September 02 2014

elb2Today in your free Exchange Invest daily, how ICE is gutting the NYSE (about time too – already the results are most encouraging!) repayment for NSEL creditors inches forward, Mongolia renews LSE contract as new Tullett boss starts. T+2 news, concerns about the future of NYSE, some data centre shuffles, first Indian exchange takeover…and more, happy scrolling:

Meanwhile, for all those Americans who enjoyed the Labor Day holiday Monday, here is a link to yesterday’s Exchange Invest Daily which was resplendent with pith and stories you may otherwise miss.

Public Markets

Can NYSE Be Saved? (subscription)
Bradley Hope – Wall Street Journal

“Within minutes, Mr. Farley made a decision: gut the place.”

PLY: Nostalgia ain’t what it used to be as the next story shows… Meanwhile this WSJ story has a great graphic demonstrating some of the upheaval which Tom Farley has introduced since he started running the NYSE, as opposed to just milking it like various predecessors.

Statistic of the day: out of 22 former members of the NYSE Euronext management board, 3 remain on the ICE payroll. Rome wasn’t burnt in a day but Tom Farley is headed in the right direction. The ICE insurrection to make a business out of the New York Stock Exchange continues apace…

Former NYSE Traders Look Back On The Old Days (subscription)
Daniel Huang – Wall Street Journal

PLY: The rose tinted spectacles apple pie halcyon days of the old fashioned ‘little floor on the prairie.’ It was quite something in its day but then so was Sergeant Bilko – and that was arguably more progressive than the NYSE floor in 2000 A.D.

MSE To Extend Deal With LSEG
English News

The parties will arrange a three-year contract extension to the agreement first signed in 2011, with a signing anticipated by Finance Minister Mongolia Ch.Ulaan and Acting CEO of MSE JSC D.Angar during an event for Mongolia’s stock market in London, on September 9th.

ICAP Announces Increase In Shareholder Voting Rights
Andrew Saks-McLeod – LeapRate

ICAP has announced its current status with regard to shareholder voting rights and capital. In conformity with UKFCA Disclosure and Transparency Rule 5.6.1, ICAP as of September 1 2014 its capital consists of 664,537,006 ordinary shares.

U.S. Case Dismissal Won’t Dim Regulatory Glare For Base Metals Sector
Reuters

Industrial metals will stay in sharp regulatory focus, even though a U.S. judge dismissed a high-profile case claiming that Wall Street banks and commodity merchants artificially inflated aluminium prices by restricting supply.

Users of the metal who launched the case are facing continued headaches about supplies as the warehouse backlogs they complained about are still largely in place, while sky-high surcharges remain for those wanting material immediately.

EI reported yesterday that ‘LME To Push For Reform After US Judge Dismisses Suits’ and reported on the dismissla itself on August 27th that ‘A US court has dismissed LME as a defendant in an antitrust case in which aluminum prices were allegedly manipulated’.

Dark Pools In The Firing Line (subscription)
Anthony Malakian – Waters Technology

As the New York attorney general, the SEC and Finra set their sights on dark pool trading, larger market structure issues are coming to the fore that will force institutional traders to reexamine how they seek out liquidity.

New Tullett Prebon CEO Eyes Electronic Trading Push (subscription)
Philip Stafford – Financial Times

New Tullett Prebon CEO John Phizackerley has indicated he will push the UK-based interdealer broker further into electronic trading, and invest as the industry struggles with significant structural change.

PLY: A clear binary option exists for IDBs: expand digitally or die.

MarketAxess: Preparing For CSDR T+2 Settlement In Europe
4-Traders

MarketAxess is updating the default settlement dates on its trading platform in line with market convention post 6th October 2014 to T+2 for cash instruments with European or Eurobond ISIN prefixes subject to exceptions for government bonds that already settle on T+1. Buy-side clients will continue to be able to request non-standard settlement dates.

