October 20 2015

elb2PLY: We’re having a good laugh at Deutsche Bank this am, who transferred $6 billion to a client by mistake – wonder if they have been employing Ops folks from Barclays? In exchange world, it’s another detail day, some good crunchy stuff with fee increases, spoofing, first signs the market realises ISDX is transforming into a serious SME market to take on AIM just as the LSE’s coder in Chief is off to State Street while Oslo introduce their private share market…and much more besides, happy scrolling:

Finally, thanks for all the messages from the parish about Rory Collins and that pioneering IT team of 1987 who turned ASX from analogue to digital “rather like changing the engines of a Boeing 747 in mid-flight across the Pacific” as Rory himself termed it. It’s good to see our most charismatic achievers being praised from all quarters, even nearly 30 years on.

Public Markets

PSE-PDS Merger Said On Track

Business World Online

The establishment of a unified platform for the Phillippines’ equity and fixed-income exchanges is nearing completion, with SEC targeting to approve the merger of the two bourses this month.

In July PSE closed a deal to buy the 28.91% stake held by the Bankers Association of the Philippines (BAP) and some member-banks in PDS for P650.55 mln (USD 14.35 mln).

PLY: Thus it appears we may finally conclude one of the longest running mergers in history.

QV EI Premium: PSE – PDEx Merger Brief.


CME To Raise Transaction Fees In January


Fees for members to trade agricultural options on CME’s electronic Globex platform will rise to 36 cents, from the current level of 25 cents, to match fees on agricultural futures. Non-member fees will rise to $1.34, from the current 70 cents.

PLY: Interesting insofar as the traditional thesis that exchange pricing power was weak in a competitive electronic age is proving increasingly less pertinent. Naturally when these trends return to financial products expect the “all buyers welcome, prices start at 2 basis points” banks to scream blue murder at the temerity of an exchange charging a dollar…


ICE Preps Europe, US Futures Data Fee Hike (subscription)

Waters Technology

Effective Jan. 1, 2016, ICE will increase the monthly fees for its ICE Endex, ICE Futures Europe-Commodities, ICE Futures Europe-Financials, and ICE Futures US market data feeds by 15% each.

PLY: See also comment above.


The Man Accused of Spoofing Some of the World’s Biggest Futures Exchanges

Matthew Leising – Bloomberg

Chicago Trader Oystacher Accused Of Spoofing In Futures

Matthew Leising – Bloomberg

Before he gained notoriety, Igor Oystacher was known as 990. Now he and his firm 3Red Trading LLC were accused of cheating on some of the world’s biggest futures exchanges in the latest effort by regulators to snuff out a form of manipulation known as spoofing.

CFTC sued 3Red and Oystacher for allegedly creating “the appearance of false market depth” to benefit their own interests “while harming other market participants.” The spoofing allegedly occurred over 51 trading days between December 2011 and January 2014.

PLY: The spoofer debate is reaching a crescendo and the exchanges do not seem to be getting a great rap, to put it mildly, Albeit so far they have been protected in the media by not being highlighted for what appears to have been relatively inept (or at least conservative) surveillance process when such activities were in plain sight…

QV EI Premium: The Kennel – Premium discussion of the “Hound of Hounslow”


Futures Exchanges Feel Threat From LSE Venture (subscription)

Philip Stafford – Financial Times

But it is worth asking what ending CurveGlobal has in mind. The bait is the portfolio margin offsets within LCH.Clearnet but this venture suggests something more ambitious is afoot.

PLY: FT raises the boat I floated the other day on a CBOE deal perhaps following from the Chicago exchange’s Curve investment. It’s a sort of Groundhog Day in the media as they all repeat the origins of the Rita name. Meanwhile, Curve staff are allegedly to be heard wandering the halls of Paternoster Square humming “Some day my portfolio margining prince will come.”

QV EI Premium: A Wobbly Curve.


Is ISDX An Alternative To AIM For SMEs?

Growth Business

PLY: Yes.

