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 5 2017

Exchange Invest issue 988 is here today whereas the Porsche 988 has been delayed. A Ferrari 458 competitor with a 600 pony 4 litre 8 cylinder boxer engine, or perhaps even 700 hp and…well the mid engined supercar has yet to see the light of day but here’s hoping…

Prosperity UK Video

Parishioners listening to the ICE conference call the other day will recall Jeff Sprecher remarked on speaking at the Prosperity UK conference last week. The event organised by Paul Marshall and Lord Hill was aimed at shaping the British economy in a post Brexit world.

I know many parishioners are eager to hear what happened – so here’s the video: Prosperity UK Panel – Brexit, Euro Clearing & Financial Market Structure with Barney Reynolds chairing not just Jeff but also Michael Spencer and even one Patrick L Young.

In Today’s Exchange Invest

EU fires a salvo which looks more pragmatic but still continues dangerous foreboding on the Euro clearing domicile – will Brussels twitch towards control or advocate freedom? NASDAQ launches pragmatic cry for better markets AKA a lot less of the dumb red tape which binds companies from going public in the USA as well as better market structure.

EEX closes Nodal acquisition, great profits for GPW, and a lot more makes a scroll obligatory today:

In BigWorld

In the political world, all eyes on France where if they vote Le Pen Sunday, the economic crunch that France needs to reboot comes sooner whereas if they vote Macron it’s destination stagnation for another 5 years until finally Le Pen does win and we’re back at square one. Sad for France, facing a devil’s alternative as an aspiring basket case economy.

Meanwhile, with all this political mullarkey and electoral stuff going on, one could easily lose sight of important news. Take for instance, the demise of the fabulously eccentric Preston Henn, owner of Fort Lauderdale’s most fascinating bazaar and a winner of the Daytona 24 hours in 1983 alongside legends AJ Foyt, Bob Wollek and Claude Ballot-Lena.. He leaves behind a widow after 60 years of marriage and not only the 1965 class winning Ferrari 275 GTB/C but also his 935, his 956 and 962 Porsches (amongst other machines). The first private owner of a Gulfstream G650 (which flying friends assure me is even faster than a Le Mans spec 956), Henn’s car collection is worth circa 100 million dollars in the current markets. RIP a remarkable man.

…and RIP too the great motorsporting baronet Sir John Whitmore who raced all manner of machines in the 1960’s, including all manner of fast Fords (helping develop the GT40) and a Lotus Elite at Le Mans (with Jim Clark)…

Public Markets

BGC Partners Reports First Quarter 2017 Financial Results
MondoVisione

GPW Group’s Record-High Q1 2017 Revenue Driven By Rising Volumes On The Financial Market

PLY: Who needs a CEO? Maybe Warsaw SE would be better off without one when they get their best results when they have no tangible top tier management… Congratulations to the staff on great results.

The Promise of Market Reform: Reigniting America’s Economic Engine
NASDAQ

PLY: A very thought provoking breakdown of US investment structure for private and public markets. A must read document for all parishioners this weekend, even if you are not in the USA.

EU Outlines 3 Options For London’s Euro Clearing Business
Financial Times

PLY: For all the hysterical palaver often spouted by the perma-misplaced ‘remoanian’ media, VP Dombrovskis emerges with 3 suggestions. It’s not a total all out bludgeon up front approach:

granting the UK regulatory equivalence using the existing legal framework;
more extensive policing in London from the EU;
or forcing the euro business to be cleared in the EU.

As an anonymous EU apparatchik notes to the Brussels Bugle: “We are very aware of the need for international integration. Our main concern is how to protect financial stability, not to get a couple more jobs in EU financial centres.”

Ultimately option 1 means stability and potential for prosperity (and infers a right to data access imho), option 2 may be dangerous bracket creep as the EU’s Canutist tendencies seek to control the financial tides while option 3 is suicide – pure financial Mutually Assured Destruction.

…Now the real battle begins. The major concern for Britain and global parishioners valuing healthy market structure must be not merely the irrational desperation of bruised political egos such as Juncker but also the danger of remoanian ultra factions ‘left behind’ in the UK who, having been cut off from the teat of Brussels are plotting to propose handing over Euro clearing in a move which goes directly against their own banks’ interests.

You can find the day’s EU releases here:
European Commission – Speech Speech By Vice-President Dombrovskis On EMIR REFIT
European Commission Proposes Simpler And More Efficient Derivatives Rules
European Commission – Fact Sheet: Questions And Answers On The Proposal To Amend The European Market Infrastructure Regulation (EMIR)

EU Plans To Ease Derivatives Rules In Bid To Boost Economy
Reuters

PLY: One step back from the brink as EU shows a pragmatism within the bureaucracy that is currently lacking in the political side.

