September 30 2015

elb2Another minor milestone: Welcome to Issue 600 of the infrastructure industry daily Exchange Invest – plaudits, congratulations, and particularly, cash (especially from our creditors) will be welcome.

Today I am at FOW’s Derivatives World CEE which has been capably organised by William Mitting and his team, delivering hundreds of eager delegates to a packed house in the splendid surroundings of my favourite Warsaw hotel, the Westin. Excellent opening speeches by Grzegorz Zawada (Warsaw SE), Cees Vermaas (CME Europe) & Carl Gilmore (Wedbush) have led elegantly into lively panels whence I shall return post pith…

Meanwhile, a round of sub editor flogging along with my administering a personal punishment of reading a few more IOSCO white papers is on the cards after a spot of word association (football) yesterday when I mentioned commodities consultant par excellence Clive Furness at one stage when intending to praise technical analyst extraordinaire Clive Lambert. D’oh! Apologies to both parties & clearly don’t grow a beard Mr Lambert or I’ll be perpetually confused. Still like that deal with Jonathan Cowan by the way so this is a good chance to mention it again.

Today in Exchange Invest – Liquidnet Bond platform launches, Commissioner Hill on CMU & why Europe is doomed without it. Cracking coupon on GPW bond issue with EBRD a buyer…

Public Markets

BGC Partners Updates Its Outlook For Q3 2015

Results will include the consolidation of those for GFI Group & BGC expects quarterly revenues circa mid-point of previously stated guidance, reflecting the addition of GFI and strong double-digit YoY growth for the Company’s Real Estate Services business. Anticipated distributable earnings revenues to increase by between approx. 51% and 61% and to be between $680 million to $725 million, compared with $449.8 million…

FXCM Announces Reverse Stock Split To Remain Listed On NYSE
Finance Magnates

From October 1st, FXCM will be enacting board decision

Read our Premium FX – CHF Crisis – Brief and FXCM Stakes Sales Brief.

WSE Issues Fixed-Coupon Bonds

Warsaw SE (WSE) issuing 7 year fixed-coupon bonds up to PLN 125 million (€29.5 mln). Rate of 3.19% gives them the lowest rate on long-term fixed-coupon corporate PLN bonds listed on Catalyst (52 bps above Polish treasuries). Issue date 6 October 2015, maturing 6 October 2022. Interest paid semi-annually.

WSE has also decided to redeem and cancel part of its floating-rate bonds. The declarations of bondholders presented during the buy-back of series A and B bonds have determined the size of the new bond issue.

PLY: 52 bps above equivalent treasuries is a great yield for any company and demonstrates the residual strength of the GPW. Then again it has to be said with the current lack of government and a tricky outlook politically, I am minded to note the Warsaw Exchange is currently better managed than the Polish government, so perhaps the treasury is lucky to be able to issue 52bps cheaper than the exchange!

EBRD Invests In 7 Years Senior Bonds Issued By WSE

EBRD is purchasing PLN 20 million (approx. €4.7 million equivalent) of senior unsecured bonds issued by WSE to support the bourse’s contributions to the development of Poland’s debt capital market.

PLY: Good.

A Stronger CMU For Europe
Jonathan Hill – European commissioner – Financial Times

No need to disrupt markets that work well in pursuit of theoretical perfection.

PLY: I love the opening line which is typical of the agitprop required before a discussion can begin in the EU – I would suggest consigning anybody seriously endeavouring to place a Venn Diagram marked “theoretical perfection” anywhere overlapping current EU regulatory process in a place with elegantly padded walls. We’re still at the ‘love in’ phase but the truth is Europe is dying. The dysfunction is everywhere and the deflationary news of today is just another sign of an economy losing its will to live (other than in a purely post war South American relativist decline scenario). CMU desperately needs to work and Commissioner Hill must succeed with what is at once a powerful force for change and regulation which can deliver growth as much as it is a single act of Europe demonstrating it wants free markets not festering socialism which curses the Eurozone.

