August 11 2016

elb2India banning sugar trade just as BSE hits a pre-IPO sweet spot? EEX powers ahead, BvB stagnant. Ramifications on WGC-LME and some insights into the linearity of some viewpoints in metals.

Thanks for all the correspondence on the BIDS BATS LIS deal, particularly my Premium piece: BATS BIDS: New Kids on The Block In Europe written just after the announcement the other day.

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

Merger of DB1 & LSEG: More Than 75% of DB1 Shares Have Been Tendered


Additional acceptance period will expire on 12 August 2016, 24:00 hours (CEST).

PLY: The blob crawls on with some more votes trickling in long, long after all the original deadlines. 181 days until this deal hits the antitrust zone of peril. QV Premium: DB1-LSE Merger Brief.


EEX Group Revenue: Significant Growth During H1 2016


vs H1 2015: sales revenue EUR 117.5m (USD 131.6m), up 34%, EBT EUR 45.8m (USD 51.3m).   

PLY: Excellent progress and good to see an arm of DB1 moving forward despite the entropy of the parent company’s Merger of Equal Desperation strategy.


BVB H1 2016 Results


vs H1 2015: operating revenue Lei 14.16m (USD 3.55m), down 5%, operating profit Lei 1.24m (USD 310k), down 4%, profit for the period Lei 1.8m (USD 450k), down 44%.

PLY: Without government support and with the Romanian investor community a fraction of its potential size due to investor education and, more fundamentally, trust issues, BvB is drifting.


Presentation By HKEX CEO Charles Li & Group CFO Paul Kennedy On 2016 Interim Results Announcement


H1 Results published yesterday.

Li: Shenzhen-HK Stock Connect ‘Imminent’


PLY: …perhaps even by end 2016…

QV Premium: HKEx – SZSE Stock Connect.


Lawmaker Warns Of ‘Broken Rice Bowls’ If Turf War Between HKEX & SFC Continues (subscription)

Enoch Yiu – SCMP

HKEX reveals 38% fall in quarterly profit and Chairman Chow Chung-kong plays down ongoing spat between regulators.


Will LME Consolidate Or Fragment London’s Bullion Market?

Andy Home – Reuters

LME has announced the launch next year of a suite of precious metals contracts, starting with gold and silver and eventually encompassing platinum and palladium.

PLY: Balanced outlook with perspective. The history looks tricky but it was also a history from a different world and even metals are moving towards the digital (and MIFID II is a looming issue too).

Market Sceptical Of New LME/WGC Gold Venture

Ewa Manthey – Fast Markets

“It’s been tried before, with very poor results,” one market source said.

PLY: (Fastmarkets is a copper centric site btw). Anonymous cynicism is not merely the first resort of the spineless, it’s the watchword of faceless linearists who dog innovation with their stubborn incapacity to see the future. WGC ought to be cheered that the arguments are so weak – e.g. ‘somebody tried it before in a different millennium’ which inspire me to note ‘it’s a new digital world, and you clearly aren’t in it” to those who enjoy the opacity of metal markets to hide behind their weasel words. True, there is a side issue which would suggest LME antipathy is strong in many places but that is a separate argument between LME and an agitated minority which ought not to interfere with WGC’s initiative.


ICE & CME: Servants Or Parasites?

Kurt Dew – Seeking Alpha

Exchanges, in the popular view, are a sort of public utility. But their high performance stocks belie this notion. They have been a bulwark of steady excess profitability for the past five years. Yet this profitability is built on a government-created data monopoly. Within the next five years, the party will end in tears.


Whistleblowers Are Poised to Collect $100 Million (subscription)

Justin Baer, Gregory Zuckerman & Aruna Viswanatha – Wall Street Journal

After his warnings about Bernard Madoff’s Ponzi scheme went ignored for years, Harry Markopolos urged U.S. regulators to encourage tipsters. Now, the forensic accountant and a team he put together are in position to benefit from those new incentives.

PLY: In Britain they would probably give Markopolos a medal of some sort, except they all seem to be reserved for hairdressers and dismal advisors to Dave Cameron this summer.


