jhunjhunwala (rumoured to have bought 4% in IEX) and a separate agreement with a clutch of investors including Edelweiss Financial Services Ltd. to sell a total of 2 7000 000 equity shares and 562 460 000 warrants in the two deals for an aggregate consideration of Rs.88.419 crore (USD 14.3 mln). FTIL held a 5% in MCX-SX along with warrants.

PLY: Now the worry is how much MCX-SX have leveraged faith and hope. It has a new cornerstone investor of sorts in Mr Jhunjhunwala but the vision remains at best, fuzzy, methinks.

Trade Group Calls For More Resilience & Transparency Of Clearinghouses (subscription)
Andrew Ackerman & Katy Burne – Wall Street Journal

A Wall Street trade group is pressing regulators to boost the resilience and transparency of clearinghouses, which constitute a key safety net for the financial system.

ISDA said firms like CME, LCH Clearnet and other clearinghouse operators must take steps to reveal more about their business risks and set aside more cash reserves.

PLY: Those expecting a distinct yes here may be surprised to hear me equivocate. While we need the safest CCPs imaginable, the ability of the banks to twist any figment of fact to suit their position clouds rational debate even more than any perceived denial on the part of CCPs. The disingenuity and dissembling of many banks makes me more cautious about their distinct lack of transparency than the debate on the future safety of the end of the waterfall which while a justifiable debate, must not become a mere whitewashing of the fact that banks often appear frankly spineless about managing their own risks. aka banks can apply additional margins to cover their perceived counterparty risk but increasingly they do not do so… Such Jobsworth risk management just won’t do, chaps. Besides, being spineless in the face of possibly upsetting some customers is the preserve of the exchanges (I wish it weren’t but sadly this is all too true – the last thing we need is the banks behaving in the same wimpish fashion).

Yes, we need a full and honest discussion about the quality of the fluid flowing into the waterfall from every direction and in that sense I am beginning to believe the bank clearing members may be protesting a little too much without recognising their own needs to be reliable in a time of crisis, memory of 2008 is already remarkably selective amongst many credit institutions.

BVB Sets Sights On EM Status (subscription)
Andrew MacDowall – Financial Times

Bucharest SE (BVB) is the largest bourse in post-communist south-east Europe and for spells in the past decade has been ranked as one of the world’s best-performing.

PLY: BvB can barely fill a large football stadium with investors. While Ludwik Sobolewski has achieved a lot as CEO of the exchange, the Romanian economy has significant issues with honesty, corruption and indeed basic corporate governance. The notion of Bucharest as a regional financial centre – taken straight from the Warsaw SE playbook – is a challenge. Foreign investors need to feel comfortable, right now Romania cannot offer that. QV the head of the anti corruption squad was ousted for, er, fraud, last week – that’s not a typical trait in what investors regard as civilised jurisdictions.

However, there may be hope, in a new President who as Mayor of Sibiu was a remarkable figure: I have made a few comments about this in my latest OpEdge column about Klaus Iohannis and his anti-corruption campaign.

Bursa Malaysia Implements Straight Through Processing For Registration
MondoVisione

Effective 1 December 2014, Bursa Malaysia will implement Straight Through Processing (STP) for registering individuals such as Dealer’s Representatives, Futures Brokers Representatives and Directors of Brokers.

Private Markets

Somalia’s New Bourse Sees Seven Firms Listing On Opening In 2015
Duncan Miriri – Reuters

Somalia SE expects seven companies in the telecoms, financial services and transport sectors to list their shares when the bourse is set up in 2015, its founder said.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX is flat, FTIL down 1.5%. Resolution appears increasingly futile.

Alas.

Technology

BATS One Feed Update
MondoVisione

As previously announced, the production release of the BATS One Feed has been delayed pending SEC approval. Please refer to the BATS One Feed Specification for updated IP address and port details.

Shanghai Futures Exchange Notice On Trading System Testing
MondoVisione

Products

SGX To Start Bond-Trading Platform By Mid-2015
Sharon Chen – Bloomberg

As first rumoured earlier this month, SGX plans to begin a bond-trading platform by the middle of next year.