Levies In HKEx’s Markets To Be Reduced From 1 November
Mondo Visione

The levies that Hong Kong Exchange (HKEx) collects on transactions in its markets on behalf of the Securities and Futures Commission (SFC) will be reduced when the Government’s Securities and Futures (Levy) (Amendment) Order 2014 takes effect on 1 November 2014.

HKEx press release here.

Hong Kong’s Debate Of Weighted Voting Rights Worries Templeton (subscription)
Gregor Stuart Hunter – Wall Street Journal

PLY: Glad to see veteran emerging markets investor Mark Mobius thinks a shift towards weighted voting rights, such as dual-class shares, is a mistake, just as I do. Indeed the practice ought to be outlawed everywhere.

Private Markets

BSE Gets SEBI, CCI Go-Ahead For USE Takeover
Economic Times

Securities and Exchange Board Of India (SEBI) and the fair trade watchdog Competition Commission (CCI) have approved the merger of United Stock Exchange of India with the BSE, making it the first merger of two exchanges in the country. For the merger to proceed the exchanges will have to secure the approval from the Bombay High Court as well, where the proposal is pending.

EI reported on May 23rd that ‘BSE To Take Over Struggling Currency Bourse USE’. And June 16th that ‘BSE Expects To Complete USE Deal In 9 Months’.

PLY: A merger of sorts but more a relief of the dead really..

CRXzone Launches As Singapore’s First Bitcoin & Litecoin Exchange
Jon Southurst – CoinDesk

Singapore’s latest exchange, CRXzone, has become the first platform to offer both litecoin and bitcoin trading in the country.

Canadian Companies Start Paying Employees In Bitcoin
Carter Graydon – Cryptocoins News

An increasing number of employees are opting to receive payments via Bitcoin…

Special Section: FTI, NSEL, India at the Crossroads

PLY: Another flat day for MCX and FTIL as the EOW proclaims some welcome (albeit delayed, news):

Investors’ Money Will Be Returned In The NSEL Case: EOW
Mateen Hafeez – Times Of India

Rajvardhan Sinha, additional commissioner of police, EOW, said that the EOW had attached properties belonging to the accused and defaulters worth around Rs 5,000 crore ($ 825.15 Mln) and said he was hopeful that money will be returned to the investors. “Since the properties have been attached, we will follow the court directions,” said Sinha.

Investigators will file an application before the court to auction the seized properties through a competent authority since the attached properties are spread over across the country. Once the court gives nod, an auction will be held and properties will be sold off. “The money obtained through this procedure will be distributed among victims,” said an officer.

EI reported on August 26th that ‘Bombay HC Forms Panel To Sell Assets Of Defaulters’.

PLY: Hooray, the sooner this is resolved the better.

‘Govt Was Aware About NSEL Scam In 2010 But Didn’t Act’
Times Of India

National Spot Exchange Ltd (NSEL) Investors Forum, representing 13,000 investors, said the Rs 5,600 crore ($ 924.16 Mln) scam was known to the ministry of consumer affairs way back in 2010 but no action was taken.

EI reported on August 18th that brokers played a major role in NSEL scam according to the fraud squad, and on August 7th that the Bombay HC allowed a group of investors to make written submissions on the charge sheet filed against MCX promoter Jignesh Shah.

PLY: Curious the investors’ forum have now discovered the scam was known to government but they the investors did not realise this for 3 years? Probably I am inferring something between the lines here but it does seem a little odd that the investors and particularly brokers suffered such an elementary due diligence failure.

Technology

MCX Shifts Data Centre To Bandra-Kurla Complex To Reduce Technology Cost
Economic Times

Within a week of shifting its corporate office to its premises at Bandra-Kurla Complex (BKC), Multi Commodity Exchange (MCX) announced here that it has also shifted its data centre and co-location from Suburban Exchange Square and FT tower respectively, to BKC.

EI reported on August 21st that FTIL and MCX will soon sign an agreement to revise the terms of their technology supply contract.