City Of London’s Brexit Job Losses Limited To ‘Low Thousands’ – New Policy Chief
Reuters

PLY: Welcome Catherine McGuinness to the most political job in the City of London. Farewell Mark Boleat who had, alas, increasingly sounded more in need of therapy than being a coherent voice for the city (he was a leading figure in the Square Mile’s council absurdly promulgating a political line in the Brexit referendum which made the CIty look alarmingly cloth eared, when arguably the dealers were much more finely attuned than the grandees). Sensible opening remarks from the new broom in the City’s policy division.

MCX Q4 Net Profit Halves Y/Y To ₹22 Cr ($3.5m)
Hindu Business Line

PLY: Commodity cyclicity blamed.

Cinnober Q1 Results
Cinnober

PLY: Cinnober results reflect the growth initiatives this quarter. Core business is strong while the company has spent recently on investing in TradeEcho and the “client clearing company” arm. Instead of capitalising losses to the balance sheet and suchlike, Cinnober have transparently taken an 11 million SEK investment which results in a marginal quarterly loss (as previously notified). Given the 180 million SEK investment in recent weeks for the client clearing spin-off, Cinnober is in rude financial health all round.

Investing for the future is a good thing. Just as NASDAQ calls for longer term investing in its excellent US white paper today, headline results at Cinnober will be impacted by the company’s investment approach for at least a couple of quarters to come.

The parish will praise all those who adopt a long-term strategy to invest and improve our markets even if some newswires have the ADHD element of pinpointing an overall inconsequential quarterly loss.

EEX Acquires 100% Ownership Of US Nodal Exchange
MondoVisione

PLY: Great deal. Of all the DB1 executive, nobody emerges unscathed from the ‘Merger of Equal Desperation’ debacle except for Peter Reitz who has been doing what we all want – building a better DB1 via his fascinating EEX empire. Maybe that hiring freeze could allow somebody to leapfrog from within Frankfurt to head the group?

EBS BrokerTec To Be Renamed NEX Markets
MondoVisione

PLY: Confirming story trailed yesterday.

Through Singapore’s CLTX, German Bourse Seeks To Tap Asia’s Commodities
Reuters

PLY: CLTX being a unit of EEX whose boss is, as noted above the man who has stuck to his knitting and grown his business while all around the the executive appears to have been broadly obsessed with daft deals. There is a great future to DB1, if only the business gets with growth and restructuring instead of investment banker led navel gazing.

Leucadia Revises FXCM Loss Exposure Estimate, Confirms Drew Niv Holds Active Role In Global Entity
FinanceFeeds (blog)

PLY: Leucadia clearly concerned about their cash now while Drew Niv being retained in any position will strike many parishioners as egregious given his personal defenestration by the CFTC.

Gain Capital Revenues Dive 49% In Q1, $18.9 Million Loss, $5 Million Paid For FXCM US Clients
LeapRate

PLY: Life will only get worse for the pure imbedded commission forex brokers methinks, that cycle is being throttled on many levels.

London Stock Exchange Group Plc Transaction In Own Shares
MondoVisione

Private Markets

BIDS Newsletter May 2017
BIDS Trading

PLY: Contains a super chart showing the growth of BATS-BIDS LIS block trading in Europe.

Special Section: FTI, NSEL, India at the Crossroads

No news today.

Technology

Remarkably no news today…

Products

Joint Public Statement FSMA-ESMA Regarding EURIBOR
MondoVisione

EEX To Launch Central & Eastern European Power Futures In Cooperation With The Power Exchange Central Europe (PXE)
MondoVisione

Seafood Futures Contracts Could Be New Financial Tool In China
Undercurrent News

A planned Chinese seafood futures contract for trade on the Dalian Commodity Exchange looks exciting.

BATS Announces New Complex Order Options Functionality
MondoVisione

Growing Market Participation For New JSE Agri Product – JSE Introduces Soya Bean Crush Futures Contract
MondoVisione

MSEI To Partner Moody’s For New Indices
Business Standard

Exclusive: London Tries To Lure Saudi Aramco With New Listing Structure – Sources
Reuters

PLY: Reminds me of Jeff Sprecher’s apposite quip concerning UK finance to the effect of, if you have the money you can make the rules, during the Prosperity UK session (here on video).

Career Paths

PLY: Congratulations to Jay Clayton who has been sworn in as Chairman of the SEC – exciting times.

Thomson Reuters Announces Voting Results For Election Of Directors
MondoVisione

Crowdfunding

Looking To Invest In Early-Stage Firms? Perhaps You Should Consider “Convertible Equity”
City A.M.

Here at Seedrs , we’ve developed a new financial instrument, convertible equity, which serves a similar function but differs in two key respects.

Other Stories

OCC Comment Letter Encourages European Commission To Extend Transitional Periods for Own Funds Requirements for Exposures Related to CCPs
OCC

Prosperity UK: Stock Exchanges, Settlement & The Future Of Euro Clearing
MondoVisione

PLY: Back to where we began today…
Thus ends an exciting week with a bang. Don’t forget to watch the Prosperity UK panel video and read the NASDAQ white paper…

Have a great weekend and thank you for reading Exchange Invest.

Patrick

Patrick L Young
Executive Director DV Advisors

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