October 10 2013

Young-Future-Trends I’m off now to chair a panel at the Markets Media conference in London this morning (all about derivatives / fixed income and how the world is changing) , so the team have been up earlier than ever this morning to get EI to you before I head into the conference.

CME braced for the worst, lots of LME week feedback, Aquis announces clearers, first arrest at NSEL (and no it wasn’t who you might think) while investors in MCX & FTIL bleed. SEC launch a new infrastructure site too…

All this and more, scroll on:

Public Markets

CME’s Duffy Says Exchange Is Braced For Turbulence

CME has survived by focusing on risk management —and that the biggest futures exchange is ready for the turbulence that would come in the Treasury futures market if the debt ceiling is not raised in time.

PLY: The world awaits an outbreak of government in the United States of America.

Hong Kong Official Backs Market Regulator In Alibaba Listing Row (subscription)
South China Morning Post
HKEx Li Urged To Do More As Regulator (subscription)
South China Morning Post

The government yesterday came out in support of the Securities and Futures Commission’s stance in the controversy over Alibaba’s listing plans and rejected calls to strip the stock exchange of its power to approve listings.

HKEx CEO Charles Li Xiaojia may have successfully diversified the local exchanges but brokers complain he has not done enough as a regulator.

Cheung will raise a question in today’s Legislative Council meeting, asking the government to check if the stock exchange has protected the public interest in the negotiation process over Alibaba’s listing plan in Hong Kong.

PLY: I actually feel Alibaba is heading towards non-story status. The board are attempting minority control by a relatively tiny cabal which is neither reasonable nor fair and I still think HKEx have made the right decision – despite it not being in the short term revenue interests of the business. In other words, a clear proof that actually exchange can be for profit and SROs…

Aluminum Premiums Pressured By “Confusion” Over LME -Alcoa CFO

Global aluminum premiums have fallen due to “confusion” over the LME’s proposal announced on July 1 to overhaul its warehousing policy, Alcoa Inc CFO and VP William Oplinger said on Tuesday.

Premiums paid on top of the LME benchmark price have dropped 17 % in Europe, 4 % in Japan and 11 % in the United States.

Industry Supports Garry Jones At LME Dinner (Video)
Metal Bulletin

On the evening of the LME’s annual dinner in LME Week, Metal Bulletin caught up with key players ahead of Garry Jones’ first speech as ceo of the bourse.

SEBI Moots Measures To Deal With Erroneous Trades
The Economic Times

To tackle instances of erroneous trading activities in the securities market, SEBI has proposed a slew of measures for stock exchanges including well-defined parameters and time-bound approach for deciding on annulment of such trades.

PLY: SEBI often tends towards overly prescriptive solutions but the Indian regulators are absolutely right to be clearly worried by trading glitches.

Private Markets

Aquis Announces Clearers

Aquis Exchange, a new pan-European share trading platform set to launch in November will link to three clearing houses: EMCF, SIX x-clear and LCH.Clearnet.

PLY: A broad solution to reach the most clients and a sensible implementation given that Aquis are well funded.

Special Section: FTI, NSEL, India at the Crossroads

PLY: The end game? The beginning of the End Game? Whatever: things are clearly moving along and that means a downtrend for Jignesh Shah, FTIL and cronies. MCX shares have jumped 5% – first limit up for weeks – as Messrs Shah and Massey exit the MCX-SX board. Likewise FTIL has rallied over 3% doubtless as investors take stock on the break-up value of the group which could be very juicy when the multiple exchange stakes are sold.

Elsewhere investors are licking their wounds while the police investigation ramps up and former NSEL staffer Amit Mukherjee has become the first person arrested.

Jignesh Shah, Joseph Massey Step Down From MCX-SX Board
The Financial Express

Jignesh Shah and Joseph Massey have resigned from the board of MCX Stock Exchange (MCX-SX) on the day the first arrest was made in connection with NSEL.

PLY: Note MCX owns 5% of MCX-SX as does FTIL. SEBI have been manoeuvring to remove the FTIL influence for some weeks over what was once Mr Shah’s proudest achievement when he won a stock market licence following legal action against the self-same regulator.

Ex-VP Is First To Be Held In NSEL Scam
The Times of India

The Economic Offences Wing, arrested Amit Mukherjee, former VP, business development, at NSEL..

Is The Game Over For Jignesh Shah Or Is It Just The Beginning?
India Today

From the FMC show cause notice (SCN) dated October 4 on Jignesh Shah:

“Such a callous approach and conduct on the part of an entity that called itself an exchange and which boasts of a reputed listed company like FTIL as the controlling holding company and directors of repute including Jignesh Shah, the promoter of FTIL as key management personnel on its board, is highly reprehensible and makes an explicit portrayal of dishonesty and lack of integrity whose actions were driven by vested self interest without any regard for their duty towards the thousands of investors to provide a reliable trading platform with adequate risk management system…This fact casts serious doubts on the reputation, credibility, honesty and integrity of Jignesh Shah who is director on the board of MCX and promoter having controlling stake in FTIL, which is the holding company of NSEL.”

