October 23 2015

Malaysia flat while NASDAQ ekes out a bit more profit and bulks up its private shares market. In regulation, Tracey MacD says “pick me!” as next FCA CEO to practitioners while the Hound of Hounslow has something like a dream team line up to argue against his extradition to the USA where officialdom has portrayed him as shortlisted for the next boss of Spectre, given the extent of his alleged master criminal activities. Down under, there’s disruption aplenty in Oz, another dark pool and best of all, Chi-X have had their licence extended to derivatives products.

In encouraging EU news, just as President Juncker continues to talk of managed decline (the truth need be neither), the Brussels-blob has sensibly decided Bitcoin is VAT-free: the cryptocurrency revolution takes a great leap forward…

My column on the SFOA Burgenstock conference where I was fortunate to play a Crossfire supporting role to industry luminaries led by Chitra Ramkrishna (NSE), Phupinder Gill (CME) and David Peniket (ICE) from Trading Places can be found here: The Right Crowd & No Crowding! Meanwhile, that reminds me, don’t forget to click the button on the left and register for the MondoVisione Exchanges Forum. I am back to chair for a second year, as per 2014, we’ll be running on time, on message and helping keep you on top of the burning issues.

Public Markets

NASDAQ OMX Q3 2015 Results
NASDAQ OMX

Q3 2014: net revenues $529 million, up 6%, operating income $231 mln, up 11%, net income $138 mln, up 12%.

Bursa Malaysia 9 Months Results Ended 30 September 2015
MondoVisione

9M2014: PATAMI at RM 148.0 mln (USD 35 mln), up 2.0%, operating revenue at RM 362.5 mln (USD 85 mln), up 3.1%, EPS 27.7 sen, up by 1.8%.

NASDAQ Private Market Acquires SecondMarket
NASDAQ OMX

NASDAQ Private Market has acquired SecondMarket Solutions, a recognized innovator in facilitating liquidity for private company securities. Separately from this transaction, Nasdaq now holds full ownership of The NASDAQ Private Market following the recent acquisition of the minority stake that was held by SharesPost.

QV EI Premium: Exchange Deals Brief Part 1, Part 2.

Nasdaq Seeks Banks As `Core Support’ In Derivatives Battle
John Detrixhe & Annie Massa – Bloomberg

Nasdaq CEO Bob Greifeld says he isn’t backing down in his fight for a piece of the European futures market, after LSE’s CurveGlobal emerged last week. NLX has been unable to win sizable share from entrenched derivatives markets owned by DB1 and ICE.

PLY: Neither copycat MTF (hmmm, perhaps that is tautology?) currently looks to have the secret sauce which cooks success. CurveGlobal has a sound CEO but disappointment at the bank roster announced last week continues to echo around London.

QV EI Premium: NLX Brief and A Wobbly Curve.

Credit Suisse, Barclays Could Pay Up To $150 Million To Settle ‘Dark Pool’ Claims (subscription)
Christopher M. Matthews & Bradley Hope – Wall Street Journal

Credit Suisse and Barclays are in discussions to pay as much as $150 million combined to end several investigations and one lawsuit alleging improprieties related to their dark pools.

FAO: Last month Credit Suisse settled client disclosure allegations for $80+ million while ITG agreed to pay the SEC $20.3 million in August.

QV EI Premium: NY AG – Barclays Dark Pool Brief

JPMorgan’s Troise Faces Job Of Rehabilitating Broker ITG
Sam Mamudi & Hugh Son – Bloomberg

Frank Troise is heading back to ITG with a mission: Clean up the mess that led to a record fine and a 40% slide in the broker’s share price.

LME Confirms Plan To Introduce Position Limits
Reuters

LME confirmed on Thursday plans to introduce limits on large positions for the first time to avoid market squeezes, initially on its new aluminium premium contract.

Finance Watchdogs Need To End Roller Coaster Rulemaking
Huw Jones – Reuters

Tracey McDermott, acting CEO of FCA, said the finance industry was starting to see some light at the end of the tunnel after facing a wave of new regulations since the 2007-09 financial crisis.

