APRIL 3 2017

Exchange Invest Issue 967 starts a bumper week of news, so no Porsche type jumps out as correlating, let’s jump into the thick of the parish as today’s weekend generated stream of stories is fascinating:

In Today’s Exchange Invest

Euronext is the big winner of the weekend. It has seen off the competition of TOM MTF in an historic victory for a besieged incumbent through coherent deployment of siege warfare tactics. Now Euronext has taken control of its CCP agenda, offering LCH a binary option: sell Clearnet or see the core business walk away. Elsewhere DB1 is on the verge of historic outbreak of management, unless it gets waylaid with more M&A before seeing through the much needed reorganisation.

And there’s more, lots lots more, you can’t avoid a scroll this crunchy Monday, so let’s get to it:

In BigWorld

Bigworld boring, parish particularly interesting.

Public Markets

Euronext and Intercontinental Exchange Sign Agreement For Derivatives Clearing

PLY: It’s official: Euronext have guts, guile, management and strategy – they really are the “New Euronext” as promised when their velvet divorce from ICE came through.

Euronext has entirely outmanoeuvred LSEG while more than maintaining the high ground of principal by reiterating their original generous offer.

The glaring strategic error of LSE in not offloading Clearnet immediately instead of making it dependent on the “MOED” being completed is now obvious for all to see. The only vaguely perceptible flaw in this approach? Maintaining the original bid level could be regarded as generous – certainly LSE have at last found a compelling proposition: sell Clearnet or close what will be an empty vessel if Euronext moves its clearing to ICE’s EU-domiciled clearing Dutch CCP. However that ‘generosity’ can be seen as a splendid outbreak of something akin to the moral high ground in the parish being re-established – good for Euronext.

Singapore Is Brave To Battle Chinese Bosses

PLY: Given how many worry the regulated nature of the parish is in danger of being brought into an element of disrepute from the cavalier antics of some, SGX is absolutely correct to pursue the standards of corporate governance expected of regulated markets and required for the parish as a whole to retain trust worldwide. This sound endeavour is sensible and deserves support from all parties, particularly the authorities where rogue companies may feel some measure of impunity.

Deutsche Börse Imposes Hiring Freeze And Launches Spending Review
Financial Times

The plans are part of an effort to keep control of the group’s 2017 budget after a slow start to the year, and include putting non-priority projects into a “keep the lights on” mode in which only spending required by regulators or to fix bugs is carried out…It was not immediately clear precisely how much the group is trying to save.

“The glamour is now gone and we have to struggle on with the less spectacular daily business. Here a new index, there a co-operation with an unknown company somewhere in the Chinese provinces,” the works council wrote in its letter entitled “Failure 5.0” in reference to the exchanges operator’s failed merger attempts. “At any rate Börse 4.0 [Deutsche Börse’s plan to modernise the exchange] as our new salvation will on its own not be enough to position our company so well that management does not once again introduce a knee-jerk round of job cuts as a last resort.”

PLY: A welcome outbreak of proper management at DB1 is a great thing but cost control is a different animal to just not spending money – hopefully DB1 already realises that to their significant cost? A hiring freeze is essential and the opportunity to thin out some of the ranks is excellent news – albeit overall headcount reductions may not be huge but at least there is better scope for strategic reorganisation in underperforming departments. I don’t wish anybody to lose their job but there have been too many cushy numbers for too long in some elements of DB1.

The works council paper is revealing in many ways, not just its whiff of resentment in old fashioned trades union “them and us” style… The worrying risk to the strategy as succinctly outlined here by Phil Stafford is that DB1 may yet fall victim to “Greifeld Syndrome” the predicament which befell NASDAQ under Bob’s CEO era where the company was prone to becoming paralysed quarter on quarter without really delivering a strategic vision. NASDAQ saw the error of its ways before Bob’s elevation to the chairmanship. Hopefully DB1 will not end up similarly as a race to the bottom discounter without a clear vision of what it actually can achieve (which is, I hasten to emphasise, absolutely enormous in terms of potential…once a sound management strategy is adopted).

Brief- Singapore Exchange Says Baltic Exchange Increased Its Investment In Baltic Exchange Derivatives Trading

PLY: Not material but another encouraging sign SGX is moving forward in small steps.

Two Exchange Whizzes Try To Tackle CBOE’s Challenges
Wall Street Journal (subscription)

PLY: Messrs Tilly & Concannon get to grips with the opportunity they have created.

Profit Only A By-Product For BSE , Technology Key Focus: CEO Ashish Chauhan
Economic Times
BSE Ready For Commodity Trading; Waiting For Sebi Nod: CEO
Economic Times

PLY: Technology focus is good but the concept of profit as byproduct strikes me more as politically correct layering to virtue signal the notoriously totalitarian and anti-capitalist Sebi staff.

