August 23 2016

elb2SGX makes an acquisition and may even allow dual share classes, so one step forward and one back by the looks of it.  Meanwhile 3 of Canada’s largest pension funds have halved their stakes in TMX.

Here is a video briefly discussing the forthcoming CEE Capital Markets Awards & CMU summit taking place September 15th in Warsaw. The nominees have just been published too. If you are interested in CMU, you can’t afford to miss the summit while the Gala dinner is the event rewarding CEE listed companies. Prices range from from €295 for the summit, to €595 for the Gala & Summit together. Email me or follow this link HERE to sign up.

Meanwhile in Bigworld, the leaders of Germany, France and Italy are considering an EU army – what could possibly go wrong there?

Public Markets

Baltic Exchange’s Board Recommends That Shareholders Accept SGX’s Offer

Andrea Soh – Business Times

SGX & Baltic Exchange Agree Terms (subscription)
Jeevan Vasagar – Financial Times

Baltic Exchange To Remain In City After Sale To SGX

Alan Tovey – Daily Telegraph

SGX has moved closer to clinching an acquisition of the Baltic Exchange, after agreeing terms (press release) with the UK bourse and winning backing from shareholders representing a majority of share capital.

SGX and the Baltic said on Monday they had agreed a cash bid of £160.41 per share and a final dividend of £19.30 per share, revised up from £18.80 offered two weeks ago.

The transaction values the Baltic at about £87m (USD 115m). The goal of the deal is to capitalise on growing Asian demand for commodities by establishing Singapore as the ideal location for the trading and settlement of shipping contracts.

PLY: Good deal for SGX. Places them in straight competition with EEX owned Cleartrade for instance as well as providing a larger London presence in addition to the fine offices of Pete Osborne et al.


SGX To Consider Dual-Class Share Structures

Andrea Tan – Bloomberg

SGX is likely to allow dual-class weighted voting rights for listed companies, after the city-state amended its laws this year to allow such structures.

PLY: Thus SGX goes where HKex will not, opening a proxy war for Sino-centric listings.


CME Suspends Trader For Spoofing


CME barred Andrey Sakharov from trading for 60 days and could extend his ban, according to a disciplinary notice.

PLY: It strikes me there will be more of these, pour encourager les autres.


Bats Europe Encourages Industry Harmonisation for MiFID II Requirement for Order Record Keeping


Bats Europe has made available for testing on its platform its MiFID II compliant process for order record keeping, which the exchange is proposing as the industry approach to encourage harmonisation. Bats is also making available a range of enhancements to facilitate further user testing of their algorithms.

PLY: Interesting invitation to a sandbox without a lot of detail on the plan. The algo testing element tacked on the end of the release is interesting given that the liability under MIFID as I understand it, falls on institutions, as opposed to the exchange itself, and no mention is made of how the testing is expected to be undertaken.


LME Cuts Ring Dealing Fees In Half For August


LME has cut fees in half for open outcry trades during August as a goodwill gesture after it had to vacate its premises because of structural problems.

PLY: Presumably Frankfurt financial centre folks will add to their post Brexit sales patter for all those banks (not) moving from London: “and we have built our skyscrapers so much more securely than London.”


Extension Of Authorisation Of The Clearing House KDPW_CCP


The Polish Financial Supervision Authority (KNF) has extended the authorisation of the clearing house KDPW_CCP to cover new classes of instruments and categories of acceptable collateral as of 9 August 2016. KNF’s decision allows KDPW_CCP to offer new services: the clearing of EUR-denominated instruments in organised trading (exchange market & ATS) and in OTC trade (interbank market), as well as the clearing of PLN-denominated OTC debt instruments. The extended authorisation of the clearing house allows it to accept collateral in EUR, including both cash and bonds.

PLY: Meanwhile, the management of the Polish Power Exchange has been changed wholesale with CEO Ireneusz Lazor amongst the latest staff to suffer at the hand of the government’s digital era Communist style purges. The risk is that the GPW, under control of the government through dual stock classes, will now seek to move the PolPX CCP under the aegis of the entirely government owned KDPW from (non-voting but majority equity held) GPW.


