October 21 2015

elb2

It’s time for another round of bank recapitalising as Credit Suisse seeks a cool 6 billion or so…and that seems to be at the low end of estimates. In our parish that means the for sale signs will soon be hanging over anything the banks can continue accessing without a shareholder right…

Great IBKR numbers kick off today’s Exchange Invest Daily:

Public Markets

Interactive Brokers Q3 2015 Results

Interactive Brokers

vs. Q3 2014: Net revenues $359 million, up 110%, income before income taxes $202 mln, up 405%.

PLY: Just when so many are writing off IBKR’s market making division, this relatively ‘digital traditional’ (for want of a better term!) – or so it is broadly perceived – side of the business had a great quarter as icing on the cake of a very strong brokerage quarter too. Great to see.

 

FTIL To Sell 1.58% In IEX To Madison India For Rs 33.96 crore (USD 5.21 mln)

The Economic Times

QV EI Premium: FTIL Stakes Sales Brief.

FAO: After the recent 2.6% stake sale to Aditya Birla Capital Advisors, and last week’s sale of 11% stake to DCB Power Ventures and Kiran Vyapar, this is presumably another tranche of the share purchase agreement with multiple buyers to sell a total of 5.78 mln shares, or 19.06% (409.95 crore rupees (USD 62 mln)). After this deal completes, FTIL will retain 6.94% of IEX.

 

Exchanges, Schwab Criticize SEC Market Structure Committee

Reuters

President Thomas Farley of NYSE, Nasdaq EVP Tom Wittman & Schwab SVP Jeffrey Brown, who signed the letter, asked the commission to rethink the makeup of the committee.

PLY: A bit of a stinging response seeing the two arch rivals unified and Schwab.

 

CORRECTED-CME To Raise Transaction Fees In January

Reuters

Reported yesterday – fee changes do not require CFTC approval, except for changes to certain incentive programs; fee changes apply to CME livestock options, not grains.

 

Citadel Securities Becomes First Non-Bank Member Of LCH.Clearnet’s SwapClear

BUSINESS WIRE

PLY: What I wonder is not so much at the clearing end but how soon we will truly see genuine anonymity and a lack of names being exchanged parallel to the SEF process? Of course the problem is overstretched regulators are already cocooned in a degree of chaos driven by political regulation which has not been properly considered in the post Lehman haste.

 

Banks Say New Rules Will Double Capital Needed To Cover Securitised Debt

Huw Jones – Reuters

PLY: Tricky when we need more asset financing and thus more securitisation levers.

 

Why US Regulators Target Spoofing (subscription)

Michael Mackenzie & Philip Stafford – Financial Times

Dubious trading practices are once more back in the spotlight after CFTC this week accused 3Red Trading and its co-founder Igor Oystacher of “spoofing” markets from commodities to stock index futures.

 

European Council Adds To Calls For Greater Regulatory Transparency (subscription)

James Rundle – Financial News

The European Council has said that information-sharing between regulatory bodies and lawmakers should be improved, following a summer row that raised concerns about the level of Parliamentary scrutiny being given to key pieces of financial regulation.

PLY: Good core ethos. However with regulators maxxed out and, frankly, vast numbers of politicians not understanding the rules they are studying…

 

ESMA Publishes Responses To The Consultation On Draft RTS Under The ELTIF Regulation

MondoVisione

Private Markets

Private Equity Investors Like Actis Get Into Selling Mode As NSE Delays IPO

The Economic Times

UK-based private equity (PE) fund Actis has agreed to sell its 1% seven-year-old investment in NSE to Hong Kong-based secondary portfolio buyer New Quest Capital Partners for Rs 178 crore (USD 27.3 mln), at almost the same valuation at which it acquired the stake (aprox. USD 2.73 bln).  Actis, along with other marquee investors including Citigroup and Goldman Sachs, has been pushing the NSE management for an IPO for a while. However, the exchange blamed regulatory and other issues for delaying its listing plans.

FAO: Last month IFCI sold 1.5% in National SE (NSE). Sold 675,000 shares at Rs 3900, bargain Rs 263.25 crore (USD 39.7 mln). Valuation of the exchange under this price was around USD 2.63 bln.

PLY: Shareholders are restive as India’s dialogue about IPO’s and exchanges is back on, albeit the process may take a considerable period of time and that is likely longer than the patience threshold of some BSE and NSE investors – watch for some impatient outbursts on the horizon as frustration with the speed of progress, or lack thereof. The dialogue remains at a very embryonic stage.

QV EI Premium: India – NSE Sales Brief and Exchange Deals Brief.

 

Agriculture Minister: Commodity Exchange Should Be Created In Ukraine

Interfax

Ukraine’s Agricultural Policy & Food Minister, Oleksiy Pavlenko, said that the top managers of CME recently visited Ukraine and analyzed the creation of a commodity exchange in Ukraine and the guarantees for its efficient functioning.

FAO: Meanwhile, Ukraine’s Securities Commission recently annulled the license of PFTS and the decision will take effect next month. In September MOEX Supervisory Board approved management’s proposal to exit the Group’s subsidiaries in Ukraine (MOEX holds 50% plus 1 share in PFTS and 43.08% in Ukrainian Exchange).

 

NY Federal Prosecutor Probes Daily Fantasy Sports Business

Reuters

Manhattan Attorney Preet Bharara is investigating whether the business model behind daily fantasy sports companies such as DraftKings and FanDuel violates federal law, WSJ reported.

Previous discussion here.

