September 17 2014

elb2In the urge to impress, alas Euronext cannot spell success. What is the word for “D’oh!” in Portuguese? (In French some allege the appropriate exclamation for error pertains to items previously found in wastebaskets on Rue Cambon). Bank lawsuit against CFTC dismissed, as floor traders admit defeat against CME. NY AG attacking Barclays as FMC seeks forcible merger of NSEL into parent FTIL. Meanwhile outside the court system Liquidnet Vega-Chi lines up for launch in November alongside BondCube. Gold frenzy in Asia albeit as picture remains cloudy of just who will actually launch futures! Oh and LCH adds Nuevo Sol to its NDF clearing facility – ‘darkest Peru’ has hint more transparency…

Happy scrolling:

Public Markets

Euronext Shares Start Trading On Lisbon Market
Euronext

Euronext N.V. announced it has succesfully [sic] completed its listing on Euronext’s regulated market in Lisbon following the admission to trading of 70,000,000 ordinary shares of Euronext.

PLY: A little light relief amidst the frequently grim prose which passes for press releases, albeit one which rather leaves Euronext open to a dose of ridicule, alas. That said the share price has been recovering of late, it’s off a few cents this am but at 19.63 Euros still below the offer price (20 Euros).

Court Dismisses Lawsuit Against CFTC Over Cross-Border Swaps Rule (subscription)
Andrew Ackerman – Wall Street Journal

U.S. District Court for the District of Columbia Judge Paul Friedman dismissed arguments by three Wall Street trade groups (filed in December) that the CFTC overstepped its authority in issuing new rules and guidance related to overseas swaps transactions.

Doubts Raised On Singapore-Taiwan Exchange Link
Rob Hartley – Euromoney

SGX and Taiwan SE (TWSE) are hoping to forge closer ties with the announcement of plans for a direct link between the two bourses, but equity market bankers reckon it will do little to boost demand.

PLY: EI reported last week that SGX and TWSE are looking at a linkage, although there remains a paucity of successful models in the region for such links (qv ASX-SGX as the blueprint for failure through no fault of either exchange’s connectivity execution). More on this topic below:

Bourses Choosing Connectivity Over Mergers
Goh Eng Yeow – The Straits Times

Just last week, SGX inked an agreement with the TWSE to work towards linking the two bourses, while a move to connect SGX with Bursa Malaysia went “live” two years ago.

Floor Traders Cave, Settle Suit Against CME
Lynne Marek – Crain’s Chicago Business

Chicago floor traders have agreed to drop their two-year-old lawsuit against futures exchange operator CME over a rule that they argued would drive them out of business.

PLY: CME pays nothing (statement here) although each side meets its own legal fees. Does this bring to an end the cycle of floor traders suing to be paid off for their obsolescence? The cycle hit an early peak when Paris Bourse paid traders out (who as I recall were promptly pursued by the French tax authorities) as the legal action was potentially an impediment to the first Euronext IPO. Then Bourse de Montreal won every complaint against it from a group of floor traders a few years later (the expert witness at the Quebec High Court was one Patrick L Young). In recent years such class actions have been few and far between but the death of the Chicago suit will hopefully bring an end to the actions and indeed hasten the decline of the floor which is entirely redundant everywhere barring the rings of LME and TOCOM.

NY AG Responds To Barclays (subscription)
Scott Patterson – Wall Street Journal

NY AG Eric Schneiderman returned fire against Barclays in its lawsuit challenging the bank’s private trading operations, arguing the court should reject the firm’s July motion to dismiss the case.

Barclays Hid Traders’ Role After Questions: Schneiderman
Chris Dolmetsch & Keri Geiger – Bloomberg

Barclays, who were sued by the NY AG in June hid the role of high-frequency traders in its dark pool even after the bank said it had shut off clients who engaged in suspect activity, AG Eric Schneiderman said.

Dubai Financial Market (DFM) Signs MoU With Korea Securities Depository (KSD)
MondoVisione

Dubai Financial Market (DFM) has signed a MoU with Korea Securities Depository (KSD) in order to promote close cooperation and further develop the post-trade securities market infrastructure between Dubai and Korea.

LCH.Clearnet’s SwapClear Launches New Blended Rate Compression Service
MondoVisione

LCH.Clearnet announced that its market-leading SwapClear IRS service has launched a new blended rate compression service. This is the latest initiative in response to a growing need for more efficient use of capital and reduced operational risk. Compression enables market participants to reduce the overall notional and number of line items in their portfolios by netting trades. The new offering, which allows participants to compress trades with different interest rates but the same remaining cashflow dates, will significantly expand the universe of eligible trades.

