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October 19 2015 – Exchange Invest

October 19 2015


elb228 years ago on this very Monday, it was Black Monday – a remarkably turbulent period at the start of my career in the City of London. Meanwhile, the ASX had chosen this seemingly innocuous date in the spring to be the first to close a floor and move electronic. Today’s a good day to raise a glass to then CTO Rory Collins and his team who made the first legacy transition to electronic. I expect to do so from the Royal Exchange, London, later today.

Meanwhile some folks from this parish are in Qatar for the WFE. I do hope the meeting goes well and that we can see the World Federation discern its purpose and indeed become a world body for exchanges, after several rather, erratic, years, when it has appeared increasingly irrelevant (as well as costly to members). It’s CEO Nandini Sukumar’s first year organising outright and she has assembled many interesting speakers from her A list contact book.

As for today’s EI…actually just have a scroll there is some very groovy crunchy stuff.

Public Markets

JPMorgan, Morgan Stanley Pay Most In $1.9 Bln Swaps Price-Fixing Settlement

Nate Raymond – Reuters

JPMorgan will pay $595 million, while Morgan Stanley and Barclays will pay $230 million and $178 million, respectively. Goldman Sachs, BoA and Credit Suisse are set to pay about $164 million, $90 million and $159 million, while Deutsche, Citi and BNP Paribas will pay $120 million, $60 million and $89 million. HSBC and RBS will pay $25 million and $33 million. ISDA will pay $750,000, while Markit will pay $45 million.

PLY: The success in suing Markit and ISDA for essentially not being open to deals to provide IP to exchanges strikes me as an interesting precedent for the world of infrastructure which may yet have further ramifications in the ongoing OTC-CCP-platform/exchange shuffle.


Timing Key For LSE’s New Derivatives Venture (subscription)

Tim Cave – Financial News

It is often said that starting a new futures market is like opening a nightclub. Lots of people will come, but only if other people are there.

PLY: The biggest problem for some upstarts in recent years was a splodge of market makers dancing around their handbags without any proper paying punters turning up to buy a drink…

QV EI Premium: A Wobbly Curve.


Banks Said To Ask Exchanges For Views On London Gold Clearing

Eddie Van Der Walt – Bloomberg

A group of five banks, (Goldman Sachs, Morgan Stanley, Societe Generale, ICBC Standard Bank, Citigroup), and the London-based World Gold Council have asked exchanges for proposals on how to start standardized central clearing and listed derivatives for the London gold market. The request was sent to LME, LSE, ICE and CME.

PLY: An interesting posse assembled by the World Gold Council who are looking at derivatives products while separately and simultaneously the LBMA have been seeking arrangements in their name too for gold derivatives.

FAO: Previous rumours regarding WGC considering a new London exchange emerged in April. Last week LBMA also formally asked exchanges and tech firms to bid for services as a gold exchange or a clearing platform.


ASIFMA: Trading Infrastructure For China-Hong Kong Bond Connect Can Be In Place In Six Months (subscription)

Liz Mak – SCMP

Discussions for a China-Hong Kong Bond Connect scheme have resurfaced, even taking priority over the Shenzhen-Hong Kong Stock Scheme.

PLY: Interesting, growth slips below 7%, China selling US T Bonds and now they are eager to trade a Bond connect…there is a fundamental financial interconnectedness to this process from the central seat of political power, which only a month or so ago seemed to have lost all control of market events.

QV EI Premium: HKEx – SSE – Stock Connect Brief Part 4 and HKEx – SZSE Stock Connect.


SIAS: Split SGX’s Roles, Mandate Internal Auditors

Kenneth Lim – Business Times


CME & China Construction Bank Sign MoU – First Time That Offshore Chinese Renminbi Futures Contracts Will Be Physically Deliverable Into London


PLY: An interesting announcement and good news for CME Europe.


Private Markets

CSE Moves HC Against Sebi’s Closure Directive

Namrata Acharya – Business Standard

QV EI Premium: Indian Exchanges Shutdown – Brief.


Indonesia Bourse To Investigate Former UBS Country Head In Insider Trading Case

Vincencia NLS – Deal Street Asia


Ethiopia Commodity Exchange Signs Agreement With Malawian Exchange


Special Section: FTI, NSEL, India at the Crossroads

PLY: No news and both MCX and FTIL broadly flat.


MOEX: Cause Of Derivatives Market Outage


MOEX halted derivatives trading at 18:10 MSK on 15 October 2015 (reported here) because of a problem with market data transmission.


Philippine SE Working To Prevent Technical Glitches From Recurring

Business World Online


Bloomberg & Symphony: Bittersweet (subscription)

Financial Times

Banks would like to unplug some terminals and Google wants to lend a hand.

