I see the government of Dubai has (surprise, surprise) announced that it, like the Sultinate of Oman, will tie its export prices for crude oil to the Dubai Mercantile Exchange instead of to Platts. Any ideas on what this means for oil pricing???

A bit of overlooked news this week: Italy's Borsa Italiana says it's going to exercise its option on MBE Holdings, which owns 60% of MTS SpA, the OTC bond platform that handles the bulk of the Continent's secondary government debt business -- and designed the pan-European government bond indexes that provide the underlying instruments for Euronext's portfolio of EuroMTS Government Bond Index Futures. Any comments on how this might alter the bidding landscape, especially with LSE and Borsa Italiana now talking to each other?

Right before agreeing to be taken over by the London Stock Exchange, Borsa Italiana exercised an option on MTS, the pan-European government bond platform that dominates the European secondary market and that designed Euronext's market-driven indexes. The Italians had shared ownership of MTS with NYSE-Euronext, but now it's all theirs – and soon part of LSE.

Sounds like a coup for LSE, but the man who built MTS, Gianluca Garbi, has been tossed from the company after a well-publicized pissing match with Borsa Italiana boss Massimo Capuano.

Garbi has landed comfortably in the government bond department of Dresdner Bank – but what does this mean for the new London-Milan project?
(from Steve Zwick in Germany)

Now it’s crunch time in Stockholm: Sweden’s Financial Supervisory Authority (FSA) is examining Borsa Dubai’s $4 billion cash “bid” for OMX, the Swedish-Finnish exchange that has operations across Scandinavia and the Balkans. OMX management wants to be taken over by Nasdaq for $3.7 billion in shares, but shareholders may find the rival cash offer more to their liking.
The unfolding drama will be fascinating to watch, for a variety of reasons.
It’s not clear whether the Dubai offer is officially a bid – a statement issued last week seems to indicate it becomes an official bid once they get 25% of OMX shares, and they’re nowhere near that in outright ownership - but do own options putting them over the limit. Even the FSA isn’t sure whether last week’s announcement constitutes an official bid, but the intent is clear.
Leading Dubai’s charge is Per Larsson, a respected former head of OM who was squeezed out when OM merged with Helsinki’s Hex to form OMX.
Leading Nasdaq’s charge is Bob Griefeld, who has OMX management and Swedish politicians on his side. He also appears to have the backing of Sweden’s Wallenberg family and Swedish bank Nordea, according to the FT.
When Larsson was tossed, it was made easy because staid OM shareholders objected to his healthy compensation package – a package many in the industry feel was well-deserved, given his ability to develop innovative products in the previous decade.
But he’d been also held accountable for OM’s failed hostile takeover of the London Stock Exchange (LSE) in the late 1990s, and the LSE plays a central role in this drama as well: Nasdaq is abandoning its own failed bid for that platform to go after OMX, and the resulting entity would form a direct competitor to the LSE – while also sharing ownership of London’s EDX platform.
Any thoughts on the following: will the Swedish government block an offer from Dubai? Will OMX shareholders go for the cash? Is Larsson on a mission to rectify past slights? And what value would a Scandinavian-Arabian entity have over other competitors?

Within the next 60 days, Borse Dubai will find out if the wrist-slap it got this week from Sweden’s Financial Supervisory Authority (FSA or, to avoid confusion with the UK regulator, the FI from the Swedish FinansInspektionen) will end its pursuit of OMX.

What happened is this: the Dubai group disclosed ownership of a 4.9% stake in OMX, but also quietly accumulated options on another 23.5%, giving it the ability to own 28.4% – provided the FI gives it approval to hold more than 10%, as is required under Swedish law.

The Swiss Futures and Options Association (SFOA) has kicked off its 28th Burgenstock Conference, this time from Montreux, on the southern tip of Lake Geneva, while the Burgenstock resort in the mountains above Lake Lucerne is renovated.

The focus so far has been pretty macro – a stream of folks from around the world touting the dynamism of the Emirate of Dubai, which is sponsoring many of the events this year. Former LME boss David King, who is now business development boss at HSBC’s Middle East operations, pointed out two interesting tidbits: first, that the bulk of the products being traded in Dubai are oriented to the retail sector; and second, that products based on Islamic finance are proliferating there.

Swedish exchange and technology group OMX has launched a volley of mud against Borse Dubai, which last month launched an unsolicited $4 billion all-cash bid for OMX, challenging Nasdaq’s $3.7 billion cash-and-share offer, and now former LME boss and current head of Middle East business development for HSBC David King has defended not only the Dubai Borse but the Dubai regulatory regime.

Swedish exchange and technology group OMX has launched a volley of mud against Borse Dubai, which last month launched an unsolicited $4 billion all-cash bid for OMX, challenging Nasdaq’s $3.7 billion cash-and-share offer, and now former LME boss and current head of Middle East business development for HSBC David King has defended not only the Dubai Borse but the Dubai regulatory regime.

It seems Jerome Kerviel, the Societe Generale trader who lost $7.2 billion, had been IMing a broker with Fimat, SocGen's brokerage arm. Below are transcriptions of those IMs, reported by the Nouvel Observteur , a French magazine. (blog by Irene Frat in Paris)

Written in the sort of short hand used to quickly convey a message (over the Reuters instant messaging system), Jérôme Kerviel seemed to have an on going dialogue with a broker at Fimat, recently renamed Newedge, called Moussa Bakir. Here are some excerpts, translated and put in understandable English :

The plunge that whacked markets in Europe and Asia as Societe Generale unwound the massive position built up by alleged "rogue" trader Jerome Kerviel has been officially ascribed to coincidence by the French government -- which says that only 8% of the drop can be attributed to SocGen's selling of a position larger than the GDP of Morocco.

But London traders have a different take.

The City is abuzz with talk of what happened in SocGen's Paris offices over the weekend of January 19 and 20 -- just after the bank had discovered Kerviel's massive position.

"Basically, they called all of their traders into the office to let them know what had happened," says one London trader. "By Monday, all of Paris knew that SocGen had a massive overhang and was going to be selling -- although I don't think anyone knew how big it really was."
It's tradition in markets to squeeze the weak longs and weak shorts, but there is also precedent for competitors declining the temptation if it presents systemic risk. That was the case with Barings, when competing banks agreed to let the British bank unwind its position alone and hold their own positions -- although many also said they would be forced to bail if the market moved too far against them.

With SocGen, it is still not clear what other banks were made aware of the situation, but it is clear that enough well-heeled individuals knew something was up, and a growing consensus in London is that their Paris counterparts simply helped themselves to the carnage on offer.
Not necessarily anything wrong with that, of course. It's what traders do.

But it means that SocGen's contribution to the turmoil of those three days far exceeds the 8% officially ascribed to it.

2008 may be the year emerging market exchanges ceased to be footnote participants at the annual Bürgenstock Meeting, sponsored by the Swiss Futures and Options Association (SFOA) and held this year in Interlaken as the Bürgenstock resort undergoes renovation.

As always, the host country – in this case, India – was the focus of Wednesday evening's opening panel and Thursday's entertainment; but representatives of the Multi-Commodity Exchange (MCX) and its parent, Financial Technologies (FT) did more than just put on a good show.