August 05 2016

elb2SGX bid for Baltic detailed, JSE launches protectionist backlash to support a monopoly in place of better South African markets, XavRol says no to moving London HQ until deal close at least and there’s more..

Meanwhile in Bigworld, no peerage for now for Michael Spencer (shame!) but the hairdressers and the amalgamated losers of the Remain referendum are lavished honours in the David Cameron resignation list.

The CEE CMU Capital Markets awards are coming up mid-September (see banner to the left). The first summit for CMU in CEE takes place on the same day, chaired by me – can you afford not to be there? Rates are very attractive: from €295 for the summit, to €595 for the Gala & Summit together. Email me or follow this link HERE to sign up.

Public Markets

Bats Q2 2016 Results


vs Q2 2015: net revenue $109.9m, up 11%, operating income $58.1m, up 20%, net income $17.9m, down 12%.

Operating expenses $52m, up 4% primarily due to an increase in global employee headcount in 2016 and additional expenses related to Bats’ IPO. This increase was offset by synergies achieved from the Direct Edge acquisition completed in January of 2014.


LSE Makes Commitment To London Amid Merger HQ Doubts

William Turvill – CITY A.M.

LSE has insisted the City will remain the home of its joint headquarters with DB1 under the terms of their deal. Any changes to the location of the merged entity’s holding company, can not be made before the deal completes, LSE CEO Xavier Rolet said. After completion, however, the board and shareholders of the merged company could potentially opt to shift the base. “We… simply don’t know what the future holds. But any major decision will be subject to 75% majority,” Rolet said.

PLY: It was a rather firm put down by Xavier in his call – has the UK government perhaps had a light word in his ear to note that any Frankfurt move would see UK support evaporate? 187 days until the Merger of Equal Desperation likely hits the antitrust zone.

LSE Chief Plays Down Euro Clearing Leaving London (subscription)

Philip Stafford – Financial Times

Xavier Rolet said there is “no immediate threat” that euro-denominated clearing, one of the City’s most prestigious businesses, could leave London after the UK voted to quit the EU.

PLY: He may have said all manner of whacky things about clearing when it came to selling his Merger of Equal Desperation but he is definitely correct here – albeit that must mean the unworkable concept of margin offset to Frankfurt is now being abandoned which leaves one to wonder why the Merger of Equal Desperation is ongoing except for stubborn inertia all round?

This Obscure Corner of London Finance Is Suddenly a Key Battleground

Will Hadfield & John Detrixhe – Bloomberg

There are signs the U.K. is readying its defenses now that French and German officials have already targeted the industry. Clearing has boomed since the 2008 financial crisis. Britain’s vote to leave the EU could endanger the thousands of jobs at the clearinghouses and their member banks if other countries follow through on their threats to repatriate euro clearing after Brexit.

PLY: Gosh, what a huge worry – the EU is about to turn suicidally protectionist in the course destroying its own credibility. Britain just needs to keep its nerve and indeed ignore an increasingly dismal media coverage which is determined to sell the country down the river as opposed to recognising the future is Brexit, the past is EUrope.

QV Premium: DB1-LSE Merger Brief.


SGX Bids $103M for London’s Baltic Exchange (subscription)

Wall Street Journal

SGX Update: Bid For Baltic Exchange


As discussed earlier this week, SGX announces that it has agreed with Baltic Exchange to proceed with the solicitation of support from shareholders of the Baltic Exchange to acquire their issued ordinary share capital for £160.41 in cash per Baltic Share. This represents a total consideration of £77.6m (USD 103m).

SGX again states that there is no assurance that the exclusivity agreement signed on 25 May 2016 will lead to any definitive agreement(s) or completion of the potential transaction.


ICE to Split Stock, A Move Few Others Undertake Anymore

Anna-Louise Jackson – Bloomberg

ICE is doing something it probably wishes more of the companies it lists would. ICE disclosed a 5-for-1 stock split along with its earnings Wednesday, an action that will lower its share price to around $56 from its current $278.86. Such steps have been increasingly rare in the past few decades, with just five other companies in the S&P 500 Index doing it this year, compared with 114 in 1986.

PLY: ICE leads by example here – if only the same thing could be said of other management teams where credibility has been singed by their being hauled over the coals for not knowing their own takeover rules…


TMX CEO: Will Consider Dividend Hike (Video)


Lou Eccleston, CEO, TMX Group joins Bloomberg TV Canada to discuss the company’s record Q2 earnings.

PLY: That ladies and gentlemen is the sound of somebody just trying to survive in office. Alas, big vendor executive Lou Eccleston is just out of his depth at TMX. I genuinely feel sorry for the man, this is cruelty in public.


LME Expected To Wave White Flag On Fees

Straits Times

LME is expected to cut some trading fees, in a bid to arrest sliding volumes, but lower costs are unlikely to convince those already using cheaper alternatives to return, metals industry sources say.


