September 24 2013

elb2 Wow, is it time for NyLon? One analyst meeting cancelled and FBN’s Charlie Gasparino goes into overdrive. I love Fox News. Does this mean we get a Greifeld-Rolet shuffle at the top, as I cannot see Xavier taking second bidding for any length of time? Will it be a US or European entity or a trans-Atlantic shuffle. Developing…

“Ibbo” jumps from LIFFE into a Premier League prop house, David Peniket profiled, interesting appointments at GMEX and source material from Budapest suggests the local English language media needs a new dictionary.

All this and more including preparations for the most exciting event of the week (any readers going?) in today’s Exchange Invest, scroll on:

Public Markets

London SE Cancels Shareholder Meeting, Could Be In Talks With Nasdaq

FOX Business Network’s (FBN) Senior Correspondent Charlie Gasparino reports that the LSE cancelled its annual analyst shareholder meeting for this Friday, “fueling speculation about a potential deal” with NASDAQ OMX while noting “that there are no active talks between both sides.”

PLY: No active negotiations but Xavier does not want to chat with the analysts. Clearly something afoot but is is “NyLon” or something different?

NYSE Said To Plan Rule Change For Voiding U.S. Options Orders

NYSE has apparently submitted a rule filing to the U.S. SEC that modifies its guidelines for dealing with erroneous trades in the U.S. options market.

PLY: Rule harmonisation will help restore US market confidence and credibility presuming trades are not cancelled as a knee jerk because Goldman and other counterparties have acted erroneously.

Hellenic Exchanges S.A.- Draft Merger Agreement Draft Spin-Off Terms

HELEX Board approved the Draft Merger Agreement of HELEX with its 100% subsidiary, non-listed “Athens Exchange S.A.” (ATHEX), with a transformation balance sheet date of June 30th 2013.

It also approved the terms of the spin-off from HELEX and contribution to its subsidiary “Thessaloniki Stock Exchange Centre” (TSEC) of the Central Securities Depository business, the Registry and Settlement management activities as well as the management of the Dematerialized Securities System with a business spin-off date of June 30th 2013.

Moscow Exchange: No Downside Left For Stock Market

Russia’s stock market is set to rebound, thanks in part to reforms to bring trading in line with international norms, Moscow Exchange’s chief executive said on Monday.

Selling at a near 50-percent discount to those of other emerging nations, Russian stocks have something of a pariah status for foreign investors worried at corruption and stalled efforts to modernize the economy.

“There is nothing left but upside,” Alexander Afanasiev told the Reuters Russia Investment Summit.

PLY: I am wholeheartedly inclined to agree, Moscow is still barely on anybody’s radar but the market has incredibly opportunities and MOEX is soundly managed for the future…

ICE’s European Man Of Mystery (subscription)
Financial News

PLY: A profile of David Peniket who is not so much a man of mystery as somebody who gets on with the job of running an exchange business. Competently and productively.

FCA Approves New LME Head Garry Jones

PLY: Garry has been blessed by the UK regulator to take over as LME CEO, I wish him every success.

Eurex Clearing To Act As CCP For SL-x Trading’s Innovative European Securities Lending Platform

Eurex Clearing, and SL-x Trading Europe (SL-x) have signed an agreement whereby Eurex Clearing will act as clearing house for securities borrowing and lending (SBL) transactions executed via SL-x’s innovative, patents pending electronic trading platform.

SL-x plans to launch the new platform in the fourth quarter of 2013 in 17 European equity markets. At the outset, Eurex Clearing will offer central clearing for SL-x’s SBL transactions in Belgian, Dutch, French, German and Swiss stocks. In these initial five markets SL-x’s platform aims to include approximately 2,000 stocks and Exchange Traded Funds that represent over 90 per cent of these markets’ stock on loan.

PLY: Backed by UK PE fund, Palamon, Sl-X is a fascinating platform to build and enhance securities lending transactions – a very important market sector which can only grow (exponentially) under the new regulatory environment. Can’t say I know CEO Peter Fenichel well but the COO is industry veteran, Hank Mlynarski.

Private Markets

Budapest – Few Opportunities? (via Google Translate)

PLY: If you don’t read Hungarian, Uncle Google has done a quick translation of the source article which was somewhat distorted (to put it mildly) by an article in a Budapest English journal and reported yesterday. Seems the complaints centre more on regulation… (We advise caution on future stories from said English web site “Hungary Around the Clock”).

Osaka Securities Exchange Change In Trade Name To Osaka Exchange, Inc.

The Osaka Securities Exchange hereby announces that its exchange will change its trade name to Osaka Exchange, Inc. Date of change (planned): March 2014 (on the same day of the derivatives markets integration).

