February 26 2016

elb2So the die is cast – if there is a DB1 takeover of LSE (why? Why? why?) then Xavier is out. Either way it’s the long twilight with Rolet defenestrated ahead of his presumed move to what some may allege is a massive mid-life crisis, or, if you prefer, a future career in French politics. Clearly the wily LSE Chairman Donald Brydon has twisted the knife faster than I thought (but then again rumour has it Xavier produced a very un-Mid Atlantic flounce if he wasn’t automatically the grand fromage of “DB1LSE” – and, oops, it seems all around there was an eerie silence when it came to supporting one alpha male investment banker over the other …well that comes from being the submissive part of a merger of equals, all that dealmaking and the escape from limbo still had to come from XR being the acquiree, not the buyer). Maybe this isn’t a deal perhaps it’s an HBO plot. Which part is Kevin Spacey again? I still rate this deal ‘hyper-yeuk’ – it isn’t that benchmark of awfulness the proposed Warsaw-Vienna deal but it is somewhat spectacularly pointless apart from the testosteronic-bravado.

Various discussions in Premium, see:

A Ponzi of Equals?

Flying A Kite

Agitprop & Mergers

The Clearing Singularity

With more to follow over the weekend… (usual prescription: 100K GBP plus public humiliation of any persons / corporations violating the individual licence terms – no exceptions).

Elsewhere, hot bidding including apparently Platts for Baltic Exchange (actually a much better asset than the sprawling LSE) Spectacular results from JSE. Average results from BME.

Meanwhile, a little personal aside outside of public markets, in the kindergarten of commerce. Today I begin a stint as a part-time Guest Lecturer at the Nicolaus Copernicus University (UMK) in Torun, Poland, lecturing a course on “Entrepreneurship & Startups.” Thus I will be out of the office during early Friday afternoon for the next term. If you need an urgent subscription invoice to Premium ahead of the weekend, email Oliwia.

Public Markets

BME 2015 Results


vs 2014: revenue  €348 mln (USD 383 mln), up 1.6%, net profit €173.5 mln (USD 191 mln), up 5.2%.

PLY: BME is still engaged in the lengthiest dying swan impersonation in the industry, volumes down, the noose tightening…can Houdini manage a final feat of escapology, or does final regulatory fiat meets competition really start to bite?


JSE 2015 Results


vs 2014: EBIT R1 billion (USD 64.4 mln), up 45%, earnings after tax R899 mln (USD 57.9 mln), up 42%.


Philippine SE 2015 Results


vs 2014: total revenues Php1.4 bln (USD 29.4 mln), down by 15%, net income Php683 mln (USD 14.3 mln), down 21%.


String of Foreign Buyers Circling Baltic Exchange

Julian Harris – City AM

PLY: all the usual exchange suspects eying this tasty morsel of freight, including:

SGX Confirms In Talks To Buy Baltic Exchange

Jonathan Saul & Anshuman Daga – Reuters

SGX said it had submitted a non-binding bid for the acquisition of the Baltic, which sources had earlier estimated could be worth some 84 million pounds ($117 million).


BME Buys Remaining 50% Of Infobolsa From DB1


Bolsas y Mercados Espanoles (BME) has authorized the acquisition of 50% of Infobolsa from DB1 for 8.2 mln euros ($9.0 mln) and has reached 100% stake in Infobolsa.


Nasdaq Completes Acquisition of Marketwired


Nasdaq announced its intent to acquire Marketwired on February 12, 2016 (reported here).


DB1 Acquisition of LSE Update:


PLY: So confirmation that Xavier has been de facto ousted as CEO of LSE, or at least his definitive twilight starts now until deal completion (if any of course). The Key names suggested are:

o Donald Brydon as Chairman;

o Joachim Faber as Deputy Chairman and Senior Independent Director;

o Carsten Kengeter as CEO and executive director;

o David Warren as CFO and executive director.

PLY: Ominously: “A joint committee (the “Referendum Committee”) has been set up to advise on the implications of the vote by the United Kingdom electorate on the European Union membership of the United Kingdom.” In other words another stitch up by the Europhiles to preclude the debate which Europe desperately needs because the Euro elite thinks the people are too stupid to appreciate the benefits of the EU.  (For those who need a primer in why the EU is failing – reread the previous sentence slowly). This daft committee of Germans telling Brits how to vote will only exacerbate the political level of this deal… Anyway, Premium is burgeoning with posts, read the analysis there, I will be adding more over the weekend.


DB1, LSE Woo Governments, Do Homework To Win Merger Support

Andreas Kroner & Anjuli Davies – Reuters

DB1 & LSE are counting on lessons learned from past missteps and behind-the-scenes talks with politicians to make sure there are no barriers to finally creating a giant European trading house.

