September 16 2014

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PLY: Hong Kong has had a difficult day with Typhoon number 8 warnings arising while the typhoon in America is probably CalPers exiting hedge fund investments.

The utterly misguided Warsaw Vienna deal may yet be falling apart, despite the government’s multiple interventions of late is the big news today, alongside CME restructuring, the BGC-CME-GFI love triangle and news that Kotak have received regulatory clearance to buy a 15% stake in MCX. UK anti trust seeking input on LSE buying Russell …and much much more. Lots of interesting nuggets as always, happy reading:

Public Markets

WSE Postpones Decision About Merger With VSE
FriedlNews
Vienna Bourse Cites Hurdles In WSE Merger Talks
Reuters
Börsenpoker Mit Neuen Karten
Edith Lackner – Wirtschafts Blatt

PLY: Encouraging news! The entirely misguided concept of merging the immature Warsaw and Vienna markets may yet not happen. There are negative noises from the previously desperate to sell Michael Buhl of Vienna citing structural issues, such as the government’s de facto theft of pension resources some months back.

Moreover, with PM Tusk now headed to Brussels and the appointment of a stunningly nondescript new Prime Minister, the government is trailing in the polls and looks increasingly likely to lose power next year. At which stage the recently installed government puppet CEO Pawel Tamborski is likely to be dismissed.

Fair Trade Regulator Clears Kotak’s 15% Stake Buy In MCX
NDTV

Kotak Mahindra Bank’s proposed Rs. 459-crore ($76.1 million) deal to acquire a 15% stake in MCX on Monday received approval of the Competition Commission of India (CCI), making the financial sector conglomerate a major player in exchange business.

As reported on July 21st, FTIL entered into a share purchase agreement (SPA) to sell a 15% stake in MCX to Kotak Mahindra Bank Ltd. (KMBL) for a total consideration of Rs. 459 crore ($76.1 million).

GFI Board Supports CME Takeover Offer Over BGC Bid
Reuters

GFI’s board of directors is backing an agreed-upon acquisition offer by exchange-operator CME over a hostile takeover bid from BGC Partners.

CME On Spot In Finely Balanced GFI Battle (subscription)
Philip Stafford – Financial Times

EI reported yesterday that GFI Group directors are accused of “engineering” the CME purchase. On September 9th EI reported that BGC Partners is to make $675 mln bid for rival GFI.

CMA Looks At LSE-Frank Russell Deal
Stock Market Wire

PLY: UK anti trust body the Competition and Markets Authority is looking at the anticipated acquisition by LSEG of Frank Russell Co. under the provisions of the Enterprise Act 2000. To assist it with this assessment, the CMA invites comments on the transaction from any interested party. These comments should be sent to Zoe Fiander (Tel no: 0203 738 6561; e-mail: zoe.fiander@cma.gsi.gov.uk) by 7 November.

Last week LSEG shareholders voted in favor of the acquisition of Frank Russell Co which EI reported on June 26th that LSE bought Frank Russell Company from Northwestern Mutual.

LME Warehouse Queues No Longer The Only Metric
Andy Home – Reuters

It is ironic that LME, which has taken so much flak over long waiting times to get metal out of some of its warehouses, is itself now forced to wait before it can start fixing the problems.

EI reported on July 31st that LME’s attempts to cut backlogs at warehouses with new rules are likely to be delayed again.

Hong Kong-Shanghai Stock Connect: Believe The Hype (subscription)
Aaron Woolner – Risk

Investors are excited about greater access to China’s cash equity markets but the corporate bond and commodity derivative sectors are the real prize.

BIST & KASE Announce Strategic Partnership Framework Agreement
BIST

Strategic partnership framework agreement between BIST and Kazakhstan SE (KASE) points to cooperation in all areas including but not limited to markets, listing, products, technology and exchange of know-how.

Sense Of Urgency Underpins Fresh Scrutiny Of Markets (subscription)
Philip Stafford – Financial Times

For the past five years, global policy makers have sought, with varying degrees of success, to reform the OTC derivatives market that they believed had exacerbated the events of 2008.

