August 09 2016

elb2LME and World Gold Council to launch precious metals futures as NASDAQ Dubai announces Single Stock Futures. BATS bringing BIDS to Europe promising an equity dark pool shake up. Lots happening in the parish in today’s Exchange Invest. Hip Hip hooray and that’s only one sentence of a packed daily round up…

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Out in the mainstream media, post Brexit grieving continues amongst the dead tree press as they come to terms with their own mortality and the voters not sharing a blind love for a failing blob. However, the editor at that paper which once championed “The Honest Financier, the Bona Fide Investor, the Respectable Broker, the Genuine Director, and the Legitimate Speculator”  has been Awarded Légion d’Honneur For Pro-EU PR. Thus France honours a British national newspaper editor, in, I am told, the first such move by a foreign power since Soviet President Leonid Brezhnev gave a similar award to the editor of the Morning Star. At least the latter has always been an openly a Communist paper unlike the furtive blob socialist myopia of the FT which must surely now change its name officially to the “Brussels Bugle” for the sake of transparency?  As one avid EI Daily reader notes “I have long stopped reading it because it is written by a bunch of socialist children with monster egos.”

I can only say I feel some sympathy with legitimate recipients of the Legion D’Honneur including parishioners from the Exchange world such as Dr Richard Sandor. Meanwhile, I wonder would the Morning Star like to expand their business coverage? There’s a clear opening for objective daily market coverage and really the Morning Star only needs to tack a little bit right to be more pro market than ‘the daily pinko.’

Public Markets

This Merger Needs a Name That Bores Us Stupid

Chris Hughes – Bloomberg

QV Premium: DB1-LSE Merger Brief.

PLY: Good column but hardly likely to win the deal more permission…  183 days to go until we expect the deal to hit the antitrust danger zone.


Is SGX Overpaying The Baltic Exchange?


“On a PE basis, it seems rather expensive as it works out to more than 50x FY15 earnings, as against SGX’s 23x FY16 and 21x FY17F earnings,” DBS Group Research said.

PLY: This deal is all about SGX showing it has mojo as opposed to pragmatic earnings now. The total money spend is hardly huge which mitigates the multiple somewhat.


Bats Europe to Launch New European Equities Large in Scale Negotiation Facility Called Bats LIS


Bats Europe and BIDS Trading (BIDS), the largest block trading ATS by volume in the U.S., announced that Bats Europe has agreed to license BIDS technology to launch Bats LIS, a new block trading service for the European equity market.

PLY: Very interesting. For years there has been talk of a BIDS European venture and Bats Lis is a product which can seriously change the dynamics of block trading in European equities. This is an exciting addition to the block equities landscape. (disclosure I was formerly a non-executive director of Liquidnet Europe).


LME Cuts Fees, But Is It Too Little Too Late?

Andy Home – Reuters

Some sort of concession on these trading costs has been widely expected for some time.

LME volumes have been falling, in stark contrast to those on its transatlantic rival CME. Broker discontent has been rising to the point that some are looking at establishing a new metals trading platform under the stewardship of previous LME CEO Martin Abbott.

PLY: The usual broker complaining or a new paradigm for greater competition?

LME Has No Plans For Further Fee Cuts


LME plans no further fee cuts after announcing lower charges for short-dated trades last week (reported here), which industry sources saw as an attempt to halt a slide in trading volumes.


Barclays Agrees to Pay $100 Million Over State Libor Probes

Erik Larson – Bloomberg

NY AG Eric T. Schneiderman Announcement of same


Barclays was fined 290 million pounds over Libor rate in 2012. UK-based bank is first to settle multi-state investigation.


New Rules & Fresh Headaches for Short-Term Borrowers (subscription)

Vipal Monga & Heather Gillers – Wall Street Journal

Move by SEC to make money-market funds safer is putting stress on a crucial funding source for cities, counties and foreign banks.

CFTC Announces Enhancements to Protect Customer Funds


Private Markets

Sebi Should Give NSE Case Closure Before Framing Algorithmic Trading Rules

Mobis Philipose – Livemint

If, for instance, the charges of collusion and unfair access are true, the market structure changes proposed by Sebi alone will not help.

PLY: Another really excellent considered column by Mobis Philipose, worth reading by anybody interested in either, or both, of HFT and Indian exchanges.


PSX Strategic Stake Sale: Evaluating The Suitors

Business Recorder

Pakistan SE (PSX) is currently in the process of selling off its 40% stake to a strategic investor.

The primary focus by PSX for the strategic sale are Borsa Istanbul, a Chinese consortium (the Shanghai SE along with two other Chinese exchanges), and LSE. There are also reports that some local banks/DFIs may also be encouraged to form a local consortium (that may also include a leading brokerage house); they may bid for the stake in PSX alone or possibly after joining hands with a foreign suitor.

QV Premium: Pakistan Exchanges Merger Brief.

PLY: I have to admit that strategic stakes always strike me as somewhat oxymoronic – a clear example of why government should not be involved in markets and let them be free.


U.S. Marshals To Hold Bitcoin Auction – Approximately 2,700 Bitcoins From 12 Cases To Be Sold


PLY: Will it be run under CFTC rules and hence allow the hackers to steal part of the cache first?

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL slightly off as Jignesh Shah enjoys his first day of his latest period of liberty.


ASX To Develop A Data Lake As Part Of Technology Overhaul


ASX has partnered with Tibco for its Enterprise Service Bus platform that will be used to help the ASX eventually develop a data strategy.

