ERDESK: Exchange Sector Review - Week ending April 30th, 2010
This week:
The sector was down -100 bps, in-line with global equities. Interdealer brokers were down -200 bps. YTD the sector is underperforming global equities by 488 bps.
ICE will acquire CLE for GBP395 mn ($604 mn; $384 mn in cash and $220 mn from its credit facilities) and expects the acquisition to be slightly dilutive in 2010 and accretive in 2011. CLE focuses on the emissions derivatives market and has a 95% market share in the US and Europe and ICE already provides the company with its trading and clearing platform. ICE had limited success in the emissions market as delays and uncertainty about a cap and trade program in the US are keeping volumes down (see page 7).
CBOE members will vote on May 21 on demutualization and IPO plans. CBOE will issue 90.7 million shares to its seat holders, and an additional 10 million shares to be issued afterwards. CBOE set a $2.5 bn valuation floor for the IPO ($25 per share) and admitted that the SEC’s $0.30 proposed cap on trading fees could reduce revenues by $14.2 mn p.a.
US Senate Agriculture Committee Chairman’s proposal to treat index options contract as swaps and extend the oversight of the CFTC has been withdrawn at the Senate. Index options contracts will continue to be regulated by the SEC. The Agriculture Committee also approved a legislation exempting defined benefit plans from taking a fiduciary obligation when entering into a swap.
CFTC will extend oversight of 7 ICE energy contracts that perform “significant price discovery functions”. 16 other contracts evaluated (including a carbon contract from the Chicago Climate Exchange, and five from the Natural Gas Exchange) will not require further oversight.
NASDAQ OMX decided to close its MTF, NASDAQ OMX Europe (NEURO) after assessing the financial prospects of the NEURO business. NDAQ will maintain its existing data centers in London and continue to support its trading and market data operations, run the UK power exchange N2EX, and support its international listings business
The following companies reported quarterly earnings:
-CME $3.62 +21% Y/Y
-NDAQ $0.43 -10% Y/Y
-BME €0.43 +8% Y/Y
-TMX C$0.66 +14% Y/Y
-OSE FY09: JPY23.3k -1% Y/Y
-MKTX $0.17 +100% Y/Y
-BEN FY2Q10 $1.55 +230% Y/Y
-WDR $0.42 +133% Y/Y
Next week:
The following companies will report quarterly earnings
-Wednesday, May 5th: ICE
-Thursday, May 6th: IMAREX
-Friday, May 7th: PSE
Provided By: Equity Research Desk, www.erdesk.com