September 26 2014

elb2

Overwhelming success for the LSE (Russell) rights issue as FTIL stake sale looming in Indian power exchange (IEX) and MCX renews FTIL vendor provision while Warsaw hints at (rather obvious) plans. Regulators continue the trans-Atlantic derivatives bicker-fest as SGX pushes smaller lot trades. KRX CCP issues alongside various pieces of vendor news and a new US association for forex. Happy scrolling:

Public Markets

LSE: 97.07% Acceptance In Rights Issue
Alliance News

LSEG Friday said that it got acceptances for 97.07% of the shares available in its rights issue , receiving valid acceptances for nearly 72.2 million shares out of a planned 74.3 million share issue, about 27% of existing group issued share capital, circa 21% of the resulting shares in issue.

Last month, the stock exchange operator announced a GBP 938 million, 3 for 11 fully underwritten rights issue to help fund the USD2.70 billion acquisition of Russell Investments, which it had announced in June. It priced the offering at 1,295 pence a share.

PLY: The investors like the deal which is unsurprising. Next step alongside integration and evaluation of the Russell acquisition? Clearly LSE needs to find a means to actually develop derivatives trade and exploit the LCH Clearnet purchase – currently there are no convincing plans apparent to me albeit against a background of restructuring at LCH. Anyway, next steps will be interesting for now; LSE has a clear mandate of the best kind for the intelligent Russell purchase.

TVS Capital Funds-Led Group In Race For FTIL’s Stake In IEX
Utpal Bhaskar – Livemint

A consortium led by Chennai-based private equity firm TVS Capital Funds Ltd is among the entities competing to buy the stake of around 25% that FTIL owns in Indian Energy Exchange Ltd (IEX).

PLY: Apparently, the top bid is in the region of around Rs.300 crore (USD 48.74 mln), with IEX valued at around Rs.1,700 crore (USD 276.2 mln).

FAO: American private equity fund TPG Capital, General Atlantic and local player PE Kedaara Capital are also on the list of potential buyers, as reported on August 12th, while Rakesh Jhunjhunwala is rumoured to have bought 4%. FTIL appointed Axis Capital to look for a buyer for the 24.89% stake in IEX (reported here)

HKEx Eyes October 27 For Trading Link Launch
Michelle Price – Reuters

On August 25th, HKEx completed connectivity test for Shanghai-Hong Kong stock connect.

Polish Bourse Plans Big Push In Derivatives & Debt Markets
Clare Hutchison – Reuters

Warsaw SE (WSE) will prioritise developing its derivatives, commodities and debt capital markets to complement its existing cash equities market in a new strategy to be unveiled next month.

PLY: Time for political parachutee Pawel Tamborski to prove he can deploy a vertige of vision and operational efficiency which the Polish government itself currently lacks,. The policy sounds so far mightily like what we have heard before but which was knocked off course by the imbecilic Vienna merger soap opera coda.

The government itself is a core actor in the current value destruction in the stock market; stealing half the private pension fund portfolio didn’t encourage investors to keep their money at home. Warsaw oozes opportunity but first the yuppies of Warsaw need to eliminate the daft hubris that because their market has been the best performer amongst the teenage markets of the New Europe, it means they will be the leading adult when markets mature… Poland oozes opportunity, the problem is nobody has much captured it for some time now.

MCX Board Approves New Pact With FTIL For Tech Support
Moneycontrol

U.S., Europe Hit Impasse Over Rules On Derivatives (subscription)
Andrew Ackerman, Katy Burne & Viktoria Dendrinou – Wall Street Journal

U.S. and European policy makers have hit a snag in their postcrisis efforts to coordinate on international rules for derivatives, which played a central role in the 2008 meltdown…at loggerheads over the regulation of clearinghouses.

PLY: I disagree, nobody hit a snag, the entire process on either side of the Atlantic has been (consciously or subconsciously) a CC-snag designed to make either regulator the irritant to stopping cohesion between every player going about their usual business…

SGX’s Bocker Wants Board Lots Phased Out (subscription)
Kenneth Lim – Business Times
Speech By Magnus Bocker, CEO Of SGX, At 15th AGM Of SGX
MondoVisione

SGX CEO Magnus Bocker has pledged his commitment to eventually do away with board lots encouraging retail participation: minimum shares lot will shrink to 100 shares in 2015, from 1,000 now.