Private Markets

Liquidnet Poised For Platform Launch (subscription)
Josh Noble – Financial Times

PLY As mentioned earlier in the week, various new platforms are entering the bond market. Today Liquidnet is in the spotlight, having bought Vega-Chi in March which follows on recent stories of a similarly timed launch for DB1 backed Bondcube while ITG are also planning to launch a fixed income platform.

KPMG To Conduct Forensic Audit Of UCX: Regulator
NDTV

FMC said auditing firm KPMG has been appointed to conduct a forensic audit of the Universal Commodity Exchange (UCX) after it found that its promoter allegedly siphoned off funds from the exchange.

The auditing firm will submit a detailed report in 4-6 weeks. Meanwhile, the exchange has been directed to maintain the current cash balance of Rs. 52.52 lakh (USD 86k) intact in the settlement guarantee fund (SGF) and not to withdraw any amount without approval from the regulator, it said.

Commodity market regulator FMC has also directed UCX to convert other investments in optional convertible debentures (OCDs) and advances made out of the SGF fund into liquid assets immediately.

UCX is the country’s sixth national level commodity bourse.

Previous discussions on the subject in EI here, here and here.

NOREXECO Gets License To Become The First Dedicated Forestry And Paper Exchange
MondoVisione

The Norwegian Ministry of Finance has given NOREXECO ASA a license to operate as a regulated market exchange. NOREXECO plans to open up for trading before the end of 2014 and will become the world’s first and only dedicated exchange for pulp and recycled paper.

PLY: Fascinating a full bourse for paper – OM / OMLX led the way with paper contracts in the 1990’s as I recall.

LXC Coin Crowdfunds In Challenge To Bitcoin
Rebecca Burn-Callander – Daily Telegraph

LXC Coin, a new cryptocurrency that will invest in the P2P lending market, has launched a crowdfunding campaign on Crowd For Angels.

The new challenger to Bitcoin is seeking to raise £250,000 on the platform, with a company valuation of £2m. Founder and CEO Henrik Ellefsen, a serial internet entrepreneur, launched the cryptocurrency as a safe haven investment for cryptocurrency enthusiasts.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Flat, only news possible forcible merger of NSEL into FTIL. Still unconvinced this is a good corporate governance move by regulators.

NSEL Lacks Credibility; Merge NSEL With FTIL: FMC To Government
The Economic Times

Stating that crisis-hit NSEL is “bereft of any credibility”, regulator FMC said it has recommended the government to consider merger of the spot commodity exchange with its promoter FTIL for speedy recovery of dues over Rs 5,300 crore from defaulters.

PLY: Is FTIL really oozing credibility? …just extending this core argument and not sure it makes too much sense, apart from on the balance sheet angle but bluntly FTIL must pay anyway, whether it likes it or not:

FTIL Opposes Merger Of NSEL With Itself, Rejects FMC’s Proposal
Firstpost

FTIL opposed the merger of scam-hit NSEL with itself as proposed by regulator FMC for speedy recovery of dues, saying that such a move would affect the Jignesh Shah-led company and 60,000 shareholders.

Instead, FTIL has suggested that government agencies, brokers and trading clients should “join forces” with NSEL to ensure recovery of Rs 5,300 crore (USD 870 mln) from 24 defaulters.

PLY: We all just wish everybody would pay up so we can get on with healing India’s markets…

Technology

Ortec Finance Partners With Vermilion Software To Provide Enhanced Performance Attribution Reporting Capabilities
MondoVisione

Products

Shanghai Gold Trading Platform Given Surprise Launch Date
Mark O’Byrne – Resource Investor

The Chinese government backed Shanghai Gold Exchange (SGE) brought forward the launch date of its international gold trading platform which is hosted in the city’s FTZ. The gold trading platform will be known as the ‘international board’ to Thursday September 18th, 11 days earlier than scheduled.

Forty members of the Exchange including global banks UBS, Goldman Sachs, HSBC and Standard Chartered, will participate in gold trading on the SGE’s international board, trading 11 yuan denominated physical gold contracts including the large 12.5 kg (400 oz) bar, the ever popular 1 kg bar and a 100 gram contract.

Initially China announced this week that it will launch the international board of SGE at the end of this month.