Russia Looks Toward European & American Alignment As IXcellerate Data center Prepares For Expansion
Andrew Saks-McLeod – LeapRate

Russia gained a step forward in bringing ruble liquidity and trading on its venues to an international audience last year when point to point connectivity took Moscow closer to the financial centers of the world. With a new datacenter expansion, Russia continues to pull forward.

PLY: Hmmm, in other news, the Ruble hit a new low… Not quite sure this story is exactly in tune with the zeitgeist of western attitudes towards Russian markets (leaving the challenging politics to one side).

Products

SGX Proposes Greater Retail Access To Bonds
Mondo Visione

Singapore Exchange (SGX) is consulting the public on a proposal to give retail investors improved access to bonds currently offered only to institutional and accredited investors (“wholesale bonds”).

Leveraging on Singapore’s position as a leading listing venue for bonds with its AAA long-term credit rating and robust regulatory framework, the proposed framework will improve access in two ways. First, retail investors can purchase SGX-listed wholesale bonds initially denominated in S$200,000 or above in smaller lot size six months after their listing (“seasoned bonds”). Second, SGX proposes to allow issuers to make subsequent offers of new bonds on the same terms as the seasoned bonds to retail investors directly. Eligible issuers will be able to offer bonds more efficiently to retail investors through this framework.

Indexes

SET To Offer Index For Firms That Have Foreign Exposure
Bangkok Post

Stock Exchange of Thailand (SET) plans to launch an index based on listed companies that have foreign revenue in order to help investors track which stocks actually have international exposure.

SET is screening qualified stocks to be components in the index and selecting an index provider, said Pakorn Peetathawatchai, executive vice-president for corporate strategy and finance. The index is expected to be unveiled next year.

Revised Lists Of MOEX Indices Announced
Mondo Visione

Moscow Stock Exchange (MOEX) has revised lists for the constituent lists of MSE Indices as well as free floats effective from September 16, 2014 through December 15, 2014.

Career Paths

LCH Hires Ex-Lloyds Rates CEO For New Fixed Income Post (subscription)
Tim Cave – Financial News

LCH.Clearnet has added a new Layer Of Management in the first major reshuffle under new CEO Suneel Bakhshi. Bruce Kellaway has joined the clearer from Lloyds Banking Group as its first Global Head of Fixed Income, according to a member notice on Monday. Kellaway, a 20-year veteran at Lloyds, was most recently MD of Rates Trading.

Meanwhile, Alberto Pravettoni, previously Head Of Corporate Strategy & CEO of Repo and Exchanges at LCH, has been named to the new role of Global Head Of Exchanges, focusing on equities, commodities and listed derivatives, according to the notice.

Financial Calendar

Friday

TMX $0.40 quarterly dividend payment
Record date ASX 89.9c dividend
BGC Partners $0.12 quarterly dividend payment
FTIL Rs. 2 interim dividend payment

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

Other stories

HFT Spat To Be Arbitrated By CME
Automated Trader

According to a Bloomberg article, HTG Capital Partners said it detected trading patterns by Allston Trading indicative of spoofing, a banned manipulative practice characterised by rapidly placed orders to create the appearance of demand followed by cancellations.

Taiwan Fixing Could Fragment Offshore Renminbi Liquidity (subscription)
Viren Vaghela & Xiao Wang – Risk

The latest CNH fixing process* will be a boon for Taiwan’s derivatives market, but concerns have emerged over the potential silo-isation of the renminbi market. The launch of a renminbi Taipei interbank offered rate (Taibor) fixing called CNT Taibor, sparks concern about fragmented liquidity pools, with different rates being offered in each offshore market.

The new fixing will start life on September 1 and comes just over a year after the first such launch, the CNH Hibor in Hong Kong, which already has a number of derivatives products referenced to it, such as interest rate swaps at tenors out to one year.

*EI reported on August 29th that Thomson Reuters has been appointed by Taipei Foreign Exchange Market Development Foundation (TFEMDF) as the official calculating agent for its offshore renminbi benchmark CNT TAIBOR.

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