EXCHANGE NEWSWIRE, 28 July 2011
CME reported 2Q11 GAAP EPS of $4.38 (+7% y/y) versus consensus of $4.16 on revenues of $838m (+3% y/y) and expenses of $304m (+9% y/y). CME lowered its operating expenditure guidance to $1.235b from $1.26b and capital expenditure guidance to $165m from $180m. CME also purchased 220k shares ($65m) within its $750m share buyback program authorized on May 9.
DB1-NYX merger is expected to hurt competition in derivatives and listings, according to the Association for Financial Markets in Europe (AFME), a group which represents banks and brokers including the exchanges’ largest clients. AFME identified seven areas for greater antitrust scrutiny in a submission to the European Commission. AFME also stated that DB1’s “historical behavior suggests that post-merger, it would have both the ability and the incentive to charge higher prices and limit entry” for exchange-traded derivatives, and that “the proposed merger would exacerbate these competition issues as well as raising new ones”.
TMX: Maple Group aims to extend the August 8 tender deadline for its C$3.8b TMX bid “until the point where we have sufficient regulatory approvals for shareholders to be able to tender into a bid with certainty of the regulatory process”, according to a source interviewed by Reuters. The deal requires approval from Canada’s Competition Bureau as well as regulators in four provinces, and the source said that the likely outcome of the deal should be clearer by the end of the Canadian summer.
NDAQ CEO Robert Greifeld said the exchange would not shy away from pursuing acquisitions, but also said that intensifying competition made LSE less attractive, an opportunity Greifeld thinks “has come and gone”. Greifeld mentioned prospects for organic growth, focused on developing services and add-ons to its core business for matching up stock and option trades, which broadens the annual opportunity to $4b from $1b. Greifeld also said that an investment in LCH.Clearnet would preserve the firm’s standing as an open handler of trades.
CME told SEC in a letter last month that the limit up/limit down proposal by the Financial Industry Regulatory Authority and the nation’s stock exchanges as the plan “sets forth an overly complicated and insufficiently coordinated structure”, and “in a macro-liquidity event, it will have the unintended consequence of undermining rather than promoting liquidity”. CME also contended that rather than support the use of trading pauses of individual securities, adjustments should just be made to existing market-wide circuit breakers.
CME will discontinue the NYMEX heating oil contract HOc1, the first energy futures contract launched by the exchange, from April 2013. NYMEX will replace the contract by expanding the listing of its ultra-low-sulfur diesel contract to the current year to add liquidity to the contract. This move is a response to regulatory changes to lower sulfur heating oil specifications in the state of New York.
BRIX launched trading with 30 participants. Active trading on the exchange will likely be followed by the publication of an index tracking spot markets, and the electricity trading exchange aims to bring negotiations between producers and large consumers under one roof, and make the pricing public, as a spot price is currently very hard to determine.
HKEX is consulting the public on the possible reintroduction of a closing auction, which was abandoned in March 2009, as part of market reforms. HKEx also refuted suggestions that technology upgrades were done solely to attract HFT, and said in a note that “Hong Kong’s current market framework, which includes stamp duty, effectively limits high frequency trading”.
Provided By: Equity Research Desk, www.erdesk.com
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