London Stock Exchange Group Plc Transaction In Own Shares
London Stock Exchange Group Plc – Total Voting Rights

Competition Among Exchanges Is A Winner-Takes-All Proposition
Seeking Alpha

Japan – Saudi Exchange Ties Strengthen After King Salman’s Visit
Asahi Shimbun

Private Markets

TOM MTF To Close

PLY: A spectacular victory for Euronext. Having made the running, TOM was somewhat becalmed last year by the time it changed CEO and created a process to look to its strategic future. This is a fascinating tale in the siege warfare of incumbent exchanges battling MTF upstarts. Euronext brilliantly and ruthlessly outplayed TOM in such a way that NASDAQ had no interest in increasing its stake and Euronext didn’t have to acquire the platform whose shareholders include many key traders on the exchange’s markets as well. This is a textbook play for the business study casebook. TOM played their hand well but Euronext, having looked profoundly vulnerable before their internal revolution provoked an outbreak of management and a totally new tactical outlook was successful thanks to keeping a cool head and repelling the siege engine.

Most significantly, as can be seen with the ICE CCP deal above, that outbreak of management at Euronext now appears to be a permanent revolution. TOM was a fascinating experiment, it just could not get beyond some fabulous initial promise once the coherence of defending from the bastions of the exchange was deployed by a cannier, savvy Euronext.

Nigeria Bourse CEO Expects Parliament To Approve IPO This Year

PLY: Further to the news of the EGM we ran Friday in Exchange Invest, Nigeria SE CEO Oscar Onyema is bullish the government will approve the IPO process greenlighted by members at the EGM last week.

A Primer On The Dalian Commodity Exchange , China’s Market For Everything From Iron Ore To Eggs
Business Insider Australia

Special Section: FTI, NSEL, India at the Crossroads

NSEL Scam: SFIO Writes To NSEL Investors Seeking Details


Reactive & Asynchronous – Adventures With APIs In Financial Trading

Michael Barker is the Head of Software for Asia/Pacific at LMAX Exchange and coded his way across the entire stack…


Vix Owner Plots New Fear Gauge To Help Measure European Fright

PLY: An obvious benefit to CBOE owning BATS is that with the likes of derivatives dervishes Mark Hemsley and Guy Simpkin in situ in London, there is a lot of talent on hand to help develop and promote derivatives products for the marketplace beyond the USA.

SGX And Tullett Prebon Launch LNG Spot Index For Dubai, Kuwait And India Region

PLY: Cool move, in a manner of speaking.

You Can Soon Short Pigs In Pork-Loving China

On March 24, the Dalian Commodity Exchange (DCE) launched China’s first official pork-price index with the help of the agricultural ministry,.

Kenya Kicks Off Green Bond Program

Shanghai Bourse To Improve Repo Rate Calculation Methods To Reduce Volatility

PLY: Shanghai SE to work on repo calculation but methinks while the catalyst was this:

(Repo Funding Costs At China Bourses Surge Before Bank Health-Check) – The problem is more the changing tenor of Chinese banking, that massive wodge of shoehorned retail cash saving just cannot be relied upon any more. Thus ahead of a quick systemic health check, things got a tad out of hand when everybody realised they seriously needed some collateral.

New Zealand’s Financial Markets Authority Confirms Short-Term Derivatives To Be Licensed

Sebi Cracks Down On Misuse Of Penny Stocks
The Wire

ETFs Catch On In India, Find Traction Far And Wide
Business Standard

Career Paths

Appointments To Hong Kong’s Securities And Futures Commission Committees

PLY: Bruce Repasy, formerly global head of the Low Touch Trading Teamat Blackrock has joined MarketAxess as Global Head of Product Engineering, reporting to Kevin McPherson, Global Head of Sales, and Nick Themelis, Chief Information Officer.

In the receivables trading space, Shaun Alexander has joined market leader Market Invoice as Head of Risk from Santander Bank.


Parish mainstream way more exciting than the crowdfunding news over the weekend…

Other Stories

ESMA Provides Implementing Details For SFTR
ESMA Updates Q&A On CSDR Implementation
MiFID II: ESMA Issues Final Specifications For Non-Equity Tape

UK’s Financial Conduct Authority Publishes Near Final Rules On MiFID II And Encourages Firms To Submit Applications For MiFID II Authorisation

IOSCO Approves The Enhanced Standard For Cross-Border Enforcement Cooperation

Japan’s Financial Services Agency: Launching The Financial Market Entry Consultation Desk -The FSA And Tokyo Metropolitan Government Welcome Foreign Financial Business Operators’ New Entry That Contributes To Strengthening Japan’s Financial Market

ISDA Announces Annual Determinations Committees Outcome

A Little More Conversation A Little Less Action – Speech By Andy Haldane,Chief Economist, Bank Of England

NZX Employee Share Plan – Team And Results
A fabulous positive start to the weekend – so much more pleasant to be able to read of good intentions in so many parts! Let’s hope this heralds a classic quarter for the parish.

Have a great week,


Patrick L Young
Executive Director DV Advisors

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