September 15 2014

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PLY: It’s Lehman Anniversary Meltdown day. Big news is Tera exchange gaining regulation for Bitcoin swaps (plaudits to the CFTC for embracing the future while many regulators are not so up to date). Elsewhere, LSE push ahead with offshore RMB initiative as HKEx and LME/LME Clear sign deals with CCB too. Buy side politics and due diligence continue creeping to the fore as IG expands into stock market brokerage. Daft illuminati sponsored new world order plan for forex ‘monoplatform’ looks to be shelved. Berne Exchange not merely alive but does a promising deal with BATS – hooray!

Egypt renews X-Stream contract, TOCOM looks at Osaka IT co-operation (prelude to merger?) as Bondcube readies for a November launch. Other stories, TR news and more in today’s free daily Exchange Invest, happy scrolling:

Public Markets

GFI Group Directors Accused Of ‘Engineering’ CME Purchase
Sophia Pearson – Bloomberg

GFI Group’s directors were accused in a shareholder lawsuit of “engineering” the wholesale brokerage’s $580 million purchase by CME to benefit themselves while spurning a superior offer from BGC Partners.

The proposed deal allows GFI directors to negotiate their own purchase of the company’s choice assets at “bargain basement prices,” shareholder Maurene L. Al Ammary said as he seeks to represent all GFI shareholders in a bid to block the transaction.

On September 9th EI reported that BGC Partners is to make $675 mln bid for rival GFI.

PLY: For some time it has been an open secret that CEO Mickey Gooch was shopping for a deal. It is not quite clear why BGC took so much time to sweep in before being spurned by which time CME had GFI at the altar, having focussed on the assets they want. Incidentally last week the only comment from CME was made by incoming CFO John Pietrowicz – it slipped my mind in the haste to pixel but he has run pretty much every deal since CME-CBOT in 2003. I am reliably informed he is responsible for the GFI deal, so an apt person to comment (insofar as he can given regulatory strictures).

LSEG Signs MOU With China Construction Bank
LSEG

PLY: The agreement, signed by LSEG CEO, Xavier Rolet and CCB Chairman, Hongzhang Wang, presages strategic cooperation which clearly focuses significantly on the role LSE hopes to play within London as part of the push to create a leading RMB offshore centre in the UK.

HKEx, LME & LME Clear Sign MoU With CCB
MondoVisione

HKEx, LME, LME Clear, and China Construction Bank Corporation (CCB) signed a MoU on 11 September 2014 for strategic cooperation in the development of new products…

2014 Could Set Record For Value Of IPOs On LSE Main Market
Nick Fletcher – The Guardian

By the end of August, about £7.4bn had been raised, according to Capita Asset Services, and on current trends this could reach £11.7bn by the end of the year, well above the record £8.7bn set in 2011.

PLY: An encouraging trend for LSE Group which appears to be firing on all cylinders right now, albeit still without any tangible derivatives presence (will Rita will have legs?).

IG Group Launches Share Dealing Platform (subscription)
Adam Palin – Financial Times

IG Group has launched its first share dealing platform aimed at hands-on investors in the stock market.

PLY: FTSE 250 company IG has heft sitting at the reputable end of the retail spread/forex/cfd market (it was a pioneer in the spread betting industry). A move that likely can only work well for both investors and indeed the exchanges where IG links its client base…

Traders Demand Deeper Look At Europe’s Dark Pools (subscription)
Anish Puaar – Financial News

PLY: A useful primer on how the buy side have increased their due diligence of both venues and the sell side in recent months, as mentioned previously in Exchange Invest despatches. Incidentally, this is a swansong article from the likeable Anish Puaar who is off to become an analyst on infrastructure for Rosenblatt – so clearly not the last we have heard of him! Good luck Anish.

Investors Team Up To Find Path Through Risky Dark Pools
Lionel Laurent – Reuters

PLY: Discussing the three year old Pohjola initiative which has a niche user base in Scandinavia. Probably not the eventual winner but a likely prototype of what the future looks like. As Mark Goodman of Soc Gen notes here “A revolution in trading has not happened yet.” However, that change of control from the broker to the client is clearly coming, regardless of whether the sell side like it or not.

CDS Sponsored For The Endorsement Process To Become A Pre-Local Operating Unit As Part Of The Global LEI System
TMX

CDS Clearing and Depository Services Inc. (CDS), Canada’s national securities depository, clearing and settlement hub, announced that the Ontario Securities Commission (OSC) has agreed to sponsor CDS towards endorsement as a Canadian Pre-Local Operating Unit (“Pre-LOU”) under the Global Legal Entity Identifier System (GLEIS). Canada’s securities depository to collaborate with DTCC to expand role in global financial infrastructure

BvB To launch New Alternative Equity Platform For SMEs & Startups
Romania Insider

Companies with a market value of up to EUR 250,000 will be able to list on an ATS at the Bucharest SE (BVB), by the end of this year, provided they list at least 10% of their shares, according to BVB CEO Ludwik Sobolewski.

