October 31 2014

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PLY: Results mania as GPW doubles dividend as BME and JPX disappoint. DB1 has a systems failure this morning while NYSE had one yesterday. Lots more to report, as we race to pixel this am, happy scrolling:

Public Markets

CME Q3 2014 Financial Results
CME Group

Total Revenues

Quarter Ended September 30: USD 762.4 mln, up 6.6%;
Nine months ended September 30: USD 2,271.4 mln, up 0.9%

Operating Income

Quarter Ended September 30: USD 430.4 mln, up 7.4%
Nine months ended September 30: USD 1296.9 mln, down 1.28%

Net Income

Quarter Ended September 30: USD 290.0 mln, up 22.7%
Nine months ended September 30: USD 820.4 mln, up 4.5%

CBOE Q3 2014 Financial Results
CBOE

Operating Revenue of $148.9 Million Compared With $136.7 Million, Up 9%

GAAP Net Income Allocated to Common Stockholders of $48.1 Million Compared With $41.0 Million
Diluted EPS of $0.57 Versus $0.47, Up 21%
GAAP Operating Margin Increases 40 Basis Points to 50.4%

JPX Consolidated Financial Results For Six Months Ended September 30, 2014
MondoVisione

Operating revenue Yen 49,751 mln (USD 447.2 mln), down 19.4%
Operating income Yen 21,858 mln (USD 196.47 mln), down 22.5%
Ordinary income Yen 22,850 mln (USD 205.39 mln), down 21%
Net income Yen 14,100 mln (USD 126.74 mln), down 14.8%

PLY: Quite a contrast between CME & JPX…

BME Q3 2014 Financial Results
MondoVisione

Revenues for the first nine months of the year stood at €249 million, up 10.2% YoY
Net profit was €38.5 million and revenue for the same period was €79.5 million, growing 16.2% and 9.6% respectively
The efficiency ratio was 29.8% at the end of Q3, up 3.1 points YoY. ROE grew by more than five points to 40.1%.

PLY: BME missed consensus numbers it seems and of particular concern, equity market income was soggy. The Spanish exchange continues to lumber on but the worry is that the business is really going nowhere at best – and even that is largely thanks to various crutches helping keep competition out in ways which run contrary to many folks’ perception of the alleged EU open market. I fear for BME, the business needs management and it is not clear there is any right now.

BGC Partners Q3 2014 Financial Results
BGC Partners

Quarter Ended September 30

Revenues for distributable earnings USD 449.8 mln, up 8.5%
Pre-tax distributable earnings USD 65.8 mln, up 75.8%
Post-tax distributable earnings USD 56 mln, up 80.5%
Adjusted EBITDA USD 107.7 mln, up 36.9%
GAAP Revenues USD 436.2 mln, up 7.9%
GAAP income from operations before income taxes USD 29.9 mln, down 29.8%
GAAP net income for fully diluted shares USD 10.7, down 73.5%

Thomson Reuters Q3 2014 Financial Results
Thomson Reuters

IFRS Financial Measures

Revenues USD 3,107 mln, up 1%
Operating profit USD 466 mln, up 47%
Diluted EPS USD 0.28, down 15%

KCG Q3 2014 Financial Results
KCG

Revenues 272.3 mln, down 41.9%

CME Reports Big Switch To Futures (subscription)
Gregory Meyer – Financial Times

Mayhem in interest rate markets this month attracted traders to listed futures contracts instead of derivatives traded OTC, according to executives at CME.

PLY: The tectonic plates are moving slowly but the post OTC rotation is ongoing and will continue to tick up every time we see a blip like this in markets…

KCG Said To Seek At Least $300 Million For HotSpot Unit
Matthew Monks & Sam Mamudi – Bloomberg

Working with Jefferies on the sale, KCG has begun reaching out to potential buyers of the platform — called HotSpot– including Nasdaq OMX, CME, ICE, DB1 and LSE, the people said, asking not to be identified discussing private information.

FTIL Fails To Get Interim Relief From FMC ‘Unfit’ Order
Ashish Rukhaiyar & Khushboo Narayan – Livemint

FTIL failed to get interim relief from a 17 December order by the FMC declaring it unfit to run exchanges, in the wake of a payment crisis at NSEL.

PLY: It has to be said without a wholesale management change it is difficult to argue against the notion that sufficient question marks hang over the FTIL management as to render them dubious stewards of a regulated marketplace.