Their aim was to make the opaque $700tn swaps market more transparent, turning it from something that was largely bilateral and telephone-based into an anonymous, electronic market.

Yet, in that same period, some argue trading equities in the US, and to a lesser extent Europe, has been steadily becoming less transparent.

Swaps Traders Resist Moves To Increase Use Of Platforms (subscription)
Michael Mackenzie – Financial Times

Reforming OTC derivatives remains a work in progress, as investors, banks and trading venues in the US come to grips with a new era of transacting swaps.

Financial Regulators Probe Dark Pools (subscription)
Nicole Bullock – Financial Times

Dark pools are squarely in the spotlight. Following the publication of Flash Boys, which claims that the US equity market is rigged, scrutiny has intensified.

Futures Look Rosy As Asian Banks Fill Gaps In The Derivatives Market (subscription)
Jeremy Grant – Financial Times

Alibaba Boosts IPO As Demand Strengthens
Elzio Barreto, Fiona Lau & Liana B. Baker – Reuters

As rumored yesterday, Alibaba raised the price range on its IPO to $66 to $68 on Monday, reflecting strong demand from investors for the year’s most anticipated debut and potentially the world’s largest-ever IPO.

Private Markets

MCX -SX Gets Conditional One-Year Renewal; Sebi Seeks Business Plan
The Economic Times

As crisis at its erstwhile promoter group continues to cast a shadow, MCX-SX got a one-year conditional renewal to function as a bourse and regulator Sebi asked it to submit a long-term sustainable business plan and take other remedial actions.

Hong Kong Gold Bourse Approved To Build Vault In China
Alex Davis – Bloomberg

Hong Kong’s Chinese Gold & Silver Exchange Society was given permission to set up a precious metals vault in Shenzhen, China, becoming the first non-mainland bourse granted onshore commodity warehousing access.

Local government authorities and the People’s Bank of China Shenzhen branch approved the exchange’s plan to build the 1,500-ton facility to store gold and silver in Qianhai, a special economic zone on the west of Shenzhen, according to Haywood Cheung, president of the CGSE. Construction will begin next year and take about 18 months, he said.

Bourse De Luxembourg Signs MOU with Bourse Gretai Securities Markets De Taiwan
MondoVisione

On the occasion of the 7th Taiwan-Luxembourg Joint Business Council, Taiwan’s GreTai Securities Markets (GTSM) and Luxembourg SE (LuxSE) signed an MoU on 12 September 2014.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL flat as various arguments break out between brokers and investors and, oh last month’s “Trading Places” column from one Patrick L Young, whoever he is…

NSEL Investors Accuse Brokers Of Being Privy To Scam
Purba Das – Business Insider

NSEL Investors’ Action Group has alleged that high-profile brokers involved in NSEL scam have been privy to the scam. The association, in a letter to the police, has urged them to take stringent action against brokers.

From August’s Trading Places: A Simply Scandalous Market – Columnist Patrick L Young Marks The First Anniversary Of A Remarkable Market Failure
Patrick Young – MondoVisione

This is a story where a rapid rise led to arrogance and hubris which now appears to be ending in disgrace. Bollywood couldn’t make it up. Jignesh Shah…

PLY: Published originally in print before Mr Shah managed to get bail.

Technology

JSE Trade Resumes After Network Glitch
Reuters

JSE trade resumed Monday after a system failure caused a two-hour stoppage. The JSE has been hit by problems with the connection between Johannesburg and London in recent years, sparking system glitches that forced trading to stop several times. One network meltdown in 2010 caused a six-hour halt.

TOCOM Statement On Some Recent News Reports On TOCOM’s Trading System
MondoVisione

TOCOM states that the recent media stories reporting the Exchange’s plan to share a new trading system with another financial exchange in Japan are devoid of any facts based on the Exchange announcements.

NSX Renews Trading Technologies Contract With JSE
MondoVisione

After 15 years of using the JSE’s equity trading systems and services to trade, clear and settle its securities, JSE and Namibian SE (NSX) undertook a review of the services and the NSX has renewed the contract with JSE to use its trading technology and services indefinitely.

PLY: Core trading system therefore comes from Millennium while the post system will soon be provided by Cinnober as JSE recently changed providers.

