October 28 2015

elb2

Having looked at how ICE elegantly rewrote the Great Game (bourse edition) playbook with the IDC deal yesterday, today, I am looking at the bourses whose CEOs’ titanic achievements have left them firmly stranded in the middle: well above the small but significantly short of the seriously large. Yesterday’s analysis was worth $120 of insight alone, today it’s: LSE NASDAQ & The Middle Oasis.

Elsewhere, you heard it all before the event here in EI but there is a broader macro picture on the entirely unsurprising Polish general election result in my latest RT Op Edge column.

In today’s EI, the highlights (tragic highlights) are the comprehensive failings of the blob to come up with a coherent approach to regulating markets in the OTC to CCP shuffle… #worrying. Meanwhile once upon a time they used to advertise (pre-particulation) “if only everything in life was as reliable as a Volkswagen.” Nowadays the ICE with its ruthless delivery of better results deserves a variation on that catch phrase, as evidenced by Q3 results:

Public Markets

ICE Q3 Results
The ICE Press Release

  • $2.91 Adjusted Diluted EPS from Continuing Operations, +24% y/y
  • $816MM Consolidated Revenues, less Transaction-based Expenses, +10% y/y
  • $323MM Adjusted Net Income from Continuing Operations Attributable to ICE, +21% y/y
  • $290MM Capital Return to Shareholders

q/e Sep 30, consolidated net income attributable to ICE $306 million on $816 million of consolidated revenues less transaction-based expenses. On a GAAP basis, diluted earnings per share (EPS) in the third quarter were $2.76. Excluding acquisition-related items, net of tax, Q3 adjusted net income from continuing operations $323 million,  adjusted diluted EPS from continuing operations $2.91, +24% over the prior third quarter.

PLY: As can be seen from the presentation, The ICE elegantly increases profits by 10%…or to put it in perspective their net quarterly income is not that far south of the entire market cap of the Greek Stock Exchange operator. QV In Premium: ICE Gets Big Data.

BGC GFI Q3 Results
Mondovisione

Straight from Howard Lutnick:

“BGC’s third quarter post-tax distributable earnings grew by more than 30% y/y to $72.9 million, while our revenues increased by approximately 56 percent to $700.9 million…strong performance was driven by the addition of GFI, the ongoing success of Newmark Grubb Knight Frank…and FENICS…These e-businesses increased their revenues by more than 142 % and their pre-tax distributable earnings by over 82%….Our integration of GFI is progressing well. We remain on target to reduce our Financial Services expense run rate by at least $50 million a year by the first quarter of 2016, and we continue to expect at least $40 million in further annualized cost savings by the first quarter of 2017, for a total of at least $90 million in annual savings.”

PLY: Good numbers and a Trayport deal is expected by end of 2015. Rumour has it the exchanges are out of the process and it’s a PE deal.

US Banks Hit Out At Collateral Rules On Derivatives Trade
Joe Rennison and Ben McLannahan – Financial Times

Banks are reeling after rules finalised by US regulators, aimed at reducing the risk of trading esoteric derivatives, are set to increase trading costs and further hit deteriorating fixed income business. The FDIC will require banks to post and receive collateral to protect against losses on derivatives that are traded bilaterally, as opposed to being centrally cleared.

PLY: The more regulation we have, the less any regulator finds the time, budget, inclination or indeed any folks capable of…thinking outside the box to see the potential issues arising. This isn’t a bump in the carpet, it’s an Himalayan mountain range which you might think could be spotted under the shag pile? Moreover, it’s tectonic plates are delivering huge clearing pressure (see below for CS story).

Nasdaq Launches Blockchain Initiative For Private Market Clients
Tanaya Macheel – American Banker

…introduced Tuesday as a digital-ledger technology called Nasdaq Linq.

PLY: Interesting, thought through and delivered presciently, as per NASDAQ tech’s standard operating procedures.

SEF Leaders Say Global Harmonization Of Swaps Regulations Remains A Pipe Dream (subscription)
Waterstechnology

Implementation of MiFID II is roughly 15 months away, and with it comes a burning question: Will the US and Europe be able to come to a mutual recognition of regulations for the swaps market? Douglas Friedman, general counsel for Tradeweb Markets, said the problem originates from assumptions by many that because the US started earlier than Europe on swaps trading reform, European regulations would largely mirror what the US did.

PLY: I would counter that the problem is two competing groups of blob egos, neither of which appears to adequately understand the situation they are mismanaging (with breathtakingly heroic levels of hubristic incompetence, no matter what blob benchmark is deployed).

Shanghai SE Steps Information Disclosure To Curb Speculation (subscription)
Shanghai Daily

SSE requires companies listed on the exchange to make detailed disclosures about risks and avoid overly positive statements about new share offerings, strategic agreements and name change

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

SGX Extends Privy List Requirement To All Material Transactions (subscription)
Trinity Chua  – The Edge Markets

PLY: SGX essentially ensuring it is up to date with all Chinese news etc. – qv the SSE news above.

PMEX Signs Deal With DGCX
Daily Times

Pakistan Mercantile Exchange Limited (PMEX), the country’s only multi-commodity exchange, and Dubai’s dynamic DGCX signed a Collaboration Agreement.

TVS Capital Fund Buys 4% in IEX
Livemint

Mumbai: TVS Shriram Growth Fund, the investment arm of TVS Capital Funds Ltd, has acquired a stake of about 4% in Indian Energy Exchange Ltd (IEX) from Bessemer Venture Partners for Rs.81 crore, (approx 12.5 million USD) the firm said on Tuesday.