PLY: Long overdue, then again something I had placed on the launchpad at SIBEX years ago but sadly lost in the chaos which descended soon after I left.

FMC Seeks Public Comments On New Guidelines For Surrendering Of Commodity Exchanges’ Memberships
Business Standard

FMC has invited public comments by 27 September on repaying the interest fee deposit to members surrendering their exchange membership.

Doubts Raised Over Global Forex Platform (subscription)
Sam Fleming, Daniel Schäfer & Jamie Smyth – Financial Times

PLY: Of all the places where the vast conspiracy theory of one world government led by mutant aliens and the illuminati seeks to dominate our lives, clearly the plutocracy has paused to ponder:

“What idiot suggested starting by rationalising the foreign exchange market?”

The idea of injecting totalitarian central planning into the world’s most dynamic marketplace demonstrates that the ambition of the political regulatory forces remain absolutely uncorrelated to their ability to deliver a system for the betterment of mankind. However, competing central platforms for forex sounds good, let’s call them SEFs and have splendid organisations like ICAP, CME and ICE amongst others compete to be the best. No need for market Stalinism or dimly conceived ‘megaplatforms.’ Let’s face it, look at how the single ‘megaclearing’ entity for world banking is working out – rumour has it SIBOS delegates will include industrial archaeologists marvelling at the way Swift still manages to incorporate technology not much beyond the era of Babbage to keep the world’s payment system stuttering along…

ASIC Grants First Trade Repository Licence
MondoVisione

ASIC has granted an Australian derivative trade repository (ADTR) licence to DTCC Derivatives Repository (Singapore) Pte Ltd (DDRS).

Alibaba Worried About Facebook IPO As Considered Nasdaq Versus NYSE
Jessica Toonkel & John McCrank – Reuters
Alibaba Said To Plan Boosting IPO Price Amid Heavy Interest
Zijing Wu, Fox Hu & Lulu Yilun Chen – Bloomberg

Alibaba could have sold nearly $2 billion worth of stock without lifting a finger. All it had to do was list its shares on Nasdaq and be included in the NASDAQ 100..

PLY: As news reaches that they may be edging the price up, it is mooted that NASDAQ lost Alibaba as a result of the Facebook farago.

Private Markets

BATS Chi-X Europe & BX Swiss Partnership
BATS Global Markets

Two key partnership elements: cross-listing for ETFs and trade reporting.

PLY: A cool deal involving the almost never discussed Berne Exchange (now BX Swiss) which has been under new management for a year or so. BX has incredible optionality although previous management was not so receptive. The new management appears more eager to grasp their vast optionality and here BATS/BXTR are tapping into that with a win win deal here that is hopefully only the start of a Berne surge.

SGE To Launch International Board On Sept. 29 (subscription)
Chuin-Wei Yap – Wall Street Journal

Shanghai Gold Exchange (SGE), as previously mentioned in EI, will launch its international board on Sep. 29 in the financial hub’s new FTZ, a widely anticipated move to open China’s tightly controlled gold market to foreign capital.

Read also our Premium post: China Liberalises.

TeraExchange Unveils First U.S.-Regulated Bitcoin Swaps Exchange (subscription)
Michael J. Casey – Wall Street Journal

TeraExchange said it worked closely with the CFTC to obtain approval for its platform, where investors can list and trade dollar-denominated bitcoin currency swaps.

PLY: Excellent! Huge plaudits to CFTC for being open to progress and applying a sensible approach to regulation of cryptocurrency. That can only help make markets better while it enhances the image of regulators (well CFTC anyway) while many jurisdictions even within the US are struggling to come to terms with the future.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Flat day for FTIL, remarkably no news, MCX up 1%.

Technology

EGX Extends Trading Technology Contract With NASDAQ OMX
MondoVisione

PLY: A pleasant Monday morning announcement from the old Ford factory in Stockholm as NASDAQ OMX & Egyptian Exchange (EGX) extend the current contract for EGX till January 2020 to tap NASDAQ OMX’s X-stream trading technology.

TOCOM Hopes Cut Costs With Osaka Exchange
The Japan News

TOCOM is considering sharing a new system with the Osaka Exchange unit of JPX with a formal decision expected at an extraordinary board meeting on Sept. 24.

HKEx Completes Second Round Market Rehearsal For Shanghai-Hong Kong Stock Connect
HKEx

Second round market rehearsal (MR2) for Shanghai-Hong Kong Stock Connect was completed smoothly on Saturday in the wake of the four party agreement signed September 05th.

