April 25 2016

elb2It’s very much all quiet on the Western front. For the first time since its announcement, the “merger of equal desperation” had a sort of ‘peace through hyperbolic exhaustion” weekend. The trenches lay silent apart from tick of clocks awaiting the noise of EGM notices being posted. The silence from ICE magisterially dominates the agenda, despite the best efforts of the current deal protagonists to do everything from zany standup routines (well I mean not all those comments can have been serious, can they?), through ever more crazed (and arguably contradictory) discussions of the 50 shades of integration shuffle which resembles a kind of bondage play between CCPs and doesn’t look likely to yield any material results – even presuming antitrust denizens say yes in a year or so’s time.

In the background LSEG have gently dropped “Clearnet” from the LCH name which is a relief to character poor chroniclers like Exchange Invest but curious given the timing…  At least now we know, the net total cross-margining benefit from the merger of Paris & London’s CCPs under French regulation, which we previously believed to be on a scale between nothing and zero, is in fact 9 characters (don’t forget that dot).

Last Friday I offered a sneak preview of the inaugural CEE CMU summit, where everybody is welcome to discuss SME funding with a focus on the markets east of the Oder (and well beyond the EU too I must add!), in partnership with the second CEE Capital Markets Awards. Save the date: September 15th, InterContinental Hotel, Warsaw. First tranche of confirmed CEO speakers includes Ivana Gazic of Zagreb and Ivan Takev of Sofia. More names to follow this week.

Public Markets

HKEx Rejoins Developed Market Bourses With Closing Auction

Eduard Gismatullin – Bloomberg

HKEx plans to start the system on July 25. Two market rehearsals are planned in May & June. HKEx scrapped its previous auction mechanism in 2009 after HSBC saw its shares plunge about 10% in the final seconds of the day. The new system comprises a 10-minute trading session and was designed after HKEx officials reviewed about a dozen of their global peers.


Bats Follows Exchange Playbook With Data Push (subscription)

Philip Stafford – Financial Times

US’s newest listed stock market looks like copying rivals as it maps out long-term growth plans.

PLY: The data push argument is a plausible one albeit that I think simply tweaking up prices is a challenge for BATS given that the board structure remains firmly skewed towards the kinds of sell side folks who could not make their abject distaste for data price rises any more obvious (short of placing exchange execs in large copper pots over open fires but the SEC to their credit have done much to prevent this practice, at least since Reg NMS was introduced). At the same time, if BATS can capture a lion’s share of primary ETF listing that changes the picture as their data becomes NAV prime source stuff not merely secondary trading data so they can enhance revenue through an added service, as opposed to merely incemental dial turning above inflation…


Senators Back Study Of Contested Stock Exchange Pricing Model

John McCrank – Reuters

The dominant pricing system used by exchanges, known as the “maker-taker” model, will be discussed at a meeting of the SEC’s Equity Market Structure Advisory Committee (EMSAC) on Tuesday.

PLY: Let a thousand pricing models bloom, as somebody not too close to the markets nearly said.


Clearing Houses Asked To Draw Up Brexit Recovery Plans (subscription)

Tim Cave – Financial News

The Bank of England has called on London’s clearing houses to draw up contingency plans on how they would cope in the event of a UK exit from the EU.

PLY: Sensible idea to have a plan. Not actually sure what substantively happens in said event but “plans are nothing and planning is everything” as Dwight Eisenhower sagely noted.


This Darned Brexit Vote Seems To Be Fouling Up Everything

Jeremy Warner – Daily Telegraph

Yet curiously, one deal that is still wending its way through the lawyers’ procedures is LSE’s proposed merger with DB1.

I say “curiously” because you might have thought that this was just the sort of transaction that would be blown apart by any vote to leave the EU. Not so, claim both parties. Brexit is completely irrelevant to this merger. Indeed, were Britain to leave the EU, it would, we’re told, make DB1’s Carsten Kengeter even keener to marry himself off to his London counterpart, though frankly I struggle to see why this would be the case.

QV Premium: DB1-LSE Merger Brief.

PLY: After a number of days in the City of London, my conclusion was that few think DB1-LSE is either a sound deal or, is going to succeed…


ICE Rule 2.10 Announcement



Betfair Receives Real Money US Betting Exchange Approval

CS Report

Betfair reported that starting on May 10th it will be able to start offering real-money betting exchanges in the US.

