John Lothian Newsletter: Euronext appoints COO ahead of IPO; Dark Pools Shed Light on Their Operations; Upstart stock exchange Aequitas to seek new investors, restrict high-frequency traders

Jun 3, 2014

First Read

World’s smallest stock markets battle growing pains
Elaine Moore – Financial Times
Every day, the flip-flop wearing moped drivers who make up the majority of Cambodia’s street traffic can look up at the tallest tower in Phnom Penh and check the performance of their country’s stock market.

**JK – I remember the young Budapest Stock Exchange in 1995 and getting a chuckle out of the former state-owned firms trading there. These markets will evolve and grow as capital seeks opportunity, and vice versa.


BATS Chi-X Europe keeps ahead of regulatory curve
Jane Cooper | The Banker
Largely thanks to its innovative new solution for on- and off-exchange reporting, pan-European exchange BATS Chi-X Europe has seen its market share balloon in recent months. But, aware of the dangers of complacency, chief operating officer David Howson says that the firm is just as focused on further innovation as on growth.

**JK – BATS regulatory radar is on.


MarketsWiki World of Opportunity Summer Intern Series Goes to London
John Lothian & Co. is pleased to announce the MarketsWiki World of Opportunity Summer Intern Education Series is coming to London on July 1st and 2nd, 2014 with the generous support of the CME Group.


MGEX: May Volume Breaks Record
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), announces the top May volume in Exchange history. This is the third consecutive month of record-breaking volume. All futures and options contracts traded totaled 162,863, a four percent increase over the previous record set back in 2011 and an 82 percent increase from May 2013.

**JK – Another Wheaties record for MGEX.


The Options Industry Council Announces Options Volume Falls In May
The Options Industry Council (OIC) announced today that 315,630,235 total options contracts traded in May, which is 18.32 percent less than last May when 386,428,255 contracts were traded. Overall 2014 volume remains up by 0.60 percent with 1,761,732,803 contracts compared to last year’s 1,751,155,921 contracts.

**JK – They are doing a volatility dance today in the VIX pit.


Colourful world of interdealers faces deep structural changes
Philip Stafford – Financial Times
The fast-growing asset management business that Terry Smith, the chief executive of Tullett Prebon will focus on when he departs the UK interdealer broker, stands in stark contrast to the industry he will leave behind.

**JK – Tough prospects for the IDBs.


Alternative Investments: Bridging the Gap to Main Street
Kim Wales – TABB Forum
Innovative entrepreneurship movements and crowd finance, in particular, are set to revitalize the capital markets by giving investors access to alternative investment vehicles and enabling hedge funds to tap the $5.1 trillion defined contribution market.


Deutsche Bourse taps Caroline Davis to serve as new head of tools
Deutsche Börse Market Data + Services today announced that Caroline Davis has joined as its new Head of Tools. She will be based in London and report directly to Holger Wohlenberg, Managing Director, Market Data + Services.

**JK – Sometimes a headline is worth a thousand words.



MarketsWiki Page of the Day

MarketsWiki Recent Updates


Jock Percy; Nandini Sukumar

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NASDAQ OMX NLX; ICE Clear Europe; New York Portfolio Clearing, LLC; Russell Investments


49,436,801 pages viewed, 7,959 articles, 183,327 edits
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Lead Stories

Euronext appoints chief operating officer ahead of IPO
Pan-European exchange group Euronext, which is set to list on three of its markets in the coming weeks, said it had hired Jos Dijsselhof as chief operating officer.

Dark Pools Shed Light on Their Operations
After years of operating in the shadows, dark pools are coming into the light. Goldman Sachs Group Inc. and Credit Suisse Group AG, two of the biggest operators of opaque trading venues known as dark pools, which execute trades away from stock exchanges, on Monday published documents explaining in detail how their venues work.

Upstart stock exchange Aequitas to seek new investors, restrict high-frequency traders
Barbara Shecter – Financial Post
A proposed new stock exchange backed by Royal Bank of Canada that seeks to keep out predatory high-frequency traders is throwing the doors open to another group: new investors.

John Millar to replace Alastair Walmsley as LSE primary markets head
Vivek Ahuja – Financial News
The head of primary markets at the London Stock Exchange, which has enjoyed a resurgent period for initial public offerings, is to leave the group.

Russell deal could propel LSE’s index revenues to 40%
Anish Puaar – Financial News
The London Stock Exchange could generate 40% of revenues from indices if its acquisition of Russell Investments is successful, according to RBC Capital Markets.

Euronext completes C-Suite line-up
Tim Cave – Financial News
Euronext, the European stock market operator being spun off by its owner IntercontinentalExchange, has appointed a new chief operating officer – completing its roster of senior executives.

