The Daily Newsletter of Market Infrastructure









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Exchange Invest is a free daily email/web newsletter
about the core events pertaining to investment
in financial markets infrastructure such as:

  • exchanges
  • IT vendors
  • brokers
  • MTFs
  • clearing houses
  • etc.

MAY 10 2017

Issue 991 of Exchange Invest coincides with the 7th generation of the Porsche “911” Carrera unveiled at the 2011 Frankfurt motor show, perhaps counterintuitively as a replacement for the 997. Magnificent motor car albeit I still scratch my head at how the 911R was essentially a GT3 without a rollcage – strikes me somebody forgot what that “R” stood for….

Prosperity UK Video

he Prosperity UK Panel – Brexit, Euro Clearing & Financial Market Structure ably chaired by Barney Reynolds headlining parish luminaries Jeff Sprecher and Michael Spencer, with one Patrick L Young lurking in the background continues to gain traction and it’s vital to spread the word methinks to add to clarity in the cloudy (at best) CCP debate post Brexit.

In Today’s Exchange Invest

Lots of fascinating news. Cinnober pragmatically scoops up the assets of Ancoa as Dar Es Salaam is the biggest winner in the public results reported (albeit in percentage terms…) while CBOE integrates BATS…and private entities NSE and India Energy Exchange ramp up IPO preparations. Lots of interesting stuff as the ISDA AGM is underway and as always cluelessness is no barrier to interacting with the CCP debate in Europe (but I have censored most of the most egregious examples of idiocy).

Cool tech deal of the day is between ECC and KB Tech…

…And there’s a lot more today with added pith, happy scrolling:

In BigWorld

So finally there is something to unite the fractious nature of American politics, as Donald Trump fires FBI Director James Comey….albeit the swamp rats and celebs (if you can tell the difference) seem to be finding ways to demur from what they had all demanded in the first place!

Elsewhere, in a remarkable twist fuelled by economic growth and inflation, it seems the original poster child Bitcoin exchange (also, alas poster child for Bitcoin exchange, er ‘technical issues”) Mount Gox may yet pay off all its creditors 100%, provided the price of Bitcoin rises just a bit more… The Merkle explains. Well MT Gox’s acronym does begin with “Magic.”

Thirdly the most optimistic news from the UK election trail is that up to 100 Labour MPs might break away if crypto-Marxist terrorist supporting leader Jeremy Corbyn remains party leader after the next election. The optimism? Well clearly convincing themselves they will have up to 100 MPs to break away is an optimistic start given an eye popping 22% Conservative party lead on a manifesto to deliver Brexit.

Public Markets

Cinnober Acquires Market Surveillance Specialist Ancoa Software
Cinnober
Ancoa Software Sold By Leonard Curtis Business Solutions Group To Cinnober Financial Technology AB
MondoVisione

PLY: This just in as EI races to pixel. Ancoa went into administration May 5th and Cinnober which already had a successful sales partnership scoops up the assets. Great deal for Cinnober, a pity to see a company as innovative as Ancoa ultimately stumped by poor management of what is a great product. Hopefully the Ancoa management can bounce back learning from their experience here.

CBOE Profit Slumps 69.3 Pct
Reuters
BATS Acquisition Expenses Sink CBOE Earnings In Q1 2017
Finance Magnates
CBOE Beats Estimates On Higher Transaction Fees
Reuters

PLY: BATS included in results effective March 1st which means comparatives show a huge dip due to the acquisition expenses. CBOE now has remarkable potential thanks to BATS but Chicago management must ignore the historic lows on the VIX and appear to appreciate that their specific position is much more volatile than their locally traded indicator might more broadly assume.

TMX Group Limited Reports Another Strong Quarter For Q1/17
Canada NewsWire (press release)

PLY: The numbers are encouraging but still the whisper I hear from all parts of Bay Street and beyond remains, “that CEO (sadly nobody remembers the poor man’s name) what does he actually do?” Good result by the staff here, just imagine what TMX could do with direction, maybe even a spot of vision.

