September 18 2014

elb2PLY: ASX makes bid for 49% of Yieldbroker as WePay emerges a huge winner from the growth in Crowdfunding while SEC Commissioner Gallagher provides a timely reminder for regulators to focus on…growth and SMEs! Paul MacGregor a welcome team addition to beef up LME sales while the WSE puppet CEO will announce whether the state controlled bourse is determined to commit suicide by Schnitzel-merger at the end of the month. Lots of discussions on commodity markets and more, with a typical regulatory twist…

Greetings as it’s independence referendum day in Scotland. If the vote goes yes, we may have a new UK bourse in the near future. Ironically, a no vote probably means chaos for Britain anyway as the political establishment is now out of lockstep even with their own backbenchers, let alone a rightly disgusted non-Scottish public at large. Expect fireworks and a close vote – even a victory for the “Union” is likely to just move the fault line south to Westminster. Meanwhile expect lots of childish ‘my Scottish origins make me want to see freedom” drivel throughout the media today – as always life is a touch more complex than whether or not your granny was a Stewart (like mine, for instance!). Good luck Scotland, either way I suspect you’ll need it – we’ll follow with analysis as it affects market infrastructure once we have a clearer idea of the results tomorrow.

Back to the core of Exchange Invest, it’s all here today from T+2 to …well why not have a scroll and enjoy the pith?

Public Markets

ASX Makes A Bid For Yieldbroker Stake
Robb Stewart – The Australian

ASX will join a host of banks as an investor in specialist electronic-markets company Yieldbroker, offering to buy a 49% stake for $65 million. ASX’s planned shareholding would be non-controlling and Yieldbroker would remain independently managed, the exchange said in a statement.

ASX press release here.

PLY: Already Staring defeat in the face in the nascent Australian post OTC market as LCH.Clearnet has been eating the protectionist monolith alive, now ASX is eager to buy into Yieldbroker. I am minded to protest that the ASX monopoly is fat enough and complain to ACCC. Besides I am not sure what the deal does for Yieldbroker? True, it relieves some bank shareholders of an investment in return for the much needed cash banks will become increasingly desperate for in a world of Basel III et al… What next for ASX, will they cement their monopoly by bidding for the upstart CHi-X equities market which has brought choice and added value (against the odds!) to Australia?

WSE CEO To Present Stance On Vienna Bourse Tie-Up In Sept

WSE CEO said on Wednesday he wanted to present its final position on a proposed tie-up with Vienna bourse operator CEESEG before the end of this month. The state-controlled Polish bourse, the biggest stock market in central Europe, wants to combine with Vienna bourse operator CEESE.

PLY: Earlier this week, VSE co-head Michael Buhl cited stumbling blocks to a potential merger with GPW in a newspaper interview which suggested he was upping the ante (by the by, has there ever been a more public merger negotiation? Frankly the idea of non-public information and the bourse as a steward for governance best practice seems an alien concept in Austria). Reuters’ correspondent Adrian Krajewski rightly notes the WSE as “government controlled” here and it will be interesting to see how the new cabinet lined up by the new Prime Minister Nemo* shapes up tomorrow – although I continue to believe the mood in the country is that this government has lurched left, proven incompetent, inadequate and is simply too far past its sell by date to survive, even with a new figurehead at the top.

*I know, I know, Nemo is not her name but it is an apt description – can even our Polish readers easily remember who she is without the prompting of the local media?

MCX-SX Might Extinguish MCX Warrants
Jayshree P Upadhyay – Business Standard

Sebi’s conditional approval to MCX-SX has put at risk founder MCX’s warrants which have the potential to convert into a 35% shareholding.

ESMA Adds BME Clearing To List Of Registered CCPs Under EMIR

ESMA has added BME Clearing to its list of registered CCPs under EMIR. EMIR requires EU-based CCPs to be registered and non-EU CCPs to be recognised in the EU.

FAO: The updated list of CCPs approved under EMIR can be checked on our dedicated website page here.

BGC’s SEF Connects With Traiana CreditLink
James Rundle – Waters Technology

BGC Partners has announced that its SEF, BGC Derivatives Markets, can now utilize pre-trade credit checks at Traiana’s CreditLink facility, before passing on trades for third-party clearing.

The SEF has already handled IRS transactions using the facility. Trades on the platform can be routed to CME Clearing or LCH.Clearnet.

Traiana is owned by interdealer broker Icap.

T+2: Catalyst For Change (subscription)
Marina Daras – Waters Technology

Marina Daras looks at the impact T+2 could have on transaction processing for buy-side firms October 6th.

Block Traders Prefer The Human Touch (subscription)
Philip Stafford, Jeremy Grant & Josh Noble – Financial Times

PLY: Discussing what in 1999 I described in “Capital Market Revolution!” as NewVAS – “New Value Added Services” – in other words, add value to the process and you keep your place in the food chain… Here when it comes to big blocks, a little human guidance from the likes of the great team at Liquidnet (reminder: I am proud to be a European NED at the world’s largest block trading marketplace) is very welcome…

NYSE To Provide Operational Updates For Alibaba IPO

NYSE said on Wednesday it will hold an industry conference call to provide operational updates for the Alibaba IPO. The call will begin at 8:30 a.m. ET on Friday and is for members of the trading, technology and operations segments of the industry. It will not provide order imbalance and detailed price information.