HKEx Boss Vows Shanghai Stock Link-Up Will Proceed
AFP

A delayed watershed scheme to allow cross-trading between Hong Kong and Shanghai’s stock markets will go ahead, the president of the Hong Kong bourse has said, adding ongoing democracy protests have not derailed the project’s progress.

China Market Regulator Says Shanghai-HK Connect In ‘Final Stage’
Reuters

A landmark Shanghai-Hong Kong stock connect scheme is in its “final stage, “Yao Gang, the deputy chairman of the China Securities Regulatory Commission (CSRC) said on Thursday, with the two exchanges set to resume testing of their trading systems amid concern its anticipated launch date was missed.

Testing For Hong Kong-Shanghai Stock Markets ‘Through Train’ To Resume (subscription)
Daniel Ren – South China Morning Post

The Shanghai and Hong Kong stock exchanges will conduct simulated trading for the through train programme tomorrow, renewing hopes for an imminent launch of the cross-border equity trading system. Brokerages in Shanghai were informed by the Shanghai Stock Exchange of the resumption of the tests.

ICAP To Shut Singapore Futures Desk (subscription)
FOW

Icap is to shut its futures broking desk in Singapore as part the ongoing restructuring of its global brokerage operations.

Read our premium post ICAP Explores A New Galaxy.

ASX & Chi-X Trade Barbs On Competition
Andrew White – The Australian

A war of words has erupted between the ASX and the broker-owned Chi-X on the third anniversary of competition in equities trading in Australia and ahead of a review that could end the ASX’s historic monopoly on clearing and settlement services.

ASX CEO Elmer Funke Kupper said the introduction of competition three years ago had failed to deliver new liquidity to the market or significantly reduce spreads — the difference between buy and sell prices — as hoped for.

But he said the fragmentation of liquidity had enabled the rise of high-frequency trading, leading to activity that “should not happen’’ in the equities market.

PLY: It is only fair that a senior executive ought to stand by his position but the sheer disingenuity of the ASX Politburo appears to know no bounds. The ASX CEO discredits his already dubious reputation for market comprehension with these remarks and I fear his bizarre ivory tower outlook on this and other topics only undermines the ASX’s credibility. The Dickensian monopoly must be undone and if that means ASX collapses, well let the market decide.

Private Markets

Bats Chi-X Europe Eyes Auction Play (subscription)
Tim Cave – Financial News

Bats Chi-X Europe, Europe’s largest equity exchange, is to introduce an opening and closing auction for its ETF listings and may expand the service to stocks at a later date, heralding a potential new front in its six-year battle with incumbent exchanges.

NCDEX Reduces Rental Charges Of Warehouses
Business Standard

NCDEX has reduced rental charges of warehouses for different agri commodities. The new charges will be applicable from November 1.

NCDEX has introduced a procedure to check the quality of fresh deposits. This procedure is implemented during fresh deposits at the exchange-registered warehouses, to ensure that they meet contract specifications.

Qatar – Extensive Rules In Place For Margin Trading
The Peninsula

Extensive rules have been put in place for margin trading activities to be conducted on the Qatari bourse, Qatar Exchange (QE).

Bitcoin Exchange Kraken Launches In Japan
CoinDesk

In its announcement, the company highlighted the strength of Kraken’s security and engineering team, as well as its high trade volumes and reputation for compliance.

Previous report on the launch here.

Belfast Company Is Bitcoining It In With Mega £9m Deal
Belfast Telegraph

Fledgling Belfast company Bitnet – set up to capitalise on the growing internet trade in digital currency bitcoins – has won a £8.9m investment from a major US fund.

Dividend News

BGC Partners declared a quarterly cash dividend of $0.12 per share payable on December 9, 2014 to Class A and Class B common stockholders of record as of November 24, 2014. The ex-dividend date will be November 20, 2014.

As previously announced in February 2014, Thomson Reuters board of directors approved a $0.02 per share annualized increase in the dividend to $1.32 per share. A quarterly dividend of $0.33 per share is payable on December 15, 2014 to common shareholders of record as of November 20, 2014.

WSE Doubles Dividend As Vienna Merger Talks End
Konrad Krasuski & Marek Strzelecki – Bloomberg

WSE proposed to double its dividend next year as earnings improved on growing gas trading and after the operator dropped plans to merge with the Vienna bourse.

The dividend will rise to 2.4 zloty a share in 2015 and 2.6 zloty in 2016 as the state-controlled bourse changed its policy to pay out at least 60% of annual profit, compared with an earlier plan of 30-50%.