Markit, Pirum Ink Securities Finance Data Delivery Partnership (subscription)
Giulia Lasagni – Waters Technology

Market data provider Markit has expanded the breadth of its securities finance data via a partnership with Pirum which enables mutual clients to access Pirum’s end-of-day and intraday trade data.

Victor Technologies And ACTIV Financial Announce Partnership For Real-Time Risk Analytics
MondoVisione

Victor Technologies is partnering with ACTIV Financial, a global provider of real-time, multi-asset financial market data and solutions, to offer its enterprise-grade Market Volatility Feed (MVF) as part of ACTIV’s market data platform.

March Of The Algorithms Raises Issues (subscription)
Sally Davies – Financial Times

Smart, self-teaching algorithms are taking over from people in homes, cars and hospitals. Are they going to do the same to the capital markets?

To an extent the machines have already won…

ITRS Builds On Asia Success With New Singapore Office
MondoVisione

ITRS Group is further expanding its Asian presence through the opening of a new Singapore office.

Products

Euronext Announces RMB Bond Listing By Bank Of China
MondoVisione

Euronext welcomed the first offshore RMB denominated bond listing by Bank of China (BOC), on its regulated Euronext market.

ICE Futures U.S. Updates Mini Gold Contract – Allows Market Participants To Take Delivery In Single Kilo-Sized Bar
MondoVisione

These contracts were previously listed on Liffe U.S. and were transitioned to ICE Futures U.S. in June.

Moscow Exchange: Russian Eurobond Futures To Begin Trading
MondoVisione

Moscow Exchange will launch trading in futures on the Russian Federation”s sovereign 2030 maturity Eurobond on 16 September.

DGCX To Launch First Spot Gold Contract In Nov
Business Standard

DGCX said it would launch its first spot gold contract in November: 1kg with 99.5% purity.

China, as reported yesterday, will launch the international board of SGE at the end of this month

NCDEX’s Forward Trading In Maize, Sugar From Sept 25
The Hindu Business Line

NCDEX will launch forward trading in maize and sugar contracts from September 25.

Calypso Collateral Management Solution Successfully Implemented At LCH.Clearnet
MondoVisione

Calypso Technology announced LCH.Clearnet Ltd and LLC have completed the project to introduce the Calypso Collateral Management solution to their Collateral and Liquidity Management (CaLM) offering.

CFTC Staff Sets Forth Enabling Process For No-Action Relief With Respect To Swaps Trading On Certain Financial Markets That Are Licensed In Australia And Overseen By The Australian Securities & Investments Commission
MondoVisione

CFTC Divisions of Market Oversight (DMO) and Swap and Intermediary Oversight (DSIO) announced the issuance of an enabling no-action letter for qualifying swaps trading platforms that are licensed in Australia and overseen by the Australian Securities & Investments Commission (Australian Licensed Markets).

TMX Datalinx – Product Announcement: Launch Of Daily Short Sale Summary Product Deferred

“In response to client feedback to the press release below, TMX is deferring the launch of its daily Short Sale Summary product, announced yesterday, so we can undertake further consultation with industry stakeholders. We will provide an update at the conclusion of our industry consultation.

If you have further questions or need additional information please contact our Account Management Team.”

Career Paths

CME unveiled a new leadership structure, appointing a number of individuals to new roles on its Executive Team, which reports to Phupinder Gill, CME CEO. Gill will continue to report to CME Executive Chairman and President Terry Duffy. Executives assuming new roles include:

Bryan T. Durkin, Chief Commercial Officer. Durkin, 53, will oversee the company’s International Offices, Client Development and Sales, Business Development, Co-location and Technology Services, Information Products, Index Services, Marketing, Research and Product Development & GFX. Durkin will report to Gill. Durkin previously served as COO since 2007, and has held positions of increasing responsibility over his more than 30-year career with the company.