CFTC Announces Two Cross-Border Related Actions


Private Markets

Irish SE Lodges €10m HQ Expansion Plan

Gordon Deegan – Irish Examiner

Irish SE (ISE) has formally lodged plans for a €10m expansion plan for its Dublin headquarters. The lodging of the plans comes after the exchange last year acquired a building at Foster Place, to accommodate the increased numbers of people working at the exchange.

PLY: Exciting times as ISE extends into another magnificent city centre building from its existing historic (and delightfully pretty) HQ.


ZAR X Suffers Setback After JSE Appeals

Robert Laing – BDLive

New stock exchange ZAR X suffered a setback on Monday when the JSE succeeded in having its conditional approval for a licence suspended by the Financial Service Board (FSB).

PLY: Parishioners against competition deserve only contempt.  Looks like JSE wants to be the next ASX. South Africa cannot afford such an arrogant monopoly.


Amman SE: Launching The First Trading Session Of OTC Market



Channel Islands Securities Exchange Takes Steps To Welcome More Islamic Finance Listings



PEGAS-CEGH Cooperation Approved By Austrian & German Authorities



Bitcoin Bitfinex Exchange Hacked: The Unanswered Questions (subscription)

Izabella Kaminska – Financial Times

Breach of HK-based exchange underlines the issues facing the cryptocurrency.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX slightly off. FTIL slightly up. Jignesh entirely still in jail for a day at least.

Final Decision On Jignesh Shah’s Bail Plea On 6 August

Jayshree P. Upadhyay – Livemint

ED files a fresh complaint against Jignesh Shah and 12 other defaulters in the NSEL scam, opposing bail.


Mexican SE Tests Traders’ Patience With Outage

Isabella Cota – Bloomberg

In the second such outage this year, BMC stopped operations for 59 minutes starting at 11:09 a.m. local time.


CBOE Is Converting Trading Floors Into Tech Workspaces

Lynne Marek – Crain’s Chicago Business

CBOE is finally letting go of a bit of its trading floor past.

PLY: Good idea – CME converted floor space into dedicated electronic trading space previously.


ENSO & EBS Treasury Partner to Create Leading Hedge Fund Basel III Optimization Platform


ENSO Financial Analytics (ENSO), has partnered with EBS Treasury to provide cash and collateral movement workflows to ENSO clients. EBS Treasury is powered via Swift Messaging, and by connecting the two platforms, ENSO clients will be able to make money market sweeps and cash movements through EBS Treasury and further optimize counterparty relationships.


Colombo SE Offers Online Services Through CDS E-Connect


Colombo SE has launched CDS e-connect, a portal with an array of online services to Central Depository System account holders.


China Moves Toward Launching CDS Market (subscription)

Shen Hong – Wall Street Journal

The National Association of Financial Market Institutional Investors is likely to ask the People’s Bank of China for formal approval to launch a CDS market soon.

QV Premium: China Capital Markets Transformation Brief – Main File.


FTSE Mondo Visione Exchanges Index Outperforms MSCI World Index In July


Financial Calendar

04.08 – WSE 2015 PLN 2.36 dividend payment

12.08 – BM&FBOVESPA Q2 2016 Results

17.08 – NZX Q2 Results

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

Analyst Notes

CME Upgraded By Zacks From “Hold” To “Buy” –  $116.00 Target Price

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


UK Parliament Treasury Committee Update: Committee Questions FCA & PRA On Crowdfunding Regulation

UK Parliament Treasury Committee Update: Crowdfunding Regulation



LendingClub Said in Talks With Western Asset on Loan Buying

Noah Buhayar & Matthew Monks – Bloomberg

Other stories

Statement Of CFTC Chairman Timothy Massad Regarding CFTC Actions Related To The Overseas Application Of Its Swaps Rules



Statement Of CFTC Commissioner J. Christopher Giancarlo Regarding Final Response To District Court Remand Order In SIFMA, Et Al. v. United States CFTC



Rogue Trader Faces Prison For Using Hacked Press Releases To Rig The US Stock Market

Jason Murdock – IBT

Leonid Momotok, 48, pleaded guilty in a New York district court for conspiracy to commit wire fraud and could face up to 20 years in prison alongside a heavy fine. Prosecutors allege that Momotok played a role in an international cybercrime operation that resulted in at least $30m in revenue.

According to the Department of Justice, between February 2010 and August 2015, Ukrainian hackers were able to compromise employee account details from three major newswire services – Marketwired, PR Newswire and Business Wire. Once inside, they targeted corporate earnings announcements, non-public press releases, financial data and product announcements.

PLY: As an old Latin teacher of mine used to say “you cannot condone this but you do come away with a certain sneaking regard for their initiative, for all its wrongs.”


ISDA & IHS Markit Launch ISDA Amend 2.0



FINRA Warns Investors About Boiler Room Scams – If You Get A Call Like This, Don’t Bite—& Don’t Buy


PLY: My Polish mobile buzzed recently to my first boiler room scam in Polish. Word to the wise is that, yip, that lively background noise of voices can give the ‘live dealing room’ effect but when it means you can’t hear the sales patter, it’s somewhat counterproductive…


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