APRIL 6 2017

Welcome to issue 970 of Exchange Invest which correlates with the Porsche Panamera, the 4 door 4 seater saloon which debuted at the 2009 Shanghai International Motor Show.

In Today’s Exchange Invest

Frankfurt trying to flex its muscle as an international CCP regime because a German bank has signed up. ICE’s Hutcheson on LIBOR and big data. ESMA has a hyperactive day of announcements – MIFID II / OTF clarification amongst them.

And there’s more, happy scrolling:

In BigWorld

I remain a super enthusiastic proponent of our technological future and to that end Bigworld delivers once again pure tech this week. As Android becomes the de facto digital OS benchmark, the next big risk in a mobile interconnected world is that bane of our lives, the loss of interface. Well for years the wondrous people with pointy heads have been developing the once unthinkable – the cellphone screen which can fix itself as part of a generation of self-fixing plastics… Soon whole generations won’t understand a world before the ATM and internet banking, let alone the concept that placing a mobile phone in the back pocket was a hubristic act of insouciant youth…

Public Markets

Frankfurt-London Truce Died Along With Deutsche Boerse Deal

On CCP: “Of course they’re going to come after it,” John Serocold, principal at consulting firm Studio Serocold, said of Eurex’s clearing ambitions. “Whether they’re going to be successful is another matter altogether.”

PLY: Fair comment by John Serocold. This story probably works in the parochial Frankfurt echo chamber insofar as suggesting DB1 can use its CCP to attract vast international post OTC clearing. Clearly on a slow news day a spin emerges to correlate different situations with the tedious Bloomberg trope that Brexit will fail, laced around one German bank signing with a German CCP and thus having all its issues in one jurisdiction, suggests the world’s banks will follow. The undertone – that there won’t be any LCH clearing cooperation without a merger is clearly a truism insofar as even the MOED seemed to have dropped that rather unworkable farago a long time ago.

Of course we could revert to how it has never been proven to my satisfaction that new German insolvency laws cured the previous monumental gap in bankruptcy practice which has long made London a slam dunk for CCP. However when I say things like that it just provokes a reset back to the snippy/haughty/arrogant “I am sick and tired of telling you this” mode at DB1 where explanation is at a premium from a company which has, tragically for shareholder and students of markets alike, proven stunningly inept at explaining and selling itself since the departure of the focussed Max Worcester over decade ago.

ICE Bets On Data To Resurrect LIBOR’s Reputation
Financial Times

PLY: Valedictory exit interview with Finbarr Hutcheson as he heads across the hall to lead ICE Clear Europe. Sensible comments on LIBOR calculation include:

“It used to be what’s your submission, and the guy came up with the number. Now it’s more the machine produces a suggested submission and the humans have to disagree with the machine . . . but they [the machines] are only as powerful as the people programming them in the first place.”

EU Watchdog Warns Banks Over Bypassing Share Trading Rules

PLY: While MIFID II loads the exchange world with a hefty quantity of often nebulous rules, at least there is some movement to deflate the egregious rule flaunting envisaged by some banks in the murkier corners of agency brokerage et al.

MCX Trading Systems To Undergo Forensic Audit
Economic Times

MCX is the second exchange after the National Stock Exchange (NSE) to see a forensic audit of its trading systems due to allegations of preferential client access.

No Easy Solution To Prop Capital Dilemma – Panel
FOW magazine

European legal experts have agreed there is no simple solution for the tighter regulation of proprietary trading firms under the European capital rules aimed at investment banks.

Bank Lobby Warns Of Market Ructions If Brexit Talks Stumble

PLY: Interesting insofar as the banks are aiming a lot of their fire here at the EU and its innately conflicted positions for decision making which, where further politicised, can make for a potential disaster. To be consumed alongside this excellent special report of a few weeks back where Reuters explained how the histrionics of the banks lost them the ear of the UK government. Now the banks are sagely advising the EU/EC not to similarly lose perspective but with a more measured tone which might at least give the banks the moral high ground and hopefully check the excess of the EU’s utterly juvenile medieval punishment politics as was evident on the latest edition of that children’s televisual favourite, the live EuroParl feed.

