August 08 2016

elb2Another entity adds its name to the antitrust assault course where DB1-LSE will soon run the gauntlet (circa 184 days to go, we’re already 167 days into the “Merger of Equal Desperation” incidentally). This time it is retail investors worried about the blob while elsewhere that promise to have the HQ in London appears to be in doubt despite Xavier’s apparently plain speaking last week.

Elsewhere, junk bonds leave the EU – what does that say about passporting? – and head for climates removed from MAR. Can CMU undo the harm? LME reduce fees from previous increases, speedbump wars looming and much more…

Meanwhile in Bigworld, it’s the Olympics – a chance to watch people on drugs do sport you often need to be on drugs to watch with interest.

Don’t forget: CEE CMU & Issuers Summit summit along with the Second CEE Capital Markets 15th September (see banner to the left). 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. I look forward to chairing the CMU summit & attending the awards gala.

Public Markets

Retail Investor Group Warns of LSE-DB1 ‘Dominance’

John Detrixhe – Bloomberg

Stock Exchange Merger ‘Will Leave Small Investors Worse Off’ (subscription)

Harry Wilson – The Times

Europe’s leading organisation for retail investors has called on Brussels to block the LSE merger with DB1, saying the combined business would be a “quasi-monopoly”. Writing to Margrethe Vestager, the European competition commissioner, the European Investors’ Association said the deal would end any meaningful competition, so that small shareholders could be worse off.

PLY: Group chaired by Paul Koster who was at one time with AEX and also a director of the Dutch regulator, AFM. The bandwagon grows – defenders of the deal not being paid by DB1 or LSE are few on the ground…

DB1’s Search For A Home (subscription)

Michael Bracher, Yasmin Osman & Katharina Slodczyk – Handelsblatt

Though the shareholders of DB1 and the LSE have approved the merger, the companies still haven’t resolved the thorny question of where to locate the stock exchange in a post-Brexit Europe. There are at least two different options.

QV Premium: DB1-LSE Merger Brief.

PLY: How interesting. Given the resolute statement of XavRol last week, you would have thought it was clearly London but evidently either his word doesn’t count for anything, or the DB1 folks intend to do the classic M&A act of promise promise promise and then renege renege renege. If London doesn’t mean London, what else will DB1 refuse to be held to? (QV It may be a good moment for somebody to translate “my word is my bond” into German as this concept may be missing at DB1).


LME Introduces Package Of Measures To Strengthen Metals Trading


LME Cuts Fees For Short-Dated Trades

Pratima Desai – Reuters

As expected (mentioned Friday), LME will cut fees for short-dated trades from Sept. 1.

So for those in the short-term date fortnight, prices are coming back down…it will be interesting to see if this quells the complaints.


Speed Bump Wars Ahead?

Terry Flanagan – Markets Media

NYSE and Nasdaq may try to beat IEX at its own game.

PLY: And wasn’t it inevitable this would be the case?


Two Former HK Financial Heads Take The Side Of SFC In Company Listing Reform Debate (subscription)

Enoch Yiu – SCMP

HK SFC founding Chairman Robert Owen and former financial minister Frederick Ma both support proposed listing reforms that would boost the influence of the SFC in listing matters, while the plans are strongly opposed by others including a HKEX director.


How Sebi Is Strengthening Risk Management In Commexes

Ram Sahgal – The Economic Times

Market regulator Sebi, along with commodity exchanges, is beefing up the risk management apparatus in the 13-year-old commodity futures market in the wake of the castor seed and more recently chana futures suspension. There are a number of measures like staggered delivery to tighten the screws on manipulators.

Private Markets

Energy Exchange Mimics Brokers as Traders Prepare for EU Rules

Mathew Carr & Tino Andresen – Bloomberg

Europe’s biggest power exchange is challenging OTC brokers by setting up a new platform to help its clients deal with beefed up post-crisis regulation, in the first move of its kind.

European Energy Exchange (EEX) last month started to match buyers and sellers of physical power and natural gas contracts in the unregulated, OTC market, going beyond its core business. It’s akin to how brokers from ICAP to BGC Partners have operated in the energy markets for decades and the platform is gaining traction with clients ahead of MiFID II.


Bitfinex Interim Announcement


Bitcoin Exchange to Spread Losses of Hack (subscription)

Joanne Chiu – Wall Street Journal

Bitfinex Exchange Customers To Get 36% Haircut, Debt Token

Clare Baldwin – Reuters

Bitfinex, the digital-currency exchange that lost $65 million to hackers last week, plans to spread the losses among all its users.

PLY: Readers may wish to compare this provision of some form of haircut and token compensation with the Swift issues earlier this year where those involved were told Swift had no liability it seems…

Should You Put Your Bitcoin in…a Bank? (subscription)

Paul Vigna – Wall Street Journal

As Bitfinex, the digital-currency exchange that suffered a hack this past week, struggles to reopen, a wider question is again being asked about bitcoin: Is it really a better mousetrap?

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX flat, FTIL up 2%, Jignesh out of jail again:

NSEL Scam: Jignesh Shah Granted Bail

The Economic Times

A special PMLA court granted bail to Shah in the sum of Rs 2 lakh (USD 3k). The ED had arrested Shah on July 12 under section 19 of Prevention of Money Laundering Act (PMLA).