PLY: Initially G3 currencies with Asian local currency bonds to follow. An interesting development and one which shows SGX is seeking to remain highly relevant.

SGX press release here.

Lawsuit Alleges Palladium, Platinum Prices Manipulated (subscription)
Ira Iosebashvili – Wall Street Journal

Goldman Sachs, HSBC, Standard Bank, and German chemical maker BASF have been accused of manipulating platinum and palladium prices in a lawsuit filed in New York by jeweler Modern Settings LLC, of Sarasota, Fla.

PLY: Gosh, one day it’s warehousing, the next it is actual price manipulation, does anybody recognise this portrayal of Goldman Sachs?

HKEx Says Investors Comfortable With Mini Contract Settlements
Alex Davis – Bloomberg

The offshore yuan’s low volatility means the time gap between price settlement and FX fixing in HKEx’s new metals futures won’t damp interest in the contracts (the US dollar yuan rate is published at 1115 in HK while the LME-linked price is set 8 hours later at 1930 HK time).

HKFE Announces Revised Margins For Futures Contracts
MondoVisione

MOEX To Reduce Fees For Large FX Trades
MondoVisione

Starting 1 December 2014, MOEX will charge different fees for FX trades depending on the order size.

NZX Launches Global Butter Futures Contract
MondoVisione

NZX will launch a Global Butter Futures Contract on Friday 12 December

SHFE Moves Ahead With Tin Contract (subscription)
Metal Bulletin

Shanghai Futures Exchange is making progress with its tin contract launch and has delivered the application to the China Securities Regulatory Commission (CSRC), the International Tin Research Institute (ITRI) said.

NSE Aims To Offer Derivatives By 2016
Duncan Miriri – The Africa Report

Nigerian SE plans to start allowing trading by 2016 of derivatives such as futures and options in interest rates, currencies and equity indexes, its CEO said.

PLY: A big month for this NSE. Elected members of the WFE, their CEO becoming Chairman of the African Federation of Exchanges and derivatives are coming too…oh and don’t forget those amazing national demographic projections.

Indexes

BM&FBOVESPA Announces 10th Portfolio Of The Corporate Sustainability Index
MondoVisione

Career Paths

FESE named Carlos Marques of BME and Tim Grange of ICE as board members.

PLY: Great to see ICE represented on the FESE board. Meanwhile, interviews have ramped up this week for the post of FESE Director General (to replace Judith Hardt now in the Swiss Banking parish). FESE has been capably managed in the interim by Rainer Riess.

FN reports that Nomura has moved 11 traders in Europe and Asia from its electronic agency brokerage Instinet back onto its own platform, undoing part of an integration of its equities trading division and the brokerage that took place last year.

SEC has named Kevin M. Kelcourse as the associate director for the Office of Compliance Inspections and Examinations (OCIE) in Boston.

Financial Calendar

Friday

Record date CBOE $0.21 quarterly dividend

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

Share Notes

LSE Wednesday said that Raffaele Jerusalmi, CEO of Borsa Italiana, sold 15,000 shares for GBP 21.90 each (bargain GBP 328.5k) on Tuesday.

Interactive Brokers CFO Paul Jonathan Brody sold 5,396 shares Monday, November 24th at an average price of $27.13 (bargain $146,393.48). Mr. Brody’s regular sales are chronicled on this specific page.

Analyst Notes

Zacks Reissued Their “Neutral” Rating On NASDAQ OMX – $47.00 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

Lending Club Boosts Size Of Planned IPO (subscription)
Tracy Alloway & Arash Massoudi – Financial Times

Lending Club has boosted the size of its planned IPO to $650m as it prepares to launch investor meetings next week and seeks a US stock market listing that is being hailed as a watershed moment in the development of the P2P lending sector.

Lending Club has chosen NYSE for its IPO.

Other stories

Milton, Merton, Myron, Markets & Me
Leo Melamed – Futures Magazine

A speech by Leo Melamed during his November European Tour.

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