QV EI Premium: IEX India Sale Brief

Global IPO Wars: Exchanges Wage All-Out Fight for Next Alibaba
Annie Massa,  Sam Mamudi – Bloomberg

In just two years, the number of cross-border IPOs on the biggest venues has more than doubled…

DB1 Rolls Out New Data Fees, Policy Changes (subscription)
Waterstechnology

Changes to Market Data Dissemination Agreement, include clarifying definitions used in the policy,  introduction of new licenses, and sweeping price rise across all market data products. End users say the changes are creating an undue administrative burden…

Credit Suisse Dismisses Talk Of Clearing Retreat (subscription)
Risk.net

Biggest US swaps FCM has cut commodities presence and plans “no further strategic changes” Credit Suisse has dismissed suggestions that plans to shrink its investment bank will force a sharp retreat from the derivatives clearing business.

PLY: The regulators are dancing with disaster, as a result of a moronic political class which essentially tried to inject socialism at all costs and has ended up with a dog’s dinner whereby banks are being coshed over the head with ridiculous new rules which will kill markets and harm consumers. Don’t get me wrong, we were always inevitably headed for a total CCP environment, the OTC marketplace as was, was “unsafe at any speed” but the current situation is a sick joke undermined at every term by a completely unthinking, unknowing but arrogant blob.

Private Markets

Central Bank Has Big Plans For Budapest SE
Portfolio

The National Bank of Hungary (MNB) intends to facilitate the listing of state-owned companies, as well as SMEs.

PLY: Negotiations are ongoing for a deal to ease the failed CEESEG de facto “Austro-Hungarian bourse empire” back to being, sooner or later, just the rump Vienna SE.

Polish Expert To Create Power Exchange For Persian Gulf countries
Alicja Ciszewska –  Warsaw Business Journal

Grzegorz Onichimowski, the co-creator of  the Polish Power Exchange (TGE) was hired by GCCIA (Gulf Cooperation Council Interconnection Authority) to establish a joint power stock exchange.

Foreign Investors & The Saudi Capital Market?
Meshari Al-Harbi – The Market Mogul

More than four months after foreign investors were allowed to enter the Saudi capital market (Tadawul), the actual flow of foreign capital into the market is negligible, amounting to just 1.11%.

PLY: The difficulty is that when you finally open up decades after markets internationalised, the investors who were interested have often already gone elsewhere…

Gibraltar SX Looks To Expand Listing Options For Managers
Bailey McCann – Opalesque

Gibraltar wants to change the game for investment managers with its new exchange…

Kuwait Bourse Set For Major Reforms
Oxford Business Group

Improving liquidity and boosting market capitalisation are the focus of reforms under way at the Kuwait Stock Exchange (KSE), as the authorities work to reinvigorate the bourse’s growth.

Palestine Securities Exchange (PSE) Q3 results
Mubasher Info KSA

Tehran & Istanbul Exchanges Sign MoU
Mondovisione

Seven Questions WIth Moscow Exchange
Candice de Monts – Petit – IR Magazine

CFO Evgeny Fetisov talks about Russia’s new individual investment accounts, recent reforms & plans to attract new listings…

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL flat.

FTIL Submits Further Updates On Clarification (subscription)
HT Media Syndication

Technology

Cinnober Wants Partners To Help Tap Banks (subscription)
FOW magazine

Tech firm Cinnober wants strategic partners to support its plan to work more closely with investment banks as it nears completion of technology upgrades targeted at the sell side.

SGX Suffered Derivatives Trading Interruption
LeapRate

One hour outage…

Products

European Blockchain Incubator Launches First Public Proof of Concept, MoneyCircles.com
CoinDesk

MoneyCircles.com is a decentralised peer-to-peer lending app built on Uphold (formerly Bitreserve) which allows circles of people to get together and mimic a credit union to save & lend with one another based on a ‘common bond’.

PLY: Interesting, albeit we could do with a Blockchain for PR hype – as everything is breathlessly & relentlessly pumped out as a global first. Then again given the profound ignorance lapping around the area, this is hardly surprising that the quality of PR in the area, sucks with a passion.

Indexes

BRIEF-BME Expands Its IBEX35 Index Family By Banks, Energy, Construction
Reuters

Financial Calendar

28.10 – ICE Q3 2015 Results
28.10 – BVB EGM – usual lack of quorum fiasco today, trying again tomorrow…
28.10 – BGC Partners’ & GFI Group’s Q3 2015 Results
28.10-30.10 – KRX general meeting of ISG at Seoul
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

Societe Generale Reiterates GBX 2,600 Price Target for London Stock Exchange Group Plc (LSE)

Analyst Notes

Fidessa Group plc’s Buy Rating Reaffirmed at Jefferies Group
CBOE Holdings Receives Consensus Rating of “Hold” from Analysts
London Stock Exchange Group Plc Receives Average Rating of “Buy” from Analysts
London Stock Exchange Group Plc Earns Buy Rating from Beaufort Securities (LSE)
ICAP plc Given Average Rating of “Hold” by Analysts

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

Other stories

BTCC Chief Bobby Lee: Bitcoin Is Not Anti-bank, It’s Pro-innovation
Ian Allison- Business Times UK

Accused CME Spoofer ‘Living The American Dream,’ Defense Says
Kim Janssen – Chicago Tribune

A trader who made more than $1.4 million in three months on CME operated “a classic bait and switch,” federal prosecutors alleged Monday afternoon as a highly anticipated fraud trial began. But lawyers for 53-year-old trader Michael Coscia say he was simply “living the American Dream.”

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