Forex Reader

– By Pushpa Sathish, Staff Writer

The London Stock Exchange, NASDAQ, Deutsche which operates the Frankfurt Stock Exchange, NYSE, and the Singapore Stock Exchange have made it to the Bombay Stock Exchange’s (BSE) shortlist of strategic investors for 26 percent of its stock. Only three will make the final cut though, and BSE CEO Rajnikant Patel is playing his cards close to his chest.

The BSE, in an attempt to reduce the number of shares held by brokers, is offering a FDI of 26 percent and a FII of 23 percent, thus allowing a total 49 percent of foreign investment in its stock exchanges, depositories, and clearing corporations. Some equity will also be up for grabs to domestic institutions and banks that do not operate their own brokerages. The stake reduction is expected to be complete by May 2007.

– By Pushpa Sathish, Staff Writer

Dirty money and laundering issues are rearing their ugly heads in Uganda. The African country recently made news when the Barclays Bank announced that it was severing all associations with foreign exchange bureaus in the nation. Accordingly, accounts with all 92 bureaus will be closed by December 29.

While the bank is not offering any details on why the move is being made, sources say that some of the forex bureaus have been involved in the illegal flow of money in to and out of the country, and in its subsequent laundering.

On the other side of the coin, the bureaus are accusing Barclays of closing down all accounts with them because the bank sees them as direct competition. But commercial bank sources are sure that the bank has certain proof of illegal activities, and that it wants no part of them.

– By Pushpa Sathish, Staff Writer

More on the metal that glitters – the Shanghai Gold Exchange (SGE) is hoping to be able to develop gold derivative products, subject to the approval of certain government regulatory agencies, said Tong Gang, an official of the exchange which trades spot gold, silver and platinum and spot-deferred gold and silver. The Shanghai Securities News has quoted Shen Xiangrong, the chairman of the exchange’s board, as stating that “the time is ripe to develop gold derivatives.” Tong Gang explained that the derivatives would be in the form of futures, options, bonds and funds.

SGE, which comprises 128 domestic members including jewelers, producers and commercial banks, is contemplating granting foreigners membership rights to the exchange. In an attempt to increase liquidity, the exchange is also considering lowering the individual investment threshold. 

– By Pushpa Sathish, Staff Writer

Individual and institutional investors overseas are eyeing India’s largest and oldest exchange, the  Bombay Stock Exchange (BSE), and biding their time to invest in the bourse even as the Indian government is drafting a plan to open the country’s stock exchanges to FDIs (foreign direct investors) and FIIs (foreign institutional investors). According to word from a senior official in the finance ministry, the policy is waiting in the wings for approval from the country’s central bank, the Reserve Bank of India (RBI) and the market regulator, Securities and Exchange Board of India (SEBI), as per the provisions outlined in the Foreign Exchange and Management Act (FEMA).

The maximum foreign investment allowed will be 49 percent, divided between individuals and institutions as either 25 percent for FDIs and 24 percent for FIIs, or 26 percent for FDIs and 23 for FIIs. Among those interested in a stake in the Indian pie are the NYSE, NASDAQ, the Australian Stock Exchange, and FIIs such as Goldman Sachs, Nomura, Fidelity, and the Singaprean private equity investor Temasek.

– By Pushpa Sathish, Staff Writer

The much-talked-about, possible merger between the New York Stock Exchange (NYSE) and the Tokyo Stock Exchange (TSE) is not on the cards any time in the near future, if a statement from TSE is to be believed. The two bourses will tie up only after the current projects at the TSE show signs of progress.

The statement follows reports of the NYSE showing interest in an Asian expansion, with its sights set on positions in Japan, China and India. CEO of the NYSE group John Thain had met TSE’s CEO Taizo Nishimuro to discuss the possibility of a trade link between the two exchanges. A report stated that NYSE had proposed a 10 percent stake for each exchange in the other’s operations, to be put into effect by 2009. 

TSE has problems of its own to tackle before it considers such a merger seriously. The bourse is attempting to get listed following disasters such as a system crash, a botched trade and a closure following a scandal that threatened to crash its trading system. The exchange issued a statement in June earlier this year that it hoped to list in 2009 after regaining the trust of its investors.

