September 10 2015

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 Condolences to the family, friends and colleagues of BlackRock Inc. Co-President Charles S. Hallac on his premature demise after a long battle with cancer. He was a pivotal figure in the creation of the fund management giant.

Bob Greifeld’s slip of the tongue costs NASDAQ a major listing. BM&F Bovespa trims CME stake to raise cash. FXCM facing pink sheet future as CFTC starts (another) crack down on retail forex brokers while global forex code of conduct is coming in 2017. All this and much more:

Parish Notices: The not to be missed meetings of the month:

Last Call – please respond today: Young Markets, my conference on the future of finance in Warsaw September 17th

Burgenstock An all star industry lineup beginning with my Crossfire panel September 23rd.

Public Markets

BM&FBovespa Rallies After Sale Of CME Stake To Raise Cash
Denyse Godoy – Bloomberg

The exchange will make about 450 million reais ($119 million) from the sale. BM&FBovespa, which still owns a 4% stake in CME after selling 20% of the stake.

PLY: BM&F surprises with this trim but says it intends to maintain its remaining holdings. This stake dates back to 2007 when the CME struck a then $700 million cross equity swap deal with then pre-Bovespa merger BM&F. CME took a 10% stake in BM&F while the Brazilians increased their original 2% stake to 5% in 2010.

Read our Premium Exchange Deals Brief Part 1, Part 2.

DB1 Delays Asia Plans Due To Turbulence, Tech Woes
Andreas Kroner – Reuters

Financial market turbulence in China and software problems have prompted DB1 to delay its planned Asian derivatives exchange and clearinghouse by about 18 months. DB1 said in June the Singapore-based Eurex Asia derivatives exchange and clearing house would begin operations in Q2 2016.

Read our Premium posts Dear Carsten – An Open Letter to the New DB1 CEO, Deutsche Boerse’s Asian Experiment and The Direction of Deutsche Boerse.

Nasdaq CEO Boasted Of Gaining Top Tech IPO, Then Lost It To NYSE
Lauren Hirsch – Reuters

PLY: Whoops there goes the business! On the Q2 earnings call, Bob Greifeld remarked – “And we’re also very happy to win Pure Storage a week or so ago.” That came nearly a month before Pure Storage announced their IPO August 12 and apparently management were left, well, miffed, at Bob G’s, er, frontrunning of the public announcement…. Wednesday Pure Storage filed with the SEC to go to NYSE.

A costly slip of the tongue.

FXCM Receives NYSE Notification Letter
GLOBE NEWSWIRE

PLY: The pink sheets beckon for FXCM as its fall from grace has delivered penny stock status and hence is incompatible with NYSE fiat (admittedly not that Europeans have ever understood why a stock priced in cents is a problem beyond an arbitrary tradition), unless / until they get that reverse 1:10 share split approved at a shareholder EGM announced in August.

QV our Premium FX – CHF Crisis – Brief and FXCM Stakes Sales Brief.

SGX “Ahead Of The Curve” On CCP Capital, Argues Director (subscription)
Blake Evans-Pritchard – Risk

SGX puts up 25% of the capital in its default waterfall, while European & US CCPs contribute 2.6% on average, Jane Diplock, an independent director of SGX, has lauded the venue for putting more capital at risk than other leading clearing houses, claiming the commitment means the firm is “ahead of the curve”.

New Global Forex Code To Take Effect In May 2017
Patrick Graham & Huw Jones – Reuters

The first comprehensive global code of conduct to regulate the scandal-hit forex market will come into force in May 2017

CFTC Cracks Down On Forex & Binary Options Brokers With New RED List
Andy Traveller – Finance Magnates

CFTC launched a new website (announcement here) on which it warns U.S. retail traders of foreign companies that are operating in the country without formal permission.

Short for “Registration Deficient List”, the RED list follows other examples from regulators abroad, such as the AMF (Autorité des marchés financiers) in France, which allows investors to identify unregistered foreign entities that may be engaged in illegal practices.

Private Markets

Santiago Exchange Plans Demutualisation (subscription)
Philip Stafford – Financial Times

Chile’s Bolsa de Santiago is pushing to demutualise and list on its own market subject to the approval of both shareholders and regulators. Earlier this year BM&FBovespa, the region’s largest exchanges operator, spent 6.6bn pesos ($10.8m) to boost its stake in the Santiago exchange to 8% and aspires to holding 15% (QV today’s BM&F stake sale in CME news).