The FTT That Won’t Die

Jeffrey Kutler – Institutional Investor

PLY: Good post by Jeff Kutler noting the risks to the US from a possible FTT as well as the EU’s ongoing discussions about this dismal impot. Incidentally, elsewhere some German financial folk are arguing against EU FTT to help Frankfurt garner more trading post Brexit.


Why DB1 Is All About Regtech (subscription)

Joanna Wright – Waters Technology

Rory McLaren, DB1’s SVP Regulatory Services says that far from being about small innovators threatening incumbents, established players are looking to partner with innovators to help clients.

PLY: Nothing about DB1’s machinations in recent months have suggested that DB1 is anything other than a predatory partner singularly incapable of dealing with small innovators even within its current blob.

Private Markets

NSE Board Meets To Finalise Bankers For Its IPO

Ashley Coutinho – Business Standard

NSE board had already given its nod to list in India and overseas, it would also file a draft prospectus with market regulator to Sebi by January 2017 for domestic listing.

PLY: Excellent news: a really great leap forward for NSE towards its IPO.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX slightly up, FTIL slightly down.

Govt Makes Fresh Push For NSEL’s Merger With FTIL

Jayshree P. Upadhyay – Livemint

PLY: So one step forward with NSE and its IPO as the Indian government still insists on a great leap backwards in the sanctity of corporate structure.

QV Premium: NSEL Scandal Brief – Part 16 and NSEL-FTIL Merger Brief.


CME Expands Base Metals Offering with Two New Alumina Futures Contracts


Alumina FOB Australia (S&P Global Platts) futures and Alumina FOB Australia (Metal Bulletin) futures will begin trading on September 26, 2016. Pending relevant regulatory review periods, available for trading on CME Globex, for submission for clearing through CME ClearPort; listed with and subject to COMEX rules.


Banks Sprint to Meet $493 Trillion Swaps Market Margin Rules

Silla Brush – Bloomberg

The world’s largest banks are racing to meet a U.S. and Japanese deadline next month when billions of dollars in new collateral requirements will begin to hit the OTC derivatives market, even as new regulatory fault lines emerge.


China Close To Launching CDS Market (subscription)

Henny Sender – Financial Times

As China suffers a rise in company defaults and an increase in corporate downgrades, the need for a credit default swap market in the country has become more pressing. And now it looks likely the People’s Bank of China will give the hedging scheme the go-ahead in coming months.

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


Finance Minister Arun Jaitley Holds Inter-Ministerial Meeting On Banning Sugar Futures

Indian Express

Finance Minister Arun Jaitley on Monday held an inter-ministerial consultation on imposing ban on sugar futures trading in an effort to curb speculation and check price rises of the sweetener during festival season.

PLY: In other words, the Indian blob still does not understand free markets.


NCDEX Rejects 50% Coriander On Quality Issues

The Hindu Business Line

The controversy involving futures trading in agriculture commodity refuses to die down. NCDEX has rejected 50% of the coriander bought into its approved warehouse following complaints on quality by traders.


EEX Publishes 2016 Auction Calendar For The New EU Common Auction Platform


Career Paths

Research vendor TIM Group, has recruited: Christopher Kleparek from Thomson Reuters, Jay Goldenstein from RavenPack International and Austin Mueller from Informa Investment Solutions.

The business development team is led by Mike Chiappinelli, Head of Sales – North America at TIM Group, who reports to President, Brent Delehey.

Financial Calendar

New! 28.09 – ASX AGM

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

Share Notes

Alberta, Quebec, Ontario Pension Funds Sell TMX Group Shares

Eric Lam – Bloomberg

Three of Canada’s largest pension funds sold a combined 10% stake in TMX for about C$312m ($241m), cutting by almost half their holdings in the operator of the Toronto SE.

Alberta Investment Management Corp., on behalf of some of its clients, Caisse de Depot et Placement du Quebec and Ontario Teachers’ Pension Plan Board each agreed to sell 1.8m common shares of TMX at C$57.70 through a group of banks led by Toronto-Dominion Bank’s TD Securities.

The sale represents about 9.9% of the outstanding common shares of TMX as of Aug. 2. After concluding the sale, each of the three pension funds will hold about 5% of TMX, and will each have a nominee for the board of directors of the company.

PLY: Interesting to see who was buying…given the way TMX looks becalmed currently, this is not an encouraging sign.


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