It hasn’t made headlines yet but the SME growth firmament is subtly changing. ISDX, backed by ICAP under the competent management of the charismatic Patrick Birley (most recently at European Climate Exchange). There is a big upheaval afoot in SME markets and this can only be good for SME funding, and a great encouragement for the EU to adopt a genuinely progressive pro choice, freedom and investment, CMU.


L’Agefi: FXCM Risks Large Penalty For Not Checking Partner Companies

Maria Nikolova – LeapRate

FXCM has encountered some problems in France, which boasts having one of the strictest Forex regulators – the AMF. According to a L’AGEFI report, FXCM is facing hefty financial sanctions in France for not checking the regulatory status of its partners in the country. The report says that FXCM risks a fine of EUR 1 million ($1.14m).

PLY: Nothing about FXCM appears to surprise these days even amongst an ongoing blizzard of problems.


Oslo Børs – Introducing Merkur Market


PLY: Merkur is a private share market, a sort of ‘halfway house’ injecting trading without the rigours of full listing. Very interesting.


LME Targets ‘Silk Road’ Deal During Xi Visit

sky NEWS

LME will this week strike a collaboration agreement with British and Chinese banks as part of Beijing’s efforts to revive ancient ‘Silk Road’ trading routes during the UK visit of President Xi Jinping


NYSE Readies For Another Hurricane Sandy With Electronic Trading

Annie Massa – Bloomberg

Stocks would trade electronically if humans cannot reach floor.


Bucharest SE: October 22, 2015 Last Trading Day On Rasdaq & Unlisted Markets


Private Markets

Little-Known Beijing Stock Market Sees Surge Of IPOs (subscription)

Wei Gu – Wall Street Journal

Regulators have blocked IPOs on China’s biggest markets in Shanghai and Shenzhen since July to curb the supply of new shares available for trading, part of a series of measures taken to combat a sharp fall in Chinese stocks that began in the summer.

But at the Chinese National Equities Exchange and Quotations (NEEQ), a market generally referred to as the “new third board” in China, fundraising has been stronger than ever, hitting a record in August.

QV EI Premium: China Capital Markets Transformation Brief – Main File.


India – Defunct Commexes Face Closure

Jayshree P Upadhyay – Business Standard

In the past three years, the regulator has ordered 16 regional exchanges to close.  Two of these – Delhi SE and Calcutta SE – have approached courts against the regulator’s closure order.  Trading members of the closed exchange will be allowed trading through its subsidiary.

QV EI Premium: Indian Exchanges Shutdown – Brief.


Ex-U.S. Agent Gets Over Six Years For Bitcoin Theft In Silk Road Probe


Carl Force, a former U.S. DEA agent, admitted to charges of extortion, money laundering and obstruction of justice and was sentenced to 78 months in prison on Monday for stealing bitcoins during the government’s investigation of Silk Road…


European Court Of Justice Set For Bitcoin VAT Decision

Stan Higgins – CoinDesk

PLY: Could be a clear answer from the ECJ in answer to the Swedish tax authorities wanting VAT. Totally binary outcome, ECJ will either signal whether EU wants to grow or suffer economic atrophy. The stakes here are as enormous as my confidence in a progressive decision, is modest.


Australian Banks Investigated By Competition Watchdog For Closing Bitcoin Company Accounts

Clara Guibourg – CITY A.M.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL flat.


Diligent Buys BoardLink From Thomson Reuters For $US10m

Suze Metherell – NBR


ASX Puts New Derivatives Platform In Beta

Allie Coyne – itnews

ASX is preparing to flick the switch on its brand-new derivatives platform, putting the Cinnober-based system (selected in February) live in beta mode to iron out any kinks before next year’s full launch.


We Cannot Go Back From High-Frequency Trades

Ashley Coutinho & Jayshree Upadhyay – Business Standard

Interview with Ashishkumar Chauhan, MD & CEO, BSE.