Speaking on Thursday, Mr Bocker said the exchange plans to go even further: “For those who are wondering, rest assured we are committed to a unit-share market. We just need to take it one step at a time.”

How CME Is Investing Its Startup-Focused Fund
Kate MacArthur – Chicago Tribune

In May, the company launched a startup-focused fund called Liquidity Ventures 1 LLC. Mark G. Fields, CME’s managing director-strategic investment group, shares how the fund focuses its $500,000 to $5 million investments.

Aluminium Users Appeal Against LME’s Removal From Anti-Trust Case
Reuters

As reported yesterday, two groups of plaintiffs that have accused LME and its owner of allowing anti-competitive and monopolistic behaviour in its warehousing network have appealed against a judge’s dismissal of the claims, the LME’s owner said.

The two appeals, by consumer and commercial classes of plaintiffs involved in the aluminium industry, were filed with the U.S. Court of Appeals on Sept. 24, HKEx said in a filing on Thursday.

BM&FBovespa Cuts 2014 Spending Plans
Reuters

BM&FBovespa SA said on Wednesday it plans to cut its 2014 spending plan to a range of 585 million to 595 million reais ($245 million to $250 million) from 595 million to 615 million reals, leaving planned 2014 and 2015 capital investments of 230 million reais to 260 million reais ($96 – 109 mln) & 190 million reais to 220 million reais ($80- 92.4 mln) respectively, intact.

BM&FBOVESPA & CFFEX Sign MoU
MondoVisione

BM&FBOVESPA (BVMF) and China Financial Futures Exchange (CFFEX) have agreed an MoU.

MOEX: Changes To Equity Market Liquidity Support Program
MondoVisione

MOEX will make changes to its Equity Market liquidity support program effective 1 October, affecting quote maintenance conditions and market maker awards.

South Korea To Double Daily Stock-Price Movement Limit (subscription)
Kwanwoo Jun – Wall Street Journal

The current 15% maximum price change that stocks are allowed to rise or fall in a given day will be raised to 30% next year.

FXPA Launches, Representing Breadth Of FX Marketplace – Foreign Exchange Professionals Association Promotes Education, Advocacy In FX
MondoVisione

Foreign Exchange Professionals Association (FXPA) was launched, a new trade body uniquely comprised of a cross-section of FX industry participants. Based in Washington, DC, FXPA’s aim is to engage key US and international regulators, policymakers, the general public and news media, through a combination of education, research and advocacy to advance a sound, liquid, transparent and competitive global currency market.

Founding members include buy-side, exchanges, clearing houses, trading platforms, MTFs, technology companies, banks and non-bank market participants. FXPA launched with membership from BNY Mellon, CalPERs, Campbell & Company, Citadel LLC, CME, GFI Group, LCH.Clearnet, LMAX Exchange, Traiana and Virtu Financial. Squire Patton Boggs serves as counsel to the FXPA.

PLY: The Association Cambistes International appears to have been part-disintermediated in the USA at least…

UK Government Consults On Extending LIBOR Powers To More Financial Benchmarks – Consultation Launched On Extending The New Legislation The Government Put In Place To Regulate LIBOR To Cover Further Benchmarks
MondoVisione
UK To Widen Law Against Benchmark Rigging, Aims For Year-End
Jamie McGeever & Huw Jones – Reuters
How Key London Benchmarks Are Calculated (subscription)
Sam Fleming – Financial Times

The government has launched a consultation on extending the new legislation the government put in place to regulate LIBOR to cover further benchmarks in the foreign exchange, fixed income and commodity markets. The consultation will run until October 23.

PLY: From Sonia to Ronia and ISDAfix to oil, precious metals and forex benchmarks, amongst others, how soon before you can call crimestoppers to report a flaw in the settlement process for benchmarks? Government expands the law to cover areas where, as usual, the incumbents failed to take account of technology change and thus have left the financial industry discredited through an unwillingness or inability to apply a little, light, lateral pre-emptive thought…

Private Markets

KRX Swaps Approval Held Up By HanMag Loss – Isda’s Noyes (subscription)
Catherine Contiguglia – Risk

European approval for Korea’s OTC derivatives clearing house is being jeopardised by concerns about the risk management set-up of its sister futures exchange.

