April 15 2016

elb2Banks are the corporate entities which define obsessive compulsive behaviour. That makes for an interesting period ahead as things could go seismic. In swaps-world, the inside / outside, ‘who let that non-bank riff raff in?’ narrow mindedness of the controlling oligarchy has been perceived as retaining a stranglehold on the marketplace. Now, at least 2 SEFs are preparing a legal fightback… Sacred cows – no matter how profitable – are not permissible under Dodd Frank/EMIR and traditional counterparties must change.  (The hypocrisy of banks demanding open CCPs while apparently pursuing robber baron monopoly tactics elsewhere, never challenged the lenders in the past so is unlikely to be a factor now). However, the tricky part of this process (and, dear Blockchainers, that’s why wanton disintermediation won’t happen:) revolves around trust. Or, to paraphrase “Ford Prefect,” when bankers are threatened with an orange jumpsuit they go to pieces so fast, people get hit with the shrapnel.

Thus we see an element of metal fatigue. Surface corrosion this isn’t and in time honoured style, honour-thief binaries are volatile as Deutsche Bank has caved in and adopted the singing position of corpulent female canary before final curtain. Expect a buckling of metals trading traditions in due course as I suspect both anti-bank strands are likely to have significant ramifications.

Next week I Look forward to seeing many readers at ICDA Blockchain – if you haven’t booked, you can still take a last minute GBP 320 rate via Exchange Invest (normal price GBP 695) use the code “YOUNG320” to claim your discount here.

Public Markets

ICAP Acquires ENSO Financial Analytics


ICAP has acquired ENSO Financial Analytics (ENSO), a leading provider of a data analytics platform for hedge funds and prime brokers.

The acquisition has been led by Euclid Opportunities, ICAP’s early-stage fintech investment incubator, founded by Steve Gibson in 2011. Euclid made its first investment in ENSO in June 2013, which was followed by a subsequent investment in October 2014 to enable further growth of the business.

ENSO will become a subsidiary of ICAP’s Post Trade Risk & Information (PTRI) division.

PLY: The ICAP VC fund is marking its territory as an engine of acquisition internalisation for its stakes, similar to the template first used with the likes of TriOptima long before Michael Spencer created his fund.


Bats Announces Pricing Of Its IPO


Bats announced the pricing of its IPO at a price to the public of $19.00 per share. The size of the offering has been increased from 11,200,000 to 13,300,000 shares of common stock.

PLY: Top of the range, market value of $1.8 billion, raising circa $253 million for selling stockholders plus overallotment options.

QV Premium:  Bats IPO Brief.


Trading Start-Ups Prep Major Bank Antitrust Suits

Mike Kentz – Reuters

TeraExchange & Javelin Capital Markets will claim the banks threatened to cut off customers who tried to trade on the platforms. TeraExchange is readying charges against many of the biggest names in the banking industry.

BAML, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, RBS and UBS will be named.


DB1 Sees LSE Deal Boosting Europe’s Economy

Jonathan Gould & Andreas Kroner – Reuters

“Having a global player in the exchange industry is critical for Capital Markets Union,” DB1 board member Jeffrey Tessler said in an interview.

QV Premium: DB1-LSE Merger Brief.

PLY: Can an economy be inflated through words alone? Certainly hats off to DB1-LSE for pushing the conceptual envelope of verbal quantitative easing… At least Jeff Tessler makes remarks without suggesting he is frothing at the mouth which is a welcome outbreak of civilisation in an otherwise very fraught doomed merger proposal. Moreover, the realpolitik of CMU is that the businesses which most need help are below the purview of anything really big exchanges can maintain – and in the case of DB1, anything they have chosen to even offer for a full economic cycle. Thus competition and enablement of small markets are much more important than cultivating political dinosaurs of dysfunction – which is the likely outcome if a DB1-LSE were to happen.


Deutsche Bank Confirms Silver Market Manipulation In Legal Settlement, Agrees To Expose Other Banks

Tyler Durden – Zerohedge

Back in July of 2014, we reported that in an attempt to obtain if not compensation, then at least confirmation of bank manipulation in the precious metals industry, a group of silver bullion banks including Deutsche Bank, Bank of Nova Scotia and HSBC (later UBS was also added to the defendants) were accused of manipulating prices in the multi-billion dollar market.

The lawsuit, originally filed in a New York district court by veteran litigator J. Scott Nicholson from Washington DC, alleged that the banks, which oversee the century-old silver fix manipulated the physical and COMEX futures market since January 2007. The lawsuit subsequently received class-action status. It was the first case to target the silver fix.

Many expected that this case would never go anywhere and that the defendant banks would stonewall indefinitely: after all their legal budgets were far greater than the plaintiffs.