Read our Premium Exchange Deals Brief Part 1, Part 2 and MILA Exchanges Brief.

HC Dismisses NSE Plea, Orders To Pay Rs 50 lk (USD 75k) To Moneylife
Moneycontrol

Bombay High Court on Wednesday dismissed the National SE’s (NSE) notice of motion against media company Moneylife, and directed India’s number one stock exchange to pay Rs 50 lakh (USD 75 k) to Moneylife. Earlier in July, NSE had filed a Rs 100-crore defamation suit in the Bombay High Court against Moneylife accusing it of publishing a ‘false’ report on algo trading on its platform.

PLY: An expensive dispute over HFT ends with what could be regarded as low latency action by the Indian court system. – certainly compared to the lack of NSEL resolution as that poblem festers its way around the system.

Visa, Nasdaq, Others Invest $30 Million In Bitcoin-Related Startup (subscription)
Bradley Hope – Wall Street Journal

Investors including Visa, Nasdaq, Citi Ventures, Capital One Financial, Fiserv and Orange have placed

$30 million in Chain Inc., a San Francisco-based company that works with banks and other institutions to develop ways to trade and transfer financial assets using the blockchain. No valuation was disclosed.

Nasdaq OMX has named Chain as its partner for a pilot (announced in May) to test Bitcoin technology for the trading of shares in private companies.

Pivit Raises $5 Million With Help Of Blythe Masters-Led Start-Up
Sarah Krouse – Wall Street Journal

Pivit, an online and mobile gaming application founded by two creators of political betting site Intrade, has raised $5 million in its most recent funding round with a nifty minority portion of the convertible notes issued using software from Digital Asset Holdings, a blockchain startup led by Blythe Masters.

Pivit is owned by Binary Event Network, started by Intrade co-founders Gregory DePetris and John McNamara along with employee Jason Finch in 2012. Pivit allows users to predict the outcome of political, sporting, financial and other news events globally and earn virtual points. They are then ranked on a public leader board and incentivized with prizes. In addition to sponsorships, it will also sell the real-time data it generates to groups including hedge funds, research firms and political campaigns.

PLY: I am delighted to see my fellow Intrade cofounders John McNamara (the original brain behind Intrade) and Greg DePetris moving forward. Previously, Cinnober, Guggenheim and Broadhaven Capital Partners invested $6 million last year. Good luck to all concerned.

Capital Markets’ Blockchain Bill To Hit $400m In 2019 (subscription)
Anna Irrera – Financial News

Banks and other firms operating in the capital markets will spend $400 million a year on developing the blockchain by 2019, though ideas on how to use the technology remain in their infancy.

PLY: I would suggest that could yet prove the underestimate of the week – even though it is a large number! More on Blockchain next week at Young Markets.

Creditors Claim $22b Against Demised Bitcoin Exchange Mt. Gox
Gola Yashu – newsbtc

PLY: What a most interesting number. Given $22 billion is about 6 times the entire value of all Bitcoin! Okay, even allowing for the fact that everybody claims to have been selling at the peak of the market… Hmmm, I suppose both sides could claim to have lost on trades but even then it suggests (given how BTC naturally expands through mining) that Mt Gox was a truly incredible (monopoly) store of BTC. More questions than answers but a tad surreal even by the standard of that wondrous DD fail (for me anyway) “Magic the Gathering Online Exchange.”

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX flat to slightly off, 63 Moons (FTIL) up 1.5%. No news.

Technology

MasterCard Globalizes Fintech Incubator

Ryan Kennedy – Payment Week

Start Path will go worldwide from its European base.

Products

TriOptima & LCH.Clearnet Expand Compression For Unlinked, Cleared IRS Eliminating 30% Of NZD Notional Outstanding In First Swapclear NZD Cycle
MondoVisione

Watchdog In US Treasury Market Probe (subscription)
Gina Chon & Martin Arnold – Financial Times

The Department of Financial Services sent letters last month to Barclays, Deutsche Bank, Goldman Sachs, Société Générale and other banks seeking information about their operations related to Treasury auctions.

Shanghai Gold Exchange Allows A-shares, ETFs As Collateral In Gold Trading
Reuters

APG & EPEX SPOT To Launch 15-Minute Contracts In Austria On 1 October 2015
MondoVisione

Indexes

CME & Rim Intelligence Sign Exclusive License Agreement For DES Japan LNG
PRNewswire

Japan Teams Up With CME To Develop LNG Index, Break Oil-Link
Jacob Gronholt-Pedersen – Reuters

CME will begin development & clearing of a Japanese liquefied natural gas (LNG) contract later this year, as the world’s biggest importer of the fuel seeks to break a decade-long reliance on oil-linked pricing.