PLY: It took 143 seconds for HanMag to implode. It may take that many weeks, or longer for KRX to regain reputation lost as a result.

…cure lots of smug “oh it couldn’t happen here, could it?” …Well I am in Istanbul today and actually I doubt it could but in points east or west from this great Euro-Asian city? Well, let’s just say that I am not entirely convinced hearing some users blithely proclaim the industry’s safety left me sleeping more soundly last evening. There’s a lot to be done to make CCPs even safer imho.

Ministry Of Environment And KRX To Launch A Mock Emission Market
MondoVisione

The Ministry of Environment and KRX announced that they will start a mock emission trading from Sep. 29 (Mon.), 2014 in order to successfully open an official Emission Trading Market in Jan. 2015.

Indian Bourses Can Help Raise $150 Bn Capital Every Year: BSE
Financial Express

Pitching for stock exchanges to become a major avenue for raising capital and channelise them into investments, Bombay SE’s (BSE) CEO Ashishkumar Chauhan said that bourses can help companies garner USD 100-150 billion worth funds a year, marking an over ten-fold increase from current levels.

EGX Issued Its First Follow-Up Report On Its Strategic Plan
MondoVisione

Tanzania Lifts Limit On Foreigners’ Stock Market Purchases
Reuters

Tanzania has set aside a rule that barred foreign investors from buying more than 60% of shares in a listed company on the Dar es Salaam Stock Exchange, CEO, Moremi Marwa, said on Thursday.

EPEX SPOT: CWE Flow-Based Market Coupling Launch To Be Pushed Over The Winter – New Target Go-Live On 31 March 2015
MondoVisione

The partners of the Flow-Based project in Central Western Europe (CWE – Belgium, France, Germany, Luxembourg and the Netherlands) have decided to target a new launch date on 31 March 2015, due to an exceptional situation on the Belgian market this winter.

PLY: Belgium may run out of power during the winter, despite Brussels generating an endless torrent of hot air. In other news, Germany has deployed so many green solutions for electricity, the country has ended up burning more coal than ever before, pushing their emissions figures up.

Atlas ATS Introduces 60-Second Price Protection For Bitcoin Traders
Pete Rizzo – Coindesk

Cryptocurrency exchange Atlas ATS has introduced a new feature “Price Lock Guarantee” that allows users to lock in quoted bitcoin prices for up to 60 seconds before executing a trade.

US Commodities Regulator To Hold Public Bitcoin Hearing
Pete Rizzo – Coindesk

CFTC will hold a public meeting to discuss bitcoin and digital currencies on 9th October in Washington, DC.

PLY: Alas I doubt I can be there as it would be good to hear how CFTC is moving towards being an enlightened regulator for the future of markets and not merely an engine of “no” as has sadly been the case in other offices of late.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX is flat as FTIL bounces back 5% as news emerges of the sale of an IEX power exchange stake.

Investors Battle For NSEL Merger With FTIL
Sundaresha Subramanian – Business Standard

A war of letters has broken out on the issue of whether to merge listed FTIL with its scam-hit subsidiary, NSEL.

PLY: I still fear that the investors are pushing here for something that, if permitted, will come to haunt free markets in the future.

Technology

Broadridge Launches New Innovations To Raise Efficiency Levels For Reconciliation And Confirmation Matching
MondoVisione

Broadridge Financial Solutions announced a new release of its PROactiveTM solution suite for reconciliation and process management.

Products

Options Grows Velocity Feed Coverage, Eyes Wider Reach (subscription)
Giulia Lasagni – Waters Technology

Infrastructure-as-a-service provider Options (formerly Options IT) has added new European markets to its connectivity and managed co-location platform, providing customers with direct access to equities and derivatives feeds from BME and Borsa Italiana, plus DB1’s CEF Ultra+ Eurex low-latency derivatives feed.