Which is why we were surprised to read overnight that not only has this lawsuit against precious metals manipulation not been swept away, but that the lead defendant, troubled German bank Deutsche Bank agreed to settle the litigation over allegations it illegally conspired with Bank of Nova Scotia and HSBC Holdings Plc to fix silver prices at the expense of investors

Terms were not disclosed, but the accord will include a monetary payment by the German bank.

PLY: A first step in what may be a seismic process for metals trading. Suspicions will be rising – and paranoia afoot – in many quarters this morning. To outsiders a spot of surface scraping has often raised questions of a remarkably opaque, arcane process with more than a hint of Dickensian oligopoly – let’s call it  “gentlemen’s clubbiness”  for the sake of politesse. Fundamental dematerialisation alongside specific choke points, has long been intriguingly advanced, in some precious metals trading it seems. Right now, I suspect we are on the precipice of a big fat fracture. As the excellent Tyler Durden notes “It goes without saying, that there would have been neither a settlement nor a payment if the banks had done nothing wrong.”

Watch this space, once the sharks start biting each other’s tails off, there is usually a lot of furious swimming in circles before bleeding carcasses drop to the bottom of the ocean leaving the oceans to a new generation.


Senate Committee Approves Authorization For CFTC


Statement Of CFTC Chairman Timothy Massad On The Senate Agriculture Committee’s Passage Of Legislation To Reauthorize The CFTC



Nasdaq Opposes Proposed Change To Stock Trading Rules (subscription)

Financial Times


Why LME Is Zeroing In On Warehouse Load-Out Charges (Again)

Andy Home – Reuters

A huge amount of aluminium is heading for the exit door on LME.


HKEx Supports Mainland Roadshow for Stock Connect Stocks



DFM Receives Land For New HQ

Robert Anderson – Gulf Business

Dubai Financial Market (DFM) is currently based in World Trade Centre.

Private Markets

India – National Agricultural Market Can Cover Only 10% Of Commodities

Rajesh Bhayani – Business Standard

The government switched on the NAM (discussed last month) on Thursday, linking Agriculture Produce Market Committee (APMC) markets. There are 6,500 APMCs in the country, of which 585 large district-level mandis will be being linked by the NAM.

A farmer in north India can sell his produce on the NAM to a trader in the west or south based on price. This will make a significant difference because there is no state or national price. Futures exchanges poll to arrive at prices but it is not an efficient mechanism.

PLY: That last sentence brings a jolt of recollection as to how little credibility free markets have in India – that needs to change.

Special Section: FTI, NSEL, India at the Crossroads

Markets closed: Ram Navami.


Millennium Exchange Release 9.1 Oslo Børs – New Release In Q4 2016



EEX Options STP live On Trayport



CME To Delay Listing Of Live Cattle Contracts From Oct 2017


CME says effective May 2, 2016, and pending all relevant CFTC regulatory review periods, it will temporarily delay listing of additional contract months (commencing with Oct. 2017 contract month and beyond) for Live Cattle futures & options contracts.


Interactive Data Launches Liquidity Indicators Service in Europe


Interactive Data, announced that its Liquidity Indicators Service is now available for European & Asia-Pacific corporate & sovereign securities.

PLY: Neat granular adds, a sign of the big data organisation to come under ICE ownership methinks.


GreenKey To Launch Instant Messenger Aggregator To Help Financial Market Firms Comply With Regulations Yahoo, WhatsApp, WeChat & AOL Retention Now Available


PLY: I like WhatsApp but am disappointed Green Key haven’t yet incorporated the rapidly growing phenomenon which is Snapchat (@FrontierFinance seeing as you asked).


FTSE Russell Partners ASEAN Exchanges To Launch ESG Index

Asia Asset Management

QV Premium: ASEAN Exchanges Project Brief.

Career Paths

As ENSO Financial Analytics is being  acquired by ICAP, ENSO founders Matthew Bernard, Michael Gentile, and Dwaine Alleyne will continue in their leadership positions with ENSO and will report to Jenny Knott, CEO PTRI.

Borsa İstanbul Chief Human Resources Officer Hüseyin Zafer, Chief Information Officer Adnan Metin, Chief Audit Executive Ali Şir Yardım, & Chief Legal Counsel İltem Dokurlar have resigned.

PLY: A year after the appointment of Tuncay Dinc as CEO, is this a genuine restructuring or another possible political machination (previously it appeared Gulenists were purged under the former CEO Ibrahim Turhan). Either way it is a rather catastrophic top tier blow to the exchange…unless…the BIST is actually going to take the quantum and rum itself as a risk oriented business (which would be fantastic news).

ISDA announced the election of 10 directors at its 31st AGM in Tokyo.