PLY: Mega-seismic news for US sports markets, as Betfair partners with horse racing track Monmouth Park to offer exchange services in New Jersey. A two way pricing function is a lot more exciting than the fairly regressive pools favoured at US tracks.

Private Markets

Hong Kong’s Local Gold Exchange To Work With ICBC In Launch Of Shenzhen Services (subscription)

Enoch Yiu – SCMP

The Hong Kong gold exchange has teamed up with ICBC to launch gold trading services in the Qianhai free trade zone in September, providing custodial and physical settlement service targeted at commercial users and precious metals traders.


BSE Asks Brokers To Submit Internal Audit Report By June 30

The Hindu Business Line


Pakistan – SECP To Introduce New Regulatory Regime

Business Recorder

SECP will introduce a new regulatory regime for securities brokers operating in the capital market focusing on minimum entry standards, criteria for sponsors, directors and employees, corporate governance, risk-based capital adequacy and regular audits.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX flat, FTIL up 1%.

NSEL Says EOW Attached Defaulters’ Assets Worth Rs 5,000 Cr (USD 750m)


NSEL has claimed that the Economic Offences Wing of the Mumbai Police has attached assets worth around Rs 5,000 crore (USD 750m) of defaulting brokers.

QV Premium: NSEL Scandal Brief – Part 16.

PLY: Attaching is good, detaching through auction will be a whole lot better, please can somebody sell the sequestered assets?


Almax Analytics Closes Seed Round – Artificial Intelligence (AI) For News Insights Advances With Veteran Financial Technology (Fintech) Players


Almax Analytics, Artificial Intelligence for News Insights in Capital Markets, announced financing of the initial growth and development for its technology (the seed round) has been closed in London. Investors include executives from MCSI, Aviva, a founding member of RiskMetrics Group, the Fintech SEIS Fund and Jonas Dromberg, a Finnish technology investor and former Bloomberg Bureau Chief.

PLY: “Veteran” in fintech usually seems to mean about last Thursday week. It is not calibrated here. I note the FinTech SEIS fund includes the excellent Brendan Bradley on its roster of experts. Good idea being funded; smart analytics for news are a fascinating area.


ISEfundhub Expands Offering To All Irish Domiciled Investment Funds


Irish SE (ISE) is now offering its funds information portal services on ISE Fund Hub to all Irish domiciled investment funds.


Sebi Mulls Entry Of Banks, MFs In Commodity Markets

Shrimi Choudhary – Business Standard

Sebi is contemplating ways to integrate the commodity and equity space, reducing asymmetry between the two.


China Raises Trading Fees For Futures To Avoid Overheating


China’s major futures exchanges said that trading fees for some futures will be raised as risks of overheating loom following days of rapid price increases and alarmingly high market turnover.

Career Paths

Funds Europe reports that David Harris has been made group head of sustainable business at LSE in a newly created role.

PLY: Before my Inbox burgeons with missives pointing out that XavRol’s acquisitions have created an air of unsustainability, at least in valuation terms: I presume that’s “sustainable” in some eco-fashion, in keeping with the big hippy business segment…

Bloomberg reports that Shari Noonan has resigned as a senior executive in Deutsche Bank’s equities-trading department.

FIA announced the appointment of seven new members to its Asia Advisory Board:

Peter Jaeger, Citi

Helen Lofthouse, ASX

Ady Ng, UOB Bullion & Futures

Kevin Rideout, HKEx

Neil Salter, Credit Suisse

James Shekerdemian, Societe Generale

Sharon Shi Ning, G.H. Financials (Hong Kong)

The new members bring the total membership of the Asia Advisory Board to thirteen.

Financial Calendar

26.04 – CFTC’s Market Risk Advisory Committee – agenda

26.04 – BVB AGM

27.04 – BGC Partners Q1 2016 Results 

27.04 – LSEG AGM 

27.04 – MOEX AGM 

27.04 – Nasdaq Q1 2016 Results

28.04 – CME Q1 2016 Results

28.04 – HKEX AGM

28.04 – SIBEX EGM & AGM 

29.04 – CBOE Q1 2016 Results 

29.04 – WSE Q1 2016 Report 

New! – 05.05 – Bats Q1 2016 Results

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


P2P Lending Companies Collapse In Shanghai


Previous PLY comment on China’s P2P (and general banking) predicament.

Other stories

First 2016 ASEA Newsletter




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