Overseas banks no longer boast about size of US offices
Tom Braithwaite – Financial Times
Pity the Porsche salesmen of Connecticut. Before the financial crisis, first UBS and then Royal Bank of Scotland built two of the world’s largest trading floors in the state. At the time, UBS issued a press release boasting that its floor was “approximately the size of two football fields”, and served by a “garage with room for 500 cars”. Today, the buildings – which are just across the street from each other – look like monuments to a lost era.

French Officials Twist U.S. Arms in Bank Inquiry
Facing the prospect of a guilty plea in the United States, the giant French bank BNP Paribas has enlisted the support of a powerful ally: its own government, including top regulators and even the French president.

S&P censured for erroneous France downgrade alert
Sam Fleming – Financial Times
Standard & Poor’s has been censured for erroneously announcing in 2011 that France’s credit rating had been downgraded, in the first enforcement action taken by the EU securities watchdog.


FINRA Makes Dark Pool Data Available Free to the Investing Public
As part of the Financial Industry Regulatory Authority (FINRA)’s effort to increase market transparency and thereby enhance investor confidence, FINRA today began providing data indicating the activity levels in each alternative trading system (ATS), including all market facilities commonly called “dark pools.”

Exchanges & Trading Facilities

CME Group Volume Averaged 13.0 Million Contracts per Day in May 2014, Up 6 Percent from April 2014
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that May 2014 volume averaged 13.0 million contracts per day, up 6 percent sequentially but down 12 percent from May 2013. Total volume for May 2014 was more than 273 million contracts, of which 86 percent was traded electronically.


CBOE Holdings Reports May 2014 Trading Volume
CBOE Holdings, Inc. reported today that May 2014 trading volume for options contracts on Chicago Board Options Exchange and C2 Options Exchange and futures contracts on CBOE Futures Exchange totaled 97.08 million contracts. Average daily volume was 4.62 million contracts, a five-percent decrease from May 2013 and a nine-percent decrease from April 2014.

CBOE Futures Exchange Reports May 2014 Trading Volume
The CBOE Futures Exchange, LLC today reported that May 2014 average daily volume and total monthly volume in futures on the CBOE Volatility Index and total exchange-wide at CFE decreased from year ago levels.

Average Daily Volume Of 8.1 Million Contracts At Eurex Group In May
In May, the international derivatives exchanges of Eurex Group recorded an average daily volume of 8.1 million contracts (May 2013: 10.1 million). Of those, 6.0 million were Eurex Exchange contracts (May 2013: 7.4 million), and 2.1 million contracts (May 2013: 2.7 million) were traded at the U.S.-based International Securities Exchange (ISE). In total, 126.3 million contracts were traded at Eurex Exchange and 45.0 million at the ISE.

ISE Holdings Reports Business Activity for May 2014
ISE and ISE Gemini combined represent 16.1% of equity options market share, excluding dividend trades.
ISE and ISE Gemini reported a combined ADV of 2.1 million contracts.
Dividend trades made up 1.9% of industry volume in May 2014.

Turnover At Deutsche Börse’s Cash Markets At 96.1 Billion Euros In May
Order book turnover on Xetra, the Frankfurt Stock Exchange and Tradegate stood at EUR96.1 billion in May (May 2013: EUR109.2 billion). Of the EUR96.1 billion, EUR88.4 billion were attributable to Xetra (May 2013: EUR99.5 billion). EUR3.9 billion were attributable to the Frankfurt Stock Exchange (May 2013: EUR5.4 billion). Order book turnover on Tradegate Exchange* totalled approximately EUR3.8 billion in May (May 2013: EUR4.3 billion).

OneChicago Announces Trading Volume For May 2014
OneChicago, LLC (OCX), an equity finance exchange, today announced its May 2014 volume of 521,746, a -52% decrease year-over-year. OneChicago is a CFTC and SEC regulated exchange offering Single Stock Futures (SSF), a Delta One product, on approximately 1,500 equities, including ADRs and ETFs.

BOX Options Exchange Price Improvement Activity For May
In the month of May, price improved contracts on BOX Options Exchange (“BOX”) averaged 268,548 per day, which represented a 9% increase over the same period last year.

Oslo Børs: Strongest Month So Far This Year

Tokyo Financial Exchange Trading Volume In May 2014

The Trading Volume On The Spanish Stock Exchange Grew 50% In May To EUR72.2 Bn.

Key figures for SIX Swiss Exchange and SIX Structured Products Exchange: May 2014

Boerse Stuttgart Generates Turnover Of Around EUR 7 Billion In May
Increases In International Equities, Derivative Investment Products And Debt Instruments

Investor Activity On Warsaw Stock Exchange Markets: May 2014

Bucharest Stock Exchange Monthly Report – Trading Value On BVB Regulated Spot Market – May 2014

Moscow Exchange’s Turnover Was RUB 36.4 Trln In May 2014

NASDAQ OMX Nordic Trading Statistics May 2014

May Statistics Report From The NASDAQ OMX Nordic Exchange

EnterNext Boosts SME Equity Research And Supports Technology Sector With Two Initiatives
Reflecting its ongoing programme of initiatives in support of companies, EnterNext, the Euronext subsidiary dedicated to promoting and growing the market for SMEs], today announced two measures to increase equity research focusing on mid-size companies. They apply to companies covered by EnterNext.

