September 14 2015

A busy Monday in view as I gear up for Young Markets in Warsaw (HFT seminar 1600 Wednesday – free to attend & full day Conference Thursday).

And it’s pretty much last call for Burgenstock, kicking off September 23rd with my Crossfire panel returning with a star studded line up including NSE CEO Chitra Ramkrishna, CME CEO Phupinder Gill, ICE Europe boss David Peniket, NASDAQ Europe boss Magnus Billing and former SwX exchange CEO & FESE President Christian Katz.

Today in EI: Grasso on US equity markets, Hungary about to take back control of Budapest bourse as the Austrians push the EU towards suicide pact known as FTT and lots more…happy scrolling something for everybody:

Public Markets

Supreme Court Allows FTIL To Transfer IEX Shares
Financial Express

PLY: Simply confirming that the suspension of voting rights et al conferred on FTIL (63 Moons) by CERC regulator will not be applied to fit and proper purchasers. (In June FTIL signed an agreement to sell 16.6% for Rs.357.06 crore (USD 56 mln), valuing IEX circa USD 337 mln, leaving FTIL with 9.4%. (Last week TVS Capital bought 3% in IEX from Bessemer Venture Partners for Rs 75 crore (USD 11.3 mln), valuing the company at Rs 2,500 crore (USD 377 mln)).

For more context read in Premium FTIL Stakes Sales Brief and IEX India Sale.

Investors Lose in Today’s Markets, Says Former NYSE Head Grasso
Cordell Eddings – Bloomberg

Investors haven’t benefited from changes in the way the market functions.

New Rules Coming From CFTC To Protect Market From ‘Flash Boys’
Francine McKenna – MarketWatch

According to CFTC Chairman Timothy Massad, automated trading accounts for more than 70% of the volume in futures markets.

US Exchanges Urged To Act In HFT Debate (subscription)
Robin Wigglesworth & Nicole Bullock – Financial Times

Anne Richards, chief investment officer at Aberdeen Asset Management, said that the success of HFT groups was an indication that they enjoyed an unfair advantage.

Human Traders Can Still Beat Computers (subscription)
Henny Sender – Financial Times

PLY: Yes they can – but not in a pure speed race.

Read our Premium A Taste Of HFT Scandal Brief – Part 6.

SEC Can Pursue Insider Trading Case Against Brokers
Joseph Ax – Reuters

Two New York stockbrokers must face civil insider trading charges brought by U.S. securities regulators, a U.S. judge ruled on Friday, despite a landmark appellate ruling that torpedoed the criminal case against them.

Traders’ Phones Are Becoming A Zone Of Total Surveillance (subscription)
Emily Glazer – Wall Street Journal

PLY: Reporting what has been clear for some time, surveillance recording methodologies originally found only in turrets have been expanding across media in a digital age.

The Unraveling Of Tom Hayes – Part One (subscription)
David Enrich – Wall Street Journal

PLY: A cautionary tale of How Tom Hayes’ life spiralled from supertrader to criminal pariah.

Firewall For Options Market Clears SEC Hurdle For Capital Plan
Brian Louis – Bloomberg

A plan to bolster the financial strength of the U.S. options market’s backstop that has drawn criticism from some exchanges and traders cleared a regulatory hurdle.

SEC lifted a stay on a plan by OCC to shore up its capital. Under the proposal, OCC has collected $150 million from the five exchanges that own it.

PLY: A tricky issue – interoperable but then again shareholders are not the same as users…

EU Deal On FTT ‘Within Reach’: Moscovici
Reuters

PLY: The anti-market socialist EU is having such a blistering time of it failing at all other economic policies, now the idiocy of an FTT is almost upon the Union it seems – not much point in wasting more breath on a CMU if it does methinks.

Boerse Stuttgart Seeks Exceptions To Planned FTT For Private Investors & Liquidity Providers
MondoVisione

PLY: A blistering riposte from Christoph Boschan as the EU tightens the noose on its efforts to further erode free markets and with it materially damage those who have the temerity to save and invest for a better future.