PLY: Rumour has it that Tom Farley is unlikely to be seen in an airport, on a plane, in a train or otherwise away from NYSE and copious network connectivity when Alibaba comes to market…

Private Markets

NSE Stake Sale: IFCI Gets 3 Bids
Kr Srivats – The Hindu Business Line

IFCI has received as many as three bids for its stake sale in the National Stock Exchange (NSE), the country’s largest bourse by profits – it plans to disinvest 2.5% of its equity shareholding. IFCI had initially held 12.44% stake in NSE. Of this, about 7% stake was sold in 2007 to Goldman Sachs, NYSE, General Atlantic and Softbank Asian Infrastructure Fund.

IFCI now directly holds about 5.5% stake in NSE. Stock Holding Corporation, now a subsidiary of IFCI, directly holds another 5%.

OTC Exchange To Explore Links With Hong Kong, Shanghai
Ted Chen – The China Post

GreTai Securities Market Chairman Wu Sou-shan announced that he will be welcoming a delegation led by HKEx CEO Charles Li to explore collaborative opportunities in expanding Taiwan’s capital markets.

NCDEX Proposes Online Mandi Trading Facility In Odisha
Sadananda Mohapatra – Business Standard

NCDEX Spot Exchange (NSPOT), has made a proposal to the Odisha government to provide online trading facility in select mandis for agricultural commodities.

West Africa Capital Markets Integration Moves Closer
Business & Financial Times

Integration of capital markets in the West African sub-region has inched a step closer with the approval for brokers in the member-countries to start drawing up partnership agreements that will enable them to trade across markets.

The Integration Council of the member-countries — made up of Ghana, Nigeria, Sierra Leone and the Bourse Regionale des Valeurs Mobilieres (BVRM), which features eight Francophone countries — gave the approval to fast-track the integration process.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX vaults 3.8% as FTIL increases 1.4% although none of the news is particularly important today, just the same old same old, ‘bickertastical’ frustration of non-resolution.

No Mandate To Take Recovery Measures On Behalf Of NSEL: FMC
Financial Express

FMC on Wednesday put out a point-by-point rebuttal after NSEL refuted FMC’s observations regarding the slow pace of recovery process (reported on September 12th).

NSEL Scam: ED Attaches Properties Of Lotus Refineries

The Enforcement Directorate (ED) on Wednesday attached the flats and offices worth Rs.17.98 crore (USD 2.93 mln) belonging to Lotus Refineries under the Prevention of Money Laundering Act in connection with the NSEL scam.


GFT Releases Big Data For Financial Services Study – Big Data Management Deemed Key Success Or Failure Factor For Banks To Compete

GFT published a study examining the ’big data’ challenges facing the corporate, retail, institutional and insurance financial services sectors. Overall, the study finds that managing, marshalling and improving the overall quality of their enterprise and customer data and meeting ever-increasing regulatory requirements are top priorities for financial services firms.

PLY: I hate to sound cynical but as engines of big data, banks have historically been dismal, why should they suddenly improve? However, rich pickings for vendors and consultants in the meanwhile as management fails to grasp the plot.


U.S. Watchdog CFTC Proposes Rules For Uncleared Swaps

U.S. derivatives regulator on Wednesday proposed a new rule for safety margins for uncleared swaps, a last remaining building block in its efforts to make the $710 trillion global market safer – the rules are largely identical to those proposed by bank regulators:

CFTC Approved Final Rule And Proposed Rule At Its Open Meeting

CFTC approved a Final Rule and a Proposed Rule at an Open Meeting, as follows:

Final Rule on Exclusion of Utility Operations-Related Swaps with Utility Special Entities from De Minimis Threshold for Swaps with Special Entities.

Proposed Rule on Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants.

ICE Sees Opportunity In Further Developing IRS Clearing, CFO Says
Renee Caruthers – FierceFinanceIT

ICE sees opportunity in building further IRS clearing services to complement that new IRS trading, and its pending acquisition of SuperDerivatives will help build that business, ICE CFO Scott Hill told an audience at a New York conference last week.

BM&FBOVESPA Launches 6/7 Arabica Coffee Derivatives

BM&FBOVESPA launched 6/7 Arabica Coffee Derivatives Contracts and authorized Structured 6/7 Arabica Coffee Rollover Transactions (KR1).

MCX Can Launch Fresh Contracts Post FTIL’s Agreement With Kotak Mahindra Bank
The Economic Times

In a move that will provide relief to several commodity futures markets participants, MCX can launch fresh contracts up to March 2015 once its erstwhile promoter FTIL signs a revised technology agreement with Kotak Mahindra Bank, a pre-condition to transferring its 15% in the exchange to the bank.

PLY: Good news for MCX, it is now free to build on its successful legacy of innovation in Indian commodities.