PLY: Tracey McDermott just deployed her trump card with the industry to be permanent FCA CEO and a sound message it is too, after a series of arbitrary fundamentalists have made global regulation what it is today: a festering mess nobody has the resources to administer according to the laws/rules the blob has been adopting.

Lawyer For Accused ‘Flash Crash’ Trader Calls U.S. Extradition Request False
Michael Holden – Reuters

The U.S. request to extradite London-based trader Navinder Sarao, the Hound of Hounslow, is “false and misleading” because it misrepresented the way markets work, his lawyer said on Thursday.

PLY: A US extradition request being accused of misleading? Perish the thought…

Ex-SEC Economist To Testify On Flash Crash (subscription)
Jane Croft – Financial Times

Westminster magistrates’ court has agreed that Mr Sarao’s defence team will be able to call expert evidence from Professor Lawrence Harris (professor of finance and business economics at the University of Southern California & a former chief economist of the SEC) about financial trading at his extradition hearing in February.

QV EI Premium: Flash Crash & Hound of Hounslow – Brief.

Chicago HFT Fined Over Wash Trade Claims (subscription)
Gregory Meyer – Financial Times

A disciplinary panel at CME found that Allston Trading for months “executed numerous transactions” wherein orders for Allston’s accounts “self-matched.” It is illegal for a firm to intentionally trade with itself.

ESMA Prepares For Entering Into Force Of Amended Transparency Directive
MondoVisione

How Humans Can Wrest Control Of The Markets Back From Computers (subscription)
Gillian Tett – Financial Times

Flash crashes affect even commodities markets hitherto considered dull such as corn.

Trading Places: In Patrick’s Opinion, Burgenstock 2015: The Right Crowd & No Crowding!
Patrick L Young – MondoVisione

Trading Places: London Shanghai Stock Connect Challenges & Opportunities
Huw Jones – MondoVisione

Trading Places: MiFID II Is Coming, How Ready Are You?
Richard Baker – MondoVisione

Private Markets

Investment Bank Alumni Take On Former Bosses With Dark Pool
Adam Haigh – Bloomberg

David Klinger, who set up Asian electronic equity-trading businesses for Credit Suisse Group and Liquidnet, is about to open a venue in Australia that he says will combine attributes of a dark pool and a sales desk. Block Event will start facilitating large share trades next month, and plans to expand into Japan and Indonesia next year.

PLY: Interesting and a good event for Australia’s financial centre ambitions to see more venues springing up, despite the reaction of the ASX.

A Roadmap For Malta SE
Edward Rizzo – Times of Malta

DGCX Collaborates With Pakistan Mercantile Exchange
Zawya

EU Rules Bitcoin Is A Currency, Not A Commodity—Virtually
Sam Schechner – Wall Street Journal

Virtual currency bitcoin took another step toward legitimacy Thursday, when Europe’s top court ruled that it must be treated like a currency—not a commodity—for tax purposes (as trailed earlier this week).

PLY: Encouraging news for the future of cryptocurrency as the EU has just changed the rules which were prevalent in some reactionary nations as well as endorsing the position of others – zero VAT, Bitcoin is a currency.

Bitcoin Groups & Law Enforcement Unite To Form Blockchain Alliance
Stan Higgins – CoinDesk

Dividend News

Nasdaq declared a quarterly dividend of $0.25 payable on December 28, 2015, record date December 14, 2015.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Markets flat with no news after the holiday Thursday.

Technology

Nasdaq’s Acquisition Of SecondMarket Will Help It Fully Leverage Blockchain Technology
Michael del Castillo – NY Business Journal

…a symbolic move that puts the DNA of a company whose roots lie in the bitcoin community deep within Wall Street.

Nasdaq’s Greifeld Unveils European Bockchain Initiative (subscription)
Tim Cave & Anna Irrera – Financial News

Nasdaq CEO Bob Greifeld has unveiled the US exchange group’s next blockchain initiative: corporate actions services on one of its European exchanges.