NSEL Investor Forum Writes To EOW, Says FTIL Has Overstated A/cs



Tullett Prebon Acquires CME Hybrid Trading Technology

Tullett Prebon

Tullett Prebon already utilises this proven technology widely across the group and now plans to develop it in-house to provide bespoke, proprietary, customer-facing capabilities, offering its clients a choice of trading methodologies including RFQ, CLOB and volume matching.

The versatile technology will be used across major asset classes and will form the cornerstone of Tullett Prebon’s new hybrid initiatives, further enhancing its voice and electronic franchise. It also represents an important step in facilitating the provision of MIFIDII solutions for the industry.

PLY: Instead of the usual “partner” nonsense here we have “acquires a long licence” which may not be how you interpreted the original headline. Me neither.


Trading Tech Accelerates Toward Speed of Light (subscription)

Vera Sprothen – Wall Street Journal

Financial-technology startups are arming traders with devices that shave precious nanoseconds off stock-market trades.


NEO Exchange Opts For OneTickCloud

Scott Thompson – IBSintelligence

Canada’s Aequitas NEO Exchange is to implement OneMarketData’s data and advanced analytics service, OneTickCloud, based on its flagship platform OneTick.


GreenKey Kicks Off Design Partner Program Led By Interdealer Brokers Tradition & Tullett Prebon


PLY: Bad day for TNT-related press releases continues. I lost my will to live during this broadly incomprehensible missive – but it seems to be relevant to the industry. Good luck reading.*

*I suppose in mitigation, it is interesting to see TNT using complex words beyond the monosyllable.


ASX’s Blockchain Plans May Have Been Hacked (subscription)

Alan Kohler – The Australian

One of the early tasks for new ASX CEO Dominic Stevens will be to have a close look at the plan to use blockchain technology in the light of last week’s massive hack and theft at Hong Kong-based bitcoin exchange Bitfinex.


Credit Suisse: Bitcoin & Blockchain Pose Little Risk To Payments Giants



Junk Bond Issuers May Snub Europe Exchanges to Sidestep EU Rules

Selcuk Gokoluk – Bloomberg

The lure of fewer regulations may attract issuers away from Ireland and Luxembourg, the dominant bourses in Europe’s about $500 billion corporate high-yield debt market, and undercut EU efforts meant to help investors spot potential trouble at inherently risky companies. The more lightly regulated Channel Islands Securities Exchange has already won its first corporate junk-bond listing since the Market Abuse Regulation (MAR) came into effect in the EU about a month ago.

New junk-bond issuers may also look at Singapore or Bermuda to sidestep EU rules. Like the Channel Islands, the two exchanges already handle debt securities, and they are covered by international arrangements regarding tax and single-market access in Europe.

PLY: This is a bit of slightly seismically dire news which Europe just didn’t need – regulations driving markets offshore. Hopefully CMU can counteract this problem…


CME Announces New Steps to Enhance Live Cattle Futures Markets


Seasonal discount for futures deliveries at Worthing delivery point. Revised grading and quality specifications. Delayed listing of additional contract months beyond October 2017.


Shanghai SE Relaxes Restrictions On Option Trading


Shanghai SE (SSE) said on Friday it would relax some restrictions on option trading, as regulators move to unwind some measures imposed during a stock market rout last year.


IOSCO Seeks Public Comment On Its Analysis Of Liquidity In Corporate Bond Markets



Thomson Reuters Eikon Messenger Numbers Surge As Yahoo Retires Legacy Messaging Platform



Trading Places – Clutch Of New Metal Hires Signals Bet On Recovery

Melanie Burton – Reuters

At least six companies have won a mandate to expand their metals businesses in the past six months, backed by Chinese and private capital, often set up by traders who have left large merchants.

Hartree Capital, Viant Commodities, state-owned China aluminium maker Chalco and mid-size Kyen Resources are among firms that have made fresh investments into metals in the past few months, with new hires from commodity trading houses like Swiss-based Gunvor and Noble.

They follow in the footsteps of Geneva-headquartered Zopco and London-based Concord Resources that were set up late last year, helping to stem a tide of departures that has thinned the ranks of the industry since 2011.

Financial Calendar

12.08 – BM&FBOVESPA Q2 2016 Results

17.08 – NZX Q2 2016 Results

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

Analyst Notes

ICE “Sector Perform” Restated By RBC Capital Markets – $282.00 Price Objective

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

Other stories

Once-Popular NYSE Has No Plan to Reopen to the Public (subscription)

Matthew Kassel – Wall Street Journal

NYSE was once a tourist mecca. From 1939 until roughly 15 years ago, crowds arrived daily for a glimpse of the bustling trading floor.

But since the morning of Sept. 11, 2001, the building and its exchange have been closed to the general public—much to the dismay of many first-time visitors to New York. Though the NYSE did consider reopening to the public at one point, a spokeswoman says it has no plans to do so in the immediate future.

PLY: What was a spectacular sight (albeit of impending fin de siecle proportions) before the dotcom crash, is now, like so many floors, somewhat hollowed out – or in this case, a live studio audience for rolling TV news channels.


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