PLY: I have been enjoying using Symphony of late, a useful tool.


Inside The Super-Secure ASX Liquidity Centre

Chris Pash – Business Insider

PLY: Further to my opening remarks on the 28th anniversary of ASX’s move to electronic trading, things now are both remarkably similar but at the same time, fascinatingly different to how the systems were conceived to be used in the 1980’s… As, as an aside, I recall (perhaps inaccurately!) the best way to discern the safest point for a back up facility in those days was to talk to a specific priest with remarkable geographical expertise in the diverse geology of the Sydney bays.


Is HFT Beneficial To Market Quality?

Value Walk

PLY: Academic paper from Sydney.



CME Launch Of Ultra 10-Year U.S. Treasury Note F & O


PLY: Interesting construct, presumably driven by CTD/supply factors.


HFTs Align With Regulators On Bond Transparency

Liz McCormick & Alexandra Scaggs – Bloomberg

High-frequency traders and U.S. regulators may make strange bedfellows, yet both are calling for more light to shine on trading in the $12.9 trillion Treasuries market.

PLY: Quite logical – without a centralised orderly market, HFT has difficulty coping. Some transparency helps everybody in a market which has been dealer driven for too long.


KRX: Plan To Develop ETP Market Including ETFs



Nodal CEO To Launch More Power, Options In 2016 (subscription)

Alice Attwood – FOW

Nodal’s clearing house launches today.


Providers Of Fixed-Income ETFs Aim To Make Them Easier To Use (subscription)

Sarah Krouse & Leslie Josephs – Wall Street Journal


OTC Derivative Reform Still Confusing For Many Hong Kong Players (subscription)

Liz Mak – SCMP

The jury is still out over whether the Hong Kong Monetary Authority and SFC’s recommended reforms on how OTC derivatives should be traded will do more harm than good.


India Should Have An Onion Futures Market

Tim Worstall – Forbes

PLY: Perhaps the worst moment in post war US capitalism viewed through the prism of India – both nations suffer from extreme onion volatility as it is the one staple which has fallen foul of the regulators… Tim Worstall as pithy, punchy and enlightening as always.


JPX: Celebrating 30 Years Of JGB Futures


PLY: An epic milestone, I can still recall copying the JGB price from Telerate to my analyst reports at Tulletts all those years ago…



CME Launches S&P 500 Dividend Index Futures


Career Paths

ITG Expected To Name JPMorgan MD as CEO (subscription)

Sarah Krouse – Wall Street Journal

ITG is expected to name J.P. Morgan Chase MD Frank Troise as its next CEO. The appointment follows the August ouster of ITG’s previous CEO, Robert Gasser, and a $20.3 million settlement with SEC relating to the firm’s “dark pool” pilot program. Mr. Gasser had led the firm since 2006.

QV EI Premium: “ITG, Dark Fines & A Coalition for Change.


dna reports that National SE (NSE) appointed Mukesh Agarwal from Crisil as the new CEO for India Index Services & Products (IISL), replacing R Sundararaman. The exchange has also appointed new heads for its technology (Sankarson Banerjee), corporate finance, secretarial as well as clearing and settlement (Natrajan Ramaswamy) departments over the past six months.


ESMA Extends Deadline For Call For Candidates For Corporate Finance Consultative Working Group To 31 October


ESMA Vacancy Notice – Policy Officer – Benchmarks Regulation/Secondary Markets (Deadline: 15/11/2015)


ESMA Vacancy Notice – Seconded National Expert – Corporate Finance/Investor Protection – (Deadline: 11/11/2015)


Financial Calendar

19-21.10 – Qatar SE host of WFE General Assembly & Annual Meeting

20.10 – Interactive Brokers Q3 2015 Results

21.10 – SGX Q1 Results FY2016

21.10 – MarketAxess Q3 2015 Results

23.10 – Thomson Reuters Q3 2015 Results

New announcements

JPX Earnings FY2015 (April 1, 2015 – March 31, 2016) – October 30, 2015

CFTC’s Market Risk Advisory Committee – November 2, 2015

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

Share Notes

CBOE COO Edward L. Provost sold 5,000 shares Thursday, October 15th at $66.10 (bargain $330,500.00). He now owns 70,669 shares.

Analyst Notes

LSE “Overweight” Rating Reaffirmed By Barclays – GBX 2,840 Price Target

ICAP Downgraded By Barclays To “Equal Weight” – GBX 500 Price Objective, Down From GBX 600.

A full table of current analysis can be found on our Analyst Ratings page which is updated daily.

Other stories

London Hedge Fund Liongate To Shut Down (subscription)

Financial Times

Second major fund to close amid volatility.


Mexico Takes Latin America To IPO Top Spot In Lacklustre Emerging Markets

Karin Strohecker – Reuters


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