Read our Premium EU FTT Brief Part 2.

Commodity Brokers’ Registration With Sebi To Start After Sept 28
Dilip Kumar Jha – Business Standard

With the shadow over minimum networth criteria cleared, brokers of commodity exchanges are set to start their registration with the new regulator Sebi after September 28, the effective FMC Sebi merger date.

Commodity Exchanges Get One Year To Rationalise Salaries
The Economic Times

Read our Premium SEBI-FMC Merger Brief.

Private Markets

MNB Said Ready To Purchase Budapest SE
Budapest Business Journal

The National Bank of Hungary (MNB) is in talks with CEESEG, majority owner of the Budapest SE (BSE), to purchase ownership of the exchange, MNB Deputy Governor Ferenc Gerhard said, according to a report in Austrian newspaper Wirtschaftsblatt.

PLY: Previous discussions on the topic here. This is a great piece of news for Budapest and the exchange community in CEE. There are so many opportunities afoot and I am sure Zsolt Katonas and his team can deliver a fascinating future for local markets. While readers can refer to the Premium CEESEG Stakes Sales Brief, it is interesting to note how the CEESE Goup is disposing of stakes just as the nation’s Finance Minister is excited about damaging investors’ best interests with the FTT.

Exchange Status Just The Start For IEX Group (subscription)
Tim Cave – Financial News

PLY: IEX was clearly not merely conceived as a means to delay predatory HFT into a fairer order flow. Given how well Brad Katsuyama and his team are capable of thinking, that is surely not surprising?

NSE Breaks Silence On Whistle-Blower Complaint
N Sundaresha Subramanian – Business Standard

National SE (NSE) has broken its silence on irregularities alleged by a whistleblower on its high frequency trading systems.

NSE Puts In Place Annulment Policy To Check Frivolous Trades
Times of India

Moroccan Govt Drafts New Rules To Attract Stock Market Investors
Reuters

Morocco’s government is considering allowing foreign companies to list on the Casablanca stock exchange and creating a second market dedicated to small and medium-sized businesses.

The foreign companies’ shares could be listed in foreign currency or in Morocco’s dirham.

PLY: Without FTT, may be attractive to EU companies especially in the Francophone world in particular…

Closely-Watched Bitcoin Startup To Roll Out Trading Platform
Greg Ryan – Boston Business Journal

Alt-Options, founded last year by four Boston University students, has created a trading platform for Bitcoin options, as well as a pricing algorithm and other tools to aid Bitcoin investors.

MtGox CEO Mark Karpeles Charged In Japan
BBC News

Adam Back: ‘We Need To Hold On To The Decentralized Nature Of Bitcoin’
Cointelegraph

Wall Street Officially Opens Its Arms to Bitcoin Invaders
Cade Metz – Wired

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX flat, 63 Moons (FTIL) a little better.

Technology

Several Companies Are Trying To Take Down The Bloomberg Terminal
Andrew Nusca – Fortune

Among them: Symphony, upstart jointly owned by some of the world’s biggest banks which next month expects to begin offering software to replace the communications system that traders use to talk to one another and will offer Dow Jones news on its feed.

BlockTrail Launches Multi-Platform Bitcoin Wallet With No Access To Your Coins
Natasha Lomas – TechCrunch

Products

Banks Wanted To Keep The CDS Market To Themselves
Matt Levine – Bloomberg

Big Banks In $1.865 Bln Swaps Price-Fixing Settlement
Jonathan Stempel – Reuters

Twelve major banks have reached a $1.865 billion settlement to resolve investor claims that they conspired to fix prices and limit competition in the market for CDS.