Is the game over for Jignesh Shah or it is just a beginning of the end of his era? The next week is crucial for Shah and his future in the Indian capital market.

PLY: Having lambasted the regulators for being slow, this report suggests clarity regarding their opinion of Jignesh Shah.

MCA Expands Scope Of NSEL Probe, 70 Firms Under Scanner
The Financial Express

The investigations into of NSEL is set to widen with the Ministry of Corporate Affairs (MCA) deciding to bring under scrutiny several other companies and exchanges which have common directors or have defaulted in payments.

NSEL Admitted Members Without KYC Documents
Business Standard

NSEL, admitted several of its 24 borrowing members without proper compliance with know your customer (KYC) norms and failed in due diligence, a forensic auditor has found.

The refusal by these 24 members to pay their dues triggered the payment crisis in August.

PLY: Time for me to add my daily “that looks damning” comment in this section.

Intel, Blackstone Bleed On Investments In MCX, FTIL

Investments by private equity funds Intel Capital and Blackstone in MCX and FTIL, respectively have gone underwater after steep fall in their prices in the wake of the ongoing payment crisis at NSEL.

From Rs 1,591 apiece, the stock is plunged to Rs 404 range.

Intel Capital’s stake in MCX has come down from a peak of Rs 125 crore (USD 22.77 mln on Nov 13th 2012) to Rs 33.41 crore (USD 5.4 mln) at Wednesday’s prices.

Intel Capital stayed invested in MCX during its highly successful IPO, hoping to ride on expected changes in regulatory environment in commodities trading.

The Blackstone 6% stake in FTIL has nosedived from last year’s peak of Rs 386.34 crore (USD 70.39 mln on Nov 13th 2012) to Rs 54.68 crore (USD 8.84 mln).

Dividend News

Hellenic Exchanges: Lapse Of The Right To The Dividend For Fiscal Year 2007

Hellenic Exchanges informs investors that on 31.12.2013 the five year period, during which the dividend for fiscal year 2007 can be collected, expires.


NASDAQ OMX & Thesys Introduce Trading Algorithm Test Facility
Nasdaq OMX

NASDAQ OMX and Thesys Technologies LLC, the infrastructure affiliate of Tradeworx serving the high-performance technology needs of market participants, today announced plans to jointly launch a next-generation testing environment which will simulate trading on all major U.S. equities exchanges.

Javelin Selects Cinnober For SEF Trading Platform Surveillance

Swap-trading marketplace Javelin has strengthened its trading platform with the integration of Scila Surveillance from independent technology supplier Cinnober.

Tata Communications Connects NSE, SGX & HKEx

Tata Communications, announces the extension of its low latency network in Asia with direct connections to the NSE, SGX and HKEx.


Bitumen Futures Make Strong Debut In Shanghai

The world’s first futures in road-paving material bitumen generated strong investor interest after launching on the Shanghai Futures Exchange on Wednesday, as China continues its drive to offer hedging in commodity markets.

China Approves Egg Futures On Dalian Commodity Exchange

China Securities Regulatory Commission (CSRC) approved the listing of the egg futures contracts at Dalian Commodity Exchange (DCE).

IPXI® Announces Offerings For Stored Value Card Technology

IPXI will be running rights auctions pertaining to pre-paid stored value cards with webinars to explain the technology on October 16, 18 and 25.


STOXX Launches New Global Infrastructure Index

STOXX announced the launch of the STOXX Global Broad Infrastructure Index, which captures the performance of the largest companies in the global infrastructure industry.

The STOXX Global Broad Infrastructure Index has been licensed to FlexShares, managed by Northern Trust, for an ETF.

Career Paths

SEC announced that Daniel M. Hawke, the chief of the Enforcement Division’s Market Abuse Unit, will step down as director of the Philadelphia Regional Office to concentrate his efforts on leading the nationwide unit.

PLY: Which intrigues me insofar as how do the CFTC announce something when there is a government shutdown?

Share Notes

ICE Director Jean Marc Forneri sold 4,000 shares Monday, October 7th at an average price of $192.09 (bargain $768,360.00). He now owns 26,055 shares.

Analyst Notes

JMP Securities Assumed Coverage On Charles Schwab – “Market Perform” 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.


British Crowdfunding Site Wants To Become A Bank

While many crowdfunding sites have marketed themselves as an alternative to banking, BankToTheFuture.com, which has helped businesses raise 487,000 pounds since it launched in August last year, plans to apply for a banking licence so it can expand its range of products to include things such as retail bonds.

Other stories

Exchanges And Traders Grapple Over HFT ‘Problem’
Traders Magazine

Six years after the practice first gained widespread notice, participants, regulators, academics and pundits are no closer to agreeing on whether or not high frequency trading (HFT) is a scourge or a blessing.

SEC Launches Market Structure Data And Analysis Website

SEC unveiled a dynamic new website to provide investors and others with the ability to interactively explore a range of new market metrics and access empirical research and analyses that further inform the broader public debate on market structure.

PLY: A good move. With developments like this one could argue, the shutdown is proving productive.

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