Trading Firms Grab Their Partners For The Mifid II Shuffle (subscription)

Tim Cave & Samuel Agini – Financial News

Working together is not something financial firms have always found easy to do. But trading venues, brokers and technology providers are increasingly linking up to help clients meet new EU regulatory requirements.

PLY: This is only in its infancy but clearly the week’s big news on that front is the BIDS BATS LIS platform as discussed in Premium: BATS BIDS: New Kids on The Block In Europe.


The Big Interview: LCH’s Daniel Maguire

Joe Parsons – The Trade

Following a controversial report regarding the costs of clearing OTC derivatives, Joe Parsons speaks to LCH’s rates and FX boss over the future of central clearing.

Private Markets

BSE Q1 Results


vs 2015: consolidated net profit at Rs 52.72 crore (USD 7.9m), up 40% , total income 165.42 crore (USD 24.8m), up 15%.

PLY: Wow, wow, and thrice wow – that is a rather awesome Q1 profit number for a BSE on the launch ramp towards IPO. Looks like a circa $700 million valuation is achievable (at least!).


Saudis to Ease Market Rules Next Month in Bid for Foreign Cash

Deema Almashabi – Bloomberg

The regulations — which will cut the amount of assets foreigners must have under management to invest directly in the nation’s stocks to 3.75 billion riyals ($1 billion) from 18.75 billion riyals — will come into force on Sept. 4, according to a statement from the Capital Market Authority on Wednesday. They will also allow individual foreign investors to own not more than 10% of shares outstanding in a single company, up from 5%.

Dividend News

ITG declared a regular quarterly cash dividend of $0.07 payable on September 7, 2016, record date August 22, 2016.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX 996.00 up 2%, FTIL flat.


The New Wall Street: Even Big Banks Want Help Navigating Markets

Matthew Leising & Annie Massa – Bloomberg

After JPMorgan’s shares plunged 21% in the opening minutes of trading on Aug. 24 last year, the world’s largest investment bank sought out an unlikely ally, Virtu Financial, to help it understand what happened.

The lion was turning to a mouse for help navigating the jungle where it has long been king. JPMorgan spends more on technology in six months than Virtu’s equity is worth. It has 240,000 employees to Virtu’s 148.

Yet Virtu is so advanced in the arms race of electronic trading and order routing that JPMorgan executives wanted its appraisal to either confirm or deny the bank’s own analysis.


BAML & HSBC Partner With Singapore For Blockchain Test (subscription)

Anna Irrera – Financial News

BAML and HSBC have teamed up with a Singapore government agency to develop a blockchain-based trade finance application, as capital market firms speed up efforts to bring DLT into use.

PLY: Trade finance is fundamentally broken and needs all the help it can get.


The Lessons Learned From the Bitcoin Exchange Hacks (Video)


Joseph Wang, Bitquant Research Laboratories chief science officer, discusses what we learned from the $71 million hack of Bitfinex.


Nasdaq To Launch Incentives To Spur Trading In Low-Volume ETFs

John McCrank & Trevor Hunnicutt – Reuters

Nasdaq plans to increase the amount it pays to trading firms that support ETFs in an effort to make thinly traded ETFs easier to buy and sell.


Asia’s Retail Investor Affinity With Leveraged Products (subscription)

Financial Times


Govt Asks Sebi To Ban Sugar Futures Trading

Jayshree P. Upadhyay – Livemint

The government is concerned that futures market aren’t setting correct price signals for sugar amid concerns of speculators dictating terms during a shortfall.

PLY: Bad move, particularly given the supposed free market inclinations of the current regime.


DB1 Shares Replaced By DB1 Tendered Shares In STOXX Indices


Career Paths

SEC named Kristin Snyder as Co-National Associate Director of the Investment Adviser/Investment Company examination program in the Office of Compliance Inspections and Examinations (OCIE).  She joins Co-National Associate Director Jane Jarcho who has led the program since August 20, 2013 and was named OCIE’s Deputy Director on February 3, 2016.  

Financial Calendar

12.08 – BM&FBOVESPA Q2 2016 Results

17.08 – NZX Q2 2016 Results

New! – 18.08 – ASX Full-Year Results For FY16

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


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