PLY: Very interesting, good for CME.

SSE To Launch Carbon Efficiency Index Next Month
Reuters

Shanghai Stock Exchange (SSE) & China Securities Index (CSI) will launch the index Oct. 8 tracking carbon efficiency of the 15 trillion yuan ($2.35 trillion) blue-chip companies belonging to Shanghai’s SSE180 index.

BM&FBOVESPA: New Theoretical Portfolios For The Ibovespa & Other Indices – Valid From September To December 2015
MondoVisione

Career Paths

BATS Options announced their Advisory Board:

Kurt Eckert, Wolverine

Sean Flynn, Interactive Brokers

Todd Hohman, Goldman Sachs

Mike Juneman, Citadel Securities

Todd Lard, Charles Schwab

Joseph Sellitto, Global Execution Brokers

Jonathan Werts, BofA Merrill Lynch

Slade Winchester, Citi

ITG appointed Nick Johnston as MD, European Head of Sales Trading, reporting to MD & CEO of ITG Europe, Rob Boardman. He joins ITG from Barclays Capital where he held the position of Head of European Sales Trading and has previously served in similar roles at both JP Morgan and Lehman Brothers.

WSJ reports that The White House is preparing to nominate Brian Quintenz, a former House aide, to fill a Republican vacancy on CFTC.

Mr. Quintenz, the managing principal at Saeculum Capital Management in Washington, previously worked as a senior policy aide to former Rep. Deborah Pryce (R., Ohio) from 2001-07. If confirmed, Mr. Quintenz would fill a vacancy left by Scott O’Malia, who stepped down from the CFTC last summer to become CEO of ISDA.

Finance Magnates reports that SunGard has expanded its leadership team with the appointment of Andrew Bateman as its newest President of its Treasury Business group.

Chain announced that former American Express CEO and venture capitalist Jim Robinson III has joined its board.

Alberta Securities Commission (ASC) announced that Bill Rice will retire from his position as Chairman & CEO on September 30, 2015 as planned. Tom Cotter, Vice-Chairman of the ASC, has been appointed interim Chairman & CEO effective October 1, 2015.  Mr. Cotter joined the ASC in 2014.

Ontario Securities Commission (OSC) announced the Market Structure Advisory Committee (MSAC) for the 2015 – 2017 term. See structure here.

Orc announced two strategic recruitments: Christer Wennerberg, who joins Orc from the SEB Group and Magnus Hedin, most recently with Nasdaq.

Financial Calendar

11.09 – Record date Nasdaq $0.25 quarterly dividend

11.09 – BME €0.4 first interim dividend payment

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

Analyst Notes

Deutsche Bank Raised Price Target On NASDAQ OMX From $58.00 To $60.00

Keefe, Bruyette & Woods Increased Price Objective On CBOE From $65.00 To $67.00 – “Hold” Rating

Deutsche Bank Reaffirmed “Hold” Rating On Betfair – GBX 2,650

Betfair “Neutral” Rating Reissued By BNP Paribas – GBX 3,000 Target Price

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

Crowdfunding

Harmoney Celebrates $100m Of P2P Loans
Rob Stock – stuff

New Zealand’s first P2P lender Harmoney celebrates its first anniversary on Thursday, having made over $100 million of loans and established a platform to launch into Australia.

Hargreaves Lansdown To Launch Into P2P Lending
Tom Belger – Bridging and Commercial Distributor

The firm is expected to bring the service to the market in H2 2016 despite the firm reporting a pre-tax profit loss of 5% for the financial year.

Lending Club Chief Renaud Laplanche Banks On Disruption (subscription)
John Durie – The Australian

Lending Club boss Renaud ­Laplanche works on the simple theory that it’s difficult for incumbents to revamp themselves to meet the competition from online competitors.

Why Kickstarter & Indiegogo Won’t Go Into Equity Crowdfunding
Scott Shane – Entrepreneur

Other stories

Euroclear Opens Gateway To China Domiciled Funds
MondoVisione

ESAs See Continued Risks In EU Financial Markets & Call For Rigorous Action On Assets & Liabilities
MondoVisione

DTCC Partners With Industry To Implement Expedited Account Transfer Process To Minimize Risks During Stressful Market Conditions
MondoVisione

FESE European Equity Market Report – August 2015 Figures
MondoVisione

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