Indian Options Get Boost As Stakes Rise In Derivatives Trade

Santanu Chakraborty – Bloomberg


Limits On Speculators’ Grain Positions ‘Simply Too High’


A former CBOT director, and floor trader, urged smaller limits on the derivatives positions that can be held by grain speculators, cautioning over volatility caused by hedge fund deals.

Ann Berg, who has also advised the US-based National Grain Trade Council and the UN’s Food and Agriculture Organization, said that the positions that speculators were allowed to take on grains were “simply too large”.

PLY: Given Ann Berg’s considerable expertise in the field, her warnings need to be taken seriously. Moreover, reading through the article, it is a pity there was not more emphasis placed on Ann’s excellent comments underlining just how spectacularly successful grain exchanges have been in re-establishing global stocks in a way which government interventions have never managed. That’s a key message for this parish in her presentation: grain exchanges work!


FX Industry Must Act Now Or Face Regulation Warns LMAX

Elliott Holley – banking technology

More transparency is urgently needed to restore trust in the FX industry, according to a new report by foreign exchange MTF LMAX Exchange – but to make that happen, the industry will have to collaborate.

Career Paths

FN reports that Antoine Shagoury, LSE COO & CIO, has resigned and is set to join State Street. Shagoury has joined LSE in February 2010.

PLY: Interesting to see one of the original Xavier Rolet hires moving on. Then again when the clock ticks “time for a wholesale revamp of LCH.Clearnet technology” amidst the broad swathe of platforms within LSE, I too would feel inclined to peruse my watch and say “Good grief! is that the time already?” and push off. There is a challenging role for the right person replacing Antoine Shagoury.

As expected, ITG appointed Francis J. Troise as CEO & President, also joining the ITG BoD.  These appointments will become effective upon Mr. Troise’s satisfaction of certain “garden leave” obligations, expected to expire in January 2016.

CalPERS appointed Brad W. Pacheco as its new Deputy Executive Officer for Communications & Stakeholder Relations. He will report to Anne Stausboll, CalPERS CEO.

Nigerian SE (NSE) appointed Mrs. Mojisola Ruth Adeola as Council Secretary & Head of the Council Secretariat. Mrs. Adeola takes over from Ms. Tinuade Awe who served as Council Secretary from January 2011. Ms. Awe will remain at NSE as General Counsel & Head of the Legal and Regulation Division. Mrs. Irene Robinson-Ayanwale who previously headed both the Legal Department and the Council Secretariat retains her role as Head of the Legal Department. The Council Secretariat which is currently under the Legal and Regulation Division will now be one of a number of departments integrated into the Office of the CEO.

CIFC hired Robert J. Klein as Senior Portfolio Manager and MD, Structured Products, and will lead the firm’s structured products portfolios.

Speakerbus, the specialist provider of critical voice collaboration solutions for financial institutions, emergency and command infrastructure, appointed Patrick McCullough as CEO.

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

FXCM Q3 2015 Results – November 5, 2015

Markit Q3 2015 Results – November 10, 2015

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

Analyst Notes

LSE “Outperform” Rating Reiterated By Credit Suisse – GBX 2,900 Price Target

NASDAQ OMX Price Objective Boosted By Jefferies – “Hold” Rating

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

Other stories

Japan’s Financial Services Agency: Publication Of Summary Points From 2015-2016 Strategic Directions And Priorities



Keynote Address Of Chairman Timothy Massad Before The World Federation Of Exchanges Annual Meeting, Doha, Qatar


PLY: The sort of reasonable speech which reminds us Chairman Massad is not his predecessor. One snippet:

“I believe there is an ample basis for the European Commission to declare us equivalent, and I think this should have been done some time ago… We are having constructive discussions, and I value greatly my good relationship with Commissioner Jonathan Hill. But I have noted previously that margin methodologies are complex and have many parameters. In addition, they are only one part of overall risk mitigation. And that is why I think the European Commission should not focus on one or two particular aspects of margining in this process – such as one day versus two day minimum liquidation periods – but rather look at overall outcomes. “


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