FEBRUARY 27 2017

Phew, 941 is the one design so obscure we cannot find a Porsche to celebrate this issue of Exchange Invest, just as well as it’s a packed issue; so here goes:

In Today’s Exchange Invest

Even a kerfuffle over the reality of R3’s 150 million dollar ledger cannot obscure the big news: the DB1-LSE deal is finally unravelling as indeed I felt was inevitable from the first moment this ill-conceived merger of equal desperation was devised.

It’s not dead yet but the clear signs of it crumbling have been apparent for weeks (even without the Frankfurt raid on the DB offices concerned about unsavoury dealing). True a jumbo jet has survived all 4 engines stalling in mid flight but an idle speculator would see the outlook for either said 747 or indeed the Merger of Equal Desperation as being broadly doomed barring a miracle.

Will anybody step up to the plate to provide political support for a company whose CEO is being accused of insider dealing? I doubt that troubles your intuition dear reader…

A big reboot and an outbreak of management and strategy would be good to see at both DB1 and LSE. A little less swaggering arrogance and a return to “my word is my bond” would be welcome too. The ball is back in their court and hopefully these companies can get back to actually doing the important things they have neglected while rainbow chasing this past (wasted) year.

Having said from day one that this deal would not happen, yes, seeing as you wondered, I do feel a little bit closer to vindication this morning. Once the C-suite tantrums give way to realism about the outlook, I look forward to hearing from DB1 and LSE as they hopefully try to move forward on the work that needs to be done.

As of now there appears to be a desperate scrabbling to see what shareholders may stomach but the essence of the deal – which began, let’s recall, centred on a flawed delusion to pool CCP margins – has been ebbing away throughout the history of this curious affair.

And of course, there’s more, happy scrolling:

In BigWorld

There was an amazing black tie demo by the 1% last evening – Hollywood’s demagogues of high income and vitrue signalling went all out against President Trump. Fortunately for tv viewers sitting through this marathon, (the event was scheduled to be as long as one of their beloved Venezuelan dictators’ speeches) some bright spark scheduled a few awards peppered between the diatribes and PwC even endeavoured to add some controversy by mixing up the envelopes.

Public Markets

HKEX 2016 Final Results, Final Dividend
Hkex 2016 Net Profit Falls 27 Percent On Lower Trading Volumes
Reuters UK
Presentation By HKEX Chief Executive Charles Li And Group Chief Financial Officer Paul Kennedy On 2016 Final Results Announcement

PLY: The pressure may yet build against CEO Charles Li again.

Recommended All Share Merger Between London Stock Exchange Group Plc And Deutsche …
Exchange News Direct

PLY: An announcement dripping with entitlement which suggests all that is wrong with current attitudes in these firms’ C-suites. Their apparent bewilderment at not being allowed to run roughshod across the rules which apply to the other mere mortals of the planet, is somewhat egregious.

“We Are Not In A Bazaar”: German Minister Rules Out DB1-LSE HQ Compromise
City AM

PLY: Minister Thomas Schaefer is grumpy when asked by City AM and also appears to suggest Britain leaving the EU is a bad idea. So, he’s clearly got the, oh what was that English word, zeitgeist, of the British slightly out of place right now. (I kept this story in to demonstrate that even allowing for EU antitrust issues, this deal has enormous problems.

How Five Meetings Are Raising Questions Over The London Stock Exchange’S Takeover By A German …
Daily Mail

PLY: Unsurprising that the LSE would have had so many meetings with senior ministers as Xavier Rolet’s unofficial party trick was to flourish his direct lines of contact to Prime Minister Cameron. The problem is not merely what has been discussed but moreover the broader worry is the general lack of comprehension of capitalism and the competitive exchange environment with the current increasingly leftward British regime displays.

…& at this juncture I will spare you the other stories on the merger of equal desperation being endangered, as they add little to the parish in-depth discussion that has not been said here before.

Tooth Fairies And The Deutsche Börse- London Stock Exchange Merger
Financial Times

PLY: Another excellent article from Jonathan Ford who outlines what I have long made clear, the delusion of threading cross-border collateral camels through the eye of the needle. Oh and for those of you fascinated by just how dysfunctional LSE may appear – scroll down to the Quora answer at the end of this bulletin…

SGX Said To Consider Giving Traders Their Lunch Break Back
The Business Times

PLY: That political hot potato (baked, presumably) returns to Singapore…

‘Only Capital Markets Can Save The European Economy’

PLY: Perfect tone from the man behind the tea trolley with the stock to sell (but perhaps on the cusp of a new phase of, well, managing, the LSE): “An innovative and globally competitive European economy is in all our interests. We must act now before we live to regret those fateful words: too late.”