Comment: Regulators Must Ensure FX Market Stability (subscription)
Gil Mandelzis (CEO of EBS BrokerTec) – Financial Times

PLY: A coherent common sense request for proportionality & logical approach to create better markets but not to stymie progress with another Reg NMS-style fiasco. As Gil Mandelzis notes:

“A continuous, trustworthy market and price at the end of the day is a public good.”

Derivatives Data At Heart Of Clearing Dispute In Scandinavia
Frances Schwartzkopff – Bloomberg

Swedish debt office is latest to raise data-quality questions. ESMA it’s reviewing the concerns before setting new rules.

Wild Trading Exposed Flaws In ETFs (subscription)
Corrie Driebusch, Saumya Vaishampayan & Leslie Josephs – Wall Street Journal

Sebi Considers Proposal On Cross-Currency Futures Pairs
The Economic Times

BSE To Offer Multi-Legged Order Entry In Currency Futures
The Hindu Business Line

Philippine SE May Soon Trade PPP Infrastructure Securities
Inquirer

Carbon Trade Exchange To Launch RGGI Spot Market
Argus Media

The Carbon Trade Exchange (CTX) will launch a physically settled spot market for Regional Greenhouse Gas Initiative (RGGI) CO2 allowances on 28 September.

JPX: Celebrating 30 Years Of 10-Year JGB Futures
MondoVisione

Indexes

FTSE Russell Passes On Adding Chinese Stocks To Indexes (subscription)
Carolyn Cui – Wall Street Journal

PLY: Pushback after recent actions.

Euronext To Consult Clients On Index Strategy
Waters Technology

Career Paths

FT notes Tracey McDermott takes over as UK FCA acting head today from Martin Wheatley

FOW reports that HKEx hired Christopher Lee, the former global head of execution at ABN Amro, as SVP in its markets unit.

Reuters reports that Canaccord Genuity appointed Daniel Daviau CEO, effective Oct. 1. Daviau, founder of Genuity Capital Markets, has been CEO of Canaccord‘s North American capital markets business since February, joining Canaccord after the Canaccord/Genuity merger in 2010. Daviau replaces David Kassie, who took over as CEO in April following the death of Paul Reynolds

TABB Group announced that Matt Simon, a principal & former head of futures research, will manage the firm’s consulting and advisory services business, reporting to Anthony Perrotta & Andy Nybo, partners, global heads of research and consulting.

GBST, a leading global provider of securities transaction and fund administration software, hired Ian Jack as CEO for its Capital Markets business in the UK.

Financial Calendar

14.09 – Interactive Brokers $0.10 quarterly dividend payment

15.09 – Thomson Reuters $0.335 quarterly dividend payment

16.09 – Record date ICE $0.75 Q3 2015 dividend

16.09 – NZX 3.0 cents interim dividend payment

18.09 – CBOE $0.23 quarterly cash dividend payment

New announcement – BVB EGM – 28/29.10.2015

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

Crowdfunding

Bank Disrupters Fail To Live Up To Hype (subscription)
Tom Braithwaite – Financial Times

Growth, ambition and stalking banks threaten sector independence.

PLY: Sort of true but at the same time not looking at the big picture. Worth a read though, the regulatory monopoly remains a big issue protecting the flaccid banking system.

P2P Sector Faces Shakeout As Regulation Bites (subscription)
Anna Irrera – Financial News

The UK’s fast-growing P2P lending sector is facing its first wave of consolidation, with smaller and less profitable players struggling to meet higher costs associated with a looming regulatory deadline.

PLY: Just as we see interest from folks seeking to enter… May be worth some of those exiting giving me a call.

Concern Over Mini-Bonds’ Move To The Mainstream (subscription)
David Stevenson – Financial Times

Over the past year or so the world of alternative finance has thrust itself into the mainstream of investment. Barely a week goes by without some new crowdfunding campaign or P2P loan launch.

Some are sensible, some less so. But Zopa, the sector pioneer, has built a very solid franchise that increasingly smells like a mainstream financial services business online. Its deadly rival Ratesetter has also branched out into new forms of lending.