September 12 2014

elb2A slightly quieter day to ingest all the news from a dynamic Labor Day week – more thoughts on ICE’s takeover of SuperDerivatives as NZX reports another steady increase in profits. Nairi products via Tullets anybody? The Bank of England has been thinking about Bitcoin. As always, they don’t take the process of thought lightly…

Interesting nuggets throughout after what has been a fabulously exciting start to September…and things are only warming up! Happy scrolling:

Public Markets

NZX Interim Report 2014
MondoVisione

NZX’s H1 net earnings were $7.0 million, 8.3% up with total revenues of $31.2 million, 2.8% higher than the same period last year which included unusually high levels of energy consulting revenue.

PLY: NZX keeps making money and more of it – it’s a great business.

ICE’s SuperDerivatives Buy Welcomed, Integration Details Still Unclear (subscription)
Faye Kilburn & Max Bowie – waters technology

Less than a calendar quarter after selling one data technology business – NYSE Technologies’ Wombat platform – to SR Labs, ICE acquired another in the form of derivatives pricing and risk management vendor SuperDerivatives, for which it paid $350 million in cash to “accelerate the expansion of ICE’s comprehensive multi-asset class clearing strategy,” officials say.

PLY: Given that ICE have an accomplished track record integrating deals, I appreciate the desire of Waters to know more but best to focus on the integration itself as opposed to discussing how you will play the game.

Stock Exchange On The Cards For Independent Scotland (subscription)
Giles Turner – Financial News

A ‘Yes’ vote in next week’s referendum on Scottish independence could turn speculation about the reestablishment of a stock exchange in the country into a reality.

PLY: In 1973 the amalgamated Aberdeen, Edinburgh, Dundee and Glasgow exchanges merged into LSE. Now the Bolivarian Monarchy of “wee eck” (Scottish Nationalist leader Alex Salmond’s nickname) could bring us a new bourse, albeit against what may be a somewhat challenging economic environment of ‘Euro-Chavez-ism.’

CBOE & C2 In Discussions On Regulatory Services Agreement With FINRA
CBOE

CBOE and C2 Options Exchange (C2) are in discussions with FINRA on a potential agreement for FINRA to provide certain regulatory services to the CBOE and C2 options markets.

Derivatives Market Transparency – CME Seeks Recognition As Trade Repository In Québec
MondoVisione

CME has filed an application for recognition as a trade repository in Québec, in addition to the applications for recognition filed by DTCC Data Repository and ICE Trade Vault.

PLY: Sensible move.

Tullett Prebon & Parthian Partners Sign Exclusive Joint Venture In Nigeria
MondoVisione

Tullett Prebon established a joint venture with Parthian Partners, a Nigerian-based IDB, as part of its continued expansion throughout the African continent.

PLY: TNT expand into the world of Naira-denominated bonds and bills. Interesting.

Private Markets

Texan HFT Closes London Outpost (subscription)
Tim Cave – Financial News

US high-speed trading firm RGM Advisors is to cease operations in Europe, where a more challenging trading and regulatory environment has already led to members of the niche community shutting up shop.

Sebi Warns Jaipur SE
Anirudh Laskar – Livemint

Sebi warned the Jaipur SE (JSE), advising it to comply with securities laws in letter and spirit, in a timely manner.

Here’s What The Bank of England Thinks Of Bitcoin
Alen Mattich – Wall Street Journal

PLY: DIscusses the paper below:

Digital Currencies: Bank Of England Quarterly Bulletin 2014 Q3 Pre-Release Articles
MondoVisione

​Innovations in payment technologies and the emergence of digital currencies
By Robleh Ali, John Barrdear, Roger Clews and James Southgate

When payment systems were first computerised, the underlying processes were not fundamentally changed. This article discusses more recent developments in payment systems, focusing on the emergence of privately developed, internet-based digital currencies.

PLY: Hamel & Sampler’s brilliant web 1.0 quotation “Somewhere out there is a bullet with your company’s name on it…” rings true here. This bullet is inscribed “Swift.”

Dividends

HKEx: Forfeiture Of Unclaimed Interim Dividend For 2008
MondoVisione

On 30 July 2014, HKEx announced that, pursuant to HKEx’s Articles of Association, the interim dividend for 2008 of HK$2.49 per share, payable on 11 September 2008 and remaining unclaimed on 11 September 2014, would be forfeited and would revert to HKEx.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX is flat while FTIL is off 1%. As always resolution is eagerly awaited while the bureaucratic process moves very very slowly. Or not, according to NSEL…

NSEL Refutes FMC Charges On Slow Recovery Process
Ashish Rukhaiyar – Livemint

NSEL has refuted observations made by FMC regarding the slow pace of recovery process from the defaulters having filed 5 arbitration petitions in Bombay high court, 27 applications in Maharashtra Protection of Interests of Depositors (MPID) court and 30 complaints with the magistrate court concerning bouncing of cheques.

