October 03 2014


Various SEF snippets – we generally avoid volumes but have given Bloomberg’s numbers as a snapshot (elsewhere cracking repo volume growth at MOEX – for a vision of the future of post OTC markets look at the volumes in repo on exchange in Istanbul and Moscow…the future looks very exciting albeit at lower margins than OTC dealers have been used to).

Stake sales, other swaps news as ESMA signs of rules etc and Institutional Liquidity Pool volume grows in cash equities. Taiwan brokers get through train access and more…

Welcome to Friday’s free Exchange Invest daily, greetings from the wonderful city of Dublin.

Public Markets

Electricity Watchdog Gives More Time To FTIL For IEX Stake Sale

Electricity watchdog CERC has granted one more month’s time till October 31 for FTIL to completely divest its stake in Indian Energy Exchange (IEX).

Kris Gopalakrishnan, Lakshmi Narayanan, Puneet Dalmia, TVS Shriramare are eyeing the IEX 25% stake (reported here).

EU Securities Trading Reforms Threaten Upheaval (subscription)
Philip Stafford – Financial Times

PLY: The horse and cart is now going T+2 when the digital world means T+0 in real time. The fact that the incumbents are bleating just shows how completely out of touch the established western infrastructure really is. The status quo won’t do, we need real-time markets and real-time clearing, not another political hash.

Europe Reveals Post-Crisis Swaps Rules (subscription)
Philip Stafford – Financial Times

Europe has published rules enforcing compulsory clearing of IRS from the middle of next year, a key component of the region’s plans to shore up markets after the financial crisis.

Esma Starts The Clock On Swaps Clearing – 10 Things You Need To Know (subscription)
Tim Cave – Financial News

PLY: Useful primer.

Nasdaq’s Greifeld Laments ‘Broad Middle’ Of Trading Losing Ground
Eric Garcia – MarketWatch

“When you look at money flows, you see a trend line toward passive investing and alternative investing,” said Robert Greifeld, CEO of Nasdaq, at the Security Traders Association 81st annual Market Structure Conference. Passive investing refers to index funds, which seek to replicate leading market benchmarks in exchange-traded funds and other vehicles. Alternative investing refers to the actions of hedge and private-equity funds.

“The broad middle, which is the source of our transactions, is losing market share.”

Dark Pools Draw Trade Away From Stock Exchanges In September
Francesco Canepa – Reuters

Dark order books, which permit shares to be bought and sold without publicly informing the market until the trade is completed, accounted for 6.9% of total European stock trading last month, up from 6.4% the month before and 5.7% a year earlier.

Around 53 billion euros ($66.95 billion) worth of shares changed hands in dark pools in September, up 20% from the previous month and 29% year on year. This compares with just 250 million euros in January 2008.

Taiwan – Brokers To Have Access To Shanghai-HK Stock Connect
China Post

Major equity market investors in Taiwan have recently been approved as investors of A-shares in mainland exchanges via Shanghai-Hong Kong Stock Connect, starting from Oct. 26.

On August 25th, HKEx completed connectivity test for Shanghai-Hong Kong stock connect. HKEx eyes October 27th for the launch of the trading link with SSE, as reported here.

Chicago Feds Crack Down On High-Speed Trading
Lynne Marek – Crain’s Chicago Business

Federal regulators in Chicago raised the stakes for high-speed traders, with the first criminal indictment for “spoofing.”

Humans Lose to Machines In $500 Billion-a-Day Bond Market
Lisa Abramowicz – Bloomberg

While investors traditionally negotiated prices for U.S. Treasuries by telephone, they’re increasingly turning to computer-based marketplaces for a range of price quotes from different dealers. A record 48% of trades in U.S. government debt have occurred on electronic platforms this year, up from 31% in 2012, according to a Greenwich Associates study.

RBC Proprietary-Trading-Desk Spinoff Plan Nixed by Regulators (subscription)
Rob Copeland & Bradley Hope – Wall Street Journal

RBC dropped a plan to spin off a lucrative proprietary-trading business into a hedge fund after U.S. regulators rejected the move.

