October 8 2015

elb2

During this year’s renaissance Burgenstock conference, I made a few comments pertaining to Crossfire (the 3 billion number came from NASDAQ’s Magnus Billing incidentally), in an ‘on the spot’ interview with Dukascopy TV.

Lest you missed it earlier in the week, I have been “Heralding The Golden Age of Exchanges” in the ASEA newsletter and discussing how The Devil Is In the Details of TPP. Interestingly, overnight Hillary Clinton has said she now doesn’t support the TPP process she helped begin as Secretary of State. Hmmm, maybe she lost the email where she agreed with it. Instead, Hils wants to tax HFT as part of her anti freedom / end free markets, manifesto for the Democratic nomination. It is not clear if that proposed duty is intended to improve government data accountability standards.

Today in EI, FTIL completes another IEX tranche sale (no: IEX – the Indian power exchange!), ICE Benchmark Administration adds another suite to its expanding range. Lots of regulatory stuff, FCA competition urges and a spot of change moaning while ESMA notes it has about 2 million less than it needs to do what it is supposed to do (deregulation looms – proof umpteen and something). Meanwhile BlackRock suggests that when the equity trading gets tough, then the markets ought to give up (why are cash market folks such binary weaklings? – today’s water cooler topic).

I hope London readers enjoy tonight’s Cinnober soiree. Alas I can’t make it: a Mission ToRun (my Polish startup group) Masterclass with Dev Singh from Australia was already in my diary.

Happy scrolling, here’s today’s market infrastructure daily:

Public Markets

FTIL Divests 2.6% Stake In IEX
Business Standard

FTIL has concluded the sale of 2.60% equity stake in IEX (788,544 equity shares) with Aditya Birla Capital Advisors.

FAO: Presumably a tranche of the  share purchase agreement with multiple buyers to sell a total of 5.78 mln shares, or 19.06% (₹409.95 crore (USD 62 mln)). After this deal completes, FTIL will retain 6.94% of IEX – which it still must sell.

QV EI Premium: FTIL Stakes Sales Brief


IG Group Revises Client Agreements In Swiss Franc Surge Cases
Reuters

Following a ruling by the Financial Ombudsman Service, IG will pay £1m (USD 1.53 mln) to compensate clients who lost money in the aftermath of the SNB decision.

PLY: Slightly counterintuitively this may actually help IG as it will be collecting monies likely withheld as some clients waited for this ruling. Watch for the possible knock on impacts on less well capitalised / managed leveraged forex folks elsewhere I suspect – presumably the eager beavers of the fourth estate have been assiduously calling others regulated by FCA. QV EI Premium: FX – CHF Crisis – Brief.

BlackRock Calls for Halting Stock Market To Avoid Volatility
Annie Massa & Sam Mamudi – Bloomberg

BlackRock has its own remedy for days of extraordinary volatility in the U.S. equity market: Shut it down.

PLY: The old habits of the unit trust manager shine through at BlackRock. Readers will recall that in about 2 weeks we mark the 28th anniversary of the Hong Kong Stock Exchange taking precisely this route when the 1987 crash occurred. They jailed the Chairman subsequently (QV Premium: Vale: Ronald Li). It remains a fascinating curiosity of the marketplace that while derivatives can undergo enormous pressure and volatility, many cash equity folks are, frankly, prissy when it comes to a spot of vexatious activity!


Regulatory Delays Weigh On CME’s European Clearing House
(subscription)
James Rundle – Financial News

PLY: Regulatory delays are weighing on everybody’s clearing houses apart from the very few who are in the US or EU (and hence have captive pre-existing business) albeit they too are hamstrung by trying to get business from elsewhere in the de facto protectionist world of new regulation.


New LME Rules Could Hit Warehouse Willingness To Take Large Clips
(subscription)
Metal Bulletin

Warehouse companies are tackling the intricacies of what many say are LME’s complicated, albeit necessary, rules to cut queues for aluminium – and make sure the delays never recur.


Tax Impact Of FMC-Sebi Merger For Commodity Traders
Gautam Nayak – Livemint

Under the Income-tax Act, 1961, business losses from speculative transactions can only be set off against business profits from speculative transactions.


Merger Challenge
Mahesh Nayak – Business Today

As regulation of the commodity market shifts to Sebi, Chairman UK Sinha has a tough job.

QV EI Premium: SEBI-FMC Merger Brief.

Shenzhen-HK Stock Link Launch Likely To Be Delayed
EJ Insight

…but China remains determined to open up its markets.

QV EI Premium: HKEx – SZSE Stock Connect.


Chinese Court Orders Everbright Securities To Pay Out Over Trading Glitch
(subscription)
Don Weiland – SCMP

The Shanghai Second Intermediate People’s Court said Everbright must pay a total of 296,124 yuan (USD 46k) to six plaintiffs in six separate cases after a glitch in August 2013 caused wild fluctuations in the Shanghai Composite Index.

PLY: A drop in the ocean compared to the original swingeing penalties (QV EI Premium: China’s Everbright Securities Trading Error – Brief). However, note how many HFT/OMS execution errors have hit the headlines since the Chinese regulators made it clear market participants would be held very much responsible indeed. (Clue round figure, below 1…outline resembles an oval race circuit).


Philippines: Ready For The ASEAN Bourses Link?
Michelle Ong – ABS – CBN News

QV EI Premium: ASEAN Exchanges Project Brief

ICE Benchmark Administration Selected As New ISDA SIMM Crowdsourcing Utility
MondoVisione

ISDA has selected ICE Benchmark Administration (IBA) to build and operate the crowdsourcing utility for the ISDA Standard Initial Margin Model (ISDA SIMM).