PLY: The inevitable… Newspaper headlines tied in with companies which were at first reluctant to pay attention to sufficient regulatory oversight now have the dudes wielding options on civil suits & orange jumpsuit wearing paying eager attention. Not good, especially not given the hyperfrothy valuations of some in the sector. Remember the salutary story of Intrade which was eventually crushed to within an inch of its life by the CFTC alone, not even the pure play prosecutorial folks involved here.

 

Irish SE Signs MoU With Korea Exchange

MondoVisione

PLY: Interested to see what this may mean in practice.

 

Bitcoin Group: BnkToTheFuture Attracts $3m To Fund Investment In World’s First ‘Mining’ IPO

Roger Aitken – Forbes

A fund to invest in the world’s first ever Bitcoin mining company through an Australian IPO, which recently went live on the online investment platform BnkToTheFuture, has secured pledges amounting to almost US$3m – representing 82% of its target – to invest in Bitcoin mining company Bitcoin Group Limited.

 

Australian Government To Review Bitcoin Regulation Powers

Stan Higgins – CoinDesk

Dividend News

Interactive Brokers quarterly cash dividend of $0.10, payable on December 14, 2015, record date December 1, 2015.

Special Section: FTI, NSEL, India at the Crossroads

PLY: FTIL up 1%, MCX flat.

Technology

Why BSE’s Cheekiness Is Not Appreciated In Some Quarters

Mobis Philipose – Livemint

PLY: Lovers of latency tales and marketing hype stories must read this typically insightful and pithy missive from the excellent offices of Mobis Philipose.

 

Investor Alert: Canadian Securities Regulators Issue Warning About Messaging Applications Being Used To Entice Investors

MondoVisione

PLY: “There’s a man out there called Justin Trudeau and if fully implemented, his manifesto could prove seriously detrimental to your wealth…” Oh no, hold on a second, that wasn’t it, this is something to do with a WhatsApp scam.

Products

Regulators Mull Reforms To Fragile U.S. Bond Markets

Richard Leong & Jonathan Spicer – Reuters

SEC Chairman: U.S. Bond Market Reform Could Take Lessons From Wall St.

Reuters

US regulators and policymakers want to improve transparency and tighten rules governing the $13tn Treasury bond market, particularly ramping up supervision of HFT firms.

 

HSBC Joins Banks Sharing Bond Data With Matchmaker Algomi

Anchalee Worrachate – Bloomberg

HSBC, Deutsche Bank and Credit Suisse are among 14 banks that agreed to use the system developed by Algomi, according to co-founder Stu Taylor. It lets banks give access to their pre-trade data to fund managers who want to discreetly identify who owns corporate or government bonds that are not widely traded.

 

Simplifying Complexity: Trading Complex Order Books in Options-Part 2

Ivy Schmerken – Markets Media

Part 1 here.

Indexes

CBOE Launches New Cash-Settled Options On Russell 1000 Indexes

LeapRate

CBOE launched new cash-settled options on three indexes – Russell 1000 Index (RUI), Russell 1000 Growth Index (RLG), and Russell 1000 Value Index (RLV).

 

STOXX Introduces New Suite Of Smart Beta Indices

MondoVisione

Career Paths

FOW reports that Adam Husted has left his role as executive director, head of clearing and business development at CME Clearing Europe.

LCH.Clearnet appointed Christine Cumming to the BoD of LCH.Clearnet LLC, the Group’s US-based entity. Christine serves as an independent NED and also as a member of the Risk Committee. Prior to her appointment, Christine held a number of leadership positions over her 35-year tenure at Federal Reserve Bank of New York.

INTL FCStone appointed Arlan Suderman as Chief Commodities Economist.

SEC named Wenchi Hu and Christian Sabella as Associate Directors in the Division of Trading and Markets’ Office of Clearance and Settlement.

FN reports that David Wright, the departing secretary general of IOSCO, is to join the European think-tank Eurofi when his term ends next year.

PLY: A very welcome addition of mental heft to Eurofi.

Financial Calendar

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

21.10 – SGX Q1 Results FY2016

21.10 – MarketAxess Q3 2015 Results

22.10 – NASDAQ OMX 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 “Hold” Rating Reaffirmed By Numis Securities – GBX 2,450 Price Target

LSE “Hold” Rating Reaffirmed By HSBC – GBX 2,500 Price Target

CBOE Price Target Upped By Jefferies To $62.00 – “Hold” Rating

Thomson Reuters Price Target Raised By Scotiabank From C$55.00 To C$56.00 – “Sector Perform” Rating.

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

Crowdfunding

Funding Circle Buys German P2P Lender Zencap To Kick Off European Expansion

Jamie Nimmo – EveningStandard

Funding Circle bought the 18-month-old company from Rocket Internet and will rebrand it. Terms were not disclosed.

Other stories

Crédit Agricole Corporate & Investment Bank Admits To Sanctions Violations, Agrees To Forfeit $312 Million – Combined With Payments To Regulators, Bank To Pay $787.3 Million

MondoVisione

 

Federal Reserve Bank Of New York: “Taking Stock Of Treasury Market Regulation”, SEC Chairman Mary Jo White, Oct. 20, 2015

MondoVisione

Federal Reserve Governor Jerome H. Powell

MondoVisione

Remarks By Counselor To The US Treasury Secretary Antonio Weiss

MondoVisione

Remarks By Acting Assistant US Treasury Secretary Seth Carpenter

MondoVisione

 

MiFID II – The Road Ahead, Speech By David Lawton, Director Of Markets Policy & International, FCA, Delivered At FCA MiFID II Conference, London

MondoVisione

Investor Protection Under MiFID II – Speech By David Geale, Director Of Policy, FCA, FCA MiFID II Conference

MondoVisione

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