Singapore Delays Plans For Gold Contract
Today

Singapore has been forced to delay its plans for an exchange-traded gold contract because of technical issues…

DGCX announced yesterday it will launch its first spot gold contract in November.

Eurex Backs Variance Launch Despite Doubt (subscription)
Luke Jeffs – FOW

Eurex plans to go ahead with its launch of Europe’s first variance futures on Monday despite a backlog of projects that has left the German exchange unsure how many clearing members will be live from day one.

LSE Announces Improvements To SETSqx Trading Service
MondoVisione

Standardising auction call periods and timings, Introducing closing price crossing session mirroring the SETS closing auction process, Improvements designed to stimulate liquidity and improve customer experience of trading in auctions.

ForexClear Expands Range Of Cleared Currencies – Service Now Includes Peruvian Nuevo Sol
MondoVisione

LCH.Clearnet Ltd has expanded the range of currencies cleared through ForexClear to include Peruvian Nuevo Sol. The move is in response to member and client demand. This addition brings to twelve the currencies now available, enabling over 95% of the non-deliverable forward (NDF) market to be cleared, including Brazilian Real, Russian Rouble, Indian Rupee, Chilean Peso, Chinese Yuan, Korean Won, Colombian Peso, Indonesian Rupiah, Malaysian Ringgit, Peruvian Nuevo Sol, Philippine Peso and Taiwan Dollar.

Capital Market Eager To Present ETF To Investors: EGX Chairman
Sara Aggour & Alia Setouhy – Daily News

Indexes

ITG Launches FX Volatility Index Application
Globe Newswire

ITG announced the launch of the ITG FX Volatility Index (ITG FXVX), an innovative daily benchmark for Foreign Exchange traders and portfolio managers.

Career Paths

Bloomberg reports that Jeffrey Bandman, who was head of partnerships and alliances for LCH.Clearnet Group Ltd., started last week as a counselor to CFTC Chairman Timothy Massad. Bandman, who previously oversaw market data businesses for Cantor Fitzgerald, will advise on new rules governing swap data and measures to reduce market risk and boost transparency.

WSJ reports that Steve Bisgay, KCG Holdings’s CFO, abruptly left Friday, the latest former Knight Capital Group executive to depart the Wall Street trading company created 14 months ago in the merger with Getco.

MV reports that TraderTools appointed Robert Varga Director of Sales in Europe. He will be based out of the company’s London office reporting to TraderTools EVP Sales, Mark Mayerfeld.

Financial Calendar

Friday

CBOE $0.21 quarterly dividend payment

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

Share Notes

CME insider Hilda Harris Piell sold 5,497 shares Monday, September 15th at an average price of $79.41 (bargain $436,516.77). He now owns 20,323 shares.

CME CAO Jill A. Harley sold 2,820 shares Monday, September 15th at an average price of $80.00 (bargain $225,600.00). She now owns 12,524 shares.

ITG insider P Mats Goebels sold 5,000 shares Friday, September 12th at an average price of $17.17 (bargain $85,850.00). He now owns 76,660 shares.

Analyst Notes

NASDAQ OMX “Neutral” Rating Reaffirmed By Zacks – $46.00 Price Objective

RSI Alert: TMX (X) Now Oversold
Forbes

In trading on Tuesday, shares of TMX (X) entered into oversold territory, hitting an RSI reading of 28.5, after changing hands as low as $52.91 per share.

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

SEC And SBA To Partner On Events On Small Business Capital Raising Under The Jumpstart Our Business Startups (JOBS) Act
MondoVisione

SEC, in partnership with the U.S. Small Business Administration, announced they will jointly host events to inform small business owners and entrepreneurs about new options that are and will become available for capital raising under the Jumpstart Our Business Startups (JOBS) Act.

Other stories

ASIC And MAS Sign World-First MoU On Authorities Access To OTC Derivatives Trade Repository Data
MondoVisione

ASIC and the Monetary Authority of Singapore (MAS) have entered into a MoU to allow trade repositories licensed in one jurisdiction to provide relevant data to the authority in the other jurisdiction.

SGX Consults On Minimum Trading Price
MondoVisione

SGX is consulting the public on details of the minimum trading price requirement and proposed changes to the existing watch-list. SGX also seeks public feedback on its proposal to retain and codify the notification process and privy list requirements for specific transactions into its Listing Rules.

Statement Of CFTC Chairman Tim Massad On The Dismissal Of The Cross Border Lawsuit
MondoVisione

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