Is Exchange System Monitoring The Answer To Systemic Risk?
Markets Media

Scotiabank Launches Financial Technology Development Arm
Narayan Ammachchi – Nearshore Americas

Products

CCB Joins London Gold Price Auction
Reuters

China Construction Bank (CCB) will join the twice-daily electronic auction process to set the benchmark price of gold, IBA announced.

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

Chi-X Australia’s Licence & Market Rules Extended To Derivatives
chi-x

Chi-X Australia welcomed the Assistant Treasurer’s granting of an expanded market trading licence to encompass trading in derivatives on the Chi-X Australia platform. In a related move, amendments to ASIC’s market integrity rules and Chi-X’s operating rules have also been approved providing the regulatory framework for Chi-X’s derivatives market platform.

PLY: Given the benefits delivered by Chi-X to the Australian marketplace already, in the face of a blizzard of Dickensian reaction masquerading as management by the ASX, the addition of this string to the Chi-X bow can only be favourable for markets, I wish them every success. In response to recent competitive threats, ASX management has proven itself sarcastic but not much else. Australia remains a ripe opportunity for free markets.

QV EI Premium:ASX Monopoly – Brief – Part 3.

SGX Eyeing Asian LNG Benchmark
Jacob Gronholt-Pedersen & Anshuman Daga – Reuters

SGX is planning to create an Asian benchmark for LNG and break a decade-long reliance on oil-linked pricing, hoping to take a greater role in an expanding spot market. (Previously discussed in June).

PLY: Interesting and exciting as Singapore positions itself to be a post FTT haven if the EU does commit willful suicide (albeit recent stories suggest the FTT may be off the agenda until 2020 or later).

The $63 Billion Market That KRX Wants In On
Regina Tan – Bloomberg

KRX is revamping its structured note offering as it taps in to rampant demand for rival OTC products that have fallen prey to shaky markets.

KRX Kerosene Market Will Launch On Oct 26, 2015
MondoVisione

Regulators Tackle Opaque Treasury Trades (subscription)
Financial Times

Pressure is building for greater transparency of bilateral deals.

Nairobi SE Becomes Third African Bourse To Launch Reit
Brian Ngugi – allAfrica

Nairobi Securities Exchange Thursday became the third African bourse to launch a Real Estate Investment Trust (REITs) market.

Comptroller Of The Currency Approves Final Swaps Margin Rule
MondoVisione

Indexes

STOXX Introduces New Index Family That Captures Implied Volatility Of VSTOXX Indices
MondoVisione

Career Paths

Bill Siegel, currently SecondMarket CEO, will lead NASDAQ Private Market.

Finance Magnates reports that HKEx appointed Brian Roberts (ex-Vanguard) as its newest SVP in its Product Development Department. Mr. Roberts will be tasked with the group’s ETFs business – he will report to Rebecca Brosnan, HKEx’s Head of Product Development.

DMS Offshore Investment Services hired Michael Garvey, a former MDof J.P. Morgan Alternative Asset Management (JPMAAM).

Financial Calendar

23.10 – Thomson Reuters Q3 2015 Results

Next week

26.10 – Dubai Financial Market BoD Meeting

27.10 – Euronext EGM

27.10 – SEC Equity Market Structure Advisory Committee Meeting

28.10 – BVB EGM

28.10 – BGC Partners’ & GFI Group’s Q3 2015 Results

29.10 – CME Q3 2015 Results

30.10 – JPX Earnings FY2015

30.10 – CBOE Q3 2015 Results

30.10 – WSE Q3 2015 Financial Results

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

Share Notes

Charles Schwab Chairman Charles R. Schwab sold 250,000 shares Tuesday, October 20th at $29.08 (bargain $7,270,000.00).

Analyst Notes

TMX Price Target Cut By National Bank Financial From C$50.00 To C$49.00.

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

Crowdfunding

P2P Firm TrustBuddy Delisted From Nasdaq After £3m Of Savers’ Cash ‘Goes Missing’ (subscription)
Kate Palmer – Daily Telegraph

Savers who use TrustBuddy have been told it is “highly unlikely” they will get any of their money back as the firm has now gone bust and been delisted from Nasdaq.

PLY: A worrying growing pain in the P2P story as clearly TrustBuddy was not operating as it ought.