China’s First Small-Loan Securitisation Makes Debut

The move – on the INTS, a trading platform of the Shenzhen SE – opens the way for small loan companies in China to raise funds directly from capital markets.

Special Section: FTI, NSEL, India at the Crossroads

MCX is flat with FTIL down 3% today as we’re all warming up for this week’s event highlight: the FTIL AGM tomorrow. Oh there’s also a payment due today for NSEL’s embattled investors but naturally a default is the, er, default position in this 30 week repayment plan…

Probe Panel Puts NSEL In A Spot
Business Standard
Panel Submits Report On NSEL: Proposes 2 Sets Of Measures

The panel chaired by Economic Affairs Secretary Arvind Mayaram to probe NSEL has given its report to the finance minister, apparently recommending an inquiry by various bodies into violation of laws by various entities and suggested FMC reassess the “fit and proper criteria” of the NSEL promoters.

The report is also understood to have called for segregation of ownership and management in commodity exchanges, termed de-mutualisation.

The panel has recommended two sets of measures to deal with NSEL and spot regulatory gaps Enforcement action has been recommended against NSEL and the persons behind the company.

PLY: We await the details to see quite what this “demutualisation” means for freedom of markets, liberty of shareholders and indeed creation of value through bourses… Stripping “fit and proper” status ought to be a slam dunk yet remarkably (perhaps fearful of another Jignesh Shah legal backlash?) it has yet to happen…

NSEL To Face Separate Action For Any Companies Law Violations

In addition to the necessary action to be taken by the Finance Ministry in the NSEL matter, the Corporate Affairs Ministry will act separately if any violations are found with respect to the companies law.

NSEL Collapse: Why Savvy Brokers Got Trapped?

Over 13000 investors including 250 brokers have taken to the streets demanding their money back. They were all lured by the promise of 14-18% assured, risk-free returns. That’s twice what a bank fixed deposit pays out. The trades were predicated on perpetually gaining commodity prices – like an eternal bull run. You’d think when something appears too good to be true – it most likely is. Why then did these high networth individuals and savvy brokers stake their money?

PLY: Good question. While I have some sympathy for losing investors, I also have to say that caveat emptor is the only rule to apply to any investment. Otherwise we end up with overly prescriptive and highly restrictive regulation which just harms the economy.

…As a footnote, 7% bank interest rate for depositors. Now, how many western money market traders can recall that level? How will taper terror end? …your Western macroeconomic thought for the day, brought to you by Exchange Invest…

NSEL Investors Want To Attach Assets Of Jignesh Shah, Directors
Business Standard

The investors of NSEL are planning to move court for the recovery of their investments through attachment of personal assets of exchange vice chairman Jignesh Shah, its directors, members and their clients.

The move is gathering momentum amidst expectations that the government may refer the matter to Serious Fraud Investigation Office (SFIO). This agency is likely to take between 30-45 days to submit its report.

PLY: Multiple delays strike me as manna from heaven for anybody seeking to spirit funds out of the country. Naturally we would never seek to impugn Mr Shah but it’s worth noting that some caught up in this scandal may yet seek to take the money they can liquidate and run? These delays appear interminable. Here I sympathise fully with investors as the ongoing hiatus built upon hiatus, while typical of Indian bureaucracy, alas, is not much help. Yes, due process must be done but it appears remarkably serial in investigation, let alone execution, to put it mildly.

NSEL Offered To Arrange Rs 270-Cr (USD 45.77 mln) Loan: Lotus Refineries
The Hindu Business Line

Lotus Refineries, which has threatened to file defamation case against the embattled NSEL, has claimed that the exchange had offered to arrange for a loan of Rs 270 crore (USD 45.77 mln) as late as July 25.
PLY: Some might wonder how a 45 million dollar loan can be organised when a lot of management claim they didn’t know anything. The NSEL crisis has lost its power to surprise me.

NSEL Headed For 6th Straight Default
The Indian Express

Members of crisis-hit NSEL have paid just Rs 11.28 crore (USD 1.79 mln) so far as against the scheduled payment of Rs 174.72 crore (USD 27.8 mln), raising the possibility of the sixth straight default on Tuesday.

PLY: It says everything about this sorry affair that here we are on a Tuesday and the latest likely default story comes only half way through the section as it is barely “newsworthy.” Painful for investors of course but unsurprising in this ongoing fiasco, alas.

Jignesh Shah And His Friends
Business Standard

Let us see what Jignesh Shah’s friends, whom he decorated with board positions in his companies, are doing…

PLY: An interesting profile of who went where after being part of what some are clearly suggesting was the patronage available by being in Jignesh Shah’s inner circle…

NSEL Investors To Protest At Financial Technologies AGM
Business Standard

NSEL Investors Forum is planning to conduct a protest in front of the AGM venue of Financial Technologies Ltd, the parent company of NSEL, in Chennai on September 25, seeking the company to repay their investments.