Euronext Ups ’15 Data, Non-Display Fees (subscription)
Faye Kilburn – Waters Technology

Dubbed the Euronext Market Data Dissemination Agreement, it includes new fees for use / redistribution of real-time and delayed data.

Products

DB1-Backed Bond Platform Eyes November Launch (subscription)
Tim Cave – Financial News

A new “all-to-all” electronic bond trading system backed by DB1 is set to go live in November targeting up to 100 buyside and sellside firms at launch.

PLY: With imminent competition ready to rage in the bond marketplace, how many platforms can survive when the Bond market bubble suffers its inevitable (and surely impending) burst?

SGX To Launch Gold Contract For Wholesalers
PTI

SGX is planning to launch a physically deliverable gold contract (6 day contract with delivery T+1) for wholesalers in the next 1-2 months having previously announced September as the likely launch date. Meanwhile, various parties look at gold contracts for the Asian region including CME while Shanghai Gold Exchange will start operations this month (see above).

TMX Datalinx Launches Same Day Short Sale Trading Information
TMX

MX Datalinx, the information services division of TMX, announced the launch of the daily Short Sale Summary report.

ISDA Extends Date For Adhering To The – ISDA 2014 Credit Derivatives Definitions Protocol
MondoVisione

ISDA is extending the adherence period for the ISDA 2014 Credit Derivatives Definitions Protocol until Wednesday, September 17, 2014 at 12 noon New York time.

Zhengzhou Commodity Exchange Launched Ferroalloy Futures
MondoVisione

ZCE has launched two new futures contracts, Ferrosilicon and Silicon Manganese.

Indexes

Shenzhen Securities Information Co., Ltd., China Southern Asset Management Co., Ltd. and Beijing SINA Internet Information Service Co. Ltd.: Big Data Series Indices Issued
MondoVisione

Shenzhen Securities Information Co., Ltd., China Southern Asset Management Co., Ltd. and Beijing SINA Internet Information Service Co. Ltd. will issue Big Data Series indices on September 12, 2014.

Career Paths

MV reports that Hong Kong’s Securities and Futures Commission (SFC) appointed of Ms Teresa Ko Yuk-yin, JP and Mr Lee Kwok Keung as members of both the Securities Compensation Fund Committee and the Investor Compensation Fund Committee effective 29 August 2014.

SFC also appointed Dr William Wong Ming-fung, SC as a member of the Nominations Committee effective 12 September 2014.

In addition, Mr Anderson Chow Ka-ming, SC (now the Hon Mr Justice Chow) has stepped down as a member of the three aforesaid committees and Mr Chan Ping Keung has stepped down as a member of the Securities Compensation Fund Committee and the Investor Compensation Fund Committee.

Full committee membership lists are available on the SFC website.

Anish Puaar is moving from Financial News where he specialised in market structure issues to London based Rosenblatt Securities as a market structure analyst. The Exchange Invest team wishes him every success.

What Happened To Lehman Brothers’ Bankers?
M Rochan – IBT

Today marks six years since US investment bank Lehman Brothers, a 158-year-old institution that survived the 1929 Wall Street crash, filed for bankruptcy protection and pulled everyone else down with it.

However, many former Lehman bankers have been able to forge successful lives since 2008. While some continue working in finance, others run successful businesses. Here’s looking at what some former Lehman staffers are doing.

Financial Calendar

This 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.

Analyst Notes

Macquarie Reissued Their Neutral Rating On LSE – GBX 1,960.20 Price Target

Barbarian At The Gate: ICE
David Aferiat – TheStreet

Trade-Ideas identified ICE as a “barbarian at the gate” (strong stocks crossing above resistance with Friday’s range greater than 200%) candidate.

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

Fitch: Lending Club IPO To Be A Milestone In P2P Evolution
MarketWatch

A successful IPO could act as a catalyst and benchmark for other P2P institutions to pursue IPOs.

Lending Club officially announced plans for an IPO in a filing last month.

Britain’s P2P Lenders Break Through The £2B Barrier
David Prosser – Forbes

PLY: If you listen very carefully you can hear the leverage dropping out of fractional reserve banking as P2P grows, empowering citizens and not just hurting banks but deleveraging government too – not sure anybody has been thinking about this, last time I checked in the Central Bankers were swaggertastically arrogant about the prospects for P2P. Well, chaps your worst nightmare is upon you and I don’t think you have planned for it. It’s a separate but correlated threat to Bitcoin – this isn’t a single bullet with your name on it, it’s a veritable high tech arsenal of laser-guided weapons.

Other stories

Oslo Børs VPS Reduces The Additional Fee For Same Day Settlement (Registration And Settlement On The Same Day) In Connection With The Transition To T + 2
MondoVisione

As of 6 October 2014 the settlement period in Norway will be shortened by one day, from T +3 to T +2.

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