April 08 2016

elb2BM&F Bovespa sells CME stake, changing the dynamics of South American market structure. Will CME continue to hold their stake unilaterally? Looks like the Brazilian exchange has snagged Cetip with a higher bid – making for some much more interesting ramifications in the region than Panama mustered this week. (Out in “Bigworld” a bunch of mostly left wing media, often themselves with vestiges of offshore structure, were assiduously missing the point: government leans towards corruption, bigger government towards bigger corruption still).

In terms of temporary losses to the parish, Paul Constantinou is leaving Trayport officially today. It’s been a remarkable 10 and a half year journey where Paul has done so much to put the vendor on the map across the globe. I wish him every success and look forward to seeing him return to the industry after a well-deserved break (beginning just in time for the flat season starting – good timing).

On a personal note, I am sorry to see Euronext leaving my native Belfast although the relocation to Portugal makes corporate sense, building up a smaller market cost which has viable cost advantages with IT/service/support staff makes sense, akin to NASDAQ’s wise strategy delivering more power to the excellent offices of Arminta Saladziene alongside her stewardship of the NASDAQ Baltic markets for instance.

…Looking to the bright future, just over a week to go to the ICDA Blockchain conference with a cornucopia of great names, including Veronica Augustsson of Cinnober, Hirander Misra of GMEX, Fredrik Voss of NASDAQ, Mark Hemsley of BATS and Peter Randall (SETL), not forgetting old friends such as Brian Donegan from the Isle of Man government and Scott Riley amongst many great names!  To qualify for a GBP 320 discount ticket (normal price GBP 695) use the code “YOUNG320” to claim your discount here.

Have a great weekend, here’s today’s pith:

Public Markets

BM&FBovespa Raises $1.25B From CME Stake Sale To Buy Rival

Guillermo Parra – Bernal – Reuters

BM&FBovespa said the decision to sell the 13.6m Class A common shares it owned in CME implies the end of a cross-holding agreement with CME that lasted almost a decade. Based on CME’s closing price of $92.22 on Thursday, BM&FBovespa fetched at least $1.254B from the deal. Sources say Cetip had agreed on terms of a revamped, unsolicited offer by BM&FBovespa. The boards of both BM&FBovespa & Cetip may announce the transaction “within 48 hours”.

In March, Cetip rejected the last offer made by BM&FBovespa.

QV Premium: Exchange Deals Brief 2.

PLY: This BM&F Bovespa silo looks amazing – just a pity that the Brazilian economy/political system is busy self-immolating around it but clearly there is no argument as to the continent’s market leader if a CETIP deal is done. However, the competitive dynamics of a perceived lessening of the CME linkage (and presumably Edemir Pinto will now step down from the CME board in due course?) makes for a change in a region where markets remain relatively undeveloped thanks to the socialist disease which has wracked the continent in various waves since WW2.


EU Lawmakers Approve MiFID II Market Rule Delay by One Year

Julia-Ambra Verlaine – Bloomberg

The European Parliament adopted the EC’s proposal to postpone the start date for MiFID II by a year to 2018 and solidified a position on “targeted amendments” that should be made, including exemptions on certain securities-financing transactions in the law.

PLY: Last week Will Mitting had an April Fool in FOW saying we would get MIFID III before MIFID II…hmmm, maybe he wasn’t joking after all.


NYSE Files to Scrap Controversial Trading Rule (subscription)

Leslie Josephs & Bradley Hope – Wall Street Journal

NYSE has proposed scrapping a controversial rule that was designed to calm trading in times of volatility but that market observers say exacerbated problems during a tumultuous session last August.

PLY: The curious thing about exchange rules is that, while the original 19th century missives have some foibles as they kind of missed the digital revolution, the – often hastily made – amendments ever since have often proved purely reactionary without perspective.


Transaction Tax Poses Bigger Threat Than `Brexit’ to Traders

David De Jong – Bloomberg

Ten European countries are developing a tax on financial transactions, a prospect so terrifying to the continent’s traders that one firm in the Netherlands has already drawn up contingency plans to move to the U.K. or Switzerland.