PLY: I beg to differ, the negotiations may be considered but the holistic picture has not been adequately considered – and for more check into Premium.


Citadel In New Attack On IEX Application (subscription)

Nicole Bullock – Financial Times

Citadel has slammed IEX, claiming it does a “terrible job” handling trades by retail investors in the latest stage of a bitter debate over the start-up trading venue’s efforts to become an exchange.

PLY: …whereas Citadel is sweetness and light and all things nice…


ICAP CEO Prepares For Radical Change To Interdealer Broker (subscription)

Philip Stafford – Financial Times

Michael Spencer to transform company into a provider for OTC markets, after deal with Tullett Prebon to sell the broking business.

PLY: This is a great asset shaping up in a whole new world.


Who Will Now Step Forward And Take On Aim? (subscription)

Financial Times

The rump of Plus Markets (now called ISDX) has carried on under the ownership of ICAP. Would Group CEO Michael Spencer be prepared to take on Aim from here?

PLY: Letter from a former Plus Chairman, Stephen Hazell-Smith who seems to be out of the loop (or simply providing a spot of arguably misplaced concern) about the future of SME equities under a DB1 acquired LSE. The suggestion of an independence for AIM I find somewhat old school statism – but hey that’s (back) in vogue in much of Europe. I also think he significantly underestimates the steady but not trumpeted progress of ISDX which is emerging gradually under the stewardship of Patrick Birley as a real AIM competitor (another factor DB1 may not have taken into account with their headstrong bid to spend more time with the Brussels bureaucrats).


CFTC Requests Public Comment on Request from LCH.Clearnet for Order Permitting Portfolio Margining of Futures & Foreign Futures Contracts & Cleared Swaps Contracts



Further Delays Loom For Mifid II’s Remaining Rules (subscription)

James Rundle – Financial News

The last pieces of Europe’s trading rulebook overhaul look set to face further delays after last-minute translation hold-ups with late March now the earliest date that the revised version of the Mifid can be published.


JSE Sets T+3 Go-Live Date



STORs Biggest Market Abuse Hurdle For Firms

Hayley McDowell – The Trade

Suspicious transaction and order reporting has been raised by industry experts as a big issue for firms ahead of MAR implementation.

Private Markets

BIST & Borsa Konya Sign Cooperation Agreement



Japan Considers Making Bitcoin A Legal Currency

Richard Smart – The Guardian

Proposed changes would bring bitcoin, dogecoin and other cryptocurrencies under definition of currency.

Dividend News

BME will submit to the General Shareholders’ Meeting for approval the distribution of a gross €0.93 per share supplementary dividend, which, if approved, will be effective on 6 May.

JSE declared both an ordinary and a special dividend for the year ended December 2015 at 520 cents and 105 cents per ordinary share respectively.

ITG declared a regular quarterly cash dividend of $0.07, record date March 4, 2016, payment date March 18, 2016.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX flat, FTIL slightly up but essentially flat too.


Euronext Halted Part Of Market On Technical Issues


On February 25th, ENX said experienced technical issues and decided to halt part of the market; derivatives market not impacted. Reopened trading at 1200 GMT.


Treasuries Dealers Seek Answers After Unexpected Auction Glitch

Susanne Walker Barton & Liz McCormick  – Bloomberg

The Treasury postponed the close of a $28 billion auction of government securities Thursday minutes before the bidding deadline, leaving primary dealers in the $13.2 trillion market searching for answers.

Thursday’s delay was “due to a technical issue,” the department said in a statement shortly before 1 p.m. in Washington. The seven-year note offering has been rescheduled for Friday at 11:30 a.m.


CFTC EEMAC Releases Report On 2015 Review And Consideration Of The Proposed Rule On Position Limits


EEMAC Raises Concerns In Review Of CFTC’s Proposed Rule On Position Limits

FTSE Global Markets

Lawmakers Urge CFTC to Keep Plan to Limit Futures Contracts

Liz Moyer – NY Times

Lawmakers heaped criticism on an advisory committee report to CFTC recommending that the agency scrap its proposed rule on position limits in derivatives trading.

Clinton Opposes Recommendation To Drop Limits On Futures Contracts

Amanda Becker – Reuters

CFTC Chief Rejects Calls to Set Aside Trading Caps (subscription)

Andrew Ackerman – Wall Street Journal

“It strikes me a bit like saying you’re against speed limits because they may make you late for work,” Mr. Massad said, speaking at the conclusion of the advisory panel’s meeting at the CFTC.

Opening Statement Of CFTC Commissioner J. Christopher Giancarlo Before The February 25, 2016, Meeting Of The Energy And Environmental Markets Advisory Committee


Opening Statement Of Commissioner Sharon Y. Bowen Before The CFTC’s Energy And Environmental Markets Advisory Committee



ICAP Global Broking To Launch Iron Ore Volume Matching


ICAP Global Broking intends to launch ‘Iron Ore Volume Matching’, an anonymous electronic mid-point volume matching service for the iron ore OTC market.