Around 150 investors are expected to stage the protest at the venue, and the issue would be raised by shareholders in the AGM.

PLY: Roll up Roll Up! True the speedway world championships have an exciting finale coming up in the final round in Torun early October but meanwhile this week there is only one event worth attending and alas I can’t make it! The FTIL AGM has all the ingredients to surpass even the worst Romanian shareholder brawls, er, meetings of recent years…


StockTouch To Leverage NASDAQ OMX FinQloud For Processing Power And Data Hosting
Nasdaq OMX

StockTouch announced today that the leading financial application used to monitor and understand the stock market will be powered by NASDAQ OMX FinQloud, powered by Amazon Web Services (AWS). StockTouch is a mobile application that displays a series of color coded heat maps that give users the pulse and direction of the market, categorized across industry sectors.


HKEx Announces US Access To Its CES 120 And VHSI Volatility Futures

Investors in the US can now trade its CES China 120 Index (CES 120) futures and HSI Volatility Index (VHSI) futures contracts directly from within the USA, after they were certified by the CFTC.

CES 120 futures contract is the world’s first exchange-traded futures contract that tracks A shares of Mainland companies as well as Mainland stocks listed in Hong Kong.

PLY: Will entrepreneurial Chinese take aways now be tempted to become IBs and boast a whole new product segment? I’ll have 2 number 6, a number 7 with rice and 5 CES 120’s please…

A good move by HKEx, this index could yet be help propel much greater awareness of the Chinese stock market although then again trust issues remain.

Indian Index To Measure Corporate Social Responsibility
Business Standard

The Indian Institute of Corporate Affairs (IICA) and the BSE Monday signed a pact to develop India’s first corporate social responsibility (CSR) index.

NYSE Liffe U.S. To Launch Futures On The NYSE Arca Gold Miners Index (GDM)
NYSE Euronext

Futures to complement the recently launched cash index.

Career Paths

GHF announces the appointment of Mark Ibbotson as Group CEO, effective 7th October. Based in the London headquarters, Mark Ibbotson will be leading the global growth and expansion of the Group, which currently has offices in Chicago and Hong Kong.

Peter Lovell has been appointed to the position of CEO of G. H. Financials (Hong Kong) Ltd and will relocate to Hong Kong to drive the firm’s expansion in Asia.

PLY: Marvellous news! Peter Lovell will doubtless do a great job in HK while the arrival of Mark Ibbotson from LIFFE where he was joint CEO brightens the day immeasurably and indeed emphasises how GHF remains in the premier league of trading businesses to have graduated from the world’s exchange floors. Founder Gidon Hershon and his Chairman, the encyclopedic John Foyle, are to be applauded in making this a true case of “dream team” management albeit at the expense of the exchange industry where it had been hoped “Ibbo” would be a key element in integrating LIFFE into ICE.

I am also pleased to see that Lamon Rutten has been appointed as Non-Executive Chairman of GMEX.

Ex-MCX CEO Lamon brings considerable depth and insight to the role as does the addition of former CME Europe MD Mark Blundell as non-exec alongside Tony Harrop, MD of Forum Trading Solutions Ltd, which provides the underlying exchange technology for GMEX.

Dorothy Delahunt joins the Executive Management team as General Counsel and Company Secretary bringing with her considerable experience including previously overseeing the legal and regulatory strategy team at UBS.

Finally as mentioned at the start of this EI, Garry Jones has been confirmed by FCA as CEO of LME.

Financial Calendar


ASX AUD 82.3 cents full-year final dividend for the year ended 30 June 2013 payment
CME $0.45 Q3 dividend payment
Financial Technologies India AGM
Hellenic Exchanges ex-dividend date for special dividend of EUR 0.03 (share capital return)
Record date Moscow Exchange EGM on 14.11.2013

ICE – ICE Swap Trade, ICE’s swap execution facility (SEF) expected to launch on September 30, 2013.

trueEX LLC – execution services for swaps will be provided on both of its CFTC-regulated platforms (DCM & SEF) commencing on October 2nd, 2013.

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

Analyst Notes

London SE – Upgraded at AlphaValue to a “Reduce” Rating – GBX 1,474.70 Price Target

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.


Announcing The First Ever UK Crowdfunding Day – November 1, 2013

The explosion of crowdfunding onto the UK startup landscape is to be recognised with a special annual event – UK Crowdfunding Day, as part of Social Media Week on Friday, November 1 2013.

PLY: Tangible details will doubtless follow after the usual pretty breathless hype which feels oh so dotcom bubble.

New Crowdfunding Platform Targets Drupal Development

A new crowdfunding platform – Drupalfund – is intended to make it easier to contribute to Drupal and accelerate development work on the open source content platform, according to Jozef Toth.

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