Indexes

S&P Dow Jones Indices And Toronto Stock Exchange Launch Two New Factor Based Indices – S&P/TSX Composite Shareholder Yield Index Licensed To Horizons ETFs
MondoVisione

S&P Dow Jones Indices and Toronto SE (TSX) announced the launch of the S&P/TSX Composite Shareholder Yield Index and the S&P/TSX Composite Buyback Index.

SZSE Credit Indices Issued
MondoVisione

Shenzhen SE (SZSE) and Shenzhen Securities Information Co., Ltd. recently announced to issue SZSE Medium-and-high Credit Index & SZSE Medium-and-low Credit Index (Code: 399299, Abbreviation: SZSE Medium-and-low Credit) on September 25, 2014.

Career Paths

FT reported that CME has lost its Asia head Singapore-based Julian Le Noble, in a surprise departure that comes as industry rivals are ramping up in the region.

MV reports that the Foreign Exchange Professionals Association began life with Adam Cooper, the senior MD and chief legal officer of Citadel, as its first elected Chairman.

FXPA also elected Derek Sammann, Senior MD, Global Head of Commodity and Options Products, CME as Vice Chairman, Craig Messinger, EVP, Global Head of Trading and Risk for Foreign Exchange, Derivatives, Fixed Income and Equities at BNY Mellon Global Markets, as Treasurer; and Eric Busay, Portfolio Manager, CalPERS as Secretary on September 16.

In addition to the four officers, initial founding board members include Chris Concannon, President & COO, Virtu Financial; Patrick Bartle, Global Head of FX Strategy, LMAX Exchange; Mark Sandomeno, Manager, GFI Emerging Markets, GFI Group; Gavin Wells, Global Head of CDSClear & ForexClear, LCH.Clearnet.

Born Technology announced that Sara Jean Goodman and Paul Dimtsis have joined the firm’s sales and marketing teams. Goodman joins as Director of Sales and Marketing, based in Chicago. Dimtsis comes on board as Managing Director of Sales and is based in Toronto.

Goodman started in the industry building a marketing team for Chicago-based broker Advantage Futures. Following her time there, she joined technology firm RTS Realtime Systems as Manager of Marketing and Communications, Europe.

Dimtsis most recently was Director of Sales for NYSE Technologies, where he covered all sales in Canada focusing on the exchange’s SFTI network, WOMBAT/Market Data offerings, and Global Liquidity Hubs. Prior to that he was Director of Sales in Canada for Orc Software, one of Born Technology’s closest partners.

Lombard Risk Management, a leading provider of integrated regulatory reporting, compliance and collateral management solutions for the financial services industry, announced that John Groetch, has been promoted to MD for the Americas.

Hong Kong’s Securities and Futures Commission (SFC) welcomes the re-appointment of Mr Ashley Alder as its CEO for another three-year term effective from 1 October 2014.

Financial Calendar

Today

NASDAQ OMX $0.15 quarterly dividend payment

New announcement

SGX Q1 FY2015 results – 21 October 2014

Next week

ICE $0.65 Q3 dividend payment

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

Share Notes

Interactive Brokers Group SVP Milan Galik sold 900 shares Wednesday, September 24th at an average price of $25.48 (bargain $22,932.00). He now owns 715,817 shares. Mr. Galik’s regular sales are chronicled on this specific page.

PLY: Gosh the drama of it all, Mr Galik cuts his usual 1800 share clip to 900…

Analyst Notes

BMO Capital Markets Initiated Coverage On GFI Group – “Outperform” Rating And $4.25 Target Price

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

P2P Lending Comes Of Age As Wall Street Muscles In (subscription)
Tracy Alloway – Financial Times

Michael Solomon announced a deal to sell $500m worth of the loans originated through his CircleBack Lending – to Jefferies who plan to securitise these “P2P” loans; bundling them into bonds that can be sold to a wide array of investors.

Other stories

CFTC’s Global Markets Advisory Committee To Meet October 9, 2014
MondoVisione

CFTC announced that the Global Markets Advisory Committee (GMAC) will hold a public meeting on October 9, 2014 at CFTC’s headquarters in Washington, D.C.

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