MCA, FinMin Divided Over NSEL-FTIL Merger
Malvika Jain – Moneycontrol

FMC, which submitted a report on NSEL scam in August, had sought for a merger between NSEL and FTIL, citing that the move would help in faster recovery of dues. Besides, NSEL is a 100% subsidiary of FTIL and hence the merger would not have made much of a difference as far as the management was concerned. While the Ministry of Corporate Affairs is against the merger, the Finance Ministry favours it. The final call on the issue will be taken by the former. Interestingly, Arun Jaitely heads both ministries.

PLY: I still think forced merger sends a wrong signal but clearly there is some argument for a 100% subsidiary. Whatever happens FTIL is clearly responsible and must be held to account alongside any other culpable parties – guilty of failed oversight or worse.

‘No Financial Market Should Be Left Unregulated’
Mahesh Nayak – Business Today

Ramesh Abhishek, Chairman of FMC which regulates commodities’ futures markets, speaks to Mahesh Nayak.

PLY Clearly a regulator speaking in the public interest as opposed to any vested interest in expanding the bureaucracy itself.

Products

CME To Launch Asia Gold Contract – Race For Pricing Power Heats Up
Dominique Patton – Reuters

CME will launch a physically deliverable 1K gold futures contract in Hong Kong later this year, joining a race in Asia to provide a viable price benchmark in the biggest gold-consuming region.

PLY: China and India seek better benchmarks while there is growing disenchantment with western benchmarks – if the latter spreads along with the European stagnancy disease, everybody will be moving to Singapore at this rate…

EI reported on August 19th that Shanghai Gold Exchange plans to start bullion trading in the city’s FTZ. On June 25th SGX announced September as deadline for launching its physical gold contract. CME and TR are seen as favorites to manage London gold fix, after they recently won the rights to manage the daily silver fix.

LME To Launch Premium Contracts For Metals In 2015 (subscription)
Ese Erheriene – Wall Street Journal

LME said it would launch premium contracts in Q2 2015, which could allow market participants to protect themselves from spikes in costs that arise on top of the cost of the metal.

PLY: Previously discussed on September 5th, this strikes me as a fascinating new product area for exchange risk transfer.

EU’s OTC Derivatives Proposals Threaten Asian Regulatory Clash
Michelle Price – Reuters

Tensions are growing between regional regulators over a proposal on collateral requirements that would make it more costly for Asian companies to trade with European banks in OTC derivatives.

PLY: America may be modestly relieved to learn that at least the EU isn’t just arguing with them, it seems to be entirely global in its dispute scope!

Indexes

Euronext Launches Southern European Banks Index NR
MondoVisione

Euronext launched Euronext Southern European Banks Index NR(SEBI), an index reflecting the banking sector of Southern Europe which will serve as the underlying for new index futures available for trading on Euronext Amsterdam from 2nd October, followed by index options on 9th October.

Career Paths

StockMarketWire reported that London Capital Group CEO Kevin Ashby has resigned. Ashby became CEO in July 2013 and introduced Charles-Henri Sabet to the company.

Sabet has recently become chairman, and is leading a group of investors in the company, as announced earlier in the year. Ashby has decided that it is an appropriate time to resign and concentrate on his other business interests.

PLY: Somewhat of a surprise, I wish Kevin every success going forward, following a dynamic period in charge of LCG after Mark Slade stepped down last year.

FN reported that Algomi, a London-based fixed income fintech startup, has appointed BCG senior partner Charles Teschner to its board.

Reuters reported that FINRA will replace the retiring chief of its arbitration unit with either Richard Berry, the unit’s director of case administration, or Kenneth Andrichik, its mediation director. Linda Fienberg, who has been FINRA’s arbitration head for 18 years, will retire at the end of November.

Financial Calendar

Today

Record date NASDAQ OMX quarterly dividend of $0.15
Interactive Brokers $0.10 quarterly dividend payment.
BME €0.40 interim dividend payment.

Next week

Record date ICE $0.65 Q3 dividend
CBOE $0.21 quarterly dividend payment
Thomson Reuters $0.33 quarterly dividend payment
Fidessa 13.1p interim dividend payment

New announcement

LSEG H1 Interim results ending 30 September 2014 on 13 November 2014

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

Share Notes

ICE Director Charles R. Crisp sold 1,000 shares Wednesday, September 10th at an average price of $188.85 (bargain $188,850.00). He now owns 11,012 shares. ICE Insider Stock Transactions are chronicled here.

Analyst Notes

Numis Securities Assumed Coverage On LSE – “Hold” Rating, GBX 2,074 Price Target

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

All Analysts, Banks and Brokers are welcome to contribute to this section.

Crowdfunding

The Global Crowdfunding Money Machine
Chris Morris – CNBC

Other stories

CFTC Financial Data For FCMs Update
MondoVisione

FCMs and retail foreign exchange dealers (RFEDs) must file monthly financial reports with the CFTC’s Division of Swap Dealer and Intermediary Oversight (DSIO) within 17 business days after the end of the month. Selected financial information from these reports is published here.

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