PLY: Will the data lake be populated with arguments for preserving their monopoly at all costs? That opening statement: “will be used to help the ASX eventually develop a data strategy” appears to leave room for some rather damning interpretation.


World Gold Council, LME & Key Market Participants To Launch LMEprecious


Gold Back to Futures on London Metal Exchange After Thirty Years

Eddie Van Der Walt – Bloomberg

London Market To Get New Gold Futures Contracts (subscription)

Neil Hume – Financial Times

LME and The World Gold Council will outline plans on Tuesday to launch a bundle of London futures contracts that aims to prepare the market for new regulations and increased scrutiny of price setting.

Approximately three-quarters of global bullion dealing takes place in the City of London but most of it is still done directly between buyers and sellers as it has been for decades.

The new futures contracts are being supported by five investment banks, including Goldman Sachs, Société Générale, China’s ICBC Standard Bank and a proprietary trader called OSTC. They have agreed to support the trading of the contracts, which will launch in the first half of 2017, and have taken an equity stake in the new platform called LMEprecious.

However, London’s two largest bullion banks, HSBC and JPMorgan, have not signed up to the project, raising questions about its likely success as it potentially splits the market into two competing camps.

PLY: At last the oft rumoured World Gold Council plans are going public. This is a fascinating development and one which sees considerable competition likely with the LBMA who have been making furtive plans for some time.


ICE Said to Propose Changes to London Robusta Coffee Contract

Isis Almeida – Bloomberg

Under the plan, traders bringing coffee from producing countries to be delivered against ICE’s London futures would pay the fee for removing the beans from bourse-approved warehouses. At present, buyers are responsible for paying load-out charges.


Nasdaq Dubai To Open Equities Futures Market

Hadeel Al Sayegh & Andrew Torchia – Reuters

Nasdaq Dubai exchange will open an equity futures market next month to trade single-stock futures on the shares of some of the UAE’ biggest companies.

PLY: Having been in the vanguard of promoting Single Stock Futures over 20 years ago, it’s always good to see another convert to the product set, I hope NASDAQ Dubai is hugely successful.


Nasdaq Gets MAS Nod For Commodities (subscription)

Alice Attwood – FOW

Nasdaq plans to offer freight, iron ore contracts for Singapore-based clients.


HKEX to Offer Mini H-shares Index Options & Make Other Derivatives Market Changes



UnaVista Launches MiFIR Transaction Reporting Test Environment



TriOptima Completes First triReduce Compression Cycle For Cleared Mexican Peso Swaps At CME


PLY: Again TriOptima displays its wondrous magic now in MXN following on from several successful BRL and CLP cycles.


NSE Sets April 2017 As Kenya’s Debut For Green Bonds

Patrick Alushula – Standard Media

Nairobi Securities Exchange (NSE) has set April 2017 as the latest date for beginning the sale of Kenya’s first environmentally friendly bond.

Career Paths

LendingClub CFO Carrie Dolan has resigned.

PLY: Unclear if Carrie Dolan was pushed due to bad results or the previous ouster of the CEO (last May) or chose to leave…


Metamako, the leading specialist in deterministic network devices for the world’s financial institutions, appointed Kevin Covington CEO.


The International Commodities and Derivatives Association (ICDA) appointed two new members to its BoD: Dr. Stéphane Graber, Secretary General of the Swiss Trading & Shipping Association (STSA), and Dr. Paul Lynch, CEO of itarle, a leading provider of multi asset algorithmic trading and analytics services for the sell-side, have joined effective immediately.

PLY: As a former board member myself, I wish the new incumbents well and applaud departing director Lamon Rutten for his contribution to ICDA (nee SFOA) over the years.


BGC Partners announced that John Battaglia is joining as SVP & Head of Carbon Markets, through its BGC Environmental Brokerage Services subsidiary. John will report to Nicole Shaughnessy, MD, Environmental Products, BGC Environmental Brokerage Services. He will be based in San Francisco. Prior to joining BGC, John served for eight years as a Director in Carbon Markets at Evolution Markets in San Francisco.


Reuters reports that Ayesha Boulware would return to ITG as a director in its U.S. sales team. Boulware, based in San Francisco, was most recently with Bloomberg Tradebook. She worked in ITG‘s client service team between 2000 and 2012.


ESMA Announces Vacancies In The USA


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.

Share Notes

LSEG insider Raffaele Jerusalmi sold 23,717 shares Friday, August 5th at GBX 2,768 (bargain £656,486.56).

Other stories

Statement Of CFTC Chairman Timothy Massad On Actions To Protect Customer Funds


Concurring Statement Of CFTC Commissioner Sharon Y. Bowen Regarding The Order Exempting The Federal Reserve Banks From Sections 4d & 22 Of The Commodity Exchange Act & Written Acknowledgment Of Customer Funds From Federal Reserve Banks



Opinion Of SEC Commissioner Piwowar, Concurring In Part & Dissenting In part From The Opinion Of The Commission – Commissioner Michael S. Piwowar, Aug. 8, 2016


PLY: I have to say the SEC here has used a rather totalitarian approach in its delivery of justice. Wrong was done but the bureaucracy forcing a re-application as opposed to enabling continuation after suspension suggests a vindictive blob.


ASIC: Review Of Australian Equity Market Cleanliness


A review by ASIC has found an overall improvement in the measures of cleanliness in the Australian listed equity market over the past decade.


ASIC Review Of Handling Of Confidential Information & Conflicts Of Interest By Sell-Side Research & Corporate Advisory



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