PLY: Not a headline grabber like winning the London Gold Fix or LIBOR calculation but this adds further heft to the IBA business and once again demonstrates the sheer execution excellence of the ICE group.

Private Markets

Securities Commission Annuls PFTS License, Decision Takes Effect In A Month
Interfax

PLY: #Hypermessy. Just when Ukraine is flailing desperately to avoid being a failed state on the EU’s eastern fringes, the stock market infrastructure (such as it was) is potentially falling apart. An all round  tragedy doing nothing to help Ukraine make up for its disappointing post Communist record of governance.

FAO: NB Last month 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).

BSE To Conduct PAN-Based Self-Trade Prevention Checks From Oct 12
The Hindu Business Line

Bombay SE, (like NSE), introducing a self-trade prevention mechanism to prevent illegal crosses.

Special Section: FTI, NSEL, India at the Crossroads

PLY: FTIL and MCX up 1%…

Technology

Boerse Stuttgart Launches New Exchange System, Xitaro, Powered By Nasdaq
Nasdaq

Boerse Stuttgart live on Genium INET, for trading of all asset classes including equities, fixed income, exchange traded products and securitized derivatives.

PLY: Good luck to Boerse Stuttgart, the biggest and best exchange in Europe many folks have never heard of, with their deployment of NASDAQ technology.

Products

Nasdaq Announces New Corporate Threat Preparedness Series – ‘POINT’
Nasdaq

Interactive Brokers Taps Airex To Grow Trader Data Portal
WatersTechnology

IBKR expanding its third-party research & data content offering in its Investors’ Marketplace portal with online content marketplace operator Airex delivering a “turnkey” deployment.

EU Starts Monitoring Power, Gas Trading To Stop Manipulation
Rachel Morison – Bloomberg

Trading companies within or outside the EU must register with a national regulator and provide records of wholesale energy market transactions, including orders executed by brokers or completed on exchanges. The Agency for the Cooperation of Energy Regulators, or ACER, in Ljubljana, Slovenia, will monitor the information to prevent insider trading.

Career Paths

FOW reports that Phil Glover, formerly senior director at Oak Futures, joined NFX as sales director.

CalPERS named Mary Anne Ashley the new Chief of its Legislative Affairs Division.

Symbiont appointed ITG Chairman, Professor Maureen O’Hara and Thomson veteran Dr. Keith B. Jarrett to its Advisory Board.

Mahesh C. Khemlani, formerly Vice Minister of Finance of the Republic of Panama, has been elected as the President of the Panama Diamond Exchange.

Two new members were appointed to European Stability Mechanism’s (ESM) Board of Auditors: Andrew Harkness, Secretary & Director of Audit at Ireland’s Office of the Comptroller and Auditor General, and Jean Guill, DG of the Commission de Surveillance du Secteur Financier in Luxembourg.

The two new members of the five-strong board will replace Marc Gengler and Jules Muis, whose  non-renewable terms expired. The Board of Auditors is chaired by Ulrich Graf, Audit Director at the Bundesrechnungshof in Germany. Igors Ludboržs, a member of the European Court of Auditors in Luxembourg since 2004, is the Board’s Vice Chairman, while Katarína Kaszasová, DG of the Slovak Ministry of Finance, is the fifth member.

Financial Calendar

Interactive Brokers Q3 Results – Tuesday, October 20, 2015 – press release

BGC Partners’ & GFI Group’s Q3 2015 Results – Wednesday, October 28, 2015 – press release

ICE Q3 2015 Results – Tuesday, November 3, 2015 – press release

TMX Q3 2015 Results – Thursday, November 5, 2015 – press release

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

Analyst Notes

CME Upgraded By BAML To “Buy” From “Neutral”

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

Crowdfunding

LendingClub CEO Says He’s No Threat to Banks, Just Their Model
Noah Buhayar – Bloomberg

PLY: Marketplace lending comes in peace, it only seeks to defenestrate the balance sheets of the outmoded banking model.


FCA Has Particular Interest in P2P Lending & Crowdfunding in Mortgage Sector
JD Alois – Crowdfund Insider

FCA announced a “Call for Input” (CFI) from interested parties to “identify potential areas where competition may not be working well and could be improved”.  FCA views competitive markets as intrinsically more efficient.

FCA states: “We have a particular interest in the scope for newer types of funding models, such as P2P lending or crowdfunding, to overcome the constraints potentially imposed by other (more traditional) funding models.”

PLY: As can be seen from the FCA’s repeated inadequacy over MTFs under its purview maintaining artificial wash markets, it apparently views competition as more important than orderly markets (which wasn’t the order of its remit last time I looked). I am all for competition but ironically I now seem to be amongst that growing body of folks who view regulation as being more important than any form of competition than the UK regulator. …That said, in this case more mortgage competition will be welcome.

Other stories

ESMA Sets Out Its Priorities For 2016
MondoVisione

PLY: After judiciously rattling the tin outside the Berlaymont for months, the EU so values its brutal regime of ill-considered, heavily politicised, over-regulation, that it doesn’t even want to pay ESMA’s low-ball (given the workload) budget figure. Or is the idea that ESMA becomes an unwitting agent of trade protectionism by not having the resources to permit outside venues into the EU? EIther way, deregulation is the future agenda. Or wholesale disintermediation of the EU as a viable entity of course.


EEX & EPEX SPOT Respond To EU Consultation On Electricity Market Design
MondoVisione

China Launches Yuan Cross-Border Interbank Payment System
Reuters

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

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