Kim Taylor, President, Global Operations, Technology & Risk. Taylor, 53, will lead all of the company’s operational functions globally – Clearing, Operations, Technology and Platform Development – and will be charged with bringing new trading and clearing products and services to market, reporting to Gill. She joined the company in 1989 and previously served as President, CME Clearing since 2004. Her organization will include the following individuals and their teams:

Julie Holzrichter, COO. Holzrichter, 46, will continue to lead the firm’s global operations, a role she has held since 2007. Holzrichter has a more than 20-year tenure at CME.

Kevin Kometer, CIO. Kometer, 50, will continue to lead the company’s global technology organization, a role he has held since 2008. Kometer joined CME in 1994.

Sunil Cutinho, President, CME Clearing. Cutinho, 43, joined CME in 2002 and, since earlier this year, served as MD, Deputy Head of CME Clearing.

Derek Sammann Senior MD, Commodity and Options Products. Sammann, 46, will be responsible for leading the firm’s Energy, Metals and Agricultural products teams, as well as the company’s options business, globally, reporting to Gill. He previously led the company’s foreign exchange, metals and options businesses. Sammann joined CME in 2006.

Sean Tully, Senior MD, Financial and OTC Products. Tully, 50, will oversee CME Interest Rate, Equity, Foreign Exchange and OTC businesses, reporting to Gill. He previously led the company’s Interest Rate and OTC businesses. Tully joined CME in 2012.

Robert Zagotta, Senior MD, Strategy & Execution. Zagotta, 49, will be responsible for the development and execution of the company’s corporate strategy, reporting to Gill. Zagotta previously led the company’s Products & Services teams since joining CME in 2012.

These individuals will serve as the senior executive team for the company, along with General Counsel & Corporate Secretary Kathleen Cronin, Chief Human Resources Officer Hilda Harris Piell, and CFO James E. Parisi, all of whom will remain in their current roles and continue to report to Gill. Parisi previously announced plans to retire from the company later this year, after which time John Pietrowicz will assume the CFO role.

CME press release here.

FOW reports that DB1 hired Oliver Engels as head of internal audit. Engels joined DB1 from DAX-listed healthcare company Fresenius.

MV reports that Green Key Technologies, a trader voice software provider, hired Ty Devlin as MD of the London office.

MV reports that Investec Structured Products, one of the UK’s leading providers of structured products and open-ended passive investment funds, announced the expansion of its sales team with the appointment of Leigh Fisher as Regional Sales Manager for London West and Emma Foley as broker services. Investec Structured Products also announces the promotion of Bobby Owen from broker services to Regional Sales Manager for London East.

MV reports that SYZ Asset Management, the institutional arm of Swiss banking group SYZ & CO, announced the arrival of Michael Clements as Head of European Equities. He will be heading up the London-based team of fund managers and analysts and will manage the OYSTER European Opportunities, OYSTER European Selection and OYSTER Continental European Selection funds. He is joined by Claire Manson, who will be taking over the management of the OYSTER European Mid & Small Cap fund. Both were previously with Franklin Templeton.

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

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

Share Notes

Interactive Brokers SVP Milan Galik sold 1,800 shares Friday, September 12th at an average price of $24.53 (bargain $44,154.00). He now owns 723,017 shares. Mr. Galik’s regular sales are chronicled on this specific page.

Crowdfunding

Kickstarter Launches In Ireland
Ciaran Hancock – The Irish Times

Kickstarter launched in Ireland, enabling people here to seek funding for projects in 15 categories, as part of a European expansion that will also see it launch in Denmark, Norway and Sweden, making Kickstarter available in 10 countries.

Bondora Sees Huge Opportunity In European P2P Lending
Georgia Quinn – Crowdfund Insider

Bondora is based in Estonia, making loans in Spain, Slovakia, Estonia and Finland,e sourcing investors from Germany, Austria, Switzerland, UK, Netherlands and Scandinavia. Founded in 2009, Bondora, formerly called isePankur, has loaned over € 22 million to date and paid out € 3 million in interest payments to investors.

Other stories

BlackRock Calls For U.S. Stock Market Reforms
John McCrank – Reuters

BlackRock has asked regulators to force exchanges to lower their access fees and require greater transparency of broker dealer-run trading venues known as “dark pools.”

SGX Study Finds Positive Correlation Between Higher Trading Prices And Liquidity, Market Depth
MondoVisione

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