UK Finance Official: No Sign Yet Of Real Problem In Bond Market Liquidity

Huw Jones – Reuters

Charles Roxburgh, director general for financial services at Britain’s finance ministry: patchy liquidity in bond markets has prompted policymakers to consider taking action to improve liquidity but there is no sign yet of a real problem.

Career Paths

Bloomberg reports that IEX Group hired Republican lobbyist Douglas Nappi, a former chief counsel to the Senate Banking Committee. Both sides are scouring Capitol Hill for allies as they seek to influence SEC’s decision on IEX’s application expected as soon as next month.

Industry veteran Richard Dour has been appointed Head of International Sales at GMEX

PLY: Good luck to Richard with this interesting position with GMEX as they continue to win new mandates.

BME has appointed Jorge Yzaguirre as the new Chairman of AIAF, BME’s Private Fixed Income market, replacing Francisco Oña, who steps down on retirement grounds.

BME has also appointed the Chairman of Bilbao SE, Manuel Ardanza, as Chairman of the Mercado Alternativo Bursátil (MAB), replacing Antonio Giralt, who is retiring.

Jorge Yzaguirre is currently Director of the Equities & Derivatives markets of BME & Chairman of MEFF, the Spanish Derivatives market. He is also a member of the ESMA Secondary Markets Standing Committee Consultative Working Group and has a PhD in Economics and Business Studies from the Universidad Autónoma of Madrid.

HKEX welcomed Henry Cheng, the new Executive Director (Monetary Management) of HKMA, to its Risk Management Committee (statutory) (RMC). Mr Cheng has replaced Howard Lee, the HKMA’s former Executive Director (Monetary Management), on the RMC.

HK SFC announced that Ms Julia Leung, currently Executive Director, Investment Products, will succeed Mr James Shipton as Executive Director, Intermediaries Division with effect from 19 June 2016.

FN reports that Canaccord Genuity is planning to make its entire nine-strong fixed-income team in the City redundant as part of wider staff cuts announced in February by the Canadian investment bank that will see 125 staff let go globally – with more than a quarter of those in London.

Financial Calendar

26.02 – Record date TMX $0.40 dividend

New! – 03.03 – CFTC Public Roundtable Regarding the Residual Interest Deadline

All forthcoming exchange / investment related events are now listed in our Events page.

Share Notes

In connection with a monthly share savings plan for employees of subsidiaries, Oslo Børs VPS Holding has sold a total of 1897 shares. New holding is 5400 shares. Employees paid a share price of NOK 85,- per share, but were allowed a discount of 20% on purchases up to NOK 625.

Analyst Notes

Keefe, Bruyette & Woods Restated “Outperform” Rating On LSE – GBX 2,875 ($40.68) Target Price

BNP Paribas Reiterated “Outperform” Rating On LSE – GBX 2,930 Price Target

Numis Securities Restated “Hold” Rating On LSE – GBX 2,450 Price Target

A full table of current analysis can be found on our Analyst Ratings page which is updated daily.


First Crowdfunded Security To Be Traded On A Secondary Market In Europe


PLY: First up don’t bother wading your way through this hyper-soapy drivel dressed up as a press release but Chapel Down did this all last year, as have several others. True, perhaps Euronext have just concluded that the UK has (sensibly) checked out of the EU Comintern early but actually this is a silly example of the exchange desperate for publicity making a story up to fit the facts they want to promote. The SME world needs a lot of help but unfortunately misleading hype isn’t going to inspire any confidence.

I have a lot of time for Philippe de Backer but he could save the money on the bus trip from the Berlaymont downtown here, March 1st is empty campanology.

Other stories

MAS Amends The Singapore Code On Take-Overs And Mergers



SEC – Fee Rate Advisory #4 for Fiscal Year 2016



JPMorgan Has New Theory About What Really Caused the Flash Rally

Alexandra Scaggs – Bloomberg

JPMorgan analysts are now advancing a new theory, one they contend is a key to how to trade most effectively in today’s volatile Treasuries market. The problems on Oct. 15, 2014, actually began in the cash market…


Opening Remarks Of SEC Chairman Mary Jo White Before The SEC Advisory Committee On Small & Emerging Companies


CFTC: Testimony Of John Rogers Before The U.S. House Committee On Agriculture Subcommittee On Commodity Exchanges, Energy & Credit



OCC & U.S. Securities Markets Coalition Comment On Final 871(m) Regulations



Canadian Securities Regulators Adopt Amendments To Early Warning System


Canadian Securities Regulators Adopt Fundamental Changes To TakeOver Bid Regime



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