LSE Launches Private Share Platform

JSE’s Newton-King: Credit Rating Moves A Catastrophic Moment For Sa
Eyewitness News

PLY: I have nothing but sympathy for Nicky Newton-King and the JSE. Rather like Athens they have run their exchanges well and been a good capital conduit for the nation around them but their actions have been entirely betrayed by an economically illiterate vote bagging political class who are ripping the fabric of society apart through their sheer incompetence.

London Stock Exchange Group Plc Transaction In Own Shares

Private Markets

AgriClear Announces Collaboration With Verified Beef Production Plus (VBP+) – New Relationship Will Promote VBP+ Canadian Cattle Via Web-Based Platform

Special Section: FTI, NSEL, India at the Crossroads

Not news today.


Neptune Continues Expansion With Integration Into FlexTrade’s Buy-Side EMS Platform – The Fixed Income Market Network Is Now Connected To Its Latest OMS/EMS Provider To Offer The Buy-Side Greater Access To Liquidity Through Best-Of-Breed Price Discovery Tools

Cobalt DL Secures LMRKTS As Multi-Lateral Compression Partner On Their New BlueSky Service – Cobalt DL Launches BlueSky, Enabling Third Party Providers To Offer Complementary Services From Its Reconciled Data


Moscow Exchange Presents New Name Of Benchmark Equities Index

PLY: MICEX Index will now be called MOEX Russia Index but for now RTS index retains its name.

Mongolian Exchange Faces Axe From Ftse Russell Frontier Watchlist

Career Paths

PLY: George Wong, Treasurer at Hong Kong Exchanges and Clearing Corporation until last December, is joining the Chinese brokerage Guotai Juntan in their Hong Kong subsidiary according to The Corporate Treasurer.

Misys has appointed former Deutsche Bank staffer Natalie Gammon as Chief Information Officer.

Rosenthal Collins Group has appointed Cary Musser Head Of Strategic Asset Management.


Horlick In A Froth Over Cash Call
The Times (subscription)

Nicola Horlick has accused Seedrs , the crowdfunding site, of being “stroppy and difficult” after it threatened her with a lawsuit over her failure to stump

PLY: Seedrs instructs lawyers in the bitter dispute about film funding which has further tarnished the image of Mrs Horlick. She claims the money is en route but has been delayed by bank bureaucracy. Clearly a credible excuse but one with huge risks if it is not true, so one would presume her capital injection will take place…

Other Stories

ESMA Clarifies Market Structure Issues Under MiFID II

PLY: Key clarifications on OTFs et al are herein – very interesting.

ESMA Identifies Areas For Improvements In Shareholder Identification And Communication Systems

ESMA Advises On Draft Legislation For CCP Recovery And Resolution

ESMA Promotes Common Approach To Rules Supporting The Use Of Smaller CRAs

Speech Of Commissioner Sharon Y. Bowen At The Eurofi High Level Seminar 2017 – What Future For Global Regulation Of Financial Markets?

Europe’s CoCos Provide A Lesson On Uncertainty
Office Of Financial Research Update

Opening Remarks At The April 2017 Meeting Of The Equity Market Structure Advisory Committee – SEC Acting Chairman Michael S. Piwowar
Remarks At The Meeting Of The Equity Market Structure Advisory Committee, SEC Commissioner Kara M. Stein, April 5, 2017

SEC Adopts Jobs Act Amendments To Help Entrepreneurs And Investors

PLY: 5 Year inflation adjustment applied to thresholds.
Malta a tad frantic in the run up to the ECOFIN (Finance Ministers’) meeting this weekend – good to see many parishioners in town.

Thanks for reading Exchange Invest.


Patrick L Young
Executive Director DV Advisors

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