Flow Traders NV, argues that it would have to move its headquarters if the Dutch authorities levy the tax.

PLY: Wise move, Flow go with the Flow of progress. if the EU wants to commit blob-icide that is its preserve but the people ought to have a means to escape. Maybe EU citizens could team up with private equity with a leveraged bid for somewhere sunny in the Middle East and let all their citizens come to Europe (part of that trade is already under way according to the mainstream media I believe).

QV Premium: EU FTT Brief Part 2.


Ex-Barclays Trader Told SFO His Bosses Knew About Libor Fix

Jeremy Hodges & Stephen Morris – Bloomberg

Libor Defendant Implicates Senior Barclays Executives (subscription)

Financial Times

Trader on trial for manipulating rate says superiors were aware of practice.


ACER: Second Phase Of REMIT Data Reporting Has Started As Planned


EU Watchdog Expands Oversight Of Energy Market Trading

Nerijus Adomaitis & Nina Chestney – Reuters

The EU started on Thursday to amass information about OTC trades in the region’s energy markets in a bid to crack down on suspected price manipulation.

EU watchdog the Agency for the Cooperation of Energy Regulators (ACER) began collecting data about trades on official energy exchanges within Europe in October but says it can only get a full picture once informal transactions are tracked too.

PLY: There is something adorable about “Informal transactions” conjures up images of Harry Lime in trenchcoat sidling up to folks on street corners and asking if they need an energy hedge.


LME Warehouse Charges – Which Path To Take? (subscription)

Metal Bulletin

LME believes all five of the solutions it has put forward to address the issue of “unfair” headline warehouse rents and free-on-truck (FOT) charges have a chance of success.


PK Singhal: Worst Is Over For MCX, Will See Revival In Company

The Economic Times

PK Singhal, President & Whole Time Director, MCX, says volume has slightly increased by about 5%.

Private Markets

Hungry For ETF Listings, Bats Pokes At Foes In Investor Pitch

Annie Massa & Alex Barinka – Bloomberg

Bats is telling prospective investors that it’s trying to gobble up a piece of NYSE’s $2 trillion ETF listing pie.

PLY: Which is true.


Bats CEO: ‘We’re Kicking The Cr*p’ Out Of Rivals (subscription)

Tim Cave – Financial News

Bats Global Markets plans to begin life as a publicly-listed company on April 15 – and its CEO is in a bullish mood.

PLY: Another clearly considered & dignified ‘stump speech’ bringing the transparent maturity of exchange executives direct to the investment world. I had hoped we were hitting the pause button on these theatricals yesterday. Good to see passion from a salaried executive but perhaps just a little bit too Gary Vee in the promotional stakes?


Watchdog Seeks to Separate KOSPI, KOSDAQ Bourse Operations


FSC will divide Korea Exchange (KRX) into the operators of the KOSPI, KOSDAQ, and derivatives markets soon after capital market regulations are revised.

PLY: This experiment remains very interesting.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL broadly flat. Of resolutions, alas another weekend ahead to hit the beach with bucket & spade while seeking to bury the head.


Successful Blockchain Test Completed By Axoni, DTCC, Markit, & Multi-Bank Working Group


PLY: I am considering starting work on a Distributed Ledger of Distributed Ledger cooperation (Actually, between us, some quite cool stuff is in the DV Labs currently but that’s by the by). The other day the Asian head of Ripple, Dilip Rao noted how DL won’t promote a singular solution: “You won’t have one network for the whole world, you should look at allowing a thousand networks to bloom.”

Amen to that.


ICAP’s EBS Suspends its Attempt to Design a White Label Product

Finance Magnates

ICAP’s EBS BrokerTec has suspended the development of its white label product for fx trading. The project has been suspended after almost 2 years in the works. Back in 2014, EBS hired industry veteran Paul Allmark from Thomson Reuters to lead the development of the product.

PLY: Surprising they couldn’t make it work.


LSEG Joins Climate Bonds Initiative Partnership Program


PLY: Now let me see, LSE, bonds, hot air. Can anybody think of anything else to add here?