PLY: PolPX is driving the profits at WSE and hence paying the dividends which will please the cash strapped government…

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX flat, FTIL down 1.5%, no new news, no signs of resolution but as always the lawyers have been furiously delivering chargeable hours.

Technology

DB1: Press Statement On Xetra Halt
MondoVisione

Today at 9:13 am CET trading on Xetra experienced constraints in handling orders in some products. To ensure orderly trading for the entire marketplace, trading was stopped for all participants from 10:09 CET on. The restart was performed without problems, so that at 10:50 am the pre-trading phase started.

Another Stock Exchange Glitch, But No Trading Halt
Bob Pisani – CNBC

Another tech glitch, on Thursday, this time with the NYSE’s SIP, which consolidates quote and trade data for NYSE-listed stocks.

According to a statement from the NYSE, the first glitch occurred at 1:07 PM ET. The SIP went down, which means that the NYSE and the other exchanges—the NASDAQ and BATS–could not exchange information on bids and offers. Simply put, they couldn’t talk to each other.

ITG Announces Triton Integration With FX Connect
MondoVisione

ITG and FX Connect, State Street Global Exchange’s end-to-end, multi-bank foreign exchange platform, announced that the ITG Triton execution management system will be integrated with the FX Connect foreign exchange platform.

Products

U.S. Options Exchanges Say New Rule Threatens To Hurt Investors
Reuters

U.S. equity options exchange operators warned on Thursday that a new rule to be implemented on Jan. 1 aimed at making sure banks have adequate capital levels could significantly raise costs for many investors that trade options.

Borsa Italiana Introduces Weekly Single Stock Options On The IDEM Market
MondoVisione

Available on the IDEM market, the Italian derivatives market of Borsa Italiana

Bloomberg Launches List Trading Tool For IRS
Finextra

Bloomberg announced that its multi-asset SEF, Bloomberg SEF launched a List trading tool for IRS.

Career Paths

Bloomberg reports that James Cawley, who pushed regulators to require that more derivatives be traded on public markets, has joined BGC Partners to help the New York-based brokerage boost its share of trading in IRS.

Cawley, founder and former head of Javelin Capital Markets, started this month as CEO of BGC’s SEF.

Jon Matonis is resigning as executive director of the Bitcoin Foundation, a trade group that supports and advocates for the development and expansion of bitcoin, the digital currency.

Effective Friday, Mr. Matonis will be replaced by Patrick Murck, who has been the foundation’s general counsel.

PLY: I wish Jon every success, he has done a remarkable job with the XBT revolution to date and I am sure he will continue to be active in the field.

FINRA announced that Richard W. Berry will become EVP and Director of Dispute Resolution, starting December 1. Berry will report directly to Richard Ketchum, FINRA’s Chairman and CEO. He is replacing Linda Fienberg, who is retiring on November 30.

The Monetary Authority of Singapore (MAS) announced that Mr V K Rajah, the Attorney-General, will be appointed to its BoD. Mr Rajah’s term of appointment will be from 1 November 2014 to 31 October 2017.

Looking To Boost Pay, Workers At U.S. CFTC Join Labor Union
Robert Schmidt & Silla Brush – Bloomberg

Employees at the U.S. agency that oversees the swaps markets, disgruntled over their pay and benefits, voted overwhelmingly to join a labor union.

PLY: Anybody know what percentage of the Euronext Paris staff are still in the hard left CGT? As I recall about a decade ago it was as high as 57%.

Financial Calendar

Next week

TMX Q3 Financial Results
ITG Q3 2014 Financial Results
Record date MarketAxess $0.16 quarterly cash dividend

New announcement

Markit Q3 2014 Financial Results – Wednesday Nov 12th 2014

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

Crowdfunding

Institutional Real Estate Crowdfunding: Big Players Join The Crowd
The Huffington Post

Current trends suggest that those who believe crowdfunding is a “minority capital” and that it excludes (to a large extent) the participation of high-profile investors should now reconsider. High-profile investors – institutions, angel investors, venture capitalists, and high net worth individuals – have begun co-investing alongside capital raised from “the crowd”.

In the real estate industry, in particular, this new trend has various implications for all involved, but especially for startups, small scale developers, and individual investors.

Other stories

JPX: Opening Of Hong Kong Representative Office
MondoVisione

JPX announced that subsidiaries Tokyo SE and Osaka Exchange will open representative offices in Hong Kong’s Central business district on November 1, 2014. The joint launch will make Hong Kong the fifth city covered by the corporate group’s network of overseas offices that currently spans New York, London, Singapore, and Beijing.

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