Some crunchy numbers in this article which is worth reading. Also, a good statistic from CME Europe exchange boss Cees Vermaas’ keynote at FOW Derivatives World CEE this AM (via the New Financial think tank): 500 billion Euros in capital market growth is available if only Europe can halve the gap ratio of bank to market funding ratio equivalent in the world’s benchmark of prosperity: the USA.

QV The Beauty of Capital Market Union & our Premium EU CMU Brief


CFTC Head Calls For Leverage Ratio Fix (subscription)
Joe Rennison – Financial Times

Timothy Massad has reiterated calls for a softening of bank capital requirements blamed for a decline in the number of clearing firms.

Remarks Of CFTC Chairman Timothy Massad Before The OTC Derivatives Conference, September 29, 2015

ASX AGM Presentation

AGM Addresses By The Chairman & The MD & CEO

ASX CEO Elmer Funke Kupper Concerned About Speed Of Global Economic Recovery
Ruth Liew – SMH

ASX Advised To Avoid Brazil Model & Keep Lid On Transaction Costs
Jonathan Shapiro – AFR

Australia’s uncompetitive financial markets are diverting profits towards ASX shareholders at the expense of traders who are paying higher transaction costs than in other parts of the world, according to Larry Tabb.

PLY: Good to see Larry Tabb joining the mature bandwagon encompassing pretty much everybody who believes in free markets (don’t forget Niki Beattie’s excellent clearing report a while back too) versus a handful of folks at ASX who continue to endorse the old smokey chimney ambience of Dickensian monopoly.

Read our Premium ASX Monopoly – Brief – Part 3.


Shanghai-London Stock Link Unlikely To Emulate Hong Kong Model
Asia Asset Management

CSRC says any stock-trading initiative between Shanghai & London would have major differences from the existing Shanghai-Hong Kong Stock Connect.

Read our Premium HKEx – SSE – Stock Connect Brief Part 4.

PLY: …Like it probably won’t happen for one thing – that would certainly differentiate it. It’s good to see this story still making the rounds but I still suspect it will prove more in the long-term typical trade mission hyperbole.

China Regulator Imposes Record Fines In Market Rout Clampdown

CSRC has handed out at least 2.37 billion yuan ($370 million) in penalties this month, five times the total for all of 2014, as the government clamps down after a stock rout.

PLY: China endeavouring to catch up with US regulators clearly… Does Barclays have an office in China? If so, how long before they get taken for something they may have done and something where there is a fairly tenuous link to their being credibly culpable?

European Dark Pools Brace For Continent-Wide Limits On Trading
Will Hadfield & John Detrixhe – Bloomberg

EU going ahead with new regulations that could stop many of the continent’s largest companies from trading on dark pools, even though a senior lawmaker has denounced the rules as unworkable and exchanges have said they will impact trading in unpredictable ways.

PLY: Remember that statement from Commissioner Hill’s ghost writer in the Brussels Bugle above: “No need to disrupt markets that work well in pursuit of theoretical perfection.”

Sebi Issues Final Guidelines For Commodity Derivatives Brokers
The Economic Times

Existing commodity derivatives exchange members will be required to make an application for registration with Sebi within three months from the effective FMC-SEBI merger day (September 28, 2015).

Read our Premium SEBI-FMC Merger Brief.


CFTC To Issue Whistleblower Award Of Approximately $290,000

PLY: Whistleblowers can gain 10-30% of fines collected. Will law firms start offering a category of “Introducing Whistleblower” to help facilitate future testimony?

Private Markets

SSE Said To Be Gearing Up For New Emerging Industries Board
EJ Insight

Shanghai SE (SSE) could launch by the end of this year a new strategic emerging industries board that will seek to attract listings of firms involved in sectors getting a policy push from the central government.

PLY: China, free markets and “they do things differently over there” have somehow randomly coalesced in my mind.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and 63 Moons (FTIL) broadly flat.