Three new directors were elected:

John Feeney, Head of Pricing & Conduct Coordination, National Australia Bank (NAB)
Benjamin Jacquard, Global Head of Credit, BNP Paribas
Hideo Kitano, MD, Head of Credit Trading Department, Head of Global Markets Structuring, Japan, & Deputy Global Head of Structured Fixed Income, Nomura Securities

Seven directors were re-elected:

Keith Bailey, Md, Market Structure, Barclays
Biswarup Chatterjee, Global Head Electronic Trading & New Business Development, Credit Markets, Citigroup Global Markets
Elie El Hayek, Md, Global Head of Fixed Income, HSBC
Diane Genova, General Counsel, Corporate & Regulatory Law, JP Morgan
Dixit Joshi, Md, Head of Institutional Client Group – Debt, & Listed Derivatives & Markets Clearing, Deutsche Bank
Will Roberts, Head of Global Rates, Structured Credit Trading & Counterparty Portfolio Management, BAML
Guy Saidenberg, Head of EMEA Emerging Markets Trading, Global Head of Securities Division Sales Strats & Structuring, Goldman Sachs International

The directors continuing on the Board are:

Yasunobu Arima, GM, Global Markets Planning Division, The Bank of Tokyo-Mitsubishi UFJ
Darcy Bradbury, MD of DE Shaw, Director of External Affairs, The DE Shaw Group
Bill De Leon, MD, Global Head of Portfolio Risk Management, PIMCO
George Handjinicolaou, Deputy CEO & Head of ISDA EMEA, ISDA
Kieran Higgins, Head of Trading & Flow Sales, Corporate & Institutional Banking, RBS
Jonathan Hunter, Global Head of Fixed Income & Currencies, RBC Capital Markets
TJ Lim, Global Head of Markets, UniCredit
Eric Litvack, MD, Head of Regulatory Strategy, Société Générale Global Banking & Investor Solutions
Christopher Murphy, Global Co-Head of FX, Rates & Credit, UBS Investment Bank
Ciaran O’Flynn, MD, EMEA Head of Bank Resource Management, Morgan Stanley
Scott O’Malia, CEO, ISDA
Richard Prager, MD & Head of Trading, Liquidity & Investments Platform, BlackRock
Sam Skerry, Head of Supply & Trading, Global Oil Europe, BP Oil International
Emmanuel Vercoustre, Deputy CEO & CFO, AXA Bank Europe

FIA announced that Mary Ann Burns, EVP & COO, will be leaving FIA at the beginning of July to head marketing & distribution for the craft brewery owned by her family.

PLY: I wish Mary Ann every success, she has been a leading member of the FIA team throughout my engagement with the political-regulatory-industry association nexus.


ASX Chairman Rick Holliday-Smith Leans Towards Local Candidates In CEO Search

Jessica Gardner – SMH

The Chairman of ASX, Rick Holliday-Smith, says he is leaning towards local candidates in the search to find a replacement for Elmer Funke Kupper.

PLY: Probably cheaper to find somebody local & maybe even easier to control. Could this finally be the moment Peter Hiom is elevated from, well, running the place, to, well, running the place?

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  

17-19.04 – IOMA: WFE’s Clearing & Derivatives Conference 2016 in Kuala Lumpur – programme

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

Analyst Notes

Goldman Sachs Set ‘Neutral’ Rating On ICAP – GBX 520 Price Target

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


Startup Mimics Crowdfunding To Disrupt Stock Exchange Model

John Detrixhe – Bloomberg

Nxchange lets companies sell shares to the public and then allows investors to trade that stock, says Evertsz, who used to be a managing director at Dutch market maker Optiver. The idea is to eliminate fees charged by brokers and investment bankers. Nxchange’s model differs from crowdfunding in that it also allows investors to trade with each other.


Funding Circle Said To Plan Europe’s First P2P ABS

Alastair Marsh – Bloomberg

Funding Circle, a small-business lending platform, hired Deutsche Bank AG to arrange the first securitization of peer-to-peer loans in Europe.

PLY: Very interesting.

Other stories

FCA Seeks To Speed Up Rule Breach Disputes

Huw Jones – Reuters

FCA set out on Thursday plans for a “focused resolution agreement” in cases where only the outcome is contested, not the rule breach or liability.

As an incentive to accept a resolution agreement, there would be a 30% discount on any fine handed down by the Regulatory Decisions Committee, the FCA’s independent body which reviews actions brought by the watchdog.


Remarks To The Investor Advisory Committee, SEC Chairman Mary Jo White, April 14, 2016



Federal Reserve Governor Lael Brainard, At IIF Blockchain Roundtable, Washington, D.C., April 14, 2016, Distributed Ledger Technologies In Payment, Clearing, & Settlement



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