WSE Partners With 1st Global Energy & Resources Conference
The 1st Global Energy & Resources Conference takes place at the premises of Warsaw Stock Exchange on Monday, 2 June 2014. Leading institutional investors in CEE, investment fund managers and analysts meet to discuss and evaluate new investment opportunities. The Conference introduces investors to US and European energy and resources companies.

Hedge Funds & Managed Futures

Gross’s Pimco Total Return Fund Posts $4.3 Billion Net Outflow in May
Min Zeng – MoneyBeat – WSJ
Investors pulled $4.3 billion from Pacific Investment Management Co.’s flagship Total Return Fund in May, marking the 13th consecutive month of outflows.

KKR’s Decision to Close Stock Hedge Fund Shouldn’t Impact Revenue
Ryan Dezember – MoneyBeat – WSJ
KKR & Co.’s decision to shutter its stock hedge fund, KKR Equities Strategies, is a “disappointing outcome” for the three-year-old foray, but pulling the plug should have no impact on the private-equity firm’s revenue, say CitigroupC +0.40% analysts.

Pantheon Woos Wealthy Individuals to Private Equity With Feeder Fund
Dawn Lim – MoneyBeat – WSJ
Pantheon is courting wealthy individuals to private equity with a new platform that would give the high-net-worth sector access to its funds–without the need for institutional investor-sized checks.

Hedge-Fund World’s One-Man Wealth Machine
In the Back Bay neighborhood of Boston, one man is building a moneymaking machine that rivals some of the hedge-fund industry’s biggest names. Calls to his office go unreturned even from those eager to fork over eight-figure sums, potential investors say. One industry veteran referred to him as “a unicorn,” as few people have ever seen him.

Algebris co-founder recruits partner for Silvaris hedge fund
Vivek Ahuja – Financial News
Silvaris Capital Management, an equities hedge fund launched last year by Algebris Investments co-founder Eric Halet, has hired Michel Sznajer as a partner covering emerging markets.

Vanguard unveils new CFO
Andrew Pearce – Financial News
Vanguard Group has named a new chief financial officer as part of a senior “internal rotation programme”.

Banks & Brokers

Rising Rate Tide May Not Lift Bank Boats
John Carney – MoneyBeat – WSJ
Rising interest rates, whenever they materialize, may not help banks as much as many investors expect.

Goldman Names New Chief Strategy Officer
MICHAEL J. DE LA MERCED – Dealbook – NY Times
Goldman Sachs named a new chief strategy officer on Monday, replacing an executive who had worked at the firm for nearly 30 years and is retiring at the end of the year.

Michael R. Bloomberg Joins 10,000 Small Businesses Advisory Council As Co-Chair
Goldman Sachs today announced that Michael R. Bloomberg, Bloomberg L.P. founder, philanthropist and Mayor of New York from 2002-2013, has joined Goldman Sachs Chairman and CEO Lloyd Blankfein, Warren Buffett and Dr. Michael Porter as a co-chair of the Goldman Sachs 10,000 Small Businesses Advisory Council.

Bank of America Merrill Lynch hires UBS’s Waddell
Bank of America Merrill Lynch has named Tim Waddell, a 28-year veteran of rival UBS , as vice chairman of corporate and investment banking for Europe, the Middle East and Africa (EMEA).

Barclays cuts several hundred investment bank jobs: sources
Barclays Plc has this week cut several hundred jobs in its investment bank as part of its plan to shrink the business by 7,000 staff over the next three years to save costs, people familiar with the matter said.

UBS investment chief poised to quit company
James Shotter in Zürich – Financial Times
Alexander Friedman is to step down as UBS’s global chief investment officer after three and a half years to pursue “a new opportunity outside the firm”.

Clearing & Settlement

OCC Announces Cleared Contract Volume Declined In May While 2014 Volume Remains Up
Press Release
OCC announced today that total cleared contract volume reached 319,742,239 in May, an 18 percent decrease from the May 2013 volume of 391,347,069 contracts. OCC’s year-to-date cleared contract volume remains up for 2014 with 1,789,079,351 contracts, 1 percent higher than the same point in 2013. OCC’s year-to-date average daily contract volume is up 2 percent at 17,369,702 contracts.