Private Markets

Bloomberg SEF Releases Year One Performance Metrics
Business Wire

Bloomberg announced that its multi-asset SEF, Bloomberg SEF LLC, executed more than $6.6 trillion in transactions during its first year of operation. Since the CFTC’s SEF rules went into effect on October 2, 2013, nearly 150,000 trades were completed on Bloomberg SEF across multiple asset classes, including IRS, CDS, and FX and commodity derivatives.

CDS and IRS comprised the vast majority of Bloomberg SEF transactions. Approximately 85,000 CDS transactions totaling $3.45 trillion and 48,000 IRS transactions totaling $3.15 trillion were executed on Bloomberg SEF in the past year. More than 11,000 FX derivatives trades were completed for a total of $59.78 billion. Commodities derivatives were the least traded instruments with 518 trades totaling nearly $2 billion.

PLY: Just one of a raft of reports of data on SEF in recent days. The market is growing, it just didn’t explode day one big bang style as many erroneously thought. The revolution continues – granularly.

Philippines – Villar Proposes Creation Of Stock Exchange For SMEs

Las Piñas City Rep. Mark Villar is proposing the creation of a stock exchange for small and medium businesses to be known as the Small and Medium Enterprises Stock Exchange (SMEX): 90% of the total number of businesses in the country and 97% of exporters are SMEs.

ECC Launches Clearing For Gas Transactions On Gaspoint Nordic

European Commodity Clearing (ECC) has successfully started clearing & settlement services for natural gas trade transactions on the Danish gas exchange Gaspoint Nordic A/S (Gaspoint Nordic).

Special Section: FTI, NSEL, India at the Crossroads

PLY MCX flat, FTIL down 3%.


First Derivatives In Contract Win With IEX
Alliance News

…has sold market surveillance system installation to IEX.


ICE Aims To Launch Global Cotton Contract Early Next Year
Maha El Dahan – Reuters

ICE plans to launch its postponed global cotton futures contract early next year, partly related to Malaysian regulatory changes recently.

JSE Launches New Range Of African Currency Futures

JSE launched the first currency futures which track the exchange rate between the Rand and select African currencies.


SGX Unveils Derivatives Index Business To Boost Interest In Traded Contracts (subscription)
Giulia Lasagni – Waters Technology

SGX is rolling out the first phase of a new index calculation engine, initially to create indexes of SGX-listed derivatives.

Career Paths

MGEX, the results of annual Board of Directors election, held October 2, 2014. Re-elected to the Board were Scott A. Cordes, Martin F. Farrell, Christopher T. Matzdorf and Michael O. Mille to two year terms.

FXone/Seabury Financial Solutions, the provider of liquidity management systems, has appointed Michael Bundy as CTO & Chief Architect.

Financial Calendar

New announcements

SGX Q1 FY2015 Financial Results – 21 October 2014
NASDAQ OMX Q3 2014 Financial Results – Friday, October 24, 2014 – Press Release here
BGC Partners Q3 2014 Financial Results – Thursday, October 30, 2014 – Press Release here
CME Q3 2014 Financial Results – Thursday, October 30, 2014 – Press Release here
Thomson Reuters Q3 2014 Financial Results – Thursday, October 30, 2014 – Press Release here
CBOE Q3 2014 Financial Results – Friday, October 31, 2014 – Press Release here

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

Share Notes

CME CAO Jill A. Harley sold 1,200 shares Wednesday, October 1st at an average price of $79.99 (bargain $95,988.00). She now directly owns 11,985 shares.

Analyst Notes

Deutsche Bank Upgraded ICE From “Hold” To “Buy” – $219.00 Target Price Up From $202.00
Deutsche Bank Upgraded Nasdaq OMX From “Hold” to “Buy” – $49.00 Target Price, Up From $46.00
Credit Suisse Reiterated Their “Underperform” Rating On CBOE – $53.00 Price Objective, Up From $49.00

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.

Other stories

FIA’s Sixth SEF Tracker Shows Continued Growth In FX Trading

FIA published the sixth issue of FIA SEF Tracker, a periodic report on trading activity taking place on swap execution facilities.

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