STOXX Launches Bond Version Of Euro STOXX 50 Index


Stoxx Starts Corporate Bond Index for Major Companies in Europe

Katie Linsell – Bloomberg

Stoxx created an index compiled of euro-denominated bonds from the 50 biggest listed companies in the euro zone.


Korea Exchange To Share Information With FTSE, MSCI

Jung Suk-yee – Business Korea

Career Paths

Today marks the last day in his current office for Paul Constantinou, the indefatigable vendor of Trayport systems for the past 10 years 7 months around the world (Australia, the Caribbean, Indonesia, Mexico and right across Europe from west to East, including Turkey). After a blizzard of 7 deals in 7 months  (6 OTC brokers & an exchange) Paul departs with a possible couple of deals still with his colleagues.

PLY: I wish Paul a pleasant break and look forward to seeing his skills deployed in the parish once again in the near future, all the best and plaudits for a decade without which many markets would have been much less and of course, it was a pleasure to be Paul’s customer as CEO of SIBEX too.

Euronext To Close Belfast Office & Cut 80 Jobs


ENX said it would be winding down in the next year as it relocates its IT services to Portugal in order to “be closer to our core markets”.

PLY: A legacy of the Duncan “the Value Destroyer” era – you might recall that time when NYSE Euronext was perceived as a sort of blundering crusade against capitalism. I do hope the Belfast office won’t lower themselves by observing those old Rue Cambon customs of disgruntled staff.

Seriously, I am sorry to see jobs lost in my native Belfast but it is understandable that Euronext can employ in Portugal cost effectively and it is a core market for the business (plus new CEO Maria João Borges Carioca Rodrigues has a strong operations background. I hope all those affected (including various EI readers) will find new berths soon – good luck guys.

TASE Employees Disrupt Opening Bell Over Labor Dispute

Shelly Appelberg, Michael Rochvarger & Uri Tomer – Haaretz

Tel Aviv SE (TASE) workers stepped up the public profile of their labor action, staging a protest at an opening-bell ceremony to mark the start of trading for Pointer Telocation.

TASE employees, who have been boycotting the creation of a joint trading platform with Nasdaq, wore T-shirts with messages opposing the project that their union printed and handed out. A Nasdaq team that came to Israel returned to New York on Wednesday without completing its goals, prompting an angry letter to TASE employees from CEO Yossi Beinart.

PLY: Oh dear, first the Chairman was said to be frustrated at the CEO, now we have that relative rarity in the parish, some form of industrial action.  Even when CGT membership swelled at Euronext a decade or so ago, they never came, quite, to such protests (not that there aren’t legendary stories of Euronext staff activities but what say US companies might deem NSFW coupling doesn’t represent mass protest).

Neurensic, an AI technology startup focused on software­as­a­service solutions for the financial services industry, named Dr. Cliff Click as Chief Technology Officer. Dr. Click joins Neurensic from H2O.ai, where he was CTO & co­founder.

Financial Calendar

11 – 17.04 – Coinsilium’s Blockchain Tech Lab at Runway East at Finsbury Square, London  

19 – 20.04 – ICDA Blockchain Conference

20.04 – SGX Q3 Results FY2016  

21.04 – I-Cham Breakfast, in Dublin, Ireland, Guest Speaker Patrick L Young discussing investment in CEE & SEE markets  

New! –  27.04 – Nasdaq Q1 2016 Resultspress release

New! – 05.05 – ITG Q1 2016 Results press release

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

Share Notes

CBOE CAO David S. Reynolds sold 1,300 shares on Thursday, April 7th at $65.83 (bargain $85,579.00). He now owns 7,939 shares.

Other stories

ESMA Publishes Responses To The Consultation On Guidelines On Transaction Reporting, Reference Data, Order Record Keeping & Clock Synchronisation



Canadian Securities Regulators Publish Amendments To Order Protection Rule



Canadian Securities Regulators Introduce Harmonized Reporting For The Prospectus-Exempt Market



Japan’s FSA: Statement Of The Minister For Financial Services On Financial System Council’s Discussion About Various Issues In Japanese Markets & Exchanges



Thai Bourse Establishes Learning Center To Strengthen SMEs, Start-Ups & SEs


PLY: Excellent news.



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