– By Pushpa Sathish, Staff Writer

Following the break in the tightening of credit by the Federal Reserve, there’s been a sharp rise in the purchase of US securities. Treasury Department sources said that net purchases reached a record $116.8 billion in August, with acquisitions in August alone totaling $32.9 billion. Foreign investors are also buying Treasury notes and bonds. Private investors purchase $29.2 billion worth of notes in August while official institutions overseas invested $17.4 billion in them. Chron reports:

Japan remained the largest holder of U.S. Treasury securities, with $644.2 billion in August. China remained the second-largest, with $339.0 billion and Britain remained third with holdings of $201.4 billion.

– By Pushpa Sathish, Staff Writer

The merger of the two largest futures exchanges in the US, the Chicago Mercantile Exchange and the Chicago Board of Trade, has increased interest in the public offering of the largest energy marketplace in the world, the New York Mercantile Exchange (Nymex). The exchange expects to rake in at least $5 billion from this year’s sale, but is waiting for approval from the US Securities and Exchange Commission before detailing how it will use the proceeds from the sale. Bloomberg reports:

Ninety-one percent of Nymex shareholders voted in favor of the sale last week, increasing the total number of shares to 95.5 million. The exchange’s 816 members received 73.4 million shares in connection with the sale of a stake to buyout firm General Atlantic LLC earlier this year.

– By Pushpa Sathish, Staff Writer

The rumors of consolidation have turned out to have a grain of truth in them. The United States’ two largest futures exchanges, Chicago Mercantile Exchange Holdings Inc. (CME) and CBOT Holdings Inc. (CBOT) have merged with the former taking control over the latter. The combined unit expects to provide service of higher quality to its increased customer base at a lower operating cost. More than $125 million is expected to be saved in annual costs. Shares of both exchanges rose following the announcement. Business Scotsman reports:

The CBOT exchange includes Treasury futures, as well as agricultural commodity futures, while CME’s exchange includes interest rate, equity index, and foreign exchange futures.

– By Pushpa Sathish, Staff Writer

Foreign securities, stocks, bonds, and money market paper are looking increasingly good to Canadian investors. Ever since the elimination of limits imposed on pension and retirement savings accounts investing in foreign content, pension funds have snapped up stocks like hotcakes. The total purchase so far this year has exceeded the annual figure of the previous four years.

Some of the most popular acquisitions are US Treasury securities, British bonds, US and foreign stocks, and non-US money market paper. Foreign bonds have contributed to more than half of the purchases made so far this year, a huge increase when compared to the 6 percent in 2000.

According to Statistics Canada, the month of August alone saw $12.3 billion worth of securities being bought. There are no takers for Canadian securities though, with even overseas buyers giving them a miss. 

Meanwhile, foreigners shunned Canadian securities, particularly bonds. Total purchases were only $335-million down from $3.1-billion in July as investors, mostly American and British, sold bonds but bought money market paper.

– By Pushpa Sathish, Staff Writer

Exchange houses are looking to consolidate their holdings through mergers with similar companies. Recent newsmakers in this category include the Chicago Mercantile Exchange Holdings Inc. (CME) and CBOT Holdings Inc. (CBOT), parent companies to the biggest futures exchanges in the United States.

According to recent news and gossip on the industry grapevine:

• CME is eyeing a merger with Germany’s Deutsche Boerse AG, but the latter seems to be more interested in tying up with Euronext NV. The hearsay has managed to push up the share value of CME though.
• CBOT is interested in the London Metals Exchange, but with the London exchange denying reports of a merger, the latter’s stock value has plummeted.
• CBOT is also looking at a merger with Nybot, the New York Board of Trades.
• An agreement between CME and the New York Mercantile Exchange (Nymex) earlier this year has allowed energy products like futures on crude oil, natural gas, heating oil and gasoline to be traded on CME’s Globex electronic platform.
• FXMarketSpace, the world’s first centrally-cleared global foreign exchange market is in the offing as a joint venture between CME and the Reuters Group PLC.
• CBOT has launched the Joint Asian Derivatives Exchange (JADE) along with Singapore Exchange Ltd., to trade futures contracts based on Asian commodities.