ISDA Announced Updated Implementation Date For 2014 ISDA Credit Derivatives Definitions

ISDA announced that trading using the new 2014 ISDA Credit Derivatives Definitions is expected to begin for most standard CDS contracts on October 6, 2014.

IOSCO Consults On Risk Mitigation Standards For Non-Centrally Cleared OTC Derivatives

IOSCO published the consultation report Risk Mitigation Standards for Non-centrally Cleared OTC Derivatives, which proposes nine standards aimed at mitigating the risks in the non-centrally cleared OTC derivatives markets.

CFTC Swaps Report Update

CFTC’s Weekly Swaps Report has been updated, and is now available.

Career Paths

LME announced the appointment of Paul MacGregor as Head of Sales.

Paul joins from ION Trading, where he was Head of European Agency Sales and responsible for business development across agency trading and trade processing. Paul previously held the position of MD of Product Strategy at FFastFill Limited, and prior to this he gained substantial exchange experience during his 18 years at NYSE Euronext. His most recent role at NYSE Euronext was as Executive Director and Head of Fixed Income Derivatives – LME press release here.

PLY: Hooray! I am delighted to see Paul taking on this very exciting role as LME moves forward under Garry Jones’ leadership and we await the deployment of the new clearing house imminently. Exciting times. Paul, you know you are the ideal man to help LME grow, all the best!

HKEx has appointed Ketan Patel to the new position of Group Risk Officer, effective 1 January 2015.

HKEx press release here.

Zawya reports that Abu Dhabi Securities Exchange (ADX) appointed Ms. Amna Abdullah Al Hammadi as the Head of the Media department at the exchange.

CalPERS announced that Ted Eliopoulos has been selected as Chief Investment Officer (CIO), permanently assuming responsibility for leading the investment office at the largest public pension fund in the US. Eliopoulos currently serves as CalPERS’ Interim CIO.

MV reports that R.J. O’Brien & Associates appointed industry veteran Paul Goodhew, as SVP, Head of Global Markets at its London-based R.J. O’Brien (UK) Limited affiliate.

MV reports that REDI Holdings strengthened its sales, account management and development capabilities in the New England region with the hiring of Sean Graham and Roseann Hoffman Woodford, two seasoned equity trading professionals, and Jeremy Warburg, a veteran buy-side software developer.

MV reports that IPSA International, an international risk advisory firm, is pleased to announce that Hugo Williamson has joined as MD in the company’s London office.

FN reports that Jeetan Patel, Europe’s director of compliance of Spire, one of Europe’s largest hft & marketmaking companies, left in mid-August & was replaced internally.

SR Labs Names ex-NYSE Exec McIntyre European COO To Drive Wombat Growth (subscription)
Faye Kilburn – Waters Technology

New York-based low-latency data platform and feed handler provider SR Labs has appointed former NYSE exec Ian McIntyre as COO in Europe, to spearhead the rollout of new capabilities as part of ongoing changes to the vendor’s leadership team following its recent acquisition of the Wombat data platform business from ICE’s NYSE Technologies division.

Financial Calendar


CBOE $0.21 quarterly dividend payment

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

Analyst Notes

Argus Hoisted Their Price Objective On CME From $84.00 To $92.00 – “Buy” Rating

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.


Whatever Happened To Promoting Small Business Capital Formation? – SEC Commissioner Daniel M. Gallagher Washington, D.C. , Sept. 17, 2014

PLY: Commissioner Gallagher remains an ally of free markets & investment and I applaud his eagerness to both get out beyond the Beltway of Washington and also to keep pushing the urgent need to reform small company investment to make every economy throughout the world more dynamic.

WePay Triples Payment Volume In Crowdfunding
Samantha Hurst – Crowdfund Insider

WePay, a provider of payments for platform businesses, announced on Wednesday a three-fold, YoY increase in payment volume from crowdfunding sites, thanks to powering five out of the top 10 crowdfunding sites including GoFundMe,, GiveForward, CrowdRise, and Fundly.

Other stories

Why Exchanges Should Be Inter-Connected
Pravin Chandrasekaran – The Hindu Business Line

In my opinion this unconditional burgeoning of exchanges has created another need for eliminating inter-exchange inefficiency.

PLY: Alas I cannot agree with this argument. Although it is a lovely one, the truth is a lot uglier in India – an interconnected commodity exchange even a year ago would likely have been hugely influenced by those now disgraced by the NSEL scandal. I think this is a delightfully utopian idea – and not a good one right now for India on a broad basis, it also ends up with central planning and we all know how well that has served the people…

Opening Statement Of CFTC Chairman Timothy G. Massad, Open Meeting On Proposed Rule On Margin Requirements For Uncleared Swaps And Final Rule On Utility Special Entities

Statement Of CFTC Commissioner Mark P. Wetjen Before The Open Meeting Of The Commodity Futures Trading Commission

Opening Statement Of CFTC Commissioner J. Christopher Giancarlo, Open Meeting On Proposed Rule On Margin Requirements For Uncleared Swaps And Final Rule On Utility Special Entities

CFTC Commissioner Bowen Opening Statement, Open Meeting

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