Tanzania: Dar Es Salaam Stock Exchange Profit Doubles In First Quarter
AllAfrica.com

EU Watchdog Urges Tougher Euro Clearing Oversight After Brexit
Reuters
ISDA CEO Scott O’Malia’s Address At ISDA 32nd Annual General Meeting, Lisbon
MondoVisione

PLY: The core issue is that confidence in the EU seeking mere passive insights as opposed to flexing their innate control freakery is a big problem. I am not convinced Steven Maijoor is in the control freak camp but he also faces challenges just keeping his agency running under budget constraints. The invisible hand is good, the clunking fist of perpetually overprescriptive EU political intervention, is not.

European Banks Warn Of London Exodus If Told To Convert Branches To Subsidiaries
Reuters

PLY: An intriguing standoff. The initial reaction of EU banks with a big footprint in London the idea of upgrading to subsidiary status from pure branch as a result of a loss of passporting is emigration.

However, just as few were inclined to “get on your bike” when advised by Norman Tebbutt in the 1980’s recession, so too the problems run a lot deeper – Deutsche Bank for instance cannot find the skills it needs to move back to Germany from London and most of the business just won’t move. That’s just one example. This is a rather elegant pincer movement from the Bank of England, demonstrating the thinking which has been absent from the blindly blithering Davosian Governor. In one neat move, the Bank of England is pushing for mutual recognition of the highest degree…or the EU’s banks – not oozing capital – must find new cash to maintain their highly lucrative London operations.

Maxim of the day: There’s life in the old lady yet.

Börsen-Zeitung: “Mifid Ii Gives Us Opportunities”, Interview With Thomas Book, Ceo, Eurex Frankfurt
Eurex

In an interview with the Börsen-Zeitung Thomas Book, CEO Eurex , talks about Eurex’s strong performance in the year to date and the company’s …

Derivatives-Swaps Rule Recalibration Dominates ISDA AGM
Reuters

European Commission Struggles To Revamp Regulators
Risk

Head Of Hong Kong Bourse Says LME Fee Increases “Largely Behind Us”
Reuters

European Commodity Clearing Cooperates With Kb Tech To Expand Access To Commodity Markets
Exchange News Direct

PLY: More on this excellent “win win” deal in the Technology section below.

NZX Publishes Final NZX Corporate Governance Code
New Zealand’s Financial Markets Authoriity: Media Statement On NZX Updated Code Of Corporate Governance
MondoVisione

London Stock Exchange Group Plc Transaction In Own Shares
MondoVisione

PLY: While LSE consistently buys its own stock, Group CEO XavRol recently sold 53500 shares (I hope they ‘systematically internalised’ that in a Turquoise block?). Is this just a down payment ahead of the bad grape harvest for reinvestment in Xavier’s photogenic vineyard or is it a sale knowing no LSE deal and perhaps a short term exit for the man who made many deals but has shown insufficient integration appetite?

Private Markets

NSE Profit Jumps 137% In FY17 As Regulatory Burden Falls
Economic Times

PLY: Spectacular headline numbers despite CEO upheavals (and still no official boss confirmation from SEBI) as well as server cabinet issues et al.

Indian Energy Exchange IPO This Fiscal Year; Kotak, Axis Appointed As Bankers
Moneycontrol.com

The IPO is to bring public shareholding in the exchange to 25 percent.

PLY: A remarkable if broadly unsung business, founded by FTIL and dominant in Indian power trading.

Trueex Takes Legal Action Against Markitserv
trueEX

PLY: Fascinating with considerable ramifications, as first mentioned in yesterday’s Exchange Invest…

Qatar Stock Exchange To Introduce New Products To Boost Capital Market
The Peninsula Qatar

Malta Stock Exchange Reports Record Profits
MaltaToday

The Malta Stock Exchange (MSE) posted a record after tax net income of €2.53 million, an increase of 50%, on the back of significant revenue growth.

PLY: Excellent numbers on the back of inherent economic strength and stable regulation – in other words the things the EU could do but the Mediterranean ex-Malta broadly fails to achieve. Interesting potential for Malta SE with Chairman Joe Portelli showing a lot of ambition to develop the market and with it aid local capital market development.