PSE To Seal Merger With Bond Exchange
The Standard

The Philippine Stock Exchange said it expects to finalize the terms and conditions for the acquisition of Philippine Dealing Systems within the next few weeks…

PLY: Remarkable! The Manila merger telenovela may yet be coming to an end…

Private Markets

Three Traders Punished For Havoc On Istanbul Stock Exchange

CSRC’s Reform Plans In The Offing, Now Market’s Stabilised
South China Morning Post

Get Your House In Order…The Chinese Are Coming
The Express Tribune

KARACHI : The Pakistan Stock Exchange (PSX) has been talk of the town for both good and bad reasons.

New Third Board Companies Get A Push To Chinext
China Daily

Mandatory Notification Of Trades – Oslo Børs VPS Holding ASA

Envision Training Centre And DGCX Launch First UAE ‘Trading Campus’

Special Section: FTI, NSEL, India at the Crossroads



R3 Admits Defeat, Stops Blockchain Development
The Merkle
R3: ‘Corda Is Not A Blockchain And We Didn’t Say It Was’ As Critics Take Aim

PLY: Just too crazy a day but there is more – much more – to be said here, as hopefully Blockchain consciousness grows that it is not a miracle panacea for middle aged exec careers, or indeed the creaking financial services architecture. That said there is still potential as Fredrik notes:

Nasdaq Executive Fredrik Voss Optimistic About Blockchain In Capital Markets

Tullett Prebon New Technology Centre Will Be Based At Belfast City Quays 2
Belfast Telegraph

FIX Trading Community Announces Enhancements To The FIX Protocol To Meet The Requirements Of MiFID II And MiFIR


Eurex Set To Expand FX Derivatives Suite
FOW magazine

Options Contracts On Euro Fixed Income Futures Contracts

India And Singapore Exchanges Launching Derivatives Contracts On Diamonds In India
IDEX Online

When A Bond Issuer Defaults
The Straits Times

PLY: Just a little warning – last week it was David Curmi in Malta, this week it is the Straits Times highlighting the risk to the end of the mega-bubble in bonds.

China Said To Probe Speculation In Commodity Futures Amid Rally

PLY: That tricky moment where th Chinese Communist party for all its market liberalisation just doesn’t appreciate “the invisible hand” isn’t a conspiracy.

Career Paths

Japan Exchange Group: Candidates For Directors, Executive Officers, Etc.

Chittagong Stock Exchange Gets New Chairman
Daily Sun

Dr AK Abdul Momen has been elected chairman of the Chittagong Stock Exchange (CSE).

PSE Up For Major Reorganization

A changing of the guard looms at the Philippine Stock Exchange

Six Years Of Deft And Diligent Sinha
Hindu Business Line

Following this crackdown, the IPO market dried down completely. Just four IPOs were made on the National Stock Exchange in 2013, compared to 71 …

Trump’s Choice To Be Secretary Of The Navy Withdraws Nomination
Fox News

Phillip Bilden cannot unleash his private interests to be Navy Secretary, a similar position to that of Virtu boss and once Army secretary nominee a few weeks back.


Investment Crowdfunding : What Works And What Needs Fixing

Rise Of Peer-To-Peer Financing Puts Government On Edge
Korea JoongAng Daily

Paul Weller Sets Up Crowdfund Campaign To Grow Fashion Label
The Industry London

Paul Weller and his business partner Phil Bickley have set up a Crowdcube campaign to raise £400,000 to expand their menswear label Real Stars.

PLY: Hope it doesn’t get into a jam but I suppose I ought not to be surprised that the front man of the style council would end up with a fashion label…

Other Stories

What Is Your Review Of LCH.Clearnet ?

LCH . Clearnet is the most dysfunctional company I have ever worked for. The turnover is absolutely ridiculous and the mergers border line illegal.

PLY: Even by the standards of anonymous answers on the Quora fora, this response is a rather epic (and profoundly worrying) expose on LCH.Clearnet albeit I am not enormously surprised to hear such an opinion which in itself suggests an even greater cause for concern…

India Poised To Be More Open, Less Protectionist: Jaitley
Times of India

PLY: Jaitley was at the LSE for the opening today, cue rictus grins all round from senior management as they realised their cash out strategy is going pear shaped.

MAS Forms Council To Review Singapore’s Code Of Corporate Governance
The Straits Times

Carnival was fabulous, good preparation for this morning’s (anticipated) events…

Best wishes,


Patrick L Young
Executive Director DV Advisors

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