People: Sef start-up CEOs stand down
Two swap execution facility (Sef) bosses have left their roles only three months after Sef trading became mandatory for some products in the US – a much-anticipated deadline that has not transformed the fortunes of start-up platforms in the way they had hoped.

Eurex Clearing Publishes Client Clearing Documentation For Use With FIA Europe And ISDA Standard Agreements – Important Milestone To Facilitate Client On-Boarding Under The New EMIR Segregation Rules

Indexes & Products

U.S. commodity ETPs see net $4 bln outflow through May -Lipper data
Investors pulled $4 billion from U.S. commodity exchange-traded products in the first five months of the year, extending last year’s negative trend even as the pace of the redemptions from gold slowed, Thomson Reuters’ Lipper data showed on Monday.

Time to flee low-vol ETF strategy
Brendan Conway – Financial News
Steady-Eddie investors, it’s time to review your favorite exchange-traded fund strategy: “low volatility.”

TOM MTF Bows Data on New Dutch Index
Max Bowie – WatersTechnology
The TOM (The Order Machine) multilateral trading facility has launches a new total return index, the NL20 Index, which reflects performance of the 20 largest listed Dutch companies, designed to deliver “transparency, predictability, efficiency, continuity and quality,” officials say.

S&P Dow Jones Indices Market Attributes: Correlation & Dispersion Index Dashboard

Revised Lists Of The Moscow Exchange Indices Announced

Is the VIX “Low”? SPX Historic Volatility Plunges to 7.88
Matt Moran – VIX Views
Lately I have heard inquiries from some stock investors as to whether the CBOE Volatility Index (VIX) recently has been at “low” levels; today it closed at 11.40.


Blackstone Invests in Cloud Theory
Timothy Bourgaize Murray – WatersTechnology
Blackstone’s Innovations team partnered with Cloud Theory to develop FundEngine, a client-facing customer relationship management (CRM) system for alternative asset managers, which operates on top of Salesforce as a turnkey solution covering fundraising, client relations, fund management, due diligence, and research. It is available on a subscription basis.

Icap Taps IPC for Voice Trading Connectivity
Giulia Lasagni – WatersTechnology
The global interdealer broker will now use trading communications provider IPC’s Trader Voice service, in addition to its Connexus extranet and Direct Connect ethernet data service.

Multrees Investor Services Launch ‘Multrees Compass’ A Leading Wealth Management Portal
‘Multrees Compass’ Set To Innovate Service Delivery For Independent Wealth Managers And Private Investment Offices

Visual Trader Launches A New Trading Strategy Generation System Into Its Platform


SEC Charges Charter School Operator in Chicago With Defrauding Bond Investors
The Securities and Exchange Commission today charged a charter school operator in Chicago with defrauding investors in a $37.5 million bond offering for school construction by making materially misleading statements about transactions that presented a conflict of interest.

[AMF Canada] $21,500 fine for market manipulation

[AMF Canada] Illegal practice as dealer and aiding with illegal distribution – Penal proceeding against Fernand Plante and Richard Rouillard

Environmental & Energy


China Central Bank Calls for More-Targeted Loosening Measures
China’s central bank and its banking regulator have vowed to adopt more-targeted loosening measures to support the economy and reduce funding costs for the nation’s companies, the state-run China Securities Journal reported, citing government officials.

MSCI Upgrade Unwanted as Emerging Beats Developed: Korea Markets
Sharon Cho and Weiyi Lim – Bloomberg
Instead of welcoming a potential upgrade to developed status by MSCI Inc., money managers prefer Korean shares to remain in the MSCI Emerging Markets Index because they’ll attract more money as the second-largest component, said BNP Paribas Investment Partners.

JCCH: Japanese Commodity Markets Summary for January 2014

SGX welcomes listing and depository of Hainan Airlines offshore RMB bond

HKEx: After-Hours Futures Trading’s Close To Be Extended To 11:45 Pm From 3 November

Thai Bourse’s New President To Strengthen Thai Capital Market Towards International Level

Frontier Markets

Patchy outlook for frontier stock index as top scorers exit
A flagship index of frontier market stocks is likely to struggle to match its previous strong performance after the promotion of its two top scorers, Qatar and the United Arab Emirates.

PineBridge raises rare Sharia fund
Becky Pritchard – Financial News
US alternative asset manager PineBridge has reached a first close on a rare sharia-compliant real estate fund, following a tough few years for sharia fundraising

With The Participation Of The CEO Of Qatar Stock Exchange, Annual Conference Of The Arab Federation Of Exchanges Opens Its Meetings In Dubai

Malawi Stock Exchange Monthly Market Performance Report – May 2014


Time to Bid for Lunch With Buffett
MICHAEL J. DE LA MERCED – Dealbook – NY Times
Warren E. Buffett is known for his generally modest lifestyle back home in Omaha. But it is that time of year when he asks for one of the most expensive lunches in the world.

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