Little Hope For Investors In Stocks Delisted By Exchanges
Business Standard

Cantor Futures Exchange Seeks To Amend Rules For Restricting Trading Privileges
FinanceFeeds (blog)

Rwanda: New Law A ‘Big Leap Forward’ For Local Commodities Exchange
AllAfrica.com

Special Section: FTI, NSEL, India at the Crossroads

CBI Nails 9 Shell Firms In NSEL Scam
Free Press Journal

PLY: Repeating from yesterday with a bit more colour as this allegation is the most striking yet: “The agency in its probe of bank frauds has found that NSEL run by FTIL was allegedly using nine shell companies.”

#Ugly

Technology

EEX Clearinghouse Partners With Financial Software Firm To Expand Trading Access
Carbon Pulse (subscription)
European Commodity Clearing Cooperates With KB TECH To Expand Access To Commodity Markets
MondoVisione

European Commodity Clearing (ECC), a subsidiary of German-based energy bourse EEX, has agreed to cooperate with a financial software vendor KB Tech…

PLY: Excellent deal for both parties, adding value to ECC and KB Tech (chaired by parish veteran Bob Antell).

GreenKey Files Patent On MiFID II Solution: Voice To Electronic Quote
MondoVisione

PLY: Interesting.

Thomson Reuters And S&P Global Enter Strategic Transcript Data Agreement
MondoVisione

A Matter Of Time: New Deal Between National Physical Laboratory And ICE
City A.M.

PLY: This remains a good idea. However (and this is the fault of the prescriptive legislation, not the fine work of ICE and others) the bit the media is so far missing is thus: While this does indeed deliver perfect time stamping for markets, there remains an issue of what time the processing hardware runs to which can vary by minuscule amounts during a trading day and thus different elements of the tech stack may be seeing / working at fractionally different times. Now we’re talking microscopic fractions of a second here but the problem is the regulators are prescribing perfect timing in what is actually an imperfect world (as market historians will recall, LTCM discovered to their cost planetary imperfection in a different paradigm).

Products

LME Seeks To Simplify LMEPrecious Contract Structure In Advance Of New Regulations
Platts

BME Creates The New IBEX MAB® Index Series
MondoVisione

IHS Markit Powers U.S. Social Sentiment Index Project With Wall Street Journal, Tracking Sentiment on Social Media
Business Wire (press release)

Plus500 Statement On Bafin Cfd Regulation For Germany
LeapRate

PLY Bafin have not restricted leverage and overall delivered a relatively mild update to CFD regulations.

Career Paths

SEC Charges Former Staffer With Securities Fraud Violations
MondoVisione

Audun Bø New Chief Executive Officer of VPS
Oslo Bors

PLY: Robert Bodnar, Executive Director at Morgan Stanley, has joined the OIC Roundtable, the independent governing body of the OIC.

William Hinman has been named director Of the SEC Division Of Corporation Finance while LiquidityBook has added industry veteran Les Vital as Head Of Technical Sales as demand for its POEMS platform Grows

James Stockdale previously Assistant Director, Qualifications has been promoted to Global Director of Learning at The Chartered Institute for Securities & Investment (CISI).

Crowdfunding

Lending Club And Marketplace Lending – One Year On From Renaud Laplanche’s Ouster
Lend Academy (blog)

Other Stories

Index Industry Association Welcomes Three New Members – CBOE Holdings, China Central Depository & Clearing Corporation And Tokyo Stock Exchange To Join Global Index Industry Association
MondoVisione

PLY: IIA moving ahead under Rick Redding’s management.

ISDA CEO Scott O’Malia’s Address At ISDA 32nd Annual General Meeting, Lisbon
MondoVisione

Remarks Of CFTC Acting Chairman J. Christopher Giancarlo Before International Swaps And Derivatives Association 32nd Annual Meeting, Lisbon, Portugal – “Changing Swaps Trading Liquidity, Market Fragmentation And Regulatory Comity In Post-Reform Global Swaps Markets”
CFTC
Thank you for reading Exchange Invest, a very interesting day of parish news all round methinks!

All the best,

Patrick

Patrick L Young
Executive Director DV Advisors

November 2017
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