R3 Blockchain Development Initiative Grows To 22 Banks Worldwide
Jessie Willms – Bitcoin Magazine

The international R3 blockchain project to develop blockchain commercial applications and standards for the financial world just got a whole lot weightier.

The 13 new banks joining the project are: Bank of America, BNY Mellon, Mitsubishi UFJ Financial Group, Citi, Commerzbank, Deutsche Bank, HSBC, Morgan Stanley, National Australia Bank, Royal Bank of Canada, SEB, Societe Generale, Toronto-Dominion Bank.

These banks join current project members Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, Goldman Sachs, J.P. Morgan, Royal Bank of Scotland, State Street and UBS.

PLY: So in 5 years this either becomes a vast competitor to Euroclear and/or antitrust encourages it to be hived off – that’s an opening binary for the trajectory of this interesting project. Standard banker / committee untenable management structure rules will apply unless it quickly garners an aggressive profit motive.


Liquidnet Launches Buyside-Only Bond Platform (subscription)
Anna Irrera – Financial News

Liquidnet has launched its much-anticipated bond trading platform in the US and Europe, the latest in a series of initiatives targeting the liquidity crunch in fixed income markets.

Liquidnet press release here.

PLY: Plaudits to Liquidnet and particular congratulations to Liquidnet Europe board member Adrian Fitzpatrick whose original idea this all was (he was enthusiastically supported at that time by his then fellow NED, some bloke called Patrick L Young…). It has been great to see Seth Merrin and his executive team take the idea on board and implement their plan. It will be fascinating to see how Liquidnet goes as the overall model deployed using what was formerly Vega Chi has not been as vastly changed as I had once thought it might be. Anyway, I wish this endeavour every success and hope it will prove as successful as Seth’s brilliant innovations in equity block trading.

Read our Premium The Bond Platforms Rush Brief – Part 2.


Commodity Traders Express Caution On Mifid II (subscription)
Emiko Terazono & Philip Stafford – Financial Times

Mifid II — is it time to panic?

PLY: I suspect emigration may be a more sensible option. Singapore looks more attractive by the day for commodity traders.

Editorial: The Future’s An Option
Financial Express

Given the importance of commodity markets, the Sebi-FMC merger on Monday is good news because, with the ghosts of the past hopefully buried, the combined entity can finally get down to the task of promoting the healthy development of commodity markets.

PLY: Options on the way: hooray! That will add a wondrous dimension to the Indian commodities markets…it’s just a pity most foreign investors are locked out of the opportunity to help the dynamic nation develop.

Read our Premium SEBI-FMC Merger Brief.


ISEdirect Services Extended To Include Submission Of Fund NAVs


MOEX To Launch Index Of State-Owned Companies

PLY: You skimmed that headline didn’t you? Seriously, read that headline again and think about it.

ECB To Use STOXX GC Pooling Indices As New Euro Secured Benchmark Rate

Career Paths

SEC named William Royer as new head of the examination program in the Atlanta Regional Office.

Financial Calendar

30.09 – ICE $0.75 dividend for Q3 2015 payment

30.09 – ASX AGM

New announcement

Thomson Reuters Q3 2015 Results – Friday, October 23, 2015.

CBOE Q3 2015 Results – Friday, October 30 – press release here.

SEC Equity Market Structure Advisory Committee Meeting on October 27 – press release here.

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

Share Notes

Interactive Brokers Vice Chairman Earl H. Nemser sold 2,540 shares Friday, September 25th at $39.79 (bargain $101,066.60).

Other stories

IMF Global Financial Stability Report (GFSR): Vulnerabilities, Legacies, & Policy Challenges, Risks Rotating To Emerging Markets, October 2015

Market Liquidity Warning From IMF (subscription)
Joe Rennison – Financial Times

IMF is calling on policymakers to adopt pre-emptive strategies to guard against the risk of liquidity evaporating, warning that aggressive central bank policies may have masked its deterioration.




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